Forecasts and signals from trader Gelaton
EUR/USD: ECB helped the euro to find the bottom
Fundamental analysis of FOREX for EUR/USD on September 22Everything is changing in forex currency trading. An increase in interest rates no longer leads to a rotation of the monetary asset. Investors are more interested in how long the rates will remain at maximum values. The statements of the ECB's "centrists" about the end of the monetary policy tightening cycle, oddly enough, but helped the euro to find the ground under its feet. It's all about the growth of German bond yields to the maximum of 2011.But the decision of the Bank of England to pause in monetary restriction further aggravated the situation of sterling.In the United States, the rates on 10-year treasuries are at the peak of 2007, and 2-year–old - 2006. But this is no longer enough for EUR/USD sellers, since many factors are taken into account by asset prices.Investors understand that high rates are serious and for a long time. In the FOMC, the value of the neutral rate has been increased by a majority of votes from 2.5% to 3.0%.An increase in the yield of US debt bonds with a decline in stock indices will support the dollar in the medium term. But in the short term, everything is possible, including buying EUR/USD at a break above 1.067 against the background of fixing speculative sales.
EUR/USD: European inflation may trigger short-term purchases
FOREX Fundamental Analysis for EUR/USD on September 28EUR/USD in the decline fulfilled another target at 1.051 and there are no visible reasons to stop the "bears" offensive at the moment.Even a rise in oil prices will not be able to negatively affect the economy of the United States, as the U.S., unlike the Eurozone, is an oil exporting country. In addition, the risks of a new round of inflation, caused by rising energy prices, will force the Fed to continue tightening monetary policy, and this is again a plus for the dollar. There is a 40% chance that the Fed funds rate will rise to 5.75% by the end of the year.Now investors are interested in the maximum point of increase in the yield of 10-year US bonds - 4.75% or 5%? The August data on durable goods orders published the day before showed the best dynamics since the beginning of the year, which surprised analysts. The US economy continues to grow steadily and is in no hurry to fall into recession.Meanwhile, the debate in the US Congress on the government shutdown is gaining momentum. The House of Representatives rejected the Senate's proposed plan to end the impasse. October 1 is just around the corner, and the United States may well lose its rating from Mood`s. This will further inflate the treasures rates and strengthen the dollar's position in forex trading.At the same time, analysts Societe Generale believe that the government crisis may hit the United States economy, which will weaken the dollar by the end of the year by 3%, and the Fed will have to think about a "dovish" reversal at the beginning of next year.There is no doubt about the strength of the EUR/USD downtrend. But investors, most likely, have already taken into account in prices the decline in German inflation. However, if the forecasts do not come true and consumer prices are higher than expected, euro buyers may become more active. On the technical side, the basis for short-term purchases will be the consolidation of the pair above 1.052.
USD/JPY: Yen cannot resist the dollar
Trading idea for USD/JPY on September 27USD/JPY maintains its uptrend and is testing the upside resistance at 149.00 on Wednesday. The pair is updating the October 2022 highs on the back of a stronger dollar.Despite the fact that the Fed decided not to raise the rate in September, the regulator made it clear that until inflation reaches the target level of 2%, the "hawkish" course of monetary policy will be maintained. Moreover, the majority of the members of the Federal Open Market Committee (FOMC) adhere to this position. In particular, the head of FRB Minneapolis Neel Kashkari notes the stability of the national economy and considers it necessary to hold another rate hike of 25 basis points this year. Head of FRB Chicago Austan Goolsbee calls inflation the most serious problem for the Fed.At the same time, the Bank of Japan maintains a soft monetary policy stance, ignoring rising inflation. The fact that negative interest rates will be maintained was announced last week by the head of the regulator Kazuo Ueda. At the same time, he did not rule out the possibility of currency intervention in case of further weakening of the yen.Earlier analysts predicted that the Bank of Japan will intervene in forex trading once USD/JPY reaches 145.00. Now they consider the 150.00 level as a new boundary.As long as USD/JPY has not reached the critical mark, the growth will continue. In this regard, we propose to place a buy order on USD/JPYBuy-limit 148.50 take-profit 150.50 stop-loss 147.80
EUR/USD: the pair is heading towards 1.051
FOREX Fundamental Analysis for EUR/USD on September 27The Fed is facing a rather difficult task - fighting inflation without the economy going into recession. Now the introduction is made a bit more complicated by the risk of a government shutdown. Based on historical calculations, all this does is delay the release of important reports, such as labor market statistics or inflation data. And making decisions without proper justification is quite difficult and not always the right thing to do. But, as usual, any uncertainty in forex trading increases the demand for the US dollar.Besides, if the US lawmakers fail to solve the budget issue by October 1, some federal employees will go on forced vacations, and 4.5 million people risk to remain without salaries, which will hit the consumer demand and, consequently, the GDP of the United States.In the medium term, the artificial recession will increase the risks of recession, especially since the resumption of student loan payments and the act of monetary restraint from the Fed are ahead. Moreover, strikes of workers in the automotive industry and rising oil prices do not contribute to economic growth, but they can increase the risks of inflation. All the more so because the signals of slowdown continue to come from time to time. For example, the consumer confidence index in September fell to a 4-month low.Moody`s has already made it clear that the US will lose its top credit rating in a government shutdown. After a similar August decision by Fitch, investors began to actively withdraw capital from treasures, which caused bond yields to rise and the dollar to strengthen. So, in this scenario, EUR/USD sales will only intensify.FOMC officials also contribute to the strengthening of the greenback periodically stating the need to continue the "hawkish" course of monetary policy. The Fed leadership is trying to convince investors that even if the tightening cycle is over, the rates will remain at 5.5% for quite a long time. With such a backdrop, the demand for risks will not grow.The first of October is approaching, and with it the tension about the government shutdown is growing. There are no reasons to buy EUR/USD. The pair is steadily declining to the targets of 1.051 and 1.042. Let's keep selling.
EUR/USD: pressure on the European currency is increasing
EUR/USD trading ideaDespite the local revival of buyers, EUR/USD remains in a downtrend and at the moment trades near the strong level of 1.0600.The dollar is strengthening its position in the currency market. It is supported by expectations of another Fed rate hike, as well as macroeconomic statistics. The dollar index is approaching the level of 106.00 - the maximum of November last year.The yield on 10-year U.S. debt bonds reached 4.55%, the highest level since 2007.On Thursday, Jerome Powell will speak and the revised estimate of the US second quarter GDP will be released. In addition, investors' attention is focused on the problems of the public debt of the United States. American lawmakers can not reach a consensus on the issue of reducing expenditures, and if by October 1 consensus is not found, the suspension of government activity is possible. In such a scenario, the demand for the dollar as a protective asset will grow.The day before, Christine Lagarde spoke at the Committee on Economic and Monetary Affairs of the European Parliament. The head of the ECB expressed concern about the high level of inflation, but noted the stability of the labor market. Christine Lagarde considers the rate of the European Central Bank sufficient for inflation to fall to the target of 2%. Investors realize that the ECB has ended the cycle of tightening financial conditions, which is a bad signal for the euro.Taking into account the fundamental background, macroeconomic statistics, technical analysis and readings of the main Forex indicators, we believe that the pair's decline will continue and we suggest placing a sell order for EUR/USDSell-stop 1.0570 take-profit 1.0400 top-loss 1.0630
Forex analysis and forecast for USD/JPY for today, September 25
With the start of weekly trading, USD/JPY has not increased activity and is still trading around 148.50.The dollar's positions are still strong, although on Friday mixed business activity indices were released. In the industrial sector for September the index rose from 47.9 to 48.9 pp while in the service sector it fell from 50.5 to 50.2 pp.The Bank of Japan's meeting at the end of last week did not change the regulator's monetary policy course. The rate remained unchanged at (-0.1%), although Kazuo Ueda noted uncertainty over the timing of inflation reaching the 2% target.Japan's consumer price index declined to 3.2% from 3.3% in August, core inflation remained at 4.3%. In the manufacturing sector, the business activity index for September fell from 49.6 pp to 48.6 pp.Technical Analysis for USD/JPYOn the chart of the day, the Bollinger Bands Indicator is reorganizing into a horizontal flat, although the MACD indicator is still targeting upward and holding a buy signal. The Stochastic oscillator from top to bottom has broken through the 80% level, exited the overbought area and is developing a decline.If the oscillator consolidates above the key level of 148.50, we continue to buy with the target mark of 150.00. Stop-loss is taken out at 147.80.In case of rebound from 148.50 we wait for consolidation below the support at 148.00 and only after that we form short positions in the direction of 146.62. Stop-loss is set at 148.75.
EUR/USD: US economy may lose its exclusivity
FOREX Fundamental Analysis for EUR/USD on September 25The Eurozone is losing to the United States on all fronts. While the Fed can afford to continue the rate hike cycle, for the ECB each act of monetary restriction causes tangible damage to the Euro bloc economy.Eurozone business activity leaves much to be desired. In September, the composite index failed to rise above the critical level of 50 p. If we take the situation of the Eurozone countries, many of them are worse off than the UK, not to mention Japan, and even more so, the US. Under such conditions EUR/USD is unlikely to return to growth.The United States economy coped with the aggressive tightening of financial conditions from the Fed. But will the dollar be able to overcome new obstacles? Is it rising oil prices, risks of a US government shutdown, strikes in the auto industry and student loan payments? According to Goldman Sachs, these four factors could slow fourth-quarter GDP from 3.1% to 1.3%. And Daco is talking about 0.6%.If the scenario starts to play out, the United States will lose its exclusivity and EUR/USD could return to recovery, provided that things do not get worse in the Eurozone itself again.Perhaps China will help the Old World? Beijing intends to reach 5% GDP growth. This would be good, but the Eurozone itself will have to try harder. First of all, the ECB should abandon monetary restriction. It is possible that the September inflation report will be the basis for this step, as Bloomberg expects CPI to fall from 5.2% to 4.6%. It would seem that the "dovish" rhetoric should hurt the euro. In fact, investors are currently concerned about the Eurozone economy much more than inflation.I believe that many negative factors are already taken into account in EUR/USD quotes. The pair has been falling for 10 weeks in a row and it is time for an upward correction. However, catching "falling knives" is not the best method of forex trading. We will consider buying when the price fixes above 1.067. It is quite risky to open longs now without any signs of reversal.
EUR/USD: ECB helped the euro to find a bottom
FOREX Fundamental Analysis for EUR/USD on September 22Everything is changing in forex currency trading. Rising interest rates no longer lead to the rot of the monetary asset. Investors are more interested in how long rates will remain at their maximum values. The statements of the ECB "centrists" about the end of the monetary policy tightening cycle, strange as it may seem, helped the euro to find its footing. It's all about the growth of German bond yields to the maximum of 2011.But the decision of the Bank of England to make a pause in monetary restriction even more aggravated the situation of sterling.In the United States, the rates on 10-year treasures are at the peak of 2007, and on 2-year treasures - 2006. But this is not enough for EUR/USD sellers, as many factors are taken into account by the prices of the asset.Investors realize that high rates are serious and for a long time. The FOMC raised the neutral rate from 2.5% to 3.0% by a majority vote.Rising US debt bond yields with declining stock indices will support the dollar in the medium term. But in the short term, everything is possible, including buying EUR/USD on a break above 1.067 amid speculative selling fixation.