Sample Category Title

• EURGBP gets rejected near SMAs; technical signals are negative
• There might be an opportunity for a rebound near 0.8300
• Eurozone publishes CPI inflation data at 10:00 GMT

EURGBP experienced another failure near its 20- and 50-day simple moving averages (SMAs) earlier this week, increasing concerns that the bad days are not over yet.

With the price resuming its negative momentum and the technical indicators reflecting a neutral-to-bearish bias, there might be a decisive moment near the 0.8300 number. The area has been a key battleground for the bulls and the bears since the end of September and the outcome there could set the tone for the coming sessions.  

If the pair holds its footing near 0.8300, it could spark a resurgence back to the 20- and 50-day SMAs seen within the 0.8330-0.8345 region. A success there could target the tentative short-term resistance line at 0.8380 and the 0.8400 round level, a break of which could see an extension toward the 200-day SMA at 0.8440 or even up to the long-term trendline near 0.8470.

Otherwise, if the 0.8300 floor cracks, the sell-off could expand toward the key support trendline, where the price posted a 2½-year low of 0.8259 earlier this month. Additional declines from there could pause somewhere between 0.8200 and 0.8170. If not, the bears could next reach the 0.8115 barrier taken from 2016.

All in all, the situation in the EURGBP market is still daunting, but the price may not enter a new bearish phase unless the 0.8300 base collapses.  

• USDCAD posts losses after 4½-year high
• RSI and stochastics confirm negative move

USDCAD is moving lower after the bullish spike to the fresh four-and-a-half-year high of 1.4176, falling beneath the 1.4000 round number.

The market remains in a positive territory; however, the technical oscillators are indicating further decreases. The RSI is pointing down slightly above the neutral threshold of 50, while the stochastic posted a bearish crossover within its %K and %D lines, heading towards the oversold area.

Immediate support could come from the 20-day simple moving average (SMA) at 1.3970 before testing the previous bottoms at 1.3925. A slide lower could open the door for a retest of the 50-day SMA at 1.3815.

Alternatively, a potential bounce off the 20-day SMA could send the bulls higher toward the 1.4100 round number and the multi-year high of 1.4176.

Summarizing, USDCAD has been in a bullish tendency since September 25 and only a decisive closing session below the 200-day SMA at 1.3690 may change this view.

Swiss KOF Economic Barometer climbed from 99.7 to 101.8 in November, surpassing expectations of 100.1 and returning above the key 100 mark. . KOF remarked, "The Swiss economy develops steadily albeit without strong dynamics."

The improvement was broad-based across production-side sectors, with positive contributions from manufacturing, financial and insurance services, hospitality, other services, and construction.

On the demand side, consumer indicators remained largely unchanged but continued to reflect favorable trends. However, the outlook for foreign demand remains subdued, tempering some of the optimism.

Full Swiss KOF release here.

Switzerland's real GDP grew by 0.4% qoq in Q3, slowing from 0.6% growth recorded in Q2 and in line with expectations. Adjusted for the impact of sporting events, growth was even more subdued, at 0.2% qoq compared to the prior quarter's 0.4% qoq.

According to SECO, growth was supported by parts of the services sector, construction, and consumer spending. However, exports of goods and manufacturing output dragged on the economy. Notably, the chemical and pharmaceutical sector, a key pillar of Swiss manufacturing, showed minimal growth after a strong Q2, while other manufacturing sectors posted significant declines.

Full Swiss GDP release here.

Daily Pivots: (S1) 1.0531; (P) 1.0551; (R1) 1.0575; More...

Intraday bias in EUR/USD remains neutral and further decline is still in favor with 1.0609 resistance intact. On the downside, break of 1.0330 will resume the fall from 1.1213. Also, sustained trading below 1.0404 key fibonacci level will carry larger bearish implication. Nevertheless, firm break of 1.0609 will confirm short term bottoming, and turn bias back to the upside for 1.0760 support turned resistance first.

In the bigger picture, immediate focus is now on 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404. Strong rebound from this level will keep price actions from 1.1273 (2023 high) as a medium term consolidation pattern only. However, sustained break of 1.0404 will raise the chance that whole up trend from 0.9534 has reversed. That would pave the way to 61.8% retracement at 1.0199 first. Firm break there will target 0.9534 low again.

Daily Pivots: (S1) 150.97; (P) 151.46; (R1) 152.05; More...

USD/JPY's fall from 156.74 resumed after brief consolidations and intraday bias is back on the downside. Sustained trading below 38.2% retracement of 139.57 to 156.74 at 150.18 will argue that whole rise from 139.57 could have completed. Deeper fall should then be seen to 61.8% retracement at 146.12 next. On the upside, break of 151.94 will turn bias back to the upside for stronger rebound.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). The range of medium term consolidation should be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 1.2656; (P) 1.2676; (R1) 1.2707; More...

GBP/USD's break of 1.2713 resistance indicates short term bottoming at 1.2486, on bullish convergence condition in 4H MACD. Intraday bias is back on the upside for 55 D EMA (now at 1.2873). For now, risk of another rebound remains as long as 1.2486 holds, in case of retreat.

In the bigger picture, a medium term top should be in place at 1.3433, and price actions from there are correcting whole up trend from 1.0351 (2022 low). Deeper decline is now expected as long as 55 D EMA (now at 1.2873) holds, to 38.2% retracement of 1.0351 to 1.3433 at 1.2256, which is close to 1.2298 structural support. Strong support should be seen there to bring rebound.

Daily Pivots: (S1) 0.8809; (P) 0.8828; (R1) 0.8851; More…

Intraday bias in USD/CHF remains neutral for the moment. Further rally is still in favor as long as 0.8800 support holds. On the upside, break of 0.8956 will resume the rally from 0.8374, and target 0.9223 key resistance next. However, firm break of 0.8800 will confirm short term topping and turn bias back to the downside for 55 D EMA (now at 0.8721).

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern. Rise from 0.8374 is seen as the third leg. Overall outlook will continue to stay bearish as long as 0.9223 resistance holds. Break of 0.8332 low is in favor at a later stage when the consolidation completes.

Markets

US markets were closed for Thanksgiving yesterday, leaving European markets looking for their own dynamics. National inflation data from Germany (HICP -0.7% M/M and 2.4% Y/Y; unchanged October) and Spain (0% M/M and 2.4% Y/Y from 1.8%, core 2.4% from 2.5%) overall printed on the softer side of expectations, suggesting (modest) downside risks for today’s Flash EMU release. The decline of EMU yields to the incoming CPI data was initially modest/limited. However, in afternoon trading, comments from Banque de France governor Villeroy clearly put other accents on the ECB’s strategy than board member Schnabel on Wednesday. The French governor indicated that the ECB needs full optionality in the current environment on the frequence and the size of rate cuts, including the December one. Inflation reaching the target sooner than expected also is a reason to bring rates to a neutral level and even a decline below neutral might be possible. Especially the latter assessment clearly diverged from Schnabel’s view. The combination of slightly softer than-expected CPI data and the Villeroy comments finally caused EMU yields to follow the path of least resistance, which currently obviously is still south. German yields declined 3.8 bps (5-y) to 1.9 bps (30-y). Money markets see the trough in the EMU easing cycle next year near 1.75%. The Euro this time quite easily withstood the further decline in yields and closed only modestly lower at 1.0552 (from 1.0566). Growing tensions/uncertainty on the French budget didn’t impact the euro. The Eurostoxx 50 even added 0.54%.

US markets rejoin the action today. However with no US data scheduled for release, the focus in the US might be on the shopping malls rather than on Wall Street. Still, US yields this morning continue their recent corrective decline, ceding 3-4 bps across the curve. EMU November CPI data take center stage (headline expected at -0.2% M/M and 2.3% Y/Y from 2%, core expected 2.8% from 2.7%). Even with the French and Italian data still to be released, risks for the outcome are to the downside. Question is how much further markets will/can push expected easing next year, given what is already discounted (1.75% ECB depo rate in H2). For now, there probably is no trigger to row against the existing downtrend in EMU yields, but it might shift into a lower gear. On FX markets, the euro (EUR/USD) enjoys some relief as the correction in US yields and the dollar apparently still has some legs. DXY drops below the 106 handle (105.85). USD/JPY, also pressured by yen strength, is testing the 150 mark this morning. EUR/USD gains a few ticks (EUR/USD 1.0582), but the political/budgetary uncertainty in France probably will continue to prevent dynamic/sustained comeback.

News & Views

November Tokyo inflation numbers boost market odds that the Bank of Japan will conduct another rate hike at its December policy meeting. Prices in the capital region rose by 0.5% M/M on a headline level. That’s the third such increase in the past four months. In annual terms, CPI jumped from 1.8% to 2.6%, matching the YTD high. The BoJ’s preferred ex-fresh food gauge equally rose by 0.5% M/M to be up 2.2% Y/Y (from 1.8%). More details showed goods and services inflation increasing by 0.8% and 0.2% respectively in November. Only household goods (-0.5% M/M) and entertainment (-0.1% M/M) had a dampening impact on the monthly CPI-print. The Japanese yen rallied from USD/JPY 151.50 to 150 in response to the figures with money markets currently discounting a 15 bps increase in the BoJ’s target rate (currently 0.25%).

French finance minister Armand yesterday noon already hinted that it’s better to have a budget that is not exactly the one they want instead of having no budget at all. PM Barnier than later on the day stressed that they will do everything to bring the country’s budget deficit from this year’s 6% of GDP to about 5% next year. He also announced a first major concession for the far-right RN who threatens the government over the budget bill. A previously planned increase for an electricity tax will no longer be included in the budget. From February, electricity taxes will now decrease by 14% instead of by 9%. While obviously welcomed, RN-president Bardella already said that his party won’t stop there and that other red lines remain. The French left opposition still plans to table a motion of no-confidence as soon as next week..

Daily Pivots: (S1) 0.6481; (P) 0.6495; (R1) 0.6513; More...

AUD/USD is still bounded in sideway trading and intraday bias remains neutral. . Further decline is expected as long as 0.6549 resistance holds. On the downside, break of 0.6433 will resume whole decline from 0.6941. However, firm break of 0.6549 will indicate short term bottoming, and bring stronger rebound to 55 D EMA (now at 0.6606).

In the bigger picture, rise from 0.6269 (2023 low) should have completed with three waves up to 0.6941. Corrective pattern from 0.6169 (2022 low) is now extending with another falling leg. Deeper decline would be seen back to 0.6269 as sideway trading extends.