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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Created on December 06, 2024

• The British pound has rallied a bit during the early hours on Thursday as we are slamming into the crucial 1.2750 level.
• This is an area that’s been both support and resistance multiple times in the past, and simultaneously we are seeing the 50-day EMA at least attempt to break down below the 200-day EMA, kicking off the so-called death cross.
• However, Friday features a non-farm payroll announcement and that could throw any move into disarray.

It does look like we are seeing a little bit of pushback as we have broken above 1.2750 only to drop back down towards it again. So, it’ll be interesting to see how this plays out. I do think we are at a major inflection point right now. So, I am watching this pair with great interest.

Greenback Strength Must Be Watched Closely

The US dollar itself has been very strong for some time and perhaps we’re seeing a little bit of profit taking ahead of the jobs report, but what will matter to me is where we close on Friday. I think that will tell the tale for a lot of things. And in that environment, we could have a little bit of a binary trade, not a binary options trade, a binary trade, meaning we are either buyers or sellers based upon a specific event.

If we break significantly above the 1.2750 level after non-farm payroll and hang on to it, perhaps you could just say if we close above there on Friday, then it might end up being a fairly significant buying opportunity. However, if we see this GBP/USD pair fall apart, then it’s very likely that we could go looking to the 1.25 level. I think Friday is pretty big for this one. In fact, this might be a situation where this controls what happens over the next several months, but we will have to wait and see if that ends up being the case.

The USD/JPY rebounded off its overnight lows, with the big rally in Bitcoin and DAX helping to reduce the yen’s haven appeal somewhat. But the pressure remains amid speculation that the Bank of Japan will hike interest rates at its upcoming policy decision on December 19, while dollar traders are looking forward to the release of US non-farm payrolls report on Friday, inflation data next week and the Fed’s own interest rate decision on December 18. So, the USD/JPY outlook is subject to change significantly in the next two weeks.

Yen loses some momentum after BoJ rate hike speculation

In the last few weeks, the yen has been gaining momentum against most major currencies, especially commodity dollars, the euro and to a lesser degree the US dollar. Investors have been piling into the yen amid speculation that the Bank of Japan could raise interest rates at its final 2024 meeting later this month.

But overnight, the BOJ’s Toyoaki Nakamura delivered dovish-leaning remarks, calling for policy tightening to proceed at a cautious pace. Toyoaki also expressed doubt about the sustainability of wage growth.

In as far as the US dollar is concerned, well until last week, the dollar had been on the ascendency amid the Trump trade, but the further big gains in risk assets like cryptos and stocks have helped to ease the pressure on some of the risk-sensitive currencies like the GBP and EUR, and this has helped to weigh on the dollar somewhat. This week’s weaker-than-expected ISM services PMI has also helped to put some downward pressure on the dollar.

Attention turns to US jobs report to shape near-term USD/JPY outlook

This week’s US economic indicators have been mixed. While the ISM manufacturing PMI at 48.4 beat expectations and showed an improvement from 46.5 the previous month, the ISMs services PMI was sharply below forecasts at 52.1 vs. 56.0 last. The JOLTS report was quite good at 7.74 million vs. 7.51 million eyed. Yet the latest weekly claims figures, released a few moments ago, was weaker, showing an unexpected rise to 224K vs. 213K eyed.

As the Federal Reserve zeroes in on employment trends, any signs of weakness in labour market reports might cement a December rate cut, currently priced with a 74% probability. 

Thus, all eyes will be on the November jobs report, due Friday. This will be the headline event, before the focus turns to next week’s CPI report and the Fed’s decision the following week. After last month’s unexpectedly strong figures and the political shift from Trump’s re-election, expectations for aggressive Fed cuts in 2025 have waned. Whether the Fed decides to cut rates in the initial months of the new year could hinge on the next few employment reports, putting the focus on the NFP data on Friday.

Here is a list of key data highlights from the US on Friday, showing what is expected and what the previous readings were:

Technical USD/JPY outlook

Source: TradingView.com

The USD/JPY remains stuck inside a rock and a hard place. Resistance is provided in the range between 151.20 to 152.00, where prior support and 200-day moving average meet. Support is provided around the 149.40 to 150.00 range (shaded blue on the chart). A clean move outside this range is now needed to potentially trigger follow-up buying or selling in that direction. Given the recent bearish price action, the risks are tilted modestly towards a downside breakdown.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

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.

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.

Created on December 05, 2024

• As we predicted earlier, the Euro will remain weak as long as economic and political tensions in the largest economies of the Eurozone persist and increase.
• As a result, investor appetite for the Euro has weakened. For two consecutive days, the EUR/USD currency pair has attempted to rebound upward, but its gains have not exceeded the level of 1.0544 before settling around 1.0515 at the time of writing this analysis.

Will the Euro continue to decline?

Dear reader, we previously mentioned that the Euro’s price in the Forex market may remain weak for a longer period due to several factors. Furthermore, the most prominent of which is the widening scope of political and economic concerns in the largest economies in the Eurozone – Germany and France – coinciding with the European Central Bank’s adherence to its easy monetary policy, in addition to the ongoing Russian-Ukrainian conflict. Also, the latest threat of Trump’s trade wars, which could directly or indirectly affect the Eurozone economy.

The French Political Situation is Unstable

According to reliable trading platforms, the Euro has recently been under selling pressure against other major currencies ahead of the vote of no confidence in French Prime Minister Michel Barnier. Moreover, this move comes after Barnier used a constitutional clause to impose his budget, which aims to reform France’s finances. Therefore, if Barnier loses, he will resign to French President Emmanuel Macron, heralding a new period of political uncertainty in Europe’s second-largest economy.

On the other hand, if Barnier wins, somehow, the euro exchange rate will recover. In general, without fiscal austerity, French debt will continue to rise and is expected to reach 7% of GDP next year, which is much higher than what the European Union allows. At the same time, eurozone countries enjoy the advantage that the powerful European Central Bank will always act as a backstop to ensure the uncontrolled deterioration of any given country’s debt.

Trading Tips:

Dear TradersUp follower, we recommend selling the Euro/US Dollar EUR/USD from every upward bounce, as the stronger downward pressure factors and Trump’s policy in the coming years – the stronger US dollar – and the US trade wars will strain the Eurozone economy as well as the single European currency.

European Stock Indices Continue to Recover

According to stock trading companies’ platforms, for five consecutive trading sessions, European stock market indices are rising, led by German stocks, which recorded a new record level. According to trading, the Stoxx Europe 600 index rose by 0.4% at the close. In the same performance, the DAX index for German stocks rose by 1.1% after breaching the 20,000-point level in the previous trading session. Also, the performance of the FTSE 100 index for British stocks, which relies heavily on exports, was weak with the rise of the pound sterling against the dollar.

Despite the gains, European stock markets were late in rising compared to the US stock markets, which recorded record numbers in September, as concerns about potential US tariffs, a weak European economy, and geopolitical tensions represented by the Russian/Ukrainian war and Middle East wars continued. Political concerns in both Germany and France seem to be clearly affecting investor sentiment.

EUR/USD Analysis Today:

Dear reader, the overall trend of the EUR/USD currency pair remains downward. As we mentioned before, the stability of the price around and below the support level of 1.0500 supports the strong control of the bears and. Consequently, the readiness for stronger losses if US jobs data comes in stronger than all expectations and political tension within the Eurozone increases.

As we mentioned before, expectations for the future parity of the EUR/USD exchange pair will increase if the bears succeed in moving first towards the support levels of 1.0455 and 1.0365. Conversely, and over the same time period, the daily chart will show a breach of the downward trend if the bulls succeed in moving towards the resistance levels of 1.0675 and 1.0885 again. Until now, we recommend selling the EUR/USD from every upward level.

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• GBP/USD holds above 1.2700 in the European session on Thursday.
• The pair could stretch higher if it clears 1.2750 resistance.
• GBP/USD’s upside could remain capped in case markets turn cautious.

GBP/USD registered small gains for the second consecutive day on Wednesday and continued to edge higher early Thursday. The technical outlook suggests that the bullish bias remains intact in the near term.

Falling US Treasury bond yields and disappointing macroeconomic data releases from the US made it difficult for the US Dollar (USD) to stay resilient against its major rivals on Wednesday. The ISM Services PMI declined to 52.1 in November from 56 in October and missed the market expectation of 55.5. Additionally, the ADP Employment Change came in at 146,000 in November, compared to analysts’ estimate of 150,000.

In the meantime, EUR/GBP closed in negative territory for the sixth consecutive day on Wednesday, suggesting that Pound Sterling continued to capture capital outflows out of the Euro.

In the early American session on Thursday, the US Department of Labor will release the weekly Initial Jobless Claims. Ahead of Friday’s Nonfarm Payrolls (NFP) data, however, the market reaction to this data is likely to remain short-lived. Instead, investors could react to changes in risk perception. At the time of press, US stock index futures were trading mixed. In case safe-haven flows dominate the action in financial markets later in the day, GBP/USD could struggle to push higher.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds comfortably above 50 and GBP/USD trades above the ascending trend line, reflecting the bullish bias.

On the upside, 1.2750 (Fibonacci 50% retracement of the latest downtrend) could be seen as next resistance before 1.2790-1.2800 (Fibonacci 61.8% retracement, 200-period SMA) and 1.2850 (static level). On the downside, immediate support is located at 1.2700 (Fibonacci 38.2% retracement) ahead of 1.2650 (100-period Simple Moving Average) and 1.2620 (Fibonacci 23.6% retracement).

• EUR/USD holds steady above 1.0500 in the European session on Thursday.
• The near-term technical outlook points to a lack of bullish momentum.
• The 20-day SMA aligns as next immediate resistance at 1.0550.

EUR/USD met resistance near 1.0550 on Wednesday but managed to close the day above 1.0500. The pair clings to small daily gains and the technical outlook is yet to point to a buildup of bullish momentum.

The US Dollar (USD) struggled to gather strength following the disappointing macroeconomic data releases on Wednesday and helped EUR/USD hold its ground. The political uncertainty in France, however, limited the Euro’s gains. French Prime Minister Michel Barnier is expected to submit his resignation on Thursday after his government lost the no-confidence vote in parliament.

In the European session, the cautious market stance doesn’t allow EUR/USD to stretch higher. In the second half of the day, the US economic calendar will feature weekly Initial Jobless Claims data. A reading below 200,000 could boost the USD with the immediate reaction, while a print near 250,000 could have the opposite impact on the currency’s valuation.

Nevertheless, investors could refrain from taking large positions ahead of Friday’s highly-anticipated November labor market report from the US.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 50, reflecting a lack of bullish momentum.

Additionally, EUR/USD is yet to clear the 1.0520-1.030 resistance, where the Fibonacci 23.6% retracement of the latest downtrend and the 100-period Simple Moving Average (SMA) are located. In case EUR/USD stabilizes above this area, the 20-day Simple Moving Average (SMA) could act as next resistance at 1.0550 ahead of 1.0600 (Fibonacci 38.2% retracement).

On the downside, 1.0500 (static level) aligns as interim support before 1.0440 (static level) and 1.0400 (end-point of the downtrend, static level).

GBP/USD is trading at $1.27185, up 0.14% for the session, reflecting a cautiously bullish tone. The pair remains above its pivot point at $1.26916, signaling potential upward momentum.

Immediate resistance lies at $1.27217, followed by targets at $1.27452 and $1.27693. Key support levels include $1.26610, $1.26408, and $1.26173.

The 50-day EMA at $1.26873 and the 200-day EMA at $1.26676 reinforce near-term support, underscoring $1.26916 as a critical level. A break above $1.27217 could pave the way for further gains, while a dip below $1.26916 may trigger sharper selling.

Euro Stays Subdued Amid Mixed PMI Data and Lagarde’s Remarks

The euro saw limited movement as mixed PMI data highlighted uneven growth in the services sector. Spanish PMI dropped to 53.1, while Italian PMI declined to 49.2.

French PMI improved slightly to 46.9. ECB President Lagarde reiterated a dovish tone, stating that rate cuts would continue, though their pace remains uncertain.

German PPI met expectations at 0.4%, while upcoming industrial and retail data will provide further direction for the euro.

EUR/USD Technical Forecast

Image © Adobe Images

The Dollar fell after an unexpected slowdown in the mighty U.S. services sector was reported by the Institute for Supply Management (ISM).

The ISM Services PMI read at 52.1% in November, well below October’s 56% and the consensus estimate of 55.5%.

The ISM said election ramifications and tariffs were cited by respondents to the survey as being behind a more cautious sentiment.

The index’s Employment, Business Activity and New Orders components all receded versus the month prior.

In the wake of the release, the Pound to Dollar exchange rate (GBP/USD) is 0.32% higher on the day. The rise comes amidst a broader pullback by the Dollar.

The price action suggests markets have grown more confident that the Federal Reserve will cut interest rates in December after these softer data.

Several members of the Federal Reserve’s policy-setting committee have spoken recently, with most saying they are inclined to cut interest rates if incoming data turns softer.

“This week’s ISM reports have ticked that box and a soft jobs number on Friday would likely seal the deal even if next week’s inflation data remains sticky,” says James Knightley, Chief International Economist at ING Bank.

Above: GBP/USD is forming a base following a period of decline.

GBP/USD investment bank consensus forecasts: The end-2024 and 2025 guide from Corpay has been released. It shows a sizeable uplift was made to the consensus forecasts for GBP/USD. Please request a copy here.

“On balance, it is supportive of the rate cut narrative at the December FOMC meeting and suggests a cooling in economic growth in the fourth quarter,” he adds.

ING tells clients that if Friday’s U.S. job report indicates an approximate 100k net job creation, and the unemployment rate ticks up to 4.2%, then a 25bp rate cut on December 18 looks probable.

The Dollar has outperformed in October and November on the back of a run of above-consensus economic data releases that confirm the U.S. economy is in robust shape.

The data outcomes have prompted investors to slash expectations for the scale of rate cuts to come from the Fed, which has bolstered U.S. bond yields and the Dollar.

However, sentiment towards the USD is nearing stretched levels, leaving the currency at risk of a pullback in the event of data setbacks.

This PMI report is a perfect example of such a setback, and the Dollar’s response is, therefore, unsurprising.