Created on December 03, 2024

• The US dollar initially did try to recover against the Japanese yen during the trading session on Monday, but a lower than anticipated manufacturing PMI number may have been a bit of a problem.
• While that has seen the US dollar rocket higher against other currencies, I think this is more or less a situation where traders are starting to focus on whether or not the Federal will cut rates in December, and that has a major influence on this pair.

In general, this is a situation where traders continue to see concerns about the interest rate differential narrowing. Now, the bond market had a lot to say about that recently, but it looks like the bond market’s giving that up a little bit. As we are below the 150 yen level, now I think things are getting really interesting.

Is the Selling Done?

Whether or not we are done selling off remains to be seen, but you can still make an argument for an uptrend. This most recent swing high though, that could be an ominous sign. I suspect at this point, you’re probably better off waiting for some type of bounce to get involved. It just has the feel of a falling knife type of situation.

That doesn’t mean that the US dollar itself is going to do poorly, and I just think that in the realm of safety bid, US dollar is right up there, but it’s not the Japanese yen. If we can turn around and recapture the 50-day EMA close to the 151.33 yen level, then I think you start to look in the other direction again. I’m not necessarily looking to short this USD/JPY pair, I guess what I’m saying is, I’m just not looking to get long of it at this point in time, although over the longer-term, I will be looking to take advantage of the interest rate swap at the end of each day.

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EUR/USD rises but the outlook remains weak

• France’s government is on the brink of collapse
• US JOLTS job openings are due
• EUR/USD recovers from 1.0460 support

EUR/USD is inching higher after steep losses in the previous session. The market is waiting cautiously for further developments in France and looks ahead to a big week for U.S. economic data.

PM Michel Barnier’s coalition government is on the brink of collapse, and he’s expected to face a vote of no confidence tomorrow, which he is unlikely to win. This could lead to further political uncertainty in the eurozone’s second-largest economy.

Political instability runs alongside a weak economic outlook. Yesterday’s PMI data showed that the region’s manufacturing sector recession continues and shows no sign of letting up.

Adding Trump’s threat of trade tariffs when he takes office in January to the mix, it’s hard to be anything but bearish towards the Euro.

EUR/USD parity wasn’t even a topic for conversation a few months ago. Now, it looks like a possibility in 2025

Separately, the US dollar is easing lower, giving back some of yesterday’s gains. The US dollar typically suffers seasonal weakness in December. However, following Donald Trump’s indication of support for a stronger dollar, that might not necessarily be the case this year.

Over the weekend, trump threatened tariffs, on BRIC members that weren’t committed to the USD as a reserve currency.

Attention today now turns to jolts job openings, which are expected to hold steady at 7.44 million.

The data comes ahead of a busy week for U.S. economic figures, including ADP payrolls, ISM services PMI, and Friday’s non-farm payroll report.

Strong data could see the market rein in fed rate cut expectations fella.

EUR/USD forecast – technical analysis

After running into resistance at 1.06, EUR/USD rebounded lower but found support at 1.0460, the 2023 low. The price trades caught between these levels. The RSI is below 50 and the 50 SMA crossed below the 200 SMA in a bearish signal.

Sellers will look to extend the 2-month bearish trend by taking out support at 1.0460 to brig 1.04 into focus ahead of 1.0330, the 2024 low.

Any recovery would need to rise above 1.06 to negate the trend and create a higher high. Above here, 1.07 comes into play.

Oil rises ahead of inventory data & OPEC’s meeting later in the week

• OPEC+ is expected to postpone the unwinding of production cut
• Chinese data helped the demand outlook
• Oil trades in a familiar range

Oil prices are rising in the European session but continued to trade in a narrow range ahead of the OPEC class policy meeting on Thursday.

The market is expecting the group of oil producers to delay its planned unwinding of production cuts beyond January 2025 in the hope of rebalancing the market and protecting prices. The outlook for supply surplus has put pressure on prices, meaning there is little option but to defer.

 Yesterday, Chinese factory activity expanded, raising hopes that the oil demand outlook is improving as the recent stimulus measures seep through the economy. However, optimism over data from China is being offset by questions over the outlook for Fed rate cuts in the coming months.

Geopolitical tensions remain in focus in the Middle East after the US-brokered ceasefire deal between Israel and Hezbollah appears to be on shaky ground.

Attention now turns to US crude stockpiles which are expected to have fallen last week while gasoline and distillate inventories are forecast to have risen. API data is due today, and EIA inventory data will be released on Wednesday.

Oil forecast – technical analysis

Oil continues to trade within a familiar range that it has traded within since September. The price is capped on the upside by 71.50 -72.50 and around 67 -67.50 on the downside. The RSI is neutral.

Sellers will want to wait from a break below 67.00 to enter a sell position, bringing 65.50, the 2024 low, into focus ahead of 63.50, the October 2023 low.

Should buyers rise above 72.50, bulls will look to 75.00 round number and 76.60 the 200 SMA.

Created on December 03, 2024

• As I look at the Euro against the British pound, I have to ask a lot of questions of whether or not we are breaking down more significantly than we have seen in the past.
• When I zoom out on the charts going back to approximately the summer of 2016, this is an area that’s held since then.

Because of that, if we break down from here, we could see the Euro just crater. That being said, it also somewhat lends itself to being a place for contrarian traders to get involved and start betting against the markets in general. It obviously would be a very difficult ride to the upside, but I think if we get beyond the 0.84 level, then you can have some credence for that.

On a Drop in this Pair

If we break down below the 0.82 level, then like I said, we really start to drop perhaps all the way down to 0.77 before it’s all said and done. That would be a brutal sell-off, but not necessarily something that is out of the realm of possibility. I think both of these economies have major issues, but right now, I think the biggest problem that I know of is probably Germany, and that does not bode well for the euro overall.

The euro is basically a basket case at this point. And I think you continue to have the major issues of the fact that you have all of these countries that have trouble cooperating. We also have the issues in Ukraine and that’s not going anywhere. So really at this point in time, while I’m not necessarily overly bullish on the pound, I definitely don’t like the euro.That’s the main takeaway here. However, I am willing to go either way. If the market tells me, it’s time to start buying, then so be it.

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GBP/USD is trading at $1.26640, up 0.12%, showing a slight bullish tilt as it holds above the pivot point at $1.26443. Immediate resistance lies at $1.26916, with further targets at $1.27235 and $1.27500.

On the downside, key support levels to watch are $1.26179 and $1.25887. The pair is supported by an upward trendline, with the 50-day EMA at $1.26683 reinforcing near-term strength.

Meanwhile, the 200-day EMA at $1.26571 serves as a critical foundation for maintaining upward momentum.  If prices remain above $1.26443, buyers could push toward the next resistance levels.

Euro Pressured Amid Weak Manufacturing Data

The Euro faced headwinds as manufacturing data across the Eurozone disappointed. Spain’s Manufacturing PMI dipped to 53.1 from 53.9, while Italy (44.5), France (43.1), and Germany (43.0) reported weaker-than-expected activity, all pointing to persistent contraction.

The bloc’s Final Manufacturing PMI held at 45.2, signaling ongoing economic challenges.

However, Italy’s unemployment rate improved to 5.8% from 6.0%. Markets now await Spanish unemployment data and France’s government budget balance for further direction.

EUR/USD Technical Forecast

Created on December 02, 2024

• The US dollar has plunged against the Japanese yen during the trading session on Friday to dip below the 150 yen level.
• But this is an area that I think will continue to be crucial, so it’ll be interesting to see how this plays out.
• I like the idea of buying on a dip that then finds itself bouncing, and I think that’s what we’re watching right now to see whether or not it happens.

We are right around the 200 day EMA, so I would anticipate a certain amount of technical trading in this area regardless. The fact that the 150 yen level is a large round psychologically significant figure is probably something worth paying attention to anyways. Ultimately, I think this is a situation where if we can break above the top of the candlestick for the Friday session, then we could really start to take off towards the 155 yen level.

On the other hand, if we break down below the bottom of the candlestick for the USD/JPY trading session on Friday, then we could go down to the 148 in level, possibly even 146 yen. There is an interest rate differential that you need to pay close attention to. With that being said, I think you’ve got to look at this as a scenario where traders will probably continue to find one way or the other to take advantage of this interest rate differential.

If things settle down. When you look at the pullback that we’ve seen from the bounce, we’re only at about the 38.2% Fibonacci retracement level. So really, it is still technically bullish. It’s just been tough to be bullish over the last four or five sessions. A bounce from here though, would solidify the idea of people taking advantage of the carry trade. So, we’ll have to wait and see how that plays out.

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Created on December 02, 2024

• At the beginning of this week, the US dollar regained its recent losses following Trump’s recent harsh threats and ahead of the start of trading for those who abandon the US dollar.
• As a result, the EUR/USD currency pair is stabilizing on a downward trend around the support level of 1.0515 after closing last week’s trading at around 1.0575.
• We expect the downward momentum for the euro-dollar to persist until the reaction to the announcement of US jobs figures at the end of the week, which will have a strong reaction on the expectations for the future of US Federal Reserve policies.

US Treasury Yields Stronger

Today, the yield on 10-year US Treasury bonds rose to more than 4.2%, reflecting a two-week decline, and its gains came with increasing speculation among investors about the strong US economic performance before the new year 2025. Also, the rise in bond yields followed the rally in the US dollar after a sharp threat from Trump to the BRICS group of countries. Correspondingly, he stated that he would impose a 100% tariff if the BRICS countries created or supported a new currency that could replace the dollar.

US central bank policies support the dollar

In terms of monetary policy, financial markets are currently betting on the possibility of the Federal Reserve cutting US interest rates by 25 basis points this month by 67%, up from 53% a week ago. In general, investors are now focusing on US jobs data and statements from a number of US Federal Reserve policy officials.

US Stocks Stabilize

According to stock trading platforms, US stock futures have seen little change today as investors seek new catalysts in the last month of 2024. Overall, US stock market indices have emerged from a strong week and month, with the three major indices rising between 1.1% and 1.45% last week and rising between 5.7% and 7.8% in November trading. Also, the Dow Jones and S&P 500 indices hit all-time highs on Friday. Simultaneously, these gains were largely driven by the rally that followed the election after the decisive victory of President-elect Donald Trump. Ultimately, the resilience of the US economy and the corporate sector also boosted investor sentiment.

EUR/USD Analysis Today:

My technical outlook for the EUR/USD currency pair remains unchanged. The overall trend is still downward, and as we mentioned before and confirm now, the stability of the euro-dollar around and below the support level of 1.0500 will continue to encourage the dominance of the bears on the trend. Furthermore, the expectations will return to the proximity of the euro-dollar parity if the bears succeed in pushing the currency pair towards the support levels of 1.0455 and 1.0380 again. Technically, these levels and below will push the technical indicators towards strong oversold levels. Conversely, and based on the daily chart, the psychological resistance of 1.1000 will remain the most important for a shift in the euro-dollar direction to bullish.

EUR/USD Trading Signals:

Based on the above analysis, we recommend selling the EUR/USD currency pair from every upward level. To get EUR/USD signals and other free trading signals, follow our website exclusively. Favourably, consider a trading strategy that avoids risk and activates take-profit and stop-loss orders to ensure the safety of your trading account from any sudden price fluctuations.

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• GBP/USD declines over 0.50%, with sellers targeting further lows after breaking past 1.2644.
• Bearish momentum confirmed by RSI; GBP faces key supports at 1.2600 and 1.2486.
• Potential recovery hinges on surpassing resistance at 1.2700 and 1.2818 (200-day SMA).

The Pound Sterling tumbled over 0.50% against the Greenback on Monday, as the latter recovered from last week’s losses, remaining bid on Monday. At the time of writing, the GBP/USD trades at 1.2659, dropping after reaching a daily high of 1.2735.

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend remains intact, and it could be threatened if buyers clear the 200-day Simple Moving Average (SMA) at 1.2818. Sellers must clear the November 28 daily low of 1.2644 before extending their drop to 1.2600. A breach of the latter will expose the latest major support at 1.2486, the November 22 swing low, followed by the current year’s low of 1.2299.

Conversely, if GBP/USD clears the 1.2700 figure, the first resistance would be the 1.2800 figure, followed by the 200-day SMA at 1.2818. Once those two levels are surpassed, it would emerge 1.2900 and the 50-day SMA as next key resistance at 1.2943.

The momentum remains bearish, as depicted by the Relative Strength Index (RSI), which aims to be lower at the beginning of December.

GBP/USD Price Chart – Daily

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• GBP/USD trades in negative territory near 1.2700 on Monday.
• The renewed USD strength weighs on the pair at the beginning of the week.
• The ISM Manufacturing PMI data will be featured in the US economic calendar.

GBP/USD rose more than 1.5% in the previous week and registered weekly gains for the first time since late September. The pair, however, started the new week under bearish pressure and retreated slightly below 1.2700 by the European morning on Monday.

The renewed US Dollar (USD) strength forces GBP/USD to stay on the back foot. The market reaction to US President-elect Donald Trump’s comments on social media boosted the USD at the weekly opening.

Trump threatened BRICS members with 100% tariffs if they were to try to replace the USD.  “We require a commitment from these countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US Dollar or, they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy,” he said on X.

In addition to Trump comments, the cautious market mood makes it difficult for GBP/USD to gain traction. At the time of press, US stock index futures were down about 0.2% and the UK’s FTSE 100 Index was trading marginally lower on the day.

In the second half of the day, the ISM will release November Manufacturing PMI data. In case the headline comes in above 50 and shows a rebound into expansion territory in the manufacturing sector’s economic activity, the immediate reaction could help the USD gather further strength. Conversely, a weaker-than-forecast print could have the opposite effect on the currency and allow GBP/USD to hold its ground.

GBP/USD Technical Analysis

Despite the decline seen at the beginning of the week, the Relative Strength Index (RSI) indicator on the 4-hour chart holds slightly above 50 and GBP/USD manages to stay a float a few pips above the 100-period Simple Moving Average, suggesting that the buildup of bearish momentum is not yet strong enough to trigger a reversal.

On the downside, 1.2690 (100-period SMA) aligns as immediate support. If GBP/USD falls below this level and starts using it as resistance, 1.2630 (50-period SMA, static level) could be seen as next support before 1.2600. On the flip side, the pair could face resistance at 1.2750 (static level) ahead of 1.2800 (static level, round level) and 1.2825 (200-period SMA).

Created on December 02, 2024

• The cable rallied a bit during the trading session on Friday to break above the crucial 1.27 level.
• However, we have seen a little bit of pushback.
• So, this is what I call a holding pattern in the Forex world. We’ve broken out. And once you see this candlestick alarm bells should be ringing because we now see that there is a significant amount of resistance above.

So, it’ll be interesting to see if we can go higher from here. If we can sustain and move above the top of this candlestick, then I think you do have a rally just waiting to happen, probably for about another 125 pips, maybe 150 pips from there. On the other hand, if we break down from here, that just tells me we’ve got more work to do in this range between 1.25 and 1.27.

Risk Appetite?

All things being equal, a lot of this will come down to risk appetite because the US dollar is considered to be a safety currency. The British pound, while not necessarily the riskiest currency in the world, is considered to be a little further out on the spectrum. Interest rate differential is negligible between the United States and Great Britain. So, I don’t even think that comes into the picture. The pound has been a little bit more resilient against the greenback than many other currencies.

I watch this GBP/USD pair a lot just because it gives me an idea as to how the US dollar is doing because if it can squash the British pound, it’ll do a number on several other currencies, perhaps even currencies like the Japanese yen. So, I’m watching very closely. It’s a bit of a binary setup. We’ll just have to see how this plays out. If we break higher, we go higher. If we break down below the bottom of the candlestick we continue to see more back and forth.

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