• EUR/USD trades at its lowest level in over a year below 1.0500.
• The technical outlook suggests that the pair is about to turn oversold.
• Investors await PMI data releases from Germany, the Eurozone and the US.

EUR/USD came under renewed bearish pressure in the American session on Thursday and touched its lowest level since October 2023 below 1.0500. The pair struggles to find a foothold early Friday as investors await key macroeconomic data releases.

The US Dollar (USD) benefited from upbeat US data and hawkish comments from Federal Reserve (Fed) officials on Thursday, forcing EUR/USD to turn south in the second half of the day.

“Over the next year, it feels like rates will end up a fair bit lower than they are today,” Chicago Fed President Austan Goolsbee said and argued that it may make sense to slow the pace of interest rate cuts as the Fed gets close to where rates will settle.

Preliminary November HCOB Manufacturing and Services Purchasing Managers Index (PMI) data from Germany and the Eurozone will be featured in the European economic calendar. In case Services PMI unexpectedly falls into the contraction territory below 50 either in Germany or the Eurozone, the immediate reaction could cause the Euro to weaken further against its major rivals.

Later in the day, S&P Global Manufacturing and Services PMI data for the US will be watched closely by market participants. If the Manufacturing PMI recovers above 50 and the Services PMI comes in near October’s final print of 55, the USD could preserve its strength heading into the weekend and force EUR/USD to stretch lower.

EUR/USD Technical Analysis

EUR/USD trades near the mid-point of the descending regression channel and the Relative Strength Index (RSI) indicator on the 4-hour chart stays close to 30, suggesting that the pair could stage a technical correction before falling further.

On the upside, 1.0500 (former support, static level) aligns as first resistance before 1.0540 (20-period Simple Moving Average (SMA)) and 1.0570 (50-period SMA, upper limit of the descending channel). Looking south, supports could be spotted at 1.0400 (lower limit of the descending channel) and 1.0360 (static level from May 2023).

Created on November 22, 2024

• During my daily analysis of the GBP/USD pair, the British pound has truly looked fairly weak.
• As we continue to threaten the 1.26 level, it looks as if we are eventually going to break down, and perhaps go looking to the 1.25 level underneath, which is a large, round, psychologically significant figure.

During the Friday session, we get the PMI numbers for both Manufacturing and Services from both the United Kingdom and the United States. That will have a direct influence on how this pair goes going forward, but I would also point out that a lot of people are paying close attention to the bond markets in the United States as interest rates continue to rise. As long as those interest rates continue to stay fairly high, it does make the US dollar much more attractive than the British pound. Furthermore, we have a lot of other things to think about at the moment that could continue to influence what happens next with the greenback.

US Dollar Continues to Be a Safety Currency

Keep in mind that the US dollar continues to be thought of as a currency that is sought out in times of need for safety. With the escalation of the war in Ukraine, I suspect that we have yet another reason to think that the US dollar will continue to strengthen against most others. Furthermore, the United Kingdom has a lot of economic and social issues at the moment that seem to be getting worse at this point. With that being said, it’s not necessarily an economy that a lot of foreign money wants to go running to. This isn’t to say that the United Kingdom’s economy is going to collapse or anything hyperbolic like that, just that the US economy seems to be on much stronger footing.

Given enough time, I think that this market will probably go looking to the 1.25 level, and if we were to break down below there, the GBP/USD market could really start to break down. In this environment, you would probably see the US dollar strengthen against multiple other currencies, not just this one.

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Created on November 21, 2024

• Since the beginning of this week, the EUR/USD currency pair has been attempting to recover from its year-low, but rebound gains have not exceeded the 1.0609 level.
• It is currently stabilizing around 1.0548 at the time of writing this analysis.
• Trump’s trade, along with European political concerns, is still affecting the EUR/USD gains.

Reasons for the Continued Decline of EUR/USD

According to reliable trading platforms, the EUR/USD price is still stable on the threshold of the psychological support of 1.0500, the lowest for the currency pair since October of last year. Also, due to several pressure factors, the most prominent of which is the strength of the US dollar since Trump won the US presidential elections, which is known for its trade hostility. Moreover, the euro zone is recovering with increased exports. This is in addition to the divergence in monetary policy between the US Federal Reserve, which hinted at calming down the rate cuts, and the opposite of the European Central Bank’s policy.

Also, the pressure on the euro is due to the escalation of tensions between Russia and Ukraine, and concerns about negative risks to the eurozone economy. According to the latest events, it was recently announced that Ukraine launched British cruise missiles at Russia for the first time in a dangerous development of the war that threatens to expand and continue.

European Central Bank Policy and Regional Tensions

The escalation of the war between Russia and Ukraine will remain a factor of concern for the eurozone. Amid these concerns, the European Central Bank highlighted in its annual financial stability report that rising geopolitical tensions and political uncertainty are amplifying sovereign vulnerabilities. Meanwhile, rising global trade tensions increase the likelihood of negative economic shocks. According to the results of the economic calendar data recently, it was announced that wages in the eurozone rose by 5.4% year-on-year in the third quarter, the largest rate since the introduction of the euro, which complicated the European Central Bank’s plans to cut interest rates. In general, the central bank is still expected to provide its fourth interest rate cut by 25 basis points in December.

US stocks may witness selling

According to stock trading platforms, US stock futures declined today, Thursday, as investors reacted to the long-awaited earnings report from Nvidia. Despite the company beating quarterly expectations and issuing strong forward guidance, Nvidia’s stock fell by more than 2% in after-hours trading. Obviously, this decline came as investors had hoped for bigger surprises, given Nvidia’s dominant role in the AI-driven market rally. According to yesterday’s trading, the Dow Jones Industrial Average rose 0.32%, the S&P 500 closed flat. Also, the Nasdaq Composite fell 0.11%. These moves were driven by mixed earnings reports and rising geopolitical concerns.

EUR/USD Analysis Today:

According to the daily chart, the overall trend for the EUR/USD pair remains on a downward trajectory, with the 1.0500 support remaining key to keep the bears in control. Dear reader, it must be taken into consideration that the recent trading sessions formed a gathering area in narrow ranges on the chart, which may herald a strong upcoming move in one of the two directions. So far, the strongest expectations are still bearish due to several factors listed above, and the exacerbation of these factors will support a stronger bearish move. Currently, the closest support levels for the euro and dollar are 1.0500, 1.0455, and 1.0380, respectively.

On the other hand, and for the same period of time, the resistance levels of 1.0675 and 1.0800 will remain the most important to break the current downward trend and start a new shift. Today, investors will focus on economic data, including US initial unemployment claims and US existing home sales figures. In addition, more insights are expected from more comments by members of the US Federal Reserve.

EUR/USD Trading Signals:

If the EUR/USD moves below the 1.0500 support level, technical indicators will move towards strong oversold levels, and you can take buy trades but without taking risks and activating take-profit and stop-loss orders to ensure the safety of your trading account from any price reversals. You can consider buying from support levels of 1.0440 and 1.0370, respectively. In case of a sell signals, it can be from the resistance of 1.0666. 

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Created on November 21, 2024

• The Australian dollar initially did rally a bit during the trading session on Wednesday but found quite a bit of resistance above as we continue to see a lot of noisy behavior.
• With that being said, I think we’ve got a scenario where traders are going to continue to look at this as a potential buy on the dip type of market as we have seen the 99.50 yen level offer massive support.
• Now, we have the 50 day EMA as well as the 200 day EMA indicators coming into the picture to offer support.

This Market Could Remains Sideways For a While

With this being said, I think you’ve got a situation where traders are going to continue to be somewhat sideways, but given enough time, I do think that eventually the interest rate differential will continue to be a major driver of what happens next. If that’s the case, once we break the 102 yen level, the pair will likely move much higher. While Japan has started discussing tightening monetary policy, the reality is that they can’t take significant action beyond the recent moves they’ve already made.

So, with that being said, I think if we do break above the 102 yen level, it will probably be more or less a FOMO trade. If we were to break down below the 99.50 yen level, then we could see a drop to the 98 level, but really at this point in time, I think the bulk of traders are still looking for this to go higher.

AUD/JPY is a pair that will continue to follow the overall attitude of the Japanese yen more than anything else, as the Bank of Japan continues to be a major factor in what happens with currency markets, specifically anything that is related to the JPY. Ultimately, the interest rate differential still makes this a very desirable investment, as recently the Reserve Bank of Australia has chosen to sit still with its monetary policy.

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• EUR/GBP has returned to the range it has been trading in since the end of September. 
• It will probably continue oscillating there until it breaks out either higher or lower.
• The false downside break at the start of November, suggests the range floor may be vulnerable. 

EUR/GBP continues trading in a range. The pair is probably now in a sideways trend and given the principle of technical analysis that “the trend is your friend” it will probably continue oscillating until it makes a decisive breakout one way or another. 
 

EUR/GBP 4-hour Chart 

The pair made a false break on November 8 when it fell to a two-and-a-half year low of 0.8260. However, rather than continuing down to the target generated from the range, EUR/GBP recovered back inside where it now trades. 

Because it is in a sideways trend, however, the odds favor a continuation sideways, which suggests the possibility of a recovery from the current level near the range floor, and the unfolding of a leg up towards the ceiling at around 0.8450. 

It is too early to say with any confidence whether EUR/GBP will indeed rise up to the top of the range. Further, the false break may be a sign of weakness and be followed by another break lower, thus complicating the picture and adding a bearish tone to the chart. 

Assuming a break lower, it is possible the pair could fall to the target established by the range, at 0.8219 – the 61.8% Fibonacci extension.

Created on November 21, 2024

• The gains made yesterday by the GBP/USD currency pair to the resistance level of 1.2715 quickly evaporated.
• Concurrently, it returned to stabilizing around its six-month low, currently around the 1.2650 support level at the time of writing this analysis.
• This comes ahead of the announcement of a package of important US economic data and statements by some US Federal Reserve officials.
• Recently, weakening risk sentiment has deprived the pound sterling of its chance to rise.

Reasons for the Rise in the Pound Sterling

According to reliable trading platforms, the pound sterling has strengthened against other major currencies. This followed the announcement of economic data results, which showed that UK consumer price inflation rose to 2.3% year-on-year in October from 1.7% in September, a larger increase than the 2.2% expected by the market. At the same time, the UK monthly inflation rate rose to 0.6% in October, from being stable in the previous month. The crucial annual rate of services for the Consumer Price Index rose from 4.9% to 5.0%, signalling to the Bank of England that it should not rush to cut interest rates.

The reaction to the economic data results caused UK bond yields to rise, reflecting expectations that borrowing costs will remain higher for longer. Overall, the chances of a British interest rate cut next month have declined after the releases, in line with the rise in the pound sterling.

Weakening Risk Sentiment Negatively Impacts Sterling

As is known, the pound is a risk currency and tensions between Russia and Ukraine have recently escalated amid measures that threaten to widen the scope and length of the war. This is in addition to the continued strength of the US dollar, driven by expectations for the future of the US economy under Trump’s leadership.

Bank of England Policy Expectations

Widely, markets are expecting no change in the Bank of England policy decisions next week, and expectations have increased based on Governor Andrew Bailey’s testimony to the Treasury Select Committee this week. However, the BoE Governor is unsure how the £26 billion jobs tax announced in October will affect UK inflation. Recent economic data has also given the BoE Governor “reason to think”. Consequently, next month is too early for another rate cut.

Technical Analysis for the GBP/USD pair today:

According to the performance on the daily chart, the overall outlook for the GBP/USD currency pair remains bearish. However, dear follower of TradersUp, you should pay attention that the movement of the GBP/USD towards the support levels of 1.2600 and 1.2545 will push technical indicators towards strong oversold levels. From the last level, you can consider buying the GBP/USD. Furthermore, as we always recommend, do not take risks and activate take-profit and stop-loss orders to ensure the safety of your trading account from any sudden price reversals. Conversely, for the currency pair to exit the downward trend, the bulls must first move towards the resistance levels of 1.2775 and the psychological resistance of 1.3000, respectively.

Also, do not forget that the pound sterling was one of the best performing G10 currencies in 2024, due to the factors of economic growth surprises and the cautious approach to dealing with interest rates at the Bank of England.

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• Recent Bank of Japan remarks have shown a growing urgency to strengthen the weak yen.

• BoJ’s Ueda said the central bank would focus on incoming data before the December meeting.

• The dollar eased as market participants awaited new developments in the US.

The USD/JPY outlook indicates growing enthusiasm among yen bulls after recent hawkish remarks from BoJ policymakers. Meanwhile, the dollar eased from recent peaks as traders awaited new US politics and monetary policy developments. 

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Recent Bank of Japan remarks have shown a growing urgency to strengthen the weak yen. BoJ governor Kazuo Ueda noted that rising wage growth would drive inflation, allowing the central bank to continue hiking interest rates. On Thursday, he said the central bank would focus on incoming data before the December meeting to decide whether to hike interest rates.

Moreover, policymakers will focus on the impacts of a weak yen on Japan’s economy. These comments have boosted the yen as markets see a growing likelihood that interest rates in Japan will rise in December. 

Before the US election, a Reuters poll had shown that most economists expected the Bank of Japan to pause in December and hike in March next year. However, Trump’s win has shifted the outlook for US monetary policy. Markets expect fewer rate cuts by the Fed, which will keep the greenback strong. Consequently, further weakness for the yen is piling more pressure on Japan to hike interest rates.

Meanwhile, after a solid Trump rally, the dollar eased as market participants awaited new developments in the US. On the other hand, Fed policymakers have assumed a more hawkish tone, lowering rate cut expectations. Nevertheless, economists still believe the central bank will cut rates in December.

USD/JPY key events today

USD/JPY technical outlook: Lower high signals bearish resurgence

On the technical side, the USD/JPY price has broken well below the 30-SMA, showing control has shifted from bulls to bears. At the same time, the price has punctured the 154.51 support level. Meanwhile, the RSI has dipped into bearish territory below 50. 

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Initially, the price broke below its bullish trendline after a surge in bearish momentum. However, bulls managed to retake control. Unfortunately, they only made a lower high, indicating weaker momentum. Consequently, bears returned and are ready to break below 154.51. Such an outcome would allow USD/JPY to revisit the 151.74 support level.

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• EUR/GBP has returned to the range it has been trading in since the end of September. 
• It will probably continue oscillating there until it breaks out either higher or lower.
• The false downside break at the start of November, suggests the range floor may be vulnerable. 

EUR/GBP continues trading in a range. The pair is probably now in a sideways trend and given the principle of technical analysis that “the trend is your friend” it will probably continue oscillating until it makes a decisive breakout one way or another. 
 

EUR/GBP 4-hour Chart 

The pair made a false break on November 8 when it fell to a two-and-a-half year low of 0.8260. However, rather than continuing down to the target generated from the range, EUR/GBP recovered back inside where it now trades. 

Because it is in a sideways trend, however, the odds favor a continuation sideways, which suggests the possibility of a recovery from the current level near the range floor, and the unfolding of a leg up towards the ceiling at around 0.8450. 

It is too early to say with any confidence whether EUR/GBP will indeed rise up to the top of the range. Further, the false break may be a sign of weakness and be followed by another break lower, thus complicating the picture and adding a bearish tone to the chart. 

Assuming a break lower, it is possible the pair could fall to the target established by the range, at 0.8219 – the 61.8% Fibonacci extension.

Created on November 21, 2024

• During my daily analysis of the GBP/USD pair, the first thing I notice is that we did try to rally, but it seems like above the 1.27 level, the sellers came in and really started to push the markets again.
• All things being equal, this does make a certain amount of sense, because quite frankly the interest rates in the bond markets continue to climb in the United States, despite the fact that the Federal Reserve is trying to loosen monetary policy.
• Quite frankly, bond traders don’t care what the Federal Reserve wants.

Technical Analysis

The technical analysis is very negative, but we are approaching an area that is rather supported. The 1.25 level of course is a large, round, psychologically significant figure, and a lot of people will be paying close attention to whether or not we can find buyers in this region. Furthermore, there will be a lot of options being traded in that general vicinity, so therefore it offers a certain amount of support. This is an area that has been important multiple times so I think a lot of traders will be paying close attention to it. On the other hand, if we were to rally from here, the market could go looking to the 200 Day EMA near the 1.2850 level, which of course is an indicator that a lot of people pay close attention to. For what it is worth, the 50 Day EMA has fallen a bit again, and it looks like it is trying to do everything it can to cross below the 200 Day EMA, kicking off the so-called “death cross.”

All things being equal, this is a pair that is fairly negative, and I think may continue to be so. Quite frankly, I think any time this market rallies, you will be looking for signs of exhaustion that you can start selling again. I have no interest in buying this pair anytime soon.

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Created on November 21, 2024

• The Japanese yen’s gains continued to weaken on Tuesday as uncertainty surrounding the future of the Bank of Japan’s policy pushed the USD/JPY pair down to 153.28.
• However, it quickly reversed to an upward trend, with gains extending to the resistance level of 155.88.
• The USD/JPY pair is currently stabilizing around the 155.40 level at the time of writing this analysis, ahead of the announcement of important US data, led by the announcement of weekly jobless claims and statements by some US Federal Reserve officials.

BoJ Policies

In addition to the strength of the US dollar since Trump’s victory, investors are also reacting to expectations about the future of the Bank of Japan’s policies. Recently, uncertainty has persisted regarding future Japanese interest rate hikes. In this regard, the Governor of the Bank of Japan confirmed that any interest rate hikes would be gradual, depending on economic conditions, and at the same time did not indicate a timeline for when such increases in rates would occur.

Exchange Rate and Japanese Intervention

The continued rise of the US dollar against the Japanese yen has often prompted statements from Japanese officials about the harm of continued increases. Recently, the latest verbal warnings from Japanese authorities have been less effective in curbing market concerns, as traders are looking at the 160 level for the US dollar against the Japanese yen as a potential trigger for further government intervention in the forex market. In general, the Japanese yen remains under pressure from the US dollar, supported by expectations that Trump’s policies may reignite inflation and limit future interest rate cuts by the Federal Reserve.

Japanese stocks in decline

According to stock trading platforms, the Nikkei 225 Japanese stock index fell by 0.8% to around 38030, while the broader TOPIX index lost 0.2% to 2693 on Thursday, as Japanese stocks reached their lowest levels in several weeks, and Japanese stocks were negatively affected by losses in the technology sector. The decline came after a sharp drop in the US-based Nvidia stock after hours, despite the company announcing better-than-expected quarterly results and providing strong forward guidance. Overall, the suffering of Nvidia shares has greatly affected the broader technology sector.

USD/JPY Technical analysis and Expectations Today:

The overall trend of the USD/JPY pair remains upward. Bulls are in control as long as the currency pair is above the resistance of 155.00. The performance of the USD/JPY pair is currently focusing on the possibility of intervention from Japan. Talk of this will increase within the resistance ranges of 155.00 and 160.00, respectively. The upward movement amidst a strong rebound from the 21-day simple moving average. So far, Japanese intervention in the foreign exchange markets has been verbal. Therefore, you should be cautious as actual Japanese intervention in the market may bring about strong selling of the currency pair. Meanwhile, the first move will be from the support of 152.00 and below.

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