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.
AUD/USD analysis on December 6, 2024After the Friday morning session, AUD/USD is in a sideways movement near the 0.6430 level. The flat dynamics are associated with weak economic indicators of Australia and the weakening of the US currency.The Australian economy showed GDP growth in the third quarter from 0.2% to 0.3% in quarterly terms, which was lower than the expected 0.5%. On an annual basis, the indicator decreased from 1.0% to 0.8%, although the forecast was 1.1%. The data on foreign trade had little effect on the Australian dollar: exports in October increased from -4.7% to 3.6%, imports from -2.8% to 0.1%, and the trade surplus increased from 4.532 billion to 5.938 billion Australian dollars. The expansion of exports offers good prospects for the Australian economy, but its slowdown remains.The US currency continues to weaken, developing yesterday's decline, which began after the release of data on the labor market. The dollar index is trading at 105.70, the number of initial applications for unemployment benefits has increased from 215 thousand to 224 thousand, and the average value over the past four weeks has increased from 217.5 thousand to 218.25 thousand. Today's final employment report at 15:30 (GMT+2) may confirm negative preliminary estimates, which will put pressure on the dollar.On the daily chart, the pair is moving near the support of the "expanding formation" model, the range of which is limited by the levels 0.7000 and 0.6380.Technical indicators confirm the downtrend. The lines of the alligator indicator are directed downwards, keeping the distance from the signal line, and the awesome oscillator indicator (AO) is located in the sales zone.Trading recommendations- Sale are relevant when breaking down the 0.6400 level with a target of 0.6260. We place the stop loss at 0.6500.- Buy when the level of 0.6470 breaks up with a target of 0.6600. Stop loss at 0.6400. 
On Friday, USD/CAD shows weak growth, testing the strength of the 1.4030 mark. The volatility of currency pairs on forex remains low, as market participants are awaiting key data on the US and Canadian labor markets.In the USA, an increase in the number of jobs outside agriculture is expected by 200 thousand after the previous 12 thousand. At the same time, the growth of the average hourly wage may slow down: from 0.4% to 0.3% on a monthly basis, and from 4.0% to 3.9% on an annual basis. The unemployment rate is likely to rise from 4.1% to 4.2%. In addition, data from the University of Michigan on the consumer confidence index for December will be published in the evening — an increase from 71.8 to 73.0 points is projected. Deviations from these expectations may affect the monetary policy of the Fed, whose meeting is scheduled for December 17-18. According to the CME Group, the probability of a 25 basis point rate cut is estimated at 70%.Investors also drew attention to the latest statistics on applications for unemployment benefits. Initial applications increased in the week to November 29 from 215 to 224 thousand, while the number of repeat applications decreased from 1.896 million to 1.871 million, which is better than analysts' expectations.As for Canada, the number of people employed is projected to increase in November from 14.5 to 25 thousand, while the average hourly wage will remain at 4.9%, and the unemployment rate may rise from 6.5% to 6.6%.The former head of the Bank of Canada, Stephen Poloz, said that the country's economy is in a state of technical recession. Despite the stability of the GDP indicator for two consecutive quarters, the increase in migration stimulated the consumption of basic goods, while spending by Canadians decreased due to the increased cost of living. At the same time, GDP per capita fell by 0.4% for the sixth consecutive quarter.On the daily chart, the main forex indicators signal uncertainty. The Bollinger bands began to narrow, indicating a decrease in volatility. The MACD remains in the selling zone. Stochastic is also directed downwards.Trading recommendations- short positions at a breakdown down to the 1.4000 level with a target of 1.3908. We will put the stop loss at 1.4050.- long positions with a confident breakout of the key resistance of 1.4050. The target will be 1.4145. We will place the stop loss at 1.4000. 
FOREX Fundamental analysis for EUR/USD on December 6, 2024Investors are beginning to realize that Donald Trump's statements before his return to the White House do not pose much of a threat. Even if the Republican tries to implement his plans, it is not a fact that American lawmakers will approve them. Therefore, the optimal forex trading strategy for today is to lock in profits from short positions in EUR/USD, temporarily abandon the US dollar and monitor developments from the outside.A decrease in activity against the background of "Trump trade", expectations of easing the Fed's policy at the last meeting in 2024, increased interest in risky assets and the traditional seasonal weakness of the dollar create favorable conditions for strengthening EUR/USD. At the same time, political instability in France, due to the resignation of the government, has not yet affected the exchange rate of the single currency. The key factor remains Marine Le Pen's statement that the prime minister, who is able to control the budget deficit more effectively, has a chance to stay in power.Investors have revised the scale of the expected Fed rate cut from 75 to 84 basis points, which weakens the dollar. Meanwhile, market participants ignore Bloomberg forecasts of employment growth of 220 thousand and stable unemployment of 4.1%, confirming the strength of the American labor market.Market expectations for the Fed rateAt the same time, the uncertainty surrounding the October data and employment forecasts for November complicates the assessment of the situation. Hurricanes and strikes have distorted statistics, which is also recognized by representatives of the Fed. Some experts predict an increase in unemployment to 4.2%, which may indicate an approaching recession.Recessions and the dynamics of the share of unemployed in the United StatesThus, a significant improvement in indicators is required to maintain the current Fed rate in December. This, along with the weakening of the "Trump trade", stimulates the sale of the dollar. Even reasons such as the increase in applications for unemployment benefits to a monthly maximum are pushing EUR/USD up.Nevertheless, fixing long positions on the dollar may lead to a correction of the pair, despite its "bearish" medium-term forecast. The high productivity of the US economy and its separation from other regions, including the Eurozone, will continue to put pressure on the euro. Trump's fiscal incentives and trade measures will have an additional impact.In such a situation, it is more reasonable to change the methods of forex trading and switch from short-term purchases of euros to sales on its growth. The reaction of EUR/USD to the US employment data remains unpredictable: weak indicators will strengthen long positions, while strong ones will cause sharp price fluctuations.EUR/USD Technical analysisEUR/USD is growing within the framework of a short-term uptrend and is approaching the main target of buyers in the area of the maximum on November 29 - 1.0597. After working out this goal, we will expect testing of the target zone 1.0636 - 1.0608. To continue the growth, market participants in the American trading session will need to break through the target zone and gain a foothold higher. In this case, the target of the bulls will be the "golden zone" 1.0709 - 1.0700.If the target zone of 1.0636 - 1.0608 is held by sellers during trading, then EUR/USD will again go into correction, within which new purchases can be considered. 
USD/CHF analysis on December 5, 2024In Thursday morning trading, USD/CHF is trading near the 0.8835 level, reflecting low market activity. Market participants are waiting for important data on the US labor market, which will be published on Friday at 15:30 (GMT+2). These data may affect forecasts for a possible Fed rate cut at the December 17-18 meeting.It is assumed that employment in the non-agricultural sector will grow from 12 thousand to 202 thousand, while the average hourly wage is likely to slow down growth: from 4.0% to 3.9% year-on-year and from 0.4% to 0.3% monthly. The unemployment rate is expected to rise from 4.1% to 4.2%. An additional factor for the market will be the University of Michigan Consumer confidence index, which is projected to strengthen from 71.8 to 73.0 points.Pressure factorsPreviously published data from ADP on private sector employment reflected a slowdown - the indicator decreased from a revised 184 thousand to 146 thousand, below the expected 150 thousand. Business activity indices in the service sector also declined. Thus, the S&P Global data fell from 57.0 to 56.1 points, and the ISM indicator decreased from 56.0 to 52.1 points.On the other hand, Switzerland has also faced economic difficulties. Inflation in November increased by only 0.7% (YoY), which is lower than the expected 0.8%, and remained at the level of -0.1% on a monthly basis. Seasonally adjusted unemployment was fixed at 2.6%, in line with expectations. At the same time, the weakness of the industrial sector in Germany, Switzerland's largest trading partner, is putting pressure on demand.The head of the Swiss National Bank (SNB), Martin Schlegel, noted that the situation may force the Central Bank to cut the rate from the current 1.0% at a meeting on December 12. The probability of monetary expansion of the regulator by 25 basis points is estimated at 72%, and by 50 points — at 28%.USD/CHF Technical analysis for todayOn the daily chart, the Bollinger Indicator is flat, and the price range is narrowing, reflecting uncertainty. The MACD indicator shows a weak sell signal, being below the signal line, and the Stochastic turns down before reaching the overbought zone.Trading recommendations- Sale: after the breakdown of the 0.8827 level with a target of 0.8750. The stop loss is 0.8865. Implementation period: 2-3 days.- Buy: after a rebound from 0.8827 and a breakdown of 0.8865 with a target of 0.8935. The stop loss is 0.8827.The current market sentiment signals a possible downtrend in the near term, although the dynamics may change under the influence of fresh data from the US labor market. 
On Thursday, USD/JPY is trading near the 149.87 mark, retreating from the highs of November 29. Published macroeconomic statistics of the United States further offensive of the "bulls".Investors paid attention to the employment data from ADP. In November, the indicator decreased to 146.0 thousand against the revised 184.0 thousand in October, which turned out to be slightly lower than expectations of 150.0 thousand. The index of business activity in the services sector from S&P Global fell to 56.1 points, and from ISM — to 52.1 points, which is much worse than expected. However, values above 50.0 still indicate an increase in activity, which reduces the likelihood of major changes in Fed policy.In addition, the Beige Book reflected moderate economic growth in most regions of the United States since the beginning of October, while consumer spending and inflation remained stable. The main attention of market participants in the coming days will be focused on labor market data. An increase in the number of jobs by 200.0 thousand is projected, a slowdown in the growth of hourly wages and a slight increase in the unemployment rate to 4.2%.Against the background of weak US data, the Japanese economy is showing positive dynamics. Business activity indices showed an improvement in November: in the services sector — up to 50.5, and the composite index exceeded the critical mark of 50 and reached 50.1. The expansion of capital investment by 8.1% in the third quarter and the rise in consumer prices in Tokyo to 2.6% strengthen expectations of a tightening policy of the Bank of Japan. Many analysts believe that the rate may be increased by 25 bps in December.USD/JPY Technical analysis for today- The lines of the Bollinger Band indicator are expanding, indicating an increase in volatility. The price range remains wide for current activity.- MACD: The sell signal remains, the histogram is in the negative zone.- The stochastic oscillator indicates growth, reflecting recent bullish sentiment.Trading recommendations1. SaleConfident breakout of the 150.00 mark downwards.Target: 148.00.Stop loss: 150.70.2. BuyA rebound from 150.00 and a breakdown of the 150.50 level up.Target: 151.50.Stop loss: 150.00.The pair continues to balance between fundamental factors and technical signals, offering traders opportunities for short-term trades. 
FOREX Fundamental analysis for EUR/USD on December 5, 2024For the first time since 1962, the French National Assembly dismissed the government. Although this event was an important political milestone, it did not turn into a disaster for the euro. France is facing a period of uncertainty - the dissolution of parliament is impossible, the appointment of a new prime minister is associated with high risks, and the president has no plans to resign. Despite expectations of a vote of no confidence in Michel Barnier and his cabinet, the EUR/USD collapse did not occur.Even against the background of the political crisis and the growth of the French and German bond yield differential to the highest since 2012, the volatility of currency pairs with the euro remains moderate. Investors do not assume France's exit from the Eurozone (Frexit) or the collapse of the Euroblock. So far, they prefer to observe the development of events and are in no hurry to draw serious conclusions.The Fed's actions and their impact on the dollarA similar wait-and-see tactic is evident in the actions of the US Federal Reserve. The head of the Federal Reserve, Jerome Powell, noted that the US economy is feeling better than at the beginning of the monetary policy easing cycle. At that time, the Fed sought to support the labor market, but fears about its "freezing" did not materialize.However, market expectations of a possible pause in rate cuts have not been confirmed. Powell did not give such signals as, for example, his colleagues Alberto Musalem from the St. Louis Federal Reserve or Mary Daly from the San Francisco Federal Reserve. As a result, the forex trading method "buy a dollar on rumors, sell on facts" played a role, and EUR/USD grew.Dynamics of euro volatilityAccording to OECD forecasts, the Fed may cut the rate to 3.25% by the first quarter of 2026, which is lower than current expectations for derivatives (3.75–4%). At the same time, the ECB is likely to soften its rate to only 2%, and not to 1.5–1.75%, as investors expect. These differences, along with an improvement in the forecast of global GDP growth for 2025 from 3.2% to 3.3%, create support for the euro.EUR/USD forecasts for December and the impact of the seasonThe OECD also warns that protectionist measures such as Donald Trump's tariffs could slow global economic growth. While these duties have not been earned, the euro has a chance of growth, especially given the seasonally weak dynamics of the dollar in December.The catalyst for the growth of EUR/USD may be disappointing US employment statistics for November or profit-taking on short positions. As in the case of the political crisis in France or Powell's statement, moderate data may push the euro up. A breakout of the $1,054 pivot level looks increasingly likely, but in the current conditions it is preferable to stay out of the market, observing the development of the situation.EUR/USD Technical analysisYesterday, EUR/USD tested the 1.0477 support. This level was held by sellers, as a result of which the pair moved to strengthen in the American trading session. As part of this growth, the maximum was updated on December 3, which formed another buying pattern. Today, the short-term uptrend may continue. The target is around the 1.0597 level. After working out this target, we will observe the border of the upper Target zone 1.0636 - 1.0608. If the bulls are successful, the next growth target will be the Gold Zone 1.0709 - 1.0700.To change the direction of the trend and switch to sales, the bears need to break through the 1.0445 level and consolidate below. In this case, from the next trading day, it will be possible to consider selling EUR/USD with the main target in the area of the lower Target zone 1.0321 - 1.0293. 
GBP/USD continues to show weak growth around the 1.2695 mark, trying to regain lost positions. However, the activity of buyers remains low.The pair was influenced by the negative macroeconomic statistics of the United Kingdom. Retail sales fell 3.4% in November after rising 0.3% a month earlier, although analysts had expected an increase to 0.7%. Business activity data was also disappointing: the PMI index for the manufacturing sector fell to 48.0 points, while in the United States, on the contrary, similar indicators improved. Investors' attention today is focused on the index of business activity in the UK services sector. Analysts expect the indicator to be at the level of 50.0 points. In addition, today there will be a speech by the head of the Bank of England, Andrew Bailey, who can shed light on the prospects for the interest rate.The situation in the real estate market remains an additional pressure on the pound. According to the Bank of England, a significant proportion of mortgage loan holders predict an increase in interest rates in the coming years, which will lead to an increase in monthly payments. Rising inflation and geopolitical risks also raise concerns about financial stability.In the USA, data on private sector employment from ADP will be published today (expected to decrease to 150,000), as well as statistics on business activity in the service sector from ISM and S&P Global. Fed Chairman Jerome Powell's speech in the evening may affect market expectations for a rate change.Technical analysis for GBP/USDOn the daily chart, the Bollinger indicator shows horizontal stabilization, but retains the potential for growth. The MACD indicates a buy, but the Stochastic is declining.Open long positions with a confident breakout of the key resistance of 1.2700 with a target of 1.2817. We put the stop loss at 1.2650.Sales when rebounding from 1.2700 and breaking down the 1.2650 level with a target of 1.2550. In this case, we will set the stop loss at 1.2700. 
FOREX Fundamental analysis for EUR/USD on December 4, 2024The euro continues to hold its position despite the political instability in France, where the government is teetering on the verge of resignation. However, this factor, coupled with the economic slowdown in the Eurozone, the ECB's aggressive monetary policy and new trade duties from Donald Trump, strengthens forecasts of a possible fall in EUR/USD to the level of parity. This is the opinion of 18 out of 42 experts surveyed by Reuters.The pivot level, which indicates the equality of the euro and the dollar, may be less painful for the export-oriented economy of the Eurozone than for its politicians. However, such a scenario is likely to strengthen the positions of the parties advocating an exit from the currency bloc. For example, the German right-wing AfD party has already included this issue in its election agenda before the parliamentary elections in February. Political risks are becoming an additional factor of pressure on the euro.Tariffs are Trump's weaponECB officials warn that Donald Trump's protectionism could further slow down the Eurozone economy. And this is not without reason. If during the first trade war of 2018-2019 tariffs on Chinese imports increased from 3% to 11%, now Trump is threatening duties of 20% for a number of countries, including Europe. For economies that depend on exports to the United States, such as the Eurozone countries, Mexico and Canada, duties of 10-25% can be a devastating blow.Dynamics of average US tariffsAlthough some analysts suggest that Trump is using tariffs as leverage in negotiations, his actions are unpredictable. Under the slogan "America first", the US economy may receive additional incentives, but a strict migration policy may weaken this trend.Economic divergenceMigration and high labor productivity have become key factors that have allowed the United States to withstand the most aggressive Fed rate hike cycle in the last 40 years, said FOMC member Adriana Kugler. Since 2008, labor productivity in the United States has increased by 30%, which is three times the growth rate in the Eurozone. This contributes to stronger economic growth: the IMF predicts that in 2024 US GDP will grow by 2.8%, while in the Eurozone it will grow by only 0.8%.EUR/USD forecastAgainst the background of the difference in economic growth, Reuters experts revised their forecasts for EUR/USD. The pair is expected to fall to 1.05 in the next three months, and to 1.04 in six months. Nevertheless, most analysts do not consider the level of parity to be inevitable, since negative factors have already been partially taken into account by the price.I'm sticking to a more pessimistic forecast. Political instability, a weak economy and pressure from the United States create an unfavorable background for the euro. If EUR/USD falls below 1.048, we will receive a signal to strengthen the shorts formed when rising to $1.06.EUR/USD Technical analysisEUR/USD is trying to continue its growth. The main goal of strengthening the pair is the maximum on November 29 in the area of 1.0597. If the asset gains a foothold higher, then buyers will probably try to break through the upper Target zone of 1.0636 - 1.0608. In this case, the next target of the bulls will be the "Golden Zone" 1.0709 - 1.0700.We will consider purchases after a decline to the support area 1.0505 - 1.0496. The stop loss can be placed at the minimum of today. The trend boundary is in the range 1.0459 - 1.0445. If EUR/USD gains a foothold below this area, the trend will change to a downward one.