Forex USD/JPY: buyers fear intervention of the Bank of Japan

USD/CHF analysis on December 5, 2024In Thursday morning trading, USD/CHF is trading near the 0.8835 level, reflecting low market activity. Market participants are waiting for important data on the US labor market, which will be published on Friday at 15:30 (GMT+2). These data may affect forecasts for a possible Fed rate cut at the December 17-18 meeting.It is assumed that employment in the non-agricultural sector will grow from 12 thousand to 202 thousand, while the average hourly wage is likely to slow down growth: from 4.0% to 3.9% year-on-year and from 0.4% to 0.3% monthly. The unemployment rate is expected to rise from 4.1% to 4.2%. An additional factor for the market will be the University of Michigan Consumer confidence index, which is projected to strengthen from 71.8 to 73.0 points.Pressure factorsPreviously published data from ADP on private sector employment reflected a slowdown - the indicator decreased from a revised 184 thousand to 146 thousand, below the expected 150 thousand. Business activity indices in the service sector also declined. Thus, the S&P Global data fell from 57.0 to 56.1 points, and the ISM indicator decreased from 56.0 to 52.1 points.On the other hand, Switzerland has also faced economic difficulties. Inflation in November increased by only 0.7% (YoY), which is lower than the expected 0.8%, and remained at the level of -0.1% on a monthly basis. Seasonally adjusted unemployment was fixed at 2.6%, in line with expectations. At the same time, the weakness of the industrial sector in Germany, Switzerland's largest trading partner, is putting pressure on demand.The head of the Swiss National Bank (SNB), Martin Schlegel, noted that the situation may force the Central Bank to cut the rate from the current 1.0% at a meeting on December 12. The probability of monetary expansion of the regulator by 25 basis points is estimated at 72%, and by 50 points — at 28%.USD/CHF Technical analysis for todayOn the daily chart, the Bollinger Indicator is flat, and the price range is narrowing, reflecting uncertainty. The MACD indicator shows a weak sell signal, being below the signal line, and the Stochastic turns down before reaching the overbought zone.Trading recommendations- Sale: after the breakdown of the 0.8827 level with a target of 0.8750. The stop loss is 0.8865. Implementation period: 2-3 days.- Buy: after a rebound from 0.8827 and a breakdown of 0.8865 with a target of 0.8935. The stop loss is 0.8827.The current market sentiment signals a possible downtrend in the near term, although the dynamics may change under the influence of fresh data from the US labor market.

On Thursday, USD/JPY is trading near the 149.87 mark, retreating from the highs of November 29. Published macroeconomic statistics of the United States further offensive of the "bulls".Investors paid attention to the employment data from ADP. In November, the indicator decreased to 146.0 thousand against the revised 184.0 thousand in October, which turned out to be slightly lower than expectations of 150.0 thousand. The index of business activity in the services sector from S&P Global fell to 56.1 points, and from ISM — to 52.1 points, which is much worse than expected. However, values above 50.0 still indicate an increase in activity, which reduces the likelihood of major changes in Fed policy.In addition, the Beige Book reflected moderate economic growth in most regions of the United States since the beginning of October, while consumer spending and inflation remained stable. The main attention of market participants in the coming days will be focused on labor market data. An increase in the number of jobs by 200.0 thousand is projected, a slowdown in the growth of hourly wages and a slight increase in the unemployment rate to 4.2%.Against the background of weak US data, the Japanese economy is showing positive dynamics. Business activity indices showed an improvement in November: in the services sector — up to 50.5, and the composite index exceeded the critical mark of 50 and reached 50.1. The expansion of capital investment by 8.1% in the third quarter and the rise in consumer prices in Tokyo to 2.6% strengthen expectations of a tightening policy of the Bank of Japan. Many analysts believe that the rate may be increased by 25 bps in December.USD/JPY Technical analysis for today- The lines of the Bollinger Band indicator are expanding, indicating an increase in volatility. The price range remains wide for current activity.- MACD: The sell signal remains, the histogram is in the negative zone.- The stochastic oscillator indicates growth, reflecting recent bullish sentiment.Trading recommendations1. SaleConfident breakout of the 150.00 mark downwards.Target: 148.00.Stop loss: 150.70.2. BuyA rebound from 150.00 and a breakdown of the 150.50 level up.Target: 151.50.Stop loss: 150.00.The pair continues to balance between fundamental factors and technical signals, offering traders opportunities for short-term trades.

FOREX Fundamental analysis for EUR/USD on December 5, 2024For the first time since 1962, the French National Assembly dismissed the government. Although this event was an important political milestone, it did not turn into a disaster for the euro. France is facing a period of uncertainty - the dissolution of parliament is impossible, the appointment of a new prime minister is associated with high risks, and the president has no plans to resign. Despite expectations of a vote of no confidence in Michel Barnier and his cabinet, the EUR/USD collapse did not occur.Even against the background of the political crisis and the growth of the French and German bond yield differential to the highest since 2012, the volatility of currency pairs with the euro remains moderate. Investors do not assume France's exit from the Eurozone (Frexit) or the collapse of the Euroblock. So far, they prefer to observe the development of events and are in no hurry to draw serious conclusions.The Fed's actions and their impact on the dollarA similar wait-and-see tactic is evident in the actions of the US Federal Reserve. The head of the Federal Reserve, Jerome Powell, noted that the US economy is feeling better than at the beginning of the monetary policy easing cycle. At that time, the Fed sought to support the labor market, but fears about its "freezing" did not materialize.However, market expectations of a possible pause in rate cuts have not been confirmed. Powell did not give such signals as, for example, his colleagues Alberto Musalem from the St. Louis Federal Reserve or Mary Daly from the San Francisco Federal Reserve. As a result, the forex trading method "buy a dollar on rumors, sell on facts" played a role, and EUR/USD grew.Dynamics of euro volatilityAccording to OECD forecasts, the Fed may cut the rate to 3.25% by the first quarter of 2026, which is lower than current expectations for derivatives (3.75–4%). At the same time, the ECB is likely to soften its rate to only 2%, and not to 1.5–1.75%, as investors expect. These differences, along with an improvement in the forecast of global GDP growth for 2025 from 3.2% to 3.3%, create support for the euro.EUR/USD forecasts for December and the impact of the seasonThe OECD also warns that protectionist measures such as Donald Trump's tariffs could slow global economic growth. While these duties have not been earned, the euro has a chance of growth, especially given the seasonally weak dynamics of the dollar in December.The catalyst for the growth of EUR/USD may be disappointing US employment statistics for November or profit-taking on short positions. As in the case of the political crisis in France or Powell's statement, moderate data may push the euro up. A breakout of the $1,054 pivot level looks increasingly likely, but in the current conditions it is preferable to stay out of the market, observing the development of the situation.EUR/USD Technical analysisYesterday, EUR/USD tested the 1.0477 support. This level was held by sellers, as a result of which the pair moved to strengthen in the American trading session. As part of this growth, the maximum was updated on December 3, which formed another buying pattern. Today, the short-term uptrend may continue. The target is around the 1.0597 level. After working out this target, we will observe the border of the upper Target zone 1.0636 - 1.0608. If the bulls are successful, the next growth target will be the Gold Zone 1.0709 - 1.0700.To change the direction of the trend and switch to sales, the bears need to break through the 1.0445 level and consolidate below. In this case, from the next trading day, it will be possible to consider selling EUR/USD with the main 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.

FOREX Fundamental analysis for EUR/USD on December 3, 2024While 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 analysisYesterday, 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.

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.