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Daily Pivots: (S1) 193.16; (P) 193.89; (R1) 194.51; More...

No change in GBP/JPY's outlook and intraday bias stays on the downside. Corrective rise from 180.00 could have completed with three waves up to 199.79. Deeper fall would be seen to 183.70 support. For now, risk will stay on the downside as long as 197.77 resistance holds, in case of recovery.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 161.17; (P) 161.64; (R1) 162.30; More....

Further decline is expected in EUR/JPY with 163.19 support turned resistance intact. Corrective rebound from 154.40 could have completed with three waves up to 166.67. Deeper fall would be seen to 155.14 support next. Nevertheless, firm break of 163.19 will bring retest of 166.67 high instead.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8319; (P) 0.8341; (R1) 0.8372; More...

EUR/GBP is staying in range trading above 0.8259 and intraday bias remains neutral. Outlook stays bearish with 0.8446 resistance intact. On the downside, decisive break of 0.8259 will resume larger down trend to 0.8201 key support.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 (2022 low), but strong support should be seen there to bring rebound. However, outlook will remain bearish as long as 0.8624 resistance holds even in case of strong rebound. Decisive break of 0.8201 will indicate long term bearish reversal.

Daily Pivots: (S1) 1.5948; (P) 1.6041; (R1) 1.6117; More...

EUR/AUD's rebound from 1.5963 extend higher and the break of 1.6161 support turned resistance delays the bearish case. Intraday bias is turned neutral first. Further fall would remain in favor as long as 1.6359 resistance holds. Sustained break of 1.5996 key support will carry larger bearish implications. However, break of 1.6359 will be the first sign of bullish reversal and target 1.6598 resistance for confirmation.

In the bigger picture, immediate focus is now on 1.5996 key support level. Sustained break there will argue that whole up trend from 1.4281 (2022 low) is already reversing. Deeper decline would be seen to 61.8% retracement of 1.4281 to 1.7180 at 1.5388, even as a correction. Nevertheless, strong rebound from current level, followed by break of 1.6359 resistance, will keep medium term outlook neutral at worst.

Daily Pivots: (S1) 0.9281; (P) 0.9313; (R1) 0.9334; More....

With break of 0.9294 minor support, rebound from 0.9204 could have completed after rejection by 55 4H EMA. Intraday bias is back on the downside for retesting 0.9204/9 support zone. Decisive break there will indicate larger down trend resumption. For now, outlook will stay bearish as long as 0.9364 resistance holds.

In the bigger picture, outlook will now stay bearish as long as 0.9444 resistance holds. Decisive break of 0.9209 low will resumed long term down trend to 61.8% projection of 0.9772 to 0.9209 from 0.9444 at 0.9096 next.

Daily Pivots: (S1) 1.3940; (P) 1.3974; (R1) 1.4019; More...

USD/CAD's rally resumed by breaking through 1.4104 and intraday bias is back on the upside. Further rally should be seen to 61.8% projection of 1.3418 to 1.4104 from 1.3930 at 1.4354 next. For now, outlook will stay bullish as long as 1.3930 support holds, in case of retreat.

In the bigger picture, up trend from 1.2005 (2021) is resuming with break of 1.3976 key resistance (2022 high). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3418 at 1.4391. Now, medium term outlook will remain bullish as long as 1.3418 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.6478; (P) 0.6514; (R1) 0.6540; More...

No change in AUD/USD's outlook and intraday bias stays neutral at this point. Further decline is expected as long as 0.6687 resistance holds. On the downside, decisive break of 61.8% projection of 0.6941 to 0.6511 from 0.6687 at 0.6421 will resume the fall from 0.6941 to 100% projection at 0.6257 next.

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.

• GBPUSD falls for 8 consecutive weeks
• 20- and 200-day SMAs post death cross
• MACD and RSI suggest more losses

GBPUSD recorded the eighth straight negative week after the pullback from the 1.3433 level, losing more than 7%. The price posted a fresh six-month low of 1.2486 on Friday, meeting the long-term ascending trend line.

More aggressive selling interest would switch the broader outlook to a bearish one, resting near the 1.2445 support, taken from the lows on May 9. Even lower, the bears would gain control, pushing the pair towards the psychological mark of 1.2300.

In case of a bounce off the uptrend line, then the price may test the 1.2715 resistance area, ahead of the 20-day simple moving average (SMA) at 1.2770 and, more importantly, the 200-day SMA at 1.2820.

The momentum oscillators are confirming a bearish structure as the RSI is pointing down near the oversold zone, while the MACD is still extending its negative steam below its trigger and zero lines. The 20- and 200-day SMAs created a death cross, confirming the falling movement.

In summary, GBPUSD  has been trending downward in the short term, but a break below 1.2445 could also alter the long-term outlook.

The NZD/USD pair has experienced a significant decline, touching a low of 0.5841 and reaching a yearly trough of 0.5796. The primary pressure comes from a robust US dollar, bolstered by anticipations of a more stringent tariff regime under US President-elect Donald Trump. Speculations about Trump imposing an additional 10% tariff on all Chinese goods have particularly impacted the Kiwi, given China’s role as New Zealand’s largest trading partner.

The market pre-emptively reacts to potential US policy shifts, recalling Trump’s previous term characterised by aggressive trade policies. This has cast a long shadow over the NZD, influencing investor sentiment.

The upcoming Reserve Bank of New Zealand (RBNZ) meeting on Wednesday is crucial, with expectations leaning towards a 50-basis-point rate cut to 4.25% per annum. This expected move aligns with the RBNZ’s dovish stance from October and could sustain the downward pressure on the NZD.

Technical analysis of NZD/USD

H4 chart: the NZD/USD has completed a decline wave, reaching 0.5797, with a subsequent recovery phase targeting 0.5922 underway. After reaching this level, a potential pullback to 0.5860 could establish a consolidation zone around this marker. A break below this range might extend the decline to 0.5777, while an upward breach could pave the way to 0.5977.

H1 chart: the pair is forming an initial growth wave towards 0.5860. Following this target, a retraction to 0.5828 is likely. The Stochastic oscillator supports this currency forecast, indicating a possible downturn from elevated levels and enhancing the likelihood of continuing the downward trajectory.

Markets

The rise in US yields and the dollar showed signs of fatigue lately, hardly reacting to positive data. What can’t go up, must come down. Donald Trump picking Scott Bessent for Treasury Secretary yesterday was a perfect trigger for a countermove. While fully supporting Trump’s tariffs and tax cuts, markets considered him as a relatively moderate/pragmatic profile. This was perceived as giving some comfort on the potential inflationary impact of future policy and to some extent mitigated worries on fiscal exuberance. US yields in a bull flattening move declined between 10.5 bps (2-y) and 12.7 bps (10-y). A $69bn 2-y US Treasury auction attracted solid investor demand with a strong bid-cover ratio of 2.77 and printing 1.8 bps below the WI bid, reinforcing the intraday bond rally. Fed governors Kashkari and Goolsbee suggested they were still open to considering rate cuts at the December meeting. German Bunds underperformed Treasuries in the wake of Friday’s post-PMI rally. Yields changed between +3.3 bps (2-y) and 5.5 bps (30-y). The Bessent nomination also triggered a positive open on US and European equity markets, but the move lacked conviction, leaving limited gains at the close (EuroStoxx 50 +0.23%; S&P 500 +0.3%). The dollar fell prey to some profit taking. DXY dropped to close at 106.82 compared to 108+ levels briefly touched on Friday. EUR/USD tried to regain the 1.05 levels but gains couldn’t be sustained with a close at 1.0495. The (temporary?) global relief didn’t help sterling much as it underperformed the euro (close EUR/GBP 0.835).

Yesterday’s market hope on a ‘guarded’ implementation of Trump policies, is already seriously challenged this morning as the US president-elect announced additional tariffs on Canada, Mexico and China (cf infra). Asian equity indices mostly show losses between 0.5% and 1%. US yields gain modestly and so does the dollar (DXY 107.1, EUR/USD 1.048). The damage for the likes of the euro could have been bigger, but we don’t draw any conclusion from the fact that Trump didn’t say anything about tariffs on European imports. It’s still a long way to January 20. At 153.9, the yen continues its recent outperformance. In this respect, Japanese October PPI services price inflation (2.9%) jumped more than expected. A sub-indicator considering firms with a high labour cost ratio at 3.3% even jumped to a multi-year high, reinforcing the case for the BOJ to proceed with policy normalization, maybe already at the December meeting. Later today, the calendar contains US consumer confidence (Conference Board) and housing data (prices, new home sales). The Fed will publish the minutes of the November 7 meeting. Data probably will be secondary to ‘announcements’ from the Trump administration. In this respect we look out whether yesterday’s correction in US yields and the dollar has much further to go. Markets will also keep an eye at multiple ECB speakers looking for ‘guidance’ on the December rate cut.

News & Views

US President-elect Trump posted on his Truth Social platform that he’ll slap steep tariffs on Mexico and Canada on his first day back in office. He will charge both neighboring countries a 25% tariff on all products until “Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country”. Doing so would likely end the trade agreement (USMCA) from his first term in office. In a separate post, he also aimed at China for not doing enough to stem flow of drugs or migrants to the US.: “Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America”. Local currencies clearly underperform this morning. USD/CAD set a new multi-year high above 1.41. USD/MXN jumped to the YTD top of 20.75 and USD/CNY returns to 7.25 for the first time since the end of July.

The British Retail Consortium’s shop price index showed overall prices rising by 0.2% M/M in November, with both food (+0.3%) and non-food prices (+0.2%) increasing. Annual shop price deflation of 0.6% in the 12 months to November followed a 0.8% drop in the 12 months to October. BRC chief executive warned that “with significant price pressures on the horizon, November’s figures may signal the end of falling inflation”. She warns that stores will pass on higher staffing costs including those coming from a rise in social security contributions by employers (2025 Budget) and a 6.7% increase in the minimum wage. A separate survey from British supermarket Asda warns that a drop in households’ disposable income and rising inflation could subdue Christmas spending..