Created on December 03, 2024

• As I look at the Euro against the British pound, I have to ask a lot of questions of whether or not we are breaking down more significantly than we have seen in the past.
• When I zoom out on the charts going back to approximately the summer of 2016, this is an area that’s held since then.

Because of that, if we break down from here, we could see the Euro just crater. That being said, it also somewhat lends itself to being a place for contrarian traders to get involved and start betting against the markets in general. It obviously would be a very difficult ride to the upside, but I think if we get beyond the 0.84 level, then you can have some credence for that.

On a Drop in this Pair

If we break down below the 0.82 level, then like I said, we really start to drop perhaps all the way down to 0.77 before it’s all said and done. That would be a brutal sell-off, but not necessarily something that is out of the realm of possibility. I think both of these economies have major issues, but right now, I think the biggest problem that I know of is probably Germany, and that does not bode well for the euro overall.

The euro is basically a basket case at this point. And I think you continue to have the major issues of the fact that you have all of these countries that have trouble cooperating. We also have the issues in Ukraine and that’s not going anywhere. So really at this point in time, while I’m not necessarily overly bullish on the pound, I definitely don’t like the euro.That’s the main takeaway here. However, I am willing to go either way. If the market tells me, it’s time to start buying, then so be it.

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GBP/USD is trading at $1.26640, up 0.12%, showing a slight bullish tilt as it holds above the pivot point at $1.26443. Immediate resistance lies at $1.26916, with further targets at $1.27235 and $1.27500.

On the downside, key support levels to watch are $1.26179 and $1.25887. The pair is supported by an upward trendline, with the 50-day EMA at $1.26683 reinforcing near-term strength.

Meanwhile, the 200-day EMA at $1.26571 serves as a critical foundation for maintaining upward momentum.  If prices remain above $1.26443, buyers could push toward the next resistance levels.

Euro Pressured Amid Weak Manufacturing Data

The Euro faced headwinds as manufacturing data across the Eurozone disappointed. Spain’s Manufacturing PMI dipped to 53.1 from 53.9, while Italy (44.5), France (43.1), and Germany (43.0) reported weaker-than-expected activity, all pointing to persistent contraction.

The bloc’s Final Manufacturing PMI held at 45.2, signaling ongoing economic challenges.

However, Italy’s unemployment rate improved to 5.8% from 6.0%. Markets now await Spanish unemployment data and France’s government budget balance for further direction.

EUR/USD Technical Forecast

Created on December 02, 2024

• The US dollar has plunged against the Japanese yen during the trading session on Friday to dip below the 150 yen level.
• But this is an area that I think will continue to be crucial, so it’ll be interesting to see how this plays out.
• I like the idea of buying on a dip that then finds itself bouncing, and I think that’s what we’re watching right now to see whether or not it happens.

We are right around the 200 day EMA, so I would anticipate a certain amount of technical trading in this area regardless. The fact that the 150 yen level is a large round psychologically significant figure is probably something worth paying attention to anyways. Ultimately, I think this is a situation where if we can break above the top of the candlestick for the Friday session, then we could really start to take off towards the 155 yen level.

On the other hand, if we break down below the bottom of the candlestick for the USD/JPY trading session on Friday, then we could go down to the 148 in level, possibly even 146 yen. There is an interest rate differential that you need to pay close attention to. With that being said, I think you’ve got to look at this as a scenario where traders will probably continue to find one way or the other to take advantage of this interest rate differential.

If things settle down. When you look at the pullback that we’ve seen from the bounce, we’re only at about the 38.2% Fibonacci retracement level. So really, it is still technically bullish. It’s just been tough to be bullish over the last four or five sessions. A bounce from here though, would solidify the idea of people taking advantage of the carry trade. So, we’ll have to wait and see how that plays out.

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Created on December 02, 2024

• At the beginning of this week, the US dollar regained its recent losses following Trump’s recent harsh threats and ahead of the start of trading for those who abandon the US dollar.
• As a result, the EUR/USD currency pair is stabilizing on a downward trend around the support level of 1.0515 after closing last week’s trading at around 1.0575.
• We expect the downward momentum for the euro-dollar to persist until the reaction to the announcement of US jobs figures at the end of the week, which will have a strong reaction on the expectations for the future of US Federal Reserve policies.

US Treasury Yields Stronger

Today, the yield on 10-year US Treasury bonds rose to more than 4.2%, reflecting a two-week decline, and its gains came with increasing speculation among investors about the strong US economic performance before the new year 2025. Also, the rise in bond yields followed the rally in the US dollar after a sharp threat from Trump to the BRICS group of countries. Correspondingly, he stated that he would impose a 100% tariff if the BRICS countries created or supported a new currency that could replace the dollar.

US central bank policies support the dollar

In terms of monetary policy, financial markets are currently betting on the possibility of the Federal Reserve cutting US interest rates by 25 basis points this month by 67%, up from 53% a week ago. In general, investors are now focusing on US jobs data and statements from a number of US Federal Reserve policy officials.

US Stocks Stabilize

According to stock trading platforms, US stock futures have seen little change today as investors seek new catalysts in the last month of 2024. Overall, US stock market indices have emerged from a strong week and month, with the three major indices rising between 1.1% and 1.45% last week and rising between 5.7% and 7.8% in November trading. Also, the Dow Jones and S&P 500 indices hit all-time highs on Friday. Simultaneously, these gains were largely driven by the rally that followed the election after the decisive victory of President-elect Donald Trump. Ultimately, the resilience of the US economy and the corporate sector also boosted investor sentiment.

EUR/USD Analysis Today:

My technical outlook for the EUR/USD currency pair remains unchanged. The overall trend is still downward, and as we mentioned before and confirm now, the stability of the euro-dollar around and below the support level of 1.0500 will continue to encourage the dominance of the bears on the trend. Furthermore, the expectations will return to the proximity of the euro-dollar parity if the bears succeed in pushing the currency pair towards the support levels of 1.0455 and 1.0380 again. Technically, these levels and below will push the technical indicators towards strong oversold levels. Conversely, and based on the daily chart, the psychological resistance of 1.1000 will remain the most important for a shift in the euro-dollar direction to bullish.

EUR/USD Trading Signals:

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• GBP/USD declines over 0.50%, with sellers targeting further lows after breaking past 1.2644.
• Bearish momentum confirmed by RSI; GBP faces key supports at 1.2600 and 1.2486.
• Potential recovery hinges on surpassing resistance at 1.2700 and 1.2818 (200-day SMA).

The Pound Sterling tumbled over 0.50% against the Greenback on Monday, as the latter recovered from last week’s losses, remaining bid on Monday. At the time of writing, the GBP/USD trades at 1.2659, dropping after reaching a daily high of 1.2735.

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend remains intact, and it could be threatened if buyers clear the 200-day Simple Moving Average (SMA) at 1.2818. Sellers must clear the November 28 daily low of 1.2644 before extending their drop to 1.2600. A breach of the latter will expose the latest major support at 1.2486, the November 22 swing low, followed by the current year’s low of 1.2299.

Conversely, if GBP/USD clears the 1.2700 figure, the first resistance would be the 1.2800 figure, followed by the 200-day SMA at 1.2818. Once those two levels are surpassed, it would emerge 1.2900 and the 50-day SMA as next key resistance at 1.2943.

The momentum remains bearish, as depicted by the Relative Strength Index (RSI), which aims to be lower at the beginning of December.

GBP/USD Price Chart – Daily

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