• UK wage growth, excluding bonuses, cooled in September. 

• The UK unemployment rate rose to 4.3% after a previous reading of 4.1%.

• Sterling has lost 1.1% of its value amid the Trump trade.

The GBP/USD price analysis indicates a weaker UK labor market, increasing expectations for BoE rate cuts. At the same time, the pair is dropping as the dollar’s Trump trade rally continues. 

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Data on Tuesday revealed that UK wage growth, excluding bonuses, cooled, and unemployment rose. In September, the unemployment rate rose to 4.3% after a previous reading of 4.1%. Meanwhile, unemployment claims edged up from 10,100 to 26,700. The labor market drives a considerable part of the economy. 

Therefore, weakness in this sector is a big motivator for the Bank of England to continue lowering borrowing costs. However, the recent government budget raised the chances of a spike in inflation, which might keep policymakers cautious.  

On the other hand, dollar strength since Trump won the US election put downward pressure on the GBP/USD pair. Sterling has lost 1.1% of its value amid the Trump trade. The new US president has proposed policy changes to boost the US economy in the long run.

Bigger tax cuts and tariffs on imported goods will benefit local businesses, heating up the economy. If this happens before inflation hits the 2% target, the Fed might be forced to pause its rate cuts and assess the situation. A cautious or hawkish shift will be bullish for the dollar. 

Meanwhile, traders are holding their breath before October’s inflation figures, which will shape the outlook for the December Fed meeting. 

GBP/USD key events today

No key events will come after the UK employment figures. Therefore, traders will await tomorrow’s US inflation report.

GBP/USD technical price analysis: Downtrend resumes after short pause

On the technical side, the GBP/USD price has broken below the 1.2850 support level to make a lower low. Moreover, it has made a strong swing below the 30-SMA, a sign that bears are in the lead. Meanwhile, the RSI trades near the oversold region, indicating solid bearish momentum. 

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Initially, the price was in a downtrend before it paused to consolidate between the 1.2850 support and the 1.3000 resistance. Therefore, the break below the range resistance signals a continuation of the downtrend.

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• USD/JPY is probably forming a bearish Broadening Formation price pattern. 
• These often occur during periods of market volatility and end with a breakout lower.

USD/JPY is probably forming a Broadening Formation price pattern which began in the last week of September. 

The Broadening Formation occurs when price starts to go sideways but forms higher highs and lower lows with each leg of its unfolding. When the highs and lows of the range are connected with trendlines this creates a widening range, or price pattern. 

USD/JPY 4-hour Chart 

Broadening Formations usually occur during periods of high market volatility as has been the case during the formation of the one on USD/JPY which coincides with the US presidential election. 

When it forms at a price top the pattern is bearish as is the case with the one on USD/JPY. Eventually price is likely to break below the lower boundary line and decline rapidly lower. The distance it is likely to go depends on how wide the pattern becomes at its broadest point.

It is difficult to determine when these patterns have concluded, however, it is worth keeping USD/JPY on a watchlist and assessing its maturity as it evolves. 

The Moving Average Convergence Divergence (MACD) momentum indicator is a useful indicator for trading the up and down legs of the pattern. The blue MACD tends to be a useful indicator of turning points in price as it turns above or below its red signal line.

• The euro wallowed near a seven-month low on Tuesday.

• Trump will likely impose higher tariffs on goods imported from the Eurozone.

• Market participants await the October US inflation figures.

The EUR/USD outlook shows a steep decline as the euro suffers at the prospect of higher import tariffs in the US. Meanwhile, the dollar soared as Trump’s win painted a bright outlook for the US economy, reducing Fed rate cut expectations. 

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The euro wallowed near a seven-month low as investors sold the currency after Trump’s presidential win. Trump will likely impose higher tariffs on goods imported from the Eurozone. Such an outcome will significantly hurt the Eurozone economy.

On the other hand, it will boost the US economy as local businesses will flourish. At the same time, Trump’s proposal for more significant tax cuts will improve business conditions. A more robust economy will translate to higher inflation. The Federal Reserve recently pivoted from rate hikes to rate cuts. 

The US Central Bank increased interest rates to bring down sky-high inflation. Although price pressures have eased significantly from the peaks, the journey is not yet over. Inflation remains above the Fed’s 2% target. Nevertheless, policymakers voted to start slashing rates because all indicators showed that inflation was in a downtrend and would soon hit the target. 

Unfortunately, that outlook might have changed with Trump’s win. Now, there is a chance that inflation will start increasing before it reaches the target. Consequently, the Fed might become more cautious about rate cuts. 

Meanwhile, market participants await the October US inflation figures for more clues on whether the Fed will cut in December. Traders currently price a lower 69% chance of a December rate cut.

EUR/USD key events today

Neither the US nor the Eurozone will release high-impact economic reports. Therefore, markets will keep digesting Trump’s win.

EUR/USD technical outlook: Bears eye 1.0600 support in new downtrend

On the technical side, the EUR/USD price has collapsed below the 1.0700 support to make a new low in the downtrend. Consequently, the bearish bias has strengthened since there is a lower high and low. At the same time, the price respects the 30-SMA as resistance, and the RSI is in the oversold region, suggesting solid bearish momentum. 

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The trend shifted when the price made a strong evening star candlestick pattern. If the new trend continues, EUR/USD will soon break below the 1.0600 support level.

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GBP/USD is trading at $1.28213, down 0.37%, as the pair remains pressured below the pivot at $1.28463. This level, which recently acted as a breakout point, now serves as a key pivot; staying below it could keep the pair in a bearish trend.

Immediate support sits at $1.27916, with further levels at $1.27509 and $1.27210 if sellers maintain control. Resistance is seen at $1.28856 and $1.29249, with the 50-day EMA at $1.29079 reinforcing the bearish outlook.

Until GBP/USD clears $1.28463, we’re likely to see cautious trading with a downward bias.

Euro Steady with German ZEW Sentiment Above Forecast

The Euro (EUR) held steady as Germany’s Final CPI m/m met expectations at 0.4%, showing stable inflation in the region. The German ZEW Economic Sentiment index also slightly exceeded forecasts, reaching 13.2, up from the previous 13.1.

Meanwhile, the broader ZEW Economic Sentiment for the Eurozone rose to 20.5, surpassing the expected 20.1. This mild improvement in sentiment supports the euro, though broader economic challenges persist in the region.

EUR/USD Technical Forecast

Created on November 11, 2024

• A shift in the Bank of Japan’s policy has tempered market expectations for further monetary tightening.
• In addition to Trump’s victory in the US presidential election and expectations of a return to market talk due to customs wars and tariffs and confronting countries that devalue their currencies.
• All of these factors contributed to further strengthening the upward trend of the USD/JPY currency pair, with last week’s gains reaching the resistance level of 154.70, the highest for the currency pair in more than three months, and closing the exciting week’s trading stable around the 152.60 level.
• This performance will be monitored by US inflation figures this week, in addition to a round of statements by US Federal Reserve officials led by Jerome Powell.

How has Trump’s victory affected the markets and investor sentiment?

Trump’s return to the White House has upended expectations for the U.S. Treasury market, where October’s losses have already erased much of this year’s 2024 gains. Less than two months after the Federal Reserve began cutting U.S. interest rates from their highest levels in more than two decades, the prospect of Trump cutting taxes and imposing big tariffs threatens to reignite inflation by raising import costs and pumping stimulus into an already strong economy.

His fiscal plans — unless offset by massive spending cuts — would also send the U.S. budget deficit soaring. That in turn has renewed doubts about whether bondholders will start demanding higher yields in exchange for absorbing the ever-increasing supply of new Treasuries. Analysts expect the 10-year Treasury yield to rise to its peak of 5% in late 2023, about 70 basis points above Friday’s level.

Overall, there is still a great deal of uncertainty about the exact policies that Trump will enact, and some of the potential impact has already been priced in, as speculators began betting on his victory long before the vote. While yields on 10- and 30-year Treasury bonds rose last week to their highest levels in months, they fell again over the next two days, ending the week at a lower level than they started. But the prospect that Trump’s policies will stimulate growth has led traders to scale back their expectations of how deeply the Federal Reserve will cut US interest rates next year, dashing hopes for bonds to rise with strong policy easing.

Economists at Goldman Sachs, Barclays, and JPMorgan have adjusted their forecasts for the Federal Reserve to show fewer cuts. Swap traders are pricing in policymakers cutting the US interest rate to 4% by mid-2025, which is a full percentage point higher than their expectations in September. And it is now in the range of 4.5% to 4.75%. Accordingly, economic data this week, especially the latest reading of US consumer and producer prices, could renew volatility. Federal Reserve Chairman Jerome Powell, New York Fed President John Williams, and Fed Governor Christopher Waller will also speak, offering potentially new insights into their outlook.

USD/JPY Technical Analysis and Expectations Today:

USD/JPY continues to trade slightly below its 100-hour moving average. Last Friday’s rebound prevented the pair from falling to oversold levels on the 14-hour RSI. Accordingly, based on the near-term performance and as seen on the hourly chart, USD/JPY is trading within a descending channel formation. However, the 14-hour RSI has recently rebounded to avoid falling into oversold levels. Therefore, bulls will target extended rebounds around 153.20 or higher at the 154.00 resistance. On the other hand, bears will look to move towards extended declines around 152.11 or lower at the 151.00 support.

In the long term, based on the daily chart, USD/JPY is trading in an ascending channel formation. Also, the 14-day RSI supports a bullish bias after the rally near overbought levels. Therefore, bulls will look to move the current rally towards 155.30 or higher to the 157.00 resistance. On the other hand, bears will look to pounce on the declines around 150.00 or lower to the 147.87 support.

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Created on November 11, 2024

• At the end of last week, the Euro attempted to recover from its strong losses against the US Dollar amid the strength of the latter following Trump’s re-election as US President.
• Last Friday’s gains for the euro against the US dollar EUR/USD did not exceed 1.0805 before closing trading stable around 1.0717.
• Also, its losses in the US presidential election week extended to the support level of 1.0682, the lowest for the euro/dollar pair in more than four months.
• Today is a holiday in the US markets, which may weaken liquidity in the markets, and accordingly the euro/dollar price moves in narrow ranges until the announcement of US inflation figures.

The EUR/USD currency pair recorded a weekly decline, under pressure from the strength of the US dollar and political turmoil in Germany, as the coalition government of German Chancellor Olaf Scholz collapsed in the middle of last week. In this regard, opposition leaders and businesses have called for new elections to reduce uncertainty. The week also saw the re-election of Donald Trump as US president, raising concerns in Europe about potential economic impacts, including tariffs on major industries such as cars and chemicals, as well as security and support for Ukraine.

On another front affecting the market, the US Federal Reserve and the Bank of England cut interest rates by 25 basis points in November, in line with expectations. The European Central Bank is expected to follow suit with a 25-basis point cut in December, with financial markets expecting a decline to 2% by June.

According to stock trading platforms, US stock indices hit new record highs. According to trading, US stocks continued their upward momentum to close at record levels at the end of last week’s trading, supported by optimism about Donald Trump’s victory in the US presidential election and the Federal Reserve’s favourable interest rate cut. According to performance, the Standard & Poor’s 500 index rose 0.4% to record a new record, after exceeding the 6,000 thresholds during the session. The Dow Jones also closed at a record high, adding 259 points to reach 44,000 for the first time, while the Nasdaq posted modest gains.

The best-performing sectors were utilities, real estate, and consumer staples, while materials stocks lagged. Tesla shares jumped 8.2% to $321.22, as the company achieved a trillion-dollar valuation for the first time in more than two years. Exxon Mobil shares rose 28.7% after raising revenue guidance. Obviously, the rise was driven by a 0.25% cut in US interest rates, with Federal Reserve Chairman Jerome Powell reaffirming confidence in the economy.

Over the course of last week’s trading, the S&P 500 and Dow rose 4.6% and 4.8%, respectively, their strongest performance since November 2023, while the Nasdaq led the gains with a 5.8% gain.

EUR/USD Technical analysis and forecast:

According to the performance on the daily chart, the general trend of the Euro against the US Dollar EUR/USD is bearish. As we mentioned before, stability around and below the support level of 1.0800 will remain a catalyst for the bears to control the trend. Also, the continuation of Trump’s previous policy may expose the Euro/USD currency pair to more losses. The closest support levels in that time frame are 1.0660, 1.0580, and then 1.0400, respectively, which are sufficient levels to push all technical indicators towards strong oversold levels. On the other hand, and in the same time frame, the current trend will not be broken without stability above the resistance of 1.1000 again.

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British Pound PRICE Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

• The US will release consumer inflation data on Wednesday.

• Economists expect the CPI to increase by 0.2%.

• Bank of Japan policy meeting minutes revealed uncertainty about the next hike.

The USD/JPY forecast brightened on Monday as the dollar rose ahead of crucial US inflation data during the week. Meanwhile, the yen weakened after Bank of Japan policy meeting minutes revealed uncertainty about the timing of the next rate hike.

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The US will release consumer inflation data on Wednesday and wholesale inflation data on Thursday. These reports will significantly shape the outlook for future Fed rate cuts. Economists expect the CPI to increase by 0.2%, holding steady from the previous month.

A bigger-than-expected increase would lower the likelihood of a Fed rate cut in December. On the other hand, if inflation aligns with expectations or is softer, the US central bank will likely cut rates again in December. Meanwhile, market participants will also watch the retail sales report on Friday for clues on consumer spending. 

Markets expect the Fed to cut rates again in December. However, since Trump won the presidential elections, bets for rate cuts in 2025 have dropped. Traders are pricing the likelihood that Trump’s policies will lead to an increase in inflation. Therefore, the Fed might be forced to cut rates at a slower pace or to pause and pivot.

Meanwhile, the yen eased on Monday after BoJ meeting minutes revealed that policymakers were unsure about the timing of the next rate hike. Nevertheless, the currency rose last week when Trump won, and top officials warned markets about sharp yen declines. A Trump presidency means that the greenback will likely rally. Therefore, the yen might suffer, prompting the Bank of Japan to hike rates. 

USD/JPY key events today

Market participants do not expect any high-impact reports today. Therefore, they will keep digesting the BoJ minutes.

USD/JPY technical forecast: Bulls struggle to breach the 153.75 resistance

On the technical side, the USD/JPY price is climbing and challenging the 153.75 resistance level. At the same time, on a larger scale, it is trading in a bullish channel with clear support and resistance lines. Bears recently pushed the price to around the channel support, where bulls took charge. 

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Currently, the price trades above the 30-SMA, with the RSI in bullish territory. Therefore, the solid bullish bias will likely lead to a break above 153.75. This will allow USD/JPY to reach the 155.00 critical psychological level.

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Created on November 11, 2024

• The Euro initially pulled back just a bit during the trading session on Friday.
• As we continue to see plenty of support underneath at the 1.07 level, I think we see so much in the way of support that it is going to be difficult to break down below here.
• But I also would point out the fact that the market is near the bottom of a larger consolidation range that I think this becomes more of a buy on the dip situation for short-term traders.

Longer-term traders probably need to see a little bit more convincing price action. So right now, we’ll have to see how this closes out, but it certainly looks like a market that is seeing a lot of support near the 1.07 level. And then again, probably at the 1.06 level, if we do in fact continue to fall. This would be a major area of support and trouble, and therefore we will have to pay close attention to it.

Interest Rates Continue to be a Major Factor

All things being equal, EUR/USD is a market that is moving based on interest rates in America going higher, despite the fact that the Fed continues to cut rates. This shows that the bond market is starting to get out of control a little bit. And perhaps that’s part of what’s going on. Remember, the US dollar is considered to be a safety currency, so that is something that you need to take into account anytime you trade this market.

Nonetheless, this is one that I think you favor short-term bounces and fading signs of exhaustion on the upside. I’m not aggressive in this market at all. And most of the time I just use it as an indicator as to how to trade the US dollar against almost everything else. As in general, if you get the US dollar right in the Forex world, you get most things right.

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Fundamental Analysis & Market Sentiment

I wrote on 3^rd November that the best trade opportunities for the week were likely to be:

• Long of Gold in USD terms following a daily close above $2,787. This did not set up.
• Long of the S&P 500 Index following a daily close above 5,878. This set up at Wednesday’s close, and the Index rose by a further 1.12% over the remainder of the week.

The weekly gain of 1.12% equals 0.56% per asset.

Last week’s key takeaways were:

1. US Presidential and Congressional Elections – President Trump won the election surprisingly strongly, winning the popular vote by 2.5% (not a landslide) and all the swing states. Republicans have also taken control of the Senate and look set to retain control of the House, meaning that all branches of government will effectively have Republican majorities. So, it seems as if America is in for some changes in policy, which may boost stock markets, cryptocurrencies, and to a lesser extent, the US Dollar.
2. US Federal Funds Rate and FOMC Statement – the Fed voted unanimously to cut rates by 0.25%, as was strongly expected and is now holding employment equal to inflation in its calculations. However, it can be said there were no real surprises here.
3. Bank of England Official Bank Rate, Votes, Monetary Policy Statement and Report – the Bank cut its interest rate by 0.25%, as expected. Governor Bailey took an optimistic tone about inflation continuing to decline slowly. The Pound declined slightly following the release, but it was nothing special.
4. Reserve Bank of Australia Cash Rate, Rate Statement, and Monetary Policy Statement – as expected, rates were left on hold, with the Bank dodging questions about the timing of future cuts, saying only that inflation remains too high. This seemed to have little influence on the value of the Aussie.
5. US ISM Services PMI – this was slightly higher than expected, suggesting stronger economic activity in the services sector.
6. US Unemployment Claims – this was as expected.
7. Canada Unemployment Rate – this was expected to tick higher, but it remained unchanged, suggesting a fractionally stronger labour market.
8. New Zealand Unemployment Rate – this fell by more than expected, from 5.0% to 4.8%, suggesting an unexpectedly strong labour market.

The Week Ahead: 11^th – 15^th November

The coming week’s schedule is shorter but includes two items that have the potential to make a very big impact: data from the USA on CPI (inflation) and PPI (purchasing power index), which will give big clues about the future timing of the Fed’s rate hikes.

1. US CPI (inflation)
2. US PPI
3. US Retail Sales
4. UK GDP
5. Australian Wage Price Index
6. New Zealand Inflation Expectations
7. UK Claimant Count Change (Unemployment Claims)
8. Australian Unemployment Rate

Monthly Forecast November 2024

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

Weekly Forecast 11^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 Japanese Yen was the strongest major currency, while the Euro was the weakest. However, the number was relatively low, so this is probably not a meaningful statistic.

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

Key Support/Resistance Levels for Popular Pairs

US Dollar Index

Last week, the US Dollar Index printed a bullish engulfing candlestick that successfully broke out beyond the resistance level at 104.15. This is a bullish sign, but it should be noted that the candlestick has a large upper wick, showing that the Dollar struggled to hold some of its earlier gains.

The price is above its level from three months ago but below its level from six months ago, suggesting a long-term mixed trend in the greenback, which indicates uncertainty.

It is also worth noting that despite the recent bullish momentum, the price is trading not far from the middle of a consolidating triangle chart pattern. This is suggestive of ultimately ranging behaviour.

This week’s outlook for the US Dollar remains unclear despite President Trump’s election and the near certainty that the Republicans will control both Houses of Congress, which should have strengthened the US Dollar. The Dollar has strengthened, but not as much as we expected. This may be a sign that the Dollar is not going to rise much more.

Be very careful in trading the US Dollar long this week. If the price can establish itself above the triangle pattern’s upper trend line and the horizontal level at 105.81, that would be a decisive bullish sign to respect.

EUR/USD

Last week, the US dollar strengthened due to the decisive Republican victory in the US general election. The Euro has been one of the weakest major currencies. These two factors gave us one of the strongest directional price movements in the Forex market last week in the EUR/USD currency pair. The weekly candlestick closed near its low, and the price reached its lowest level in over 4 months. 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.

So, it seems there are plenty of reasons to go short here, but I still see a few reasons to remain cautious:

1. The shorter-term moving averages are above the longer-term moving averages, suggesting that this could be more of a spike lower than a trend—or at least that this trend is not mature enough to be reliable.
2. Two bullish inflection points are close by, at $1.0666 and $1.0600. Short trades may be safer below $1.0600.

USD/JPY 151.29

I expected the USD/JPY currency pair to have potential support at ¥151.29.

The H1 price chart below shows how the price action rejected this support level with a large outside bar / engulfing candlestick, marked by the up arrow within the price chart below. This rejection occurred right at the start of the Tokyo session last Wednesday, which can often be a great time to find powerful reversals in the Japanese Yen.

This trade reached a floating profit approximately as large as the risk if the stop was placed just below the swing low, which was the low of the week.

I am not sure that this currency pair is respecting technical factors much right now. It seems to be pushed around by macro factors rather than its own parameters, so it is probably not a good currency pair for technical traders now. However, there is volatility left in it, so day traders could find catching swings here an interesting project.

Bitcoin

Bitcoin, even in US Dollar terms, gained strongly over the past week, getting 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.

Bitcoin traded over the weekend, and on Saturday and Sunday, it continued rising to new record highs. The screenshot below was taken on Sunday, and we can see there is hardly any upper wick on this candlestick, which is a very bullish sign, especially as the price is trading firmly within blue sky and the candlestick is relatively large.

There is every reason to be bullish on Bitcoin right now, and I am long of Bitcoin. However, I noticed that Bitcoin ETFs do not seem to be getting the full gain made by the underlying, not in some way, so if you can afford it, you might want to buy Bitcoin futures instead of a Bitcoin ETF or even spot Bitcoin itself if you can. There are Bitcoin micro futures available on the CME, which are only sized at 10% of the value of one Bitcoin.

NASDAQ 100 Index

US stock markets have been in bullish territory for quite a while, but the NASDAQ 100 Index has been mostly consolidating for a few months after making a record high early in the year on the back of strong gains. In recent years, it has been excellent for many major tech stocks that are members of this index.

The bullish breakout led to new record highs after the Republican clean sweep in the US general election. In 2016, when President Trump was first elected, the rally in the broader stock market triggered by his election was bigger than the rally seen in the tech sector. However, that may be different now as Trump is seen as having become friendlier to the tech sector—this might also be connected to the fact that Elon Musk is going to play a role in the new administration.

There is almost no upper wick on the weekly candlestick here, and the candlestick is of a relatively large size, so there seems to be every reason to be long of this Index.

I see the NASDAQ 100 Index as a buy.

S&P 500 Index

I wrote last week that this major, broad US stock market Index would likely make a bullish breakout to new record high prices if Trump won the US Presidential election. This was a good, accurate call.

The election of a new President has historically triggered quite large rallies in the US stock market. President Trump is famously pro-business, and Republicans look extremely likely to have captured both Houses of Congress, so we may be in for a renewed rally in this Index. Undoubtedly, the election results pushed the price strongly into blue sky.

Interestingly, the NASDAQ 100 Index rose slightly more than the broader S&P 500 Index. This suggests that a big rally might be more skewed towards tech stocks, but it is also true the NASDAQ 100 is just more volatile, so this differential might not be very significant.

There is almost no upper wick on the weekly candlestick here, and the candlestick is of a relatively large size, so there seems to be every reason to be long of this Index.

I see the S&P 500 Index as a buy.

Bottom Line

I see the best trading opportunities this week as

• Long of Bitcoin in USD terms.
• Long of the S&P 500 Index.
• Long of the NASDAQ 100 Index.

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