Created on November 22, 2024

• During my daily analysis of the GBP/USD pair, the British pound has truly looked fairly weak.
• As we continue to threaten the 1.26 level, it looks as if we are eventually going to break down, and perhaps go looking to the 1.25 level underneath, which is a large, round, psychologically significant figure.

During the Friday session, we get the PMI numbers for both Manufacturing and Services from both the United Kingdom and the United States. That will have a direct influence on how this pair goes going forward, but I would also point out that a lot of people are paying close attention to the bond markets in the United States as interest rates continue to rise. As long as those interest rates continue to stay fairly high, it does make the US dollar much more attractive than the British pound. Furthermore, we have a lot of other things to think about at the moment that could continue to influence what happens next with the greenback.

US Dollar Continues to Be a Safety Currency

Keep in mind that the US dollar continues to be thought of as a currency that is sought out in times of need for safety. With the escalation of the war in Ukraine, I suspect that we have yet another reason to think that the US dollar will continue to strengthen against most others. Furthermore, the United Kingdom has a lot of economic and social issues at the moment that seem to be getting worse at this point. With that being said, it’s not necessarily an economy that a lot of foreign money wants to go running to. This isn’t to say that the United Kingdom’s economy is going to collapse or anything hyperbolic like that, just that the US economy seems to be on much stronger footing.

Given enough time, I think that this market will probably go looking to the 1.25 level, and if we were to break down below there, the GBP/USD market could really start to break down. In this environment, you would probably see the US dollar strengthen against multiple other currencies, not just this one.

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Created on November 21, 2024

• Since the beginning of this week, the EUR/USD currency pair has been attempting to recover from its year-low, but rebound gains have not exceeded the 1.0609 level.
• It is currently stabilizing around 1.0548 at the time of writing this analysis.
• Trump’s trade, along with European political concerns, is still affecting the EUR/USD gains.

Reasons for the Continued Decline of EUR/USD

According to reliable trading platforms, the EUR/USD price is still stable on the threshold of the psychological support of 1.0500, the lowest for the currency pair since October of last year. Also, due to several pressure factors, the most prominent of which is the strength of the US dollar since Trump won the US presidential elections, which is known for its trade hostility. Moreover, the euro zone is recovering with increased exports. This is in addition to the divergence in monetary policy between the US Federal Reserve, which hinted at calming down the rate cuts, and the opposite of the European Central Bank’s policy.

Also, the pressure on the euro is due to the escalation of tensions between Russia and Ukraine, and concerns about negative risks to the eurozone economy. According to the latest events, it was recently announced that Ukraine launched British cruise missiles at Russia for the first time in a dangerous development of the war that threatens to expand and continue.

European Central Bank Policy and Regional Tensions

The escalation of the war between Russia and Ukraine will remain a factor of concern for the eurozone. Amid these concerns, the European Central Bank highlighted in its annual financial stability report that rising geopolitical tensions and political uncertainty are amplifying sovereign vulnerabilities. Meanwhile, rising global trade tensions increase the likelihood of negative economic shocks. According to the results of the economic calendar data recently, it was announced that wages in the eurozone rose by 5.4% year-on-year in the third quarter, the largest rate since the introduction of the euro, which complicated the European Central Bank’s plans to cut interest rates. In general, the central bank is still expected to provide its fourth interest rate cut by 25 basis points in December.

US stocks may witness selling

According to stock trading platforms, US stock futures declined today, Thursday, as investors reacted to the long-awaited earnings report from Nvidia. Despite the company beating quarterly expectations and issuing strong forward guidance, Nvidia’s stock fell by more than 2% in after-hours trading. Obviously, this decline came as investors had hoped for bigger surprises, given Nvidia’s dominant role in the AI-driven market rally. According to yesterday’s trading, the Dow Jones Industrial Average rose 0.32%, the S&P 500 closed flat. Also, the Nasdaq Composite fell 0.11%. These moves were driven by mixed earnings reports and rising geopolitical concerns.

EUR/USD Analysis Today:

According to the daily chart, the overall trend for the EUR/USD pair remains on a downward trajectory, with the 1.0500 support remaining key to keep the bears in control. Dear reader, it must be taken into consideration that the recent trading sessions formed a gathering area in narrow ranges on the chart, which may herald a strong upcoming move in one of the two directions. So far, the strongest expectations are still bearish due to several factors listed above, and the exacerbation of these factors will support a stronger bearish move. Currently, the closest support levels for the euro and dollar are 1.0500, 1.0455, and 1.0380, respectively.

On the other hand, and for the same period of time, the resistance levels of 1.0675 and 1.0800 will remain the most important to break the current downward trend and start a new shift. Today, investors will focus on economic data, including US initial unemployment claims and US existing home sales figures. In addition, more insights are expected from more comments by members of the US Federal Reserve.

EUR/USD Trading Signals:

If the EUR/USD moves below the 1.0500 support level, technical indicators will move towards strong oversold levels, and you can take buy trades but without taking risks and activating take-profit and stop-loss orders to ensure the safety of your trading account from any price reversals. You can consider buying from support levels of 1.0440 and 1.0370, respectively. In case of a sell signals, it can be from the resistance of 1.0666. 

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Created on November 21, 2024

• The Australian dollar initially did rally a bit during the trading session on Wednesday but found quite a bit of resistance above as we continue to see a lot of noisy behavior.
• With that being said, I think we’ve got a scenario where traders are going to continue to look at this as a potential buy on the dip type of market as we have seen the 99.50 yen level offer massive support.
• Now, we have the 50 day EMA as well as the 200 day EMA indicators coming into the picture to offer support.

This Market Could Remains Sideways For a While

With this being said, I think you’ve got a situation where traders are going to continue to be somewhat sideways, but given enough time, I do think that eventually the interest rate differential will continue to be a major driver of what happens next. If that’s the case, once we break the 102 yen level, the pair will likely move much higher. While Japan has started discussing tightening monetary policy, the reality is that they can’t take significant action beyond the recent moves they’ve already made.

So, with that being said, I think if we do break above the 102 yen level, it will probably be more or less a FOMO trade. If we were to break down below the 99.50 yen level, then we could see a drop to the 98 level, but really at this point in time, I think the bulk of traders are still looking for this to go higher.

AUD/JPY is a pair that will continue to follow the overall attitude of the Japanese yen more than anything else, as the Bank of Japan continues to be a major factor in what happens with currency markets, specifically anything that is related to the JPY. Ultimately, the interest rate differential still makes this a very desirable investment, as recently the Reserve Bank of Australia has chosen to sit still with its monetary policy.

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• EUR/GBP has returned to the range it has been trading in since the end of September. 
• It will probably continue oscillating there until it breaks out either higher or lower.
• The false downside break at the start of November, suggests the range floor may be vulnerable. 

EUR/GBP continues trading in a range. The pair is probably now in a sideways trend and given the principle of technical analysis that “the trend is your friend” it will probably continue oscillating until it makes a decisive breakout one way or another. 
 

EUR/GBP 4-hour Chart 

The pair made a false break on November 8 when it fell to a two-and-a-half year low of 0.8260. However, rather than continuing down to the target generated from the range, EUR/GBP recovered back inside where it now trades. 

Because it is in a sideways trend, however, the odds favor a continuation sideways, which suggests the possibility of a recovery from the current level near the range floor, and the unfolding of a leg up towards the ceiling at around 0.8450. 

It is too early to say with any confidence whether EUR/GBP will indeed rise up to the top of the range. Further, the false break may be a sign of weakness and be followed by another break lower, thus complicating the picture and adding a bearish tone to the chart. 

Assuming a break lower, it is possible the pair could fall to the target established by the range, at 0.8219 – the 61.8% Fibonacci extension.

Created on November 21, 2024

• The gains made yesterday by the GBP/USD currency pair to the resistance level of 1.2715 quickly evaporated.
• Concurrently, it returned to stabilizing around its six-month low, currently around the 1.2650 support level at the time of writing this analysis.
• This comes ahead of the announcement of a package of important US economic data and statements by some US Federal Reserve officials.
• Recently, weakening risk sentiment has deprived the pound sterling of its chance to rise.

Reasons for the Rise in the Pound Sterling

According to reliable trading platforms, the pound sterling has strengthened against other major currencies. This followed the announcement of economic data results, which showed that UK consumer price inflation rose to 2.3% year-on-year in October from 1.7% in September, a larger increase than the 2.2% expected by the market. At the same time, the UK monthly inflation rate rose to 0.6% in October, from being stable in the previous month. The crucial annual rate of services for the Consumer Price Index rose from 4.9% to 5.0%, signalling to the Bank of England that it should not rush to cut interest rates.

The reaction to the economic data results caused UK bond yields to rise, reflecting expectations that borrowing costs will remain higher for longer. Overall, the chances of a British interest rate cut next month have declined after the releases, in line with the rise in the pound sterling.

Weakening Risk Sentiment Negatively Impacts Sterling

As is known, the pound is a risk currency and tensions between Russia and Ukraine have recently escalated amid measures that threaten to widen the scope and length of the war. This is in addition to the continued strength of the US dollar, driven by expectations for the future of the US economy under Trump’s leadership.

Bank of England Policy Expectations

Widely, markets are expecting no change in the Bank of England policy decisions next week, and expectations have increased based on Governor Andrew Bailey’s testimony to the Treasury Select Committee this week. However, the BoE Governor is unsure how the £26 billion jobs tax announced in October will affect UK inflation. Recent economic data has also given the BoE Governor “reason to think”. Consequently, next month is too early for another rate cut.

Technical Analysis for the GBP/USD pair today:

According to the performance on the daily chart, the overall outlook for the GBP/USD currency pair remains bearish. However, dear follower of TradersUp, you should pay attention that the movement of the GBP/USD towards the support levels of 1.2600 and 1.2545 will push technical indicators towards strong oversold levels. From the last level, you can consider buying the GBP/USD. Furthermore, as we always recommend, do not take risks and activate take-profit and stop-loss orders to ensure the safety of your trading account from any sudden price reversals. Conversely, for the currency pair to exit the downward trend, the bulls must first move towards the resistance levels of 1.2775 and the psychological resistance of 1.3000, respectively.

Also, do not forget that the pound sterling was one of the best performing G10 currencies in 2024, due to the factors of economic growth surprises and the cautious approach to dealing with interest rates at the Bank of England.

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