Created on November 25, 2024

• At the beginning of this week’s trading, the EUR/USD currency pair is expected to stabilize around its recent losses, which extended to the support level of 1.0332 last week.
• Technically, this is the lowest level for the currency pair in the forex market in two years.
• Before attempting to rebound upwards, the week’s trading closed around the level of 1.0418. The downward trend remains the strongest.

Magnitude of Euro Loss

According to recent forex market trading, the Euro has declined by 4.76% against the US dollar over the past 52 weeks. Recently, the EUR/USD has declined by 4.21% since the beginning of the month. Furthermore, the Euro has declined by 5.54% against the dollar since the beginning of 2024.

Economic Slowdown Pressures Euro Performance

Recently, investor appetite for the single European currency, the Euro, has weakened. After it was announced that business activity in the Eurozone contracted unexpectedly this month, raising concerns about the outlook for the European economy and indicating that the European Central Bank will need to be more aggressive with interest rate cuts. According to economic data results, the Purchasing Managers’ Index for service providers and manufacturers weakened. Political crises in Germany and France, as well as the threat of tariffs from the Donald Trump presidency, also affected the currency.

On another influential front, a key measure of wages in the eurozone jumped by the most since the euro was introduced for trading in 1999 – a move that complicated the European Central Bank’s plans to cut interest rates as inflation declines. As announced, negotiated wages in the third quarter rose by 5.4% year-on-year. This was higher than 3.5% in the previous three months and was largely driven by Germany.

The European Central Bank’s Vision of Trump’s Threats

In this regard, at the end of last week, European Central Bank President Christine Lagarde said that the European Union faces growing threats to its trade with other parts of the world and must respond by deepening capital markets to finance innovation and increase productivity. Lagarde’s concerns came as US President-elect Donald Trump wants to raise tariffs on imports from a wide range of countries.

Lagarde added, “The geopolitical environment has become less favourable, with growing threats to free trade from around the world.” Also, “As the most open of the major economies, the European Union is more exposed to these trends than others.” Added, Lagarde that with the source of growth at risk, Europe needs to move “urgently” to increase the financing available to innovative new companies that can help drive economic expansion, with many of them having to rely on funding from the United States and elsewhere.

EUR/USD Analysis Today:

My technical outlook for the EUR/USD currency pair remains unchanged. The overall trend remains downward, and as mentioned before, moving below the 1.0500 support level will further strengthen the bears’ control. Consequently, do not be surprised if the pair tests lower levels that may reach the currency pair’s parity level if the weakness factors from Trump’s trade and the economic slowdown in the Eurozone led by Germany continue. Currently, the closest support levels for the EUR/USD are 1.0335, 1.0280, and 1.0160, respectively. Technical indicators continue to move towards oversold levels after recent losses.

EUR/USD Trading Signals:

You should be cautious as the EUR/USD will remain bearish. Any attempt to rebound upwards will be a selling opportunity. 

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• Dollar bulls cheered Trump’s pick for US Treasury Secretary.

• Market participants are awaiting the FOMC meeting minutes.

• Data on Friday revealed a sharper-than-expected slowdown in the UK economy.

The GBP/USD forecast suggests further dollar strength after Trump picked Scott Bassent as the next US Treasury Secretary. Meanwhile, due to downbeat economic data, the pound remained fragile after reaching a six-month low on Friday. 

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The greenback regained strength on Monday as bulls cheered Trump’s pick for US Treasury Secretary. After Trump’s win, Scott made remarks supporting a stronger dollar and the proposed import tariffs. Therefore, traders believe he will be bullish for the dollar. 

Meanwhile, market participants are awaiting more clues for future Fed moves. On Tuesday, the US will release the FOMC meeting minutes, which might shed more light on the December meeting. The meeting came soon after Trump won the election and shifted the outlook for the US economy.

Consequently, policymakers might have assumed a more cautious tone, leading to a decline in Fed rate cut expectations. Currently, markets are pricing a 52% chance of a cut in December. Hawkish minutes might lower this likelihood below 50%, further boosting the dollar.

Meanwhile, the pound was frail after data on Friday revealed a sharper-than-expected slowdown in the UK economy. Notably, retail sales fell by 0.7%, more than the expected 0.3% decline, showing weak consumer spending.

Meanwhile, PMI data showed an unexpected decline in business activity in the manufacturing and services sectors. The manufacturing PMI came in at 48.6, compared to estimates of 50.0. The services PMI was 50.0, below forecasts of 51.9. The downbeat economic data might pressure the Bank of England to cut interest rates. 

GBP/USD key events today

Market participants do not expect any key reports from the UK or the US today. Therefore, they will continue to absorb US political developments.

GBP/USD technical forecast: Bearish momentum surges after 30-SMA retest 

On the technical side, the GBP/USD price is collapsing after retesting the 30-SMA resistance. At the same time, the RSI is falling far below the 50 mark, indicating stronger bearish momentum. Initially, the downtrend paused at the 1.2500 support level, where the RSI made a bullish divergence. 

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The price gapped up as it revisited the 1.2600 resistance and the SMA. After that, bears took back control with a solid candle. Given the strong bearish bias, the price might soon retest the 1.2500 support level and likely break below.

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• EUR/USD opened higher after closing the previous week deep in the red.
• The technical outlook is yet to point to a buildup of bullish momentum.
• Improving risk mood could help the pair stretch higher.

EUR/USD lost more than 1% for the third consecutive week but opened with a bullish gap on Monday. The pair, however, retreats slightly after testing 1.0500 and the technical outlook shows a lack of bullish momentum.

News of president-elect Donald Trump nominating fund manager Scott Bessent as the US Treasury Secretary caused US Treasury bond yields to decline sharply at the weekly opening, making it difficult for the USD to find demand.

Assessing Bessent’s nomination, “Bessent, a hedge fund CEO, is known to be a fiscal hawk, so this should ease some of the more extreme deficit fears as he has advocated a 3% deficit by 2028,” said Deutsche Bank analysts. “In practise that will be extremely tough but for now the market can be a bit relieved. He is also thought to be less extreme on trade policy than some of his rivals for the job.”

In the meantime, US stock index futures are up about 0.5% in the European morning on Monday, highlighting a positive shift in risk mood. In case risk flows continue to dominate the action in financial markets after Wall Street’s opening bell, the USD could come under renewed selling pressure and help EUR/USD extend its recovery.

The European economic docket will feature IFO – Current Assessment and IFO – Business Climate figures for November. A significant decline in these business sentiment data could limit the Euro’s gains with the immediate reaction.

EUR/USD Technical Analysis

EUR/USD remains within a descending regression channel and the Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50 despite the bullish opening to the week. On the downside, 1.0450 (mid-point of the descending channel) aligns as immediate support before 1.0400 (round level) and 1.0360 (lower limit of the descending channel).

Looking north, first resistance could be spotted at 1.0500 (round level, static level) ahead of 1.0535 (50-period Simple Moving Average (SMA), upper limit of the ascending channel) and 1.0600 (round level, static level).

GBP/USD is trading at $1.25975, up 0.56%, as it tests the pivot point at $1.26072. Immediate resistance stands at $1.26617, with further levels at $1.27153 and $1.27714 if the pair gains bullish traction. On the downside, support is found at $1.25537, with additional cushions at $1.25061 and $1.24569.

The 50 EMA at $1.26106 aligns closely with the pivot, reinforcing its importance as a tipping point. A break above $1.26072 could drive further bullish momentum, while a failure to hold may signal a bearish reversal.

Euro Dips as PMI Data Misses Expectations

The Euro (EUR) struggled on weak economic data. German Final GDP q/q stagnated at 0.1%, while French and German PMI figures fell below forecasts.

French Manufacturing PMI hit 43.2, below the 44.6 projection, and German Services PMI dropped to 49.4, missing the 51.6 estimate.

Market focus shifts to Monday’s German Ifo Business Climate data at 86.1, down from 86.5, and ECB President Lagarde’s insights on future monetary policy.

EUR/USD Technical Forecast

Fundamental Analysis & Market Sentiment

I wrote on 17^th November that the best trade opportunities for the week were likely to be:

The weekly gain of 10.74% equals 5.37% per asset.

Last week’s key takeaways were:

1. UK CPI (inflation) rose from 1.7% to 2.3% annualized, a fraction higher than the expected 2.2%.
2. Canada’s CPI (inflation) rose from -0.4% to 0.4% month-on-month, a fraction higher than the expected 0.3%.
3. UK Monetary Policy Report Hearings
4. US Unemployment Claims – this was almost exactly as expected.
5. UK Retail Sales – this was considerably worse than expected, showing a month-on-month decline of 0.7%, while a drop of only 0.3% was widely forecast.
6. Canada Retail Sales – as expected.
7. US, German, UK, and French Services & Manufacturing PMI: The US data was strong and healthy, but the other countries saw weaker-than-expected numbers.

Apart from the inflation data, there were no data points last week that were truly interesting to the market, and even inflation is no longer the concern it was some months ago. 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.

The Week Ahead: 25^th – 29^th November

The coming week’s schedule is again relatively light. Still, it has some important inflation-related data (including in the USA) and central bank releases from the US Federal Reserve and the Reserve Bank of New Zealand.

1. US Core PCE Price Index
2. US CB Consumer Confidence
3. US Preliminary GDP
4. US FOMC Minutes
5. German Preliminary CPI (inflation)
6. Australian CPI (inflation)
7. Canadian GDP
8. Reserve Bank of New Zealand Official Cash Rate, Rate Statement, and Monetary Policy Statement
9. Chinese Manufacturing PMI
10. US Unemployment Claims

Monthly Forecast November 2024

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

Weekly Forecast 24^th November 2024

I made no weekly forecast this week, as there were no unusually strong directional price movements over the past week, which is the basis of my weekly trading strategy.

Last week, the Australian Dollar was the strongest major currency, while the Euro was the weakest. Like the previous week, one-third of the most important Forex currency pairs and crosses changed 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 bullish candlestick that continued the recent breakout beyond 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. The price reached a new 2-year high. These are bullish signs, but it should be noted that the candlestick has a large upper wick, showing that the Dollar struggled to hold some of its gains. Another bearish note is hit by the price retreating from a high very close to the nearest overhead resistance level at 107.95.

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.

The strong US Dollar is supported by the expectation that the new Trump / Republican control of the executive and legislature in the USA will lead to a more hawkish monetary policy. This has been evidenced by the strong increase in US Treasury Yields over recent weeks.

I have plenty of technical and 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.

Bitcoin

Bitcoin saw another week of extraordinary gains as it powered to new all-time highs, topping just below the big round number at $100,000, which has still not been reached. The price rose by almost 10% last week.

There is no reason not to be bullish except that the price is now very close to the huge six-figure round number at $100,000. If the price arrives at, or very close to, that point, we will likely see massive profit taking as there will be a 25% gain within just a few weeks, an enormous rise in value for any asset. So, this leg of the bull run, or this whole trend, may not have much further to run.

Bitcoin received a significant boost from the election victories of President Trump and Congressional Republicans in both Houses. Republicans are seen as more likely to favour lighter regulation of cryptocurrency, so their ascendancy has boosted both crypto in particular and risk sentiment in general, which also helps a risky asset like Bitcoin.

It is smart to be long of Bitcoin, but be mindful of $100,000 as a potentially strong barrier. With such momentum and strong gains, a trend or momentum trader should be interested. However, waiting for a daily (New York) close above $100,000 before entering a new long trade in Bitcoin will probably be wise.

Note that Bitcoin ETFs are not getting the full gain made by the underlying, so if you can afford it, you might want to buy Bitcoin futures instead of a Bitcoin ETF or even spot Bitcoin. There are Bitcoin micro futures available on the CME, which are only sized at 10% of the value of one Bitcoin.

EUR/USD

Last week, the EUR/USD currency pair printed a relatively large bearish candlestick, which made the lowest weekly close seen in almost two years. The weekly candlestick closed some way from its low, with a noteworthy lower wick on the candlestick. The price is below its levels from both 3 and 6 months ago, which is my preferred metric for calling a long-term bearish trend. 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.

There are plenty of reasons to be short here, but I am a bit concerned about Friday’s spike lower and the fairly strong bounce. However, the price feels heavy, and lower prices are likely over the coming week.

A shorter-term approach is to look for short swing trades from retests and rejections of resistance levels above the current price.

USD/JPY

I expected the USD/JPY currency pair to have potential support at ¥153.33.

The H1 price chart below shows how the price action rejected this support level with a small hourly pin bar, marked by the up arrow within the price chart below. This rejection occurred soon after the start of the overlap of the London / Tokyo sessions, which can often be a great time for reversals in Japanese Yen currency pairs and crosses.

Note that this multi-candlestick reversal took a while to set up, but it was worth the wait for a decisive change in direction.

So far, this trade has given a maximum profit of slightly more than 1.5 to 1.

The US Dollar remains in a long-term bullish trend, and the Japanese Yen is prone to weakness, so long trade setups in this currency pair might be something to watch out for.

USD/CHF

I expected that the USD/CHF currency pair would have potential support at $0.8805

The H1 price chart below shows how the price action rejected this support level with a strong hourly inside bar, marked by the up arrow within the price chart below. This rejection occurred soon after the start of the overlap of the London / New York sessions, which can often be a great time for reversals in the US Dollar.

So far, this trade has given an excellent maximum profit approximately 1.5 to 1.

The US Dollar is in a strong long-term bullish trend, and the Swiss Franc is relatively weak, like the Euro with which it is strongly positively correlated, so there may be more opportunities for long trades here over the coming days and weeks.

NASDAQ 100 Index

The NASDAQ 100 Index rose last week, closing right on the high of its range, which is a bullish sign. This is a healthy bullish rebound within a long-term bullish trend. The linear regression analysis applied in the price chart below also shows a consistent bullish trend over the shorter term.

The strong trend and the election victories of Trump and Congressional Republicans have provided a tailwind for higher stock market prices in the USA. Notably, many other countries are seeing their stock markets struggling, partly due to fears that the new Trump administration will impose tariffs on US imports.

The question now is whether the price will continue to rise and make a new record high above the record high it set a couple of weeks ago.

I see the NASDAQ 100 Index as a buy once it makes a new record high closing price.

S&P 500 Index

My analysis of the S&P 500 Index is exactly the same as my analysis of the NASDAQ 100 Index above.

Bottom Line

I see the best trading opportunities this week as

• Long of Bitcoin in USD terms following a daily (New York) close above $100,000.
• Short of the EUR/USD currency pair.
• Long of the NASDAQ 100 Index following a daily (New York) close above 21,139.
• Long of the S&P 500 Index following a daily (New York) close above 6,002.

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Created on November 22, 2024

• The Canadian dollar has initially pulled back just a bit against the Japanese yen during early trading on Thursday.
• That being said, this is a market that continues to see the same resistance barrier that people are paying attention to, specifically the area between the 111.50 yen area and the 112 yen area.
• This is a region that’s been consolidating for some time, and I think that will continue to be the story in this market.

If we can break through there, then I think a lot of upward momentum re-enters the market. That being said, you also have to keep in mind that traders will continue to look at the overall risk appetite. And if that picks up, that should help. We do get core retail sales out of Canada on Friday, so that might be a mover as well. This will be especially true if retail sales in Canada, much stronger than anticipated, as it could only exacerbate the move to the upside and the potential breakout.

Moving Averages in this Pair

The 50 day EMA is starting to get towards the 200 day EMA. And it looks like we are trying to get a bit of a bullish cross, which of course helps the idea of longer term traders jumping in with the so called golden cross underneath. We have support at 109 yen. As long as we can stay above that level, I really don’t see a situation where the market breaks down.

And to the upside, we could go as high as 115 yen. I do expect this to happen sooner or later. But also keep in mind that the Canadian dollar is heavily influenced by crude oil, which hasn’t really been that great as of late. So ultimately, this is a market that’s building up pressure, but it can’t break out quite yet. If and when it does, it could be quite brutal.

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• EUR/USD retreats to two-year lows near 1.0330.
• The US Dollar appears unstoppable and reaches new top.
• Next data of note in the euro area will be flash inflation data.

It was an awful week for EUR/USD. In fact, the fourth quarter has been dreadful so far for the European currency. Since late September’s yearly highs, above 1.1200, the pair has closed with gains in just one week. The Fiber has retreated nearly 8% since then or more than eight cents. 

The Euro has had a rough ride lately, with much of its weakness amplified by a resurgent US Dollar (USD). The Greenback has gained fresh momentum, fueled by the sudden resurgence of geopolitical tensions — particularly in the Russia-Ukraine conflict — as well as the revival of the so-called “Trump trade.” Against this backdrop, the US Dollar Index (DXY) surged to a new cycle high, climbing above the 108.00 mark for the first time since early November 2022.

Why parity is back on the table

Considering the same scenario, if EUR/USD lost eight big figures in nearly two months, a “meagre” three-cent drop could seem even more likely.
Aside from the current oversold condition of the single currency, there’s little to suggest a near-term rebound — let alone a sustainable recovery.

The prospects for a stronger US Dollar dominate sentiment and are only occasionally tempered by technical corrections as investors are expected to back the “Trump trade” throughout most of 2025.

On the domestic front, preliminary indicators of business activity in both Germany and the broader Euroland are far from encouraging. Adding to this, the bleak outlook for the German economy — exacerbated by visible political instability and stagnant economic activity across the bloc — doesn’t bode well for the Euro.

And that’s without even considering the performance of the US economy.

Looking ahead, the specter of renewed tariffs on European or Chinese goods under a possible Trump administration could stir up inflation in the US. If the Fed continues its cautious approach — or even tilts hawkish in response — the USD could strengthen further, keeping EUR/USD under pressure.

A looser ECB, a cautious Fed

On the monetary policy front, the Federal Reserve (Fed) cut its benchmark interest rate by 25 basis points at its November 7 meeting, bringing the Fed Funds Target Range (FFTR) to 4.75%-5.00%. This widely expected move is part of the Fed’s ongoing effort to steer inflation closer to its 2% target. However, cracks are beginning to appear in the labour market, even as unemployment rates remain near historic lows.

Fed Chair Jerome Powell struck a cautious tone in his latest remarks, signalling that the central bank is in no rush to lower rates further. This has dampened speculation about a December rate cut while simultaneously providing additional support for the Dollar.

Other Fed officials, notably Governor Michelle Bowman, echoed Powell’s sentiment, emphasising the need for restraint when considering future rate reductions.

Meanwhile, across the Atlantic, a dovish narrative continues to dominate among European Central Bank (ECB) policymakers, despite October’s uptick in the Harmonised Index of Consumer Prices (HICP) and higher Negotiated Wage Growth in the third quarter.

So far, markets are pricing in approximately 75 basis points of easing by the Fed over a 12-month horizon, compared to around 150 basis points of rate reductions expected from the ECB within the same period.

Techs on EUR/USD

Further losses could push EUR/USD down to its 2024 low of 1.0331 (November 22). The breakdown of this level could open the door to a probable visit to the weekly lows of 1.0290 (November 30 2022) and 1.0222 (November 21).

On the upside, there is minor resistance at the weekly top of 1.0606 (November 18), seconded by the critical 200-day Simple Moving Average (SMA) at 1.0857.

It is worth noting that the short-term technical outlook remains bearish as long as the pair stays below the latter.

Furthermore, the daily Relative Strength Index (RSI) entered the oversold region near 16, while the Average Directional Index (ADX) at nearly 49 indicates a strong trend.

British Pound PRICE Today

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

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

• UK retail sales fell by 0.7% in October, compared to estimates of a 0.3% drop.

• The UK economy only expanded by 0.1% in the third quarter.

• US initial jobless claims unexpectedly fell last week from 219,000 to 213,000.

The GBP/USD price analysis shows weaker consumer spending in the UK, which has pushed the pound to a six-month low. On the other hand, the US labor market remains resilient, reducing Fed rate cut expectations.

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Data on Friday revealed that retail sales in the UK fell by 0.7% in October, compared to estimates of a 0.3% drop. The decline in sales is a clear indication that consumer spending is weak. This follows other economic reports showing a slowdown in the UK economy. Notably, GDP data showed that the economy only expanded by 0.1% in the third quarter. 

Adding fuel to the fire, the UK PMI reading for both services and manufacturing missed the estimates. The negative figures may keep lasting pressure on the pound throughout the current trading session.

If this trend continues, the Bank of England might be forced to change the timing for rate cuts. Initially, experts believed the new government budget would boost economic performance. However, so far, economic data has shown the opposite.

On the other hand, the US economy has remained resilient despite high interest rates, keeping policymakers cautious. Data on Thursday revealed that initial jobless claims unexpectedly fell last week from 219,000 to 213,000. Meanwhile, economists had expected 220,000 claims.

Labor market resilience has kept the Fed from rushing to lower borrowing costs. At the same time, Trump’s recent win has shifted the outlook for economic growth and inflation. His policy changes might boost growth and lead to a spike in inflation. High inflation will force the Fed to keep interest rates at a restrictive level, which is bullish for the dollar.

GBP/USD key events today

• US flash manufacturing PMI
• US flash services PMI

GBP/USD technical price analysis: Bears trigger a decline to the 1.2500 support

On the technical side, the GBP/USD price has broken below the 1.2600 support level to make a new low near the 1.2500 key psychological level. The new low indicates a continuation of the downtrend after retesting the 30-SMA resistance. 

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However, the RSI has made a slight bullish divergence. While the price has made a lower low, the indicator has made a higher one. This is a sign that bearish momentum is fading and could lead to a reversal. However, if the price stays below the 30-SMA, bears might eventually breach the 1.2500 support level.

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• Japan’s core consumer inflation increased by 2.3% in October.

• 56% of economists expect the Bank of Japan to hike rates in December.

• US jobless claims unexpectedly fell to 213,000.

The USD/JPY outlook shows a stronger yen amid increasing bets for a December rate hike by the Bank of Japan. However, the pair fluctuated on Friday after mixed economic data from Japan. Meanwhile, the dollar remained strong after data in the previous session revealed a still-tight US labor market.

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Japan released mixed reports on Friday, which initially boosted the yen before it gave up its gains. Core consumer inflation in the country increased by 2.3% in October, above forecasts of 2.2%. At the same time, services inflation increased by 1.5% after a previous reading of 1.3%. Increasing price pressures give the Bank of Japan enough room to hike interest rates. As a result, traders raised the likelihood of a December rate hike. 

At the same time, a Reuters poll revealed that 56% of economists expect the Bank of Japan to hike rates in December. This increased from the previous month when only 49% expected such a move; hence, the yen gained.

However, a separate report revealed that manufacturing activity in Japan fell in November amid weak demand in China. 

On the other hand, data from the US on Thursday revealed that jobless claims unexpectedly fell to 213,000, compared to forecasts of 220,000 claims. Few claims indicate a low unemployment rate and a robust labor market, boosting the dollar. At the same time, a strong labor market lowers the likelihood of a Fed rate cut in December. Market participants are now awaiting US business activity data for more clues on whether policymakers will vote to cut rates in December.

USD/JPY key events today

• US flash manufacturing PMI
• US flash services PMI

USD/JPY technical outlook: Bears meet strong hurdle at 154.51

On the technical side, the USD/JPY price trades below the 30-SMA with the RSI below 50, supporting a bearish bias. However, the decline has paused to consolidate near the 154.51 key support level. 

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Price action shows many wicks as bears and bulls battle for control between the support level and the 30-SMA resistance. If bears win, the price will make a lower low and target the next support at 151.74. On the other hand, if bulls win, USD/JPY will breach the SMA to retest the 156.51 resistance level.

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