Created on October 23, 2024

• As I look at the Euro, the first thing I see is that we tried to rally a bit during the early hours on Tuesday, only to give up those gains and show signs of hesitation.
• At this point, we continue to dance around the 1.05 level, an area that of course has been crucial for some time.
• And I think we need to pay close attention to what we do in this general vicinity. The candlestick certainly shows just how feckless the euro is at the moment, but I do think that if we turn around and rally from here, if we can break above the 1.09 level, that would be very bullish.

But that being said, it doesn’t look like that’s going to happen. We have to take a look at the 1.0775 level, and if we break down below there, then I think the market goes looking to the 1.07 level.

The Fed Still Matters

Keep in mind, a lot of this comes down to the Federal Reserve and the way it may have to react to stronger than anticipated economic data.

Furthermore, the European Union looks as if it is in a little bit of trouble. So, I think it all ties together for a potentially negative turn of events. All things being equal, I am more of the thought process of waiting to see whether or not this level actually holds.

I wouldn’t necessarily go into the market right now, but I think you have that binary decision. In other words, above the 1.09 level, you probably have to be a buyer. On the other hand, below the 1.0775 level, you probably have to be a seller.

Keep in mind how volatile this pair can be choppy, but I also recognize that once it starts moving, it does tend to trend for quite a while. Because of this, a certain amount of patience makes sense, and I think would be rewarded over the longer term.

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Created on October 23, 2024

• The US dollar is still the strongest against the rest of the major currencies due to factors that reduce expectations regarding further US interest rate cuts, in addition to the possibility of Trump winning the US presidential elections.
• Additionally, there is increasing demand for buying the US dollar as a safe haven amid rising global geopolitical tensions.
• Accordingly, the downward trend for the GBP/USD pair remained the strongest and its recent losses may continue to reach the support level of 1.2944, the lowest level for the currency pair in more than two months.
• The GBP/USD pair is stable around the 1.2990 level at the time of writing the analysis.

What is expected for the GBP/USD pair if Trump wins the US elections?

According to Forex market trading. The price of the US dollar is rising with the increasing chances of Donald Trump winning on November 4, and accordingly, analysts say that there are more possibilities in the following weeks for the victory. In this regard, US betting markets, including Polymarket, Kalshi and PredictIt, have raised the implied probability of a Trump win to more than 60%. The high expectations of a Trump victory are reflected in the continued outperformance of the US dollar, which includes another drop in the GBP/USD exchange rate to below 1.30. In the forex market, the euro/dollar exchange rate has also fallen by half a percent over the past 24 hours to trade at 1.0827.

Meanwhile, polls suggest the presidential race is much closer than the betting markets suggest. According to the Bookmakers Review, betting odds have accurately predicted a win for 77% of the expected candidates over the past 35 years.

Analysis from Barclays finds that at least 2% of the recent advance of the US dollar against the euro and the pound is due to positioning for the upcoming vote. As a result, a Kamala Harris win would see the premium fade while the status quo remains intact, sending the likes of GBP/USD and EUR/USD soaring.

In the event of a Trump victory, Barclays assumes markets will price in a 60% tariff on China as a near certainty and a 70% tariff on countries with large trade surpluses with the US. Earlier this week, analysts at Deutsche Bank said the likelihood of a “red victory” was also increasing, with Republicans gaining control of Congress and the White House. “We see the most bullish outcome for the US dollar being a red sweep and the most bearish outcome for the dollar being a blue sweep, but the magnitude of the moves is likely to be larger in the former case,” said George Saravelos, an analyst at Deutsche Bank. “We see the dollar rising across all currency pairs in a red sweep.” Trump, for his part, insisted last week that he has not changed his mind about pursuing a number of policies that are expected to support the dollar. In a new interview, Trump dismissed economists’ warnings that his proposed tariffs would have a negative impact on the economy and raise inflation. He said, “To me, the most beautiful word in the dictionary is tariffs,”.

A potential Trump president wants to impose a 60% tax on imports from China and a flat 10% levy on the rest of the world. This would be a repeat of the first-ever tariff-heavy agenda, and markets are taking notice. “It’s interesting that the dollar’s ​​trajectory since its August lows closely follows the pattern that preceded the 2016 US election,” the analyst added.

Historically, the US dollar had surged in the wake of Trump’s victory in 2016. if history repeats itself, a significant rally could be in store in the coming weeks. Barclays’ model shows that the GBP/USD exchange rate is expected to fall to 1.23 in the event of a Trump victory. For EUR/USD, the target is set at 1.03. However, in case of Harris’ victory, EUR/USD is expected to recover to 1.11 in the following weeks. As for GBP/USD, the recovery is expected to extend to 1.33.

Technical forecasts for the GPB/USD pair today:

According to the performance on the daily chart, the general trend for the GBP/USD pair is still bearish. Technically, the stability below the psychological level of 1.3000 strengthens the bears’ control over the general trend and warns of a stronger downward move if the USD’s strength factors continue. The next support levels for the currency pair will be 1.2920 and 1.2800, respectively, which are sufficient to push the technical indicators towards strong oversold levels. On the other hand, and over the same time frame, there will be no initial break of the downtrend without first moving above the resistance of 1.3150.

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Created on October 23, 2024

• Reducing expectations for further US rate cuts continues to drag on EUR/USD, with losses extending below the psychological support level of 1.0800 to the support level of 1.0792.
• Furthermore, the currency pair is at the lowest level in more than two and a half months.
• Amid this performance the US dollar index rose above 104.1 on Wednesday, recording its highest levels since early August as investors continued to reduce bets on aggressive interest rate cuts by the Federal Reserve, while preparing for the upcoming US presidential elections.

Also, the US dollar is tracking the rise in Treasury yields, with the benchmark 10-year Treasury note reaching 4.22% for the first time since late July amid strong economic data and concerns about the deficit. Now, markets are pricing in a 90% probability that the Fed will opt for a more modest 25-basis point interest rate cut in November after a hefty 50-basis point cut in September. Concurrently, Investors are looking to the Federal Reserve’s Beige Book for updates on the central bank’s economic outlook.

According to forex trading, the US dollar is hovering at multi-month highs against other major currencies, with buying activity most pronounced against the yen.

In general, financial markets have increased their expectations for further rate cuts by the European Central Bank. The ECB cut interest rates for the third time this year, citing improved inflation control but a deteriorating economic outlook for the euro zone. ECB President Christine Lagarde’s comments were interpreted as a signal of a downward revision of economic forecasts, prompting markets to expect a 25bp cut at each meeting until mid-2025.

Investors are closely watching upcoming economic data, including PMI figures, which are expected to confirm the sluggish regional performance and potentially support further ECB action. A 25bp rate cut in December is widely expected, with a 30% chance of a larger 50bp cut. Meanwhile, strong US economic data has dampened expectations of a more aggressive rate cut by the Fed.

EUR/USD Technical analysis and forecast:

No change in my technical view on EUR/USD forecast as the overall trend remains bearish and breaking the 1.0800 psychological support strengthens the bears’ control over the trend and heralds a deeper downside move. Next up will be 1.0745 and 1.0600, respectively. These are enough to push all technical indicators towards strong oversold levels. On the other hand, and on the same time frame, the daily chart will not break the bearish outlook without the currency pair first moving above the psychological resistance of 1.1000. Aslo, the euro price will be affected today by new statements from the Governor of the European Central Bank, Lagarde.

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Gold (XAU/USD) remains bullish at $2,750.21, with support at $2,738.16. Resistance is at $2,754.01, and the 50-day EMA of $2,719.07 strengthens the trend. A break below support could signal sharper declines.

Sterling Awaits Key BOE Speeches Amid IMF Meetings

Sterling (GBP) remains steady as traders anticipate key speeches from MPC member Breeden and BOE Governor Bailey. Both talks are expected to offer insights into future monetary policy, so the pound may experience heightened volatility.

These speeches, alongside ongoing IMF meetings, could provide crucial guidance for the pound’s short-term direction.

Investors will be looking for any signals on interest rate adjustments or economic outlook, which could influence market sentiment and GBP movement.

GBP/USD Technical Analysis

GBP/USD is trading at $1.29688, down 0.11%, staying just below its pivot point of $1.29915. This level is key—if the pair breaks above it, we could see a stronger bullish bias, with immediate resistance at $1.30154 and further levels at $1.30531 and $1.30770.

Created on October 23, 2024

I believe this point in time, if we can break above the 50 Day EMA, I’d be a buyer of this pair. I would have a stop loss at the 1.2975 level, aiming for a move to the 1.33 level.

• During my daily analysis of the GBP/USD pair, the first thing I understood by looking at the chart is just how hesitant we are to make a bigger move.
• That being said, we also get PMI numbers later this week on Thursday, which could have a major influence on both of these currencies as both the United States and the United Kingdom or release those announcements at different points in the day.
• Because of this, think you have got a situation where we might see a bit of volatility between now and then, but ultimately, we will make a bigger decision.

If we can break above the 50 Day EMA, presently trading right around the 1.31 level, then it’s likely that we would see quite a bit of upward momentum in the British pound. Keep in mind that the US dollar is considered to be a bit of a “safety currency”, so therefore you need to be cautious about the overall risk appetite. After all, if we start to see risk appetite get eviscerated, that will help the US dollar strengthen, and that should, at least in theory, drive this pair lower. At that point, I think you have to look at the 200 Day EMA for potential support near the 1.2850 level. Anything below there could be catastrophic for the British pound, but I think it probably would be more or less a result of the US dollar strengthening against almost everything, not necessarily Sterling.

I do believe that we have a lot of noise ahead of us, and I do think that this is a market that will continue to be difficult to get your hands on, so like many of the other major currency pairs, I think that we are essentially in a bit of a “holding pattern.” This is because we are waiting for some type of fundamental analysis and news to get the markets moving. As things stand right now, I think we are simply treading water.

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• USD/JPY flirts with the 151.00 level, driven by rising US Treasury yields but held back by key resistance at the top of the Ichimoku Cloud.
• Momentum remains bullish, with the RSI hitting a new high, suggesting further upside towards the 200-DMA at 151.36 and beyond.
• A break below 151.00 could see support at 149.68, with further downside risks targeting the October low at 149.09.

The US Dollar prints back-to-back gains against the Japanese Yen on Tuesday but struggles to clear the 151.00 figure decisively. At the time of writing, the USD/JPY trades at 150.92, as the US 10-year T-note yield keeps the pair contained at around current exchange rates.

USD/JPY Price Forecast: Technical outlook

The USD/JPY is testing key resistance at the top of the Ichimoku Cloud (Kumo) at around 150.80/95, with buyers eyeing the 200-day moving average (DMA) at 151.36.

From a momentum standpoint, buyers are in charge. The Relative Strength Index (RSI) is reaching a new higher high, signaling bulls are gathering steam.

A daily close above the 151.00 figure could sponsor a test of the 200-DMA at 151.36. On further strength, the pair could test the July 25 swing low turned resistance at 151.93 before cracking 152.00.

Conversely, if USD/JPY dives beneath 151.00, the first key support would be the Tenkan-Sen at 149.68, ahead of the October 21 low of 149.09.

USD/JPY Price Chart – Daily

Created on October 22, 2024

• The Dollar and is Euro is trending downward against the US likely to incur further losses over the next five days.
• According to forex market trading, the EUR/USD exchange rate fell below the 200-day simple moving average last week, which equates to a significant technical deterioration.
• Our forecast model for this week sees the 200-day moving average as a key line, where the exchange rate is in a downward trend when declining and an upward trend when rising.

Commenting on the pair’s performance, W. Brad Bechtel, an analyst at Jefferies, an investment banking and capital markets firm, explains: “200-day moving averages can be key pivot points over long horizons, and currencies, along with other assets, tend to get ‘stuck’ above or below their moving averages for several months at a time.”

EUR/USD Technical analysis and forecast:

Technically, the 200-day moving average is at 1.0871, and early indications suggest that the technical level is now acting as a ceiling, as last week’s bounces failed to clear the hurdle. Therefore, the coming days could see EUR/USD struggle with the pair below the 200-day moving average, and it could be vulnerable to retesting last week’s low of 1.0810.

Fundamentally, the euro is under pressure as financial markets now believe that the European Central Bank will cut interest rates more, and faster, than the US Federal Reserve. This has led to a decline in eurozone bond yields relative to US bond yields, providing a fundamental narrative for the EUR/USD decline. According to analysts at Société Générale, “near-term support for the euro-dollar is at 1.0778, the low of early August. A deeper decline in a repeat of 2016 cannot be ruled out if US yields gain upward momentum after the presidential election.”

Furthermore, the European Central Bank responded last week to the deteriorating inflation dynamics in the eurozone by cutting interest rates by another 25 basis points. This week will see several speakers from the ECB, including ECB President Christine Lagarde herself, who will address this decision and what the future holds. Upside risks for the euro include ECB members seeking to temper expectations about the pace of future cuts, a possibility given how aggressive pricing has been recently.

According to the market, the ECB is now more hawkish than the US Federal Reserve; financial markets are less convinced that there is an urgent need for a US rate cut due to better-than-consensus economic data suggesting that the US economy has gained momentum heading into the final quarter of the year. The Fed will cut US rates again in early November, but not by as much as previously expected (25 basis points, not 50 basis points) and there is a good chance that the Fed will call for caution on future rate cuts.

On another factor influencing the forex market, the US election is less than two weeks away, and analysts say the recent outperformance of the US dollar is linked to signals that Donald Trump is the Favorite to win the vote. His tariff-heavy trade policy and generous tax-cut agenda are believed to support dollar expectations. In this regard, Fouad Razakzada, an analyst at City Index, says: “With Donald Trump gaining ground in the polls, markets have begun to factor in a possible win, which could keep the US dollar supported.”

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Created on October 22, 2024

• In my daily analysis of the USD/JPY pair, the pair has exploded to the upside during the Monday session, as we have broken above the ¥150 level, an area that of course is very important.
• Now that we are above that area, it looks as if short-term pullbacks will continue to get bought into, especially as the 200 Day EMA has offered significant support.
• In general, this is an exhaustively bullish mood, and now that we have broken above the crucial ¥150 level, we could start to see momentum pick up.

Interest Rate Differential Continues

The interest rate differential continues in this pair, as the market has broken to the upside, and I think we will continue to see traders hold onto this pair in order to collect swaps at the end of every day.

After all, the Bank of Japan has recently admitted that he cannot tighten monetary policy any further, so therefore think you get a situation where we will see the upward trajectory continue.

After all, I like the idea of buying short-term pullbacks that we can take advantage of, as the market has shown itself to be important.

Even if we see a breakdown from this area, the 200 Day EMA is likely to provide strong support. Should the price fall below that level, additional support can be found around the ¥148 level, with the 50 Day EMA just beneath it. This creates a scenario where traders may view any dips as opportunities to buy “cheap US dollars”.  Keep an eye on the USD/JPY live chart for real-time movements and potential trade setups.

=On the upside, I think we’ve got a situation where the pair could very easily go to the ¥153.50 level, which is an area that has been noisy in the past.

All things being equal, I do think that the carry trade is back, and therefore we will continue to see this move to the upside. All things being equal, I have no interest in selling this pair.

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• GBP/USD trades slightly below 1.3000 in the European session on Tuesday.
• Key support area seems to have formed in the 1.2950-1.2960 area.
• BoE Governor Bailey will deliver a speech later in the session.

Following a two-day recovery, GBP/USD turned south on Monday and lost 0.5% on the day. The pair struggles to gather recovery momentum early Tuesday and trades slightly below 1.3000.

Markets adopted a cautious stance at the beginning of the week amid escalating geopolitical tensions in the Middle East, allowing the US Dollar (USD) to benefit from safe-haven demand. At the time of press, US stock index futures were down between 0.4% and 0.6%.

A bearish opening in Wall Street, followed by an extended slide in major equity indexes could allow the USD to preserve its strength and force GBP/USD to stretch lower.

The US economic calendar will feature the Richmond Fed Manufacturing Index data for October, which is unlikely to trigger a noticeable market reaction.

In the early American session, Bank of England (BoE) Governor Andrew Bailey will deliver a keynote address at the Bloomberg Global Regulatory Forum in New York. Since he is unlikely to comment on the policy outlook, this event could have little to no effect on Pound Sterling’s valuation. The next important data release for GBP/USD will be S&P Global’s preliminary October Manufacturing and Services Purchasing Managers Index (PMI) data for the UK and the US on Thursday.

GBP/USD Technical Analysis

GBP/USD trades within the descending regression channel coming from late September and the Relative Strength Index (RSI) indicator on the four-hour chart stays well below 50, reflecting the bearish bias.

On the downside, the lower limit of the descending channel and the 100-day Simple Moving Average (SMA) form a strong support area at 1.2950-1.2960 ahead of 1.2900 (round level, static level). Looking north, first resistance could be seen at 1.3050 (static level, upper limit of the descending channel) before 1.3090-1.3100 (Fibonacci 23.6% retracement of the latest downtrend, static level) and 1.3140 (50- day SMA).