Weekly Forex Forecast and Analysis for 29.01-02.02


The market is entirely focused on the Federal Reserve’s meeting, but other crucial events may unfold in the coming days: stock market volatility will likely increase by mid-week.

Contents

USD: everything depends on the Fed

USD: everything depends on the Fed

No surprises are expected from the regulator at this meeting, with the interest rate likely to remain at 5.50% per annum. However, the market trend for the coming weeks will depend on comments from Federal Reserve officials. Soon, the Fed should decide whether to reduce the rate in March or wait until May. Although the USD is currently in a strong position, signals about the upcoming easing of monetary policy may weaken it.

EUR: focus on prices

EUR: focus on prices

Germany is set to report on the GDP for Q4 2023: the economy might have deepened the recession and contracted by 0.3%, which is negative news for the EUR exchange rate. The eurozone is gearing up to provide updates on the consumer price index in January. The indicator might have decreased from 2.9% seen earlier to 2.8% y/y.

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GBP: chances for growth

GBP: chances for growth

The Bank of England will likely keep the interest rate at 5.25% per annum at the next meeting. Like other central banks, the English regulator will wait for the Federal Reserve’s active actions and embark on the monetary easing cycle later. The GBP has a chance for growth.

JPY: sideways movement

JPY: sideways movement

The yen ended up in a sideways channel due to the lack of decisions from the Bank of Japan and tension amid the forthcoming Federal Reserve meeting. So far, consolidation is the main scenario for the JPY.

China: impact on risk assets

JChina: impact on risk assets

China is set to release data on the manufacturing PMI in January, which could have risen from 49.0 points recorded earlier to 49.3 points. The more robust the statistics, the better for assets linked to risk.

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