Forex-novosti i prognoze od 18-11-2024

• AUD/USD holds steady around 0.6505 in Monday’s early Asian session. 
• The stronger US economic data and cautious comments from Fed officials might lift the USD. 
• Trump's policies on taxes, tariffs could weigh on the Aussie.

The AUD/USD pair trades flat near 0.6505 amid the consolidation of the US Dollar (USD) during the early Asian session on Tuesday. Investors will monitor the Reserve Bank of Australia (RBA) Meeting Minutes, which is due later on Tuesday. 

The US Dollar Index (DXY), which measures the USD against a basket of currencies, currently trades around 106.20 after retreating from a more than one-year high last week of 107.07. The Greenback struggles to gain ground as the Trump trade seems to lose momentum. However, the stronger US economic data and cautious remarks from the Federal Reserve (Fed) might cap the downside for the USD in the near term. 

In a light week for US economic data, the National Association of Home Builders (NAHB) Housing Market Index climbed to 46.0 in November, the highest since April, from 43.0 in October, beating the estimation of 44.0.

On the Aussie front, Donald Trump has threatened to implement 60% tariffs on exports from China as he seeks to protect US companies and jobs. The likely negative spillovers from Trump’s policies might drag the Australian Dollar (AUD) lower as China is a major trading partner of Australia. 

Investors brace for the RBA Meeting Minutes for more cues on future interest rates. The hawkish tone about the inflationary outlook for the Australian economy could lift the Aussie against the USD for the time being. 

• GBP/USD found a reprieve from recent bearish momentum.
• Cable snapped a six-day losing streak, recovering a scant half of a percent.
• UK CPI inflation figures due in the midweek market session.

GBP/USD climbed 0.5% on Monday, kicking off the fresh trading week with a bullish recovery that ended a six-day losing streak and paring back recent losses to send price action back toward the 1.2700 handle. Gains in Cable bids are owing more to a general easing in one-sided Greenback momentum than any intrinsic strength in the Pound Sterling, with GBP traders hunkering down for this week’s fresh update in UK Consumer Price Index (CPI) inflation figures.

It was a quiet start to the trading week with a limited economic data docket on Monday. Markets twisted into risk appetite recovery mode, easing bullish pressures that have bolstered the US Dollar across the board in recent weeks.

The Bank of England (BoE) will warm up Cable action on Tuesday with the UK central bank’s latest Monetary Policy Report Hearings slated for Tuesday, but GBP traders will be focusing on Wednesday’s UK CPI print for October. Markets forecast annualized UK CPI inflation to accelerate to 2.2% YoY in October from the previous print of 1.7%, while core UK CPI is expected to hold steady at 3.2% YoY.

Markets are getting a nice breather from high-impact US economic data this week, though Cable traders will be keeping an eye out for Friday’s UK Retail Sales update, as well as S&P Purchasing Managers Index (PMI) figures due on both sides of the pond to wrap up the trading week.

GBP/USD price forecast

The Pound Sterling dug in its heels and recovered a meager 0.5% on Monday, but cumulative losses still see Cable mired in bear country south of the 200-day Exponential Moving Average (EMA) near 1.2850.

GBP/USD tapped multi-month lows at the 1.2600 handle last Friday, in a complete reversal of the pair’s multi-year highs set in September of this year. The pair shed 6.25% top-to-bottom from September’s peak at 1.3434, and a near-term bullish bounce could see a fresh round of short positions collecting between 1.2700 and 1.2800.

GBP/USD daily chart

• Technical outlook shows silver below the 50-day SMA at $31.54, with potential resistance at $32.00 and $32.95.
• Current market dynamics could push silver towards $33.00 if upward momentum continues.
• Bearish control remains if price drops below $30.13, key supports at $30.00 and September 6 low of $27.69.

Silver prices soar late in the New York session, trading with gains of over 3% at around $31.16 after bouncing off daily lows of $30.24. A weak US Dollar and falling US Treasury yields augmented appetite for precious metals, which halted their slide after the US Presidential Election.

XAG/USD Price Forecast: Technical outlook

Silver’s uptrend remains intact despite trading below the 50-day Simple Moving Average (SMA) at $31.54.  Although it has printed a lower low beneath the October 8 swing low of $30.13, sellers need the grey’s metal price to stay below the 50-day SMA. If that’s not achieved, the next resistance would be $32.00, followed by the October 4 peak at $32.95. On further strength, $33.00 would be up next.

On the other hand, XAG/USD is slumping below $30.13, and sellers are in charge. The next support would be $30.00, followed by the Intermediate support seen at $27.69, the September 6 low.

Oscillators such as the Relative Strength Index (RSI) remain bearishly biased, though in the short term, some upside is seen.

XAG/USD Price Chart – Daily

• Gold prices rally over 1.80%, boosted by geopolitical developments and a dip in the US Dollar Index to 106.27.
• Recent US support for Ukraine escalates tensions, influencing safe-haven assets and impacting the Greenback.
• Traders adjust Fed rate cut expectations, with a decrease in the likelihood of a December adjustment from 82% to 62%.

Gold price rallied over 1.80% at the beginning of the week and climbed above $2,600 after falling to a two-month low of $2,536. An escalation of the Russia-Ukraine conflict, along with a weak US Dollar, opened the door for Gold’s leg up on Monday. At the time of writing, XAU/USD trades at $2,610.

Wall Street sentiment is mixed. Two of the four largest US equity indices trade with gains, while the other two fluctuate. Geopolitics continued to drive the bullion’s price action after Russia’s massive attack on Ukraine triggered a reaction by the White House.

Recently, two officials revealed that US President Joe Biden authorized Ukraine's use of long-range missiles inside Russia, CNN revealed. The decision comes as a reaction to thousands of North Korean troops being deployed in support of Moscow’s war effort.

This weighed on the Greenback, which, according to the US Dollar Index (DXY) that tracks the buck's performance against a basket of six currencies, dropped some 0.38% to 106.27.

Nevertheless, former US President Donald Trump’s victory bolstered the Greenback on fears that tariffs and lower taxes are seen as potential drivers of inflation and might slow the Fed’s easing cycle.

The Fed is expected to lower borrowing costs for the third straight meeting in December. Nevertheless, recent data has witnessed investors trimming the odds from an 82% chance of an imminent cut of 25 basis points (bps) to 62%, according to CME FedWatch Tool data.

Ahead of this week, the US economic schedule will feature housing data, Initial Jobless Claims, S&P Global Flash PMIs, and the University of Michigan (UoM) final reading of Consumer Sentiment for November.

Gold price soars amid a weak US Dollar

• Gold prices recover as US real yields, which inversely correlate against bullion, fall three basis points to 2.088%.
• US Treasury bond yields were also pressured ahead of the weekend, with the 10-year benchmark rate down two basis points to 4.42%.
• Boston Fed Susan Collins said the US central bank does not urgently need to lower rates. Lastly, Chicago’s Fed Austan Goolsbee kept the central bank options open regarding December’s meeting, adding, “The dispute on neutral rate could support slower cuts.”
• According to data from the Chicago Board of Trade via the December fed funds futures contract, investors are pricing in 24 basis points of Federal Reserve rate cuts by the end of 2024.

Gold price recovers as buyers target 50-day SMA

Gold price resumed its upside as expected, following November 14, once a ‘hammer’ was formed, which opened the door for a rebound. Once XAU/USD has risen above the October 10 swing low of $2,603, buyers emerged and eyed the 50-day SMA at $2,653, with further resistance around $2,700. Exceeding this could pave the way to the November 7 high of $2,710.

On the other hand, further losses are seen below the November 14 swing low of $2,536, but firstly, traders will face the 100-day Simple Moving Average (SMA) at $2,547. Once those two levels are taken, Gold’s next support would be $2,500.

The Relative Strength Index (RSI) has moved away from its neutral line, indicating bearish momentum that could lead to further declines in XAU/USD.

• The Canadian Dollar caught a brief reprieve from steady selling pressure.
• Canada delivers CPI inflation figures this week, ending a data dry spell.
• The CAD still remains deeply discounted against the Greenback.

The Canadian Dollar (CAD) tiled into the bullish side for the first time in over a week on Monday, kicking off the trading week’s chart action with a meager bullish recovery against the Greenback. Market flows are less about bidding up the Loonie than they are taking a breather from one-sided US Dollar buying, and sustained recovery momentum is unlikely to build underneath the CAD’s tattered wings.

Canada is set to release its first batch of impactful economic data in over a week on Tuesday. Headline Canadian Consumer Price Index (CPI) inflation figures for October are expected to accelerate on an annualized basis. The Bank of Canada (BoC) will also be releasing it’s own special version of Canadian CPI, but markets are struggling to nail down a forecast for the CPI metric.

Daily digest market movers: Canadian Dollar gets reprieve from Greenback strength

• The Canadian Dollar recovered half of a percent against the Greenback as the Loonie struggles to pare back ground from multi-year lows.
• Canadian CPI inflation figures are due on Tuesday. Headline CPI inflation for the year ended in October is expected to accelerate to 1.9% YoY from 1.6%. October’s monthly CPI inflation print is expected to swing back to 0.3% after the previous month’s -0.4% contraction.
• USD data remains on the tepid side this week, giving markets a much-needed break from US-centric economic data releases.
• A smattering of Federal Reserve (Fed) officials making appearance this week could throw a wrench in the works. Fedspeak has drifted toward the cautious side in recent weeks.
• Canadian Retail Sales for September also loom ahead at the end of the week on Friday.

Canadian Dollar price forecast

The Canadian Dollar (CAD) is drifting back into the bullish side against the US Dollar on Monday. However, the Loonie has found itself at the bottom of a very long hole after falling to multi-year lows against the Greenback and sending USD/CAD to 54-month highs late last week.

A slight paring of the pair’s recent peaks is unlikely to spark a sustained move, so bears should be ready to wave goodbye to the prospect of a sustained move lower back into the 200-day Exponential Moving Average (EMA) near 1.3675.

USD/CAD daily chart

The US Dollar retreated further and tested three-day lows as the Trump rally seems to have lost some enthusiasm among market participants, although this carries the potential to be only temporary and may open the door to another “buy the dip” move.

Here is what you need to know on Tuesday, November 19:

The US Dollar Index (DXY) lost further ground and threatened to challenge the key 106.00 support amid lower US yields. Next on tap will be Building Permits, Housing Starts, and the API’s weekly report on US crude oil inventories.

EUR/USD advanced to three-day highs and managed to surpass the key 1.0600 hurdle on the back of the Dollar’s losses. The EMU’s final Inflation Rate takes centre stage seconded by Current Account results, the Labour Cost Index, and the speech by the ECB’s Elderson.

Finally, GBP/USD regained the smile and rose markedly to the proximity of the 1.2700 barrier following six consecutive daily declines.

USD/JPY resumed its uptrend, leaving behind Friday’s deep decline and reclaiming the 155.00 zone and above.

AUD/USD added to Friday’s bounce and manage to reclaim the 0.6500 hurdle in response to the persistent knee-jerk in the US Dollar. The RBA will publish its Minutes of the November 5 meeting.

WTI prices rose markedly and flirted with the key $70.00 mark per barrel on the back of the resurgence of geopolitical concerns in the Russia-Ukraine front.

The weaker Greenback and lower US yields across the board encouraged Gold prices to set aside part of the recent multi-day weakness and revisit the area beyond the $2,600 mark per troy ounce. By the same token, Silver prices surpassed the $31.00 mark per ounce, hitting new five-day highs.

• Mexican Peso continues its upward trend for the fourth consecutive day amid favorable risk sentiment.
• Banxico’s recent rate cut to 10.25% reflects ongoing inflation concerns with forecasts adjusted to 4.7% end for 2024.
• Moody’s adjustment of Mexico’s credit outlook to negative highlights potential fiscal and economic challenges from judicial reforms.
• Traders monitor potential impact of Trump’s economic policies on Fed’s rate decisions.

The Mexican Peso appreciated against the US Dollar at the beginning of the week, gaining 0.39% during the North American session. A light economic docket in Mexico and the US keeps traders digesting last week’s Bank of Mexico (Banxico) interest rate cut and US inflation data. The USD/MXN trades at 20.27 at the time of writing.

Last Thursday, Banxico lowered rates by 25 basis points to 10.25% as expected, even though the central bank acknowledged inflation risks are tilted to the upside. The board members also updated their forecast and expect inflation to end at 4.7% in 2024, up from 4.3% in previous forecasts.

In addition, Moody’s changed Mexico’s credit outlook to negative, mentioning constitutional reforms, which they claimed “risks eroding checks and balances of the country’s judiciary system,” which could negatively impact Mexico’s economic and fiscal strength.

The Peso continued to rise for the fourth straight day due to an improvement in risk appetite. US equities climbed, while the Greenback dropped to a three-day low.

In the US, investors continued to assess US President-elect Donald Trump’s inflation-prone policies, which might deter the US Federal Reserve (Fed) from lowering rates.

Despite this, traders expect the Fed to cut rates by 25 basis points, as depicted by the CME FedWatch Tool, with odds standing at 62%. Estimates the US central bank would keep the Fed funds rate unchanged lie at 38%.

Daily digest market movers: Mexican Peso advances sponsored by offered US Dollar

• Banxico’s Governing Council voted unanimously to lower borrowing costs from 10.50% to 10.25%, as expected. Governors added that although inflation remains high and requires a restrictive policy, the disinflation process “implies that it's adequate to reduce the level of monetary policy restriction.”
• Officials expect inflation to converge to the 3% goal by the last quarter of 2025.
• The USD/MXN remains underpinned by the fall of the Greenback. The US Dollar Index (DXY), which tracks the performance of the Greenback against six currencies, dropped 0.38% to 106.26.
• Fed officials crossed the wires on Friday. Boston Fed’s Susan Collins reiterated Fed Chair Jerome Powell’s words last Thursday about the central bank not needing to rush rate cuts. Collins said, “I don’t see a big urgency to lower rates, but I want to preserve a healthy economy.”
• Richmond’s Fed Thomas Barkin said the Personal Consumption Expenditures (PCE) Price Index would remain in the high twos during the year's second half. He hopes and expects inflation numbers to come down in Q1 2025 and added there’s a long way to go to determine the impact of high tariffs.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 23 bps of Fed easing by the end of 2024.

USD/MXN technical outlook: Mexican Peso climbs as USD/MXN drops below 20.30

The USD/MXN uptrend remains intact with the Peso gaining some territory. If bears want to regain control, they must push the exchange rate below 20.00. A breach of the latter would expose the 50-day Simple Moving Average (SMA) at 19.75, followed by the psychological 19.50.

For a bullish continuation, the USD/MXN must surpass 20.50, followed by last week’s high at 20.69. If surpassed, the year-to-date (YTD) high of 20.80 emerges as the next ceiling level before testing 21.00. A breach of the latter and the March 8, 2022, peak at 21.46 would emerge as the next resistance.

Oscillators like the Relative Strength Index (RSI) are bullish, suggesting a projected further upside in the USD/MXN.

• The Dow Jones saw limited momentum in a quiet start to the trading week.
• Equities are overall tilted into the high end, but steeper losses in key stocks drag averages down.
• Investors get to take a breather from high-impact US data until the end of the week.

The Dow Jones Industrial Average (DJIA) held steady on Monday, testing into new weekly lows but overall keeping a tight grip on the 43,450 region. Market sentiment is grappling with a cooling effect that gripped indexes last week following the recent post-election rally.

After several high-impact prints on the economic calendar last week, traders get a chance to catch their breath with the US data docket on the moderate side until S&P Purchasing Managers Index (PMI) figures for November print on Friday. Mid-tier residential construction starts and permits will be reported on Tuesday, with a couple of outings from Federal Reserve (Fed) officials on Wednesday and weekly unemployment benefits claimants on Thursday.

Dow Jones news

Equities are broadly higher on Monday, with two-thirds of the Dow Jones’ constituent securities climbing from the week’s opening bids. However, losses were concentrated in Nike (NKE) which declined nearly 3% to $74.50 per share. According to analysts, investors are growing concerned that the shoe manufacturer could be looking at downside revisions to guidance in FY 2026 as the footwear giant faces downward pressure from potential US tariffs aimed at China. Tailwinds from an announced increase in Nike cash dividends is getting further crimped by an overall disappointing economic outlook in China.

Dow Jones price forecast

The Dow Jones index is churning chart paper near 43,450, holding steady near familiar lows despite a brief test into fresh lows earlier Monday, softening an approach back toward the 43,000 handle. Despite early November’s post-election splurge, the Dow has steadily declined, shedding 2.77% top-to-bottom from record highs at 44,485.

Despite a near-term swing into the bearish side, the Dow Jones is holding firmly in the bullish end, trading north of the 50-day Exponential Moving Average (EMA). Even if bears maintain control in the immediate window, a one-sided bull run baked into charts since October of 2023 has left price action well north of the 200-day EMA at 40,250.

Dow Jones daily chart

• GBP/USD remains flat, with potential for movement pending UK economic updates and Fed speakers.
• Technicals suggest vulnerability to further downside if 1.2600 support breaks, with next key levels at 1.2596 and 1.2445.
• A move above 1.2696 could test resistance at 1.2700, with significant upside resistance at the 200-day SMA of 1.2817.

The GBP/USD fluctuates, yet it remains virtually unchanged at the beginning of the week as UK traders await the release of UK inflation figures and Retail Sales data. In the meantime, aside from Fed speakers, a scarce economic docket in the US might pave the way for some consolidation on the major. The pair trades at 1.2628, flat.

GBP/USD Price Forecast: Technical outlook

The breach of the August 8 daily low of 1.2664 opened the door for further GBP&USD downside. Although the pair has reclaimed the 1.2600 figure, sellers remain in charge. If bears push the exchange rate below 1.2600, the next support would be a November 15 swing low of 1.2596. Once surpassed, the next stop would be the May 9 low of .12445.

On the other hand, if GBP/USD climbs past the November 15 high of 1.2696, 1.2700 will follow. Further upside is seen above 1.2800, with the 200-day Simple Moving Average (SMA) standing at the crucial support level of 1.2817.

Oscillators such as the Relative Strength Index (RSI) give buyers the upper hand in the short term. However, the RSI remains bearish below its neutral line, putting a lid on GBP/USD upside.

GBP/USD Price Chart – Daily

• NZD/USD is expected to see more weakness as the US Dollar holds onto gains.
• Interest rate cuts from the Fed are expected to be slower and shallow.
• NZ Q3 producer inflation unexpectedly accelerated for both inputs and outputs.

The NZD/USD pair struggles to hold the immediate support of 0.5850 in the North American trading session on Monday. The Kiwi pair sees more downside as the US Dollar (USD) performs strongly across the board on expectations that the economic agenda of President-elected Donald Trump will boost inflationary pressures and spurt the overall growth.

Historically, the Federal Reserve (Fed) tends to slowdown its policy-easing cycle in a high-inflation environment.

Meanwhile, Fed Chair Jerome Powell also delivered slightly hawkish remarks in his speech at Federal Bank of Dallas event on Thursday. Jerome Powell said that the economy is not sending any signals that should compel the Fed to cut interest rates aggressively. However, he reiterated that the disinflation trend towards the bank’s target of 2% is intact and is allowing the central bank to push Federal Funds rate towards the neutral setting.

Powell refrained from providing any economic projections for the period when Trump will administer the office. Powell said, "I think it's too early to reach judgments here." He added, "We don't really know what policies will be put in place."

In the New Zealand region, the Producer Price Index (PPI) grew faster-than-expected in the third quarter of the year but failed to dent market expectations for more larger-than-usual interest rate cuts by the Reserve Bank of New Zealand (RBNZ). The PPI for output surprisingly accelerated to 1.5% from 1.1% in the second quarter of the year. Economists expected the producer inflation to have grown at a slower pace of 0.9%.

The RBNZ reduced its Official Cash Rate (OCR) by 50 basis points (bps) to 4.75% last month and is expected to do the same in its monetary policy meeting on November 27.

The Pound Sterling (GBP) is flat on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP steady on the day

“BoE MPC member Greene is speaking on the inflation outlook later today and UK markets are focused on Wednesday’s CPI data for clues on the near-term policy outlook. Swaps are pricing in only limited (3-4bps) of easing risk for the December 19th BoE decision.”

“GBP is steady on the session but the risk or more short-term losses will grow on a break under 1-year trend line support at 1.2575 currently. Resistance is 1.2700.”

• EUR/GBP crosses key 0.8350 threshold but faces resistance near 0.8400, with current trading influenced by UK GDP concerns.
• Potential upside could see the cross target the 100-day SMA at 0.8413, with further resistance at the 200-day SMA at 0.8475.
• Downside risks remain if the pair retreats, with support levels at recent lows of 0.8306 and 0.8260.

The Euro recovered some ground versus the British Pound on Monday as traders digested the latest UK Gross Domestic Product (GDP) report, which hinted the economy is slowing down. The EUR/GBP trades at 0.8359, up by 0.11%.

EUR/GBP Price Forecast: Technical outlook

The EUR/GBP extended its gains past the psychological 0.8350 area, though buyers remain unable to crack 0.8400. Additionally, sellers leaning to the 50-day Simple Moving Average (SMA) at 0.8360 keep the cross pair from reaching 0.84 despite printing a daily peak of 0.8373.

If bulls clear 0.8373 and 0.84, the next stop would be the 100-day SMA at 0.8413. A breach of the latter will expose the 200-DMA at 0.8475.

Conversely, if EUR/GBP retreats below 0.8350, the first support would be the November 14 low of 0.8306. Once surpassed, the next floor would be the November 11 swing low of 0.8260.

Oscillators such as the Relative Strength Index (RSI) suggest bulls are gathering momentu, as the RSI cleared its neutral line, turning bullish.

EUR/GBP Price Chart – Daily

ECB Governor Makhlouf said he believed a ‘prudent and cautious’ approach to policy setting was appropriate which suggests he is not in favour of a bolder rate cut at the December policy decision, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR consolidates above key support

“There are a few more ECB speaks on tap today—including President Lagarde. Swaps are pricing in around 30bps of easing at the December 12th decision so some recalibration of rate cut expectations could give the EUR a little support in the short run but it is marginal and the broader USD trend remains strongly bullish. Scope for EUR rebounds is limited for now.”

“The EUR is little changed on the session and short-term trading patterns have slipped into a sideways consolidation range. Price action reflects better EUR selling pressure on minor gains, however. Broader trends are EUR-bearish and key support sits just below the market at 1.0448 (2023 low).”

“A further lurch lower in the EUR is likely to develop on a break under there. Resistance is 1.0600/50.”

• USD/JPY rebounds from 155.00 as BoJ Ueda didn’t provide specific timing for further interest rate hikes.
• Japan Kato warned of possible intervention to support the Yen against excessive volatile moves.
• Trump’s protectionist policies would accelerate US inflation and growth.

The USD/JPY recovers sharply from 155.00 in Monday’s North American session after a sharp correction on Friday. The asset bounces back as investors doubt the capability of the Bank of Japan (BoJ) to hike interest rates again in the near term.

In a meeting with business leaders in Nagoya, BoJ Governor Kazua Ueda kept hopes of more rate hikes alive by saying that the central bank will tighten the monetary policy further if the economy performs in line with its expectations. Ueda mentioned that the central bank is evaluating every factor including the risk associated with the United States (US) economy.

However, Ueda stayed vague on providing a specific timing for rate cuts, which forced traders to doubt BoJ’s ability to increase interest rates further.

Meanwhile, expectations of Japan’s intervention in the FX domain could offer some support to the Japanese Yen (JPY). On Friday, Japanese Finance Minister Katsunobu Kato warned of possible intervention if the yen fell too far and too fast.

The US Dollar (USD) performs strongly across the board as market participants expect interest rate cuts from the Federal Reserve (Fed) would be slower and shallow. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, clings to gains near 107.00, the highest level seen in more than a year.

Fed dovish bets have been eased as investors expect the economic agenda of President-elected Donald Trump to result in higher inflation and stronger economic growth.

This week, investors will pay close attention to the preliminary S&P Global PMI data for November, which will be published on Friday.

The Canadian Dollar (CAD) is little changed to start the week. There is no incentive to push the CAD higher at this point while yield differentials remain so favourable for the USD so stability or, more likely, more CAD softness are the only alternatives for spot trends in the short run, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD steadies while spreads remain wide

“Spot is sitting close to estimated fair value today (1.4122). Note that BoC rate cuts have rekindled the domestic housing market. October home sales rose 7.7% over September to reach the highest level in more than two years.”

“USD/CAD is consolidating just below 1.41. Price trends remain broadly USD-bullish following last week’s strong close. There are no signs on the short– or longer-term charts that the USD rally is poised to reverse at this point and while oscillator signals are still extending deeper into overbought levels, these conditions can persist for extended periods of time.”

“Minor dips will remain wellsupported. Key support is 1.3945/50. Longer run trends are leaning towards a retest of the 2020 high just under 1.47.”

The US Dollar (USD) is consolidating in quieter trade at the start of the week. Market participation feels a little lighter to start the week. After the surge in the USD following the US elections, investors may be taking a step back to assess prospects as the president-elect assembles his team and lays out policy priorities, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD little changed versus core majors

“Looking at the last two US presidential elections, the DXY rallied in 2016 in the initial response to Trump’s victory and weakened in response to Biden’s 2020 win. In both cases, the USD’s immediate, post -election reaction started to weaken in mid/late December (after a 5.5% gain in 2016 and a 4.5% loss in 2020). So far, the USD’s broader trajectory is closely tallying with the 2016 profile; a similar (roughly 5% swing) in the DXY in response to the 2024 outcome suggests initial risk for the index is for a rise to around 108.50 ahead of some late year consolidation perhaps.”

“So far today, the core majors are soft but little changed on the day while the JPY is underperforming following comments from BoJ Governor Ueda. The governor commented that the timing of the central bank’s next hike depended on the economy and price trends. This was his last major speech ahead of the BoJ’s December 18-19th policy decision and his failure to flag the risk of more tightening clearly saw the JPY slip.”

“Swaps continue to price in 13bps of tightening for next month, however. There’s limited data for the markets to focus on today but there is a fair bit of central bank speak—from ECB President Lagarde, chief economist Lane and BoE’s Greene to the Fed’s Goolsbee (a nonvoter).”

• The Greenback steadies and trades sideways on Monday after a soft start in Asia. 
• All eyes shift back to geopolitics, with the Biden Administration delivering the green light for Ukraine to use long-range US missiles for targets in Russia. 
• The US Dollar index holds ground above 106.50 while looking for direction. 

The US Dollar (USD) consolidates on Monday after a very calm start of the week in the Asian session, with the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, slightly in the red near a fresh year-to-date high reached last Thursday above 106.50. The main driver for the currency on Monday is the green light from the Biden Administration on Sunday for Ukraine to use long-range US missiles to target Russian infrastructures within Russian borders, just ahead of the G20 meeting in Rio De Janeiro this Monday. 

The US response comes after Moscow deployed nearly 50,000 troops to Kursk, the southern Russian region. Reporting on that, “the change comes largely in response to Russia's deployment of North Korean ground troops to supplement its own forces, a development that has caused alarm in Washington and Kyiv,” Reuters said.,. 

The US economic calendar is very light this Monday. Besides a speech by Federal Reserve Bank of Chicago President Austan Goolsbee, nothing really market moving on the docket. Markets will instead look out for the G20 meeting and comments around Ukraine. 

Daily digest market movers: The storm has passed

• It is a very calm start to the week, and all eyes will shift to Rio de Janeiro in Brazil for the G20 summit, where Ukraine will be high on the calendar. Headlines around Ukraine started to pick up again last Friday when German Chancellor Olaf Schultz had a phone call with Russian President Vladimir Putin after nearly two years of radio silence. Over the weekend, Russia launched its biggest missile and drone attack thus far in this conflict. In response, the US Biden administration provided a green light for Ukraine to use long-range US missiles to target tactical infrastructure within Russia. 
• At 15:00 GMT, Federal Reserve Bank of Chicago President Austan Goolsbee delivers welcome remarks at the Financial Markets Group annual conference in Chicago.
• The National Association of Home Builders (NAHB) will release its monthly Housing Market Index for November at 15:00 GMT. The expectation is for a slight increase to 44 compared to 43 previously. 
• Equities are very mixed at their start this Monday, with some minor losses and gains dispersed across the quote board. All eyes are on after the US closing bell on Wednesday when Nvidia will release its earnings. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 61.9%. A 38.1% chance is for rates to remain unchanged. While the rate-cut scenario is the most probable, traders have significantly pared back some of the rate-cut bets compared with a week ago.
• The US 10-year benchmark rate trades at 4.42%, just off the high printed on Friday at 4.50%

US Dollar Index Technical Analysis: Settle down boy!

The US Dollar Index (DXY) has undergone market repricing on President-elect Donald Trump having secured his presidential victory and gaining control of the House of Representatives and the Senate. For now, it looks like the past weeks’ moves have topped out and will start to ease a touch. levels seen before heading into the US Presidential Elections two weeks ago. 

After a brief test and a firm rejection last Thursday, the 107.00 round level remains in play. A fresh yearly high has already been reached at 107.07, which is the static level to beat. Further up, a fresh two-year high could be reached if 107.35 gets taken out. 

On the downside, a fresh set of support is coming live. The first support is 105.93, the closing level on November 12. A touch lower, the pivotal 105.53 (April 11 high) should avoid any downturns towards 104.00. 

US Dollar Index: Daily Chart

AUD/USD appears oversold below 0.65 relative to where Asian currencies and commodity prices are, DBS’ Senior FX Strategist Philip Wee notes.

RBA to issue minutes for the November 5 meeting

“We expect no surprises in tomorrow’s Reserve Bank of Australia minutes for the November 5 meeting. Last Friday, RBA Governor Michele Bullock confirmed it would be some time before inflation returns sustainably to the 2-3% target.”

“Although CPI inflation fell to 2.1% YoY in September, trimmed mean inflation remained high at 3.2%. The unemployment rate was unchanged at 4.1% for a third month in October after peaking at 4.2%. The futures market sees the RBA delaying rate cuts to 2Q25.”

GBP/USD has a trendline support level of around 1.2570, DBS’ Senior FX Strategist Philip Wee notes.

Bailey to reaffirm BoE’s gradual approach on policy

“Appearing before the Parliament’s Treasury Committee on November 19, Bank of England Governor Andrew Bailey and his colleagues will likely reaffirm their gradual approach to removing monetary policy restraint. Having lowered the bank rate by 25 bps in August and November, the OIS sees quarterly rate cuts to 4.25% by mid-2025.”

“Following the Chancellor’s budget announcement on October 31, the BOE forecasted inflation rising and staying above the 2% target until 2027, based on its assumption for rates to decline to 3.7% by 4Q25.”

“On November 20, UK CPI inflation should rebound to 2.2% YoY (0.5% MoM) in October from 1.7% YoY (0% MoM) in September. While CPI core inflation is expected to moderate to 3.1% YoY from 3.2%, it remains above the 2% target.”

The Dollar Index (DXY) rebounded by 5.9% to 106.7 in the past 1.5 months, following its 4.8% decline to 100.8 in 3Q24, DBS’ Senior FX Strategist Philip Wee notes.

Trump Trade may lose momentum

“The 107.3 high in October 2023 will be a significant resistance level, and DXY may correct lower if the Trump Trade loses momentum. The rallies in the S&P 500 Index and Bitcoin stalled around 6k and 90k, respectively, last week.”

“The Atlanta Fed GDPNow model projected US GDP growth slowing to 2.5% in 4Q24 from 2.8% in 3Q24. The US Treasury 2Y yield entered a 4.24-4.37% range last week. Since Trump’s victory, the futures market has reduced the odds of a December Fed cut to 58% from 80%.”

“On November 21, let’s see if Fed Governor Michelle Bowman joins her colleague’s optimism for inflation to return to the 2% target and rates to decline further towards neutral in 2025. Bowman dissented September’s 50 bps cut but supported November’s 25 bps cut.”

• The Mexican Peso trades slightly lower on Monday after a mild recovery. 
• The Peso gained as the effect of the Trump-trade wore off, Banxico upgraded its forecasts, and Mexico made a budget announcement. 
• USD/MXN could be starting a new leg higher after pulling back within its uptrend. 

The Mexican Peso (MXN) edges lower in its key pairs on Monday after three consecutive days of mild gains. These came partly on the back of revised forecasts by the Bank of Mexico (Banxico) at its November meeting on Thursday, an optimistic budget announcement from Mexico’s Economy Minister on Friday, and as the waning bullish effect of the “Trump-trade” on the US Dollar (USD). Despite the Peso’s three-day rebound, MXN is in a technical downtrend overall, suggesting vulnerabilities could lurk just out of sight. 

Mexican Peso recovery looks vulnerable 

The Mexican Peso slightly retreats on Monday after a weak recovery in the second half of last week after Banxico revised its forecast for inflation at the end of 2024 to 4.7% from 4.3%. The change suggests the central bank will probably not cut interest rates as aggressively as previously expected, propping up the Peso. The maintenance of elevated interest rates increases capital inflows into a country, supporting its currency. 

Nevertheless, Banxico went ahead with a 25 basis points (bps) (0.25%) cut at its policy meeting on Thursday, bringing its main interest rate down to 10.25% from 10.50% previously. The bank  continued to see the balance of risks “to growth of economic activity remained biased to the downside.”

Also on Thursday, Moody’s Ratings cut Mexico’s credit rating to Baa2 “Negative” from “Stable” as a result of a combination of the country’s high budget deficit, which is expected to end 2024 at 5.9% of Gross National Product (GDP), the highest it has been since the 1980s, and risks to the economy from the government’s reforms of the judiciary, which Moody’s views as threatening the rule of law and “eroding checks and balances” to power. 

“While our assessment of the quality of institutions in Mexico is already low compared to rating peers, particularly when it comes to rule of law and control of corruption, we will assess whether a further deterioration in the policymaking framework and the independence of the judicial system could limit the government's ability to address rising credit challenges," Moody's said.

The Mexican Finance Minister Rogelio Ramírez de la O responded to the downgrade by saying that Moody’s had not taken into account his proposed budget for 2025, which was published the following day. In the 2025 budget, Ramirez de la O forecast an increase in growth of between 2% and 3% and a budget deficit of 3.9% of Gross Domestic Product (GDP). 

The budget projection suggests an increase in growth from a rate of 1.5% to 2.5% in 2024 and a reduction in the deficit from the 5.9% expected by the end of 2024, according to Reuters. 

Technical Analysis: USD/MXN closes in on November high

USD/MXN has pulled back after rallying higher within a rising channel. The short-term trend is probably bullish but could also be sideways. The pullback from the November 12 high has found support at the 50-period Simple Moving Average (SMA) in the 4-hour chart (as seen below), and the pair could be about to start recovering. 

USD/MXN 4-hour Chart 

If USD/MXN extends a new leg higher, it could rally up to a zone between 20.80 (November 6 high) and 20.89 (61.8% Fibonacci extension of the prior rally). A cross of the blue Moving Average Convergence Divergence (MACD) above its red signal line would provide a buy signal and evidence supporting such a move higher. 

A break above 20.80 would confirm a higher high and an extension of the bullish trend and unlock the next upside target at 21.00 (round number, upper boundary of channel), where buyers could start to meet resistance. 

In case USD/MXN extends its correction lower, support lies in the 19.70s from the 50-day SMA (not shown) the early November lows and the lower boundary line of the rising channel just below.

• USD/CAD stays firm near 1.4100 as the US Dollar performs strongly across the board.
• Fed Powell doesn’t see any urgency for lowering interest rates aggressively.
• Traders await Canadian inflation data for fresh BoC interest rate cues.

The USD/CAD pair holds into gains near a fresh more than four-year high around 1.4100 in Monday’s European session. The Loonie pair strives to maintain its winning spell for the seventh trading day on Monday on multiple tailwinds: strength in the US Dollar (USD) across the board on likely acceleration in the United States (US) inflation due to President-elected Donald Trump’s victory in both houses and weakness in the Canadian Dollar (CAD) on increasing Bank of Canada (BoC) dovish bets.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains near a fresh yearly high of 107.00. Market sentiment is slightly cautious as investors expect the Federal Reserve (Fed) to follow a more gradual policy-easing approach. S&P 500 futures trade cautiously during European trading hours.

On Thursday, Fed Chair Jerome Powell pushed back expectations of aggressive interest rate cuts but affirmed that the policy-easing cycle is intact, with inflation remaining on a sustainable track toward the bank’s target of 2%.

"The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said and added, “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully."

Meanwhile, the CAD remains on the backfoot as trades expect the BoC to cut interest rates again by 50 basis points (bps) in the December meeting. For more interest rate cues, investors await the Canadian Consumer Price Index (CPI) data for October, which will be published on Tuesday. Statistics Canada is expected to show that month-on-month headline CPI rose by 0.3% after a 0.4% deflation in September. On year, the inflation data is expected to have grown by 1.9%, faster than the former reading of 1.6%.

• Crude Oil edges up slightly on Monday as the war between Russia and Ukraine escalated over the weekend. 
• The G20 meeting, starting on Monday, includes a Ukraine peace deal high on the agenda. 
• The US Dollar Index eases a touch on Monday after having printed a fresh one-year high at 107.07.

Crude Oil price is trading below $68.00 on Monday, ticking up slightly following the escalation in the war between Russia and Ukraine over the weekend. Russia launched a large air strike to hit Ukraine’s power grid, while US President Joe Biden’s administration allowed Kyiv to strike Russian territory with its long-range missiles.

Solutions around the Ukraine situation will be discussed in the G20 meeting starting Monday in Rio de Janeiro, Brazil. With the turn of events since Friday, several parties – even Ukrainian President Vladimir Zelensky himself – called for an end to the war in 2025. A truce or an end to the situation would mean more downturn for Crude, with Russian Oil possibly being accepted again once sanctions and embargoes are lifted under a peace deal. 

The US Dollar Index (DXY) is retreating a touch from its fresh one-year high at 107.07 that was printed last week. It looks like markets have repriced all elements from the triumph of President-elect Donald Trump. The focus is shifting back to the Federal Reserve (Fed) and the question if the December rate cut is still a good idea before going into the Trump presidency. 

At the time of writing, Crude Oil (WTI) trades at $67.19 and Brent Crude at $71.20.

Oil news and market movers: Ukraine situation high on the calendar

• The G20 meeting is set to start this Monday in Rio de Janeiro with a peace deal for Ukraine high on the agenda. Over the weekend, the Biden administration delivered a green light for Ukraine to use US missiles beyond Russian borders, seen as a next step in the escalating tensions. 
• Vortexa data show that the amount of crude Oil held around the world on tankers that have been stationary for at least seven days fell to 50.97 million barrels as of November 15, 14% less than last week, Bloomberg reports. 
• Nigerian business tycoon Aliko Dangote is looking to raise billions of dollars to step up production at his $20 billion oil refinery on the outskirts of Lagos, the Financial Times reports.

Oil Technical Analysis: Pressure building again

Crude Oil price is still stuck in the same pattern, posting lower highs and a rather flat level on the downside near $65.00-$66.00. A break lower this support area could quickly see a move to $64.38, a fresh low for 2024. The Relative Strength Index (RSI) on the daily chart suggests that there is still room for a push lower. 

On the upside, the 55-day Simple Moving Average (SMA) at $70.04 is the first barrier to consider before the hefty technical level at $73.29, which aligns with the 100-day Simple Moving Average (SMA). The 200-day SMA at $76.59 is still quite far off, although it could get tested in case tensions further intensify. 

On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support together with that small ascending trend line from October. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

European Central Bank (ECB) Governing Council member and Central Bank of Ireland Governor Gabriel Makhlouf said on Monday that overwhelming evidence would be needed to consider a 50 basis points rate cut in December, pre Reuters.

Key takeaways

"I believe in cautious and prudent approach, believe the policy is working."

"We are going meeting by meeting."

"Let's see what data tells us; but reasonable to assume we are on a downward trajectory."

"Would be premature to start making decisions on what new US administration might do."

"I am confident we will meet our target next year, all of us should chill out a bit on whether it will be Q1, Q2 or even Q3."

Market reaction

EUR/USD showed no reaction to these comments and the pair was last seen trading virtually unchanged on the day at 1.0540.

The US Dollar (USD) is likely to trade in a range of 7.2250/7.2500. In the longer run, momentum is beginning to slow; a breach of 7.2000 would mean that USD is not rising further, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Momentum is beginning to slow

24-HOUR VIEW: “Following last Thursday’s rise to 7.2700, we indicated on Friday that ‘Given the severely overbought conditions, USD is unlikely to advance further.’ We were of view that USD ‘is more likely to trade in a range, probably between 7.2350 and 7.2700.’ USD subsequently traded in a range of 7.2308/7.2555, closing slightly lower by 7.2429 (-0.13%). Further range trading still seems likely, even though the softened underlying tone suggests a lower range of 7.2250/7.2500.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Wednesday (13 Nov, spot at 7.22470), wherein ‘The level to monitor is 7.2800 and the next resistance above 7.2800 is at 7.3115.’ USD has not been able to make further headway since then, and momentum is beginning to slow. From here, if USD breaks below 7.2000 (no change in ‘strong support’ level) would mean that USD is not rising further.”

USD/SGD eased into Fri NY close and continued to trade on the back foot this morning. Pair was last seen at 1.3442 levels, OCBC FX analysts Frances Cheung and Christopher Wong notes.

Bearish divergence on MACD and rising wedge pattern are forming

“Daily momentum is mild bullish but rise in RSI moderated. Bearish divergence on MACD and rising wedge pattern appear to be forming. Technical patterns point to signs of bearish pullback in the near term. Support at 1.3340 (200 DMA), 1.3290 (61.8% fibo retracement of Jun high to Oct low).”

“Resistance at 1.3490, 1.3520 levels. Policy uncertainties associated with Trump policies, swings in RMB and JPY should continue to drive USDSGD in the near term. S$NEER was last at 1.27% above modelimplied mid.”

The UK economy grew at a slightly slower pace in the third quarter than economists polled by Bloomberg had expected. The pound came under some pressure as a result, causing EUR/GBP to rise. However, we would be cautious about reading too much into Friday's figures, Commerzbank’s FX analyst Michael Pfister notes.

The risks are on the upside

“Firstly, quarter-on-quarter growth of 0.14% was very close to the rounding threshold. At the same time, there were some hopeful signs: private consumption grew strongly and thus contributed the lion's share to growth. This was probably due to the continued rise in real wages, which gave consumers more room to maneuver.”

“At the same time, the government continued to invest and gross fixed capital formation increased. Basically, a rather volatile sub-component pushed growth down significantly. This component rose sharply in the second quarter, thus having a strong weight in the aggregation. In the third quarter, by contrast, a now relatively small increase pushed growth down accordingly.”

“We therefore believe that the third quarter figure somewhat understates long-term growth potential, just as we believe that the growth figures for the first half of the year were somewhat overstated. The UK economy is likely to return to somewhat stronger growth in the coming quarters. We therefore remain cautiously optimistic on sterling, especially as the Bank of England's focus is more on inflation and stronger consumption suggests that the risks are on the upside.”

Chance for US Dollar (USD) to drop below 153.85; the major support at 153.20 is unlikely to come under threat. In the longer run, pullback in USD could extend to 153.20, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

Pullback in USD could extend to 153.20

24-HOUR VIEW: “Last Friday, we were of the view that USD ‘is likely to continue to rise.’ Our view was incorrect, as after rising to a high of 156.74, USD plunged to a low of 153.85. USD closed sharply lower by 1.22% at 154.34. While the sharp and swift sell-off appears to be overdone, there is a chance for USD to drop below 153.85 before stabilisation can be expected. The major support at 153.20 is unlikely to come under threat. Resistance is at 154.80; a breach of 155.25 would suggest the weakness in USD has stabilised.”

1-3 WEEKS VIEW: “When USD was at 156.50 last Friday (15 Nov), we indicated that ‘Momentum remains strong, and the next technical objective is at 158.00.’ USD then rose to 156.74 and then in a sudden move, plunged to a low of 153.85. The breach of our ‘strong support’ level at 154.95 indicates that the USD advance from the middle of last week has ended. The current price action is likely part of a pullback that could extend to 153.20. The downward pressure would remain intact as long as 155.80 is not breached.”

Towards the end of last week, the USD rally seemed to have run out of steam. For the time being, EUR/USD seems to be stabilising just above 1.05, which is around 6.5 cents below the interim high at the end of September. This should come as no surprise to anyone. In 2016, the US dollar also experienced temporary sideways movements in the weeks following Donald Trump's election victory. And this time around, the victory probably came as less of a surprise to the market, as the polls had already pointed to it and the US dollar had already appreciated quite a bit before the election. It is therefore likely that much of the USD's initially justified strength has now been priced in, Commerzbank’s FX analyst Michael Pfister notes.

EUR/USD seems to be stabilising just above 1.05

“As a result, market participants are likely to turn their attention in the coming weeks to the question of how long the USD strength will last this time around. As a reminder, in 2016/2017 the US dollar also appreciated significantly after the election, but quickly lost this strength in the months following Trump's inauguration. This was probably mainly due to the fact that Trump did not immediately implement his trade policy, which he had already announced at the time, but the tariffs and the trade war only picked up speed in 2018/2019. Then the dollar rebounded.”

“I am not saying that history will repeat itself. After all, Trump is likely to be much better prepared this time around, as evidenced by his rapid personnel decisions. But is he so well prepared to implement an inflationary trade policy from day one? Especially if he also wants to impose high tariffs on long-standing allies, I have my doubts that this can be implemented quickly (not to mention the fact that our economists generally doubt that the tariffs will be that high). That's not to say it won't be implemented, just that it could take a bit longer, similar to 2018/2019. Therefore, I think a breather in USD strength is not unwarranted.”

“Of course, if it becomes (even) clearer that Trump wants to push through his policies quickly, this could change. However, I am not so much thinking of (even) more USD strength. Rather, I think the euro would suffer. Although the euro has depreciated quite a bit in the aftermath of the election, there is certainly potential for a much weaker euro if tariffs go ahead. Until then, however, the market is likely to wait for further signs that Trump is serious.”

The Swiss Franc (CHF) weakening this episode (QTD) comes alongside the decline also seen in other major FX, though the magnitude of CHF depreciation was slightly lesser (- 4.7% vs USD) compared to JPY, EUR, GBP, AUD (down over 5-8% vs USD). USD/CHF was last seen at 0.8871 levels, OCBC FX analysts Frances Cheung and Christopher Wong note.

Bullish momentum on daily chart intact

“Safe-haven characteristic of CHF was likely one of the mitigating factors that saw CHF fell by less. Nevertheless, US election outcome was one of the main reasons that triggered broad USD strength as market contemplates a return of US exceptionalism under Trump presidency/ Red sweep.”

“Bullish momentum on daily chart intact though RSI shows signs of easing from near overbought conditions. Near term retracement not ruled out. Support at 0.8800/20 (200 DMA, 50% fibo retracement of 2024 high to low), 0.8720 (21 DMA). Resistance at 0.89 (61.8% fibo), 0.9020 (76.4% fibo).”

“Data of interests this week include sight deposits (Mon), trade data, Swiss watch exports (Tue).”

• AUD/USD struggles around 0.6450 as the US Dollar performs strong broadly.
• Trump’s economic agenda is expected to boost price pressures.
• Investors await the RBA minutes for fresh interest rate guidance.

The AUD/USD pair trades with caution near 0.6450 in Monday’s European session. The Aussie pair finds temporary support but struggles to gain ground as the US Dollar (USD) remains broadly firm. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 106.50 in European trading hours but remains close to its annual high of 107.00.

The optimism over President-elected Donald Trump implementing its economic agenda in his administration has kept the US Dollar on the frontfoot. Donald Trump is expected to levy hefty tariffs on imports and lower taxes, which will accelerate inflationary pressures and force the Federal Reserve (Fed) to follow a more gradual policy-easing approach.

Also, Fed Chair Jerome Powell said on Thursday that the economy has not sent any signals, which strain on cutting interest rates aggressively. However, he commented that price pressures remain on a sustainable path towards the bank’s target of 2%, which allows us to continue heading towards the neutral rate.

For the last policy meeting of this year, traders see a 65% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

Meanwhile, the next move in the Australian Dollar (AUD) will likely occur on Tuesday after the release of the Reserve Bank of Australia (RBA) minutes of the monetary policy that took place on November 5. In the policy meeting, the RBA left its Official Cash Rate (OCR) unchanged at 4.35% and Governor Michelle Bullock delivered a hawkish interest rate guidance with concerns over upside risks to inflationary pressures.

This week, attention will again turn to the region's central banks. Today we start with some PPI growth in the Czech Republic and steadily elevated core inflation in Poland. Tomorrow, the National Bank of Hungary is scheduled to meet, and no change in rates at 6.50% is generally expected. The NBH doesn't have many options at the moment despite inflation and GDP surprising to the downside. Friday's move up in EUR/HUF again shows that the risk-off mood here persists, ING’s FX analysts Frantisek Taborsky notes.

EUR/HUF to continue being the main focus this week

“Thursday also sees a central bank meeting in Turkey. Again, we should see rates unchanged here at 50%. The focus will be on communication given the higher-than-expected inflation numbers but also a rather dovish tone in the latest inflation report. We expect the first cut in December but obviously it will be a close call dependent on the next inflation print.”

“CEE FX is still looking for new levels in the post-election environment. We remain generally bearish here. Lower EUR/USD, downside economic surprises and pricing in more rate cuts should continue to put pressure on FX. Additionally, Friday's sell-off in equity markets may bring back risk-off sentiment. The EUR/HUF will continue to be the main focus this week, having regained above 408 on Friday.”

“We believe the NBH meeting will return this story to the spotlight and EUR/HUF will be near 410 again into the meeting. The market has outpriced earlier rate hike expectations, while we saw some rally in HUF rates last week. We think positioning in HUF remains short, but less so than before the election. On one hand, this gives the space to add new short positions. On the other, it suggests that the NBH should have the worst behind it.”

The New Zealand Dollar (NZD) is expected to trade in a range between 0.5845 and 0.5885. In the longer run, outlook for NZD remains negative; the technical target now is at last year’s low of 0.5775, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Outlook for NZD remains negative

24-HOUR VIEW: “We expected NZD ‘to continue to weaken’ last Friday. However, it traded in a 0.5841/0.5880 range. The price movements are likely part of a range trading phase. Today, NZD is expected to trade between 0.5845 and 0.5885.”

1-3 WEEKS VIEW: “We turned negative in NZD last Wednesday (13 Nov, spot at 0.5925), but we indicated that ‘it is too early to tell if the major support at 0.5850 is within reach.’ After NZD fell below 0.5850, we indicated last Friday (15 Nov, spot at 0.5845) that ‘the outlook for NZD remains negative, and the technical target now is at last year’s low of 0.5775.’ We will continue to hold the same view, provided that 0.5915 (‘strong resistance’ previously at 0.5925) is not breached.”

The big event in the GBP market this week is the release of the October CPI report on Wednesday, ING’s FX analysts Francesco Pesole notes.

‘Core services’ inflation to slow down to 4.3%

“As usual, markets will be looking almost solely at the services inflation figure, which our economist sees accelerating marginally from 4.9% to 5.0%. However, when stripping out categories that are less relevant for the Bank of England, we see a substantial slowdown to 4.3% in ‘core services’ inflation.”

“That would be good news for the BoE, but probably not enough to justify another cut in December. Incidentally, markets might focus a bit more on the ‘non-core’ services CPI figure, sticking to cautious BoE pricing and put a cap on the recent tentative rebound in EUR/GBP.”

“Our view on the pair remains moderately bearish in the near term as we see any dovish repricing in BoE expectations coming after a December outsized ECB cut.”  

Momentum indicators are turning flat; Australian Dollar (AUD) is likely to trade in a sideways range of 0.6445/0.6485. In the longer run, further AUD weakness still appears likely; the next level to watch is 0.6400, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next level to watch is 0.6400

24-HOUR VIEW: “When AUD was at 0.6450 last Friday, we highlighted that ‘provided that 0.6490 remains intact, AUD could decline further.’ However, we pointed out that ‘the major support at 0.6400 is unlikely to come into view.’ Our expectations did not turn out, as AUD traded sideways between 0.6443 and 0.6482, closing at 0.6465 (+0.16%). As momentum indicators are turning flat, further sideways trading appears likely, probably in a range of 0.6445/0.6485.”

1-3 WEEKS VIEW: “We indicated last Friday (15 Nov, spot at 0.6450) that ‘further AUD weakness still appears likely.’ We also highlighted that ‘The next level to watch is 0.6400.’ Although downward momentum has slowed somewhat, we will continue to hold the same view for now. Overall, only a breach of 0.6520 (no change in ‘strong resistance’ level) would mean that the weakness in AUD has stabilised.”

USD/JPY rose sharply this morning, and was last seen at 154.84, OCBC FX analysts Frances Cheung and Christopher Wong notes.

Bullish momentum on daily chart fades

“Markets were earlier anticipating some hint on policy moves from Governor Ueda at an event in Nagoya but his remarks were interpreted as less hawkish. He said that actual timing of adjustments will continue depending on developments in economic activity and prices as well as financial conditions – akin to policy decision being data dependent.”

“Last Fri, Finance Minister Kato said authorities will respond appropriately to any excessive move and authorities see one sided, sudden move in FX markets. In the very near term, self-inflicted concerns of officials’ intervention may slow pace of USD/JPY rise.”

“Bullish momentum on daily chart faded while RSI was flat. Potential bearish divergence on RSI observed. Further downside play not ruled out. Support at 153.00/30 (21 DMA, 61.8% fibo retracement of Jul high to Sep low) needs to be broken for bears to gather further traction towards 150.70 (50% fibo). Resistance at 156.50 (76.4% fibo).”

Silver prices (XAG/USD) rose on Monday, according to FXStreet data. Silver trades at $30.75 per troy ounce, up 1.64% from the $30.25 it cost on Friday.

Silver prices have increased by 29.22% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 84.37 on Monday, down from 84.70 on Friday.

(An automation tool was used in creating this post.)

PMIs have become an increasingly important release for the eurozone after the European Central Bank shifted the focus from inflation to growth and is now taking a broader range of soft activity data into account. The eurozone’s composite PMIs is at 50.0, the break-even level between contraction and expansion, meaning a greater resonance of even small movements in the index when they are published on Friday – especially if on the downside, ING’s FX analysts Francesco Pesole notes.

EUR/USD to trade around 1.04 at year-end

“Our economists are cautiously optimistic on the eurozone-wide figure, where they expect 50.2 (consensus is 50.0), although they suspect German figures could still disappoint. On this topic, expect a buildup in market scrutiny over the German snap elections in February and what those can mean for both Europe’s (geo)political balance and prospects of any bending of Germany’s strict debt rules. Our colleague Carsten Brzeski argues here how fiscal stimulus will have to come under the new government, regardless of the fiscal break. Still, that will take some time, and one of our key macro calls for 2025 remains that the ECB will need to do the heavy lifting in supporting the economy ahead of further protectionism-related growth headwinds.”

“Our short-term call for EUR/USD is that it can hold above 1.050 this week as dollar bulls take a break, but that is admittedly not a high-conviction view. As discussed above, the dollar momentum remains strong and there is no obvious catalyst for an inversion, outside of technical considerations. Obviously, soft EZ PMIs can easily prompt a break lower as markets could price in a 50bp ECB cut in December from the current 30bp. Ultimately, in line with our call for a half-point ECB move in December, we expect EUR/USD to trade around 1.04 at year-end.”

“Today, there are a few key ECB speakers, including President Christine Lagarde and Chief Economist Philip Lane. Remember how the latest ECB minutes showed some frictions within the Governing Council on the sustainability of disinflationary drivers. With plenty of ECB-speak this week, we may get a slightly clearer picture of where consensus is on this.”

Data from CFTC on speculative positioning show net US Dollar (USD) longs versus the rest of G10 rising to the highest since July until last Tuesday. In open interest terms, that is 12%, according to our calculations. That is a quite high figure, just above the 1-standard-deviation upper bound, however it is still well below April’s 24% peak. Long USD positions likely grew further throughout last week, but CFTC figures probably fail to capture the depth of the shift to a structural bullish stance on the dollar after Donald Trump’s election. Our perception remains that market positioning is quite stretched on dollar longs, and the greenback remains at risk of some technical correction in the near term, ING’s FX analysts Francesco Pesole notes.

DXY to find support around 106.0

“At the same time, the macro story hasn’t really offered any reason for second thoughts on the dollar rally. Inflation data has been hotter than the Federal Reserve's target would tolerate, and Chair Jerome Powell added a layer of caution on future easing in a speech last week. With very little extra information on the US economy being added this week, the market-implied policy divergence between the Fed and most other G10 central banks could mean that any positioning-led correction will be short lived.”

“Ultimately, our economists’ call is that the Fed will cut in December. Markets are pricing in 15bp, so there is room for a dovish repricing to hit the dollar. However, that repricing may not happen before jobs data are released in 18 days. That is a relatively long period for markets, and one where – net of any positioning-related wobble – the long dollar ‘Trump trade’ may remain the only clear-cut directional call in FX. We suspect DXY will still find support around 106.0 in case of a correction, and there is a tangible possibility it will be trading above 107.0 by Thanksgiving.”

“This week, expect market focus to remain on Trump’s cabinet nominees, in particular when it comes to the Treasury. The only potentially market moving data releases aside from jobless claims will be the leading index, which has however had very limited predicting ability for the direction of the economy. We'll also be looking out for S&P Global PMIs, which are expected to show more of the same for the US: weak manufacturing being more than offset by strong services. There are a few Fed speakers watch too, starting today with Chicago Fed President Austan Goolsbee, who is considered a dovish-leaning member.”

• The Pound Sterling struggles near 1.2600 against the US Dollar as investors expect the Fed to follow a more gradual policy-easing approach.
• Fed officials refrain from projecting the consequences of Trump’s policies on interest rates.
• The next big move for the British currency will likely occur on Wednesday when UK inflation data for October will be released.

The Pound Sterling (GBP) remains under pressure near 1.2600 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair struggles to gain ground as the US Dollar clings to gains near a more-than-a-year high, with the US Dollar Index (DXY) wobbling around 107.00. 

The Greenback trades firmly as investors expect the Federal Reserve (Fed) to follow a more gradual rate-cut approach given the recent slight rebound in inflation and the growth outlook on strong expectations that President-elected Donald Trump will be able to implement his economic agenda smoothly.

In the December meeting, there is a 62% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool. This is significantly down from the almost 77% seen a month ago.  

Trump’s victory is also making analysts reassess the Fed’s interest-rate outlook for next year. “The Fed’s Monetary Policy Committee (MPC) will be acutely aware that Donald Trump’s policies could be significantly inflationary, primarily due to the impact of tariffs being passed on to consumers while lower taxes heat up the economy,” analysts at Quilter Investors said. 

“Investors will no doubt be combing through their comments carefully for any perceived guidance on how that might impact the path of interest rates going forward,” they added.

Meanwhile, Fed officials have refused to comment on the likely impact of Trump’s policies on the monetary policy action and the economic outlook. On Thursday, Fed Chair Jerome Powell said that “it is too early to reach judgments on the effect of Trump policies.”

On the economic data front, investors await the preliminary S&P Global Purchasing Managers’ Index (PMI) data for November, which will be published on Friday.

Daily digest market movers: Pound Sterling struggles to recover after Friday sell-off

• The Pound Sterling edges higher against its major peers on Monday, striving to gain ground after Friday’s sell-off. The British currency fell sharply after the United Kingdom (UK) Office for National Statistics (ONS) showed that the economy surprisingly contracted by 0.1% in September. The data also showed that the economy barely grew in the third quarter.
• The unexpected fall in UK GDP could prompt expectations for more interest rate cuts by the Bank of England (BoE). "We believe that if UK economic data continues to disappoint, the BoE may become more focused on reviving growth," according to analysts at BBVA.
• The uncertainty over the UK economic outlook is expected to deepen further as the government is caught between choosing the European Union (EU) and the US for strengthening its trade relations. The comments from Stephen Moore, a senior economist advisor to Donald Trump, in an interview with BBC indicated that the US will be less interested in working with the UK if it puts the EU ahead of it. 
• “The UK is kind of caught in the middle of these two forms of economic model and I believe that Britain would be better off moving towards more of the American model of economic freedom. And if that were the case, I think it would spur the Trump administration’s willingness to do the free trade agreement with the UK," Moore said. His comments came after BoE Governor Andrew Bailey urged the administration to rebuild ties with the European Union.
• This week, investors will pay close attention to the UK Consumer Price Index (CPI) data for October, which will be published on Wednesday. The inflation data is likely to influence BoE rate cut expectations for the December meeting.

Technical Analysis: Pound Sterling hovers near 1.2600

The Pound Sterling aims for a firm footing near 1.2600 against the US Dollar in London trading hours on Monday. The GBP/USD pair remains broadly under pressure as it remains well below the 200-day Exponential Moving Average (EMA) at 1.2850.

The 14-day Relative Strength Index (RSI) slides sharply to 30.00, suggesting a strong bearish momentum.

Looking down, the psychological support of 1.2500 will be a major cushion for Pound Sterling bulls. On the upside, the Cable will face resistance near the 200-day EMA.

Scope for the Pound Sterling (GBP) to edge lower to 1.2590; the major support at 1.2565 is likely out of reach. In the longer run, GBP is likely to continue to weaken to 1.2565, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Below 1.2590 GBP to weaken towards 1.2565

24-HOUR VIEW: “Last Friday, we noted that ‘Downward momentum is showing tentative signs of slowing, but there is scope for GBP to retest the 1.2630 level.’ We added, ‘The major support at 1.2615 is unlikely to come under threat.’ The anticipated decline exceeded our expectations, as GBP fell to a low of 1.2598, closing at 1.2619 (-0.39%). Despite the relatively sharp decline, downward momentum has not increased much. That said, there is scope for GBP to edge lower to 1.2590. The major support at 1.2565 is likely out of reach. Resistance is at 1.2640, followed by 1.2670.”

1-3 WEEKS VIEW: “When GBP was at 1.2665 last Friday (15 Nov), we indicated that GBP “is expected to continue to weaken to 1.2615, possibly 1.2565.” We did not anticipate it to reach 1.2615 as quickly, as it dropped to a of low of 1.2598. While downward momentum has not increased much, GBP is likely to continue to weaken to 1.2565. On the upside, a breach of 1.2745 (‘strong resistance’ level was at 1.2770 last Friday) would indicate that the downward pressure that started early last week has faded.”

The US Dollar (USD) bulls show signs of fatigue even as better US data last Fri did not fuel further USD upticks. DXY was last at 106.52 levels, OCBC FX analysts Frances Cheung and Christopher Wong notes.

Potential bearish divergence forming on daily MACD

“In response to better-than-expected US data and less dovish rhetoric (from Powell), markets have already scaled back probability of 25bp cut in Dec meeting to ~65% chance (vs 71% chance a week ago). Prospects of Fed cut will continue to adjust as US data comes. This puts focus on data this week: prelim PMIs, Uni of Michigan sentiment data (Fri) before core PCE (27 Nov).”

“Firmer print will add to US exceptionalism narrative, keeping USD rates and USD elevated for longer, until the trend turns. Bullish momentum on daily chart moderated while rise in RSI slows near overbought conditions.”

“Potential bearish divergence may be forming on daily MACD, but price action requires further monitoring. Near term, not ruling out a technical retracement. Support at 106.50, 105.60 (76.4% fibo) and 104.50/60 levels (21DMA, 61.8% fibo retracement of 2023 high to 2024 low). Resistance at 107, 107.40 (2023 high).”

The Euro (EUR) is likely to trade in a range between 1.0505 and 1.0585. In the longer run, price action continues to suggest EUR weakness; the next support level is at last year’s low, near 1.0450, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next support level is at last year’s low, near 1.0450

24-HOUR VIEW: “The following are excerpts from our update last Friday: ‘Conditions remain oversold, but the weakness still has not quite stabilised just yet. That said, as momentum has slowed somewhat, any further decline is likely part of a lower trading range of 1.0490/1.0580. In other words, EUR is unlikely to break clearly below 1.0490.’ Our view of range trading was not wrong, even though EUR traded in a higher range of 1.0516/1.0592, closing at 1.0541 (+0.10%). There has been no increase in either downward or upward momentum, and we continue to expect EUR to trade in a range, probably between 1.0505 and 1.0585.”

1-3 WEEKS VIEW: “We turned negative in EUR on 07 Nov, when EUR was at 1.0730. After EUR fell below our technical target of 1.0500, we indicated last Friday (15 Nov, spot at 1.0525) that ‘The price action continues to suggest EUR weakness, even though caution is warranted given the deeply oversold conditions.’ We added, ‘The next support is at last year’s low, near 1.0450.’ EUR then snapped its 5-day losing streak, closing higher by 0.10% at 1.0541. Although downward momentum has slowed somewhat, only a breach of 1.0610 (no change in ‘strong resistance’ level) would indicate that EUR is not weakening further. Meanwhile, oversold conditions could lead to a couple of days of range trading.”

European Central Bank (ECB) Vice President Luis de Guindos said on Monday that “the balance of risks has shifted from concerns about high inflation to fears over economic growth.”

Additional takeaways

Market reaction

These prudent remarks from the ECB policymaker fail to deter the Euro’s recovery, as the EUR/USD pair edges 0.25% higher on the day to near  1.0570 at the press time.

• NZD/USD may depreciate further as daily chart analysis indicates a strengthening bearish bias.
• The pair attempts to break below the lower boundary of the descending channel at the 0.5850 level.
• The immediate resistance appears at the nine-day EMA at 0.5901, followed by the 14-day EMA at 0.5928.

The NZD/USD pair retraces its recent gains, trading around 0.5850 during the European hours on Monday. A review of the daily chart highlights a growing bearish bias, as the pair tests the lower boundary of its descending channel pattern.

The nine-day Exponential Moving Average (EMA) remains below the 14-day EMA, signaling persistent weakness in short-term price momentum. Meanwhile, the 14-day Relative Strength Index (RSI) hovers around the 30 level, indicating oversold conditions for the NZD/USD pair and hinting at the possibility of an upward correction.

Regarding the support, the NZD/USD pair is testing the lower boundary of the descending channel, which aligns with the throwback support at the psychological level of 0.5850. A decisive break below this channel would reinforce the bearish outlook, increasing downward pressure and potentially driving the pair toward its two-year low of 0.5772, last seen in November 2023. 

On the upside, immediate resistance lies at the nine-day EMA at 0.5901, followed by the 14-day EMA at 0.5928, which coincides with the upper boundary of the descending channel. A breakout above this channel would enhance bullish momentum, paving the way for the NZD/USD pair to target the psychological level of 0.6100.

NZD/USD: Daily Chart

• EUR/CAD gains positive traction for the third straight day and climbs to a one-week top.
• The mixed technical setup warrants some caution before positioning for further move-up.
• A sustained strength beyond 1.4915-1.4920 might shift the bias back in favor of bulls.

The EUR/CAD cross attracts some follow-through buying at the start of a new week and looks to build on its recovery from the vicinity of the 1.4700 mark, or the lowest level since July 10 touched last week. Spot prices climb to a one-week top during the first half of the European session and currently trade around the 1.4870 region, up 0.25% for the day. 

A modest downtick in the US Dollar (USD) provides a modest lift to the shared currency. Furthermore, bets for a larger interest rate cut by the Bank of Canada (BoC) continue to undermine the Canadian Dollar (CAD) and act as a tailwind for the EUR/CAD cross. That said, rebounding Crude Oil prices could limit deeper losses for the commodity-linked Loonie and cap gains for the currency pair.

From a technical perspective, the EUR/CAD cross is currently placed near the 200-day Exponential Moving Average (EMA). This is closely followed by the 38.2% Fibonacci retracement level of the downfall witnessed over the past two weeks, around the 1.4885 region, and the 1.4900 mark. A sustained strength beyond the said barriers might shift the bias in favor of bulls and set the stage for further gains. 

That said, oscillators on the daily chart – though have been recovering from lower levels – are holding in negative territory. This, in turn, makes it prudent to wait for strong follow-through buying beyond the 1.4915-1.4920 area before confirming that the EUR/CAD cross has formed a near-term bottom and positioning for a move beyond the 1.4950 area (50% Fibo. level), towards reclaiming the 1.5000 psychological mark.

On the flip side, the 23.6% Fibo. level, around the 1.4820 region, now seems to protect the immediate downside ahead of the 1.4790-1.4785 zone. The subsequent downfall could expose the multi-month low, around the 1.4710 area. The EUR/CAD cross could eventually weaken further below the 1.4700 round figure and accelerate the downfall towards testing the next relevant support near the 1.4675 region.

EUR/CAD daily chart

• AUD/JPY depreciated as BoJ Ueda reiterated that interest rate hikes would proceed gradually.
• BoJ Governor Ueda also emphasized the importance of carefully assessing the impact of FX movements.
• RBA Bullock stated that current interest rates will remain unchanged until the central bank is confident about the inflation outlook.

The AUD/JPY cross has trimmed its daily gains and trades near 99.90 during European trading hours on Monday. Meanwhile, the Japanese Yen (JPY) faced headwinds following remarks from Bank of Japan (BoJ) Governor Kazuo Ueda. Ueda reiterated that interest rate hikes would proceed gradually, contingent on the economy meeting expectations, but did not specify a timeline for future increases.

In a subsequent statement, Ueda emphasized the importance of carefully assessing the impact of foreign exchange (FX) movements on the economy, price forecasts, and associated risks at each policy meeting. He warned that failing to adjust monetary support appropriately could necessitate rapid rate hikes in the future. Ueda refrained from commenting on short-term FX fluctuations.

Japan's Finance Minister Katsunobu Kato issued a warning on Friday, stating that the government will closely monitor the foreign exchange (FX) market with heightened vigilance. Kato emphasized that appropriate measures would be taken to address any excessive movements in the currency.

The Australian Dollar (AUD) gained ground following hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock last Thursday. Bullock emphasized that current interest rates are sufficiently restrictive and will remain unchanged until the central bank is confident about the inflation outlook.

Recent data indicated a slowdown in employment growth for October, while the unemployment rate held steady, highlighting the resilience of the labor market. Market focus now shifts to the release of the latest RBA meeting minutes on Tuesday, which could offer further insights into the central bank's policy stance.

European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel said on Monday, “Trump's tariffs may have a minor impact on inflation.”

He added, “global integration would have to decrease substantially to cause a noticeable rise in inflationary pressures.”

Market reaction

These comments have little to no impact on the Euro, as the EUR/USD pair keeps its range near  1.0500 at the press time.

• EUR/USD consolidates above 1.0500 as investors look for fresh cues for Fed-ECB likely interest rate action in December.
• Fed’s Powell emphasized that there is no need to rush for rate cuts.
• Fears of a US-Eurozone trade war have escalated among investors.

EUR/USD trades sideways slightly above the psychological support of 1.0500 at the start of the week. The major currency pair consolidates as the US Dollar’s (USD) rally stalls after posting a fresh annual high. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, looks for fresh triggers to extend its upside above the key resistance of 107.00.

According to analysts at Capital Economics, "While a period of consolidation looks likely in the near term, we have revised up our forecasts for the US Dollar and now project a further 5% appreciation by the end of 2025." Economists added, "That is based primarily on a view that President-elected Donald Trump will push ahead with the core tariff policies he proposed on the campaign trail and that the United States (US) economy will continue to outperform its major peers."

Investors are looking for fresh cues to know how Trump’s policies will guide the monetary policy action for the December meeting and 2025. Meanwhile, Federal Reserve (Fed) officials refrain from projecting the likely consequences of Trump’s policies on the economy and the interest rate policy. In the event at Federal Bank of Dallas on Thursday, Fed Chair Jerome Powell said, "I think it's too early to reach judgments here." Powell added, "We don't really know what policies will be put in place."

On the interest rate outlook, Jerome Powell said that the economy is not sending any signals that might force us to ramp up rate cuts, however, he reiterated that inflation is on a sustainable path towards the bank’s target of 2% that allows them to head towards the neutral rate.

This week, investors will focus on the preliminary S&P Global Purchasing Managers Index (PMI) data for November, which will be published on Thursday. The PMI data will show the current status of private business activity and the impact of Trump’s victory on business optimism. 

Daily digest market movers: EUR/USD stays under pressure amid worries over likely Eurozone-US trade war

• EUR/USD trades sideways, with investors focusing on European Central Bank (ECB) President Christine Lagarde’s speech at an event in Paris scheduled at 18:30 GMT. Investors would like to know how much Trump’s protectionist policies will impact the Eurozone economy. Also, market participants would look for cues about the likely interest rate cut size in the December meeting. 
• Fears of a trade war between the Eurozone and the United States have deepened after the commentary of Stephen Moore, a senior economist advisor to Donald Trump, who said at BBC radio over the weekend that the US would be less interested in a free trade deal with Britain if the government put its economic relations with the European Union (EU) ahead of those with the US, Reuters reported.
• The spark of a trade war between the Eurozone and the US arose when Trump mentioned, in his election campaign, that the euro bloc would "pay a big price" for not buying enough American exports.
• According to analysts at ING, the ECB is expected to cut interest rates again in December, but a 50 basis points (bps) cut is far from certain.

Technical Analysis: EUR/USD hovers around 1.0500

EUR/USD wobbles above the immediate support of 1.0500 in European trading hours on Monday. The outlook of the major currency pair remains bearish as all short- to long-term Exponential Moving Averages (EMAs) are declining. 

The 14-day Relative Strength Index (RSI) oscillates in the bearish range of 20.00-40.00, adding to evidence of more weakness in the near term.

Looking down, the pair is expected to find a cushion near the October 2023 low at around 1.0450. On the flip side, the round-level resistance of 1.0600 will be the key barrier for the Euro bulls.

• EUR/GBP faces challenges as traders expect the ECB to deliver a rate cut in December.
• The European Commission forecasts 0.8% growth for the Euro Area in 2024, maintaining its projection from the Spring estimate.
• UK Economist Ruth Gregory expects that the BoE will hold interest rates steady at 4.75% in December.

EUR/GBP remains stable near 0.8350 during early European trading hours on Monday. The EUR/GBP cross faces headwinds as the Euro remains under pressure due to the European Central Bank's (ECB) dovish outlook, with a policy rate cut anticipated at its December meeting.

In its Autumn 2024 forecast, the European Commission predicts 0.8% growth for the Euro Area in 2024, unchanged from its Spring estimate. However, the growth projection for 2025 has been slightly lowered to 1.3% from 1.4%, while the Eurozone economy is expected to expand by 1.6% in 2026.

Commenting on the outlook, EU Economy Commissioner Paolo Gentiloni remarked, "As inflation continues to ease and growth in private consumption and investment gains momentum, coupled with record-low unemployment, growth is expected to gradually accelerate over the next two years."

The UK economy expanded by 0.1% quarter-on-quarter in the three months ending September, slowing from the 0.5% growth seen in Q2 and missing market expectations of a 0.2% increase. Year-on-year, UK GDP grew by 1.0% in Q3, aligning with forecasts and improving on the 0.7% growth recorded in Q2. On a monthly basis, GDP contracted by 0.1% in September, reversing a 0.2% gain in August.

Capital Economics’ Deputy Chief UK Economist Ruth Gregory reiterated their expectation that the Bank of England (BoE) will maintain rates at 4.75% in December, with a 25-basis-point rate cut anticipated in February.

• EUR/JPY gains momentum to near 163.00 in Monday’s early Asian session, up 33% on the day. 
• The lack of clear guidance on the next BoJ rate hike timing weighs on the JPY. 
• ECB’s Cipollone said the central bank should cut rates further to support recovery.

The EUR/JPY cross attracts some buyers to around 163.00 during the early European session on Monday. The Japanese Yen (JPY) weakens against the Euro (EUR) amid the uncertainty over the Bank of Japan's (BoJ) rate-hike plans. The European Central Bank (ECB) Vice President Luis de Guindos and Phillip Lane are scheduled to speak on Monday. 

The BoJ Kazuo Ueda said this Monday that the timing for when the central bank adjusts the degree of our monetary support will depend on the economic, price, and financial outlook. Ueda further stated that the Japanese central bank wouldn't necessarily wait for external risks to completely fade before hiking again. Nonetheless, he offered few clues on whether the BoJ would raise rates in December. The lack of clear guidance on the next rate hike timing exerts some selling pressure on the JPY and creates a tailwind for EUR/JPY. 

The verbal intervention from the Japanese authorities could provide some support to the JPY and cap the upside for the cross. Japan's Finance Minister Katsunobu Kato said on Friday that the Japanese government will scrutinize the Foreign exchange market with very high vigilance and take appropriate action against excessive moves.

On the Euro front, the European Central Bank (ECB) board member Piero Cipollone noted on Friday that the ECB should cut interest rates further to support a nascent economic recovery in the Eurozone and also in the face of potential new trade tariffs in the US. However, the pace and extent of rate cuts will depend on the incoming data. The dovish comment from the ECB policymakers could undermine the Euro in the near term. 

Here is what you need to know on Monday, November 18:

Financial markets remain relatively quiet at the beginning of the new week. The economic calendar will not feature any high-impact macroeconomic data releases on Monday. Market participants will keep a close eye on headlines surrounding geopolitics and pay attention to comments from central bank officials.

Boosted by hawkish comments from Federal Reserve (Fed) officials, including Chairman Jerome Powell, the US Dollar (USD) Index gained more than 1.5% in the previous week. The index stays in a consolidation phase above 106.50 in the European morning on Monday. Later in the day, Chicago Fed President Austan Goolsbee will be delivering a speech. Meanwhile, US stock index futures trade in positive territory after Wall Street's main indexes closed in the red on Friday. 

Citing two US officials familiar with the decision, CNN News reported over the weekend that US President Joe Biden has authorized Ukraine to use powerful long-range American weapons to strike inside Russia. Reporting on the matter, “the change comes largely in response to Russia's deployment of North Korean ground troops to supplement its own forces, a development that has caused alarm in Washington and Kyiv,” Reuters said.

EUR/USD fell nearly 1.7% last week and registered its lowest weekly close since October 2023. The pair holds steady in the early European session and fluctuates at around 1.0550. During the American trading hours, European Central Bank (ECB) President Christine Lagarde will deliver a speech titled "The Economic and Human Issues of a Changing Era" at an event organized by The Collège des Bernardins in Paris, France.

GBP/USD declined over 2% last week and closed in negative territory for the seventh consecutive week. The pair trades in a narrow range slightly below 1.2650 early Monday. On Wednesday, the UK's Office for National Statistics will publish Consumer Price Index (CPI) data for October.

Bank of Japan (BoJ) Governor Kazuo Ueda said on Monday that the Japanese economy is recovering moderately despite weak signs. "We will scrutinize at each policy meeting how foreign exchange moves affect our economic, price forecasts and risks," Ueda reiterated. After falling more than 1% on Friday, USD/JPY moves up and down in a narrow band at around 154.50 on Monday.

Gold remained under bearish pressure last week and dropped to its lowest level in nearly two months below $2,540 on Thursday. Following a quiet Friday, XAU/USD gains traction to begin the new week and recovers toward $2,600.

In a speech in Canberra on Monday, Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent said that the ”forward guidance in Australia might be less useful than in the United States.”

Further comments

Market reaction

AUD/USD is consolidating its rebound following these comments. The pair currently trades at 0.6465, up 0.07% on the day.

• USD/CHF drifts lower to near 0.8875 in Monday’s early European session. 
• The US Retail Sales rose 0.4% in October vs. 0.8% prior, stronger than expected. 
• The safe-haven flows might support the Swiss Franc. 

The USD/CHF pair softens to around 0.8875 on Monday during the early European session, pressured by the weakening of the US Dollar (USD). Investors will keep an eye on the Swiss Industrial Production for the third quarter (Q3) and the Federal Reserve’s (Fed) Austan Goolsbee speech later on Monday. 

The Greenback edges lower as Trump Trades lose momentum. However, the encouraging US economic data and the cautious comments from the Fed officials might cap the downside for the pair. On Friday, Boston Fed President Susan Collins stated that monetary policy remains restrictive and an interest rate cut is still on the table for December, but a final decision would be based on the incoming data. Meanwhile, Chicago Fed President Austan Goolsbee said that markets tend to overreact to interest rate changes and that the Fed should maintain a slow and steady approach to reaching the neutral rate.

Data released by the Commerce Department's Census Bureau on Friday showed that US Retail Sales increased by 0.4% in October, following the 0.8% rise recorded in September (revised from 0.4%), beating the estimation of 0.3%. 

On the other hand, the renewed geopolitical tensions between Russia and Ukraine might boost the safe-haven currency like the Swiss Franc (CHF). Citing two US officials familiar with the decision, CNN News reported on Sunday that US President Joe Biden's administration allowed Ukraine to use US arms to strike inside Russia in a significant reversal of Washington's policy in the Ukraine-Russia conflict. 

 

FX option expiries for Nov 18 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0500 1.2b
• 1.0520 1b
• 1.0600 2.1b
• 1.0625 1.2b
• 1.0650 626m

USD/JPY: USD amounts                     

• 154.50 450m

AUD/USD: AUD amounts

• 0.6630 600m

USD/CAD: USD amounts       

• 1.3950 789m

NZD/USD: NZD amounts

• 0.5835 853m

• GBP/USD rebounds from oversold zone amid potential bullish reversal.
• The lower boundary of the descending wedge at the psychological level of 1.2600 acts as the primary support.
• The pair may approach the upper boundary of the descending wedge, aligned with the nine-day EMA at 1.2746 level.

GBP/USD breaks its six-day losing streak, trading around 1.2630 during the Asian hours on Monday. The daily chart analysis shows the sellers' control weakens as the pair moves downwards within the descending wedge pattern. This signals a potential bullish reversal for the pair.

Additionally, the 14-day Relative Strength Index (RSI) is at the 30 level, suggesting an oversold situation for the pair and a potential for an upward correction as soon as possible.

On the downside, the GBP/USD pair seems to test the lower boundary of the descending wedge at the psychological level of 1.2600. A break below this level would reinforce the bearish bias and put downward pressure on the pair to navigate the region around the yearly low at 1.2299, which was recorded on April 22.

For resistance, the GBP/USD pair could test the upper boundary of the descending wedge, aligned with the nine-day Exponential Moving Average (EMA) at 1.2746 level. Further barrier appears at the psychological level of 1.2800, aligned with the 14-day EMA at 1.2804 level.

GBP/USD: Daily Chart

Bank of Japan (BoJ) Governor Kazuo Ueda is back on the wires on Monday, noting that “we will check, at each policy meeting, data and factors available at the time in deciding policy.”

Additional comments

• EUR/AUD softens to around 1.6285 in Monday’s early European session.
• The cross maintains the negative outlook below the key 100-period EMA, but further consolidation cannot be ruled out. 
• The initial support level emerges at 1.6264; the immediate resistance level is seen at 1.6317. 

The EUR/AUD cross weakens to near 1.6285 during the early European session on Monday. The Australian Dollar (AUD) gathers strength against the shared currency amid the hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock last week. 

The RBA reiterated that “the Board is not ruling anything in or out” and that there is “the need to remain vigilant to upside risks to inflation.” Traders brace for the RBA Meeting Minutes from its last board meeting for more clues on future rates, which are due on Tuesday. 

According to the 4-hour chart, the EUR/AUD cross keeps the bearish vibe, with the price holding below the key 100-period Exponential Moving Average (EMA). However, further consolidation cannot be ruled out as the Relative Strength Index (RSI) hovers around the midline, suggesting the neutral momentum in the near term. 

The lower limit of the Bollinger Band at 1.6264 acts as an initial support level for the cross. The crucial contention level is seen in the 1.6205-1.6200 region, representing the psychological level and the low of November 12. The additional downside filter to watch is 1.6135, the low of October 18. 

On the bright side, the first upside barrier for EUR/AUD is located at 1.6317, the 100-period EMA. Further north, the next hurdle to watch is 1.6337, the upper boundary of the Bollinger Band. Any follow-through buying could see a rally to 1.6430, the low of November 5.  

EUR/AUD 4-hour chart

• Silver kicks off the new week on a positive note, though the upside potential seems limited.
• The technical setup supports prospects for the emergence of fresh selling at higher levels. 
• A sustained strength beyond the $31.00 mark is needed to negate the negative outlook.

Silver (XAG/USD) regains positive traction at the start of a new week and climbs to the $30.70-$30.75 area during the Asian session, albeit it remains confined in a multi-day-old range around the 100-day Simple Moving Average (SMA).

The XAG/USD last week rebounded from the $29.70-$29.65 support zone, representing the 61.8% Fibonacci retracement level of the August-October rally. Moreover, the emergence of fresh buying on Monday favors bullish traders. That said, technical indicators on the daily chart are holding in negative territory and are still away from being in the oversold zone. Hence, any subsequent move up is more likely to confront stiff resistance and remain capped near the $31.00 round-figure mark. 

Some follow-through buying, however, will suggest that the recent corrective fall from the vicinity of the $35.00 psychological mark, or a 12-year peak touched in October, has run its course and pave the way for additional gains. The XAG/USD might then climb to the next relevant hurdle near the $31.70 area (38.2% Fibo. level) before aiming to reclaim the $32.00 round figure. 

On the flip side, the $30.20 region, followed by the $30.00 psychological mark could act as immediate support ahead of the $29.70-$29.65 area, or a two-month low touched on Friday. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the XAG/USD below the $29.00 mark, towards the very important 200-day SMA support near the $28.80-$28.75 zone en route to the $28.40-$28.35 region, or the 78.6% Fibo. level.

Silver daily chart

Gold prices rose in India on Monday, according to data compiled by FXStreet.

The price for Gold stood at 7,032.01 Indian Rupees (INR) per gram, up compared with the INR 6,952.83 it cost on Friday.

The price for Gold increased to INR 82,019.95 per tola from INR 81,096.42 per tola on friday.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• Gold price attracts some haven flows on Monday amid rising geopolitical risks. 
• The USD remains on the defensive below a one-year high and also lends support.
• Bets for less aggressive Fed rate cuts and elevated US bond yields to cap gains. 

Gold price (XAU/USD) gains strong positive traction on Monday and reverses a part of last week's sharp decline to the lowest level since September 12. The commodity, for now, seems to have snapped a six-day losing streak and is supported by reviving safe-haven demand, bolstered by the risk of a further escalation of geopolitical tensions. Apart from this, subdued US Dollar (USD) price action is seen as another factor offering some support to the precious metal.

The upside for the Gold price, however, seems limited in the wake of expectations that US President-elect Donald Trump's policies will likely rekindle inflationary pressures and limit the scope for further rate cuts by the Federal Reserve (Fed). This has been a key factor behind the recent upsurge in the US Treasury bond yields, which should continue to act as a tailwind for the Greenback and keep a lid on any meaningful appreciation for the non-yielding Gold price. 

Gold price benefits from geopolitical risks; bulls seem non-committed amid less dovish Fed

• Gold price registered its biggest weekly decline since September 2023 and dropped to over a two-month low last week amid the recent strong US Dollar rally to over a one-year high. 
• Geopolitical developments over the weekend drove some haven flows and assisted the precious metal to gain strong positive traction during the Asian session at the start of a new week. 
• US President Joe Biden authorized Ukraine to use US-supplied long-range missiles to strike deeper inside Russia, which has deployed North Korean troops to reinforce its war.
• A Russian attack on a nine-story building killed at least eight people in the northern city of Sumy. Russia also launched a massive drone and missile attack targeting energy infrastructure. 
• Israeli forces killed at least 111 Palestinians in the Gaza Strip on Saturday and continued military operations in Lebanon after assassinating Hezbollah’s top media relations officer, Mohammad Afif.
• Investors now seem convinced that President-elect Donald Trump's tariff plans and debt-funded tax cuts would stoke inflation, potentially slowing the Federal Reserve's rate easing cycle. 
• Fed Chair Jerome Powell said last Thursday that there’s no need to hurry into cutting interest rates amid a resilient economy, a strong job market, and inflation still above the 2% target.
• Boston Fed President Susan Collins said in an interview that another rate cut in December is on the table, but it is not a "done deal" and that there's no preset path for monetary policy.
• Separately, Chicago Fed President Austan Goolsbee noted that as long as we keep making progress toward the 2% inflation goal, rates will be a lot lower than where they are now.
• The yield on the benchmark 10-year US government bond stands firm near a multi-month peak, which favors the USD bulls and might cap gains for the non-yielding yellow metal.

Gold price climbs closer to $2,600 after defending 100-day SMA / 50% retracement  confluence 

From a technical perspective, the recent sharp pullback from the all-time peak stalled near the 50% retracement level of the June-October rally. The said support, around the $2,536-2,535 area, coincided with the 100-day Simple Moving Average and should now act as a key pivotal point. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for further losses. The subsequent downfall could drag the Gold price further towards the $2,500 psychological mark en route to the 61.8% Fibo. level, around the $2,480 region.

On the flip side, any subsequent strength above the $2,600 mark (38% Fibo. level) is likely to confront stiff resistance and remain capped near the $2,620-2,622 region. Some follow-through buying, however, could trigger a short-covering rally towards the $2,655-2,657 congestion zone, or the 50-day SMA, en route to the $2,672-2,673 region (23.6% Fibo. level). A sustained move beyond the latter might shift the bias in favor of bulls and allow the Gold price to reclaim the $2,700 round figure. 

• USD/CAD grapples to extend its winning streak for the seventh consecutive session on Monday.
• The US Dollar’s strength is bolstered by recent hawkish remarks from Federal Reserve Fed officials.
• The commodity-linked CAD may receive support from positive sentiment surrounding Oil prices amid escalated concerns over possible supply disruptions.

USD/CAD trades around 1.4090 during the Asian hours on Monday, holding its ground near the four-year high of 1.4105, which was reached on Friday. The upside of the loonie pair is attributed to a stronger US Dollar (USD), driven by recent hawkish remarks from Federal Reserve (Fed) officials.

Fed Chair Jerome Powell downplayed the likelihood of imminent rate cuts, highlighting the economy's resilience, robust labor market, and persistent inflationary pressures. Powell remarked, "The economy is not sending any signals that we need to be in a hurry to lower rates."

Moreover, on Friday, Federal Reserve Bank of Chicago President Austan Goolsbee emphasized the importance of the Fed adopting a cautious, gradual approach in moving toward the neutral rate. Meanwhile, Boston Fed President Susan Collins tempered expectations for continued rate cuts in the near term while maintaining market confidence in a potential rate reduction in December.

The USD/CAD pair may break its six-day winning streak as the commodity-linked Canadian Dollar (CAD) could strengthen, buoyed by positive sentiment surrounding Oil prices. This optimism is driven by heightened concerns over potential supply disruptions amid the escalating tensions between Russia and Ukraine.

However, the Canadian Dollar faces downward pressure due to expectations that the Bank of Canada (BoC) will accelerate interest rate cuts in response to cooling inflation and a struggling economy. Traders are likely to focus on Tuesday's Canadian CPI inflation report for fresh insights into the central bank's policy direction.

• WTI receives minor support due to increased fears over possible supply disruptions amid rising geopolitical tensions.
• Russia launched its largest airstrike on Ukraine in nearly three months.
• Biden allows Ukraine to use Army Tactical Missile Systems (ATACMS) to strike inside Russia.

The West Texas Intermediate (WTI) Oil price holds steady above $67.00 per barrel during Monday's Asian trading session, reversing a recent decline as escalating tensions between Russia and Ukraine heighten worries over possible supply disruptions.

Over the weekend, Russia launched its most significant airstrike on Ukraine in nearly three months. Moscow also stationed nearly 50,000 troops in Kursk, a southern Russian region. In addition, North Korea has sent thousands of its troops to Kursk as part of Russia's offensive. This move has raised alarm among US President Joe Biden and his advisers, with concerns that North Korea's involvement could usher in a perilous new phase in the conflict, according to CNN News.

Moreover, CNN News reported on Sunday, citing two US officials, that President Joe Biden has authorized Ukraine to use the Army Tactical Missile Systems (ATACMS), powerful long-range American weapons, to carry out strikes within Russia.

Additionally, crude Oil prices faced pressure as Federal Reserve Chair Jerome Powell dampened expectations for imminent rate cuts, highlighting the economy's resilience, a strong labor market, and ongoing inflationary pressures. Powell remarked, "The economy is not sending any signals that we need to be in a hurry to lower rates." Prolonged higher borrowing costs could negatively affect economic activity in the United States (US), the world’s largest Oil consumer.

Meanwhile, concerns over weakening demand in China, the world’s largest Oil importer, have fueled bearish sentiment in the crude Oil market. The recent 10 trillion Yuan debt package in China, which lacked direct economic stimulus measures, has further intensified market worries.

• The Indian Rupee holds steady in Monday’s Asian session.
• Significant foreign outflows and Trump trades might drag the INR lower. 
• The Fed’s Goolsbee is set to speak later on Monday. 

The Indian Rupee (INR) flat lines on Monday amid the modest decline in the US Dollar (USD). The renewed Greenback demand from investors and weakening of the Chinese Yuan are likely to keep pressure on the Iocal currency in the near term. Additionally, the unabated foreign fund outflows contribute to the INR's downside. 

The routine intervention by the Reserve Bank of India (RBI) by selling USD might help limit the Indian Rupee’s losses, though this has led to a drop in India's forex reserves. In the absence of top-tier Indian and US economic data releases due on Monday, the focus will remain on risk sentiment and the speech from US Federal Reserve (Fed) Austan Goolsbee. 

Indian Rupee looks vulnerable amid multiple challenges

• The Indian Rupee is expected to be trading at 84.5 per US Dollar by the end of December this year, according to the median forecast of the Business Standard poll. 
• Moody's Ratings estimated the Indian economy to grow by 7.2% in 2024, driven by a gradual recovery in household spending and easing inflation pressures. The rating agency further projected growth rates of 6.6% and 6.5% in 2025 and 2026.
• "We remain negative on the outlook for Asian FX through H1 2025, given the potential negative economic impact of likely US tariff hikes," MUFG Bank said in a note.
• The US Retail Sales rose 0.4% in October, compared to 0.8% recorded in September (revised from 0.4%), the Commerce Department's Census Bureau revealed on Friday. This figure was stronger than the 0.3% expected. 
• Chicago Fed President Austan Goolsbee said on Friday that markets tend to overreact to interest rate changes and that the Fed should maintain a slow and steady approach to reaching the neutral rate.
• Boston Fed President Susan Collins noted that another rate cut in December is on the table, but it is not a "done deal," per Reuters. 
• The markets have priced in nearly 60% of the 25 basis points (bps) rate cut by the Fed at the December meeting, according to the CME FedWatch Tool.  

USD/INR still maintains its constructive bias

The Indian Rupee trades flat on the day. The longer-term uptrend of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. Nonetheless, the 14-day Relative Strength Index (RSI) exceeds 70, indicating an overbought condition. This suggests that additional consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation. 

The resistance level to watch if buyers step in would be 84.50. A break above this barrier could pave the way for a test of the 85.00 psychological level.

On the other hand, the resistance-turned-support level at 84.35 acts as an initial support level for the pair. If the support level fails to hold, bears could push prices lower toward 84.00, the round mark. The additional downside threshold is seen at 83.88, the 100-day EMA.

• The Japanese Yen struggles to capitalize on Friday’s recovery from a multi-month low. 
• BoJ Governor Ueda offered no cues about a December rate hike and weighed on the JPY.
• Intervention fears and subdued USD price action might cap gains for the USD/JPY pair. 

The Japanese Yen (JPY) drifts lower against its American counterpart and reverses a part of Friday's recovery from the lowest level since July 23 following Bank of Japan (BoJ) Governor Kazuo Ueda's remarks. Ueda offered no cues about a December rate hike, which seems to have disappointed investors and weighed on the JPY. Apart from this, a generally positive risk tone is seen as another factor undermining demand for the safe-haven JPY.

That said, speculations that Japanese authorities might intervene in the FX market to prop up the domestic currency hold back JPY bears from placing aggressive bets. This, along with subdued US Dollar (USD) price action, could act as a headwind for the USD/JPY pair and cap gains. Traders might also prefer to wait on the sidelines and look forward to BoJ Governor Ueda's media conference at 04:45 GMT for some meaningful impetus. 

Japanese Yen attracts fresh sellers after BoJ Governor Ueda’s not-so-optimistic comments

• Bank of Japan Kazuo Ueda said this Monday that the central bank will continue to raise policy rates, adjust the degree of monetary support if the economy, and prices move in line with the forecasts.
• Ueda added that Japan's economy is recovering moderately albeit there are some weak signs, and that the timing of the rate hike will depend on economic, price, and financial outlook.
• Japan's Finance Minister Katsunobu Kato warned on Friday that the government will scrutinize the FX market with very high vigilance and take appropriate action against excessive moves.
• US President Joe Biden authorized Ukraine to use US-supplied long-range missiles to strike deeper inside Russia, raising the risk of a further escalation of geopolitical tensions.
• The US Dollar remains on the defensive following the post-US election rally to the year-to-date peak touched last Thursday, though any meaningful depreciation seems elusive. 
• Investors seem convinced that US President-elect Donald Trump's touted policies will be inflationary, which could limit the scope for further rate cuts by the Federal Reserve.
• Adding to this, the recent comments from influential FOMC members, including Fed Chair Jerome Powell, forced investors to scale back their bets for more aggressive rate cuts. 
• Powell said last Thursday that with the economy growing steadily, a strong job market, and inflation still above the 2% target, there’s no need to hurry into cutting interest rates. 
• Adding to this, Boston Fed President Susan Collins noted on Friday that there's no preset path for monetary policy and that the economy is in a very good place right now.
• Separately, Chicago Fed President Austan Goolsbee said that inflation numbers have to keep improving and that the recent CPI print has been a little higher than the target.
• The US Census Bureau reported on Friday that Retail Sales expanded by 0.4% in October, surpassing expectations for a 0.3% gain but down from September’s 0.8% increase.
• According to the CME Group's FedWatch Tool, traders are currently pricing in a 60% chance of another 25-basis-point rate cut by the Fed at the December monetary policy meeting. 
• Investors now look to BoJ Governor Ueda's press conference for cues about a possible December rate hike, which should infuse some volatility and drive demand for the JPY. 

USD/JPY technical setup supports prospects for a move towards reclaiming the 156.00 mark

From a technical perspective, the USD/JPY pair once again showed some resilience below the 154.00 mark at the start of a new week. The subsequent move up, along with positive oscillators, favors bullish traders and supports prospects for a further intraday appreciating move. Acceptance above the 155.00 psychological mark will reaffirm the positive bias and pave the way for a move towards reclaiming the 156.00 round figure with some intermediate resistance near the 155.70 region. 

On the flip side, the 153.85 zone now seems to have emerged as an immediate support, below which the USD/JPY pair could drop to the 153.25 region en route to the 153.00 mark and the next relevant support near the 152.70-152.65 area. A convincing break below the latter might expose the very important 200-day Simple Moving Average (SMA) resistance breakpoint, now turned support, currently pegged near the 151.85 region.

• The Australian Dollar recovers its recent losses due to the hawkish RBA.
• Australia's 10-year government bond yield eased to near 4.66%, pulling back from a one-year high.
• The US Dollar may appreciate following hawkish comments from Fed officials.

The Australian Dollar (AUD) extends its gains for a second consecutive session on Monday, supported by hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock last Thursday. Bullock emphasized that current interest rates are sufficiently restrictive and will remain unchanged until the central bank is confident about the inflation outlook.

Australia's 10-year government bond yield eased slightly to around 4.66%, retreating from a one-year high. Recent data indicated a slowdown in employment growth for October, while the unemployment rate held steady, highlighting the resilience of the labor market. Market focus now shifts to the release of the latest RBA meeting minutes on Tuesday, which could offer further insights into the central bank's policy stance.

The AUD/USD pair’s upside could be restrained as the US Dollar (USD) may continue to strengthen, driven by recent hawkish remarks from Federal Reserve (Fed) officials and stronger-than-expected US economic data.

Fed Chair Jerome Powell downplayed the likelihood of imminent rate cuts, highlighting the economy's resilience, robust labor market, and persistent inflationary pressures. Powell remarked, "The economy is not sending any signals that we need to be in a hurry to lower rates."

Australian Dollar extends gains as RBA holds hawkish stance regarding policy outlook

• Federal Reserve Bank of Chicago President Austan Goolsbee remarked on Friday that markets often overreact to changes in interest rates. Goolsbee emphasized the importance of the Fed adopting a cautious, gradual approach in moving toward the neutral rate.
• Boston Fed President Susan Collins tempered expectations for continued rate cuts in the near term while maintaining market confidence in a potential rate reduction in December. Collins stated, "I don't see a big urgency to lower rates, but I want to preserve a healthy economy."
• The US Census Bureau reported on Friday that Retail Sales increased by 0.4% month-over-month in October, exceeding the market consensus of 0.3%. Additionally, the NY Empire State Manufacturing Index for November posted an unexpected surge, coming in at 31.2 compared to the anticipated 0.7 decline, signaling robust manufacturing activity.
• China’s Retail Sales rose 4.8% year-over-year in October, surpassing the expected 3.8% and the 3.2% increase seen in September. Meanwhile, Industrial Production grew by 5.3% YoY, below the forecasted 5.6% and the 5.4% growth recorded in the previous period.
• China's National Bureau of Statistics (NBS) shared its economic outlook during its press conference, noting an improvement in China's consumer expectations in October. The bureau plans to intensify policy adjustments and boost domestic demand, highlighting that recent policies have had a positive impact on the economy.
• The US Producer Price Index (PPI) rose by 2.4% year-over-year in October, up from a revised 1.9% increase in September (previously 1.8%) and surpassing market expectations of 2.3%. Meanwhile, the Core PPI, which excludes food and energy, climbed 3.1% YoY, slightly above the anticipated 3.0%.
• Australia’s seasonally adjusted unemployment rate held steady at 4.1% in October for the third month in a row, matching market expectations. However, employment change data revealed only 15.9K new jobs added in October, which fell short of the anticipated 25.0K.
• Australia's Consumer Inflation Expectations dropped to 3.8% in November, down from 4.0% in the previous month, reaching the lowest level since October 2021.

Technical Analysis: Australian Dollar rises toward 0.6500 as RSI climbs from oversold zone

AUD/USD hovers around 0.6470 on Monday, reflecting short-term downward pressure on the daily chart as the pair stays below the nine-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) has begun climbing from the 30 level, indicating that selling pressure may be waning and hinting at the potential for an upward correction.

On the downside, the AUD/USD pair may encounter significant support around the 0.6400 level. A breach of this psychological threshold could intensify downward pressure, potentially pushing the pair toward the yearly low of 0.6348, last seen on August 5.

Immediate resistance for the AUD/USD pair is at the psychological level of 0.6500. A break above this could propel the pair toward the nine-day EMA at 0.6514, followed by the 14-day EMA at 0.6542. Clearing these EMAs could open the path for a move toward the three-week high of 0.6687.

AUD/USD: Daily Chart

Citing two US officials familiar with the decision, CNN News reported on Sunday that US President Joe Biden authorized Ukraine to use powerful long-range American weapons to strike inside Russia.

The decision to allow the use of the Army Tactical Missile Systems, or ATACMS, inside Russia came after Moscow deployed nearly 50,000 troops to Kursk, the southern Russian region.

It is also worth mentioning that North Korea has deployed thousands of its troops to Kursk as part of Russia’s offensive, sparking concern from Biden and his advisers that their entry could lead to a dangerous new phase in the war, per CNN News.

“The change comes largely in response to Russia's deployment of North Korean ground troops to supplement its own forces, a development that has caused alarm in Washington and Kyiv,” Reuters reported, citing a US official and a source familiar with the decision.

In response, Ukrainian President Volodymyr Zelenskiy said, “today, many in the media are saying that we have received permission to take appropriate actions.”

"But strikes are not made with words. Such things are not announced,” he added.

The Bank of Japan (BoJ) Governor Kazuo Ueda said on Monday that the Japanese economy is recovering moderately despite weak signs.

Key quotes

Market reaction to the BoJ’s Ueda speech

At the time of writing, USD/JPY is trading 0.46% higher on the day to trade at 155.01.

On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1907, as compared to Friday's fix of 7.1992 and 7.2312 Reuters estimates.

• EUR/USD appreciates despite a negative bias amid the cautious US Federal Reserve.
• Fed Chair Powell stated that the economy is not sending any signals that we need to lower rates quickly.
• The headline inflation in the Euro Area is projected to drop sharply to 2.4% in 2024, from 5.4% in 2023.

The EUR/USD pair trades around 1.0550 during Monday’s Asian trading session, hovering near its yearly low of 1.0496, which was reached on November 14. Downside risks for the pair have intensified following cautious comments from Federal Reserve (Fed) officials and stronger-than-expected US Retail Sales data, broadly supporting the US Dollar (USD).

Last week, Fed Chair Jerome Powell tempered expectations for imminent rate cuts, emphasizing the economy's resilience, a strong labor market, and persistent inflationary pressures. Powell stated, "The economy is not sending any signals that we need to be in a hurry to lower rates."

The CME FedWatch Tool indicates that markets are pricing in nearly a 60% probability of a 25-basis-point rate cut by the Fed at its December meeting.

The US Census Bureau reported on Friday that Retail Sales increased by 0.4% month-over-month in October, exceeding the market consensus of 0.3%. Additionally, the NY Empire State Manufacturing Index for November posted an unexpected surge, coming in at 31.2 compared to the anticipated 0.7 decline, signaling robust manufacturing activity.

The Euro faces continued downward pressure as the European Central Bank (ECB) maintains a dovish stance, with a policy rate cut expected at its upcoming December meeting. Headline inflation in the Euro Area is projected to drop sharply to 2.4% in 2024, down from 5.4% in 2023, before easing more gradually to 2.1% in 2025 and 1.9% in 2026.

The European Commission's Autumn 2024 forecast projects 0.8% growth for the Euro Area in 2024, unchanged from the Spring forecast. However, the 2025 growth forecast has been revised slightly downward to 1.3% from 1.4%, while the Eurozone economy is projected to grow by 1.6% in 2026.

EU Economy Commissioner Paolo Gentiloni stated, "As inflation continues to ease and growth in private consumption and investment gains momentum, alongside record-low unemployment, growth is expected to gradually accelerate over the next two years."

• NZD/USD gains ground to around 0.5875 in Monday’s early Asian session. 
• New Zealand’s PPI Input and Output were stronger than expected in Q3;  Business NZ PSI improved in October. 
• Strong US data and muted expectations for US rate cuts might cap the pair’s upside. 

The NZD/USD pair trades in positive territory near 0.5875 on Monday during the early Asian session. The pair edges higher on the stronger-than-expected New Zealand economic data and the consolidation of the Greenback. 

Data released by Statistics New Zealand on Monday showed that New Zealand’s Producer Price Index (PPI) Input climbed 1.9% QoQ in the third quarter (Q3), compared to 1.4% in the previous reading. Meanwhile, the PPI Output rose 1.5% QoQ in Q3 versus 1.1% prior. Both figures came in better than the estimations. Additionally, the Business NZ Performance of Services Index (PSI) improved to 46.0 in October from 45.7 in September. The upbeat economic data provides some support to the New Zealand Dollar (NZD) against the US Dollar (USD). 

However, the upside for the Kiwi might be limited as President-elect Donald Trump has threatened to implement 60% tariffs on exports from China as he seeks to protect US companies and jobs. The likely negative spillovers from Trump’s policies might drag the NZD lower as China is a major trading partner for New Zealand. 

On the USD’s front, the solid economic performance and the cautious tones from the US Federal Reserve (Fed) reduced the expectations for a rate reduction at the central bank's upcoming FOMC meeting in December, lifting the USD. Futures markets hint at 60% odds of a Fed rate cut in December, though expectations for rate cuts through 2025 have moderated to 77 basis points (bps).

• GBP/USD ticks higher at the start of a new week amid a modest USD downtick.
• The Trump trade optimism should limit the USD downside and cap the major.
• The BoE uncertainty could also contribute to capping the upside for the GBP.

The GBP/USD pair kicks off the new week on a subdued note and consolidates in a range above the 1.2600 round-figure mark, or the lowest level since mid-May touched on Friday. Spot prices, for now, seem to have snapped a six-day losing streak amid a modest US Dollar (USD) downtick, though the fundamental backdrop supports prospects for an extension of the recent well-established downtrend.

The USD remains on the defensive below the year-to-date (YTD) top set last Thursday as bulls pause for a breather following the post-US election blowout rally. Any meaningful USD depreciation, however, seems elusive in the wake of expectations that US President-elect Donald Trump's policies will likely rekindle inflationary pressures and limit the scope for further rate cuts by the Federal Reserve (Fed). This has been a key factor behind the recent upsurge in the US Treasury bond yields, which suggests that the path of least resistance for the USD is to the upside. 

The British Pound (GBP), on the other hand, might struggle to lure buyers on the back of the uncertainty concerning the Bank of England's (BoE) path forward on interest rates. Data released last week showed that UK wage growth excluding bonuses cooled in September and the unemployment rate to 4.3% from 4.1%. Furthermore, the UK GDP unexpectedly contracted for the first time in five months in September, increasing expectations for BoE rate cuts. That said, BoE members do not see the central bank cutting interest rates at the December policy meeting.

This, in turn, makes it prudent to wait for strong follow-through buying to confirm that the GBP/USD pair has formed a near-term bottom. Bearish traders, however, might now wait for a sustained break and acceptance below the 1.2600 round figure before placing fresh bets amid absent relevant market-moving economic releases on Monday, either from the UK or the US.

European Central Bank (ECB) board member Piero Cipollone said on Friday that central bank should cut interest rates further to support the recovery in the Eurozone and also in the face of potential new trade tariffs in the US, per Reuters.

Key quotes

Market reaction

At the time of writing, EUR/USD is trading 0.08% higher on the day at 1.0535.

• The Gold price attracts some buyers to around $2,570 in Monday’s early Asian session. 
• Traders wind back expectations for a Fed rate cut in December, weighing on the yellow metal.
• Geopolitical risks could boost the Gold price, a traditional safe-haven asset. 

The Gold price (XAU/USD) rebounds to near $2,570, snapping the six-day losing streak during the early Asian trading hours on Monday. However, the strength of the US Dollar (USD) might cap the upside for the precious metal. 

The Greenback rally in the wake of Donald Trump's election win could exert some selling pressure on the USD-denominated Gold price. The expectations of higher inflation next year due to Donald Trump’s policies have led to fewer expected rate cuts. 

Furthermore, traders pared back expectations for lower rates in December after Fed Chair Jerome Powell said that the US central bank would be in no rush to cut, citing the “remarkably good” performance of the economy. Higher interest rates generally drag the Gold price lower, as it makes holding non-yielding assets like gold less appealing.

On the other hand, the rising geopolitical tensions in the Middle East and the ongoing conflict between Ukraine and Russia could boost the safe-haven flows, benefiting the yellow metal. President Joe Biden's administration has allowed Ukraine to use US arms to strike inside Russia in a significant reversal of Washington's policy in the Ukraine-Russia conflict, per Reuters.