FOREX Fundamental analysis for EUR/USD on November 1, 2024
Whatever the outcome of the US elections, the new president will get the economy on the rise. Artificial intelligence and rising productivity are contributing to accelerated GDP growth, and inflation has almost reached the 2% target. The Democrats began their rule with a recession, and they risk ending up with weak employment figures. Does this mean that it will be more difficult for the EUR/USD bears?
Bloomberg experts take into account the impact of hurricanes and strikes and predict that employment in the United States will grow by 110 thousand in October, while forecasts range from a reduction of 10 thousand to an increase of 180 thousand. The labor market has been a strength of the Kamala Harris administration, but natural disasters and labor protests can make a difference.
Weak statistics will strengthen expectations of easing the Fed's monetary policy. Derivatives markets forecast a rate cut of 117 basis points next year, which is less than the 184 bps expected in early October. That is why the dollar in October showed the best result in the last two years, supported by an increase in the yield of treasuries. The "bears" in EUR/USD made an impressive breakthrough, but by the end of the month, the "bulls" began to regain the positions lost in forex currency trading.
Although the volatility of the euro has increased against the background of the presidential election, the chances of a reversal have shifted in its favor, albeit remaining under pressure. Favorable news from Europe and China helped the euro strengthen. But how long will it last?
The eurozone economy grew by 0.4% in the third quarter, and inflation returned to 2% in October. This reduced the probability of a December cut in the ECB deposit rate from 50% to 20%. The strengthening statistics contribute to a gradual easing of policy, allowing the ECB to maintain a tough approach, which is favorable for the euro. However, both currencies affect the dynamics of the pair: the publication of data on the American labor market and the upcoming elections may strengthen the dollar again, returning it to previous levels.
The volatility of currency pairs on Forex is rising more strongly than in the last US election, due to the uncertainty of the outcome and concerns about Donald Trump's policies. Investors are watching the elections no less than they are watching the reports on the labor market, and they have good reason to do so.
Strong US labor market statistics will create an opportunity to sell EUR/USD in the range of 1.076-1.0865. Weak data will give rise to short positions when rebounding from resistance levels at 1.0905 and 1.0930. But regardless of the employment figures, an event looms on the horizon that could change the global economic picture.