Fundamental Analysis & Market Sentiment

I wrote on 1^st December that the best trade opportunities for the week were likely to be:

• Long of Bitcoin in USD terms following a daily (New York) close above $100,000. This set up at the end of the week, so there is no result.
• Short of the EUR/USD currency pair following a strong bearish reversal below $1.0620. This set up at the end of the week, so there is no result.
• Long of the S&P 500 Index. This resulted in a profit of 0.83%.

The weekly gain of 0.83% equals 0.28% per asset.

Last week’s key takeaways were:

1. US Average Hourly Earnings –higher than expected, showing a month-on-month increase of 0.4% compared to the forecasted 0.3%, showing the US economy is still going strong, giving a fundamental boost to the US Dollar.
2. US Non-Farm Employment Change – a little higher than expected (see above).
3. US Unemployment Rate – a fraction higher than expected at 4.2%.
4. US JOLTS Job Openings – considerably higher than expected, at 7.74 million compared to the forecasted 7.51 million, reinforcing the point made in 1.
5. US ISM Services PMI –worse than expected.
6. US ISM Manufacturing PMI –better than expected.
7. Swiss CPI (inflation) – a month-on-month deflation by 0.1%, as expected.
8. Australian GDP – this was very disappointing, with a quarterly increase of only 0.3% when 0.5% was widely expected, giving a tailwind to the Aussie’s decline over the week.
9. US Unemployment Claims – very slightly higher than expected.
10. Canadian Unemployment Rate – this rose much more strongly than expected, from 6.5% to 6.8%, when only 6.6% was expected, suggesting the Canadian economy is experiencing a chilly wind.

What has been the most interesting to the market over the past week was the strong US data, continuing the theme of American economic growth and other economic metrics making the USA the envy of the world right now. We saw also the Australian Dollar get hit and this is due to a faltering Australian economy that makes further rate cuts likelier over the near term. 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, with the broad US S&P 500 Index, the NASDAQ 100 Index, and the German DAX all reaching record highs.

The Week Ahead: 9^th – 13^th December

The coming week’s schedule is packed with key US economic data, and four central bank policy meetings, with three of them expected to produce rate cuts. This means it will likely be an important week, and we will probably see a strong increase in price movements in the Forex and stock markets.

1. US CPI (inflation) – the annualized rate is expected to rise from 2.6% to 2.7%. Any surprises could cause volatility in the US Dollar and US stock markets.
2. US PPI
3. European Central Bank Main Refinancing Rate & Monetary Policy Statement – a rate cut of 0.25% is expected.
4. Reserve Bank of Australia Cash Rate & Rate Statement – the Bank is expected to hold the Cash Rate steady at 4.35%, but there is an increased chance of a surprise rate cut.
5. Bank of Canada Overnight Rate & Rate Statement – a rate cut of 0.50% is expected.
6. Swiss National Bank Policy Rate & Monetary Policy Assessment – a rate cut of 0.25% is expected.
7. UK GDP
8. US Unemployment Claims
9. Australian Unemployment Rate

Monthly Forecast December 2024

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

Weekly Forecast 8^th December 2024

Last week, I forecasted that the AUD/JPY and CAD/JPY currency pairs would rise in value, as they fell by such unusually large amounts the previous week. Unfortunately, both currency crosses fell over the week, the AUD/JPY by 1.74% and the CAD/JPY by 0.94%.

The US Dollar was the strongest major currency, while the Australian Dollar was the weakest. Volatility fell last week, with less than half of the most important Forex currency pairs and crosses changing 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 bearish doji candlestick that continued the reversal of the recent breakout to back underneath 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. These are bearish signs, but it should be noted that 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.

I have plenty of fundamental reasons to be bullish on the US Dollar. However, the upside over the coming week might be limited, so long-term trades long of the USD might be more successful than short-term trades.

We will be getting highly important US CPI (inflation) and PPI (purchasing power index) data on the US economy this week, so technical factors might not be very important, with price action over the second half of this week likely to be more data-driven.

Bitcoin

Bitcoin finally broke above the psychologically important $100,000 level last week, reaching a new record high above that, and even made a daily close above this level. However, there are signs that the momentum has stalled or slowed, and the price does not really seem to be respecting $100,000 anymore, as the price is chopping above and beyond it.

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

As we got a daily close above $100,000 on Friday, I am comfortable being long. I am not confident we are going to immediately see a further strong rise, but there is no reason to be bearish. The weekly price action still looks bullish.

EUR/USD

Last week, the EUR/USD currency pair printed a doji candlestick, with the candlestick having a higher high and higher low than the previous week’s candlestick. These are potentially bullish signs. However, the price is still 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.

Although there are reasons to be short here, I am a bit concerned about the strength of the bullish inflection from the recent multi-year low. On the other hand, this currency pair tends to make deep retracements within even its strongest trends.

Friday saw the price strongly reject the resistance level at $1.0610 although it is also possible this was simply a reaction to the strong average hourly earnings and non-farm payrolls data which was released in the USA that day.

I am not very optimistic about this trade but based on historical precedents in technical analysis and trend, it makes sense to be short of this currency pair.

A rate cut by the ECB is expected this week, so if there is any surprise there, we might see a move in the Euro which could push the price around here. The same holds for US CPI (inflation) data which is also coming this week.

NASDAQ 100 Index

Last week saw the NASDAQ 100 Index print a powerful bullish candlestick reach and close at a new record high for the first time in three weeks, and the price closed very near the top of its range, which is a bullish sign. There is nothing more bullish than the fact that the price is trading bullishly in blue sky.

The price is nicely contained within a linear regression analysis channel, which can be seen in the price below, giving added reliability to the continuation of this trend.

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

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

I see the NASDAQ 100 Index as a buy.

S&P 500 Index

Last week saw the S&P 500 Index rise again to reach a new record high, and it closed the week quite near the high, which is a bullish sign. There is no sign more bullish than the fact that the price is trading bullishly in blue sky.

Everything I wrote above about the NASDAQ 100 applies to the S&P 500 Index too, the only difference is that while the NASDAQ 100 was dipping previously, the S&P 500 was still rising. Both indices have performed almost exactly the same over 2024 in terms of percentage gain.

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

DAX Index

Last week saw the DAX Index rise unusually strongly to reach a new record high, and it closed the week right on its high, which is a bullish sign. There is no sign more bullish than the fact that the price is trading bullishly in blue sky.

Recent weeks have been dominated by the USA having a successful economy and soaring stock market compared to the rest of the world, with the German DAX one of the very few other major equity indices that is also breaking to new all-time highs. This is seen as a bit of a mystery as the German economy is not doing especially well, with most analysts seeing it as due to the strength of the German industries which the index represents (technology, financials, industrials) rather than Germany as a whole.

It is worth noting that the DAX performed almost as well as the major US equity indices over 2024. The DAX is up by 19% while the major US indices are up by 26%.

After a bullish candlestick with such strength, I see the DAX Index as a buy.

Bottom Line

I see the best trading opportunities this week as

• Long Bitcoin in USD terms.
• Short of the EUR/USD currency pair.
• Long of the NASDAQ 100 Index.
• Long of the S&P 500 Index.
• Long of the DAX Index.

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EUR/USD rises despite French government collapse

• PM Barnier loses a vote of no-confidence, as expected
• Eurozone retail sales fall -0.5% MoM
• EUR/USD trades caught between 1.0450 and 1.06

EUR/USD is rising despite the collapse of the French government. French lawmakers passed a no-confidence vote against PM Michel Barnier on Wednesday evening, throwing the country into more political uncertainty and a deeper crisis.

However, both the euro and the French CAC managed to move higher because the collapse of the French government was already priced in. Furthermore, contagion outside of French markets is fairly limited. The risk premium on holding French debt over German debt has risen to its highest level since 2012.

On the data front, eurozone retail sales were weaker than expected, falling -0.5% MoM in October after falling -0.3% in September. The data comes after weak PMI data yesterday showed the eurozone composite PMI fell to a 10-month low.

The ECB is expected to cut interest rates by 25 basis points next week, and the markets are also pricing in around 157 basis points worth of easing by the end of next year, significantly more than the level of easing expected from the Federal Reserve.

The US dollar is trading slightly lower versus its major peers after Federal Reserve chair Jerome Powell’s speech yesterday, where he continued support for a slower pace of rate reductions ahead but did nothing to deter from expectations of a December cut.

Attention now turns to US initial jobless claims and comments from fed Barkin.

EUR/USD forecast- technical analysis

After recovering from a low of 1.0330 EUR/USD is consolidating between 1.06 and 1.0450. To extend the bearish trend that has been in place since the end of September, sellers will look to break below 1.0450 to test 1.04 and 1.0330.

Meanwhile, a rise above 1.06 creates a higher high and support the pair towards 1.07

USD/JPY falls with BoJ rate hike bets in focus & ahead of jobless claims data

• BoJ chatter & safe haven flows support the yen
• US eases after post-Powell gains; jobless claims are up next
• USD/JPY falls towards 150.00

USD/JPY resumed its downtrend after rising in the previous session. It is strengthening as traders assess whether the BoJ will hike interest rates again later this month. Known dove policy maker Nakamura said he wasn’t opposed to rate hikes, which has helped to strengthen the currency.

BoJ will announce its rate decision on December 19th, and expectations of a hike have been growing following recent comments from Ueda. However, media reports have raised questions over whether the hike will actually happen.

The yen is also benefiting from concerns surrounding South Korea, where the won continues to trade around a 2 year low following a short-lived martial law decree.

The U.S. dollar gained yesterday, but it’s inching lower against its major peers today after Federal Reserve Jerome Powell highlighted the strength of the U.S. economy and signaled support for slower rate reductions. However, a December rate cut is still expected, with the market pricing in a 74% chance of a 25 basis point reduction.

Attention is now on US jobless claims, which come ahead of Friday’s non-farm payroll report. Expectations are for 215k jobs added, up from 213k. Non-farm payrolls are expected to show 200,000 jobs were added in November up from just 12,000 in October.

USD/JPY forecast – technical analysis

After falling from a peak of 156.75, USD/JPY fell below the 200 SMA before finding support at the 100 SMA at 148.65. The recovery failed to rise above 150.8, the 0.5% Fib retracement of the 162 high and 139 low.

Sellers supported by the RSI below 50 will look to extend the bearish trend below 148.65 towards 148.15 the 38.2% level and towards 145.00.

Should buyers retake 150.80 a move towards 153.85 and 157.10 could be on the cards.

All week, traders were waiting for the release of the November jobs report to see whether it will confirm market pricing of a 25 basis point rate cut in December. In short, it may well have. Although wages remained strong and the headline nonfarm payrolls data beat expectations, it was the reports other metrics that caused the dollar to wobble. Traders saw rising unemployment rate, falling participation rate and the weak household survey – with the latter showing a big drop – as reasons to sell the USD/JPY. But with the EUR/USD dropping as well, it wasn’t just a clean dollar reaction you would have expected. The USD/JPY forecast is subject to change greatly in the coming weeks with US CPI due next week followed by FOMC and BoJ decisions the following week.

NFP fails to impress

The non-farm payrolls data was stronger and there were positive revisions to prior two months data, increasing employment by 56K. However, the household survey revealed a big 355K drop, and participation rate fell to a 6-month low of 62.5%. The unemployment rate also ticked higher to 4.2%.

Average earnings came in stronger, rising 0.4% on a month-over-month basis compared to 0.3% expected, keeping the year-over-year rate to 4.0%.  This was overshowed however by the mostly negative news from the jobs front.

US CPI among next week’s data highlights

US inflation data (CPI and PPI) will be released next week, the last set of key data before the Fed meets the following week. CPI will be published on Wednesday, December 11 at 13:30 GMT. Following Trump’s victory in the presidential election race, investors have sharply reduced their expectations about further US interest rate cuts in 2025. The upcoming December rate decision is unlikely to be impacted by this CPI report, unless we see a super-hot print. But whether the Fed will go ahead with a cut at its initial 2025 meetings will be influenced, among other key data highlights, by this CPI report, although it is employment that the Fed is now more focused on.

But after today’s NFP report, a 25-bps rate cut is now more likely than not. Indeed, market pricing of a December rate cut rose to around 87% from 70%, and USD/JPY dipped back to 150.00 handle – will it break lower now?

Yen strengthens again ahead of BoJ decision 

The EUR/JPY fell along with the USD/JPY, suggesting a broad-based yen rally following the US nonfarm payrolls report. In recent weeks, the yen has strengthened against most major currencies, particularly commodity dollars, the euro, and to a lesser extent, the US dollar. This surge has been driven by investor speculation that the Bank of Japan might raise interest rates at its final meeting of 2024, scheduled for later this month. 

However, a couple of days ago comments from BoJ board member Toyoaki Nakamura tempered this momentum. Nakamura struck a dovish tone, urging a cautious approach to policy tightening and raising concerns about the sustainability of wage growth. 

Technical USD/JPY forecast: Key levels to watch

Source: TradingView.com

The USD/JPY has again dropped to test the key 149.40-150.00 support zone where it was residing at the time of writing. A close below this zone could potentially pave the way for this week’s earlier of 148.65 and then 146.50 – the next potential support level. A daily close above or within this zone 149.40-150.00 support zone will keep the bulls interested and we may then see a potential recovery towards the 151.20-152.00 resistance range. All told, the odds of a breakdown look the more likely scenario, owing to the drop in bond yields and expectations about a potential BoJ rate hike in two weeks’ time.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

• The Pound Sterling hit three-week highs against the US Dollar above 1.2750.
• GBP/USD awaits US inflation data amid a relatively data-light week ahead.
• Bearish bias intact while the Pound Sterling holds below the key 200-day SMA.

The Pound Sterling (GBP) held on to the corrective upside against the US Dollar (USD), fuelling a brief GBP/USD recovery above the 1.2750 barrier.

Pound Sterling stood resilient to persistent USD demand

Political turbulence in South Korea and France, US President-elect Donald Trump’s tariff threats, and the diverging monetary policy outlooks between the US Federal Reserve (Fed) and the Bank of England (BoE) emerged as the main drivers for the GBP/USD price action.

On Monday, the pair started the week negatively, tumbling over a big figure to hit weekly lows at 1.2617. Since then, Pound Sterling buyers fought back control and resumed the previous week’s recovery to reach the highest level in three weeks above 1.2750.

Trump threatened on Saturday that he would impose 100% tariffs on BRICS nations if they tried to replace the USD with their own. Mounting tariff war fears fuelled risk-aversion across the financial markets, reviving the demand for the Greenback as a safe-haven asset while weighing on risk currencies such as the British Pound.

However, sustained bets for a 25 basis points (bps) Fed interest rate cut in December remained a drag on the US Dollar despite Chairman Jerome Powell’s prudent remarks. Markets price in a 70% chance of such a move later this month, the CME Group’s FedWatch Tool shows, at the press time.

Powell said in his speech at the New York Times’ DealBook Summit, “growth is definitely stronger than we thought, and inflation is coming a little higher. The good news is that we can afford to be a little more cautious as we try to find neutral,” he added, referring to the neutral interest rate.

A series of US economic data releases, including the ISM surveys, JOLTS Job Openings and the ADP Employment Change, came in mixed and failed to alter the market’s expectations of a rate cut this month, limiting the Greenback’s upside attempts.

That said, the USD stayed underpinned by the market’s nervousness amid looming geopolitical and trade war risks and ahead of the all-important US Nonfarm Payrolls data release.

On the other side, the Pound Sterling regained traction, paying little heed to the dovish comments from BoE Governor Andrew Bailey on Wednesday. In a pre-recorded interview with the Financial Times (FT), Bailey said that “he expects four UK rate cuts next year as inflation eases.”

Heading into the weekend, GBP/USD consolidated at multi-week highs, anticipating the key US labor data for a fresh directional impetus.

Following the 36,000 increase recorded in October, the US Bureau of Labor Statistics announced on Friday that Nonfarm Payrolls (NFP) rose by 227,000 in November. This print came in above the market expectation of 200,000 but failed to boost the USD, helping GBP/USD cling to its weekly gains. Other details of the jobs report showed that the Unemployment Rate edged higher to 4.2%, while the annual wage inflation held steady at 4%. 

The week ahead: All eyes on US CPI inflation

It’s a mediocre week from the point of view of macroeconomic news, with the US Consumer Price Index (CPI) data likely to stand out. 

The first two trading days of the week have little to no top-tier economic publications from both sides of the Atlantic until the US inflation report drops on Wednesday.

However, China’s inflation data could stir markets amid mounting concerns about an economic slowdown, impacting risk sentiment and high-beta currencies such as the British Pound.

Thursday will feature the US Producer Price Index (PPI) data, while the UK monthly Gross Domestic Product (GDP) and industrial figures will feature on Friday.

It will be dry in terms of Fedspeak as the Fed enters its  ‘blackout period’ on Saturday ahead of the December 17-18 policy meeting.

That said, geopolitical developments and US-Sino trade updates will be closely followed.

GBP/USD: Technical Outlook

From a short-term technical outlook, sellers will likely retain control if GBP/USD holds below the 200-day Simple Moving Average (SMA) at 1.2821.

Adding credence to the negative outlook, the pair charted dual Bear Crosses a week ago.

However, the 14-day Relative Strength Index (RSI) has recovered to the 50 level from the negative territory, suggesting that the rebound could extend before the next leg down.  

The Pound Sterling needs a sustained break above the 200-day SMA at 1.2821 to sustain the recovery.

The next substantial contention area aligns near 1.2900, the confluence of the round figure and the 50-day SMA.

Further up, the 100-day SMA at 1.2967 could challenge the bearish commitments.

On the downside, the immediate support aligns at the 21-day SMA at 1.2685, below which the week low of 1.2617 will be tested.

Additional declines will threaten the six-month low of 1.2488.

Key Events:

• USDJPY is consolidating near the 150-mark
• Silver is rebounding from one-year support
• The US Dollar index is holding above its one-year resistance ahead of today’s NFP data
• Key market catalyst next week: US CPI data release on Wednesday

The Dollar’s pullback below the 108 zone, coupled with rising inflation figures in Japan, is shifting market sentiment. The latest Tokyo Core CPI has risen from 1.8% to 2.2%, boosting expectations for a potential BOJ rate hike on December 19th, just after the anticipated Fed rate cut on December 18th.

Another crucial factor is the “Trump effect” on the US Dollar, which is countering the bearish pressure from priced-in Fed rate cuts as we head into the December holidays. Demand for the US Dollar may increase alongside interest in precious metals, including silver. This dynamic is likely to keep a relatively bullish foundation for both assets unless key support levels are breached.

Technical Analysis: Quantifying Uncertainties

USDJPY Forecast: 3Day Time Frame – Log Scale

Source: Tradingview

USDJPY is currently testing key support at 148.60, with the next level to watch at 146.80 in the event of further downside. Deeper declines could retest levels 144 and 140.
The current technical setup, however, leans bullish:

• The 3-day RSI has rebounded from the neutral zone
• Price action is holding above the 20-period SMA following the November drop
• The 150-mark continues to serve as psychological support

If the 148.60 low holds firm, the next resistance is at 153.30, aligning with the lower boundary of the long-term trendline connecting consecutive lows from January 2023 to 2024. Longer-term resistance levels include 157 and 160, reflecting significant Yen weakness and potential BOJ intervention risks.

Silver Forecast: 3Day Time Frame – Log Scale

Source: Tradingview

Silver is in rebound mode, trading above the $29.80 support, which aligns with the trendline connecting consecutive higher lows over the past year. Resistance remains strong at $31.50.
Key technical indicators signal that the primary uptrend is intact:

• Silver continues to respect the lower channel boundary and May-November support levels
• The 3-day RSI is rebounding from the neutral zone

While gold has broken below the lower boundary of its primary uptrend following the US presidential election, silver remains resilient. Critical support levels are intact until convincingly breached.

Upside potential: Above $31.50, resistance levels to watch include $32.50, $35, $37, and $40

Downside Potential: Below $29.60, support levels lie at $27.80, $26.80, and $26.00

— Written by Razan Hilal, CMT – on X: @Rh_waves and Forex.com Youtube Channel

• EUR/USD fluctuates above 1.0550 after posting strong gains on Thursday.
• Investors await November Nonfarm Payrolls data from the US.
• Near-term technical outlook remains bullish, with next resistance aligning at 1.0600.

EUR/USD gathered bullish momentum and gained more than 0.7% on Thursday. Before testing 1.0600, however, the pair went into a consolidation phase and was last seen fluctuating at around 1.0570.

The US Dollar (USD) came under bearish pressure and helped EUR/USD push higher on Thursday after the US Department of Labor reported that the number of first-time applications for unemployment benefits rose to 224,000 in the week ending November 30 from 215,000 in the previous week.

Later in the day, November labor market data from the US will be scrutinized by investors. Following the 12,000 increase recorded in October, because of hurricanes and strikes, Nonfarm Payrolls (NFP) are forecast to rise by 200,000 in November.

According to the CME FedWatch Tool, markets are currently pricing in about a 70% probability of a 25 basis points (bps) Federal Reserve (Fed) rate cut in December. A disappointing NFP print of 150,000 or lower could confirm a rate reduction and further weigh on the USD. On the flip side, a reading above 200,000 could cause markets to refrain from pricing in a December cut and trigger a leg lower in EUR/USD.

Later in the American session, several Fed policymakers will be delivering speeches. Since the Fed’s blackout period will start on Saturday, these comments could also drive the USD’s valuation heading into the weekend.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart retreated toward 60 early Friday, suggesting that the bullish bias remains intact, while EUR/USD stages a technical correction. On the upside, 1.0600 (Fibonacci 38.2% retracement of the latest downtrend) aligns as immediate resistance before 1.0650-1.0660 (200-period Simple Moving Average (SMA), Fibonacci 50% retracement) and 1.0730 (Fibonacci 61.8% retracement).

Looking south, first support could be spotted at 1.0520-1.0530 (100-period SMA, 50-period SMA, 20-period SMA, Fibonacci 23.6% retracement) ahead of 1.0500 (psychological level, static level) and 1.0440 (static level).

GBP/USD is trading at $1.27508, slightly down by 0.05% in the session, as it remains above the pivot point at $1.27389. This level aligns with near-term bullish sentiment, supported by an upward channel providing a foundation for further gains.

Immediate resistance stands at $1.27703, with subsequent targets at $1.27932 and $1.28143. On the downside, key support is found at $1.27136, followed by $1.26863 and $1.26600.

The 50-day EMA at $1.27058 and the 200-day EMA at $1.27018 underline a supportive zone, suggesting a bullish structure. A sustained move above $1.27389 could open the door to higher resistance levels.

Euro Declines as Factory Orders, Retail Sales Disappoint

The Euro faced pressure as mixed economic data raised concerns. German Factory Orders fell by 1.5%, better than the forecasted -2.0% but far below last month’s 7.2% surge.

French Industrial Production dipped by 0.1%, missing expectations of 0.2%, while Retail Sales across the Eurozone declined by 0.5%, underperforming the predicted -0.3%.

Meanwhile, German Industrial Production dropped 1.0%, countering a forecasted 1.0% gain. These figures underscore ongoing economic challenges, impacting sentiment around the Euro.

EUR/USD Technical Forecast

GBP/USD eases from multi-week high, trades with negative bias below mid-1.2700s

The GBP/USD pair oscillates in a range below mid-1.2700s during the Asian session on Friday and consolidates its recent gains registered over the past three days, to over a three-week high touched the previous day. Traders now seem reluctant to place aggressive bets and opt to wait for the release of the crucial US monthly employment details later today. 

The popularly known Nonfarm Payrolls (NFP) report will be looked upon for the interest rate outlook in the US and guide the Federal Reserve (Fed) policymakers on their next policy decision at the December meeting. This, in turn, will help determine the near-term trajectory for the US Dollar (USD) and provide some meaningful impetus to the GBP/USD pair. In the meantime, the recent decline in the US Treasury bond yields fails to assist the USD attract any meaningful buyers or recover from a multi-week low. Read more…

GBP/USD rallies on rate cut hopes, NFP Friday in the barrel

GBP/USD climbed on Tuesday, bolstered by Bank of England (BoE) Governor Andrew Bailey tipping his hand and revealing a path forward to further rate cuts in 2025. Broad-market investor sentiment remains on the high side, although a fresh round of key US Nonfarm Payrolls (NFM) jobs figures are looming just ahead on Friday.

BoE Governor Bailey noted earlier Thursday that he sees around four rate cuts in 2025, which briefly sent the Pound stumbling during the London market session, but GBP traders quickly recovered their footing and pushed Cable back into the high end for the day. The head of the UK central bank reiterated cautious talking points and reaffirmed a data-dependent stance, helping to keep market expectations on-balance that the BoE will leave rates unchanged on December 19. Read more…

Created on December 06, 2024

• The EUR/USD pair is one I always look at, as it can give you a bit of a “heads up” as to how the US dollar is moving.
• As a general rule, if you understand where the US dollar is going, you can often understand what happens with most major forex pairs.
• After all, major forex pairs have the “USD” as part of the equation.
• As the euro is the most widely traded currency against the greenback, it’s a good determinant of what could happen.

Technical Analysis

The technical analysis is fairly neutral at the moment, despite the fact that we have seen quite a bit of pushback near the 1.05 level. The 1.05 level is a large, round, psychologically significant figure, and therefore it will attract a lot of attention overall. With this, I think that we are just simply hanging around in trying to sort out where the market is going to go over the longer term. With this being the case, I think you will more likely than not have a lot of noise, as the Non-Farm Payroll announcement comes out on Friday, which will attract a lot of attention and also cause a certain amount of liquidity issues that will increase volatility.

If we were to break above the 1.06 level, then it opens up the possibility of a move to the 1.0750 level. A short-term pullback from here should see plenty of support near the 1.05 level, but if we were to break down below there, then it’s possible that the euro drops to 1.04, which is a small support level, which has been tested a couple of times. Anything below there become somewhat catastrophic for the euro, as traders will more likely than not end up running to the US dollar in multiple currencies, not just this one.

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Created on December 06, 2024

• The euro has rallied a little bit during the early hours on Thursday as we continue to see a lot of choppy behavior with the euro against the pound.
• The 0.8250 level is an area that has been rather significant support and ultimately, I think this area is something that you need to pay close attention to.
• Not only is it important right now, but it’s been important multiple times going back all the way to 2016.

We are on the precipice of perhaps falling apart or perhaps bouncing significantly. We’ll just have to wait and see if we do drop down below the 0.8250 level and even the 0.82 level then we have a situation where the market would really start to tank for the euro, you’d probably see the euro tanking against the US dollar as well i do think that’s a real possibility here so because of that I’m not willing to throw a huge position on to the upside.

IF We Break Higher

That being said, if we could recapture the 0.8350 level, then we may get a grind higher. That I don’t think would be a quick move, but it is a possibility. I mean, it’s something that we’ve seen previously, but the euro just looks really threatened right now. And if we do break down below the 0.82 area, you could see the market drop all the way down to the 0.76 level before it’s all said and done.

Obviously, this would be a huge move and would take quite a bit of time to get there. Ultimately, if that were to happen, I would also anticipate that the Euro would be doing better against the US dollar, and it could be a longer-term “buy on the dips” trend that a lot of people would be following. I don’t anticipate this happening, but it is something that you need to keep in the back of your mind.

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