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Daily Pivots: (S1) 1.6162; (P) 1.6207; (R1) 1.6254; More...

Intraday bias in EUR/AUD stays neutral at this point. On the upside, firm break of 1.6359 resistance will be the first sign of bullish reversal and target 1.6598 resistance for confirmation. On the downside, though, below 1.6125 minor support will bring retest of 1.5963 low.

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) 0.9289; (P) 0.9307; (R1) 0.9324; More....

No change in EUR/CHF's outlook and intraday bias stays neutral for the moment. Further decline is in favor with 0.9343 resistance intact. On the downside, below 0.9269 minor support will bring retest of 0.9204/9 support zone. Decisive break there will confirm larger down trend resumption. Nevertheless, firm break of 0.9343 will now be a sign of near term bullish reversal, and target 0.9444 resistance for confirmation.

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.

• A no-confidence vote to remove French PM Barnier pushed out by the far-right National Rally party may topple the French government this week.
• A current political fiasco in France has triggered an increase in the credit risk premium on longer-term French sovereign bonds.
• A further uptick in French sovereign bonds’ credit risk premium may lead to a major bearish breakdown on the more risk-sensitive EUR/CHF cross pair.

Since our last publication, the higher risk-sensitive EUR/CHF cross pair has wobbled as it grappled with the Eurozone’s economic weakness and a looming unfavorable external trade environment due to further global supply chain disruptions due to incoming US President-elect Trump’s 10% to 20% tariffs threat on other countries’ exports to the US, inclusive of the Eurozone.

The EUR/CHF inched lower in the week of 18 November (ex-post US Presidential election outcome on 6 November) and retested a key intermediate support of 0.9255, a key swing low made almost a year ago on 29 December 2023.

An increase in France’s sovereign bond credit risk premium

Fig 1: 10-year yield spread of French sovereign bond over German Bund as of 3 Dec 2024 (Source: TradingView, click to enlarge chart)

The credit risk premium of longer-term sovereign debt in France can be defined by the 10-year yield spread between France’s and Germany’s sovereign bonds (Bunds)

When the yield spread between 10-year France’s sovereign bonds over Germany’s Bund increases, it suggests a potential increase in the credit risk premium of holding French sovereign bonds.

Since the outcome of the second round of the recent summer French snap-National Assembly election on 7 July, the 10-year yield spread of France’s sovereign bonds over Germany’s Bund has continued to inch higher after its prior major bullish breakout that occurred earlier in the week of 10 June 2024 as the election results have led to a hung-parliament in France.

At the start of this week, the far-right National Rally leader Le Pen intensified her party stance to support a call for a no-confidence vote in the National Assembly to remove the incumbent French Prime Minister Barnier over his refusal to tweet his 2025 budget to suit the viewpoints of the National Rally party.

A no-confidence vote may happen as soon as this Wednesday, 4 December, and the French government may topple this week if things go in favour of Le Pen’s National Rally party.

A further increase in the 10-year yield spread of France’s sovereign bonds over Germany’s Bund towards the 0.98% medium-term resistance level may trigger further downside pressure in the EUR/USD and EUR/CHF (see Fig 1).

EUR/CHF’s last line of defence stands at 0.9255

Fig 2: EUR/CHF medium-term & major trends as of 3 Dec 2024 (Source: TradingView, click to enlarge chart)

The current price level of the EUR/CHF is being traded at 0.9320 at this time of the writing, just a whisker above the 0.9255 key intermediate support in place since its 29 December 2023 swing low.

The weekly MACD trend indicator has continued to inch downwards below its zero centreline which suggests a persistent major downtrend that increases the odds of a major bearish breakdown on the EUR/CHF (see Fig 2).

Watch the modified 0.9565 key medium-term pivotal resistance (also the 200-day moving average) and a break below 0.9255 with a weekly close below it may see fresh multi-year lows on the EUR/CHF to expose the next supports at 0.9085 and 0.8890 in the first step.

On the other hand, a clearance above 0.9565 negates the bearish tone for a squeeze up to revisit the 1.0040/1.1000 long-term pivotal resistance zone (also the upper boundary of the long-term secular descending channel in place since the April 2018 swing high).

• EURJPY finds support near ascending line
• Stochastic and RSI look oversold; bullish move is expected

EURJPY has declined considerably after the pullback from the three-month high of 166.68, losing more than 6% in just one month. The pair recorded a fresh, more than two-month low of 156.36, with the simple moving averages (SMAs) confirming the bearish view in the short term.

However, the technical oscillators indicate the end of the dive. The stochastic oscillator posted a bullish crossover between its %K and %D lines in the oversold territory, while the RSI is pointing slightly up below the 30 level.

If prices continue to head lower, support could come from the 155.15 barrier ahead of the more-than-seven-month low of 154.40. A break below this area would reinforce the short-term bearish view and open the way toward the 153.20 barricade, registered in December 2023.

On the flip side, if the bulls retake control, price advances may stall initially near the 158.10 barrier and the 23.6% Fibonacci retracement level of the down leg from 175.37 to 154.40 at 159.30. A potential upside violation of the latest area would send traders toward the 38.2% Fibonacci of 162.30, which overlaps with the 20-day SMA.

In summary, the EURJPY remains above the medium-term uptrend line, showing indications of a potential bullish wave once more.

Switzerland’s inflation data for November showed CPI falling -0.1% mom, matching expectations and mirroring October’s pace. Core CPI, which excludes volatile items like fresh and seasonal products, energy, and fuel, was flat on a monthly basis. Price movements showed domestic products falling -0.1% mom, while imported product prices dropped -0.4% mom.

On an annual basis, CPI edged up slightly from 0.6% yoy to 0.7% yoy, stabilizing after a downward trend since May, but falling short of market expectations of 0.8% yoy. Core CPI also rose modestly from 0.8% yoy to 0.9% yoy. Domestic product prices saw a slight decline from 1.8% yoy to 1.7% yoy, while imported product prices recovered somewhat, rising from -3.1% yoy to -2.3% yoy.

Full Swiss CPI release here.

Daily Pivots: (S1) 1.0448; (P) 1.0511; (R1) 1.0560; More...

Intraday bias in EUR/USD remains neutral for the moment, and outlook stays bearish 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) 148.86; (P) 149.81; (R1) 150.53; More...

With 151.94 minor resistance intact, further decline is expected in USD/JPY. 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 instead.

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) 1.2599; (P) 1.2671; (R1) 1.2724; More...

Outlook in GBP/USD is unchanged and intraday bias remains neutral for the moment. While another rise cannot be ruled out, outlook will stay bearish as long as 55 D EMA (now at 1.2858) holds. Below 1.2615 minor support will turn intraday bias back to the downside for retesting 1.2486. Break there will resume whole fall from 1.3433.

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 1.2867) 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) 0.8814; (P) 0.8852; (R1) 0.8903; More…

Intraday bias in USD/CHF stays neutral as range trading continues below 0.8956. With 0.8800 support intact, further rally remains in favor. 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 0.8731).

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.

Daily Pivots: (S1) 1.3993; (P) 1.4042; (R1) 1.4094; More...

Range trading continues in USD/CAD below 1.4177 and intraday bias remains neutral for the moment. Further rally is expected with 1.3930 support intact. On the upside, firm break of 1.4177 will resume larger up trend towards 1.4391 projection level. However, break of 1.3926 will turn bias to the downside for deeper pullback to 55 D EMA (now at 1.3864).

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.