Sample Category Title

• EURUSD reversed from long-term support level 1.0500
• Likely to rise to resistance level 1.0620

EURUSD currency pair recently reversed up from the major long-term support level 1.0500 (which has been steadily reversing the price from the start of 2023, as can be seen below), standing close to the lower daily Bollinger Band.

The support level 1.0500 level was further strengthened by the lower daily Bollinger Band.

Given the strength of the support level 1.0500, oversold weekly Stochastic and the strong US dollar bearishness seen today, EURUSD currency pair can be expected to rise to the next resistance level 1.06200, former support from the start of this year.

Markets

The week started off with some Bund underperformance, both vs US Treasuries and UK gilts. With the front end adding up to 7 bps, European money markets are slightly paring bets on ECB rate cuts. The terminal rate in the recent repricing was brought down to less than 2%. Such a supportive monetary policy stance isn’t something we consider necessary based on the current economic data, even if the picture isn’t particularly rosy. This week’s (German) PMI’s (on Friday) serve as a reality check and will be watched closely for signs of the economy further bottoming out. Greek Governing Council member Stournaras said in any case ”there’s going to be a number of cuts” and advocated going in steps of 25 bps, the next one all but certain to happen in December. Stournaras said borrowing costs could be close to 2% toward the end of next year. The UK curve joined the bear flattening move in Europe but the US parted ways. US rates were flat (3-yr) to 4 bps (30-yr) higher in a steepening move. Stocks trade on the backfoot in Europe and open mixed on Wall Street. The Nasdaq ekes out a small gain. Tech-heavyweights Tesla and Nvidia more or less cancel each other out with the former rising on speculation president-elect Trump will ease self-driven car rules. The latter slides over an overheating problem with its most recent chip ahead of Wednesday’s earnings release. Currency markets are uninspired. The Japanese yen underperforms on a speech by Ueda. The Bank of Japan governor kept the cards close to his chest, not offering any particular hint on a potential rate hike at the December meeting. USD/JPY recoups some of Friday’s gains but remains sub 155. The euro is generally better bid after a horrible two first weeks in November, though we remain cautious on its upside potential. EUR/USD rises to 1.057. EUR/GBP builds on Friday’s momentum to trade around 0.837 ahead of UK inflation numbers on Wednesday and retail sales and PMI’s on Friday. The greenback on a trade-weighted basis is on track for a back-to-back loss to 106.5. The crypto market captured some headlines with Bitcoin trading back above the 90k barrier. Gas prices on commodity markets hit a new one-year high as supply concerns add to higher demand. Oil prices rebounded the recent lows just north of $70/b (Brent) as well.

News & Views

Greek Prime Minister Mitsotakis said at a Bloomberg event that Athens is planning to repay next year at least €5bn of debt outstanding under the Greek loan facility with maturities ranging from 2033 to 2043. Before year-end the Greek government will still conclude a €7.9bn repayment of floating rate debt (also under GLF) which matures in 2026, 2027 and 2028. Greece has already paid back loans worth €5.3bn in December 2023 and €2.65bn in December 2022 thanks to good growth and the high primary surpluses it is running. The Greek debt ratio is on a downward path since peaking at 207% of GDP in 2020. Next year, it is expected to drop below 150% of GDP. Improving public finances helped the country regain its investment grade status at S&P and Fitch at the end of last year after losing it at the start of the EMU sovereign debt crisis.

The Czech National Bank published remarks on a panel discussion in which CNB governor Michl took part last Thursday. He reiterated his view that we are now entering a phase of higher inflation volatility around central bank targets, with an upside risk. Some degree of restriction is necessary to ensure low core inflation. Looking ahead, core inflation may need to be slightly below 2%. Since this is not reflected in the CNB’s current outlook, they are already discussing the appropriate time to pause rate cuts, likely at the next, December, policy meeting. The CNB cut its policy rate by 25 bps to 4% in November with neutral rates estimated to be at least 3.5%. EUR/CZK trades a tad weaker today, at 25.30.

Greek ECB Governing Council member Yannis Stournaras told Bloomberg today that a 25 bps rate cut at the upcoming December meeting would represent “an optimal reduction".

He acknowledged that interest rates remain firmly in restrictive territory, emphasizing that even with continued cuts to reach the neutral rate, "it’s still a long way to go,” indicating multiple reductions are likely ahead.

Stournaras also highlighted the optimistic revision in inflation expectations. "The baseline is that now, inflation falls more rapidly than we thought in our September forecasts,” he noted, adding that ECB could meet its 2% inflation target on a sustainable basis by early to mid-2025 rather than by the end of the year.

• EUR/USD faces pressure due to a strong US Dollar and concerns about the ECB’s policy direction.
• The US election and potential trade war concerns are weighing on the Euro.
• The interest rate differential between the Fed and ECB is a key factor to watch.

The US Dollar bulls continue to hold firm at the start of the week following signs that some weakness may materialize. So far this has proven to be false, as Asian session declines were immediately wiped out following the European.

ECB Policymakers Send Mixed Signals

The US election has raised concerns for the EU regarding a potential trade war, and its impact on the Euro Area. Mixed messaging from ECB policymakers this morning has kept EUR/USD under pressure following an attempted rally at the start of the European session. Markets will no doubt be eyeing a speech by ECB President Christine Lagarede this evening in Paris for clues as to how the ECB views the potential impact of a Trump Presidency.

Earlier in the day, ECB Vice President Luis de Guindos said that the main worry has moved from high inflation to concerns about economic growth. A trade conflict between the Eurozone and the US could start after Trump said in his campaign that the Eurozone would face serious consequences for not purchasing enough American goods.

Rate Differential Concerns Grow

Following another bout of strong US data last week and an uptick in US PPI numbers, markets continue to price in less cuts from the Federal Reserve. This has kept the USD underpinned at a time when the ECB is dealing with disappointing growth and the possibility of more aggressive rate cuts.

As things stand, the ECB is scheduled to cut rates as much as 140+ bps through December 2025, the Fed are only expected to cut around 70+ bps. This is a massive discrepancy and if this gap continues to grow, the chances of further losses for EUR/USD will rise.

ECB and Federal Reserve Implied Rates – December 2025

ECB

FED

Source: LSEG

Looking ahead to the rest of the week, US and EU PMI data will be key. For the Euro Area more so than the US as concerns linger around growth moving forward. A disappointing PMI print for the EU will keep the Euro on the back foot.

The US PMI data will have markets focused on performance as well, largely to see if the US economy is as strong as recent data suggests. Job creation in the sector might also be of interest given the up and down payroll figures and downgrades in the US.

Technical Analysis of EUR/USD

From a technical standpoint, EUR/USD is holding above the key psychological handle at 1.0500. An inverse hammer candle close on Friday hinted at further upside today, but there remains significant downward pressure on the pair.

This is evidenced by the failure of the pair to hold onto gains with early European session largely wiped out already in a similar vain to Friday.

The positive is that EUR/USD continues to hover around oversold territory on the RSI period 14. This of course not a guarantee of a move higher but a sign that attention should be paid for a potential reversal.

Immediate resistance rests at the 1.0600 and 1.0700 handles respectively before a potential retest of the descending trendline around the 1.0755 handle comes into focus.

A move lower here and a break of the 1.0500 handle faces support at 1.0450 before support at 1.0366 becomes a possibility.

EUR/USD Daily Chart, November 18, 2024

Source: TradingView.com

Support

• 1.0500
• 1.0450
• 1.0366

Resistance

• 1.0600
• 1.0700
• 1.0755

Daily Pivots: (S1) 1.0506; (P) 1.0549; (R1) 1.0583; More...

EUR/USD is staying in consolidation above 1.0495 temporary low and intraday bias stays neutral. Outlook will stay bearish as long as 1.0760 support turned resistance holds. On the downside, firm break of 1.0495 will resume the fall from 1.1213 to 1.0447 support and then 1.0404 key fibonacci level next.

In the bigger picture, price actions from 1.1274 (2023 high) are seen as a consolidation pattern to up trend from 0.9534 (2022 low), with fall from 1.1213 as the third leg. Downside should be contained by 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404, to bring up trend resumption at a later stage. However, firm break of 1.0404 will raise the chance of reversal and target 61.8% retracement at 1.0199.

Daily Pivots: (S1) 1.2580; (P) 1.2638; (R1) 1.2680; More...

GBP/USD's fall from 1.3433 is in progress and intraday bias stays on the downside. Next target is 100% projection of 1.3433 to 1.2842 to 1.3047 at 1.2456. On the upside, above 1.2719 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 1.2842 support turned resistance holds, in case of recovery.

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 1.2977) 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) 0.8857; (P) 0.8883; (R1) 0.8906; More…

USD/CHF is extending consolidations below 0.8916 temporary top and intraday bias stays neutral. Outlook remains bullish as long as 0.8773 resistance turned support holds. On the upside, break of 0.8916 and sustained trading above 61.8% retracement of 0.9223 to 0.8374 at 0.8899 will pave the way back to 0.9223 key resistance.

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) 153.18; (P) 154.97; (R1) 156.07; More...

Intraday bias in USD/JPY remains neutral for the moment. Another rise is in favor as long as 153.87 resistance turned support holds. Break of 156.74 will resume the rally from 139.57 towards 161.91 high. However, firm break of 153.87 and the near term rising channel would confirm short term topping. In this case, intraday bias will turn back to the downside for 151.27 support, or even further to 38.2% retracement of 139.57 to 156.74 at 150.18.

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.

The forex markets are largely consolidating today, with no major developments to drive decisive moves. Euro is showing some recovery, but the uptick appears more like a corrective bounce than a reversal. Sterling and Swiss Franc are following similar patterns, with modest strength lacking the momentum needed for sustained gains. This cautious tone is evident in the tight trading ranges of EUR/USD, GBP/USD, and USD/CHF, as traders await key events, including Wednesday's UK CPI release, and Eurozone and UK PMI data on Friday.

Yen, however, is under mounting pressure as the European session progresses. Rising treasury yields in the US are acting as a headwind, with US 10-year yield once again eyeing the 4.5% mark. Compounding Yen's challenges is the absence of clear signals from BoJ regarding its next policy move. With no explicit guidance on a December rate hike, market participants are increasingly skeptical of imminent monetary tightening. Despite this, Yen remains sensitive to risk sentiment, meaning it could stage a rebound if US equity markets face renewed sell-offs.

Focus will soon turn to RBA meeting minutes, set for release during the upcoming Asian session. Earlier this month, RBA left its cash rate unchanged at 4.35% but caught markets off guard by maintaining a strongly vigilant stance on upside inflation risks. NAB, one of Australia’s largest banks, has already revised its forecast for the first rate cut, pushing the timeline from February to May 2025. The minutes will be closely analyzed to gauge whether February remains a realistic window for RBA’s initial easing move or if the central bank is preparing for a longer wait.

Technically, AUD/USD's fall from 0.6941 paused last week just ahead of 61.8% projection of 0.6941 to 0.6511 from 0.6687 at 0.6421. But there is no sign of bottoming yet, not to mention even reversal. Firm break of 0.6421 would probably trigger another round of accelerated selloff, and pushes AUD/USD towards 100% projection at 0.6257, which is slightly below 0.6269 (2023 low).

In Europe, at the time of writing, FTSE is down -0.04%. DAX is down -0.56%. CAC is down -0.45%. UK 10-year yield is up 0.0382 at 4.509. Germany 10-year yield is up 0.043 at 2.398. Earlier in Asia, Nikkei fell -1.09%. Hong Kong HSI rose 0.77%. China Shanghai SSE fell -0.21%. Singapore Strait Times fell -0.32%. Japan 10-year JGB yield rose 0.0012 to 1.076.

ECB's Makhlouf: Pretty overwhelming evidence needed for 50bps cut in Dec

Irish ECB Governing Council member Gabriel Makhlouf signaled caution today, emphasizing that an interest rate cut at the December 12 meeting is not guaranteed.

“It would be going a bit far to say an ECB interest rate cut next month is 'in the bag,'” he stated, adding that the evidence s would need to be "pretty overwhelming" for a more aggressive 50bps reduction.

Makhlouf also addressed the uncertainty surrounding the impact of US President-elect Donald Trump’s administration on inflation dynamics. He stressed that it would be "premature" to base monetary policy decisions on assumptions about Trump’s fiscal and trade policies, stating, “I do think it would be premature to come to conclusions as to exactly what it is that the new US administration is going to do.”

Eurozone goods exports rises 0.6% yoy in Sep, imports falls -0.6% yoy

Eurozone goods exports rose 0.6% yoy to EUR 237.8B in September. Goods imports fell -0.6% yoy to EUR 225.3B. Trade balance reported a EUR 12.5b surplus. Intra-Eurozone trade fell -1.0% yoy to EUR 215.5B.

In seasonally adjusted term, goods exports rose 0.4% mom to EUR 237.6B. Goods imports fell -0.8% mom to EUR 224.1B. Trade balanced reported EUR 13.6B surplus, larger than expectation of EUR 7.9B. Intra-Eurozone trade fell -0.9% mom to EUR 212.9B.

BoJ's Ueda highlights wages as key inflation driver, reaffirms tightening path

BoJ Governor Kazuo Ueda reiterated in a speech today that the central bank remains committed to its gradual policy tightening path, conditional on the realization of its economic and price outlook. However, the timing of adjustments will depend on evolving "economic activity and prices" as well as "financial conditions."

Ueda stated that monetary policy decisions would hinge on assessments at each Monetary Policy Meeting, taking into account the latest data and projections. Key considerations include underlying inflation trends and financial conditions, with a focus on balancing risks to economic activity.

On inflation, Ueda highlighted that the effects of previous cost pass-throughs from higher import prices are waning. However, he noted that "inflationary pressure stemming from wage increases is projected to strengthen" as economic activity and wage growth remain robust.

While underlying inflation currently lags the 2% target, it is expected to rise moderately and align with the price stability target in the second half of the projection period through fiscal 2026.

NZ BNZ services rises to 46, still extremely challenging conditions

New Zealand’s BusinessNZ Performance of Services Index rose slightly from 45.7 to 46.0 in October. Despite the marginal improvement, the index stayed well below the 50 threshold, indicating ongoing contraction in the sector for a fourth consecutive month. The result also falls significantly short of the long-term average of 53.1.

The proportion of respondents reporting negative sentiment increased from 58.5% to 59.1%. Concerns about the cost of living and broader economic challenges continued to dominate.

BNZ Senior Economist Doug Steel emphasized the sector's struggles, stating that “although it is contracting at a much slower pace than it was in June (when the PSI was 41.1), the PSI has been hovering between 45 and 46 over the last four months.” He noted that while some business surveys indicate an improving outlook, current conditions remain "extremely challenging”.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 153.18; (P) 154.97; (R1) 156.07; More...

Intraday bias in USD/JPY remains neutral for the moment. Another rise is in favor as long as 153.87 resistance turned support holds. Break of 156.74 will resume the rally from 139.57 towards 161.91 high. However, firm break of 153.87 and the near term rising channel would confirm short term topping. In this case, intraday bias will turn back to the downside for 151.27 support, or even further to 38.2% retracement of 139.57 to 156.74 at 150.18.

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.