Technical Analysis Today

[Zerologic]

The British pound weakened against the USD after weak UK employment data

GBPUSD yesterday drew a bearish candle with a long body with a slight shadow at the bottom of the candle. Price formed a high of 1.28726, dropped to a low of 1.27185, and closed at 1.27500. The price drops across the lower band and MA 200 from the upside.

The employment data report released yesterday showed weak data. The unemployment rate rose 4.3% while average income grew faster than expected in the last three months. The Office for National Statistics reported that the ILO Unemployment Rate rose to 4.3% from 4.0% in the three months ended August, higher than estimates of 4.1%. In the same period, UK employers added 219k new workers, less than the previously revised 373k.

Slowing UK labor demand seems to be weighing on the Pound Sterling despite other positive data. Annual growth in average employee regular earnings excluding bonuses in the UK was 4.8% in July to September 2024, and annual growth in total earnings including bonuses was 4.3%. This total annual growth is influenced by one-time payments to civil servants made in July and August 2023.

Meanwhile, the BoE is expected to lower interest rates at its December meeting. Investors expected a 25 basis point cut. However, according to BoE Chief Economist Huw Pill, salary growth is still quite stiff at a high level making it difficult to align with the bank's inflation target of 2%, it seems possible they will hold interest rates longer.

On the other hand, Trump's protectionist policies are predicted to increase inflationary pressures so that the Fed may take a gradual policy easing approach. In December, it is predicted that the Fed will cut interest rates by 25 basis points. According to the FedWatch tool, the possibility of a 25 basis point cut is 58.7%, and the possibility of interest rates remaining unchanged is 41.3%.

Next, investors today will focus on US CPI data. The core CPI is predicted to be 0.3%, the same as the previous revision, the CPI m/m is also predicted to be the same as the previous 0.2%, while the CPI y/y is forecast to rise 2.6% from the previous 2.4%.

 

[Zerologic]

AUDUSD extends decline after US CPI data release

Yesterday the AUDUSD pair continued its decline and drew a bearish candlestick with a long body across the lower band line. Price formed a low of 0.64799, a drop from a high of 0.65455, and the candle closed at 0.64839 on FXOpen. AUDUSD has experienced four consecutive days of decline, indicating that USD strength is more dominant.

Prior to the release of the US CPI data, the market moved weakly, but shortly after the release of the CPI data, prices then fluctuated, rising sharply in less than five minutes to 0.65455 but paused and finally declined gradually. Yesterday's US CPI data was in line with expectations, the core CPI was 0.3%, the Consumer Price Index for All Urban Consumers was 0.2%, while the all-item index was 2.6% from the previous revision of 2.4%.

Even though it temporarily caused AUDUSD to rise, the price then fell, prolonging the strengthening of the USD which also occurred in other currency pairs against the USD.

Today investors will focus on Australian employment data, Employment Change is predicted to fall by 25.2k from the previous 64/1k, and the Unemployment Rate is predicted to be the same as previously at 4.1%. Investors will also pay attention to RBA Gov Bullock Speaks which may provide hawkish or dovish hints.

Apart from Australian employment data, today there is also the release of US economic data, PPI, where the core PPI is predicted to be 0.3% from the previous 0.2%. Unemployment Claims are estimated to be 224k from the previous 221k.

 

[Zerologic]

The GBPUSD pair extended its decline following the release of PPI data

The GBPUSD pair yesterday drew a bearish candle extending its consecutive downtrend for five days in a row. Price formed a high of 1.27193 and a low of 1.26289 and closed at 1.26644. Price has crossed the lower band line and is outside the line.

The United States Producer Price Index (PPI) yesterday showed an actual value of 0.2% higher than the previous data revision of 0.1%, but the value was the same as predicted. In theory, data that is higher than expectations is optimistic for the currency, whereas data that is lower is pessimistic for the currency. Meanwhile, Unemployment Claims data showed 217k from the expected 224k and the previous revision of 221k. This data adds to the optimistic attitude towards the USD.

Even though there was no high volatility in the market after the data release, the strengthening of the USD seems to be continuing, this can be seen from the USD currency which strengthened against other major currencies including JPY, CAD, CHF, AUD, Euro. The euphoria of Trump trades still seems to be driving the strengthening of the USD even though several technical analyzes show oversold levels, but this does not prevent a bear market.

Today investors will wait for the release of UK GDP which is expected to be the same as the previous revision of 0.2%. If the actual value is higher than expected it may encourage GBP to strengthen, whereas if it is lower it is a pessimistic attitude for GBP.

Furthermore, investors are also waiting for the release of US Core Retail Sales data which is expected to fall 0.3% from the previous 0.5%, U.S. retail and food services sales are expected to be 0.3% from the previous 0.4%.

 

[Zerologic]

USDJPY fails to extend gains as USD weakens

Last week USDJPY price drew a bearish candle with a long body as it paused its previous rally. The price formed a high of 156.091 and a low of 153.854 closing at 154.253.

The Japanese yen previously weakened against the USD for four consecutive days due to the protectionist Trump administration, but in weekend trading USDJPY declined due to US core retail sales data 0.1% lower than expected 0.3%. In addition, Japanese Finance Minister Katsunobu Kato's statement that he would take appropriate action against excessive currency movements was another reason for JPY strengthening at the end of last week.

Data taken from the US Cencus showed that the preliminary estimate of US retail and food services sales for October 2024, adjusted for seasonal variation and differences in holidays and trading days, but not for price changes, was $718.9 billion, an increase of 0.4 percent (±0.5 percent) from the previous month, and up 2.8 percent (±0.5 percent) from October 2023. Total sales for the August 2024 to October 2024 period were up 2.3 percent (±0.5 percent) compared to the same period last year. The August 2024 to September 2024 percent change was revised from up 0.4 percent (±0.5 percent)* to up 0.8 percent (±0.2 percent).

Retail trade sales rose 0.4 percent (±0.5 percent) from September 2024, and were up 2.6 percent (±0.5 percent) from a year ago. Non-store retailers rose 7.0 percent (±1.4 percent) from a year ago, while food services and drinking places rose 4.3 percent (±2.1 percent) from October 2023.

Investors' focus today is on BOJ Gov Ueda Speaks which might give fresh hints of hawkish or dovish statements as the future direction of interest rate policy.

 

[Zerologic]

Gold got positive traction on Monday halting the previous week's decline.

Gold prices rose yesterday by drawing a long body bulls candle. The price formed a low of $2563, a high of $2614 and closed at $2611. Monday's rise in gold prices halted the previous week's consecutive declines after last drawing an indecision Doji candle.

Weakening USD seems to have an impact on gold prices. The US dollar weakened after US retail sales core data showed lower than expected numbers. On the other hand, investors still expect Trump's policies in his administration to increase inflation and slowdown the Fed from easing interest rate cuts more slowly. This in turn could increase USD demand and raise government bond yields which could hold back bullish expectations on gold. Traders may still be skeptical that Monday's rise in gold is just a pullback or reversal and may wait for further market changes.

On the other hand, gold's support for geopolitical risks still has potential as a safe-haven asset even though other factors are also a factor such as the Chinese economy and Trump's policy developments.

In the latest development over the weekend, US President Joe Biden authorized Ukraine to use the American Army Tactical Missile System (ATACMS) to attack Russia. The decision to allow the use of US long-range weapons inside Russian territory comes after Moscow deployed North Korean ground troops to supplement its own forces. A prolonged war increases further geopolitical risks that could possibly trigger a third world war.

Meanwhile in the Middle East, the latest news has dragged in a new country fighting against Israel, Iraq. According to CNBC, the Iraqi Islamic Resistance Movement claimed to have fired a drone that successfully hit a vital target in Eliat, an Israeli-occupied territory.

 

[Zerologic]

USDCAD extends losses as Canadian CPI data comes in higher than forecast

Yesterday's USDCAD pair price drew a bearish candle with a long body continuing the previous bears candle. Price formed a high of 1.40358, a low of 1.39542 and close at 1.39548 near the middle band line.

Canada released CPI data on Tuesday showing higher-than-expected inflation. The actual data of the CPI report showed that headline inflation rose to 2%, faster than expectations of 1.9% and from 1.6% in September. Monthly headline inflation rose 0.4%, at the same pace as price pressures slowed in the previous month. Economists forecast monthly headline CPI to grow 0.3%.

Faster-than-expected inflation data may weigh on the BoC to cut rates more than usual, but Canadian employment data may be another consideration for easing, Canada's Unemployment Rate was at 6.5% in October, much higher than needed to maintain a full employment level.

The Dollar Index (DXY) which tracks the USD currency is now down -0.4% at 106.187. Next, investors will wait for the Fed's next steps at the December meeting, with predictions that the Fed will cut interest rates 25 basis points to 4.25%-4.50% next month according to FedWatch tool data from the CME group.

Today investors are waiting for the UK CPI data, although it does not have a direct impact on the Canadian Dollar, but the correlation between currencies allows for an impact. It is estimated that the UK CPI will rise 2.2% from the previous 1.7%.

 

[Zerologic]

Silver failed to continue its increase, the price dropped after the market formed a Doji candle

Silver price drew a Doji candle on November 19 indicating an indecision market. The next day the price of Silver drops and draws a bearish candle. Price formed a high of 31,326 and a low of 30,767 and closed at 30,825.

Here there are differences in market patterns compared to gold. The price of gold appears to be trending upward for three consecutive days drawing a bull candle, in contrast to Silver which drew a bearish candle in the last candle.

It seems that the escalation of the Ukrainian and Russian wars is weighing on Silver because of the pessimistic outlook for Silver's use in industry. Tensions increased further after Joe Biden allowed Ukraine to use US-made long-range weapons to attack Russia. On the other hand, Russia changed its nuclear doctrine to relax the conditions for responding with nuclear weapons which could trigger the Armageddon war.

On the other hand, the lack of stimulus from the Chinese government caused demand for Silver from the solar panel industry to decline and weighed on Silver prices. Another report said Chinese-owned solar panel companies began reducing production as Trump's election victory raised the prospect of higher tariffs on the sector.

 

[Zerologic]

GBPUSD fell amid market expectations of a dovish Fed ease

GBPUSD yesterday drew a bearish candle continuing the previous day's decline. Price formed a high of 1.26594, a low of 1.25755, and closed at 1.25881. This decline further widens the distance between the Bollinger bands, indicating high market volatility.

The Pound Sterling's decline may have been triggered by traders' doubts about whether the Bank of England (BoE) will cut interest rates again at its December meeting considering that the UK Consumer Price Index (CPI) for October on Wednesday showed that price pressures were increasing faster than expected. According to Forexfactory UK CPI rose 2.3% from expected 2.2% and previous data revision of 1.7%. Meanwhile, the Monetary Policy Committee (MPC) projects inflation at 2.4% and 2.5% in November and December respectively.

Another pressure from the strengthening of the USD, the dollar index (DXY) today rose 0.38% from 106,461 to a high of 107,156 continuing the previous day's rise. On the other hand, investors are starting to reduce their forecasts for the Fed to lower interest rates at its December meeting because US President Donald Trump's inflationary, growth-oriented trade policy is predicted to lead to more gradual policy easing. According to the CME group's Fedwatch Tool, the possibility of the Fed lowering interest rates by 25 basis points of 56.1% and the possibility of interest rates remaining unchanged is 43.9%.

Boston Fed Bank President Susan Collins expressed the need to gradually push monetary policy towards a neutral range from the current restrictive state. While the US Unemployment Claims data was lower than expected which was also the reason for the strengthening of the USD, the actual data was 213k from the forecast of 220k and previous data of 219k.

Today, investors will focus on UK retail sales and PMI data which will be released today.

 

[Zerologic]

NZDUSD decline reached 0.58160 before RBNZ interest rate decision

The New Zealand Dollar (NZD) experienced three consecutive days of decline last week. At the weekend the price drew a bearish candle with a high of 0.58602, a low of 0.58160, and a close at 0.58295.

Some of the reasons for the NZD's decline are due to the USD's overall strong performance amid expectations that the Fed will follow a gradual rate cut path. This forecast has been triggered by President Trump's protectionist policy of imposing import tariffs which could trigger inflation.

Deutsche Bank analysts estimate that the Fed will maintain interest rates above 4% throughout 2025 because the import tariff policy is likely to encourage growth of 2.5% next year and cause inflation above 2.5% until 2026.

According to the CME group's FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points is 52.7% and the probability of interest rates remaining unchanged is 47.3% in December.

On the other hand, the RBNZ is predicted to cut interest rates by 50 basis points on Thursday from 4.75% to 4.25%. This forecast is the reason that the prospect of a decline in NZDUSD is still possible.

 

[Zerologic]

Scott Bessent was chosen by Trump to be Minister of Finance, the price of gold dropped more than $30

Yesterday's gold price fell from a high of $2721 to a low of $2615. Price drew a bearish long-body candle close at $2625. The gold price has crossed the middle band and MA 50 from the upside.

The decline in gold prices was in line with the news that US President Donald Trump chose Scott Bessent at the weekend as Minister of Finance in his next cabinet. Bessent is an experienced Wall Street professional and is seen as a safe bet by the market, thereby reducing safe-haven flows into Gold. Investors appear to think that Scott Bessent can ease some concerns about Trump's fiscal plan. It is hoped that Scott Bessent can reduce the budget deficit by 3% by 2028.

On the other hand, it is predicted that the Fed will reduce interest rates more slowly because of Trump's policies which could cause inflation. The CME FedWatch Tool assesses the probability of a 25 basis point (bp) rate cut by the Fed at its December 18 meeting at 56.1%. Probability 43.9% interest rate unchanged. The Dollar Index (DXY) is now at 106.913, down 0.54% from 107.940 which was previously at 108.071.

Meanwhile gold gets support from geopolitical risks due to fears of the outbreak of World War 3 after several NATO countries allowed Ukraine to use their weapons to target Russia.

Today investors' focus will be on the US CB Consumer Confidence news release which is predicted to rise to 111.8 from the previous 108.7

 

[Zerologic]

Trump's tariff threats caused the Canadian dollar to fluctuate

USDCAD yesterday drew a long-axis bullish candlestick with a high of 1.4177, a low of 1.39799, and a close at 1.40547. The bullish candle that is formed depicts prices rising high and then facing drastic downward pressure to form a long wick. The weakening of the Canadian dollar even broke out the upper band line and left the line.

Previously USDCAD was trading in the price range of 1.39267 - 1.40177, but after Trump threatened that he would impose 25% tariffs on Canadian and Mexican imports, this has made the Canadian dollar weaken very dramatically. Trump's policy of attacking neighboring countries is predicted to reduce Canadian imports and reduce demand for buying Canadian dollars. Trump even threatened to impose an additional 10% on Chinese imports above 60%, this is predicted to greatly reduce Chinese imports, although it will likely increase inflation.

On the other hand, according to US Energy Information Bureau (EIA) data, the US is 52% dependent on Canadian crude oil, thus raising doubts about the potential negative political policy impact of Trump's tariff threats. Trump's move is expected to increase the price of goods and inflation in the US, which in turn will allow the Fed to slow down interest rate cuts more gradually. However, market projections that the Fed will probably cut interest rates by 25 basis points in December have not changed much. According to the CME group's FedWatch tool, there is a 62.8% chance that the Fed will cut interest rates by 25 basis points and a 37.2% chance that the Fed will leave interest rates unchanged.

Meanwhile, the BoC is predicted to cut interest rates by 25 basis points in December because growth is starting to pick up. The BoC in October lowered interest rates by 50 basis points from 4.25% to 3.75%.

 

[Zerologic]

Waiting for German inflation data EURUSD price is drawing a bulls candle

Yesterday the EURUSD pair drew a bulls candle and broke the previous high forming a high of 1.05871, low of 1.04738 close at 1.05655 on FXOpen. The EURUSD pair rose after consolidating movements in the range after the gap on Monday. The pair's rise seemed to be fueled by a fall in the USD as investors weighed Donald Trump's recent statement on new tariff policies targeting imports from China, Mexico, Canada and the European Union.

The decline in investor interest in the USD was seen from the dollar index (DXY) which fell 0.77% from a high of 106,924 to a low of 105,856, extending the previous decline.

While the Fed is expected to reduce interest rates more slowly because Trump's policies are predicted to cause inflation, this is because more expensive imports to obtain industrial raw materials cause production costs to rise and companies may raise product prices.

According to the CME group's FedWatch tool probability target rate at the December Fed meeting, there is a 66.5% chance that the Fed will cut interest rates by 25 basis points, and a 44.5% chance that the Fed will not change interest rates. High interest rates encourage support in the currency as treasury yields are more promising.

Fed Chair Jerome Powell has taken a cautious approach, signaling there is no immediate need for additional rate cuts.

Meanwhile, the current ECB interest rate of 3.40% has been lowered from the previous 3.65% in October according to data from Investing. Next today, investors will focus on German inflation data which is forecast at -0.2% from the previous 0.4%.

On the other hand, bank holidays in the US in observance of Thanksgiving Day may reduce trading volume in the market.

 

[Zerologic]

GBPJPY rebounded after a five-day decline.

GBPJPY drew a bull candle with a low of 181.197, a high of 192.457, close at 192.236. Price formed a bull candle with a long body engulfed by the previous candle reflecting weak rejection.

The GBPJPY pair started drawing a bear candle on November 21 reflecting the Japanese Yen gradually strengthening. The Japanese interest rate is now 0.25% which was updated on October 31 from previously unchanged at 0.25%. The yen is gearing up for Japanese inflation figures on Friday. Tokyo core Consumer Price Index (CPI) inflation is forecast to rise to 2.1% for the year ending November, compared to the previous period's 1.8%. Meanwhile, Japan's Unemployment Rate is also forecast to rise to 2.5% in November from 2.4%. While Retail Sales are forecast to rise from the previous 0.7% to 2.1%. The inflation data will be used by BoJ policy makers who may keep interest rates low for an indefinite time.

While the Bank of England interest rate is now at 4.75% since November 7 from 5.00% previously, the next interest rate decision is scheduled for December 19. Inflation is currently 2.3% from the target of 2%, which allows the BoE to be more cautious on the policy of cutting interest rates. Today the BoE will release M4 money supply data which calculates the Change in the total quantity of domestic currency in circulation and deposited in banks which is forecast to fall 0.4% from 0.6% previously.

In addition, Mortgage Approvals will also be released today which is forecast at 65k from 66k previously. This measures the number of new mortgages approved for home purchases during the previous month. BOE Gov Bailey Speaks will also later provide new clues that may provide hawkish or dovish statements for the December BoE interest rate.

 

[Zerologic]

The increase in gold prices was limited, profit-taking due to easing geopolitical risks.

The price of gold on Friday experienced a recovery, but profit-taking resulted in a gold sell-off bringing the price down. Gold drew a bull candle with a high of $2665, a low of $2633 close at $2650.

The price of gold last week tried to recover after the drop on November 25. However, gold's upward movement was limited by being swallowed by the previous bearish candlestick. The reduction in geopolitical risk tension between Israel and Hezbollah, which reached a ceasefire agreement, was one of the reasons gold fell 3% daily.

On the other hand, the weakening USD provided support for gold, helping XAU/USD maintain its gains in the middle of the week. The USD Index (DXY) fell to 105.615, extending its previous decline.

According to the US Census Bureau Durable Goods Orders increased by 0.2% MoM in October, missing market expectations of 0.5%. Meanwhile, the US Department of Labor announced that Initial Jobless Claims fell to 213k in the week ended November 23 from 215k in the previous week. The Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve's preferred gauge of inflation, rose 2.3% year-on-year, up from 2.1% in September and line with market consensus, while Annual core PCE inflation edged up to 2.8% from 2.7%.

Today investors will focus on US PMI data, ISM Manufacturing PMI is expected to rise to 47.7 from the previous 46.5.

 

[Zerologic]

CHFJPY extends losses ahead of Swiss CPI release

CHFJPY price yesterday drew a bearish candle extending its previous decline. Yesterday the price formed a high of 170,353, a low of 168,197, closed at 168,709.

On a weekly time frame, the decline starting at the end of October indicates the strengthening of the Japanese Yen against the Swiss franc.

The Japanese Yen currency tends to strengthen against other currencies including the USD and Euro. A stronger-than-expected rise in inflation in Tokyo in November, boosting expectations of the Bank of Japan's interest rate hike at next month's policy meeting.

Japan's capital spending implied lower investment than expected and was much lower than previous data. Meanwhile, the Final Manufacturing PMI showed data as expected at 49.0, the same as the previous data revision.

Apart from investors focusing on Swiss CPI data, today they will also focus on American JOLTS (Job Openings and Labor Turnover Survey) data which is expected to rise to 7.49M from the previous 7.44M.

Meanwhile, according to the Swiss Federal Statistical Office, the Swiss CPI has experienced a downward graph with data at the end of October at 0.6% from the previous 0.8%. The decline in inflation may be a consideration for the central bank to cut interest rates. The Swiss National Bank (SNB) interest rate is now 1% from the previous 1.25% updated on September 26.