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EUR/USD remains stable at around 1.0483 as markets digest the implications of the latest FOMC minutes. The Federal Reserve signalled a potential pause in rate cuts if inflation reaccelerates but also indicated readiness to continue easing if economic indicators weaken.

Today promises heightened activity for EUR/USD due to a slew of US economic data releases. It is a significant day as the US will release its initial Q3 GDP estimate. After recording a 2.8% growth in Q2, market participants are keen to see if this momentum carried into the third quarter. Expectations suggest a robust period, potentially boosting the US dollar if the data exceeds forecasts.

Additionally, the US will unveil October's figures for personal income and expenses, durable goods orders, and the core PCE price index. These data points could significantly influence the dollar's trajectory, adding to today's trading volatility.

Technical analysis of EUR/USD

H4 chart: The EUR/USD appears to be challenging the upper boundary of its recent downward trend. Current technical analysis suggest a potential upward move towards 1.0580. After reaching this level, a corrective pullback to 1.0460 may occur before another upward wave targets 1.0700. This bullish scenario is supported by the MACD, which shows a positive divergence as it approaches the zero line from below.

H1 chart: The shorter-term H1 chart indicates that EUR/USD is on an upward trajectory towards 1.0580, with the currency consolidating above 1.0460. A breakout above this consolidation could validate the move towards 1.0580. Subsequently, a retracement to 1.0460 may set the stage for further advances. The Stochastic oscillator signals potential upward momentum, suggesting an increase in buying pressure.

• A higher beta CAD/JPY cross pair can be considered as a macro theme play in line with a potential risk-averse environment triggered by Trump’s trade tariffs.
• Technical analysis suggests a potential new medium-term downtrend phase for CAD/JPY.
• Watch the 111.45 key medium-term resistance on the CAD/JPY.

US President-elect Trump’s latest trade tariffs salvo, a cornerstone of his “America First” policy has hit his northern neighbour where he threatened to impose 25% tariffs on all Canada’s exports to the US, in retaliation for illegal migration and drug trafficking into the US via Canada’s borders as alleged by Trump on his latest social media posts on his Truth Social site.

Canada is one of the largest trading partners with the US where its exports t are mostly energy-related. Hence if such tariff measures are followed through by the incoming Trump administration, Canda export revenues are likely to take a significant hit which in turn trigger a negative feedback loop in the Canadian dollar.

A higher beta trade can be expressed or played out using the yen crosses; CAD/JPY as a macro theme play to capture such potential adverse impact on the Canadian dollar where the Bank of Canada (BoC) may be forced to introduce more dovish monetary policy stance in 2025 to offset the “higher costs” of its oil-related exports to the US.

CAD/JPY is the weakest among the G-10 yen cross pairs

Fig 1: G10 JPY cross pairs 5-day rolling performance as of 27 Nov 2024 (Source: TradingView, click to enlarge chart)

The CAD/JPY cross pair has tumbled for two consecutive days with an intraday accumulated loss of 2.1% at this time of the writing and hit a six-week low of 107.82.

Based on a five-day rolling performance basis, the CAD/JPY is now the worst-performing major G-10 JPY cross pair with a loss of -2.9% (see Fig 1).

CAD/JPY at risk of starting a medium-term downtrend

Fig 2: CAD/JPY medium-term & major trends as of 27 Nov 2024 (Source: TradingView, click to enlarge chart)

Key technical analysis elements on the CAD/JPY have suggested an increased risk of a fresh medium-term downtrend phase after it hit a 52-week high of 118.86 on 10 July 2024.

Tuesday, 26 November price action has broken down its 50-day moving average, and the lower boundary of the bearish “Ascending Wedge” configuration.

In addition, the MACD trend indicator has continued to inch toward its zero centreline after a bearish divergence condition flashed out on 14 November 2024.

These observations suggest a potential growing downside momentum factor that may trigger the start of a medium-term downtrend phase for the CAD/JPY.

Watch the 111.45 key medium-term pivotal resistance and a clear break with a daily close below 104.85 exposes the next medium-term supports at 101.80 and 97.55.

On the flip side, a clearance above 111.45 invalidates the bearish scenario for a potential recovery towards the next medium-term resistances of 115.90 and 118.70 in the first step.

The New Zealand dollar has ended a five-day losing streak on Wednesday. In the European session, NZD/USD is trading at 0.5887, up 0.9% on the day.

RBNZ chops rates by 50 basis points

The Reserve Bank of New Zealand lowered its cash rate by 50 basis points today in a widely-expected decision. This brings the cash rate to 4.25%, its lowest level since November 2022. This marked a second straight cut of 50 basis points, as the central bank is showing an aggressive stance to cutting rates.

The rate statement noted that inflation had fallen around the midpoint of the 1%-3% target and if economic conditions evolved as expected, the Bank expected to lower rates early in 2025. Governor Orr echoed this stance in his press conference, as he hinted at another 50-bp rate cut as early as February.

What is suprising is the reaction of the New Zealand dollar, which has surged higher despite the oversized rate cut and the signal of more to come. The RBNZ lowered rates by 50 bp last month and the New Zealand dollar responded with losses of around 1%. This time around, investors may be focusing on the expected positive impact that the rate cut should have on the weak New Zealand economy. As well, some investors had expected a 75-bp cut at today’s meeting and the smaller cut may have boosted the New Zealand dollar.

FOMC minutes: More rate cuts coming

The Federal Reserve released the minutes of the November meeting on Tuesday. At the meeting, FOMC members unanimously voted to cut rates by 25 basis points. The minutes indicated that Fed officials were confident that inflation was falling and the labor market remained strong. Given, this positive outlook, members expected to lower interest rates but no timeline was provided.

NZD/USD Technical

• NZD/USD pushed above resistance at 0.5868 and tested resistance at 0.5901 earlier. The next resistance line is 0.5937
• There is support at 0.5832 and 0.5799

New Zealand dollar jumps on disappointment from RBNZ rate decision but larger bears remain firmly in play.

Kiwi dollar jumped around 1% against its US counterpart on Wednesday morning after RBNZ’s 50 basis points rate cut disappointed many who expected more aggressive action and cut by 75 basis points.

The Reserve Bank of New Zealand reduced interest rates to 4.25% from 4.75% and signaled further easing, as inflation fell near central bank’s target and the policymakers want to stimulate economy to accelerate the way out of recession.

RBNZ’s statement was dovish and signaled another 50 basis points cut in February, with expectations to reach levels between 2.5% and 3.5%, which is seen as neither restrictive nor accommodative, by the end of 2025.

Although the disappointment from the central bank’s decision prompted some short covering, larger downtrend is unlikely to significantly hurt larger downtrend, as fundamentals are overall negative for Kiwi dollar and technical picture is bearish on daily and weekly chart.

Adding to negative signals was last week’s close below former base at 0.5850 (Apr / July).

Upticks face solid barriers at 0.5910/35 zone (lower top of Nov 20 / 20DMA / Fibo 23.6% of 0.6378/0.5796 downtrend) where recovery should be ideally capped to keep larger bears intact, while sustained break here would signal stronger correction.

Res: 0.5910; 0.5921; 0.5935; 0.5977.
Sup: 0.5900; 0.5816; 0.5796; 0.5773.

Market Picture

The crypto market dipped to a total cap of $3.15 trillion on Tuesday. However, on Wednesday morning, buying prevailed, pushing the capitalisation back above $3.22 trillion, around the same level as the previous day. The return of buyers is boosting hopes of an end to the correction, fuelled by the overwhelmingly positive momentum in equity markets.

A major driver of the recent correction was Bitcoin, which lost almost 9% from peak to trough. Both profit-taking and the cautious sentiment in global markets drove it down. The impact of both factors may be waning at the 76.4% retracement of the rally from the November lows, a strong level in strong bull markets.

Bitcoin’s recent pullback gave altcoins a chance to catch up. The Altcoin Season Index has risen to 54, a new high for the year and an impressive rise from 27 in the last six days. This is an indirect confirmation that Bitcoin’s recent correction is due to a search for more profitable alternatives rather than a fundamental change in sentiment. As such, we expect the crypto market to return to historic highs soon, with altcoins being the driving force. However, this does not negate the renewal of the highs of the first cryptocurrency.

News Background

Bitcoin’s path to the psychological level of $100K has “stalled” against the backdrop of the liquidation of longs for $430 million and increased concerns about the publication of the Federal Reserve meeting minutes and inflation data, notes CryptoQuant. The situation could be exacerbated by the upcoming US Thanksgiving holiday on 28 November.

According to DeFi Llama, Ethereum has regained dominance of the USDT stablecoin offering after TRON took the lead in August 2022. The ETH blockchain has issued $60.3 billion worth of tokens, compared to nearly $58 billion on its rival’s network.

In November, trading volume on the decentralised exchanges (DEX) on the Solana network reached a record $109.8bn, almost twice as high as Ethereum’s. The previous monthly record was set in March 2023. In both cases, such high levels can be attributed to the hype surrounding meme coins.

Tron founder Justin Sun has become the largest investor in World Liberty Financial, the crypto platform linked to Donald Trump’s family. He bought 2 billion WLFI tokens worth $30 million.

Maya Parbho, a presidential candidate for Suriname, the South American republic, has announced plans to recognise Bitcoin as legal tender and move the country’s financial infrastructure to blockchain.

EUR/USD is recovering losses from the 1.0335 zone. USD/JPY is declining and showing bearish signs below the 154.00 level.

Important Takeaways for EUR/USD and USD/JPY Analysis Today

• The Euro struggled to start a fresh increase and declined below the 1.0500 zone.
• There is a key contracting triangle forming with resistance at 1.0500 on the hourly chart of EUR/USD at FXOpen.
• USD/JPY is trading in a bearish zone below the 155.00 and 154.00 levels.
• There is a major bearish trend line forming with resistance near 153.60 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair started a fresh decline from the 1.0610 zone. The Euro declined below the 1.0550 and 1.0500 levels against the US Dollar.

The pair even declined below 1.0400 and the 50-hour simple moving average. Finally, it tested the 1.0335 zone. A low was formed at 1.0332 and the pair is now recovering losses. There was a move above the 1.0400 level.

The pair surpassed the 50% Fib retracement level of the downward move from the 1.0609 swing high to the 1.0332 low. On the upside, the pair is now facing resistance near 1.0500.

There is also a key contracting triangle forming with resistance at 1.0500. The next major resistance is near the 76.4% Fib retracement level of the downward move from the 1.0609 swing high to the 1.0332 low at 1.0545.

An upside break above 1.0545 could set the pace for another increase. In the stated case, the pair might rise toward 1.0610. Immediate support is near the 1.0430 level.

The next major support is at 1.0400. If there is a downside break below 1.0400, the pair could drop toward the 1.0335 support. The main support on the EUR/USD chart is near 1.0320, below which the pair could start a major decline.

USD/JPY Technical Analysis

On the hourly chart of USD/JPY at FXOpen, the pair started a steady decline from well above the 155.00 zone. The US Dollar gained bearish momentum below the 154.00 support against the Japanese Yen.

The pair even settled below the 153.60 level and the 50-hour simple moving average. A low was formed at 152.33 and the pair is now showing bearish signs. On the downside, the first major support is near 152.20.

The next major support is near the 151.50 level. If there is a close below 151.50, the pair could decline steadily. In the stated case, the pair might drop toward the 150.00 support. Any more losses might send the pair toward 148.00.

Immediate resistance on the USD/JPY chart is near the 23.6% Fib retracement level of the downward move from the 155.88 swing high to the 152.33 low.

The first major resistance is near a bearish trend line at 153.60. If there is a close above the 153.60 level and the hourly RSI moves above 50, the pair could rise toward 154.10 or the 50% Fib retracement level of the downward move from the 155.88 swing high to the 152.33 low.

The next major resistance is near 155.05, above which the pair could test 155.00 in the coming days.

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Germany’s GfK Consumer Sentiment Index fell sharply for December, dropping from -18.4 to -23.3, far below expectations of -18.8. This marks the lowest level since May 2024 (-24.0) and reflects a significant deterioration in household confidence as the year ends.

November saw economic expectations decline from 0.2 to -3.6, marking the fourth consecutive drop and the weakest level since February. Income expectations also plunged, falling from 13.7 to -3.5, while willingness to buy slipped further from -4.7 to -6.0. In contrast, willingness to save increased from 7.2 to 11.9, highlighting a defensive shift in household behavior.

“Consumer sentiment in Germany is therefore currently at a level comparable to the end of 2023,” noted Rolf Bürkl, consumer expert at NIM, adding that “consumer uncertainty has increased again recently, as evidenced by the rising willingness to save.” Bürkl highlighted several contributing factors, including rising concerns over job security due to reported job cuts, production relocations, and an uptick in insolvencies.

Full Germany Gfk consumer sentiment release here.

ECB Executive Board member Isabel Schnabel stressed the importance of a cautious approach to monetary easing, warning against shifting policy into "accommodative territory."

Speaking to Bloomberg, Schnabel stated that ECB could “gradually move toward neutral” if incoming data continue to align with the bank’s baseline projections. However, she rejected market expectations for accommodative policy, remarking, “From today’s perspective, I do not think that would be appropriate.”

Schnabel also dismissed speculation about larger rate moves, such as half-point cuts, expressing “a strong preference for a gradual approach.”

She cautioned that cutting rates prematurely, even if inflation were to fall short, could be counterproductive if deeper structural issues underlie the economic weakness.

In her view, “the costs of moving into accommodative territory could be higher than the benefits,” particularly as it would deplete policy options needed for future shocks that monetary measures could address more effectively.

Schnabel estimates the neutral interest rate to fall within the 2% to 3% range. With the deposit rate currently at 3.25% after three quarter-point cuts this year, she noted, “we may not be so far” from neutrality now.

• GBP/USD is stuck in a tight range, reflecting market indecision.
• Upcoming US data releases, including GDP and PCE data, could trigger a breakout from the range.
• The US Dollar Index’s performance will heavily influence GBP/USD’s movements.

Cable has continued to consolidate in a 100 pip range this week with yesterday a prime example of the indecision at play. GBP/USD tested both the high and low of the range before finishing the day relatively flat.

US Data Ahead and Central Bank Meetings

There has been  some respite for the GBP as the US Dollars impressive rally has also stalled this week. Despite this GBP/USD has failed to push on which could be a sign that bears may be holding the edge.

Given the lack of UK data this week, the US will be key with a slew of medium and high impact data releases scheduled. The FOMC minutes were released yesterday, with more cuts expected but ‘gradually’. No surprise really given the potential implications that may arise from a Trump Presidency.

The December Fed meeting is around 60-40 in favor of a rate cut of 25 bps but the January meeting seems to be favoring a pause. The meeting will come 9 days after Donald Trump takes office and I would think a pause would be a prudent approach given Trump’s tariff rhetoric.

Source: LSEG

Looking across the pond and the Bank of England (BoE) are expected to pause in December. This could work in favor of the GBP in the short-term but moving forward into 2025 and the BoE are likely to cut more than the Fed at present. This of course could change as more data is released and the impact of Trump’s economic policy is felt.

A batch of US data awaits later in the day with initial jobless claims and the 2nd GDP estimate. We will also get the first glimpse of PCE data as well which may shed more light on the recent rise in US PPI and CPI data. The data could once again drive GBP/USD price action but as has been the case of late, any moves are unlikely to prove sustainable.

Technical Analysis

US Dollar Index (DXY)

The Dollar Index has been interesting to monitor of late and has been a driving force for dollar denominated pairs.

The DXY is trading below the multi-month key level at 107.00 which it has done on Monday and Tuesday this week. However, the index has failed to close below this level which has been key to keeping bulls interested.

The daily candle close today will be key with a close below this level likely to lead to further downside. It is key to monitor the US data as this could be key to where the DXY ends the day.

US Dollar Index (DXY) Daily Chart, November 27, 2024

Source:TradingView.com

GBP/USD

From a technical standpoint, GBP/USD has been stuck in a 100 pip range for the last four days. Price is making a move to the upside at the moment but acceptance above the range high at 1.2618 is needed for further upside to materialize.

A move above this key level opens up a test of resistance at 1.2681 and 1.2750. Looking further and we have the 200-day MA at 1.2819.

A rejection and a move lower from these levels faces support at the 1.2500 psychological level with a break of this level leading to a run toward the 1.2440 and 1.2312 handles respectively.

GBP/USD Daily Chart, November 27, 2024

Source:TradingView.com

Support

• 1.2500
• 1.2440
• 1.2312

Resistance

• 1.2618
• 1.2681
• 1.2750

• USDCHF takes a breather after hitting a four-month high
• Buying the dip has an advantage above 0.8750
• US core PCE inflation eyed for more volatility later today

USDCHF lost momentum after its uptrend peaked at a four-month high of 0.8956 last Friday, and there could be more cloudy periods ahead according to the technical picture.

With the RSI changing trajectory to the downside after topping near its 70 overbought level and the MACD sliding below its red signal line, the risk is more on the downside than on the upside.

That said, the price continues to trade within an upward-sloping channel and the 20- and 200-day simple moving averages (SMAs), which could balance selling interest within the 0.8800-0.8820 region, are heading for a positive intersection. Hence, any potential declines could still be attractive, unless there is a negative correction beneath 0.8750.

In the event selling forces strengthen below 0.8750, the 38.2% Fibonacci retracement of the May-September upleg could take action around 0.8700 ahead of the 50-day SMA. Slightly lower, the 0.8615-0.8640 zone could force some stability, preventing a continuation toward the 23.6% Fibonacci of 0.8573. If the latter fails to hold, the downfall could reach the 0.8500 mark.

Should the bulls bounce back above 0.8900, they will aim for a test at the channel’s upper band near 0.8990. Success there could lead the pair toward the 78.6% Fibonacci level of 0.9040. Then, all the attention could turn to the 0.9100-0.9150 caution territory.

In summary, USDCHF could face some hurdles in the short-term, though it could stay attractive to buyers if it manages to rotate near 0.8750. Watch out for the US core PCE inflation data due today at 13:30 GMT.