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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• GBP/JPY has fallen consistently during November, weakening by seven Yen to the Pound.
• It may now be in a bear trend both in the short and medium term, suggesting the odds favor more downside still. 

GBP/JPY may have reversed both its short and medium-term uptrends after the last bout of weakness. If so, the pair could see more downside on the horizon since it is a principle of technical analysis that the odds favor extensions of trends.

GBP/JPY Daily Chart 

GBP/JPY began selling off on October 31 after it peaked at 199.81 on the preceding day. Since then it has staircased down, reaching a new low in the 192.80s on November 22 – seven whole Japanese Yen (JPY) to the Pound Sterling (GBP) lower than at the end of October.

It has also broken below all three major Simple Moving Averages (SMA), the 50, 100 and 200-day SMAs on a closing basis. 

The (blue) Moving Average Convergence Divergence (MACD) momentum indicator line has both crossed below the red signal line and below the zero level, and taken together these are  bearish signs.  

A break below the 192.80 level could open the way to further losses with the next target at around 189.56, the low of the Right-Angled triangle that formed in late September and early October. 

Created on November 25, 2024

• Despite risk aversion among investors, the US dollar remains more attractive to buy than the Japanese yen, even though both currencies are among the most important safe havens in times of uncertainty.
• Trump’s trade continues to support the strength of the US dollar.
• During last week’s trading, the US dollar against the Japanese yen USD/JPY pair jumped towards the resistance level of 155.88, near the highest for the currency pair in four months.

According to the Forex market trading, the price of the US dollar / Japanese yen rose by 1.79% during the trading of the current month. Moreover, the currency pair rose by 9.75% during the trading of the year 2024.

Decline in Japanese Inflation and its Impact on Central Bank Policy

According to economic data, Japan’s core inflation rate slowed to a 9-month low of 2.3% in October, while the underlying inflation rate also fell to 2.3%, the lowest in six months, and slightly above expectations of 2.2%. On the other hand, Japan’s manufacturing sector contracted more than expected in November, despite growth in services activity.

On the monetary policy front, the Bank of Japan’s governor has indicated the possibility of raising interest rates again as early as December, citing the recent weakness in the Japanese yen. In addition, the Japanese prime minister is considering a $90 billion stimulus package to ease the impact of rising prices on households. However, the strong dollar and US Treasury yields have prevented the low-yielding Japanese yen from rising more than its recent performance.

Moreover, a Japanese survey showed that Japanese companies in China have become more pessimistic about the world’s second-largest economy, with about two-thirds saying it is getting worse and nearly half cutting or halting their investments. About 64% of Japanese companies said the Chinese economy is worse than last year, according to the latest survey by the Japan Chamber of Commerce and Industry in China.

USD/JPY Technical Analysis and Expectations Today:

The overall trend of the USD/JPY currency pair remains upward. The 14-period Relative Strength Index still has room to rise before moving towards oversold levels, which could happen if the bulls manage to push the pair towards the resistance levels of 155.85 and 157.00, respectively. The USD/JPY pair will remain within its current range until the return from the US holidays this week, which may affect liquidity and investor sentiment to start trading normally.

Conversely, and on the same timeframe, the upward trend of the USD/JPY currency pair will be breached if the bears return the pair towards the support level of 151.60. Otherwise, the overall trend will remain upward. We see that any downward movement of the currency pair may be an opportunity to buy. You can follow the trading signals for the USD/JPY and other free live trading signals on our website.

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Created on November 25, 2024

• The continued strength of the US dollar since Trump’s victory has been supporting the downward trend of the GBP/USD currency pair, which recently plunged to the support level of 1.2487, the pair’s lowest in six months.
• Before closing the week’s trading around the 1.2528 level, the downward performance is expected to continue until new strength factors emerge for the sterling.
• According to forex market trading, the GBP/USD pair has declined by 2.86% since the beginning of this month. Recently, the pound sterling has depreciated by 1.59% against the US dollar since the beginning of 2024.

Disappointing UK Economic Performance

The UK prime minister has pledged to achieve sustainable economic growth of 2.5% a year and improve living standards, a challenge for an economy that has been suffering from almost stagnant productivity since the global financial crisis of 2008-09. According to the economic calendar results, UK inflation accelerated more than expected in October to well above the Bank of England’s 2% target. UK consumer price inflation was reported to have risen by 2.3% from a year earlier after rising energy bills. Services inflation – closely watched by price makers for signs of domestic pressure – remained high at 5%.

The performance of the pound sterling against the dollar will remain under significant pressure, which is understandable given that the US economy continues to grow at a strong pace, with more growth expected in the future as Donald Trump’s pro-growth policies are awaited. Compare this to the situation in Britain, where the new government has hit businesses with huge tax increases, minimum wage hikes, and additional burdens from labour law.

Future of Bank of England Policy

Market pricing shows that investors have raised their expectations for the number of interest rate cuts that the Bank of England will make next year from two to three. Currently, the chances of a UK interest rate cut in December remain low, but a cut in February 2025 is now fully priced in.

Technical Analysis for the GBP/USD pair today:

According to the daily chart performance, the overall trend of the GBP/USD currency pair remains downward. As mentioned before, moving below the 1.2500 support level will further strengthen the bears’ control of the trend. The continued strength of the current US dollar factors may push the GBP/USD pair to stronger downward levels, the closest of which are currently 1.2465, 1.2330, and 1.2200, respectively, which in turn will move all technical indicators towards oversold levels. Furthermore, any upward rebound of the GBP/USD pair will be a target for selling again for now.

You should note that the US holidays this week may negatively affect sentiment and liquidity in the markets. Therefore, it is wrong to make decisions until after the holidays and the volume of liquidity returns to avoid sudden movements that affect trading investments. Also, you can view free live trading signals for the GBP/USD pair and other distinctive trading signals on our website.

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Created on November 25, 2024

• At the beginning of this week’s trading, the EUR/USD currency pair is expected to stabilize around its recent losses, which extended to the support level of 1.0332 last week.
• Technically, this is the lowest level for the currency pair in the forex market in two years.
• Before attempting to rebound upwards, the week’s trading closed around the level of 1.0418. The downward trend remains the strongest.

Magnitude of Euro Loss

According to recent forex market trading, the Euro has declined by 4.76% against the US dollar over the past 52 weeks. Recently, the EUR/USD has declined by 4.21% since the beginning of the month. Furthermore, the Euro has declined by 5.54% against the dollar since the beginning of 2024.

Economic Slowdown Pressures Euro Performance

Recently, investor appetite for the single European currency, the Euro, has weakened. After it was announced that business activity in the Eurozone contracted unexpectedly this month, raising concerns about the outlook for the European economy and indicating that the European Central Bank will need to be more aggressive with interest rate cuts. According to economic data results, the Purchasing Managers’ Index for service providers and manufacturers weakened. Political crises in Germany and France, as well as the threat of tariffs from the Donald Trump presidency, also affected the currency.

On another influential front, a key measure of wages in the eurozone jumped by the most since the euro was introduced for trading in 1999 – a move that complicated the European Central Bank’s plans to cut interest rates as inflation declines. As announced, negotiated wages in the third quarter rose by 5.4% year-on-year. This was higher than 3.5% in the previous three months and was largely driven by Germany.

The European Central Bank’s Vision of Trump’s Threats

In this regard, at the end of last week, European Central Bank President Christine Lagarde said that the European Union faces growing threats to its trade with other parts of the world and must respond by deepening capital markets to finance innovation and increase productivity. Lagarde’s concerns came as US President-elect Donald Trump wants to raise tariffs on imports from a wide range of countries.

Lagarde added, “The geopolitical environment has become less favourable, with growing threats to free trade from around the world.” Also, “As the most open of the major economies, the European Union is more exposed to these trends than others.” Added, Lagarde that with the source of growth at risk, Europe needs to move “urgently” to increase the financing available to innovative new companies that can help drive economic expansion, with many of them having to rely on funding from the United States and elsewhere.

EUR/USD Analysis Today:

My technical outlook for the EUR/USD currency pair remains unchanged. The overall trend remains downward, and as mentioned before, moving below the 1.0500 support level will further strengthen the bears’ control. Consequently, do not be surprised if the pair tests lower levels that may reach the currency pair’s parity level if the weakness factors from Trump’s trade and the economic slowdown in the Eurozone led by Germany continue. Currently, the closest support levels for the EUR/USD are 1.0335, 1.0280, and 1.0160, respectively. Technical indicators continue to move towards oversold levels after recent losses.

EUR/USD Trading Signals:

You should be cautious as the EUR/USD will remain bearish. Any attempt to rebound upwards will be a selling opportunity. 

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• Dollar bulls cheered Trump’s pick for US Treasury Secretary.

• Market participants are awaiting the FOMC meeting minutes.

• Data on Friday revealed a sharper-than-expected slowdown in the UK economy.

The GBP/USD forecast suggests further dollar strength after Trump picked Scott Bassent as the next US Treasury Secretary. Meanwhile, due to downbeat economic data, the pound remained fragile after reaching a six-month low on Friday. 

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The greenback regained strength on Monday as bulls cheered Trump’s pick for US Treasury Secretary. After Trump’s win, Scott made remarks supporting a stronger dollar and the proposed import tariffs. Therefore, traders believe he will be bullish for the dollar. 

Meanwhile, market participants are awaiting more clues for future Fed moves. On Tuesday, the US will release the FOMC meeting minutes, which might shed more light on the December meeting. The meeting came soon after Trump won the election and shifted the outlook for the US economy.

Consequently, policymakers might have assumed a more cautious tone, leading to a decline in Fed rate cut expectations. Currently, markets are pricing a 52% chance of a cut in December. Hawkish minutes might lower this likelihood below 50%, further boosting the dollar.

Meanwhile, the pound was frail after data on Friday revealed a sharper-than-expected slowdown in the UK economy. Notably, retail sales fell by 0.7%, more than the expected 0.3% decline, showing weak consumer spending.

Meanwhile, PMI data showed an unexpected decline in business activity in the manufacturing and services sectors. The manufacturing PMI came in at 48.6, compared to estimates of 50.0. The services PMI was 50.0, below forecasts of 51.9. The downbeat economic data might pressure the Bank of England to cut interest rates. 

GBP/USD key events today

Market participants do not expect any key reports from the UK or the US today. Therefore, they will continue to absorb US political developments.

GBP/USD technical forecast: Bearish momentum surges after 30-SMA retest 

On the technical side, the GBP/USD price is collapsing after retesting the 30-SMA resistance. At the same time, the RSI is falling far below the 50 mark, indicating stronger bearish momentum. Initially, the downtrend paused at the 1.2500 support level, where the RSI made a bullish divergence. 

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The price gapped up as it revisited the 1.2600 resistance and the SMA. After that, bears took back control with a solid candle. Given the strong bearish bias, the price might soon retest the 1.2500 support level and likely break below.

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• EUR/USD opened higher after closing the previous week deep in the red.
• The technical outlook is yet to point to a buildup of bullish momentum.
• Improving risk mood could help the pair stretch higher.

EUR/USD lost more than 1% for the third consecutive week but opened with a bullish gap on Monday. The pair, however, retreats slightly after testing 1.0500 and the technical outlook shows a lack of bullish momentum.

News of president-elect Donald Trump nominating fund manager Scott Bessent as the US Treasury Secretary caused US Treasury bond yields to decline sharply at the weekly opening, making it difficult for the USD to find demand.

Assessing Bessent’s nomination, “Bessent, a hedge fund CEO, is known to be a fiscal hawk, so this should ease some of the more extreme deficit fears as he has advocated a 3% deficit by 2028,” said Deutsche Bank analysts. “In practise that will be extremely tough but for now the market can be a bit relieved. He is also thought to be less extreme on trade policy than some of his rivals for the job.”

In the meantime, US stock index futures are up about 0.5% in the European morning on Monday, highlighting a positive shift in risk mood. In case risk flows continue to dominate the action in financial markets after Wall Street’s opening bell, the USD could come under renewed selling pressure and help EUR/USD extend its recovery.

The European economic docket will feature IFO – Current Assessment and IFO – Business Climate figures for November. A significant decline in these business sentiment data could limit the Euro’s gains with the immediate reaction.

EUR/USD Technical Analysis

EUR/USD remains within a descending regression channel and the Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50 despite the bullish opening to the week. On the downside, 1.0450 (mid-point of the descending channel) aligns as immediate support before 1.0400 (round level) and 1.0360 (lower limit of the descending channel).

Looking north, first resistance could be spotted at 1.0500 (round level, static level) ahead of 1.0535 (50-period Simple Moving Average (SMA), upper limit of the ascending channel) and 1.0600 (round level, static level).

GBP/USD is trading at $1.25975, up 0.56%, as it tests the pivot point at $1.26072. Immediate resistance stands at $1.26617, with further levels at $1.27153 and $1.27714 if the pair gains bullish traction. On the downside, support is found at $1.25537, with additional cushions at $1.25061 and $1.24569.

The 50 EMA at $1.26106 aligns closely with the pivot, reinforcing its importance as a tipping point. A break above $1.26072 could drive further bullish momentum, while a failure to hold may signal a bearish reversal.

Euro Dips as PMI Data Misses Expectations

The Euro (EUR) struggled on weak economic data. German Final GDP q/q stagnated at 0.1%, while French and German PMI figures fell below forecasts.

French Manufacturing PMI hit 43.2, below the 44.6 projection, and German Services PMI dropped to 49.4, missing the 51.6 estimate.

Market focus shifts to Monday’s German Ifo Business Climate data at 86.1, down from 86.5, and ECB President Lagarde’s insights on future monetary policy.

EUR/USD Technical Forecast

Fundamental Analysis & Market Sentiment

I wrote on 17^th November that the best trade opportunities for the week were likely to be:

The weekly gain of 10.74% equals 5.37% per asset.

Last week’s key takeaways were:

1. UK CPI (inflation) rose from 1.7% to 2.3% annualized, a fraction higher than the expected 2.2%.
2. Canada’s CPI (inflation) rose from -0.4% to 0.4% month-on-month, a fraction higher than the expected 0.3%.
3. UK Monetary Policy Report Hearings
4. US Unemployment Claims – this was almost exactly as expected.
5. UK Retail Sales – this was considerably worse than expected, showing a month-on-month decline of 0.7%, while a drop of only 0.3% was widely forecast.
6. Canada Retail Sales – as expected.
7. US, German, UK, and French Services & Manufacturing PMI: The US data was strong and healthy, but the other countries saw weaker-than-expected numbers.

Apart from the inflation data, there were no data points last week that were truly interesting to the market, and even inflation is no longer the concern it was some months ago. Markets are more interested right now in global growth and the likely appointments of the upcoming Trump administration, which will take power in January. We saw US and European stock markets gaining again last week as risk sentiment in parts of the world improved.

The Week Ahead: 25^th – 29^th November

The coming week’s schedule is again relatively light. Still, it has some important inflation-related data (including in the USA) and central bank releases from the US Federal Reserve and the Reserve Bank of New Zealand.

1. US Core PCE Price Index
2. US CB Consumer Confidence
3. US Preliminary GDP
4. US FOMC Minutes
5. German Preliminary CPI (inflation)
6. Australian CPI (inflation)
7. Canadian GDP
8. Reserve Bank of New Zealand Official Cash Rate, Rate Statement, and Monetary Policy Statement
9. Chinese Manufacturing PMI
10. US Unemployment Claims

Monthly Forecast November 2024

I made no monthly forecast for November, as the long-term trends in the Forex market were too unclear.

Weekly Forecast 24^th November 2024

I made no weekly forecast this week, as there were no unusually strong directional price movements over the past week, which is the basis of my weekly trading strategy.

Last week, the Australian Dollar was the strongest major currency, while the Euro was the weakest. Like the previous week, one-third of the most important Forex currency pairs and crosses changed in value by over 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 the recent breakout beyond the resistance level at 105.81, as well as the upper trend line of the formerly dominant consolidating triangle chart pattern, which can be seen in the price chart below. The price reached a new 2-year high. These are bullish signs, but it should be noted that the candlestick has a large upper wick, showing that the Dollar struggled to hold some of its gains. Another bearish note is hit by the price retreating from a high very close to the nearest overhead resistance level at 107.95.

The price is above its levels from three and six months ago, suggesting a long-term bullish trend in the greenback that should be exploitable.

The strong US Dollar is supported by the expectation that the new Trump / Republican control of the executive and legislature in the USA will lead to a more hawkish monetary policy. This has been evidenced by the strong increase in US Treasury Yields over recent weeks.

I have plenty of technical and 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.

Bitcoin

Bitcoin saw another week of extraordinary gains as it powered to new all-time highs, topping just below the big round number at $100,000, which has still not been reached. The price rose by almost 10% last week.

There is no reason not to be bullish except that the price is now very close to the huge six-figure round number at $100,000. If the price arrives at, or very close to, that point, we will likely see massive profit taking as there will be a 25% gain within just a few weeks, an enormous rise in value for any asset. So, this leg of the bull run, or this whole trend, may not have much further to run.

Bitcoin received a significant boost from the election victories of President Trump and Congressional Republicans in both Houses. Republicans are seen as more likely to favour lighter regulation of cryptocurrency, so their ascendancy has boosted both crypto in particular and risk sentiment in general, which also helps a risky asset like Bitcoin.

It is smart to be long of Bitcoin, but be mindful of $100,000 as a potentially strong barrier. With such momentum and strong gains, a trend or momentum trader should be interested. However, waiting for a daily (New York) close above $100,000 before entering a new long trade in Bitcoin will probably be wise.

Note that Bitcoin ETFs are not getting the full gain made by the underlying, so if you can afford it, you might want to buy Bitcoin futures instead of a Bitcoin ETF or even spot Bitcoin. There are Bitcoin micro futures available on the CME, which are only sized at 10% of the value of one Bitcoin.

EUR/USD

Last week, the EUR/USD currency pair printed a relatively large bearish candlestick, which made the lowest weekly close seen in almost two years. The weekly candlestick closed some way from its low, with a noteworthy lower wick on the candlestick. The price is below its levels from both 3 and 6 months ago, which is my preferred metric for calling a long-term bearish trend. The US Dollar Index is also in a long-term bearish trend. A final bearish filter is that the 50-day moving average is below the 100-day moving average, which validates the trend.

There are plenty of reasons to be short here, but I am a bit concerned about Friday’s spike lower and the fairly strong bounce. However, the price feels heavy, and lower prices are likely over the coming week.

A shorter-term approach is to look for short swing trades from retests and rejections of resistance levels above the current price.

USD/JPY

I expected the USD/JPY currency pair to have potential support at ¥153.33.

The H1 price chart below shows how the price action rejected this support level with a small hourly pin bar, marked by the up arrow within the price chart below. This rejection occurred soon after the start of the overlap of the London / Tokyo sessions, which can often be a great time for reversals in Japanese Yen currency pairs and crosses.

Note that this multi-candlestick reversal took a while to set up, but it was worth the wait for a decisive change in direction.

So far, this trade has given a maximum profit of slightly more than 1.5 to 1.

The US Dollar remains in a long-term bullish trend, and the Japanese Yen is prone to weakness, so long trade setups in this currency pair might be something to watch out for.

USD/CHF

I expected that the USD/CHF currency pair would have potential support at $0.8805

The H1 price chart below shows how the price action rejected this support level with a strong hourly inside bar, marked by the up arrow within the price chart below. This rejection occurred soon after the start of the overlap of the London / New York sessions, which can often be a great time for reversals in the US Dollar.

So far, this trade has given an excellent maximum profit approximately 1.5 to 1.

The US Dollar is in a strong long-term bullish trend, and the Swiss Franc is relatively weak, like the Euro with which it is strongly positively correlated, so there may be more opportunities for long trades here over the coming days and weeks.

NASDAQ 100 Index

The NASDAQ 100 Index rose last week, closing right on the high of its range, which is a bullish sign. This is a healthy bullish rebound within a long-term bullish trend. The linear regression analysis applied in the price chart below also shows a consistent bullish trend over the shorter term.

The strong trend and the election victories of Trump and Congressional Republicans have provided a tailwind for higher stock market prices in the USA. Notably, many other countries are seeing their stock markets struggling, partly due to fears that the new Trump administration will impose tariffs on US imports.

The question now is whether the price will continue to rise and make a new record high above the record high it set a couple of weeks ago.

I see the NASDAQ 100 Index as a buy once it makes a new record high closing price.

S&P 500 Index

My analysis of the S&P 500 Index is exactly the same as my analysis of the NASDAQ 100 Index above.

Bottom Line

I see the best trading opportunities this week as

• Long of Bitcoin in USD terms following a daily (New York) close above $100,000.
• Short of the EUR/USD currency pair.
• Long of the NASDAQ 100 Index following a daily (New York) close above 21,139.
• Long of the S&P 500 Index following a daily (New York) close above 6,002.

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