• The Bank of Japan kept rates unchanged on Thursday.

• Japan’s ruling party lost its majority seats.

• The US dollar paused its rally before the nonfarm payrolls report.

The USD/JPY outlook has turned slightly bearish due to an absence of dovish remarks at the Bank of Japan policy meeting. At the same time, the greenback lost ground after mixed data in the previous session. Market focus has shifted to the looming NFP report and the US presidential election. 

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The Bank of Japan kept rates unchanged on Thursday as expected. However, market participants looked forward to more dovish remarks after Japan’s recent election. Japan’s ruling party lost its majority seats, creating uncertainty about the political landscape. Therefore, traders were pricing a more cautious tone and messaging about a delay in rate hikes. However, there was no such message, allowing the yen to strengthen. 

Meanwhile, the US dollar paused its rally before the nonfarm payrolls report and the US election. Recent reports have shown a mixed picture of the economy, leaving Fed rate cut bets mostly unchanged. On Wednesday, data showed a better-than-expected increase in private employment. Private employers created an additional 233,000 jobs in October, well above forecasts of 110,000. A different report revealed that the economy expanded by 2.8% in the third quarter, below estimates of 3.0%. 

Nevertheless, the labor sector has remained resilient. Therefore, there is less pressure on the Fed to lower borrowing costs. All eyes are now on the PCE price index and the nonfarm payrolls report. Economists expect slower job growth in October. 

At the same time, traders are cautious ahead of the US presidential election, which might affect fiscal and monetary policy.

USD/JPY key events today

• US core PCE price index m/m
• US Employment Cost Index q/q
• US unemployment claims

USD/JPY technical outlook: Bears win battle for control at the 30-SMA

On the technical side, the USD/JPY price has broken below the 30-SMA and the 153.00 support level, indicating a bearish sentiment shift. At the same time, the RSI has fallen below 50, suggesting solid bearish momentum. 

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The shift comes after the RSI made a bearish divergence, signaling fading bullish momentum. Still, bears must make lower highs and lows to confirm a new downtrend. If this happens, the price will revisit support levels, including 150.00 and 148.00.

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Created on October 31, 2024

• The British Pound fluctuated throughout Wednesday’s trading session, with the 1.30 level acting as a significant psychological barrier that has previously proven important.
• Options traders are paying close attention to this key area. 
• Furthermore, the 50-day EMA sits just above and of course offers a significant amount of resistance.
• If we can break above the 50-day EMA, then I think at that point in time it becomes a very bullish sign.

I think this opens up the possibility of a move to the 1.34 level, but between now and then, I think it is a scenario where we are waiting on the jobs number. The jobs number comes out on Friday, and that of course is something worth watching out for. The 1.29 level underneath is a major support level, which is also backed up by the 200 day EMA that offers a significant amount of support.

Noisy Between Now and Non-Farm Payroll Numbers on Friday

This is a market that I think continues to see a lot of choppiness and between now and that jobs number, I think we do just simply grind and kill time. All things being equal though, this pullback has offered a bit of value. I think this value is something that people might take advantage of because the British pound has held up better against the U S dollar than some of the other currencies.

I’m thinking of like the Canadian dollar, the New Zealand dollar, et cetera. So, with all this being said, I do think that we’re at a major point of inflection and the next couple of days could tell us what’s going to happen next. Watch that 50 day EMA, it could be rather crucial.

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• EUR/USD stays in a consolidation phase near 1.0850 after posting gains on Wednesday.
• The 200-day SMA aligns as key technical resistance at 1.0870.
• Markets await inflation data from the Euro area and the US.

EUR/USD fluctuates in a tight channel at around 1.0850 after closing the third consecutive day in positive territory on Wednesday. The near-term technical outlook suggests that the bullish bias remains intact but buyers could hesitate to bet on an extended uptrend unless the pair manages to clear the key technical hurdle at 1.0870.

The Euro gathered strength against its rivals on Wednesday after the data from Germany showed that the Gross Domestic Product (GDP) expanded by 0.2% on a quarterly basis in the third quarter, coming in better than the market expectation for a 0.1% contraction. Additionally, annual inflation in Germany, as measured by the Consumer price Index (CPI) rose to 2% in October’s flash estimate from 1.6% in September, further boosting the Euro.

On the other hand, mixed macroeconomic data releases from the US made it difficult for the US Dollar (USD) to stay resilient against its rivals. The ADP Employment Change arrived at 233,000 for October to beat analysts’ estimate by a wide margin, while the first estimate of the annualized GDP growth for the third quarter came in at 2.8% and fell short of the market consensus of 3%.

Later in the day, the Harmonized Index of Consumer Prices (HICP) data from the Eurozone and the Personal Consumption Expenditures (PCE) Price Index figures from the US will be featured in the economic calendar. Investors are likely to ignore these readings. The US GDP report showed on Wednesday that the PCE Price Index rose 1.5% in Q3, down from 2.5% in Q2. Hence, the monthly PCE inflation reading for September is unlikely to trigger a reaction.

Toward the end of the European session, month-end flows could ramp up market volatility and cause major pairs to move irregularly.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60, suggesting that the bullish bias remains intact. On the upside, the 200-day Simple Moving Average (SMA) aligns as a key resistance level at 1.0870. Once the pair flips that level into support, 1.0900 (round level) could act as interim resistance before 1.0940 (100-day SMA).

On the downside, first support could be seen at 1.0800 (round level) before 1.0750 (static level) and 1.0700 (round level, static level).

• GBP/USD bounces off ascending channel support, clears 1.3000, and reaches a high of 1.3039 after the UK’s autumn budget release.
• Buyers must clear October 18 peak at 1.3070 to test 1.3100 and the 50-day SMA at 1.3138.
• Key support lies at the October 29 close of 1.3014 and the 100-day SMA at 1.2974, followed by the October low of 1.2936.

The Pound Sterling erased some of its earlier losses, climbing above its opening price against the US Dollar, after the UK Chancellor Rachel Reeves revealed its autumn budget. The GBP/USD trades above 1.3000, virtually unchanged.

According to the Financial Times, the Autumn budget was well received by the markets. Gilt yields are falling, and Cable aimed higher after the new labor Government announced its first budget in 14 years.

GBP/USD Price Forecast: Technical outlook

The GBP/USD bounced at the bottom of an ascending channel trendline, extending its gains after Chancellor Reeves, ended her speech. Initially, the pair cleared 1.2970, and pushed higher, clearing the 1.3000 figure hitting a high of 1.3039.

From a technical standpoint, the GPB/USD is not out of the woods, as sellers continued to cap the pair’s advance. Buyers must clear October 18 peak at 1.3070, so they could remain hopeful of testing 1.3100. Once those key resistance levels are taken out, the 50-day Simple Moving Average (SMA) would be up next at 1.3138.

Otherwise, if sellers push the exchange rate below the October 29 daily close of 1.3014, it would expose the 1.3000 psychological level as the next support. A breach of the latter will expose the 100-day SMA at 1.2974, before the GBP/USD tumbles towards October 300 low of 1.2936.

GBP/USD Price Chart – Daily

• Since the start of this week, the EUR/USD exchange rate has been trading in a neutral range with a slight bearish tendency, stabilizing around and below the support level at 1.0800.
• This pattern may continue until there is a reaction to the upcoming U.S.
• employment numbers and the Federal Reserve’s preferred inflation reading. The U.S. dollar remains the strongest among major currencies, supported by safe-haven demand and tempered expectations of further interest rate cuts.

On the European side, Germany’s economy, which is the heart of Europe, is showing troubling signs of slowdown. Once renowned for its resilience, Germany’s economy is now the slowest growing among the G7 and Eurozone countries. The recent IMF forecasts project a contraction of 0.2% in 2024 and only a 0.8% growth rate in 2025 — a far cry from the robust expansion once associated with Europe’s industrial leader.

The budget gap exceeding 40 billion euros, combined with an expected tax revenue shortfall of 60 billion euros over the next five years, paints a picture of an economy in stagnation. With both small and large German companies tightening their belts, some are questioning if Germany is on the brink of a “lost decade.”

The Costs of Germany’s Dependence on Exports

For decades, Germany’s success relied on its ability to export high-quality goods worldwide, especially to markets like China. Exports account for nearly half of Germany’s GDP, significantly higher than other major economies, making it vulnerable when demand falls. Today, German exports to China are struggling, particularly in the automotive and machinery sectors. Companies like Diegoma, a producer of industrial machinery, face order delays due to economic uncertainty and fluctuating demand. This export slowdown has highlighted the risks of an economy heavily dependent on external markets. With China increasingly shifting to local suppliers and global trade slowing, Germany’s heavy reliance on exports could pose long-term growth challenges. The German government has already lowered its tax revenue projections, signalling the widespread impact of these economic pressures.

Political Divisions Hinder Economic Action

Germany’s economic challenges are compounded by political gridlock, as Chancellor Olaf Scholz’s coalition government struggles to agree on key policies. This coalition, an unusual alliance of Social Democrats, Greens, and Liberals, often clashes on issues such as climate regulations, industrial policy, and economic reform, leaving business leaders frustrated by delays and indecision. This discord has had a tangible impact on the economy.

A recent survey found that nearly 37% of German companies are now considering cutting production or moving operations abroad, up from 31% a year earlier. The Greens’ strong stance on climate policy has created tensions within the coalition, drawing criticism from businesses and local leaders alike. This political impasse, along with aging infrastructure, is increasingly seen as an obstacle to the structural reforms Germany needs to stay competitive.

Germany’s auto industry on the brink

As one of the country’s biggest contributors to GDP, Germany’s auto sector is struggling with rising costs, falling demand for electric vehicles, and fierce competition from Chinese manufacturers offering more affordable electric cars. Volkswagen recently announced the closure of its first German plant, a historic move that reflects the broader slowdown in the auto industry. Companies such as BMW and Mercedes-Benz have cut their profit forecasts, citing weak demand, particularly in China — a market that once accounted for a large share of their sales.

The ripple effects are being felt across the industry, affecting many of the suppliers and small businesses that support Germany’s automakers. Overall, the shift has left some automakers scrambling to adapt. Volkswagen, for example, has committed to cost-cutting measures, including layoffs and potential production cuts, to stay competitive. But with job losses mounting and supply chains weakening, the industrial slowdown is starting to show in Germany’s employment statistics.

Can Germany regain its economic resilience?

The outlook for Germany has become a focal point for mixed views, with recent reports offering both optimism and caution. A recent Bloomberg report suggests that Germany’s economic slowdown “may be over,” with business confidence improving slightly. The Ifo Expectations Index, which rose in October, points to a possible stabilization with sectors such as tourism and information technology showing growth.

For the services sector, which has seen gains amid manufacturing struggles, the latest data offers a glimmer of hope. However, most economists remain unconvinced, arguing that such optimism may be premature. Germany’s industrial base remains in a precarious position. Despite some positive readings, broader economic data is revealing issues

Palladium has been the best-performing asset class among all precious metals last week. The price rise was driven by the US call for G7 countries to impose sanctions on Russian palladium supplies. Russia supplies about 40% of the world’s palladium. Earlier this month, the price of palladium broke above its 50-day moving average and then its 200-day moving average within days of each other. In October, approaching these levels provided support for buyers, and given palladium’s lower liquidity compared to gold and even silver, strong price movements cannot be ruled out. From current levels near $1,170, the next and easy target for the upside is $1,200, which was the peak at the end of last year. The 200-day moving average is at $1,700 per ounce and breaking that could push prices to higher levels. This could also mean a repeat of the explosive rise from late 2018 to March 2020.

At the time of writing, palladium futures on the New York Mercantile Exchange were around $1,200 per ounce, up 9% since the beginning of last week. Deep-rooted deficits continue to hamper growth. With a projected five-year tax revenue shortfall of €60 billion and a budget gap of over €40 billion, Germany’s fiscal outlook points to economic stagnation rather than recovery.

EUR/USD Technical analysis and forecast:

The general trend for the EUR/USD currency pair price remains bearish and stability around and below the 1.0800 support level will continue to encourage bears to control the trend and the continuation of the US dollar’s ​​gains from stronger US jobs numbers this week, along with the demand for buying it as a safe haven, which encourages bears to move the currency pair towards stronger bearish levels.

the closest of which are currently 1.0755 and 1.0600, which are sufficient to push all technical indicators towards strong oversold levels. On the other hand, according to the performance on the daily chart, breaching the downtrend requires moving above the psychological resistance of 1.1000 at least.

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Created on October 30, 2024

• At the time of writing, the GBP/USD pair was trading at $1.3010, almost unchanged from Monday’s opening levels.
• According to the trades, the British pound (GBP) struggled to attract investors at the start of trading in the week after the release of some disappointing domestic data.
• According to the results of the economic calendar, the latest UK distribution trading survey came in below market expectations, with the index falling from 4 to -6 this month, contrary to expectations of a rise to 10.
• Also, this has weighed on the pound’s exchange rate in the wake of the release as investors hesitated to support the pound.

Furthermore, as for the US dollar (USD) it was subdued ahead of the high-impact data. The US dollar (USD) remained steady against most of its major counterparts as the data-free US calendar saw the “dollar” struggle to find a clear path. However, USD investors are also likely to be reluctant to place any overly aggressive bets on the greenback ahead of several key data releases due this week.

With a slew of economic data expected later in the week, the USD has remained mostly subdued. Looking ahead, the primary catalyst for GBP/USD movement is likely to be the release of the latest US JOLT job openings. Although the data is expected to show a slight decline in job creation last month, the index is expected to remain close to the strong levels seen in August, which could support the USD further. The latest CB Consumer Confidence Index could also provide some additional support to the USD if the index comes in as expected and confirms another uptick in US sentiment.

Turning to the GBP, there will be no UK data on Tuesday, which could leave the pound lower ahead of Wednesday’s Autumn Budget.

According to stock trading platforms, UK stocks rise on strong earnings. The FTSE 100 index of UK shares rose above the flat line at 8,295, extending gains from the previous session as markets assessed the results of London-traded giants. HSBC rose 2.5% to lead the day’s leaders after beating third-quarter earnings estimates amid a group restructuring, as well as announcing a $3 billion share buyback. Also, the results from the UK’s largest bank highlighted the benefit of increased monetary stimulus in China, sending Standard Chartered and Prudential up more than 1% due to their large exposure to Asia. In addition, Pearson shares jumped about 2% on stronger sales in the period. BP shares fell after reporting mixed results for the quarter, in line with other major energy companies around the world as falling energy demand has squeezed refining margins.

According to Forex trading, the dollar hovers near three-month highs. The US Dollar Index (DXY) was little changed around 104.3 on Tuesday, hovering near a three-month high, as traders continue to bet that the Federal Reserve will cut US interest rates but not as aggressively as initially expected, while key economic data is digested. The shock report showed that the number of job openings was the smallest since January 2021 and layoffs rose, while consumer confidence in the Fed rose by the most since March 2021. Advance GDP growth estimates, personal consumption expenditures and employment reports are also due this week.

Overall, the odds of a 25 basis point Fed funds rate cut next week are currently around 95%. Meanwhile, bets on a Donald Trump victory were also weighing on the dollar as his policies on tariffs, taxes and immigration are seen as inflationary. Overall, the US dollar was mostly higher against the Australian dollar and the euro.

Technical forecasts for the GPB/USD pair today:

According to the performance on the daily chart, the stability of the GBP/USD pair price around and below the psychological level of 1.30 is still a catalyst for bears to control. Technically, the downtrend will strengthen by moving towards the support levels of 1.2920, 1.2880 and 1.2790.

At these levels, all technical indicators will move towards strong oversold levels. On the other hand, and in the same time frame, moving above the resistance of 1.3150 will represent a breach of the current downtrend. Strongly, the pound will be affected today by the announcement of the details of the British budget and the US dollar awaits the announcement of the US jobs numbers and the US inflation reading.

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Created on October 30, 2024

• The USD/JPY exchange rate rose for the fifth consecutive week ahead of several important economic data releases from the United States and the upcoming interest rate decision from the Bank of Japan.
• According to the trading, it rose to the resistance level of 153.85, its highest level since July, and is about 10% higher than its low in September.

Upcoming U.S. Economic Data

The USD/JPY pair will interact with several important economic data releases from the United States, which will provide more information about the upcoming actions by the Federal Reserve. The first data will be released on Tuesday when the Conference Bureau publishes its latest consumer confidence report. Analysts expect the data to show confidence rising to 99 in October as inflation declines and the Labor market improves. US consumer confidence is one of the most important economic figures because of its implications for the economy. Highly confident consumers spend more money, which boosts the economy, which is notable because consumer spending is the largest part of the US GDP.

Other important data will be released on Wednesday when ADP releases its October payrolls data. Analysts expect the figure to come in at 101,000, a significant drop from the 143,000 jobs it posted last year. After that, the US will release its first estimate of third-quarter gross domestic product. Economists expect the figure to show the economy expanded by 3% last quarter, meaning it is doing relatively well.

The most important data will be the US nonfarm payrolls data for October, due on Friday. Economists polled by Reuters expect the data to show the US economy added 111,000 jobs this month, a significant drop from the 254,000 jobs it added in September. The country’s unemployment rate is expected to come in at 4.1%, while average hourly earnings are expected to rise by 4.0%. The figures will be important because of their impact on the Federal Reserve, which is considering what to do at its Nov. 7 meeting. Analysts expect the bank to leave interest rates unchanged or cut them by 25 basis points.

Crude Oil Price Decline

The USD/JPY pair also rose as crude oil prices dropped by over 4.5% on Monday. Brent, the global benchmark, fell by 4.35%, while West Texas Intermediate (WTI) declined by 4.36%. The decline followed Israel’s response, which focused on Iran’s missile manufacturing facilities and avoided major attacks on its oil infrastructure and nuclear sites. Iran, in turn, signalled that it would not respond aggressively due to its already struggling economy. Analysts believe that with these tensions easing, oil supplies are unlikely to face significant disruptions.

Upcoming U.S. Election

Another major event for USD/JPY is the upcoming U.S. election next week. Recent polling data shows Donald Trump holding an advantage over Kamala Harris. For instance, his lead on Polymarket has expanded in recent months. A Trump victory is expected to be favourable for the U.S. dollar due to his focus on tariffs. Higher tariffs could lead to heightened geopolitical tensions and rising inflation in the U.S.

Bank of Japan Interest Rate Decision

According to the economic calendar, the other big news for USD/JPY currency pair will be the Bank of Japan’s interest rate decision on Thursday. Furthermore, analysts expect the bank to leave rates unchanged at 0.25%. The bank’s governor, Kazuo Ueda, also hinted at this during a meeting in Washington last week. The BoJ will then deliver its economic outlook report and a press conference where it will offer hints on what to expect later this year. The latest data showed that core inflation in Tokyo moved below the BoJ’s 2.0% target. As such, there are signs that the unwinding of the yen trade will not continue.

USD/JPY Technical analysis and Expectations Today:

The daily chart shows that the USD/JPY exchange rate has been doing well in the past few months. It has risen from a low of 140 in September to around 154, its highest level since July 30. The pair has moved above the 50-day and 100-day exponential moving averages (EMA), which are about to witness a bullish crossover.

Oscillators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are all pointing up. Therefore, the path of least resistance will be at 154.52, the low recorded on June 4. A move above this level will indicate further gains.

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• US job vacancies fell to 7.44 million, missing estimates of 7.98 million.

• US  consumer confidence jumped to 108.7, well above forecasts of 99.5.

• The upcoming US presidential election is causing uncertainty.

The EUR/USD forecast shows a return of bullish momentum after a long decline. The greenback eased after employment figures in the previous session revealed unexpected weakness. At the same time, the uncertainty surrounding the US election has sent traders to the safe-haven gold.

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The US released mixed economic reports on Tuesday on consumer sentiment and employment. However, market participants focused on the employment figures since the Fed closely monitors the labor sector. 

The JOLTs job openings report revealed that vacancies fell to 7.44 million, missing estimates of 7.98 million. The decline showed that there were fewer open positions for the unemployed, indicating weaker demand for labor. The soft figures solidified bets for a November Fed rate cut. 

Meanwhile, consumer confidence jumped to 108.7, well above forecasts of 99.5. However, this was not enough to significantly shift the outlook for rate cuts. 

Traders are on edge ahead of GDP and monthly employment figures that will show the state of the US economy. The nonfarm payrolls report will likely reveal an addition of 111,000 jobs in October, well below September’s job growth. A miss would raise fears of a weak labor sector, boosting Fed rate cut expectations. On the other hand, continued resilience might lower the chances of two rate cuts before the year ends. 

At the same time, the upcoming US presidential election is causing uncertainty, sending traders to the sidelines. The race between Trump and Kamala is tight, meaning there is no certainty over the possible outcome. Consequently, market volatility will likely increase before, during, and after the voting.

EUR/USD key events today

• German preliminary CPI m/m
• US ADP nonfarm employment change
• US advance GDP q/q

EUR/USD technical forecast: Bullish RSI divergence

On the technical side, the EUR/USD price has made a new high above the 30-SMA, supporting a bullish bias. At the same time, the price trades above the SMA, and the RSI is in bullish territory above 50. 

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The downtrend recently paused after the RSI made a bullish divergence. The weakness in the downtrend allowed bulls to take charge by breaking above the SMA. However, to solidify the new bias, the price must stay above the SMA and reach higher resistance levels like 1.0900.

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Created on October 30, 2024

• The Euro initially pulled back just a bit during the trading session on Tuesday, only to turn around and show signs of life.
• By doing so, the market is likely to continue to see a lot of noisy behavior.
• I think ultimately this is a situation where the 164 Yen level underneath will continue to be a significant area of interest as it was previous resistance and now should offer support based on market memory.

Keep in mind that the Bank of Japan has an interest rate decision on Thursday, and this of course will have a major influence on what happens next, but the Bank of Japan has already admitted that it can’t do much as far as tightening monetary policy. So, I think you will continue to see the carry trade come back to life.

Carry Trade Continues to Drive this Pair Despite Euro Weakness

While the euro is not necessarily my favorite currency, it’s not as bad as the Japanese yen. And it’s worth noting that you are speaking of relative strength, not strength. Those are two different things. The market could rally to the 168 yen level above where I see a massive amount of market memory just waiting to cause issues. Right now that’s my target. With all of the noise between here and there on the charts and of course the Bank of Japan interest rate decision, I do think it’s going to be a very messy move to that level, but I do think it happens given enough time.

For what it is worth, the 50-day EMA is starting to curl higher, and it looks like it wants to cross above the 200-day EMA, kicking off the so-called Golden Cross. While I’m not a huge advocate of this signal, it is something worth noting for longer-term traders. I’m not a big fan of it, but that being said I know that a lot of the longer-term “buy-and-hold traders” will pay attention to it.

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• GBP/USD holds above 1.3000 in the European session on Wednesday.
• The UK government will announce the Autumn Budget.
• The US economic calendar will feature ADP Employment Change and Q3 GDP data.

Following Monday’s choppy action, GBP/USD gained traction and closed in positive territory on Tuesday. The pair stays in a consolidation phase above 1.3000 in the European session on Wednesday as market focus shifts to key macroeconomic data releases from the US and the UK budget announcement.

UK Chancellor Rachel Reeves will unveil the Autumn Budget later in the day, which is expected to include tax rises and spending cuts. 

Previewing the potential market reaction to the UK budget announcement, “Chancellor Reeves is expected to loosen fiscal policy somewhat and if she manages to pull that off and maintain credibility with investors, the GBP might benefit,” Scotiabank’s Chief FX Strategist Shaun Osborne said in a recently published report.

Meanwhile, the US economic calendar will offer the ADP Employment Change for October and the US Bureau of Economic Analysis’ first estimate of the third-quarter Gross Domestic Product (GDP) growth.

Investors see the employment in private sector rising by 115,000 following the 143,000 increase recorded in September. Additionally, the US’ GDP is forecast to expand at an annual rate of 3% in the third-quarter.

The USD could stay resilient against its rivals if these data arrive near or above market expectations and make it difficult for GBP/USD to push higher. On the other hand, mixed or disappointing data releases from the US could help the pair hold its ground. Nevertheless, it could be risky to bet on a direction in between the US data releases and the UK budget announcement.

GBP/USD Technical Analysis

GBP/USD rose above the descending trend line and the pair closed above the 100-day Simple Moving Average (SMA) on Tuesday. Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart rose slightly above 60, highlighting a buildup of bullish momentum.

On the upside, 1.3030 (20-day SMA) aligns as immediate resistance before 1.3100 (round level) and 1.3140 (50-day SMA). In case the pair falls below 1.3000 (round level, static level) and starts using this level as resistance, 1.2970 (100-day SMA) could be seen as next support ahead of 1.2900 (static level).