• Business activity in the UK stalled in December.

• Prices charged by UK companies accelerated at the fastest rate in nine months.

• Traders are almost fully pricing a 25-bps Fed rate cut this week.

The GBP/USD outlook shows a recovery from Friday’s lows after UK PMI data revealed accelerating price pressures. However, the long-term outlook for the pair remains bleak amid dollar strength and a stalled UK economy. 

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Data on Monday showed that business activity in the UK stalled in December. The flash composite PMI held at 50.5, slightly below the forecast of 50.7. However, the report also showed that prices charged by companies accelerated at the fastest rate in nine months, indicating a spike in inflation. Market participants focused on this as it might keep the Bank of England cautious. 

However, other data on Friday revealed that the UK economy unexpectedly contracted in October. Therefore, the outlook for the economy remains uncertain. The BoE will hold its policy meeting on Thursday, and markets expect policymakers to keep rates unchanged. However, in 2025, things might change if data continues pointing to soft economic demand. 

Meanwhile, the greenback remained steady after a strong week where markets slashed bets for Fed rate cuts in 2025. However, traders are almost fully pricing a 25-bps rate cut this week. 

At the same time, the looming shift in leadership in the US will likely keep the dollar strong. Trump’s policy proposals might come into effect in 2025, boosting the greenback and weighing on the pound. 

GBP/USD key events today

• US flash manufacturing PMI
• US flash services PMI

GBP/USD technical outlook: Price rebounds after meeting the 0.618 Fib

On the technical side, the GBP/USD price has rebounded for the first time since it broke below its bullish trendline. The rebound comes after the price fell to the 0.618 Fib retracement level, which acted as a strong support level. During this decline, the price broke below the 1.2651 support level, which might now act as resistance. 

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Notably, the price trades well below the 30-SMA and the RSI is below 50, a sign that bears are in the lead. Therefore, the downtrend will likely continue after the brief recovery. The price might reverse at the 1.2651 level or continue to the 30-SMA before dropping. A continuation of the downtrend will allow bears to target a major support level at 1.2500.

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• USD/JPY advances beyond the 154.00 mark, dismissing stronger-than-expected Japanese Flash PMIs for December.
• Technical analysis highlights a bullish trend with the pair clearing key technical barriers, including the 200-day SMA and Kijun-Sen.
• Potential resistance lies at the November 20 high of 155.89; supports are positioned at the Kijun-sen at 152.69 and further at 152.10-11.

The USD/JPY extended its gains as the Japanese Yen (JPY) remains the laggard in the G10 FX complex. Although Japan’s Jibubank Flash PMIs for December improved, traders ignored the data. The pair trades above the 154.00 figure, a level last seen in November 26.

USD/JPY Price Forecast: Technical outlook

the USD/JPY continued to extend its gains, past the 200-day Simple Moving Average (SMA) and the Kijun-Sen, opening the door to clear 153.00 and the previously mentioned 154.00.  

Momentum favors further USD/JPY upside as depicted by the Relative Strength Index (RSI), which aims higher.

The first resistance would be the November 20 daily high at 155.89. A breach of the latter will expose 156.00, followed by the November 15 swing high of 156.75. Conversely, if USD/JPY tumbles below 154.00, the first support is the Kijun-sen at 152.69, followed by the Senkou Span A at 152.21. if surpassed, the next support would be the confluence of the 50 and 200-day SMAs at 152.10-11

USD/JPY Price Chart – Technical outlook

Created on December 16, 2024

• The downward trend of the EUR/USD currency pair remains the strongest, and the 1.05 support will continue to be a positive momentum for bears.
• It is preparing for stronger losses if the results of US economic releases this week come stronger than expected, along with paying attention to the US Federal Reserve’s announcement.
• This is ahead of the Christmas holidays and investors stopping their investment portfolios during the holidays.
• Last week, the Euro-US Dollar’s losses extended to the 1.0453 support level before closing the week’s trading stable down around the 1.0502 level.

The European Central Bank cuts interest rates and promises more

Last week, for the third consecutive meeting, the European Central Bank cut interest rates, indicating more cuts during 2025, as inflation approaches 2% and the European economy struggles amid economic and political uncertainty led by the bloc’s largest economies. In a sign of its changing stance, the ECB dropped the wording of its statement, saying policy would remain “sufficiently restrictive” for as long as necessary.

The ECB’s announcement comes at a sensitive time as investor and market sentiment towards the eurozone’s economic recovery is fragile and worsening as the bloc’s largest economies – Germany and France – are leading the economic slowdown and political uncertainty. This has weakened the eurozone’s economic growth forecast for 2025. Consequently, the chances of further interest rate cuts by the ECB in upcoming meetings are stronger. Overall, the euro’s path will be monitored by the future of the German elections and the treatment of the deficit in France, which has weakened France’s credit rating to negative.

Will the Euro Price Rise in the Coming Days?

According to licensed trading companies and forex analysts’ forecasts, we do not expect the euro price to rise in the coming days, and any opportunities for an upward rebound may be targets for new sales. In addition to the political and economic concerns of the Eurozone, Trump’s upcoming policies will affect the performance of the Eurozone economy, which is internally struggling and externally affected by Trump’s trade wars. The bloc’s economy relies on exports to the outside world. In addition, the fate of the German elections and its handling of the deteriorating economic situation, as well as the improvement in French deficit figures, will remain under the watchful eye of investors and markets to find opportunities for the euro to recover.

Trading Tips:

The Euro-Dollar price may remain bearish and below the 1.05 support, which warns of a strong technical downward move coming if the political and economic pressures on the Euro increase, in addition to the future of US policy under Trump’s leadership.

The US Central Bank may cut interest rates cautiously

This week, all eyes will be on the US Federal Reserve’s monetary policy meeting, during which policymakers are expected to push for a quarter-point cut in US interest rates. However, Deutsche Bank AG and BNP Paribas expect no further action by the Federal Reserve this year. Monetary easing is also expected to slow more in 2025 than officials expected three months ago, with most economists expecting only three US interest rate cuts in 2025.

EUR/USD Analysis Today:

You should take into account that the downward path of the Euro against the US Dollar EUR/USD will become stronger as long as it is technically stable below the psychological support of 1.0500. If the results of important economic data and events this week are in favour of the strength of the dollar, expect the date of the parity price for the Euro Dollar to approach, and technically this may happen if the bears move the currency pair to the support levels of 1.0420 and 1.0300 first. In contrast, and on the same time frame, the daily chart will not witness an initial break of the downward trend without rebounding above the resistance levels of 1.0765 and 1.0830, respectively.

In general, we still prefer to sell the Euro Dollar from every upward level. Furthermore, without risk and activating profit limit and stop loss orders to ensure the safety of the trading account from any sudden price reversals.

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Created on December 16, 2024

• This week’s central bank announcements, led by the Fed and Bank of England announcements, will shape the future of GBP/USD’s 2024 close and give a glimpse into what 2025 will look like.
• Especially, with Trump taking over the US economy. Ahead of this week’s key events, GBP/USD is trading lower around the 1.2615 support level, near its lowest in over two weeks.

The Bank of England Faces Rising Inflation Expectations

Although the Bank of England wants to combat the slowdown of the British economy by cutting interest rates, rising inflation will prevent it from doing so. In this regard, the latest Bank of England/Ipsos inflation expectations survey reveals a rise in UK public inflation expectations, with average expectations for the coming year rising to 3%, up from 2.7% in August 2024. It also shows an increase in inflation expectations over the next 12 months to 2.8% from 2.6%. According to the announcement, long-term inflation expectations, measured over a five-year horizon, have risen to an average of 3.4%, compared to 3.2% in the previous survey. Consequently, these results reflect growing public concerns about inflationary pressures in Britain.

What to Expect from the Bank of England Announcement?

Overall, this is a significant development for policymakers at the Bank of England, ahead of its decision this week. Accordingly, inflation expectations are of paramount importance in driving actual inflation outcomes: If people expect inflation to rise in the future, they may accelerate their spending to avoid paying higher prices later. This increased demand could in turn lead to higher prices, creating a vicious cycle of inflation. The inflation expectations data comes on the day that the UK economy was announced to have contracted by 0.1% for the second consecutive month, confirming that the economy has lost momentum rapidly from the growth mentioned above in the first half of the year. This confirms market expectations that the bank will proceed cautiously in 2025, cutting interest rates on three to four occasions.

Trading Tips:

The price of the pound against the dollar may stabilize around its current path until the reaction to the results of important economic data and announcements from global central banks, so caution is required

The Pound is Affected by the Contraction of the British Economy

According to the platforms of licensed trading companies. The price of the pound has been subjected to selling pressure against the rest of the other major currencies following the announcement of the contraction of the British economy for the second month in a row. According to the Office for National Statistics, the UK’s gross domestic product fell by 0.1%, and according to the announcement, British industrial production and construction output fell by 0.6% and 0.4%, respectively, while the services sector failed to grow.

On a quarterly basis, UK GDP grew slightly by 0.1% compared to the previous 3-month period. GDP increased by 1.3% over the year compared to market expectations of 1.6%. Economists commented on the announced figures that budget uncertainty has weighed on demand and sentiment. Furthermore, the survey data paints a more pessimistic picture for the fourth quarter than growth models from the Office for Budget Responsibility and the Bank of England suggest. At the same time, the fourth quarter could see a weaker pace of growth, as companies deal with the higher tax burden announced in the budget as well as heightened geopolitical uncertainty.

Technical Analysis for the GBP/USD pair today:

According to the performance of the GBP/USD price on the daily chart, the general trend is down and is getting stronger. Concurrently, Forex traders are looking forward to moving towards the psychological support level of 1.2500 now. Technically, the direction of the Relative Strength Index is still down and has room to move before reaching oversold levels. Moreover, the MACD is turning higher and will not lack strength. In contrast, and in the same time frame, there will be no initial break of the current downtrend without returning to the resistance level of 1.2830 first.

Decisively, the GBP/USD pair will be affected this week by the announcement of both the Bank of England and the US Federal Reserve on the scheduled interest rates and the banks’ policy statement will be of interest to investors and analysts. However, the interaction will be with the readings of the manufacturing and services purchasing managers’ indices. Also, the British inflation and employment figures. In addition to the announcement of the US retail sales figures and the GDP growth readings, then the US inflation reading preferred by the Federal Reserve – the Personal Consumption Expenditures Price Index – it is truly a trading and fateful week for the GBP/USD pair.

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Created on December 16, 2024

• For two consecutive weeks, the USD/JPY pair has been moving within a prominent upward channel on the daily chart, culminating in a move towards the resistance level of 153.80, the pair’s highest level in more than two weeks.
• Obviously, this is before closing the week’s trading stable around the 153.60 level.
• Moreover, this performance will be on an important date with the last global central bank announcements this year and before the Christmas holidays.
• Therefore, strong fluctuations in the performance of the currency pair are expected this week.

The US Federal Reserve May Cut Interest Rates

 This week, Federal Reserve officials will conclude a two-day meeting and issue an update on US interest rate policy. At their meeting last month, Fed officials cut the US interest rate by a quarter point. This came after a larger half-point cut in the September meeting. The biggest expectation is that the US Federal Reserve will announce another interest rate cut, although some Fed officials have recently indicated that they have not yet made a final decision on whether they will support a rate cut this month.

Trading Tips:

I still recommend buying the US dollar against the Japanese yen from every downward level, but without risk, while monitoring the strong factors influencing the trend this week

Reasons for Selling Pressure on the Japanese Yen

Since the beginning of this month, the Japanese yen has been under selling pressure against other major currencies. Clearly, the most prominent was against the US dollar. According to reliable trading company platforms, the Japanese yen has recorded its longest losing streak against the US dollar since last June, as traders bet that the Bank of Japan will refrain from raising interest rates.

On the policy front, Bloomberg recently reported that Bank of Japan policymakers see little cost in waiting until January 2025 or later to raise interest rates because there is a limited risk that inflation will exceed the cap. Also, the report added that they are open to raising interest rates depending on economic data and market developments. Overall, financial markets have reduced their bets on a rate hike by the Bank of Japan this month after the report, now setting a 16% probability for this outcome. A week ago, the chance of a Japanese rate hike was 64%. The Bank of Japan’s decision comes a day after the US Federal Reserve cut interest rates by a quarter of a percentage point, although the longer-term outlook is gloomier.

Affected by the bank’s decisions, the Bank of Japan’s quarterly Tankan survey released on Friday showed that confidence among major Japanese companies remains optimistic, but the data did not move interest rate expectations. Also, hedge funds have recently increased their bets against the yen, according to Commodity Futures Trading Commission data for the week ended December 10.

USD/JPY Technical Analysis and Expectations Today:

Based on recent performance, the USD/JPY has now risen to trade slightly above its 100-hour moving average. As a result, the currency pair is about to enter the overbought levels of the 14-hour RSI. Therefore, bulls will look to extend the current rally towards 154.71 or higher to the resistance of 155.61. On the other hand, bears will seek to benefit from a correction downwards around 152.68 or lower at the support of 151.80. In the long term, according to the performance on the daily chart, the USD/JPY currency pair has completed an upward breakout from a descending channel formation. Also, the 14-day RSI has bounced back to approach the overbought levels. Therefore, bulls will seek to continue moving within an upward channel towards the resistance levels of 157.65 or higher to the resistance of 161.75. As for the MACD indicator, it is trying to move away from the oversold levels. On the other hand, bears may benefit from selling to take profits from moving towards the support levels around 149.60 or lower at the support of 145.00.

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• The euro dropped on Monday due to dovish comments from a top ECB official.

• Eurozone business activity improved in December.

• The dollar extended its gains as markets anticipated a more cautious Fed.

The EUR/USD forecast shows a surge in European Central Bank rate cut bets after dovish policymaker remarks. Meanwhile, PMI data showed a slight rebound in the Eurozone economy. However, business activity remained in contraction, showing a frail economy. 

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The euro dropped on Monday due to dovish comments from a top ECB official. ECB Vice President Luis De Guindos said that inflation in the Eurozone bloc would likely hold at the 2% target in 2025. Moreover, he noted that the central bank will continue cutting rates if inflation meets forecasts. 

The European Central Bank lowered borrowing costs by 25-bps on Thursday. At the same time, policymakers remained dovish, forecasting more cuts due to the weak economy and uncertainty about likely tariffs in the US. Such an outlook will likely weigh on the euro, especially since it diverges with the US outlook. 

Furthermore, data on Monday revealed that business activity in the Eurozone improved in December due to growth in the services sector. Notably, the flash composite PMI increased from 48.3 in November to 49.5 in December. Meanwhile, economists had expected a drop to 48.2. However, business activity remains in contraction below 50.

Elsewhere, the dollar extended its gains as markets anticipated a more cautious Fed in the coming year. Nevertheless, traders have fully priced a rate cut this week. Meanwhile, the likelihood of a January cut remains low at 24%. 

EUR/USD key events today

• US flash manufacturing PMI
• US flash services PMI

EUR/USD technical forecast: Bears make another attempt at 1.0475 support

On the technical side, the EUR/USD price is bouncing lower after finding a strong barrier at the 30-SMA. Meanwhile, the RSI trades below 50, suggesting solid bearish momentum. However, bears have found it difficult to break below the 1.0475 support, which coincides with the 0.5 Fib retracement level. 

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A break below this zone would allow the price to make lower lows and reach the 1.0400 key support level. Such an outcome would signal a new downtrend. On the other hand, if the support zone holds firm, the price might break above the SMA to retest the 1.0601 resistance level. However, bulls would have to break above this resistance to confirm a new bullish trend.

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Created on December 16, 2024

• The Euro has rallied rather significantly during the trading session on Friday as we continue to see the Japanese Yen itself get eviscerated.
• Keep in mind, the Bank of Japan just simply cannot tighten interest rates, and this shows just how weak the Yen is because the Euro is very weak as well.
• All things being equal, this is a market that I think will continue to go back and forth, perhaps trying to reach the top of the range above at the 165 yen level.

This is an area that will be somewhat difficult to break above, but I think we would have to pay very close attention to the market if we get anywhere near it.

Just Below Current Levels

Underneath, we have the 155 yen level as a floor. As we are basically in the middle of this, it makes quite a bit of sense that we see a lot of volatility here. The size of the candlestick is something worth paying close attention to as it does say that there’s alert into the euro against the yen or maybe a better way to put it is money’s just leaving Japan.

Either way EUR/JPY is a market that looks positive, and we have just formed a massive triple bottom so I do think we will probably turn things around. Again, while I don’t like the euro, I really don’t like the yen and therefore this is a battle of two very weak currencies although obviously, Europe is in better shape than Japan is, as the Japanese economy is crushed under the weight of debt and higher interest rates in that country would just wipe out economic progress. So, with all that being said, I think this remains a buy on the dip market, albeit probably not my favorite yen related pair.

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The GBP/USD is trading at $1.26396, up 0.24%, as it gains strength near the pivotal $1.26663 level, supported by an upward trendline on the 4-hour chart. This level is crucial for maintaining the bullish momentum, with immediate resistance at $1.27194 and a stronger hurdle at $1.27966.

On the downside, support is observed at $1.26046, followed by $1.25255, offering a safety net for the pair.

The 50 EMA at $1.26884 and the 200 EMA at $1.27083 highlight a mixed sentiment, with sellers likely to challenge gains near resistance levels. For now, the bullish trend remains intact, but a break below $1.26663 could invite sharp selling pressure, pushing prices toward lower supports.

Euro Outlook: German Trade Data Disappoints, PMIs Ahead

The euro faced pressure following disappointing German trade balance data, which fell to €13.4B against a forecast of €15.7B. Weakness in wholesale prices (0.0%) and stagnant French CPI (-0.1%) underscored economic challenges.

Looking ahead, Monday’s key flash PMIs will shape sentiment. French Manufacturing PMI is expected at 43.2, signaling contraction, while Services PMI holds steady at 46.9. German PMIs are marginally better but still sluggish, with Services forecasted at 49.5.

ECB President Lagarde’s speeches will be closely monitored for policy signals, especially as inflation and growth concerns persist in the eurozone. The euro remains vulnerable to further downside.

EUR/USD Technical Forecast

On Wednesday, the Fed will deliver its interest rate decision. Economists expect a 25-basis point interest rate cut, placing market focus on the economic projections and press conference.

Projections for a more hawkish Fed rate path may drive the USD/JPY toward 160 on interest rate differentials. Conversely, signals for multiple Fed rate cuts may pull the USD/JPY below 150.

On Friday, the US Personal Income and Outlays Report will wrap up an important week for the USD/JPY pair. Core PCE Price Index and personal income/spending trends could influence sentiment toward a Q1 2025 Fed rate cut.

In summary, a December and a potential Q1 2025 rate cut could drag the USD/JPY toward 140. Conversely, a hawkish Fed rate cut may drive the pair toward 160.

Short-term Forecast:

Near-term USD/JPY trends will hinge on the looming Fed and Bank of Japan interest rate decisions. A narrowing in the US-Japan interest rate differential in favor of the Yen could pull the USD/JPY pair toward 140. Conversely, a BoJ hold and hawkish Fed rate cut may drive the pair toward 160.

Investors should monitor real-time data, central bank decisions, and expert commentary to adapt trading strategies effectively. Don’t miss crucial market movements. Follow our real-time FX updates and stay ahead in the markets here!

USD/JPY Price Action

Daily Chart

After last week’s rebound, the USD/JPY sits above the 50-day and 200-day EMAs, signaling bullish momentum tied to BoJ and Fed policy expectations.

A USD/JPY return to 155 would support a move toward the 156.884 resistance level. Furthermore, a break above the 156.884 resistance level could enable the bulls to target the crucial 160 level.

Investors should consider the economic indicators and central bank policy decisions, potentially affecting USD/JPY price trends.

Conversely, a drop below the 50-day EMA could bring the 200-day EMA and 149.358 support level into play. A fall through the 149.358 support level may signal a drop to the 140.309 support level.

The 14-day RSI at 58.33 indicates a USD/JPY climb to the 156.884 resistance level before entering overbought territory (RSI above 70).

Fundamental Analysis & Market Sentiment

I wrote on 8^th December that the best trade opportunities for the week were likely to be:

The weekly gain of 1.91% equals 0.38% per asset.

Last week’s key takeaways were:

1. US CPI (inflation) – the annualized rate rose from 2.6% to 2.7% as expected.
2. US PPI – this was higher than expected, rising on a 0.2% increase the previous month to 0.4% this month, suggesting inflationary pressures remain. Both these top two items helped to strengthen the US Dollar.
3. European Central Bank Main Refinancing Rate & Monetary Policy Statement – a rate cut of 0.25% was given as expected. The Bank also took a minor dovish tilt on the inflation outlook which helped to weaken the Euro.
4. Reserve Bank of Australia Cash Rate & Rate Statement – the Bank held its Cash Rate steady at 4.35% as expected, but the Bank took a minor dovish tilt by suggesting cuts were on their way in 2025, which helped to weaken the Aussie, although it remains stronger than the New Zealand Dollar with which it is usually strongly correlated.
5. Bank of Canada Overnight Rate & Rate Statement – a rate cut of 0.50% was implemented as expected, which helped send the Canadian Dollar lower to a 4-year low against the US Dollar.
6. Swiss National Bank Policy Rate & Monetary Policy Assessment – a rate cut of 0.25% was implemented as expected.
7. UK GDP – showed a contraction of 0.1% for the second consecutive month, raising fears of a recession in the UK which would surely require serious rate cuts.
8. US Unemployment Claims – this came in slightly higher than expected.
9. Australian Unemployment Rate – this was notably better than expected, falling to 3.9% when 4.2% was expected.

Another noteworthy item are remarks coming from a Bank of Japan official in suggesting that the Bank may pass on a rate hike at its next policy meeting. This could cause considerable weakness in the Japanese Yen.

Last week basically saw a continuation of the ongoing trend theme of a strong US Dollar and stock market, with the tech-based NASDAQ 100 Index rising to reach a new all-time high. It is not a simple “risk on” scenario, the boom is especially centered on US assets.

Last week also saw rate cuts from three major central banks, despite the stickiness of US inflation. Also, the US inflation data came in as expected, and the data triggered a firm rise in US stock markets.

The Week Ahead: 16^th – 20^th December

The coming week has a big schedule with some of the biggest items in the Forex market: a US Fed policy meeting expected to bring a rate cut, and two other central bank policy meetings, although neither is expected to produce a rate cut. This means it will likely be another important week, as it is effectively the last trading week before Christmas when many people will be away from the markets for two weeks or so.

The coming week’s important data points are:

1. US Federal Funds Rate, FOMC Statement & Economic Projections – a rate cut of 0.25% is expected by almost everyone.
2. US Core PCE Price Index – this is the Fed’s preferred inflation indicator, so it can be impactful.
3. US Final GDP – annualized economic growth is expected to remain steady at 2.8%^.
4. Bank of Japan Policy Rate and Monetary Policy Statement – no rate hike is expected.
5. Bank of England Official Bank Rate, Votes, and Monetary Policy Summary
6. US, German, British, French Flash Services & Manufacturing PMI.
7. US Retail Sales
8. UK CPI (inflation)
9. Canadian CPI (inflation)
10. UK Retail Sales
11. Canadian Retail Sales
12. New Zealand GDP
13. US Unemployment Claims
14. UK Unemployment Claims (Claimant Count Change)

Monthly Forecast December 2024

For the month of December, I forecasted that the EUR/USD currency pair would fall in value. The performance of my forecast so far is:

Weekly Forecast 15^th December 2024

Last week, I made no weekly forecast as there were no unusually strong price movements in currency crosses, which is the basis of my trading strategy.

The US Dollar was again the strongest major currency, while the Japanese Yen was the weakest. Volatility fell slightly last week, with only 41% of the most important Forex currency pairs and crosses changing in value by more than 1%.

You can trade these forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

Technical Analysis

US Dollar Index

Last week, the US Dollar Index printed a bullish candlestick that continued in the direction of the long-term bullish trend. The recent price action also seems to have retested the upper trend line of the formerly dominant consolidating triangle chart pattern, which can be seen in the price chart below. The price is above its price from three and six months ago, suggesting a healthy long-term bullish trend in the greenback that should be exploitable.

I have plenty of fundamental reasons to be bullish on the US Dollar. However, the upside over the coming week might be limited, so long-term trades long of the USD might be more successful than short-term trades. However, the price action is definitely more bullish than it was last week, and I think we will see another week of gains by the greenback this week.

We will be getting highly important US Core PCE Price Index data and FOMC data on the US economy this week, so technical factors might not be very important, with price action over the second half of this week likely to be more data driven.

Bitcoin

Bitcoin has continued to chop around the $100,000 level over the past week, printing a bullish inside candlestick which failed to make a new record high. Although it can be argued that there are signs that the momentum has stalled or slowed, the price action remains bullish and a breakout over the coming week looks more likely than a significant bearish breakdown to happen.

The strong long-term bullish trend is something worth paying attention to, and it has been given a tailwind by the Republican victory in the recent US elections. The price chart below shows a spectacular long-term bullish trend which has been ongoing for the past two years.

To exploit the bullish breakout which I expect to happen in the safest way possible, I would wait for a new record daily high closing price before entering a new long trade, above $103,647.

EUR/USD

The EUR/USD currency pair is in a valid long-term bearish trend. This currency pair typically takes its time to move, with its trends usually including plenty of deep retracements, but for almost three weeks after plunging to a new long-term low price well below $1.0400, the price consolidated without turning definitively bearish.

The Dollar is relatively strong, while the Euro has been weakened a bit lately by the more dovish approach the European Central Bank took at its policy meeting last week.

This currency pair often has very reliable trends, which is why I am interested in being short, but the price action off the lows over recent weeks has been too bullish for my liking, and we are still some way off the lowest daily close at $1.0414. So, I would wait for a New York close above that price before entering a new short trade here.

NZD/USD

Last week, the NZD/USD currency pair printed a large, strongly bearish candlestick, closing right on its low. It closed at a 2-year low, which is a significant bearish breakdown in any asset.

The Australian Dollar has got a lot of attention lately as it weakened to new long-term lows as the RBA passed on a rate cut, but it is worth noting that the New Zealand Dollar is also very weak, but even more so, making the Kiwi attractive on the short side.

The Kiwi was weakened by last week’s 0.50% strong rate cut by the Reserve Bank of New Zealand, although it was widely expected.

This currency pair does not trend very reliably, so I don’t take long-term trades in it, but it certainly looks very weak right now.

USD/CAD

Last week, the USD/CAD currency pair printed a bullish candlestick, closing not far from its high although it had some upper wick. It closed at a 4-year high, which is a significant bullish breakdown in any asset. The price action is bullish, no question about that.

The Loonie was weakened by last week’s 0.50% strong rate cut by the Reserve Bank of New Zealand, although this was widely expected.

This currency pair does not trend very reliably, so I don’t take long-term trades in it, but it certainly looks very strong right now.

The main commodity currencies (CAD, NZD, AUD) are all weak, so it might be that they are best traded as a short basket over the coming week against a stronger currency.

NASDAQ 100 Index

Last week saw the NASDAQ 100 Index print another bullish candlestick to reach and close at a new record high for the second week running. The price closed not far from its high, although the candlestick was small and slightly doji-like, which suggests the trend may be running out of steam. More evidence in that direction is shown by narrowing of the linear regression analysis within the price chart below. However, when the price of a major stock market index is trading in blue sky, that is a bullish sign that must be paid attention to.

US stock markets are leading global equities, which is nothing unusual, boosted by President Trump’s reputation as doing anything to generate economic growth and stock market growth, as well as his recent announcement of his intention to put strong tariffs on imports from Mexico and China.

Maybe more importantly, the US stock market has been in a strong bullish trend for over one year now, so there is plenty of momentum supporting last week’s bullish move.

I see the NASDAQ 100 Index as a buy.

Cocoa Futures

Cocoa futures have been rising powerfully over the past five weeks, especially over the past week which printed a very large, strong, bullish candlestick.

Trading commodities long when they break to new 6-month high prices, especially when there is powerful momentum as there is here, has historically been a very profitable trading strategy, so there are plenty of good reasons to be long here.

During the second half of 2023 and the early months of 2024, the price increased by almost 600%, which is a meteoric rise. This happening so recently suggests that it could happen again, giving even more reason to be long here.

Cocoa is a superfood and is becoming better known for its health-giving properties when used in moderation. This is another factor which is giving the price a tailwind.

I see Cocoa as a buy, but I point out that Cocoa futures are very big, worth approximately $100,000 which is a dangerously large position size for most retail traders. Trading Cocoa CFDs can be dangerous over the long term as overnight swaps will usually be very high. Therefore, I urge retail traders to look into Cocoa ETFs or ETCs such as COCO which own cocoa futures but can be purchased for only a few US Dollars per share.

Bottom Line

I see the best trading opportunities this week as

• Long Bitcoin in USD terms following a daily (New York) close above $103,647.
• Short of the EUR/USD currency pair following a daily (New York) close below $1.0414.
• Long of the NASDAQ 100 Index.
• Long of Cocoa futures or a Cocoa ETF/ETC.

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