FOREX Fundamental analysis for EUR/USD on December 3, 2024
While political instability in France is intensifying, the EUR/USD exchange rate continues to decline. Internal conflicts, including a coalition of leftists and a National Association trying to express distrust of Michel Barnier's government, undermine the position of the euro. Even Marine Le Pen's concessions failed to stabilize the situation. The spread between French and German bond yields — a key indicator of political risks in Europe — has reached its highest levels since 2012 and is approaching the critical 100 basis points. This increases the pressure on the European currency.
Against the background of the weakening influence of Trump trading and a decrease in the likelihood of a significant easing of the ECB's policy in December, investors began to adjust forex hedging instruments. However, skepticism about the implementation of Donald Trump's promises is causing a decrease in appetite for the dollar. His threats of trade sanctions against the BRICS and pressure on neighbors such as Canada and Mexico are perceived as a political bluff.
Despite talk of a possible alternative to the dollar, its dominance in the global financial system remains unshakeable. The dollar's share in global foreign exchange reserves exceeds 60%, and more than 80% of all foreign exchange transactions in Forex are carried out with its participation. Even alternative platforms such as the Chinese CIPS are heavily dependent on the SWIFT system. Discussions among the BRICS countries on the creation of a new currency are likely to remain within the framework of simplifying cross-border settlements, rather than a real threat to the hegemony of greenback.
However, the main threat to the dollar comes from within. Budget deficits, economic nationalism and the weakening of the rule of law may weaken greenback's position in the long run, according to UBS analysts. Nevertheless, these processes will take decades, and while the dollar remains in strong positions, the "bears" for EUR/USD continue to dictate conditions.
Investors are now turning their attention to monetary policy. The probability of a Fed rate cut by 25 basis points in December rose to 76%, which puts pressure on the dollar. Some FOMC members, such as Christopher Waller, believe that the current policy is too harsh, which slows down the US economy.
The key events will be Jerome Powell's speeches and the publication of US employment data for November. If EUR/USD does not stay above the 1.047 pivot level, this may trigger a further decline. Short positions formed on the growth to 1.06 remain relevant.
EUR/USD Technical analysis
Yesterday, the EUR/USD correction continued within the framework of a short-term uptrend. As a result, the support area 1.0505 - 1.0496 was broken. The pair approached the support area 1.0459 - 1.0445. At the close of the American trading session, buyers became visible on the market. Therefore, today we can expect the formation of a pattern to enter long positions and, after the appearance of appropriate signals, open longs with a target near the 1.0597 level.
To sell and change the direction of the trend, market participants need to break through the 1.0445 mark and gain a foothold in the American trading session below. In this scenario, starting tomorrow, it will be possible to consider selling EUR/USD with a 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. 
AUD/USD is fluctuating in a sideways trend near the 0.6467 level. Despite the positive macroeconomic data from Australia, the local dollar does not show significant strengthening.According to reports from the Australian Bureau of Statistics (ABS), retail sales increased by 0.6% in October, which was the third consecutive increase after +0.1% in September and +0.7% in August. The largest growth was recorded in the segments of general goods (+1.6%) and household goods (+1.4%), while sales of clothing, shoes and personal goods decreased by 0.6%, and department stores — by 0.3%.In the construction sector, the number of building permits increased by 4.2% and reached 15.5 thousand, and the cost of housing construction increased by 3.2%, amounting to 8.33 billion Australian dollars. At the same time, November inflation slowed down: the consumer price index from TD Securities decreased from 3.0% to 2.9% in annual terms and from 0.3% to 0.2% on a monthly basis. The slowdown in inflation may become a trigger for easing the policy of the Reserve Bank of Australia (RBA), which has so far maintained a neutral exchange rate.USA: moderate recoveryThe US dollar index stabilized at 106.50, receiving support from improved business activity in the manufacturing sector. The PMI index rose from 48.5 to 49.7 points, and the ISM index rose from 46.5 to 48.4 points. However, the price index in the sector decreased from 54.8 to 50.3 points, which may limit the further growth of the dollar.AUD/USD Technical analysis for todayOn the daily chart, the pair is trading above the support line within the "expanding formation" pattern with a range of 0.7000–0.6300.The fast EMA lines of the alligator indicator are tilted down, confirming the sell signal.The awesome oscillator indicator remains in the negative zone.Trading recommendations- SaleConditions: a decrease below the level of 0.6440.Target: 0.6350.Stop loss: 0.6500.- BuyConditions: consolidation above the 0.6510 level.Target: 0.6630.Stop loss: 0.6470. 
USD/CAD review of December 2, 2024In the Monday morning trading session, USD/CAD shows a recovery from the bearish trend of the end of last week. The pair is approaching the 1.4030 mark, where it is trying to gain a foothold higher. Market participants are waiting for the release of key data that can become a driver of further movement. Today at 16:30 and 16:45 (GMT+2), the S&P Global business activity indices for November for the United States and Canada will be published. According to forecasts, the US indicator will remain at 48.8, which will indicate stagnation, and the ISM index for the manufacturing sector may rise to 47.5 from the previous 46.5. The Canadian index, on the contrary, may drop to 50.8 against 51.1 earlier.Pressure factors on the Canadian dollarRecent Canadian GDP data has added pressure on the loonie. In September, the growth was only 0.1% instead of the projected 0.3%. In the third quarter, the economy showed growth of 0.3% on a quarterly basis and 1.0% on an annual basis, which is in line with analysts' expectations. The main contribution to the growth was an increase in consumer spending by 0.9% and government spending by 1.1%. However, investments in new housing decreased by 0.1%, and renovation costs decreased by 0.4%.Statistics have increased the chances of a rate cut by the Bank of Canada by 50 basis points next month from 31% to 44%. The probability of a softer adjustment by 25 basis points has already been fully taken into account by the market.US market expectationsAmerican investors are preparing for the release of the November labor market report at the end of the week. It is expected that the number of new jobs outside the agricultural sector will grow to 183 thousand, and the growth rate of average hourly wages will decrease to 0.3% against 0.4% previously. The unemployment rate is likely to remain at 4.1%. Similar indicators in Canada can show the stability of the average wage at 4.9% and unemployment at 6.5%.USD/CAD Technical Analysis for todayOn the daily chart, the Bollinger indicator has leveled off, indicating uncertainty in the short term. The MACD indicator continues to decline, supporting a weak sell signal. The stochastic oscillator is located near the oversold zone.Trading recommendations- Buy: after a confident breakdown of the 1.4050 level up with a target at 1.4145. Stop loss is recommended at 1.4000.- Sell: when rebounding from the 1.4050 level and breaking down the 1.4000 level with a target of 1.3908. The stop loss should be set at 1.4050. 
The USD/JPY pair is strengthening after last week's decline, as a result of which it reached its minimum values on October 21. At the moment, quotes are rising above the level of 150.65, which is facilitated by the factors of technical analysis by John Murphy and the expectation of the publication of key US statistics this week.In the United States labor market in November, economists forecast an increase in the number of new jobs to 183 thousand, and average hourly earnings may slow growth from 0.4% to 0.3%. The unemployment rate is projected to remain at 4.1%. The University of Michigan consumer confidence index is also expected to rise to 72.9 points. On Wednesday, the market's attention will be focused on data from ADP on private sector employment. It is expected to decrease to 165 thousand. Also on this day, the Fed's Beige Book will be released, which will provide a fresh overview of the economic situation.Factors supporting the yenAgainst the background of statements by the head of the Bank of Japan, Kazuo Ueda, commenting on a possible interest rate hike at a meeting in December, the Japanese yen is strengthening its position. Positive data on inflation in Tokyo (growth to 2.6%) and growth in retail sales, despite less optimistic indicators, also confirm steady domestic demand. The recovery in industrial production (3.0% growth) and an increase in corporate spending (up to 8.1% year-on-year) indicate a gradual economic recovery, which strengthens the arguments for tightening monetary policy.USD/JPY Technical Analysis for todayOn the daily chart, the Bollinger Band indicator shows a downtrend with an expansion of the range, which indicates the likelihood of a further decline in the pair. The MACD indicator is below the zero level, maintaining a sell signal. Stochastic, approaching the minimum values, indicates the possibility of short-term growth.- We will open long positions: when the level 151.50 breaks up with a target of 153.18. We will set a stop loss at 150.50.- We consider sales when the price rebounds from the resistance of 151.50 and breaks down the level of 150.50. The nearest target will be 148.24. We will place the stop loss at 151.50.ConclusionThe current dynamics of USD/JPY remains dependent on data on the US economy and decisions of the Bank of Japan. Traders are advised to monitor key resistance and support levels to select optimal entry points. 
FOREX Fundamental analysis for EUR/USD on December 2, 2024Donald Trump's statement about the possible imposition of 100% duties on goods from the BRICS countries, if they do not abandon the idea of creating a single currency, has shocked global markets. Investors rushed to the US dollar, which strengthened its position among other forex currency indices. The sale of EUR/USD after the publication of inflation data in the Eurozone turned out to be very successful.Inflation in the Eurozone rose to 2.3%, exceeding the ECB's target level for the first time in three months. Theoretically, this should have supported the euro, reducing the likelihood of a reduction in the deposit rate in December. However, core inflation remained at 2.7%, and the slowdown in the growth of prices for services from 4% to 3.9% became a reason for profit-taking, which gave an impetus to the "bears" in EUR/USD.The political crisis in FranceAn additional blow for the euro was the aggravation of the political situation in France. The National Rally parliamentary Party has issued an ultimatum to Michel Barnier's government - either a budget adjustment or a vote of no confidence. Disagreements between the Finance Ministry and the left over the €60 billion budget caused the yield spreads of French and German bonds to rise to the levels of the 2012 debt crisis.The draft budget provides for a deficit of 6.1% of GDP in 2024, while the left insists on reducing it, which may delay reaching the EU target of 3%. A possible vote of no confidence in the government increases the pressure on the euro.Reaction to Trump's ultimatumTrump's demand for the BRICS countries to give guarantees of abandoning the single currency raises serious questions. Although the idea of creating a currency was rejected at the last summit, Moscow and Beijing are unlikely to agree to such conditions. Other countries are likely to seek compromises, strengthening the influence of Washington and the US dollar.Prospects for EUR/USDThe situation in the United States also plays into the hands of Greenback. The expected employment recovery in November after a decline due to the October hurricanes supports the likelihood of a Fed pause in January, which strengthens the dollar. Holding short positions on EUR/USD with its growth to $1.06 remains an actual forex trading strategy. These positions can be increased periodically, taking into account favorable conditions for further decline of the pair.EUR/USD Technical analysisAfter last week's rise, EUR/USD is correcting downwards. A possible correction target is the support area 1.0505 - 1.0496.After testing this support, it will be possible to consider new purchases with the first target at 1.0546 and the second at 1.0597.If the 1.0597 level is broken up during trading, then market participants will reach the upper target zone of 1.0636 - 1.0608. A breakthrough of the upper target zone will open the way for the growth of quotations in the area of the gold zone 1.0709 - 1.0700.To sell and change the direction of the trend, sellers need to break through the key support of 1.0459 - 1.0445 and consolidate below. 
USD/CHF analysis on November 29, 2024In the morning session on Friday, USD/CHF remains under pressure, updates the lows on November 11, testing the level of 0.8810. The volatility of currency pairs is low due to the weekend in the United States - the celebration of Thanksgiving Day. Investors analyze the data published earlier. In October, the basic price index of personal consumption expenditures rose to 2.8% from the previous 2.7%, and the overall figure rose from 2.1% to 2.3%, in line with analysts' expectations. These figures increased the likelihood of a rate cut by the US Federal Reserve in December. by 25 basis pointsIn Switzerland, investors are expecting the release of key macroeconomic data. The GDP for the third quarter will be presented today. Experts predict the indicator to remain unchanged at 1.8% year—on-year, but a slowdown in the quarter to 0.4% from the previous 0.7%. The KOF index data for November will also be published, where a slight increase to 100.0 points from 99.5 is expected.The head of the Swiss National Bank, Martin Schlegel, said that the regulator's policy will depend on the level of inflation, which must be kept in the range of 0-2%. Switzerland has shown success in price control by lowering the consumer price index to a three-year low after the COVID-19 pandemic. According to Schlegel, given the country's high dependence on global economic processes, flexibility in managing inflation remains a priority.USD/CHF Technical Analysis for todayOn the daily chart, the indicators do not give unambiguous signalsBollinger bands show horizontal dynamics while maintaining a wide range.The MACD indicator indicates a decline, confirming the sell signal.Stochastic is approaching the oversold zone, indicating a possible rebound in the dollar in the short term.Trading recommendationsWe open short positions when the 0.8800 level breaks down with a target of 0.8730. We will set the stop loss at 0.8827.We will consider purchases when rebounding from the key support of 0.8800 and breaking up the resistance of 0.8827 with a target of 0.8900. We will place the stop loss at 0.8800. 
AUD/USD analysis on November 29, 2024The AUD/USD pair is showing steady strengthening, continuing the growth that began in the middle of the week. At the moment, the instrument is testing the 0.6520 level for a breakdown, which is facilitated by the closure of American markets in connection with the celebration of Thanksgiving Day.Earlier, investors analyzed data from the United States. Among the key indicators:GDP for the 3rd quarter confirmed growth at the level of 2.8%.Orders for durable goods increased by 0.2% in October (against the expected 0.5%).Personal income of US households increased by 0.6%, exceeding forecasts. Spending slowed to 0.4%, but also turned out to be higher than expected.The index of personal consumption expenditures (PCE) increased from 2.7% to 2.8% in annual terms.Labor market data also supported the positive sentiment. The number of initial applications for unemployment benefits decreased to 213 thousand, exceeding forecasts.The Australian economy has also performed well. Lending to the private sector in Australia grew by 6.1% year-on-year, exceeding expectations. In addition, the head of the Reserve Bank of Australia (RBA) Michelle Bullock noted that achieving stable inflation below 3% will require significant efforts, and this is unlikely until 2026.AUD/USD Technical analysis for todayThe Bollinger indicator indicates a narrowing of the range, signaling the possibility of short-term fluctuations.The MACD retains a strong buy signal.Stochastic is approaching the overbought zone, which increases the risks of a pullback in the short term.Trading recommendations1. Long positionsEntry conditions: breakout of the 0.6532 level up.Target: 0.6600.Stop loss: 0.6500.2. ShortsEntry conditions: a rebound from 0.6532 and a breakdown down to the level of 0.6500.Target: 0.6440.Stop loss: 0.6532.In the current situation, traders' attention should be focused on key resistance and support levels, as well as on the dynamics of news from the United States and Australia.