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EUR/USD: old schemes stop working

EUR/USD, currency, EUR/USD: old schemes stop working

FOREX Fundamental Analysis for October 30

United States GDP grew by 4.9% in the third quarter, reversing the theory that monetary tightening, in addition to lowering inflation, is putting pressure on economic growth. The 10-year bond yield rose to 5%, but its rise is no longer having as much impact on the dollar's strength. It seems that the old patterns are failing and it is not known which way EUR/USD will go now.

December is not the best month for the greenback. Since 2017, it has never rallied at the beginning of winter, and it started to weaken at the end of fall. The dollar closed four out of six Novembers in the red zone. But in 2023, geopolitics interfered in forex trading.

In addition, in late fall, the economic calendar is oversaturated, which can provoke slides in EUR/USD. The volatility of currency pairs will be off the charts at times.

This week the Fed will meet, many important reports will be released, including Non-farm Payrolls, and the key event may be the US Treasury's announcement on the volume of bond issuance. In August, it was after this announcement that the treasury yields soared to 5%, which made EUR/USD head towards parity. At that time the Treasury announced about $103 bln. Now, according to rumors, it will be about $114 bln.

But it should be taken into account that it is not August, and the yield of treasuries is no longer the main driver of the greenback growth. Moreover, the chances of a rate hike this year have fallen from 50% to 24%, although this has not affected the EUR/USD dynamics.

The market needs new roadmaps, and investors hope that this week's releases will help assets to determine the direction of movement. We are still waiting for news activity and try not to lose on volatility spikes, when the pair will move between the boundaries of the range 1.05-1.07. We believe that the methods of forex trading in the price channel are still valid.

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EUR/USD: against the background of the elections, the dollar may not notice the NFP
EUR/USD, currency, EUR/USD: against the background of the elections, the dollar may not notice the NFP FOREX Fundamental analysis for EUR/USD on November 1, 2024Whatever the outcome of the US elections, the new president will get the economy on the rise. Artificial intelligence and rising productivity are contributing to accelerated GDP growth, and inflation has almost reached the 2% target. The Democrats began their rule with a recession, and they risk ending up with weak employment figures. Does this mean that it will be more difficult for the EUR/USD bears?Bloomberg experts take into account the impact of hurricanes and strikes and predict that employment in the United States will grow by 110 thousand in October, while forecasts range from a reduction of 10 thousand to an increase of 180 thousand. The labor market has been a strength of the Kamala Harris administration, but natural disasters and labor protests can make a difference.Weak statistics will strengthen expectations of easing the Fed's monetary policy. Derivatives markets forecast a rate cut of 117 basis points next year, which is less than the 184 bps expected in early October. That is why the dollar in October showed the best result in the last two years, supported by an increase in the yield of treasuries. The "bears" in EUR/USD made an impressive breakthrough, but by the end of the month, the "bulls" began to regain the positions lost in forex currency trading.Although the volatility of the euro has increased against the background of the presidential election, the chances of a reversal have shifted in its favor, albeit remaining under pressure. Favorable news from Europe and China helped the euro strengthen. But how long will it last?The eurozone economy grew by 0.4% in the third quarter, and inflation returned to 2% in October. This reduced the probability of a December cut in the ECB deposit rate from 50% to 20%. The strengthening statistics contribute to a gradual easing of policy, allowing the ECB to maintain a tough approach, which is favorable for the euro. However, both currencies affect the dynamics of the pair: the publication of data on the American labor market and the upcoming elections may strengthen the dollar again, returning it to previous levels.The volatility of currency pairs on Forex is rising more strongly than in the last US election, due to the uncertainty of the outcome and concerns about Donald Trump's policies. Investors are watching the elections no less than they are watching the reports on the labor market, and they have good reason to do so.Strong US labor market statistics will create an opportunity to sell EUR/USD in the range of 1.076-1.0865. Weak data will give rise to short positions when rebounding from resistance levels at 1.0905 and 1.0930. But regardless of the employment figures, an event looms on the horizon that could change the global economic picture.
Nov 01, 2024 Read
USD/JPY: the Bank of Japan decided not to change the rate
USD/JPY, currency, USD/JPY: the Bank of Japan decided not to change the rate USD/JPY analysis for October 31, 2024On Thursday, USD/JPY is weakening, moving away from local highs on July 31, and is already testing the level of 152.90 for a breakdown downwards. Traders are waiting for the release of weighting statistics on the labor market in the United States.Experts' forecasts indicate a sharp slowdown in job growth in the non–agricultural sector - from 254 thousand to 115 thousand. The average hourly wage growth is also expected to slow down from 0.4% to 0.3%, with an annual increase of 4.0%. The unemployment rate is expected to remain at 4.1%. At the moment, investors are relying on the October report from ADP, which showed an increase in employment in the private sector to 233 thousand, which is significantly higher than forecasts. However, on the eve of the pressure on the dollar was exerted by data on the reduction of US GDP in the third quarter from 3.0% to 2.8%.Today, investors' attention is focused on the results of the Bank of Japan meeting. As expected, the regulator left the rate unchanged at 0.25%, considering that there is no reason to tighten policy. The head of the Central Bank, Kazuo Ueda, has previously stressed that any policy adjustments will be based on the dynamics of inflation and economic growth. Analysts suggest that the US presidential election on November 5 may increase anxiety in the markets, which, in turn, may affect Japanese assets. The Bank of Japan predicts that in the current fiscal year, the consumer price index will stop at 2.5%, and next year it will drop to 1.9%, below the target level of 2.0%. GDP is projected to grow by 0.6%. Domestic political factors are also putting pressure on the Bank of Japan. The ruling parliamentary coalition weakened its position in the October 27 elections, and now it has to find new allies.The situation for the yen is aggravated by weak retail sales data in Japan. In September, their annual growth decreased from 2.8% to 0.5%, and on a monthly basis, the indicator fell by 2.3% after an increase of 1.0% a month earlier.The main forex indicators on the daily chart do not give unambiguous signals. Bollinger bands continue to grow, although the price range is narrowing, which indicates short-term fluctuations. The MACD signals a downward trend, and the Stochastic indicates a decline, moving away from the overbought zone.It is recommended to open short positions with a confident breakdown down to the level of 152.50. The first target becomes 150.50. We take out the stop loss at 153.50.If the 152.50 level acts as a powerful support, the pair will bounce off it and break through the 153.50 mark, then we will get a signal to form purchases with a target of 155.50 and a stop loss at 152.50.
Oct 31, 2024 Read
Forex analysis and forecast for AUD/USD for today, October 31, 2024
AUD/USD, currency, Forex analysis and forecast for AUD/USD for today, October 31, 2024 During Thursday's Asian session, the AUD/USD pair shows an unstable movement near the 0.6570 mark. Pressure on the asset is exerted by data on the Australian economy.September retail sales showed a slowdown to 0.1% instead of the expected 0.3%. In the third quarter, sales increased by 0.5% after a decrease of 0.3%. The number of construction permits issued increased by 4.4% in September, offsetting a 3.9% drop a month earlier. In annual terms, the indicator accelerated to 6.8%. Investors also drew attention to statistics from China, where business activity in the service sector rose to 50.2 points against expectations of 50.4, and the manufacturing sector slightly exceeded forecasts, strengthening from 49.8 to 50.1 points.Earlier, AUD/USD was under pressure from Australian inflation data, which increased expectations of monetary policy easing by the Reserve Bank of Australia (RBA). Consumer prices in September slowed from 2.7% to 2.1% (against the forecast of 2.3%), and the quarterly increase was only 0.2%. Lower prices for electricity and fuel have allowed to reach a three-year low, but the high cost of services remains, preventing the Central Bank from relaxing its hawkish policy.The US dollar, despite the decline in US GDP from 3.0% to 2.8%, strengthened its position thanks to the ADP report on private sector employment. In October, this figure rose to 233.0 thousand jobs, although a decrease to 115.0 thousand was expected. A strong labor market and stable GDP do not contribute to monetary policy easing by the Fed, which supports the dollar.On the daily AUD/USD chart, the Bollinger bands indicator narrows, showing a decrease, but remains wide enough for current market activity. The MACD indicator turns up, but retains a sell signal. Stochastic, having retreated from the minimum values, indicates a possible corrective growth.Short positions can be opened after a confident breakdown down to the level of 0.6536 with a target mark of 0.6456. We will place the stop loss at 0.6590.If the AUD/USD pair bounces off the 0.6536 support and breaks through the 0.6600 resistance, we will get a buy signal with a target at 0.6700. We will place the stop loss at 0.6536.
Oct 31, 2024 Read
EUR/USD: dollar has no plans to retreat
EUR/USD, currency, EUR/USD: dollar has no plans to retreat FOREX Fundamental analysis for EUR/USD on October 31, 2024In FOREX currency trading, unexpected data leads to sharp fluctuations. When central banks make decisions based on statistics, any surprises can be a strong catalyst. Thus, favorable data from Europe spurred the "bulls" in EUR/USD, especially against the background of news from the United States.The Eurozone economy unexpectedly grew by 0.4% in the third quarter, double the forecasts of Bloomberg. In addition, Germany avoided the expected recession by increasing GDP by 0.2%. This, along with an increase in inflation from 1.8% to 2.4%, inspired the ECB's hawks to make active statements.Joachim Nagel, the head of the Bundesbank, warned of the potential risks of a sharp easing of policy, and Isabelle Schnabel stressed the need for a cautious approach in combating inflation. The officials' comments reduced the probability of a December cut in the ECB deposit rate by 50 basis points from 50% to 25%, which gave support to the euro.In addition, the growth gap between the United States and Europe is narrowing. The U.S. economy slowed to 2.8% in the third quarter, falling short of expectations of 3.1%.European economic growth was partly driven by one-off factors such as the Olympic Games in France. The fact that Germany avoided recession does not guarantee stable growth, as its GDP decreased by 0.3% in the second quarter, and the current growth of 0.2% only confirms stagnation.The United States economy, thanks to advances in AI and productivity growth, is maintaining a higher pace. For the period from 2009 to 2019, U.S. GDP increased by 2.5% and long-term growth of the fed's estimates of 1.8%. Against the background of employment growth, which in the private sector added 233 thousand jobs in October, the labor market remains strong.These data became the basis for traders to revise their trading plans on the eve of important events, including the October report on the US labor market and the presidential election, which will set the direction for dollar pairs for several weeks ahead. This increase in uncertainty has caused the cost of hedging against dollar fluctuations to rise to a two-year high.The EUR/USD pair reached the upper limit of the consolidation range at 1.076-1.0865. Rollback attempts have led to sales, but so far short positions remain unstable. If the repeated test of the 1.0865 level does not end with a breakthrough, you can consider selling after unsuccessfully testing the resistance at 1.0905.EUR/USD Technical analysisYesterday, the EUR/USD correction continued. As a result, the pair approached the resistance area 1.0884 - 1.0873. If buyers test this zone, and sellers do not let the bulls go higher, then it will be possible to form new sales of the asset with the first target at 1.0822 and the second at 1.0761.If the resistance area (A) is broken up during trading, the upward correction will continue to the resistance area 1.0946 - 1.0929.
Oct 31, 2024 Read
EUR/USD: China is trying to accelerate the economy again
EUR/USD, currency, EUR/USD: China is trying to accelerate the economy again FOREX Fundamental analysis for EUR/USD on October 30, 2024Positive news from China and expectations of weak economic data from the United States gave the EUR/USD bulls the opportunity not only to hold the 1.077 level, but also to launch an offensive. Now the pair is trying to determine the boundaries for short-term consolidation, reacting to the upcoming US presidential election and fluctuations in treasury bond yields.According to Reuters, China is preparing the largest fiscal package in recent years at 10 trillion yuan (about $1.4 trillion), complementing recent cash injections to support the economy. An official announcement is expected from November 4 to 8, but the information has already affected the markets: oil prices, which sank earlier due to Israeli strikes on Iran, have begun to recover.European investors were enthusiastic about the rumors about China's fiscal stimulus. The Eurozone economy, weakened by the problems of German industry and weak export demand, is much inferior to the American one. However, Spain is showing positive forecasts, and, according to the IMF, by 2025 it may overtake the United States in terms of GDP growth.Bloomberg forecasts point to US economic growth of 3% in the third quarter, but the trade deficit, which has peaked in the last 2.5 years, forced the Atlanta Fed to revise expectations from 3.3% to 2.8%. Real GDP and employment data may be even lower, given the impact of hurricanes and strikes, which are projected to reduce the number of jobs from 254 thousand to 110 thousand. This is one of the lowest figures since 2020, and weak data may increase the chances of a Fed interest rate cut in November, which stimulates EUR/USD growth.The weakening of economic activity in the United States led to a drop in the yield of treasuries, which previously, on the contrary, supported the dollar due to expectations of fiscal incentives. Moreover, long-term rates rose faster than short-term ones, indicating investors' concerns about the growth of public debt.According to the CRFB, under Donald Trump, the budget deficit will expand by $7.5 trillion over 10 years, and by $3.5 trillion under Kamala Harris. The chances of a Republican victory are pushing up bond yields and the dollar exchange rate. However, can weak American statistics stop the "bears" in EUR/USD? There is not much time left before the results, but for now intraday forex trading in the range of 1.076-1.0865 is recommended.EUR/USD Technical analysisEUR/USD maintains a short-term downtrend. Sellers continue to test the target zone 1.0794 - 1.0777, but so far unsuccessfully, so an upward correction may begin from it with targets in the resistance area 1.0884 - 1.0873 and higher, in the resistance area 1.0946 - 1.0929.After working out the goals of corrective growth, we suggest considering new sales of the instrument. The main target mark of sellers will be the minimum of October 23 in the area of 1.0761.
Oct 30, 2024 Read
Forex analysis and forecast for GBP/USD for today, October 29, 2024
GBP/USD, currency, Forex analysis and forecast for GBP/USD for today, October 29, 2024 In Tuesday's Asian trading, GBP/USD remains near the 1.2965 level. Pressure on the pound is exerted by statistics from the British Consortium of Retailers (BRC), where in October a decrease in the retail price index was recorded from -0.6% to -0.8% in annual terms, against analysts' expectations of -0.5%. This indicator hints at a weakening of inflation, which may allow the Bank of England to actively reduce interest rates.Today at 11:30 (GMT+2), data on consumer lending will be published in the UK. It is predicted that net consumer lending will decrease from 4.2 billion pounds to 4.1 billion, and approval of mortgage applications — from 64,858 thousand to 64,200 thousand. Additional pressure on the GBP/USD pair was exerted by business activity data for October: the index in manufacturing decreased from 51.5 to 50.3 points, in the services sector — from 52.4 to 51.8, and the composite index — from 52.6 to 51.7 points, which falls short of analysts' expectations.The head of the Bank of England, Andrew Bailey, stressed that the introduction of the digital currency (CBDC) "Britcoin" will not entail the abandonment of the use of cash. The Bank of England is already exploring the use of distributed ledger technology (DLT), noting the importance of adapting to innovations in the financial sector.On the daily GBP/USD chart, the Bollinger band indicator indicates a moderate narrowing of the range, reflecting short-term uncertainty. The MACD indicator shows a weak buy signal, and the Stochastic is approaching the overbought zone, signaling a possible short-term weakening of the pairSell deals can be opened when the price breaks below 1.2948 with a target of 1.2860 and a stop loss at 1.3000With a rebound from 1.2948 and an upward breakdown of the 1.3000 level, we will consider long positions with a target of 1.3100. We will set the stop loss at 1.2948.
Oct 29, 2024 Read
EUR/USD: consolidation is expected before the release of non-farm payrolls
EUR/USD, currency, EUR/USD: consolidation is expected before the release of non-farm payrolls FOREX Fundamental analysis for EUR/USD on October 29, 2024In 2016, Donald Trump was treated with skepticism, but by 2024 his potential return raises serious concerns. The memories of how resolutely he fulfilled his election promises give investors a clear idea of his possible actions. And this is an increase in protectionism, a demographic shock and a significant expansion in the issuance of treasury bonds to cover fiscal policy flaws. These risks limit the growth of EUR/USD, as any attempts to lift the pair are immediately used for sales.The prospect of a new round of trade barriers and a long-term period of high rates when Trump returns to the White House raises concerns, especially in countries with vulnerable economies. Trump may impose tariffs of 60% on Chinese imports, which will be even more destructive than 10% tariffs for other countries. If trade restrictions are tightened, Beijing will redirect exports worth $420 billion to other regions, mainly to Europe, which could lead to a new trade war.The market has already reacted to this prospect. Since the beginning of the year, the European index of U.S. tariff-sensitive stocks has fallen 2%, despite an 8% rise in the broader stock index.The political background is also playing on Trump's side. Hurricanes such as the devastating Helen, as well as the subsequent Milton, along with strikes, may negatively affect employment in the United States in October. Experts expect an increase of 125 thousand, which is significantly less than the September increase of 254 thousand, and the actual data may be even lower. Republicans will seek to use weak statistics to highlight economic problems under Joe Biden's presidency.In case of weak data on non-farm payrolls, traders can quickly buy EUR/USD. Given the expectations of an acceleration in European inflation from 1.7% to 1.9%, a temporary rise in the pair is possible, but its chances of a trend reversal remain low. Trump's policy may raise the yield on 10-year U.S. Treasury bonds above 5%, which will strengthen the dollar.Trump's fiscal incentives could increase the national debt to 116% of GDP, whereas under Kamala Harris this figure will probably remain below 109%.The forex trading strategy assumes the consolidation of EURUSD within the range of 1.0745-1.0865, therefore, intraday transactions become relevant, taking into account the economic calendar.EUR/USD Technical analysisEUR/USD is trading in a short-term downtrend. Yesterday, sellers tried to break through the Target zone of 1.0794 - 1.0777, but without success. At the same time, one of the tenets of forex currency trading says that if an asset does not go in one direction, then it is highly likely that it will start moving in the opposite direction. Therefore, an upward correction may begin today.In case of an upward correction, the pair will probably try to test the resistance areas 1.0884 - 1.0873 and 1.0946 - 1.0929. From these levels, new sales can be considered with the main target at 1.0761.
Oct 29, 2024 Read
USD/JPY: the attractiveness of the yen does not reduce interest in the dollar
USD/JPY, currency, USD/JPY: the attractiveness of the yen does not reduce interest in the dollar Fundamental analysis for USD/JPY on October 28, 2024The political situation threatens the stability of the Japanese yen. Since mid-September, the USDJPY pair has been steadily growing amid expectations of weak voting results for the ruling party in the parliamentary elections in Japan and the likely return of Donald Trump to the White House. The fears were justified: for the first time since 2009, the Liberal Democratic Party of Japan lost its majority in the lower house of parliament, gaining 215 seats with Komeito partners with the minimum required 233. Amid uncertainty around political leadership, investors are massively selling USDJPY.Among the first to react to the pair's fall were hedge funds and asset managers, who switched from net buying to actively selling the yen during the week. Political instability will complicate the Bank of Japan's plans to normalize monetary policy, and its silence at the next meeting on October 31 may become an obstacle to short-term bearish positions on USDJPY.At first glance, the difference in the approaches of the Fed and the Bank of Japan to monetary policy contributes to the strengthening of the yen against the dollar. Markets expect the US federal funds rate to drop from 5% to 3.4%, and the Japanese rate to rise by 50-75 bps by 2025, which supports interest in USDJPY sales. However, the time factor and the probability of failure also play a role.Forecasts by Bloomberg experts suggested that the Bank of Japan would continue to normalize monetary policy by December or January. But the weakening of inflation and the election result may push back the deadlines. The Fed may also be cautious if positive economic data from the United States continues to arrive.Trump's leading position in the presidential race adds to the uncertainty in forex currency trading. If he wins, a new spike in inflation is very likely due to protectionist tariffs, which will exacerbate problems in supply chains and provoke wage growth due to reduced migration. This will increase pressure on the Fed, forcing it to maintain high rates, which is likely to strengthen the dollar.In the coming months, the trend for USDJPY may change several times. For the bears, the key conditions remain the formation of a coalition in the Japanese parliament and the weakening of statistics on the American labor market for October. If these factors work, sales look attractive; otherwise, the chances of achieving the goals of 158 and 160 within the uptrend increase.
Oct 28, 2024 Read
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