FOREX Fundamental analysis for EUR/USD on November 18, 2024
The return of Donald Trump to the White House has brought the theme of American exceptionalism back to world markets. Shares of companies from the United States are showing more rapid growth compared to European ones, and the yield of American debt bonds (treasuries) is significantly ahead of the performance of German bonds. These differences increase the outflow of capital from Europe to the United States, which pushes the EUR/USD exchange rate closer to parity.
Against the background of expectations of fiscal incentives from the Republican administration, the S&P 500 index has gained 23% since the beginning of the year, while the EuroStoxx 600 has risen by only 5%. European equity markets remain under pressure due to concerns related to import tariffs and trade conflicts, and the euro is under pressure through currency correlation. The gap in dynamics between the Old and the New World has reached record levels, which has already been informally called the "Trump gap."
During his previous presidency, Donald Trump viewed the growth of the stock market as an indicator of the success of his own policies. Investors expect that the president will avoid actions that could harm the upward trajectory of the indices, which stimulates a rally in American markets.
The increase in the yield of treasuries is largely due to expectations of an increase in the budget deficit due to new fiscal measures, as well as the stable state of the American economy. In October, retail sales increased by 0.4%, exceeding forecasts, while data for September were revised upward from 0.4% to 0.8%.
The situation in Europe is not optimistic at all. The German economy, according to recent estimates, is at risk of entering a recession. Experts predict a 0.1% decline in GDP in 2024 after a 0.3% decline in 2023. This constrains the growth of German bond yields and strengthens the gap in rates with American debt instruments, which plays into the hands of EUR/USD sellers.
The US dollar continues to strengthen, showing a seven—week rally - the longest since February. Previously, the growth was associated with a revision of market expectations about the softness of the Fed's monetary policy, and now the situation is developing in a similar way. Forecasts for 2025 suggest only three Fed rate cuts of 25 bps instead of the six previously expected.
Thus, the strength of the American economy, capital outflow from Europe and the Fed's more restrained approach to monetary policy easing continue to put pressure on the EUR/USD exchange rate. The only hope for the euro remains the correction of the S&P 500 index, but it is unlikely to be prolonged. We are holding sales with a target of $1,035.
FOREX Fundamental analysis for EUR/USD on December 24, 2024The US dollar, thanks to the Fed's decision to suspend interest rate cuts and Donald Trump's controversial policy, is showing its best quarterly results since 2022. Uncertainty in the markets is growing, forcing investors to look for safe assets, one of which remains the dollar. Attempts by the EUR/USD bulls to develop an offensive are facing stiff resistance.Donald Trump has previously stated that a strong dollar creates economic difficulties, reducing the competitiveness of American companies. However, his plans to implement an "America First" strategy, including fiscal stimulus and trade tariffs, only exacerbate this problem. The growth of the American economy against the background of a slowdown in other countries attracts capital to the United States, strengthening the dollar. Speculators, in turn, increased the volume of long positions to the maximum since May.In 2024, the dollar holds the lead among other forex currency indices due to its undervaluation. Forecasts for the end of 2023 suggested that the Fed's tight monetary policy would slow US GDP growth to 1%, but the reality turned out to be different — the economy is ready to grow by 3%. Expectations of a decrease in Treasury bond yields also failed to materialize — instead, they increased. The start of the rate reduction cycle, which was forecast for early 2024, occurred only in September.Interestingly, major financial institutions expect further declines in bond yields in 2025. Their consensus forecast assumes a drop in the yield of 10-year securities to 4.25%, which is lower than current levels. This is based on assumptions about a slowdown in the economy and continued easing of the Fed's policy. However, an alternative scenario assumes that due to fiscal incentives, growing budget deficits and inflationary pressures, rates will rise, strengthening the dollar.But the uncertainty remains. Perhaps Donald Trump will not be able to implement his initiatives, inflation in the United States will slow down, and the economy will begin to cool. In this case, the euro may strengthen sharply even against the background of the weakness of the eurozone and the continued reduction of ECB rates.In the meantime, the market is preparing for the holidays, being in a consolidation phase. Low volatility of currency pairs can provoke sharp movements in EUR/USD, including a breakdown of support at 1.0385. However, perhaps the best solution would be to take a wait-and-see attitude during this period of uncertainty. 
USD/CHF analysis on December 23, 2024Since the beginning of the week, USD/CHF has been moving in a corrective trend, trading around 0.8933. The strengthening of the Swiss franc, supported by the monetary policy of the Central Bank, almost returned the asset to the levels of the beginning of last week.At the last meeting, the Swiss National Bank lowered the interest rate by 50 basis points to 0.50%. This was the most significant step in monetary policy easing in the last decade. The reason for this decision was lower-than-expected inflation, which is projected to reach zero in 2025. In addition, the construction price index for the period from April to October increased by 0.1% and reached 115.2 points, which is the highest since 2019. The annual growth rate was 0.5%.The US dollar index is holding at around 107.50. The decline in the growth rate of the base index of personal consumption expenditures caused a negative market reaction. In November, the indicator was 0.1% month-on-month against 0.3% earlier, and remained at 2.8% year-on-year, falling short of the projected 2.9%. The income of the population also slowed down from 0.7% to 0.3% during this period.USD/CHF technical analysis for todayOn the daily chart, technical indicators confirm the buy signal. The fast EMAS of the alligator indicator show a break from the signal line, and the awesome oscillator (AO) histogram forms correction bars in the positive zone.Trading recommendationslong positions when the price is fixed above the level of 0.8960 with a target of 0.9090. The stop loss is placed at 0.8900.sale is possible when the level of 0.8900 is broken down and fixed below, with a target of 0.8780. The stop loss should be set at 0.8950. 
The NZD/USD pair is consolidating around 0.5658 amid weak economic data from New Zealand.In the third quarter, the country's GDP decreased by 1.0%, and in the second quarter, the figure was revised to -1.1%. After a short period of growth, the economy has been declining for two consecutive quarters, indicating the beginning of a recession. 11 of the 16 industries recorded negative dynamics, with manufacturing, business services and construction the most affected. GDP per capita decreased by 1.2%, continuing to fall for the eighth consecutive quarter.The US dollar index adjusted to 107.40 after reaching annual highs. The slowdown in personal consumption expenditures in the United States in November from 0.2% to 0.1% in monthly terms and an annual increase to 2.4% put pressure on the dollar. Core costs excluding food and energy remained stable at 0.1% and 2.8%. Household incomes decreased from 0.7% to 0.3% over the same period.On the daily chart, the pair is correcting near the support line of the descending channel, the boundaries of which are in the range of 0.5740–0.5600.Technical indicators confirm the continuation of the downtrend. The fast EMAs of the alligator indicator remain below the signal line, and the histogram of the awesome oscillator indicator (AO) forms correction columns in the negative zone.- It is recommended to open short positions when the level of 0.5620 breaks down with a target of 0.5480. The stop loss is set at 0.5680.- Long positions will be relevant if the price is fixed above the level of 0.5690. The nearest target will be 0.5830. We will place the stop loss at 0.5620. 
FOREX Fundamental analysis for EUR/USD on December 23, 2024The market was so afraid of the FOMC's December forecasts that it began to wonder if the Fed had completed its monetary easing cycle. This caused the EUR/USD pair to fall to a two-year low. However, the slowdown in the growth of the American index of personal consumption expenditures (PCE) and the dovish statements by the Fed representatives somewhat dampened the ardor of the bears. Even Donald Trump's threats against the EU could not affect the dynamics of the pair.In November, PCE grew by only 0.1%, which was the lowest since May. The core index also slowed to 2.8% year-on-year. The head of the Federal Reserve Bank of New York, John Williams, insists on further rate cuts, and Mary Daly from the Federal Reserve Bank of San Francisco agrees with the forecast of two stages of policy easing in 2025. Austin Goolsbee of the Federal Reserve Bank of Chicago assumes that the cost of borrowing will decrease over the next year and a half.Even the words of Cleveland Fed President Beth Hammack, who voted to keep the rate at 4.75%, did not alarm investors. She believes that further rate cuts are possible if inflation continues to slow down. The drawdown of PCE to 0.1% supports the likelihood of policy easing as early as January. Derivatives have reduced the probability of a pause in the Fed's actions from 95% to 89%.Despite the rise in yields on Treasury bonds and US stock indices, the EUR/USD bulls remain active. Even Donald Trump's statement about possible tariffs on the EU if Europe does not increase purchases of oil and gas from the United States did not cause them serious concerns. This looks strange against the background of the EU's policy of abandoning Russian gas and expanding the share of American LNG to 48%.Although the EUR/USD bears have temporarily retreated, their positions remain strong. HSBC analysts do not expect the dollar to weaken in 2025. Manulife Investment Management sees the need to improve the global economy in order to reduce the USD index, but there are no signs of this yet. Deutsche Bank predicts a decline in the EUR/USD pair to the parity level.We recommend using EUR/USD pair corrections followed by a rebound from the resistance levels of 1.0465 and 1.0500 to form or strengthen short positions. 
AUD/USD analysis on December 20, 2024AUD/USD is consolidating near the 0.6221 mark. The pair is in a sideways trend with a downward trend. This is due to the high popularity of the US dollar, which puts pressure on the Australian currency.According to the Australian Bureau of Statistics (ABS), household wealth continued to grow for the eighth consecutive quarter in the third quarter, rising 2.4% to AUD$401 billion. The total amount of wealth reached 16.9 trillion, which is 9.9% more than a year earlier. The main growth drivers were an increase in the value of real estate and savings in pension funds. Meanwhile, expected inflation rose from 3.8% to 4.2% in December, exceeding the Reserve Bank of Australia's target range of 2.0–3.0%. This increases the likelihood of maintaining the current monetary policy of the regulator for a long time. Analysts expect the first rate cut not earlier than spring, but with a further increase in inflation, the decision may be postponed until the second half of the year.The US dollar index is trading at 108.10, updating yesterday's highs. In the third quarter, US GDP grew to 3.1% (against the expected 2.8%), the number of initial applications for unemployment benefits decreased to 220,000, and repeat applications decreased to 1,874 million. Sales volumes in the secondary housing market in November also showed a significant increase of 4.8%, reaching 4.15 million.AUD/USD technical analysis for todayOn the daily chart, the AUD/USD pair adjusted and left the "expanding formation" figure with the boundaries of 0.7100–0.6250. The indicators indicate a strengthening of the downtrend. The EMA lines of the alligator indicator are directed downwards and are below the signal line, while the Awesome Oscillator histogram remains in the negative zone.Trading recommendationssale will be relevant if the price drops below the level of 0.6190 with a target of 0.6080. The stop loss is 0.6250.buy is considered when the pair is fixed above the 0.6250 level with a target of 0.6370. The stop loss is 0.6200. 
GBP/USD analysis on December 20, 2024On Friday, after the decision of the Bank of England to leave the interest rate at 4.75%, GBP/USD is adjusted near the 1.2480 mark. This decision was supported by six of the nine members of the Monetary Policy Committee of the regulator. Financiers are afraid of a new round of inflation growth. Three members preferred a 25 basis point rate cut, which turned out to be more than analysts expected (two votes in favor of a cut were expected).Experts note a change in the Central Bank's rhetoric in assessing inflation and the labor market: from an "unstable" to a "balanced" situation. This may indicate a possible policy adjustment next year. At the same time, representatives of the Bank of England pointed to an increase in inflation.: The consumer price index rose from 1.7% in September to 2.6% in November, and GDP forecasts for the fourth quarter were lowered from an expected 2.0% to 1.7%. According to forecasts, the interest rate may fall to 3.50% in 2025.The US dollar index strengthened to 108.10, which is higher than yesterday's highs. The US economy grew by 3.1% in the third quarter against the projected 2.8%. There is also a decrease in initial applications for unemployment benefits to 220 thousand (against the forecast of 230 thousand), and repeated applications fell to 1.874 million. The volume of sales in the secondary housing market increased by 4.8% and reached 4.15 million, which is higher than expected and close to the highs of March (4.19 million).Technical analysisOn the daily chart, the pair is approaching the support line of the descending channel with the boundaries of 1.2700–1.2300. The main forex indicators confirm the sell signal - the fast EMA lines on the alligator indicator diverge from the signal line, and the awesome oscillator (AO) histogram forms corrective bars in the negative zone.Trading recommendationssale is relevant after the breakdown and consolidation of the pair below the level of 1.2450 with a target of 1.2300. The stop loss is 1.2520.buy is considered when the price rises and fixes above the level of 1.2530 with a target of 1.2700. The stop loss is 1.2450. 
On Friday, USD/CHF shows versatile fluctuations near the level of 0.8980. After testing local highs in early July, the asset declined amid the publication of fresh macroeconomic data from the United States.The Philadelphia Federal Reserve's index of business activity in the manufacturing sector unexpectedly fell from -5.5 to -16.4 points in December, although analysts had forecast an increase to 3.0 points. The personal consumption expenditure price index increased by 1.5% in the third quarter, and its base version rose from 2.1% to 2.2%. Initial applications for unemployment benefits decreased from 242 thousand to 220 thousand, which turned out to be better than the forecast of 230 thousand, and the number of repeat applications decreased from 1.879 million to 1.874 million, also exceeding expectations. In addition, sales in the secondary housing market increased by 4.8% in November, reaching 4.15 million against the forecast of 4.07 million.Swiss statistics reflected a decline in trading activity. Exports decreased from 27.826 billion to 23.682 billion francs, while imports fell from 19.801 billion to 18.257 billion francs, reducing the trade surplus from 8.025 billion to 5.424 billion francs. According to SECO, the Swiss economy is expected to grow by 1.2% in 2023, 1.6% in 2025, and 1.7% in 2026, which is lower than the average annual growth of 1.8%. Experts see the main driver of the recovery in domestic demand, as demand for Swiss goods in Germany and China continues to decline.Investors also continue to analyze the results of the US Federal Reserve meeting on December 18. As expected, the rate was reduced by 25 basis points to 4.50%. The regulator's new forecasts suggest a rate cut of 50 basis points in 2025, which differs from the September expectations of three consecutive cuts of 25 basis points.USD/CHF technical analysis for todayJohn Murphy's technical analysis on the daily chart shows the expansion of the Bollinger bands, which opens up opportunities for a bullish trend. The MACD indicator indicates a steady buy signal. Stochastic also demonstrates an attempt to reverse downwards, signaling a possible overbought dollar in the short term.Trading recommendationssale with a confident breakdown of the 0.8957 level down. The target will be the 0.8900 mark. We will put the stop loss at 0.8990.buy will be possible if the 0.8957 level acts as support, and then the pair breaks the 0.9000 mark up. In this case, the prospect of growth to 0.9100 opens up. We will place the stop loss at 0.8957. 
FOREX Fundamental analysis for EUR/USD on December 20, 2024Tariff disputes are just beginning to excite the Federal Reserve System (Fed), and Donald Trump is already initiating a partial government shutdown. The Republican rejected the proposal of the Speaker of the House of Representatives Michael Johnson on temporary financing of government agencies until March 14, insisting on a solution that includes raising the debt ceiling. However, the plan failed in the vote — 235 against 174. This led to the suspension of the government's work, which increased the volatility of currency pairs and increased interest in safe haven assets. EUR/USD, of course, continues to decline.Trump, in a familiar manner, called what was happening a "Biden shotdown," arguing that the current president is solely responsible for the government. He takes credit for the strong economy left by the Democrats and criticizes everything he considers problematic. Meanwhile, the economy is indeed showing resilience. U.S. GDP growth accelerated to 3.1% in the third quarter, higher than expectations and the previous estimate of 2.8%. The forecast of the Federal Reserve Bank of Atlanta indicates a further increase to 3.2% in the fourth quarter.Trump's election victory was driven by criticism of high inflation under Joe Biden. However, his own policies, including tariffs and fiscal incentives, are pro-inflation and have already begun to influence the Fed's forecasts. Department Head Jerome Powell noted that some officials have begun to take into account the potential consequences of the new president's policies in their economic assessments. That is why the Fed limited forecasts to only two rate cuts in 2025, raising market doubts about the end of the monetary easing cycle.Despite accusations against the Fed for lowering rates against the backdrop of a strong economy and rising inflation, its actions look justified. The regulator is well aware that markets are responding to expectations. Investors began to ask questions: will the Fed continue to cut rates, was the December adjustment the last one, and could a new stage of policy tightening begin?These doubts were caused by a decline in stock indices, an increase in treasury bond yields and a strengthening dollar, which, in turn, tightened financial conditions and may slow down inflation.Thus, the growth in demand for protective assets due to the shotdown, rumors about the end of the Fed's policy easing cycle and the likelihood of tightening financial conditions contribute to the fall of EUR/USD.Ignoring the potential slowdown in the US economy due to the government shutdown, investors continue to sell euros. If the shotdown pushes the Fed to further rate cuts, the EUR/USD rate may reach the target of 1.03. The strategy is to keep short positions.EUR/USD Technical analysisEUR/USD is trading in a short-term downtrend. In the decline, sellers reached the Target zone of 1.0353 - 1.0326, but failed to break through it. Therefore, an upward correction may develop today, the purpose of which will be to test the resistance area (A) 1.0444 - 1.0435. After that, we will consider new sales with the first target at 1.0393, and the second target at today's minimum.If the resistance area (A) is broken up during trading, the correction will continue to the resistance area (B) 1.0494 - 1.0481. This zone is the boundary of the trend, and sales can also be considered from it.