FOREX Fundamental Analysis for November 21, 2023
The sole leader in forex currency trading has not yet been determined, but investors already realize that it will not be the dollar. Speculators are hastily closing long positions on the greenback, which helped EUR/USD rise to three-month highs. The fundamental backdrop and stock indices are helping the European currency to recover.
The United States Treasury successfully auctioned $16 bln of bonds. The yield on the treasuries does not exceed 4.78%, which indicates a high demand for securities amid deteriorating macro statistical reports. Apparently, the economic potential of the United States is significantly overestimated, and the risks of recession, on the contrary, are underestimated.
Dynamics of bond yields and the U.S. Economic Surprise Index
The probability of the first Fed rate cut next March has risen to 30%, while the odds of a monetary expansion in May have risen to 59%. With a 55% probability, the derivatives market predicts a 100 basis point rate cut in 2024.
As a rule, Central Banks pursue a unified policy, so the ECB will decide to change the course of monetary policy after the Fed. The ECB is expected to cut rates by 90 bps during 2024. The transition to a soft policy of the Central Bank supports risky assets and has an impact on the dollar.
At the same time, some representatives of the monetary authorities, such as the head of the Central Bank of France Villarois de Galo, believe that investors have moved very quickly to the idea of a "dovish" reversal, forgetting about the long plateau of high rates.
I believe the financier is right. The market has quickly forgotten about the tremendous work of the central banks to curb inflation, especially since the last stage of this work is rightly considered the most difficult. It is easier to bring inflation down from 10% to 3% than from 3% to 2%. And as soon as investors remember this, EUR/USD will go into a pullback. On, and as long as the pair holds above the 1.094 pivot level, we will emphasize buying towards 1.12.
AUD/USD review from December 4, 2023The American dollar is losing ground in forex trading while the Australian dollar continues to recover, gaining support from national statistics. AUD/USD is trading near 0.6650 on Monday.The October Australian Retail Sales report showed a 0.2% (m/m) decline in the figure, but a 1.2% year-on-year increase was recorded. Corporate gross operating profit declined by 1.3% in September, but solely due to a 2.7% increase in employee compensation. Loan approvals rose 2.8% and borrowing costs added 4.9%.The Reserve Bank of Australia will hold its interest rate meeting tomorrow. It is expected that the regulator will not adjust financial conditions.The US dollar index remains at 103.100. Markets did not react to Jerome Powell's speech on Friday, although the Fed chief confirmed the likelihood of another rate hike.Technical analysis of AUD/USD for todayOn Daily AUD/USD has formed an uptrend. The Alligator indicator has correctly opened the moving average fan upwards, awesome oscillator is forming upward bars in the positive area.After consolidation of the pair above 0.6690, we open long positions with the target at 0.6790. Stop-loss is placed at 0.6650.Below 0.6620 we move to sales with take profit at 0.6500 and stop loss at 0.6680. 
GBP/USD starts the new week with a slight drawdown, retreating from the local highs of August 31 and trading around 1.2670.Last week there were a lot of significant economic releases from the US and UK. For example, the UK manufacturing sector business activity index rose from 46.7 pp to 47.2 pp in November. The data of the British construction business also showed positive dynamics. Moreover, the statistics improved for the third month in a row, which suggests that the housing market is emerging from the crisis. At the same time, the index of business activity in the manufacturing sector of the United States from S&P Global remained at the level of 49.4, and according to ISM kept the value of 46.7 with the forecast growth to 47.6 pp.On Friday, Jerome Powell's speech was held, allowing another increase in the federal funds rate.Technical analysis for GBP/USD for todayThe Bollinger Bands indicator on the daily formation chart remains in a steady rise while the MACD is starting to show signs of reversal and has already generated a sell signal. The Stochastic oscillator has reversed downward, exited the overbought area and is developing a decline.If the pair will consolidate below 1.2650, we move to short positions with the target mark of 1.2550. Stop-loss is set at 1.2700.A break above 1.2700 will indicate the continuation of the uptrend. The next target for buyers is 1.2800. Stop loss is set at 1.2650. 
FOREX Fundamental Analysis for December 4, 2023Investors once again did not believe Jerome Powell's statements about the continuation of the Fed's hawkish course until a complete victory over inflation. Markets remember that a few days earlier three Fed officials, including Powell's deputy, spoke in favor of ending the monetary restriction cycle. The speech of the head of the regulator did not support the dollar. On the contrary, stock indices went up, which allowed EUR/USD to rebound from a two-week low.Bitcoin, for the first time since April 2022, exceeded the 40000 mark, gold updated the maximum, and the U.S. stock market is closing in the "green" zone for the fifth week. The likelihood of a Fed rate cut is increasing appetite for risky assets. The derivatives market expects the Fed to cut the rate by 125 basis points to 4.25% in 2024. Bloomberg predicts that the rate will reach 3% in 2025. Forex currency trading is going well for risk buyersIf the Fed's monetary policy course pushes the economy into recession, the Fed should move to monetary expansion. Even if GDP remains strong and inflation continues to move towards 2%, the regulator still needs to cut rates, as their current values are severely hampering economic growth.But the euro has weaknesses too. The ECB is also determined to keep the rate at a high level, as well as the Fed, but only the state of the Eurozone economy is not the same as in the US.The European Central Bank is likely to be the first of the developed countries' central banks to move to easing monetary policy, which will weaken the Euro against all G10 currencies except the dollar. The greenback is being pulled down by falling bond yields, rising stock indices and demand for risk assets.While the euro and the dollar are measuring who is weaker, EUR/USD will remain in the consolidation range of 1.08-1.10. If the US stock market completes its upward wave, the euro could be sold. We will use forex trading strategies in the price channel. Buy the pair on the downside and sell on the upside. 
FOREX Fundamental Analysis for November 30, 2023German inflation slowed to 2.3%, allowing ING to claim that the ECB's assessment of inflationary pressures was wrong. Inflation is falling across the Eurozone and the regulator, according to financial analysts, can start cutting interest rates right from tomorrow. The expectation of monetary policy easing and the weak Euro bloc economy, which requires global stimulus, put pressure on EUR/USD.And is deflation really that attractive? According to Rafael Bastick, head of FRB Boston, consumers are already starting to postpone purchases and cut back on spending, expecting prices to fall further. This is detrimental to any economy, and especially to the Eurozone economy, as the ECB probably overdid it by raising rates, although the main cause of inflation was a logistical disruption due to the COVID-19 pandemic, which the European regulator had no influence on.In the United States, the negative processes associated with the cooling of the economy are slower, as here large-scale stimulus allowed the population to accumulate excess savings. Nevertheless, the FOMC is no longer denying the likelihood of lowering rates, which now create additional economic risks.At the same time, the OECD urges Central Banks not to rush to reduce the cost of borrowing. Here they believe that the Fed will cut rates in the second half of 2024, and the ECB only in 2025. OSER forecasts US GDP growth of 1.5% next year and 1.7% in 2025. This is a good performance compared to the Eurozone. For Germany, analysts are planning growth of 0.6% and 1.2% respectively.American exceptionalism allows Goldman Sachs to state that in 2024 the dollar index will continue to lead other forex currency indices. Morgan Stanley recommends long-term EUR/USD selling with an eye on the parity level. Banks believe that the world economies, except for the U.S., will not withstand the burden of high rates, which will increase the demand for the dollar as a protective asset.We believe that EUR/USD dynamics now largely depends on inflation reports. If the US PCE falls below expected values, the main currency risk could continue to strengthen. If the forecast and actual figures are close, the pair will go into a prolonged consolidation. The EUR/USD growth was too turbulent and it is time to take a pause.It is possible that the upper boundary of the consolidation range is already marked and passes through 1.1015. If the price goes below 1.096, the pair will test the lower boundary of the channel around 1.091 or 1.086. For risk traders, you can look for entry points for short-term sales. 
GBP/USD continues its upward trend with the renewal of local highs on Wednesday. Buyers broke an important resistance at 1.2700 and are trying to consolidate above this level."Bullish" impulse GBP/USD received yesterday after the speech of three representatives of the Federal Reserve, each of whom announced a possible change of course of the regulator's monetary policy, as inflation is steadily declining, and high rates carry additional risks for the United States economy.The dollar index descended to 102.600. Today, investors are waiting for the release of the annual report on US GDP, as well as the consumer price index. On Friday there will be a speech by Jerome Powell.British statistics has little influence on the pair dynamics, but today the head of the Bank of England Andrew Bailey will speak, who may highlight the prospects of the Central Bank's monetary policy course, which will cause an increase in volatility.Technical analysis for GBP/USD for todayOn the daily chart, GBP/USD broke through the upper boundary of the ascending channel. The Alligator indicator has correctly built a fan of averages upwards. Awesome oscillator is growing in the positive range.After consolidation of the pair above 1.2760 we form purchases in the direction of 1.2930. Stop-loss is set at 1.2720.Selling will be relevant if the pair drops below the support at 1.2660. The nearest target for sellers is 1.2500. Stop-loss in this case will be placed at 1.2720. 
FOREX Fundamental Analysis for November 29, 2023The market received an indirect confirmation of the red-hot idea of a "dovish" reversal. In yesterday's speech, the head of FRB Chicago compared the monetary restriction cycle with the process of turkey cooking. Both there and there, he notes, the main thing is not to overdo it. Austan Goolsby believes that as inflation approaches the 2% target, the need to tighten financial conditions decreases. Markets saw the statement as a hint that the Fed is moving to a softer monetary policy.FOMC member Christopher Waller, known for his hawkish stance, went even further in his reasoning. He believes that with inflationary pressures falling steadily, there is no point in keeping rates at a high plateau for a long time.The markets took these words as a signal to sell the dollar. Stock indices rushed to new heights and dragged risky instruments, including EUR/USD, through currency correlation. The probability of the federal funds rate cut in May overnight rose from 51% to 70%. The odds of its reduction to 4.5% by the end of 2024 rose from 51% to 76%.In addition, Christopher Waller reassured the markets by stating that the treasury rates are above the July values, when the Fed stopped monetary restriction, so there is no reason to worry about easing financial conditions.If such hardened hawks are turning into doves, no great confirmation of risky ideas is needed. So, indeed, the Fed may allow monetary easing, as even the regulator's leadership sees current rates as unnecessarily high. Again, the Fed is not abandoning the scenario of a soft landing for the economy.Now the markets are waiting for Friday's speech of Jerome Powell. If the head of the Fed confirms the course of the "regulator" on monetary expansion, the main EUR/USD rally will be ahead. Today we will analyze important statistics - annual data of US GDP and consumer price index. The pivot level for EUR/USD is 1.094. As long as the pair is trading higher, long positions remain relevant. 
Trading idea for USD/JPY from November 28, 2023On Tuesday, USD/JPY shows a weak recovery attempt and trades just above 148.50 at the moment.Market participants are interested in the direction of the monetary policy vector of the Bank of Japan, in this regard they are carefully analyzing the national statistics. In October, inflation in Japan accelerated from 3.0% to 3.3%, but the core rate fell from 4.2% to 4.0%.After the report was released, the BOJ governor noted a lack of confidence that inflation will reach the 2% target in the near future. Kazuo Ueda considers the growth of wages and consumer prices as a positive development, but stated the risks of uncertainty and that the Central Bank will not give up control of the yield curve and raise interest rates.At the moment USD/JPY dynamics depends more on the dynamics of the US dollar. Investors are waiting for important economic releases and Friday's speech of Jerome Powell. Special attention is paid to the estimation of the US third quarter GDP, as well as the personal consumption goods price index.We believe that USD/JPY maintains the global uptrend and will soon retest the important resistance at 150.00. We suggest including a buy order in the trader's trading planBuy-stop 149.00take-profit 150.00stop-loss 148.40 
On Tuesday, GBP/USD traded in a varied manner, not retreating far from the local highs of September 1. Yesterday the pair strengthened slightly, playing off the weakness of the U.S. dollar.Rumors are growing in the market that the Fed may move to easing monetary policy faster than previously planned. At the same time, the Bank of England states that it will be difficult to achieve the inflation target of 2%, so the cycle of rate hikes is likely to continue.Sterling was also supported by UK Prime Minister Rishi Sunak's statement about attracting £29.5 bln of foreign investment.The UK Retail Prices Index was released today, recording a decline from 5.2% to 4.3%. The retail sales index for the month rose from (-36.0) to (-11.0).Analysts believe that the situation in the UK is improving, and the increase in consumer demand before the Christmas holidays will help the economic recovery.A number of Fed representatives will speak today.Technical analysis of GBP/USD for todayThe Bollinger Bands indicator on the Daily is headed for a strong rise, as is the MACD indicator, which maintains a buy signal. The Stochastic oscillator is in the area of maximum values.After price consolidation above 1.2650, we open purchases with a target of 1.2747. Stop-loss is set at 1.2600.If the pair drops below the support at 1.2600, we move to short positions with the target at 1.2500. Stop-loss is set at 1.2650.