USD/JPY Fundamental analysis on November 4, 2024
Look for someone who benefits from it. Japan does not need either a strong or a weak yen. In the first case, exporters face difficulties, in the second, inflation is rising, making imports more expensive, which is extremely undesirable for a country dependent on energy resources. Japan is striving for a stable currency, and the verbal interventions of the government of the land of the Rising Sun, together with the moderately hawkish position of the Bank of Japan, helped to contain the growth of USD/JPY.
Although on paper, the yen may seem strong due to the rate hike by the Bank of Japan. Of course, the speed of monetary restriction has a decisive effect on USD/JPY, but the Central Bank is in no hurry to strengthen the course of monetary policy. If the rate increase is slow, the difference in Japanese and US bond yields is still significant, money continues to flow from Asia to North America, weakening the yen in forex currency trading. The uncertainty of the political situation caused by the loss of the parliamentary majority by the Liberal Democratic Party led to an increase in the dollar exchange rate above 153.8.
Nevertheless, Kazuo Ueda was able to calm the excitement of speculators, saying that political changes would not affect the Bank of Japan's policy on the overnight rate. The Bank will continue to make decisions based on wage growth and inflation forecasts, which they expect to reach 2.5% in the 2024/2025 financial year and 1.9% in the next two years. These indicators indicate the intention to continue the normalization of monetary policy.
The futures market has raised the probability of the BoJ's next move in January from 63% to 69%, although it is possible that the cost of borrowing will rise in December. Ueda noted that the Bank of Japan needs less time to assess the economic outlook than expected. At the same time, strong indicators in the United States are pushing the BoJ to take more active action. If the Fed suspends easing in January, Japan will probably raise rates too, without fear of strengthening the yen's position.
Thus, the verbal interventions of the Japanese government and signals from the BoJ about the imminent tightening of monetary policy helped stabilize USD/JPY. However, the effect may be temporary. If Donald Trump wins the presidential election, the yield on US Treasury bonds will increase, which will strengthen the dollar.
The rise in popularity of Kamala Harris before the elections plays into the hands of Japan, as speculators take profits on the dollar, keeping USD/JPY from further growth.
In my opinion, the fate of the yen largely depends on the outcome of the US presidential election. If the Republicans occupy the White House, USD/JPY may reach the level of 155.5, which will create conditions for purchases. The victory of the Democrats, on the contrary, will signal the sale of EUR/JPY with targets at the levels of 163.2 and 161.
FOREX Fundamental analysis for EUR/USD on November 5, 2024Market reversals begin to form when investors close their positions. In October, traders focused on the so-called "Trump trade" — predictions of a victory for Donald Trump and the Republicans, which would lead to a political change in the White House and Congress. In this situation, investors expected that the policy of the 45th president would affect the global economy, bring chaos to the markets, and the US dollar would receive support. It seemed that the EUR/USD bulls had no chance left, but they still appeared.Unexpectedly for many, Kamala Harris's chances began to rise when investors almost turned their backs on her. The reason is either the mistakes made by the Republicans, or the successful actions of the Democrats to attract voters. The drop in the probability of a "red wave" strengthened the euro and allowed the EUR/USD pair to partially recover losses.Goldman Sachs experts believe that Kamala Harris's victory can only temporarily weaken the dollar, but fundamental factors such as a strong US economy and the suspension of monetary easing by the Fed should eventually support the US currency.Another reason for the EUR/USD growth was the presentation by the Labour Party of the pro-inflationary budget in the UK, which reduced expectations for further acts of monetary expansion by the Bank of England. In addition, the strong economic indicators of the Eurozone have given reason to believe that the ECB will not rush to cut rates. And this is also a factor in supporting the euro.If Kamala Harris wins the election, Forex currency trading will again follow the monetary policy of the Fed and other Central Banks. However, other scenarios remain. Research shows that despite the drop in support for Trump in some states, according to NBC News, the election race remains at 49% versus 49%. This creates the risk of a repeat of the situation in 2020, when Trump refused to recognize the election results. Such a scenario would be shocking for the markets.On the other hand, a Trump victory could strengthen the dollar again. Potential new tariffs and fiscal incentives will cause inflation to rise, which may prompt the Fed to suspend policy easing. Out of habit, Trump may try to put pressure on Fed Chairman Jerome Powell, but he is unlikely to make concessions.In this situation, selling EUR/USD at 1.0905 can be risky and bring losses to traders. The pair is most likely to fluctuate in the range from 1.07 to 1.1, depending on the election results. The decision whether to hold short positions or stay out of the market is made by each investor independently.EUR/USD Technical analysisEUR/USD is developing a correction of the short-term downtrend. On Monday, buyers tested the resistance area 1.0884 - 1.0873. During the European trading session, the pair broke through this range, but in the American session it returned to the area of 1.0884 - 1.0873.Today, it is necessary to continue monitoring near strong resistance areas in order to find profitable entry points for sale. If the resistance area (A) is broken up during trading, the correction will continue to the resistance area 1.0946 - 1.0929. From this zone, it will be possible to consider sales with the first target at 1.0853 and the second at 1.0761.At the same time, the US presidential election can disperse the volatility of currency pairs in the market and cancel the postulates of technical analysis. Traders who prefer less risky trading are better off staying out of the market on such days. 
FOREX Fundamental analysis for EUR/USD on November 4, 2024Investors ignored the weak October US employment report, but were alarmed by the uncertainty of pre-election polls. After a weak job growth of 12 thousand and a short-term rise, the EUR/USD pair fell sharply, starting an important trading week with a gap. Kamala Harris, who was considered a loser by many, surprised analysts, and the likelihood of her victory reduced interest in the dollar.As the election approached, U.S. bond yields and demand for the dollar grew, and by October 29, hedge funds and asset managers had increased their net long positions on the dollar from $8 billion to $17.8 billion. The market, confident of Trump's victory, was disappointed.ABC News and Ipsos polls showed Kamala Harris with a 49% advantage versus 46% nationally, and a New York Times/Siena poll confirmed her lead in five of the seven key states. The Des Moines Register study came as a surprise: in Iowa, traditionally supportive of Trump. The Democrat was also in the lead here.The weakening of confidence in Trump's return forced traders to reconsider their positions, which was reflected in the opening of the week with a gap on EUR/USD. A possible Trump presidency, according to many, could strengthen the dollar due to potential protectionism and economic incentives leading to inflationary growth.In addition, Trump erred in interpreting the employment report as the collapse of the economy due to Harris' policies. Job growth was temporarily limited by hurricanes and strikes, which explains investors' disregard for the report, one of the weakest since 2020.The Fed's interest rate forecasts remain restrained: derivatives indicate a decrease of 44 bps by the end of 2024, which indicates a likely pause in the cycle of monetary expansion.The logic of such forecasts is clear: with a strong economy and uncertain inflation. The new White House administration will definitely affect inflation expectations.Most likely, we are seeing a scenario where Kamala Harris' victory will lead to EUR/USD rising above 1.1, weakening dollar support, and Trump's victory could push the euro to 1.07. Uncertainty is keeping traders out of the game for now.EUR/USD Technical analysisLast week, an upward correction to a short-term downward trend developed for EUR/USD. As part of the corrective recovery, the pair reached the resistance area (A) 1.0884 - 1.0873. The zone was held by sellers, which led to a decrease in the asset to the level of 1.0833. However, today the markets opened with a gap, and the price broke through the resistance area (A).In this regard, EUR/USD may reach the resistance area (B) 1.0946 - 1.0929, the trend boundary. After testing this zone, we will again consider short positions with the first target at 1.0853 and the second at 1.0761 
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. 
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. 
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. 
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. 
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. 
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.