FOREX Fundamental analysis for EUR/USD on November 19, 2024
Forex currency trading is largely based on history. Investors, after Donald Trump's victory in the presidential election, are actively repeating the 2016 scenario, again betting on the US dollar. As it was 8 years ago, the greenback is rapidly strengthening. However, following the results of Trump's first term, the dollar index fell by 10%, mainly due to the pandemic. But there was another factor – fears that China, protesting against the imposition of customs tariffs, would begin to get rid of American treasury bonds. And so, in the third quarter of 2024, it becomes a reality.
In July-September, the two largest holders of treasuries, Japan and China, significantly reduced their holdings of treasuries. Japan sold securities for a record $61.9 billion, and China for $51.3 billion, which was the second largest reduction in history.
Japan's actions can be explained by currency intervention to support the yen, but China's steps look like a warning signal. In late 2017 and early 2018, the dollar was losing ground, despite the increase in the yield of treasuries. Back then, it was said that China was selling bonds in retaliation for the duties. However, Washington quickly proved that these weapons are not so dangerous. The rising yield of treasuries is hitting the global economy, including China, and the dollar soon regained its position. Its further decline in 2020 was explained by the Fed's monetary incentives.
The return of the old pattern alarmed the EUR/USD bears, prompting them to take profits on short positions. European exports to the United States are likely to grow in anticipation of new duties. In September, exports from the EU to America increased by 8.9%, as companies rushed to strengthen supplies.
Despite the recent EUR/USD rebound, the pair's fundamental problems remain. Even without the new duties, the Eurozone expects GDP growth to slow to 1.45% by 2029 due to an aging population and low productivity. At the same time, US economic growth is projected at 2.29%. American companies continue to outperform European competitors, and Goldman Sachs notes three key factors supporting the dollar: high tariffs, a dynamic economy and strong demand for assets.
Thus, the recent strengthening of the euro is only a short—term correction. If the pair fights off the resistance levels of 1.061–1.0625 or 1.068–1.07, or returns below 1.0545, then we get a good opportunity to form short positions.
On Wednesday, AUD/USD is adjusted within the framework of a downtrend and is currently trading at 0.6526. This is due to the strengthening of the Australian dollar against the background of positive economic data and the depreciation of the US currency.The recent minutes of the Reserve Bank of Australia (RBA) meeting showed that high inflation remains the main problem of the economy. Although the overall inflation rate is slowing due to lower fuel prices, core inflation continues to rise and is expected to return to the target range of 1-2% only by 2026. This is holding back GDP growth. The bank has kept its key rate at 4.35% and intends to adhere to a restraining monetary policy until economic conditions improve. The regulator allows a reduction in rates only if there is a steady decline in consumer activity and a noticeable deterioration in the labor market situation.The US dollar index is trading at 106.10. His position is influenced by weak statistics on the real estate market. In October, the number of construction permits issued decreased from 1.425 million to 1.416 million, falling short of forecasts of 1.440 million. Also, the volume of new construction decreased by 3.1%, to 1.311 million units, with expectations of 1.340 million.AUD/USD Technical Analysis for todayThe AUD/USD pair is correcting near the support line within the framework of the "expanding formation" model with dynamic boundaries of 0.6980–0.6320.The EMA lines on the alligator are directed downwards, maintaining a stable distance from the signal line.The histogram of the awesome oscillator indicator is in the negative zone, but the sell signal is weakening.Open short positions after the price is fixed below the level of 0.6490 with a target of 0.6400. Let's set the stop loss at 0.6540.Purchases after the pair's steady growth above the 0.6560 level with a target of 0.6670. We will place the stop loss at 0.6520. 
FOREX Fundamental analysis for EUR/USD on November 20, 2024The momentum of the "Trump trade" is weakening, and the growth of geopolitical tensions in Eastern Europe is helping to restore the position of EUR/USD.The rapid fall of the euro against the US dollar after the presidential election turned out to be excessive, and by the end of autumn, investors are beginning to show caution.As a result, the steady uptrend of the dollar is facing new challenges.Features of the current situationThe traditional attributes of "Trump trading" - the growth of stock indexes and treasury bond yields, and with them the correlation of currencies — are failing. The escalation of the conflict in Eastern Europe, including the use of American weapons by Ukraine and Russia's revision of its nuclear doctrine, is forcing investors to look for "safe havens". This led to lower bond rates and reduced pressure on the euro. If the threat of a nuclear strike remains only at the level of rhetoric, the situation in the markets is likely to stabilize.And, although Fed Chairman Jerome Powell claims that the election results will not affect monetary policy, history shows the opposite. After Trump's victory in 2016, the Fed began to take into account possible fiscal incentives, which prompted the Fed to tighten monetary policy.Forecasts for DecemberThe probability of a Fed rate cut in December is falling and reached 59.1% against 80% after the publication of inflation data.The European Central Bank (ECB), on the contrary, may go for easing. The chances of reducing the deposit rate by 25 basis points are 77%, and the probability of a more decisive step by 50 basis points is 23%. The head of the Bank of Italy, Fabio Panetta, stressed that the current levels of inflation and weak domestic demand require a transition to a more lenient policy.Trade with ChinaThe decline in the effectiveness of Trump's protectionist policy is manifested in the growth of imports from China. In October, shipments from China to the United States increased by 13%, which is reminiscent of the situation in 2018, when the foreign trade deficit increased contrary to expectations of a reduction. This highlights the failures of protectionism in achieving its stated goals.ConclusionGeopolitical events may create a temporary pullback, but fundamental differences — the more active monetary policy of the Fed and the weakness of the ECB — continue to put pressure on EUR/USD. Without drastic changes, such as nuclear escalation, the long-term trend of the pair will remain downward, opening up opportunities for selling the pair with a target of $1,035. 
NZD/USD analysis on November 19, 2024On Tuesday, the NZD/USD is trading near the 0.5890 mark, due to positive economic data from New Zealand and the depreciation of the US dollar.The index of selling prices of New Zealand producers increased from 1.1% to 1.5%, and purchasing prices — from 1.4% to 1.9%. In addition, prices for capital goods rose (+0.1%). The only negative indicator was the price index for agricultural expenses, which lost 0.2%, but even this may be a positive signal due to a reduction in equipment and raw materials costs in the agricultural sector.The US dollar index continues to lose ground and reached 106.10. The reason for the decline is the uncertainty caused by the plans of President Donald Trump. His import tariff strategy and tax reduction programs funded by higher government debt could accelerate consumer price growth. This, in turn, will force the Fed to reconsider monetary policy, which is causing alarm among investors.Data on the volume of new home construction in the United States for October is expected to be published today. Analysts predict a decrease from 1.354 million to 1.340 million, which corresponds to a negative trend.Technical analysis for NZD/USD for todayThe NZD/USD pair is moving within the "expanding formation" model with boundaries of 0.6460–0.5800.Indicators confirm the downward trend. The EMA lines on the alligator are moving away from the signal line, which strengthens the sell signal.The histogram of the awesome oscillator indicator is in the sales zone, forming correction bars below the transition level.After breaking down the 0.5850 level, we open sales with a target of 0.5730. Let's set the stop loss at 0.5900.If the pair grows above 0.5930, long positions with a target of 0.6060 will be relevant. We place the stop loss at 0.5880. 
USD/CAD analysis on November 19, 2024In Tuesday morning trading, USD/CAD shows a recovery after the decline at the beginning of the week, which did not allow it to gain a foothold at the highs of May 2020.On Friday, the US dollar came under pressure due to retail sales data. In October, the indicator decreased from 0.8% to 0.4%, which turned out to be higher than the predicted drop to 0.3%. However, excluding cars, it fell more significantly — from 1.0% to 0.1%, against the expected 0.3%. Industrial production also declined, but less sharply than before: from -0.5% to -0.3%. At the same time, the Canadian economy has shown improvement. Wholesale sales in September increased from -0.9% to 0.8%, almost matching expectations (0.9%), and production sales decreased from -1.3% to -0.5%. Yesterday's data also turned out to be positive: the volume of house construction increased from 223.4 thousand to 240.8 thousand in October, exceeding forecasts of 239 thousand.Today, investors' attention is focused on inflation data in Canada, which will be published at 15:30 (GMT+2). In October, the consumer price index is expected to rise from 1.6% to 1.9% in annual terms and from -0.4% to 0.3% on a monthly basis. However, the general trend of inflation remains downward. Last month, the decline in gasoline prices due to cheaper oil to $ 65 per barrel became a key factor, and experts believe that a similar trend could have continued, despite a temporary increase in oil prices to $ 75 per barrel. BMO Capital Markets forecasts that core inflation will reach 2.4–2.5%. Higher taxes may increase the cost of housing, but this is offset by lower mortgage costs due to the interest rate cut by the Bank of Canada in October. Another 25 basis point rate cut is expected at the December 11 meeting.USD/CAD Technical analysis for todayOn the daily chart, the Bollinger band indicator continues to expand, indicating the possibility of price growth, but the MACD indicator shows a downward reversal (the histogram tends to fall below the signal line). Stochastic, having left the overbought zone, confirms the likelihood of a downtrend in the short term.After breaking down the 1.4000 level, we open short positions with a target of 1.3908. We put the stop loss at 1.4050.In case of a rebound of the pair from the 1.4000 level and a breakdown up to 1.4050, we open purchases with a target of 1.4145. We will place the stop loss at 1.4000. 
On Tuesday, after a significant decline yesterday, USD/CHF remains in a state of uncertainty, trading around 0.8836.Investors' attention is focused on weak data on Swiss industrial production. In the third quarter, its growth slowed from 7.0% to 3.5%. Additional pressure is exerted by negative inflation statistics. In October, the producer and import price index fell by 0.3% after falling by 0.1% a month earlier, although analysts had expected an increase of 0.1%. In annual terms, the decline increased to -1.8% against the previous -1.3%.Important business activity data for November is being released in the United States. The index is projected to grow slightly in the manufacturing sector from 48.5 to 48.8 points, and in the service sector from 55.0 to 55.2 points. Also on Friday, there will be a speech by the head of the Swiss National Bank, Martin Schlegel, who took office in October 2024. The speech of the head of the regulator may have an impact on the further dynamics of the franc.USD/CHF Technical analysis for todayThe Bollinger Band indicator on the daily chart shows growth, but the range is narrowing, which indicates mixed dynamics in the short term.The MACD indicator has gone into the negative zone, forming a sell signal.Stochastic is also decreasing, confirming the likelihood of continued downward dynamics, although it is in the middle of the operating range, which leaves room for maneuver.Open sales at a breakdown down to the level of 0.8827, with a target of 0.8750. We will place a stop loss at 0.8865.Long positions are possible with a rebound from the 0.8827 level with an upward breakout of resistance at 0.8865. The target is 0.8935. We will put the stop loss at 0.8827. 
FOREX Fundamental analysis for EUR/USD on November 18, 2024The 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. 
On Monday, AUD/USD remains within the downtrend, correcting near the 0.6464 level. The Australian dollar is trying to develop an upward movement due to positive economic data, but it is still close to summer lows.In October, the unemployment rate in Australia, seasonally adjusted, remained at 4.1%, which is supported by an increase in the number of employed by 36.8 thousand, to 14.537 million. The number of unemployed increased by 0.8 thousand to 623.5 thousand, and the level of full employment increased by 9.7 thousand to 10.037 million. Part-time employment also increased by 6.2 thousand to 4.499 million. At the same time, the share of employed in the total population remained at 64.4%, while the level of economic activity slightly decreased from 67.2% to 67.1%.The Reserve Bank of Australia (RBA) is expected to: it will postpone the start of the monetary policy easing cycle from February to May next year. The regulator takes into account the stability of the labor market and the continuing inflation risks.The US dollar index, after Friday's correction, is now trading around 106.50. Investors are assessing the prospects for the actions of the US Federal Reserve, where, according to the CME FedWatch tool, the probability of a 25 basis point rate cut in December is 65%. After that, the regulator is expected to pause to analyze inflationary pressure and the state of the labor market. Fed Chairman Jerome Powell stressed that further rate decisions will depend on current economic data.On the daily chart, AUD/USD is adjusted above the support line of the "expanding formation" model with dynamic boundaries of 0.6950–0.6300.Technical analysis confirms the sell signals. The EMA lines of the alligator indicator are directed downwards and maintain a stable distance from the signal line, while the awesome oscillator histogram continues to decline in the sales area.Open sales after the breakdown and consolidation of the price below the level of 0.6440 with a target mark of 0.6350. We will set the stop loss at 0.6500.Long positions are possible after the pair grows and strengthens above 0.6490 with a target of 0.6590. We will put the stop loss at 0.6420. 
FOREX Fundamental analysis for EUR/USD on November 15, 2024When fresh data is added to the "Trump trade" confirming the strength of the American economy, the competing currencies of the US dollar are rapidly losing ground. The EURUSD pair fell by 6% from September highs, reaching a more than one-year low. This happened against the background of accelerating inflation in the United States and Jerome Powell's hints that the Fed would not rush to reduce the federal funds rate.Will the U.S. economy remain as stable during Donald Trump's second term? This is the key issue. The reaction of the markets to his victory resembles the scenario of 2016. At that time, the dollar strengthened immediately after the elections, but by 2020, the USD index fell by 10% due to the pandemic that caused the recession. The EURUSD is the same: after the elections 8 years ago, the pair fell, but a year later it was able to grow by 5.6%.The "America first" thesis works as long as the economy shows strength. Now this scenario is confirmed: the number of applications for unemployment benefits fell to the lowest in May, and the consumer and production price index accelerated in October. If such trends continue, the Personal Consumption Expenditure Index (PCE), the Fed's preferred inflation indicator, could rise to 2.7–2.8%. This will offset the Fed's success in fighting inflation and cast doubt on forecasts of a decline in PCE by the end of the year to 2.6%, which was the Central Bank's target.Jerome Powell stressed that there is no need for hasty decisions on the part of the Central Bank. On the contrary, the stability of the economy allows the Fed to carefully consider steps to reduce rates. If the incoming data requires a slowdown, the Fed is ready to follow this course, which seems logical.Powell's statement changed the dynamics of the futures market. After the publication of CPI data, expectations of maintaining the rate at 4.75% in December fell from 41% to 17%. However, a day later, the odds returned to 41%, supporting the dollar. The greenback, as in 2016, is strengthening simultaneously with the growth of stock indices, thanks to the effect of "American exceptionalism".Trump-trade will continue as long as the U.S. economy remains strong. However, it is worth remembering that recessions can occur not only because of pandemics. The Fed's overly strict policy is one of the main risks to economic growth. High rates can cause a recession.So far, this is only a theoretical threat. After reaching the previous EURUSD target of 1.05, traders are advised to pay attention to the new target of 1.035 and continue selling euros against the US dollar.