FOREX Fundamental analysis on October 7, 2022
Forex currency trading demonstrates confusion and wobbling. As soon as rumors of a "dovish" reversal of the Federal Reserve appear, stock indexes, and with them risky assets, rush up the hill together, until statistics and FOMC members begin to talk about the opposite. The S&P 500 immediately falls like a stone, taking EUR/USD with it.
Even the "hawkish" hints of the ECB cannot support the European currency. In the minutes of the September meeting of the regulator, a red thread was the thesis that a violent rate increase would not interfere with the economic growth of the Eurozone in any way. The Board of Governors believes that aggressive actions now will help to avoid tougher measures in the future. In theory, such phrases should inspire buyers of the single currency. However, the threat of a global recession is driving investors into the dollar.
The International Monetary Fund also warns of the risks of an economic downturn. The IMF compares the global economy to a ship caught in a storm. In recent years, negative factors of influence have replaced one another with enviable stability. Analysts do not see any noticeable improvements in the near future either. Rather, on the contrary. Global GDP is projected to decline for at least two quarters of 2023.
Of course, it is not easy for investors to survive in such conditions. Since the 90s of the last century, the markets have not reacted so sensitively to the financial statistics of the United States. Forex trading on the news has been reduced to the "bad news for the US – good news for the market" mode, as investors continue to hope for a change in the Fed's policy. The reaction of stock assets to the release of US business activity indices demonstrates this idea well.
Of course, the main indicator remains inflation, data on which will be published on October 13. But the report of the labor market of the United States cannot be called secondary. If Non-farm Payrolls demonstrate problems, the Fed will have to respond to them by easing monetary policy, although, judging by recent statements by FOMC members, such a scenario seems unlikely.
According to Bloomberg's forecast, employment will grow by 250 thousand in September. If the indicator turns out to be in the range of 100-150 thousand, we are waiting for the rally of the S &P 500 and EUR/USD. The trader's trading plan includes a strategy of short-term longs and subsequent medium-term sales. When a strong report is released, the pair can immediately go to 0.97.
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Eurozone: indicators of investor confidence and retail salesIn April, investors in the eurozone focused on the Sentix investor confidence index and retail sales data for February. The Sentix index rose significantly in March, helped by a large-scale stimulus package in Germany. However, after the introduction of new tariffs by US President Donald Trump, investor sentiment may worsen, although this may not be fully reflected in the current data. Retail sales have been showing a decline in recent months, which corresponds to a drop in consumer confidence after a strong recovery in the second half of last year. Despite favorable conditions for increased consumption, such as a stable labor market, rising real wages and low interest rates, geopolitical uncertainty is likely to restrain consumer sentiment.Sweden: public debt and inflationIn Sweden, the Office of Public Debt has published data on the state of central government debt for February. In February, the surplus amounted to SEK 74.0 billion, exceeding the projected SEK 60.9 billion, due to higher tax revenues. citeturn0search10 In March, preliminary data on inflation was below expectations: the CPIF index was 2.3% yoy, and CPIF excluding energy and 3.0%. citeturn0search7 This decrease in inflation may ease the pressure on the Riksbank to further tighten monetary policy.USA: tariff policy and market reactionPresident Trump has confirmed his intention to impose extensive tariffs on imports, despite a significant drop in stock markets and fears of a recession. He described these measures as a necessary "medicine" to correct economic imbalances. In response, China announced the imposition of 34% tariffs on all American goods from April 10 and restrictions on exports of rare earths. citeturn0search8 These events have increased concerns about the global trade war and its potential impact on the global economy.Financial markets: reaction to macroeconomic eventsStock markets around the world have experienced sharp declines amid escalating trade disputes. Futures for the S&P 500 fell by more than 3%, and Asian markets showed the most significant decline since 2008. citeturn0news77 Investors expect the Federal Reserve may cut interest rates in response to growing recession fears. At the same time, oil prices continue to decline, reflecting concerns about a slowdown in global economic growth.In general, the current macroeconomic situation is characterized by increased volatility and uncertainty due to the escalation of trade conflicts and their potential impact on global economic growth. 
Intraday analysis: pressure remainsAt the moment, the intraday direction of movement of the AUD/USD pair remains downward. The continuation of the sell-off, which began at the level of 0.6941, forms a target in the area of 0.5860, corresponding to 61.8% of the projection of the movement from 0.6941 to 0.6087, which started from the point of 0.6388. At the same time, a breakdown of local resistance at 0.6062 may temporarily weaken the bearish momentum, putting the pair's dynamics into a phase of short-term consolidation without changing the overall trend.Medium-term view: confirmation of a downtrendFrom the point of view of the medium-term structure, the current decline from 0.6941 recorded in 2024 is considered as a link in a broader downward trend that started from the 2021 maximum at 0.8006. The next target in this trend is the 0.5806 level, which is a 61.8% projection of the downward momentum from 0.8006 to 0.6169, which started from the local maximum of 0.6941. The technical picture continues to point to the predominance of bearish sentiment.The overall picture: the downward trend persistsThe overall outlook for the AUD/USD pair remains negative until the quotes overcome the resistance around 0.6388. This level plays a key role in determining the direction of the medium-term trend: only consolidation above it can cast doubt on the current downward structure. In the meantime, the trading instrument maintains a steady downward trend, and any attempts at growth are perceived as corrective waves within a bearish trend. 
FOREX Fundamental analysis for EUR/USD on April 7, 2025The Trump administration's policy has led to an unexpected result - lower Treasury yields, albeit for an alarming reason - growing fears of a recession. This effect, despite its contradictory nature, can be considered a partial victory for the White House. However, the recent strong US employment report temporarily changed the mood, giving the "bears" on EUR/USD the opportunity to regroup.Finance Minister Bessent continues to insist on the long-term strength of the dollar, while analysts at Pictet Asset Management predict its weakening by 10-15% over a five-year period. JP Morgan's revision of the US GDP forecast from 1.3% to -0.3% for 2025 looks even more alarming, which contrasts with the optimistic statements of officials.Although the March job growth of 228,000 looks impressive, it is important to consider several factors:- The data reflects the situation before the announcement of new tariffs- The previous figures have been revised downwards- An increase in unemployment to 4.2% indicates a possible deterioration in the trendThese nuances allow us to consider the current figures as a temporary lull before the possible deterioration of the situation.The market, which expected four rate cuts in 2025 due to fears of stagflation, is now forced to adjust its forecasts. Chairman Powell maintains a cautious stance, while Trump publicly criticizes the Fed for being slow, demanding more drastic policy easing.China's announcement of 34% duties on US imports has put pressure on EUR/USD. However, the current situation is fundamentally different from the trade war in 2016, when the dollar retained the status of an unconditional safe haven asset. Now we are seeing an unusual correlation between the dollar index and the S&P 500 - both assets are moving down at the same time.The previous EUR/USD sales strategy from 1.1050 proved its effectiveness. However, further dynamics will depend on two key factors.:1. The behavior of the American stock market2. The bulls' ability to keep the pair above the 1.1000 levelIf US stocks continue to fall and consolidate below 1.1000, the pressure on the euro may increase. Otherwise, a return to the upward trend is possible. The current situation requires special flexibility in approaches and careful monitoring of both fundamental factors and technical levels. 
The USD/CAD pair demonstrates a corrective movement in the area of 1.4218 during the Asian session, reacting to the deterioration in the Canadian labor market. The March employment statistics interrupted the positive dynamics observed during the last quarter, showing a significant deterioration in key indicators.Recent data has revealed a complex deterioration of the situation:Total employment decreased by 33,000 jobs (-0.2%)Full-time employment decreased by 62,000 (-0.4%)The unemployment rate rose to 6.7% (the highest since November 2024)The number of unemployed increased by 36 thousand compared to FebruaryOf particular concern is the decrease in employment in the private sector by 48,000 positions, which was only partially offset by growth in the public sector. These data indicate growing problems in the real sector of the economy.The US currency, on the contrary, is showing signs of recovery, rising to 102.40 in the DXY index. This increase is due to comments by Fed Chairman Powell, who did not rule out the possibility of easing monetary policy in the near future. According to the CME FedWatch Tool, the probability of a rate cut at the May meeting to 4.00-4.25% is estimated by the market at 54.7%.USD/CAD technical analysisOn the daily chart, the pair is trying to overcome the support of the descending channel 1.4040-1.4430. Technical indicators maintain a bearish signal:The "Alligator" indicator shows the downward expansion of the oscillation rangeAwesome Oscillator forms correction bars in the negative zoneTrading recommendationsFor sales, you should wait for a confirmed breakout of the 1.4170 level with the prospect of moving to 1.3950, setting a protective stop loss at 1.4250.For purchases, it is necessary to consolidate above 1.4280, which may open the way to testing 1.4510, with the protection of the position at 1.4200. 
USA: pay attention to the ISM index and the labor marketThe ISM Services Business Activity Index for March will be published in the United States this afternoon.A similar PMI indicator released earlier indicated an improvement in the outlook, despite continued uncertainty about tariff policy.The March Challenger report on job cuts is also expected to be published. Although this indicator rarely has a significant impact on the market, it can provide additional information about the extent of federal layoffs.Eurozone: final PMI data and ECB meeting minutesInvestors will also focus on the final data on business activity indices (PMI) for March in the eurozone. In recent months, the revised figures have significantly differed from the preliminary ones, which makes them particularly important. In addition, the minutes of the March meeting of the European Central Bank (ECB) will be published, which may provide insight into possible decisions of the regulator at the April meeting.Sweden: statistics and speech by the head of the RiksbankThe indices of business activity in the service sector and the composite PMI will be released in Sweden today. The consensus forecast assumes that they will remain at the level of the previous month, similar to the manufacturing PMI index published on Monday. The head of the Riksbank, Eric Tedeen, will participate in a panel discussion on the European capital market. Although Sweden's monetary policy is unlikely to be the main topic, there may be individual statements that could attract investors' attention.Main events and market newsIn the US, President Donald Trump announced the introduction of new tariffs on the Day of the Exemption, which caused uncertainty in the markets. Tariff rates range from 10% to 60% depending on the country, while a single base tariff of 10% has been introduced. These measures turned out to be tougher than expected, leading to a sharp decline in sentiment in global markets due to fears of a slowdown in economic growth, falling corporate profits and increased inflationary pressures.In China, the Caixin services PMI unexpectedly rose to 51.9 in March from 51.4 in February. This was the result of increased domestic demand, which contributed to an increase in business activity and the number of new orders, the best result for the services sector since December last year.In Denmark, the Central Bank (Nationalbanken) has published data on currency interventions for March. As expected, the bank did not take any action in the foreign exchange market, which continues a 26-month streak of non-intervention.In Poland, the Central Bank (NBP) left its key interest rate at 5.75%, which was in line with analysts' forecasts. Additional details regarding the prospects for monetary policy will be announced after the press conference of NBP head Adam Glapinsky, scheduled for 15:00 CET.Stock marketsAsian stock indexes are trading in the red zone, with the largest losses recorded in Japan amid the strengthening of the yen, as well as after the announcement of a 24% tariff against the country.Futures on European indices are also showing a decline, while American markets have suffered the most significant losses due to a sharp increase in tariff pressure, which is actually a hidden tax for consumers.The overall market dynamics are consistent with observations of the escalation of trade wars in the last month and a half.Currency and debt marketThe markets expected milder tariff conditions, but their calculations did not materialize. The final decisions turned out to be tougher, which increased the risk of a recession in the United States. Futures for the S&P 500 and Nasdaq dropped sharply, while Japan's Nikkei dropped 3.5%.In the bond market, US Treasury yields declined along the entire curve, while the spread between two-year and ten-year securities decreased by 15 bps compared to yesterday's highs.Amid growing uncertainty, the US dollar weakened relative to other forex currency indices. USD/JPY lost 2% overnight and is trading near 147. EUR/USD strengthened above 1.09. Scandinavian currencies were influenced by multidirectional factors: on the one hand, the increased likelihood of a recession in the United States exerts pressure, on the other hand, the attractiveness of assets increases beyond the dollar. EUR/SEK is trading at 11.75, while EUR/NOK is trading near 11.33. 
FOREX Fundamental analysis for EUR/USD on April 3, 2025The Trump administration's introduction of so-called "discount reciprocal" tariffs has sent shockwaves through global markets. The differentiated duties - 10% on total imports, 20% for the EU, 24% for Japan and 34% for China - exceeded the most pessimistic expectations. Finance Minister Bessent aggravated the situation by hinting at the possibility of further tightening measures in the event of retaliatory actions by trading partners.The official goal of the new policy is the redistribution of economic benefits in favor of the United States. However, experts doubt the realism of the administration's plans to raise 2.5 trillion dollars. According to Capital Economics estimates, the actual revenue will not exceed 700 billion due to the inevitable reduction in import flows. At the same time, the economic consequences can be extremely negative.:- Acceleration of inflation to 4% (an increase of 2.5 percentage points)- Increased likelihood of recession- GDP decline by 1% in the next quarter (forecast by Piper Sandler)Different countries have shown mixed reactions to the new measures. China is preparing for a mirror response, while the EU is taking a wait-and-see attitude. Japan demands the abolition of duties.Financial markets have already begun to adapt to the new reality. Expected:- Pressure on American stock indexes- The flow of capital from the United States to other regions- The weakening of the dollar against the background of lower yields of treasuriesFrom the point of view of John Murphy's technical analysis, a favorable background remains for EUR/USD. Long positions formed in the 1.0735-1.0755 zone and supplemented at levels above 1.0845 look promising. The marks of 1.1050 and 1.1170 can be considered as the nearest targets. 
FOREX Fundamental analysis for EUR/USD on April 1, 2025The prolonged uncertainty surrounding US trade policy continues to put pressure on global markets. According to the IMF, the longer there is uncertainty about future tariff barriers, the more negative this could have for economic growth. The expected introduction of reciprocal import duties on the "Day of America's Liberation" casts doubt on the prospects for sustainable GDP expansion in the United States. Against this background, recession risks continue to increase, which creates additional pressure on the US dollar and supports the recovery movements of the EUR/USD pair.Leading financial institutions are consistently revising forecasts for the likelihood of an economic downturn in the United States. Goldman Sachs raised its forecast from 20% to 35%, while JP Morgan and Moody's Analytics analysts estimate the risks at 40%. Such adjustments are associated with increasing uncertainty ahead of the launch of new trade restrictions, which may significantly increase the average level of customs duties from the current 2.2% to historical highs. This situation seriously complicates long-term planning for both businesses and consumers, undermining confidence in the economic outlook.The Trump administration sets two difficult-to-reconcile goals through the introduction of additional duties. On the one hand, the government expects to increase budget revenues to compensate for the extension of tax benefits. On the other hand, it seeks to put pressure on trading partners, forcing them to lower their own tariff barriers. However, the temporary nature of the planned measures, which are due to take effect on April 2, raises questions about their effectiveness as a tool for sustainable replenishment of the state treasury.Analysts are particularly concerned about the possible reaction of the main US trading partners to the new restrictions. Traditionally, countries with significant trade surpluses with America have used these excess funds to purchase Treasury bonds. Over the past decade, the volume of foreign investment in treasuries has grown from 6.1 trillion to 8.5 trillion dollars, with Japan remaining the largest holders with 1.06 trillion, China with 759 billion, Luxembourg, representing European investment funds, with 424 billion, and Canada with 379 billion dollars. In the event of a reduction in these investments, the market may face an increase in government bond yields, which will create additional difficulties for the American economy and may force the Fed to accelerate the pace of monetary policy easing.There is no consensus among analysts about the prospects for the US currency. Goldman Sachs expects the dollar to weaken against the background of a more active reduction in Fed rates, while Wells Fargo experts, on the contrary, predict a strengthening of USD by 1.5-11%, depending on the reaction of international partners to the new trade restrictions.For the EUR/USD pair, the expected volatility creates potential trading opportunities. A breakout of resistance in the area of 1.0845 may open the way for building up long positions, while consolidation below 1.0780 will create the prerequisites for short trades. The current situation requires special attention to the development of events after April 2 and the reaction of key participants in international trade, which can significantly change existing market trends. 
USA: inflation and labor market expectationsToday, traders who prefer forex trading based on the news are focused on two news items from the United States – the ISM industrial business activity index for March and the JOLTs report on the number of vacancies for February. According to forecasts, the ISM index will remain at the level of the previous month, but regional data indicate a possible decline amid trade uncertainty. The Federal Reserve pays special attention to JOLTs data as an indicator of labor demand, which may influence future monetary policy decisions.The Eurozone: inflation and the labor marketPublished inflation data in the leading economies of the eurozone turned out to be mixed: France, Spain and Germany recorded a slowdown, while in Italy inflation turned out to be higher than expected. Overall, the HICP index for the eurozone is likely to decline from 2.3% to 2.1% in annual terms, driven by lower prices for energy and services. Despite this, the ECB remains inclined to lower rates in April. Unemployment data is also expected to be published today, which is projected to remain at 6.2%, indicating the stability of the labor market.Denmark and Sweden: Wages and PMIIn Denmark, data on wage growth in the private sector for the first quarter will be published. In the fourth quarter of 2024, nominal salaries increased by 4.6% year-on-year, providing a 2.9% increase in real incomes. Wage growth is expected to continue in the first quarter of 2025, but will be lower than in the previous year.In Sweden, the PMI index for the manufacturing sector for March is expected to be around 53 points, which corresponds to the level of the last five months. In February, the figure was 53.5, with all components except inventories showing growth, including new orders, production, and employment.Overview of global marketsAsian markets: Central Bank policy and business activityThe Reserve Bank of Australia (RBA) left the key rate at 4.10%, which was in line with expectations. The regulator expressed confidence in a gradual decrease in inflation, but noted the risks of a slowdown in domestic demand. Financial markets have already priced in two or three rate cuts before the end of 2025.In Japan, a quarterly Tankan survey was published, the results of which were mixed. The index of business sentiment of large industrial companies decreased from 14 to 12, which was the lowest value for the year. At the same time, the service sector showed improvement, with the indicator rising from 33 to 35, reaching its highest level since 1991, boosted by increased consumer spending and a record influx of foreign tourists. Inflation expectations in Japan continue to rise, which supports the Bank of Japan's plans to further tighten policy.In China, the Caixin private business activity Index (PMI) in the manufacturing sector rose to 51.2 points (against the forecast of 51.1), which was the highest value since November. The growth was driven by improved demand conditions and an increase in foreign orders to a maximum in 11 months.European markets: inflation and GDPIn Germany, the HICP index dropped to 2.3% year-on-year (versus the forecast of 2.4%), mainly due to falling energy prices (-2.8% versus -1.6% in February). A slowdown in service sector inflation (to 3.4% from 3.8%) may be a key factor for the ECB when deciding on a rate cut.Danish GDP for the fourth quarter of 2024 was revised up to 1.8% QoQ (from 1.6% QoQ in the preliminary estimate), and annual economic growth was 3.7% (+0.1 percentage points to the previous forecast). The pharmaceutical sector continues to make the main contribution to growth, but other industries are expected to become more active in 2025.In Norway, organizations representing the interests of workers in industry have agreed on a 4.4% wage increase in 2025, which is slightly lower than Norges Bank's forecast (4.5%). This confirms the trend towards a slowdown in wage growth, despite a stable labor market, which opens up opportunities for a gradual easing of monetary policy.Stock markets: dynamics and expectationsGlobal stock markets came under pressure again yesterday, but the dynamics differed from previous sessions due to trade wars. In the US, major indexes closed in positive territory: The Dow Jones is up 1.0%, the S&P 500 is up 0.6%, while the Nasdaq is down 0.1% and the Russell 2000 index of small companies is down 0.6%.The growth of the American market was quite broad: 21 out of 25 industry indexes ended the day in positive territory. However, the predominance of defensive sectors indicates that investors prefer safer assets, despite the improvement in sentiment. Volatility (VIX) has increased, even despite the rise of the S&P 500, which signals continued caution.Asian markets are mostly growing today, especially in export-oriented South Korea and Taiwan. European futures are also trading higher, while American futures are showing a decline.Currency and debt marketsThe US bond market ended the day with an increase in yields on the short section of the curve: 2-year US Treasury bonds rose by 5 bps, and the yield on 10-year UST was 4.21%. The rumors about the ECB's tougher stance supported the yield on 2-year German bonds, but did not have a significant impact on the euro exchange rate. The EUR/USD pair gradually declined to 1.08.USD/JPY continues to consolidate near 150.00. The EUR/SEK pair rose to 11.86, partly due to factors related to the end of the month. The Norwegian krone (NOK) initially weakened, but ended the day unchanged against the euro at 11.36. In the future, Scandinavian currencies will react to trade tariff decisions, while the Swedish krona (SEK) may be vulnerable to dividend flows.