Created on November 26, 2024

• The EUR/USD currency pair’s attempt to recover at the end of last week with gains to the 1.0530 level quickly evaporated and returned downward this week.
• Today, the euro-dollar pair plummeted today to the support level of 1.0425 ahead of important US data.
• The performance confirms our technical view that the EUR/USD will remain in its downward range and any upward rebound may be a selling opportunity.

Will the EUR/USD rise in the coming days?

So far, most technical and momentum indicators are still clear in expecting further decline in the performance of the EUR/USD pair. Accordingly you should expect more weakness. Subsequently, if the selling wave returns, the lowest support levels recorded by the currency pair in recent trading sessions at 1.0331, the lowest for the currency pair in two years, will be retested, followed by a test of the support level at 1.02. However, tactically, there is room for some strength in the coming days with a correction of the recent excessive selling levels. The relative improvement in the performance of the currency pair came after the announcement of the candidate for the position of US Treasury Secretary, which gave some optimism to investors and markets.

The State of the German Economy and Its Impact

According to forex market trading, the euro price was affected by economic data that showed that the German Ifo business climate index fell from 86.5 in October to 85.7 in November, weaker than the expected reading of 86.0. In the same announcement, the current conditions index fell from 85.7 to 84.3 and the expectations index fell from 87.3 to 87.2. Overall, the reading confirms that the German economy is still in recession. Therefore, the outlook for next year 2025 is also weak as the loss of competitiveness in industry. Moreover, the adverse demographic structure is likely to offset any boost from recovery in real household incomes and monetary easing.

Concurrently, the BCI index is consistent with a sharp contraction in German GDP, as is last week’s November Purchasing Managers’ Index survey. Also, the composite Purchasing Managers’ Index fell further into recession territory in November. The next major release will be eurozone inflation figures, which could determine whether the European Central Bank (ECB) will cut interest rates by a large 50 basis points in its interest rate decision next month.

European Inflation Figures Under the Microscope

According to this week’s economic calendar, forex traders will be focusing on the official German inflation figures next Thursday. Similarly, Spain releases inflation figures on the same day. As is well known, the German and Spanish releases often serve as a good guide to where the Eurozone inflation release – due on Friday – will fall and because of this, the impact on the Euro could be significant if there are any surprise deviations from expectations.

Meanwhile, Eurozone inflation is forecast to rise to 2.4% from 2.0% in October, which would ensure the ECB sticks to a 25-basis point cut next month. However, if inflation data comes in lower than expected, the ECB may consider cutting interest rates by a larger amount, especially in light of last week’s disappointing PMI data. If so, the euro could come under pressure against other major currencies, especially the US dollar.

Trump’s Policies Continue to Support the US Dollar

The US dollar continued to make further gains against other major currencies. Optimism was dampened by the name of the new US Treasury Secretary. Furthermore, Trump promised that he would impose an additional 10% tariff on goods from China. Comparably, he pledged to impose 25% tariffs on all products from Mexico and Canada, which led to a decline in their currencies by about 1% each. Simultaneously, the US dollar index DXY returned to stability above the 107.00 resistance, near its highest level in two years.

In general, risk sentiment is now collapsing due to the risks of Trump’s tariffs – the dollar is seen as a safe haven. According to reliable trading platforms, the US dollar recorded gains today against all currencies except the Japanese yen in Asian trading. In the same performance, the 10-year Treasury yield rose by 2 basis points to 4.29% after declining by 13 basis points in the last session.

EUR/USD Analysis Today:

Technically, the overall trend of the EUR/USD currency pair remains downward. As we previously advised, dear reader, you should expect any gains for the EUR/USD currency pair to evaporate quickly and the expectations of the EUR/USD parity become stronger. Currently, the closest support levels are 1.0420, 1.0330, and 1.0200, which are sufficient to push all technical indicators towards oversold levels.

EUR/USD Trading Signals:

No matter how strong and accurate the analysis is, you should always work with a trading strategy of not risking and activating profit and stop loss orders to ensure the safety of your trading account from any price surprises, especially in the Trump era.

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Created on November 26, 2024

• During the trading session on Monday, we have seen a little bit of a pullback in the British pound against the Japanese yen to test the crucial 200 day EMA.
• That being said, the 200 day EMA has held so far, and it looks like we are trying to build up enough pressure to turn around and break to the 195 yen level.
• If we can clear that level, then I think it opens up the possibility of a move to the 200 yen level.

All things being equal, GBP/JPY is a pair that is highly sensitive to risk appetite, so you do have to keep that in mind. So, it’ll be interesting to see how we behave over the next couple of days as this pullback has been a little bit of relief for those who got a little stretched. And now we have to see whether or not sideways action will build enough of a base here in order to continue to go higher. If we do break higher and clear the 50 day EMA, then I think we’ve got a situation where the market goes looking to the 200 yen level. If we can break above there, then the 207.50 yen level could be the target.

If We Break Down

On a breakdown below the 200-day EMA, I believe that the 190 yen level will offer a significant amount of support. Keep in mind that the Bank of Japan continues to be fairly loose with its monetary policy, despite the fact that occasionally they will jawbone the market. The interest rate differential does pay you at the end of every day, and I think a lot of traders will continue to pay close attention to this on a move above the 195 yen level, I do think that more traders will jump in and try to catch a little bit of a FOMO trade at that point.

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Created on November 26, 2024

• The British Pound has pulled back just a bit during the early hours on Monday as we continue to see a lot of noisy behavior.
• With this being said, I think we’ve got a situation where the 1.25 level continues to offer significant support, an area that also has been very important multiple times.

If the GBP/USD market were to bounce from here again, then we could see a move to the 1.27 level, which is an area where we had bounced from and then came back below it, only to bounce back to the downside once we reached it again. In other words, there should be a lot of market memory in this area. If we can break the above there, then we have the possibility of going to look at the 200-day EMA.

On the Other Hand

On the other hand, if we were to break down below the 1.25 level, then it opens up the possibility of a move down to the 1.23 level, an area that I think will continue to be important as it also has a lot of market memory. All things being equal, the US dollar is by far one of the strongest currencies in the world right now. And while the British pound itself isn’t too bad, it’s not the US dollar.

So, I still think this is a market that rallies will get faded at the first signs of exhaustion, and therefore I’m looking for selling opportunities. If we do break above here, then I think we’ve got a lot of work to do to turn things around. This isn’t to say that we won’t get the bounce that looks like it’s trying to set up, because quite frankly, a little bit of profit taking might make a certain amount of sense. But nonetheless, at this point in time, I think you’ve got a lot of work to go before we can truly turn things around for a longer term move.

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Created on November 26, 2024

• Dear my daily analysis of the USD/JPY pair, the market has shown itself to be rather flat, which is not overly surprising, considering that we had been consolidating for a couple of weeks previously.
• The ¥155 level continues to be a bit of a barrier, but if we can break above there I think it will release quite a bit of kinetic energy in this pair.

Keep in mind that this is a market that still has a positive swap, and that will continue to be a major factor in how people approach it. After all, the Bank of Japan can do nothing to tighten monetary policy at this point, because quite frankly there is so much in the way of debt that is attached to the Japanese economy that it would completely implode domestic conditions if they approached to aggressively.

Technical Analysis

I believe that the ¥155 level is crucial, and if we can break above there could open up a move to the ¥160 level. The 50 Day EMA has recently broken above the 200 Day EMA, roughly at the ¥150 level, kicking off the so-called “golden cross” that a lot of longer-term traders pay close attention to. The market has been bouncing rather significantly over the last month or so, and we have seen the Japanese yen lose quite a bit of strength. Perhaps we are entering an area of digestion, which would make quite a bit of sense considering that we had reached the ¥150 level in rather short order.

Going forward, it does look like this is a “buy on the dips” type of market, with the 50 Day EMA offering potential support near the ¥151.50 level. After that, we have the 200 Day EMA sitting just above the ¥150 level, which of course is an area that would attract a lot of attention from a large, round, psychologically significant figure standpoint, and of course the same indicator that most trend followers pay close attention to over the longer term anyway. I remain bullish, but I recognize we may be a bit noisy in the short term.

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Created on November 26, 2024

• In my daily analysis of the EUR/USD pair, it looks like the euro is simply treading water, just below the crucial 1.05 level.
• This is not much of a surprise, considering that we have plunged so drastically to the downside that the market is almost certainly oversold at this point.
• This isn’t to say that I think we need to be buyers of this pair, just that I think a balance is probably more likely than not.

In fact, it’s probably worth noting that we initially tried to rally during the trading session on Monday but gave back those gains rather rapidly.

Because of this, I think you have got a situation where traders are going to continue to see a lot of volatility in this pair, and that does make a certain amount of sense considering that the European Union has a whole host of issues to worry about. After all, we’ve got a situation where there is a hot war on the continent that is only getting worse, so that in and of itself probably makes some traders a little bit cautious about being involved in the European Union.

US Elections

The US elections have been like a shot in the arm for the US dollar and US equities overall. I think that continues to be the case, but it’s also worth noting that the market is paying close attention to the interest rate situation in the United States, as they have been rising, despite the fact that the Federal Reserve has been cutting. With this being the case, think you get a situation where traders will continue to look at this through the interest rate differential argument, but then again you also have to keep in mind that the US is more likely to be business friendly than the European Union now that Donald Trump is taking over.

We also have the idea of safety as far as the US dollar is concerned, and I think that continues to be the case here. After all, the world is a somewhat scary place at the moment, and that means that the US dollar might be where people run to.

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