Monetary Policy Divergence: The Great Central Bank Divide
Market Analysis for Week Number 19 2024
Wednesday, May 08, 2024 (Week 19): The foreign exchange market is poised for volatility as traders brace for crucial central bank meetings and key economic data releases. The Bank of England's monetary policy decision on Thursday and the US Consumer Price Index data next Wednesday are set to shape the near-term direction of the GBP/USD and EUR/USD pairs, respectively. Meanwhile, the USD/JPY pair remains on an upward trajectory, driven by the widening interest rate differential between the US and Japan.
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EUR/USD: Range-Bound Ahead of Key Data Releases
The EUR/USD pair is expected to remain range-bound in the coming days, as traders assess the monetary policy outlook for both the US Federal Reserve and the European Central Bank (ECB). The pair's direction will likely be influenced by the US CPI data and the outcome of the European Parliament elections.
GBP/USD: BoE Meeting and GDP Data in Focus
The GBP/USD pair may face downward pressure in the near term, with the Bank of England's monetary policy meeting and the UK's Q1 GDP data being the key events to watch. A more dovish tone from the central bank or a weaker-than-expected GDP reading could weigh on the Pound.
USD/JPY: Upward Trajectory Intact, Barring BoJ Surprises
The USD/JPY pair is expected to maintain its upward trajectory in the coming days, as the stark interest rate differential between the US and Japan persists. However, any surprises from the Bank of Japan's policy meeting or stronger-than-anticipated Japanese economic data could temporarily halt the pair's advance.
USD/CAD: BoC Decision and GDP Data to Guide Near-Term Direction
The USD/CAD pair's near-term direction will likely be determined by the Bank of Canada's interest rate decision and Canada's Q1 GDP data. A more dovish stance from the central bank or a weaker-than-expected GDP reading could lead to an appreciation of the USD/CAD pair.
Gavin Pearson
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Specialises in forex
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