Created on November 18, 2024

• The British Pound’s resilience against the strong US Dollar has not lasted long.
• Over the past six trading sessions, the GBP/USD has been subjected to selling, starting from the resistance level of 1.3008.
• Reaching the support level of 1.2596, the lowest level for the currency pair in six months, and closing the week’s trading stable around the level of 1.2617.
• Technically, we mentioned that the movement of the pound sterling/dollar price below the psychological level of 1.3000 would give the bears momentum and thus prepare for stronger downward breaches, which is what actually happened.

The British Economy: Least Affected by Trump

With Trump’s victory, talk has increased about renewed trade wars and tariffs between global economies led by the United States. However, economic experts have stated that Trump’s policies may have a limited impact due to strong British service exports and the level of the goods trade deficit with the United States. Services are usually exempt from trade wars. Conversely, experts believe that the strength of the US economy under Trump will boost Britain if it increases the value of service exports.

Future of the Cautious Bank of England Policy

Moreover, Expectations have increased that the Bank of England’s policies will remain cautious after the recent announcement that inflation rates in the country rose above the bank’s target. According to the results of the economic calendar data, the British consumer price index may rise this week by an annual rate of 2.2%, according to the average forecast of 24 Bloomberg surveys. This is up from 1.7% last month, when it fell below the Bank of England’s 2% target for the first time in more than three years. At its last meeting, the Bank of England delivered a second interest rate cut by a quarter of a percentage point and sent no indication that rapid easing might be necessary. This came as the stance is more conservative than that of the neighbouring euro zone, and is in line with the calm tone adopted by US Federal Reserve Chairman Jerome Powell recently.

Technical forecasts and signals for the GBP/USD pair today:

Technically, the downward trend of the GBP/USD is gaining strength. The continued strength of the US dollar may give the bears the opportunity to move to stronger support levels, the closest of which is currently 1.2520, then 1.2440, and then 1.2300, which is important for moving technical indicators towards oversold levels. You can consider buying GBP/USD from both the second and last levels without taking risks and activating take-profit and stop-loss orders to ensure the preservation of the trading account. According to recent trades, the pound sterling is recording its worst extended losing streak in 10 years, falling by 2% last week alone, marking the seventh consecutive week of losses.

You can get more GBP/USD signals and free live trading recommendations exclusively on our website.

As for the performance of technical indicators, the Relative Strength Index (RSI) is on the verge of the 30 level, which confirms its proximity to oversold levels. Therefore, currency traders will be watching for new buying opportunities. As for the MACD indicator, it is also heading towards oversold levels. Ultimately, the Stochastic indicator is settling well below the 20 level and is waiting for a rebound upwards.

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Created on November 18, 2024

• At the end of last week’s trading, the USD/JPY was subjected to selling, starting from the resistance level of 156.75, the highest for the currency pair in three months, with losses extending to the level of 153.86.
• Obviously, this came amid profit-taking before trading closed stable around the level of 154.30.
• Concurrently, the overall trend of the USD/JPY pair remains bullish and may remain so for some time.

US Dollar Stable Around Two-Year High

According to reliable trading platforms, the price of the US dollar index DXY, which measures the performance of the US currency against a basket of other major currencies, is stable around its highest in two years, and according to recent trading, the index has recorded seven consecutive weeks of gains. The US dollar’s gains came primarily in light of the strong US economic performance and hints from US Federal Reserve officials led by Jerome Powell that the bank will not accelerate the pace of reducing US interest rates as long as the economy is strong, especially compared to other global economies that are suffering. Recently, market expectations for a 25-basis point cut in US interest rates in December fell to 62%, down from 86% previously.

Strong US Economic Data

According to economic data, we have observed positive results for US economic sectors that confirm the view of the US Federal Reserve. Most notably, US retail sales exceeded expectations, indicating continued resilience in the consumer sector. Prior to that, the main and core US producer prices were announced as expected, but annual growth rates exceeded expectations, in contrast to the US consumer price index data, which met expectations.

In terms of the performance of US stock indices, over the past week, the S&P 500 lost 2.2%, the Dow Jones fell 2.3%, and the Nasdaq declined 2.9%, reflecting a reversal of the upward trend that followed the US presidential election and was driven by optimism surrounding President Trump’s policies.

USD/JPY Technical Analysis and Expectations Today:

Recently, the gap between expectations regarding the future of US and Japanese central bank policies has widened, which will be in favour of further strengthening the upward trend of the USD/JPY currency pair. Therefore expect to buy the currency pair back from every downward level, and currently, the closest support levels for the USD/JPY are 153.70, 152.20, and 150.00, respectively. Conversely, and according to the performance on the daily chart above, the psychological resistance of 160.00 will remain an important target for the upward trend and for the markets. Consequently, it will then increase talk of imminent Japanese intervention in the forex markets to prevent further decline in the yen. However, this time, there is Trump, who has often talked about countries that devalue their currencies.

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Created on November 18, 2024

• The US Federal Reserve’s affirmation of not rushing to cut interest rates, coupled with Trump’s election victory, has extended the US dollar’s gains.
• This has increased selling pressure on the EUR/USD currency pair, driving it down to 1.0496, its lowest level in a year.
• Last Friday, the euro attempted to rebound but gains were capped at 1.0592, and amidst stronger bearish control, the pair closed the week lower around the support level of 1.0538.

Trump Could Drive Euro/Dollar to Parity

According to Forex trading, the sharp losses that followed the announcement of Trump’s victory, which was followed by strong gains for the US dollar, its highest in two years, increased talk about the possibility of the euro/US dollar moving to the parity price of 1:1 in light of Trump’s trade policies. Especially, if the trade wars between the Eurozone and the United States expand. With the euro dollar breaking the 1.0440 level, these expectations may increase. Specifically, since they coincide with devastating economic and political issues that threaten the future of the single European currency area.

Concerns about Germany Will End Euro Gains

Given the increasingly gloomy outlook for the recovery of the German economy, coupled with the continued easing of European Central Bank policy, you should consider that any gains for the euro in the forex market may be subject to a rapid collapse. According to reliable trading platforms, the EUR/USD is around 1.0538, the EUR/JPY is around 162.64, the EUR/AUD is around 1.6300, and the EUR/GBP is around 0.8350, according to the latest trading price updates.

Will Germany See New Leadership?

The economic recession could hit the current German leadership. Markets are watching the agenda of the Christian Democratic Union leader who is vying to succeed Olaf Scholz. Dear reader, beware that the return of Donald Trump means that the next German government may have to deal with a global trade war, complicated relations with Beijing, and possibly difficult choices regarding the conflict in Ukraine – with extremist parties ready to capitalize on any misstep. Amid this tension, the Council of Economic Experts, which advises the German government, has scrapped its economic growth forecast for 2024 to predict a second year of contraction, followed by a small economic growth rate of 0.4% in 2025.

European Central Bank Policies

The US Federal Reserve’s recent affirmation that it will not rush to cut interest rates if the US economy is strong is widening the gap between it and the European Central Bank’s policies, which are following a rate-cutting path and will not change its direction in the face of current European political and economic concerns. Obviously, this would be a significant downward pressure factor for the EUR/USD in the coming months. Recently, the European Central Bank has cut interest rates three times since last June due to declining inflation and a slowdown in the eurozone economy. Currently, It is widely expected that interest rates will be cut again in December 2024, when policymakers receive updated forecasts that will help them assess the outlook for the eurozone.

EUR/USD Technical Analysis and Forecast:

Technically, the downward trend of the EUR/USD currency pair is getting stronger by breaking the support at 1.0500 consolidates the bears’ control. According to the direction of the technical indicators, the next most important support levels will be 1.0440 and 1.0390, which in turn will move the technical indicators towards strong oversold levels and increase expectations for the EUR/USD price to move towards the parity price. Conversely, and on the same time frame, the daily chart for a break of the downward trend on the bulls will push the EUR/USD price towards the resistance levels of 1.0750 and 1.0840, respectively.

We advise you to sell the EUR/USD pair from each upward level.

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Created on November 18, 2024

Potential signal:

I would be a buyer of this pair if we can recapture the ¥164 level. If we get above there, I would put a stop loss at the ¥163 level and aim for the ¥167 level.

• Dear my daily analysis of the yen related pairs, it’s worth noting that the euro initially did try to rally, but then it plunged.
• Because of this, we are now testing the 200 Day EMA, which of course is an important indicator that a lot of people will pay attention to for the longer-term, and therefore think you get a situation where if the buyers are going to return, it’s probably going to be fairly soon.
• All things being equal, this is a fairly ugly candlestick, so it’ll be interesting to see if we can get some of that “mojo back” from the previous move higher.

All things being equal, this is a pair that continues to favor interest rate differentials for the euro, with this being the case, the market is likely to continue to see a lot of people getting involved, as they can get paid at the end of every day to hang on to this pair. Quite frankly, even though the euro itself isn’t necessarily a currency that I liked, it is going to probably fare better than the Japanese yen going forward.

Technical Analysis

The technical analysis for the EUR/JPY currency pair of course suggests that there is a lot of support in this area, as the ¥163 level is an area that we’ve seen a lot of action at previously. That being said, the market is likely to continue to see the area between they are in the ¥162 level as a major “squishy support level.” By doing so, the market is likely to continue to see a lot of value hunters out there trying to get involved, and therefore I think you’ve got a scenario where people will look for a value play to get long again.

If we were to break down below the ¥161 level, then it’s likely that the pair could drop down to the ¥158.50 level, which is an area that we have seen a lot of support at previously. That would be a target for short sellers, but at this point in time I think they will probably be repudiated long before we get to that area.

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• GBP/USD holds steady above 1.2600 to start the new week.
• The pair closed the previous six trading days in negative territory.
• The technical picture is yet to point to a buildup of recovery momentum.

GBP/USD registered six consecutive daily losses and fell over 2% in the previous week. The pair holds steady above 1.2600 in the European morning on Monday but the technical picture doesn’t yet point to a buildup of recovery momentum.

The broad-based US Dollar (USD) strength weighed heavily on GBP/USD last week. Hawkish comments from Federal Reserve (Fed) officials and the inflation data from the US, which showed that the annual core Consumer Price Index (CPI) rose 3.3% in October, helped the USD outperform its rivals.

Meanwhile, the UK’s Office for National Statistics (ONS) reported on Friday that the UK’s Gross Domestic Product (GDP) expanded by 0.1% on a quarterly basis in the third quarter. This reading missed the market expectation for a 0.2% growth and didn’t allow GBP/USD to gain traction ahead of the weekend.

In the absence of high-tier data releases, investors could react to changes in risk perception on Monday. At the time of press, US stock index futures were trading mixed. In case Wall Street’s main indexes start the week on a bearish note amid escalating geopolitical tensions, GBP/USD could have a hard time holding its ground.

Over the weekend, CNN News reported that US President Joe Biden has authorized Ukraine to use powerful long-range American weapons to strike inside Russia. Reporting on the matter, “the change comes largely in response to Russia’s deployment of North Korean ground troops to supplement its own forces, a development that has caused alarm in Washington and Kyiv,” Reuters said.

In the early trading hours of the American session, Chicago Fed President Austan Goolsbee will be delivering a speech. According to the CME FedWatch Tool, markets are currently pricing in a nearly 40% probability of the Fed holding the policy rate unchanged at the December meeting. If Goolsbee adopts a cautious tone regarding another rate cut before the end of the year, GBP/USD could come under renewed bearish pressure.

GBP/USD Technical Analysis

GBP/USD was last seen trading near the upper limit of the 10-day-old descending regression channel at around 1.2630. In case the pair starts using this level as support, sellers could remain on the sidelines. However, the Relative Strength Index (RSI) indicator on the 4-hour chart remains below 40, suggesting that even if the pair rises, it would be considered as a technical correction rather than a reversal.

Above 1.2630, the 20-period Simple Moving Average (SMA) could act as next resistance at 1.2670 before 1.2700 (round level, static level). On the downside, 1.2580 (mid-point of the descending channel) could be seen as first support before 1.2530 (lower limit of the descending channel) and 1.2500 (round level).

• EUR/USD trades near 1.0550 following previous week’s sharp decline.
• The pair remains technically bearish in the short term despite stabilizing.
• ECB President Lagarde will deliver a speech later in the day.

EUR/USD managed to find a foothold on Friday but still lost nearly 1.7% in the previous week. The pair stays in a consolidation phase to begin the new week and trades at around 1.0550.

Hawkish comments from Federal Reserve (Fed) officials caused investors to reassess the probability of one more 25 basis points rate cut in December last week, providing a boost to the US Dollar (USD) and weighing heavily on EUR/USD.

Monday’s economic calendar will not offer any high-impact data releases that could impact EUR/USD’s action. Hence, market participants will pay close attention to comments from central bank officials.

In the early American session, Chicago Fed President Austan Goolsbee will be delivering a speech. Speaking on the policy outlook on Friday, “I don’t like tying our hands,” Goolsbee said and added that they still have more data to come before deciding on the December policy decision. Later in the day, European Central Bank (ECB) President Christine Lagarde will deliver a speech titled “The Economic and Human Issues of a Changing Era” at an event organized by The Collège des Bernardins in Paris, France.

Meanwhile, investors will also keep an eye on geopolitical headlines. Over the weekend, CNN News reported that US President Joe Biden has authorized Ukraine to use powerful long-range American weapons to strike inside Russia. Reporting on the matter, “the change comes largely in response to Russia’s deployment of North Korean ground troops to supplement its own forces, a development that has caused alarm in Washington and Kyiv,” Reuters said.

US stock index futures trade marginally higher in the European morning but investors could seek refuge in case geopolitical tensions escalate further. A bearish opening in US stocks could help the USD regather its strength in the second half of the day.

EUR/USD Technical Analysis

EUR/USD seems to have stabilized following the previous week’s decline but the technical outlook remains bearish. The pair trades within the descending regression channel and the Relative Strength Index (RSI) indicator stays below 50. 

On the downside, 1.0500 (mid-point of the descending channel) aligns as first support before 1.0440 (lower limit of the descending channel). Looking north, first resistance could be spotted at 1.0570 (upper limit of the descending channel) ahead of 1.0600 (round level) and 1.0650 (50-period Simple Moving Average).

Created on November 14, 2024

• The Canadian dollar initially pulled back just a bit during the early hours on Wednesday, as the Japanese yen saw a little bit of strength early, but we have since turned around to show signs of life.
• All things being equal, this is a market that has been very noisy for a while, and the fact that we had bounced from a couple of days ago at the 200 day EMA does suggest that we are going to continue to try to grind to the upside.
• The 112 yen level is the top of an overall consolidation range that we have been in, and if we can break above that level, then it’s likely that we will go much higher.

On the other hand, if we turn around and drop from here, the 200 day EMA sits right around the 110 yen level, which of course is a large round psychologically significant figure and an area that a lot of people will be paying close attention to. Keep in mind that this is also a play on oil a lot of the times due to the fact that Canada is a major exporter of crude oil, while the Japanese import 100 percent of theirs. With this being the case, it does tend to move right along with the WTI crude oil market, for example.

Noisy Market Will Continue to Be So

That being said, the market is going to continue to be noisy, but I think given enough time, we will have to make a bigger decision. The Japanese yen itself is being hindered by the fact that the Bank of Japan can’t do anything to tighten interest rates, and as long as that’s going to be the case, there’s really no reason to think that the yen will strengthen significantly, unless of course there’s been some type of event.

I think this is a grind to the 112 yen level, and once we can break out of there, then we can really take off. For what it is worth, the US dollar climbed over a major hurdle against the yen today, so we may see the yen fall apart everywhere.

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