Created on December 27, 2024

• The Canadian dollar initially did rally a little bit during the trading session, but it is somewhat stagnant at this point, which makes a certain amount of sense as we are getting close to the crucial 110 yen level.
• The 110 yen level is the beginning of a zone of resistance that extends to the 111.50 yen level.
• So, I think you have to look at this as a process, not necessarily something that just takes off.

Now, having said all of that, the US dollar is beating up on the Japanese yen, and I think that does have a little bit of a knock-on effect, but it’s also worth noting that we are at the 200-day EMA. The stochastic oscillator is starting to crossover in the overbought condition as well, and as this market has been somewhat sideways over the last several months, that could come into play.

Interest Rates Not as Big Here

However, the interest rate differential between most currencies and the Japanese yen is still fairly wide, although it’s probably worth pointing out in Canada, not as much as many of the other majors. The biggest thing that this pair has going for it is the fact that it’s denominated in Japanese yen. I do not like the Canadian dollar at all, but in this case, the Canadian dollar just is a touch stronger than the Japanese yen.

You still get paid swap at the end of every day, assuming that you’re with a reputable broker, but you also have to recognize the fact that there is going to be quite a bit more work to do here than there would be in say the US dollar against the yen or maybe even the pound against the yen. Short-term pullback should be thought of as buying opportunities with a 50 day EMA, probably offering quite a bit of support as well. Furthermore, we also have the 106 yen level that drops down to the 105 yen level offering a large region of support. I’m a buyer, not a seller, but not an avid buyer.

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Gold (XAU/USD) is trading at $2,633.03, down 0.03%, consolidating above its pivot at $2,631.59. The 50-day EMA at $2,624.82 offers near-term support, while the 200-day EMA at $2,639.07 signals broader consolidation.

Immediate resistance is at $2,651.62, with potential to rise toward $2,676.43. Support lies at $2,608.24, with a break below targeting $2,584.66.

Gold’s outlook remains cautiously optimistic above $2,630, but a breach could trigger bearish momentum.

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Created on December 26, 2024

Bullish View

• Buy the GBP/USD pair and set a take-profit at 1.2665.
• Add a stop-loss at 1.2400.
• Timeline: 1-3 days.

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.2400.
• Add a stop-loss at 1.2665.

The GBP/USD exchange rate remained relatively unchanged this week, as the forex market experienced low volumes due to the Christmas Holiday. It has stalled at 1.2545, a few pips above this month’s low of 1.2478.

The GBP/USD has also stalled because there was no important economic data from the UK and the United States. The only data that came out were Monday’s US consumer confidence and UK GDP numbers.

While these are crucial numbers, their impact on the pair was muted because they came a few days after the Bank of England (BoE) and the Federal Reserve made their final decisions of the year.

The BoE left interest rates at 4.75% as it expressed concerns about the country’s inflation, which rose again in November. However, with the UK economy contracting, there are odds that the bank will cut interest rates several times in 2025.

The Fed, on the other hand, slashed interest rates by 0.25%, bringing the year-to-date cuts to 1% It, however, expressed a more hawkish tone as it hinted that it will deliver just two cuts in 2025. The Fed is highly concerned that Trump’s policies will be highly inflationary.

Some of his most notable policies are mass deportations, tax cuts, which will increase the budget deficit, and tariffs.

The next data to watch on Thursday will be initial and continuing jobless jobs numbers. While these are important numbers, their impact on the Fed and the GBP/USD pair will be muted.

GBP/USD Technical Analysis

The daily chart reveals that The GBP/USD exchange rate has been downtrend in the past few days. It has dropped below the important support at 1.2665, its August lows.

The pair has also moved below the 50-day moving average. Also, oscillators like the MACD and the Relative Strength Index (RSI) have all pointed downwards.

On the other hand, it has formed a double-bottom pattern at 1.2478. A double-bottom often leads to more gains. Therefore, the pair will likely have a brief rebound in the next few days. Such a move will see it rise to the next key resistance level at 1.2665.

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Created on December 26, 2024

• The US dollar initially pulled back just a bit during the trading session on Tuesday, only to turn around and show signs of life.
• At this point, if we can break above the crucial ¥158 level, then it’s likely that we will continue to see a lot of upward momentum, perhaps opening up the possibility of a move to the ¥162 level.
• This is an area that has been important a couple of times, so I think this makes a lot of sense.

Short-term pullbacks at this point in time will continue to see plenty of support, and I think the ¥155 level continues to offer a short-term floor in the market. Interest rate differential favors the US dollar which is something that you should not forget anytime soon, as the US dollar continues to see interest rates climb. Despite what the Fed’s doing, most traders focus on what the Fed says, but what you really need to do is pay attention to what the bond markets do. Now we have pretty high yields in the US, ten-year especially. So that continues to make the US dollar like a wrecking ball against most other currencies, and especially the Japanese yen, which has a whole litany of problems by itself.

Bank of Japan? Not a Factor.

The Bank of Japan recently raised rates a bit. We’ve completely turned around since then, and now it looks like we are going to continue to climb again. A break above the ¥158 level could open up the possibility of a move to the ¥162 level. I have no interest whatsoever in shorting this USD/JPY market, and it’s very possible we may go much higher before it’s all said and done, as the Federal Reserve looks like they will be a little bit more hawkish in 2025 than people had anticipated.

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Created on December 26, 2024

• The British pound initially did try to rally during the trading session on Tuesday, but gave back gains and we are essentially closing pretty much flat.
• It does make a certain amount of sense that the market would do very little as we are facing a cluster of resistance.
• This is an area that I think would continue to be a massive barrier and headache unless we get a lot of yen selling across the board.

The fact that the liquidity wouldn’t have been there comes into play as well. That being said, despite the fact that the British pound isn’t necessarily a currency I love, it’s not the worst one out there. And the worst one out there might actually be the Japanese yen, maybe the Swiss franc. It’s kind of a tossup at this point. You could even throw the euro into that group.

Big Support Level Under Here

So, I do think then if we get a little bit of a pullback, it’s probably worth paying close attention to the ¥195 level, which is an area that’s a large round, psychologically significant figure, an area that’s seen some market action previously. And an area that the 50 day EMA is rapidly approaching. If it can break above the ¥195 level, then the short term technical flaw will just simply move up with that 50 day EMA.

On the upside, we have the ¥200 level, which has been like a brick wall for the British pound. But if and when we finally break above there, it’s likely that we would see this GBP/JPY pair really start to take off to the upside, perhaps driving the British pound all the way up to the ¥208 level, which of course was the recent swing high. I have no interest in buying the yen, which means I have no interest in shorting this pair.

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Pound Sterling consolidates against USD in holiday-curtailed week

The Pound Sterling (GBP) trades sideways above the psychological support of 1.2500 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair consolidates as trading volume is low amid a holiday-shortened week due to Christmas Eve and Boxing Day on Wednesday and Thursday, respectively.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, also trades sideways around 108.15. Read more…

GBP/USD Forecast: Pound Sterling stays directionless below 1.2550

GBP/USD moves sideways in a tight range below 1.2550 in the European morning on Tuesday after posting small losses on Monday. The pair is likely to have a hard time finding direction in the near term, with trading conditions remaining thin heading into the Christmas holiday.

The US Dollar held its ground on Monday but struggled to gather strength following mixed macroeconomic data releases from the US. Read more…

Created on December 23, 2024

• The US dollar initially did try to rally during the trading session on Friday, but gave back the gains rather rapidly as the US dollar is certainly overbought at this point.
• Furthermore, interest rates in America dropped, which of course helps a lot of people get away from the greenback, and therefore it does make a certain amount of sense that we pulled back a bit.
• The ¥155 level underneath is a large, round, psychologically significant figure, and an area that previously had been important. I think ultimately this is a scenario where we are waiting to see some type of value that we can take advantage of.

Technical Setup?

It is possible that we have a technical setup coming, with the ¥155 level being a prime example of an area where people would be willing to jump into. This would be a complete repudiation of that massive candlestick on Thursday, and of course one would assume that there would be a certain amount of volume right there, as it was where the candlestick jumped from. Any bounce in that area could end up being a nice buying opportunity, but if we were to break down below there, then we may have to go looking to the 50 Day EMA near the ¥152 region.

On the other hand, if we were to turn around a break above the ¥158 level, then it just shows a significant amount of momentum jumping into the market, and perhaps pushing this market toward the ¥160 level. After that, we have a much bigger move just waiting to happen, and I do think that eventually the US dollar continues to strengthen against the Japanese yen, if for no other reason than the fact that monetary policy in 2025 ends up being a somewhat tight year for the Federal Reserve. Conversely, the Bank of Japan can do very little to normalize rates, at least not anything significant. With this, I prefer to buy dips going forward.

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Created on December 24, 2024

• In the shortened trading week due to Christmas holidays, the performance of the Euro is likely to remain under pressure against the US Dollar.
• Since the beginning of the week’s trading, the EUR/USD exchange rate has been stable around and below the support level of 1.0400, and as mentioned, any attempts at short-term recovery will be weak.

Reasons for the Euro’s Decline Against the US Dollar

According to licensed trading platforms, the EUR/USD pair is facing pressure again, as it failed to extend the recovery it achieved last Friday. European Central Bank President Christine Lagarde told the Financial Times at the beginning of trading this week that she is optimistic that the central bank is on track to achieve its 2.0% inflation target. Lagarde stated that we are “very close” to the point where “we achieve sustainably a 2% inflation rate over the medium term.”

The comments reinforce the view that declining inflation will allow the ECB to “outperform” similar central banks in the coming months, keeping the euro under pressure, especially against the US dollar. Additionally, the ongoing political and economic uncertainty plaguing the largest economies in the Eurozone continues to affect investor sentiment towards the euro.

The US Federal Reserve is Not in a Hurry to Cut Interest Rates in 2025

In this context, and with the latest announcement, the US Federal Reserve indicated that it is likely to cut US interest rates only twice in 2025 amid a recovery in economic activity. However, the US dollar declined slightly on Friday following the release of some US inflation figures in personal consumption expenditures, which came in below expectations, reducing the US dollar’s rise.

According to economic calendar data, the core personal consumption expenditures price index in the United States increased by 0.1% on a monthly basis in November, half the expected rate of 0.2%. The year-over-year comparison remained unchanged at 2.8% in November, while the market expected an increase to 2.9%. Overall, this has provided some relief in the market and intensive selling of the US dollar, which needs a constant supply of “hawkish” data surprises to fuel its rise. Therefore, any accurate or below-expectations data will lead to declines in the US currency.

However, some forex analysts believe that by early 2025, the weakness of the EUR/USD pair may resume with the confirmation of more superior US economic performance. Also, the setup for the markets until 2025 is good for the trends to continue. Moreover, the US elections and the shift to a stronger US dollar have received support from the Federal Open Market Committee (FOMC), which reduced expectations of interest rate cuts in 2025.

According to the forex analysis team at MUFG Bank, “Our outlook for the EUR/USD outlook remains that the euro will decline to near parity in the first quarter of next year before stabilizing and recovering moderately in the second half of the year.” MUFG Bank believes this is due to the divergence in economic performance between the Eurozone and the United States, which continued during the first part of the year before fading.

Trading Tips:

Keep in mind that the EUR/USD trend will remain bearish and stability below the 1.05 support confirms the strength of the bears’ control. The current trading week includes the Christmas holidays, which affects liquidity and investors’ desire to trade.

EUR/USD Analysis Today:

Dear reader, according to the latest trading performance of the EUR/USD pair, there is now decent support at the horizontal support line 1.0344, which is where the euro’s weakness was bought last week over three consecutive days. Technically, any weakness in the euro-dollar pair this week would likely test this area first and may be bought again, allowing for a more neutral tone. However, caution should be exercised as a break below the 1.0344 support level could lead us to the next important support level of 1.0230 in a relatively short period. From there, it will quickly reach the euro-dollar parity. Overall, market conditions will be tense in the next two weeks, but there are still some economic reports to watch. Low liquidity can often lead to large movements, indicating that we are not necessarily in a state of idleness for trading.

As mentioned before and we confirm now, any attempts by the EUR/USD to recover upwards will be weak and prone to a rapid collapse.

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Created on December 24, 2024

• The British pound has initially tried to rally a bit during the trading session on Monday, but as you can see, has struggled a bit to continue to go higher and has turned things around actually to show signs of weakness.
• With that being the case, I think you’ve got a situation where traders will look at this through the prism of a market that is testing the 1.25 level for some type of support.
• If it continues to find support at the 1.25 level, then we may enter a range between 1.25 and 1.2750, which is a range that we’ve been in for a while now.

All things being equal, I do think it could very well be that case. We also have to keep in mind that this is a market that is dealing with a serious lack of liquidity at this point. Therefore, we have to pay attention to the idea of the holidays being a time where you probably should be leaving this alone. But even if we do have to trade this or we find that we are trading this, if we were to break down below the 1.25 level, I think the downside is somewhat limited, at least in the short term.

Trying to Find Value?

Short term speaking, I think you’ve got a situation where GBP/USD traders will be looking at this through the prism of trying to find value. But if we break down below the 1.25 level, 1.23 is an area where we’ve seen buyers come in previously, and it wouldn’t surprise me to see the British pound defended there. On the upside, the 1.275 zero level has been extraordinarily difficult to get above, and now we have the 50 day EMA there as well. I suspect the next couple of days will be more sideways with a downward slant than anything else.

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