Sample Category Title
GBP/USD Daily Outlook
Daily Pivots: (S1) 1.2247; (P) 1.2318; (R1) 1.2452; More
GBP/USD retreats mildly today intraday bias stays on the upside at this point. Further rally should be seen to 38.2% retracement of 1.3141 to 1.2036 at 1.2458. Sustained break there will pave the way to 61.8% retracement at 1.2783. On the downside, below 1.2309 minor support will turn intraday bias neutral first.
In the bigger picture, the strong rebound from 38.2% retracement of 1.0351 to 1.3141 at 1.2075 argues that price action from 1.3141 are merely a correction to rise from 1.0351 (2022 low). Current rally from 1.2036 is tentatively seen as the second leg of the pattern. Hence, while further rally is in favor, upside should be limited by 1.3141 to start the third leg.
Forex Markets Hold Steady; Anticipation Builds for RBA Hike on Tuesday
As the new trading week opens, the forex markets present a scene of relative tranquility during the Asian session. Dollar is attempting a modest recovery from last week's downturn, yet the impetus for a decisive rally seems absent. In contrast to the upbeat sentiment in Asian equity markets, spurred by Friday's surge on Wall Street, currencies such as the Australian and New Zealand Dollars are not following suit, entering a phase of consolidation instead. Yen has shown vulnerability in response to BoJ Governor Kazuo Ueda's reaffirmation of a dovish policy outlook. Meanwhile, Swiss Franc has edged ahead, together with Euro, as the British Pound trails its continental counterparts.
Today's economic calendar will feature Eurozone PMI services final and Sentix investor confidence, complemented by UK's construction PMI and Canada's Ivey PMI. These figures, however, are not expected to be the catalysts for significant market movement. Market participants seem poised to hold their breath for more definitive events, such as tomorrow's widely anticipated rate decision by RBA and the forthcoming Japanese wage statistics, which could provide fresh directional inspirations.
In this context, AUD/JPY currency pair stands out as one to watch. Technically speaking, AUD/JPY's triangle consolidation from 97.66 is likely completed already and rise from 86.04 is ready to resume. Break of 97.66 resistance will confirm this bullish case and target 99.32 high. Firm break there will resume larger up trend from 59.85 (2020 low). Next target will be 61.8% projection of 86.04 to 97.66 from 94.21 at 101.39. However, break of 96.48 will delay the bullish case and bring retreat first.
In Asia, at the time of writing, Nikkei is up 2.23%. Hong Kong HSI is up 1.71%. China Shanghai SSE is up 0.83%. Singapore Strait Times is up 0.49%. Japan 10-year JGB yield is down -0.040 at 0.876.
ECB's Lagarde determined to bring inflation down to 2%
In an interview with Kathimerini, ECB President Christine Lagarde enunciated the bank's determined path: "We are determined to bring inflation down to 2%. According to our projections, we will get there in 2025."
This determination comes against a backdrop of soaring prices affecting economies worldwide, with ECB focusing not just on the broader inflationary metric but also on its constituent parts. "When we measure inflation, we pay attention to the headline rate,"
Delving into the specifics, Lagarde acknowledged the significant volatility in food prices, a primary concern for policy-makers and consumers alike. She highlighted a future clouded by environmental uncertainty: "Is the price of food going to be higher in the future? That's a possibility if you look at the impact of climate change."
Lagarde also touched on the societal impact of inflation, particularly the strain on the vulnerable populations. "Let me say that our mandate is to ensure price stability, and this is the best contribution we can make to social peace and to society, to the most vulnerable of its members in particular."
BoJ Governor Ueda affirms commitment to easing amid uncertain inflation-wage dynamics
BoJ Governor Kazuo Ueda reaffirmed today the central bank's commitment to its accommodative stance.
"We're seeing more positive signs than before in corporate wage and price-setting behavior," Ueda stated, acknowledging the nascent signs of a healthier inflation-wage cycle. However, he also underscored the prevailing uncertainties, admitting, "there's still uncertainty on whether the positive cycle will strengthen, as we predict."
With an eye on supporting economic activity, Ueda emphasized the central bank's resolve, "We will patiently maintain monetary easing," indicating no immediate shift from BoJ's long-standing dovish position.
Last week's decision to relax the 1% cap on 10-year JGB yield, allowing greater movement in long-term borrowing costs, was a nod to flexibility in BoJ's approach. Today, Ueda elaborated, "We will conduct nimble market operations when interest rates rise, depending on the level and speed of moves of long-term rates."
Ueda also sought to temper market expectations regarding the potential for sharp rises in long-term yields. "Even if long-term rates come under upward pressure, don't expect the 10-year JGB yield to sharply exceed 1%," he stated.
The Governor's comments reflect a deep consideration of the "real" interest rate, which factors in inflation expectations. He explained, "Long-term rates may rise somewhat but what's important is to look at the real interest rate that takes into account inflation expectations."
He reassured markets, "Even if long-term rates rise, real interest rates will move in negative territory so monetary conditions will be sufficiently accommodative."
Japan's PMI services finalized at 51.6, growth is on the wane
Japan's PMI Services was finalized at 51.6 in October, down from previous month's 53.8. PMI Composite figure similarly declined to 50.5 from September's 52.1.
Andrew Harker of S&P Global Market Intelligence highlighted the subdued performance: "While the PMI data continue to make positive reading for the Japanese service sector, the recent trends suggest that growth is on the wane."
He elaborates that the slowdown is notably marked by the softest increases in activity and new orders witnessed since the year's inception, which could herald a persistent deceleration as we edge closer to the year's end.
This softening expansion has raised concerns regarding the service sector's capacity to buoy the broader economy, particularly as manufacturing continues to lag. Harker notes the stagnation of new orders in October, halting an eight-month stretch of growth and presenting a cautionary backdrop for the upcoming months.
This week's market movers: RBA , BoJ opinions, Fed comments, and UK GDP
RBA gears up for a widely anticipated rate hike amidst stubbornly strong inflation figures. With inflation showing no signs of a slowdown, indicated by a quarterly CPI jump of 1.2% and a monthly CPI acceleration to 5.6% yoy, all eyes are on the RBA's rate decision and its subsequent implications on monetary policy.
Investors and analysts alike are bracing for a 25 basis point increase to 4.35%, but the larger narrative lies in RBA's inflation forecasts and the strategic path set for future rates. The uncertainty is palpable, and the forthcoming Statement on Monetary Policy is expected to shed light on these pivotal questions.
Simultaneously, BoJ is slated to release Summary of Opinions from its late October meeting. The bank's subtle shift in language, hinting at a more flexible stance on the 1% yield cap, has stoked interest in the details of this adjustment and the broader implications for Japan's protracted negative interest rate policy. Upcoming cash earnings data from Japan will also be scrutinized as wages growth is a prerequisite to sustainable inflation.
Adding to the mix, BoC and ECB will also be under examination as they publish summaries of deliberation and an economic bulletin, respectively. Additionally, as the Fed's blackout period ended, the financial world awaits policymakers' insights, particularly their perspectives on the timing and extent of future rate reductions.
On the data front, UK's GDP figures are expected to be a highlight too, with current indicators hinting at the UK skirting the edges of a recession. Negative deviations from expected GDP outcomes could solidify the narrative that BoE's rate hikes have reached their peak already.
Lastly, as the global economic pulse is continually assessed, China's upcoming reports on trade balance, CPI, and PPI will provide valuable data points, offering a glimpse into the resilience of the world's second-largest economy amid widespread deflation and slowdown concerns.
Here are some highlights for the week:
- Monday: BoJ minutes; Germany factory orders; Eurozone PMI Services final, Sentix investor confidence; UK PMI construction; Canada Ivey PMI.
- Tuesday: Japan average cash earnings, household spending; China trade balance; RBA rate decision; Swiss unemployment rate, foreign currency reserves; Germany industrial production; Eurozone PPI; Canada trade balance; US trade balance.
- Wednesday: New Zealand inflation expectations; Germany CPI final; France trade balance; Italy retail sales; Eurozone retail sales; Canada building permits; BoC summary of deliberations.
- Thursday: BoJ summary of opinions; China CPI, PPI; ECB monthly bulletin; US jobless claims.
- Friday: UK GDP, production, trade balance; US U of Michigan consumer sentiment.
GBP/USD Daily Outlook
Daily Pivots: (S1) 1.2247; (P) 1.2318; (R1) 1.2452; More
GBP/USD retreats mildly today intraday bias stays on the upside at this point. Further rally should be seen to 38.2% retracement of 1.3141 to 1.2036 at 1.2458. Sustained break there will pave the way to 61.8% retracement at 1.2783. On the downside, below 1.2309 minor support will turn intraday bias neutral first.
In the bigger picture, the strong rebound from 38.2% retracement of 1.0351 to 1.3141 at 1.2075 argues that price action from 1.3141 are merely a correction to rise from 1.0351 (2022 low). Current rally from 1.2036 is tentatively seen as the second leg of the pattern. Hence, while further rally is in favor, upside should be limited by 1.3141 to start the third leg.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:50 | JPY | BoJ Minutes | ||||
| 00:00 | AUD | TD Securities Inflation M/M Oct | -0.10% | 0.00% | ||
| 07:00 | EUR | Germany Factory Orders M/M Sep | -1.40% | 3.90% | ||
| 08:45 | EUR | Italy Services PMI Oct | 48.5 | 49.9 | ||
| 08:50 | EUR | France Services PMI Oct | 46.1 | 46.1 | ||
| 08:55 | EUR | Germany Services PMI Oct | 48 | 48 | ||
| 09:00 | EUR | Eurozone Services PMI Oct | 47.8 | 47.8 | ||
| 09:30 | EUR | Eurozone Sentix Investor Confidence Nov | -22.5 | -21.9 | ||
| 09:30 | GBP | Construction PMI Oct | 46.2 | 45 | ||
| 15:00 | CAD | Ivey PMI Oct | 54 | 53.1 |
Technical Outlook and Review
DXY:
The DXY (US Dollar Index) chart currently has a bearish overall momentum, suggesting the potential for a bearish reaction off the 1st resistance level and a drop towards the 1st support.
The 1st support at 104.38 is identified as an overlap support and is associated with the 38.20% Fibonacci Retracement level, indicating it could be a significant level where the price might find some buying interest.
On the resistance side, the 1st resistance at 105.65 is categorized as a pullback resistance, suggesting it could act as a level where the price may face selling pressure.
The 2nd resistance at 106.71 is defined as a multi-swing high resistance, indicating another potential level where the price may encounter obstacles in its upward movement.
EUR/USD:
The EUR/USD chart currently has a bullish overall momentum, indicating the potential for a bullish continuation towards the 1st resistance.
The 1st support at 1.0674 is identified as a pullback support and is associated with the 23.60% Fibonacci Retracement level, suggesting it could be a significant level where the price might find buying interest.
On the resistance side, the 1st resistance at 1.0765 is categorized as an overlap resistance and is linked to the 38.20% Fibonacci Retracement level, indicating it could act as a level where the price may encounter selling pressure.
The 2nd resistance at 1.0858 is identified as a pullback resistance and is related to the 50% Fibonacci Retracement level, further reinforcing its potential as a level where the price might face obstacles in its upward movement.
EUR/JPY:
For EUR/JPY, the chart’s overall momentum is currently bullish, supported by the price trading above the bullish Ichimoku cloud. There’s a potential for a bullish continuation towards the first resistance.
The first support at 159.78 is identified as a pullback support, representing a level where the price might find support during any potential retracement in the bullish trend.
The second support at 158.12 is recognized as swing low support, indicating an additional level that might offer support during the bullish trend.
On the resistance side, the first resistance at 162.86 is characterized as swing high resistance, signifying a level that could potentially act as a significant barrier to the price’s upward movement within the current bullish scenario.
Additionally, an intermediate resistance at 160.47 is associated with swing high resistance, further supporting a potential level that could pose an obstacle to the price’s upward movement within the bullish trend.
EUR/GBP:
For EUR/GBP, the overall momentum of the chart is presently bearish, triggered by the price breaking below an ascending support line, suggesting a potential for a bearish move.
There’s a possibility that the price might rise towards the first resistance at 0.8697 in the short term before reversing and potentially dropping towards the first support.
The first support at 0.8621 is recognized as a level of swing low support, indicating a point where the price might find support during a potential downward movement.
On the resistance side, the first resistance at 0.8697 is identified as pullback resistance, suggesting a level that could potentially act as a barrier to the short-term upward movement within the overall bearish context.
Furthermore, the second resistance at 0.8734 is characterized as an overlap resistance, indicating it could serve as an additional substantial barrier to the price’s upward movement within the prevailing bearish trend.
GBP/USD:
The GBP/USD chart currently has a bullish overall momentum, suggesting the potential for a bullish continuation towards the 1st resistance.
The 1st support at 1.2301 is identified as a pullback support and is associated with the 23.60% Fibonacci Retracement level, indicating it could be a significant level where the price might find buying interest.
The 2nd support at 1.2073 is considered a multi-swing low support, further reinforcing its potential as a support level.
On the resistance side, the 1st resistance at 1.2597 is categorized as a pullback resistance and is linked to the 50% Fibonacci Retracement level, suggesting it could act as a level where the price may encounter selling pressure.
Intermediate resistance at 1.2455 is also noted as a pullback resistance and is related to the 38.20% Fibonacci Retracement level, adding to the potential areas where the price might find resistance.
GBP/JPY:
For GBP/JPY, the chart currently reflects a bullish momentum, indicating a potential scenario for a bullish continuation towards the first resistance.
The first support at 183.35 is identified as a level of pullback support, suggesting it might act as a supportive level during any potential retracement in the bullish trend.
The second support at 181.05 is recognized as multi-swing low support, providing an additional level that might offer support during the bullish trend.
On the resistance side, the first resistance at 186.46 is characterized as multi-swing high resistance, coinciding with the 78.60% Fibonacci Projection. This suggests that it could act as a significant level, potentially hindering further bullish movement within the current upward trend.
USD/CHF:
The USD/CHF chart currently has a bearish overall momentum, suggesting the potential for a bearish continuation towards the 1st support.
The 1st support at 0.8858 is identified as an overlap support and is associated with the 50% level, indicating it could be a significant level where the price might find some buying interest.
On the resistance side, the 1st resistance at 0.9093 is categorized as an overlap resistance, suggesting it could act as a level where the price may face selling pressure.
The 2nd resistance at 0.9216 is considered a multi-swing high resistance, indicating another potential level where the price may encounter obstacles in its upward movement.
USD/JPY:
The USD/JPY chart currently has a bearish overall momentum, suggesting the potential for a bearish continuation towards the 1st support.
The 1st support at 144.94 is identified as an overlap support, indicating it could be a significant level where the price might find some buying interest.
On the resistance side, the 1st resistance at 151.97 is categorized as a swing high resistance, suggesting it could act as a level where the price may face selling pressure.
The 2nd resistance at 152.93 is associated with the 100% Fibonacci Projection, indicating another potential level where the price may encounter obstacles in its upward movement.
USD/CAD:
The USD/CAD chart currently demonstrates an overall bearish momentum. However, there is a potential scenario for price to make a bullish bounce off the 1st support. Price is also trading within a bullish channel, potentially acting as a support zone.
The 1st support level at 1.3574 is identified as a pullback support. Further below, the 2nd support level at 1.3380 is marked as an overlap support, indicating a potential area of price support.
To the upside, the 1st resistance level at 1.3864 is identified as a multi-swing-high resistance that aligns close to the upper trendline of the bullish channel, further reinforcing the potential for resistance in that region.
AUD/USD:
The AUD/USD chart currently exhibits an overall bullish momentum, suggesting a potential for a bullish breakout of the 1st resistance and move higher towards the 2nd resistance.
The 1st resistance level at 0.6503 is identified as an overlap resistance. Higher up, the 2nd resistance level at 0.6593 is also noted as an overlap resistance.
To the downside, the 1st support level at 0.6299 is identified as an overlap support. Further below, the 2nd support level at 0.6206 is marked as a swing-low support, indicating a potential for a strong price support.
NZD/USD
The NZD/USD chart currently demonstrates an overall bullish momentum, suggesting a potential for a bullish continuation towards the 1st resistance.
The intermediate resistance level at 0.5984 is identified as an overlap resistance while the 1st resistance level at 0.6051 is also marked as an overlap resistance, acting as a potential barrier to upward price movements.
To the downside, the 1st support level at 0.5867 is identified as an overlap support, potentially acting as a strong support zone.
DJ30:
The DJ30 chart currently shows a bearish momentum, characterized by the price being below a major descending trend line, suggesting a potential continuation of bearish sentiment.
There is a likelihood for a bearish reaction off the first resistance at 34112.38, potentially leading to a drop to the first support.
The first support at 33451.97 is associated with the 38.20% Fibonacci Retracement, indicating a level where the price might find support during its potential decline in the bearish trend.
On the resistance side, the first resistance at 34112.38 is recognized as an overlap resistance, representing a significant barrier to the price’s upward movement in the current bearish scenario.
The second resistance at 34449.91 is identified as pullback resistance, suggesting it might pose another substantial obstacle for the price’s upward movement within the prevailing bearish trend.
GER40:
For GER40, the chart currently demonstrates a bullish momentum, suggesting a potential scenario for a bullish continuation towards the first resistance.
The first support at 14582.90 is recognized as an overlap support, indicating a level where the price might find support during any potential retracement or decline in the bullish trend.
On the resistance side, the first resistance at 15527.50 is characterized as an overlap resistance and coincides with the 50% Fibonacci Retracement level, suggesting it as a significant barrier to the price’s upward movement in the current bullish scenario.
Moreover, the second resistance at 16020.20 aligns with another overlap resistance and the 78.60% Fibonacci Retracement, further solidifying it as a potentially stronger level that could impede the price’s upward movement within the bullish trend.
US500
For US500, the chart currently indicates a bearish momentum, suggesting a potential scenario for a bearish reaction off the first resistance at 4368.2, possibly leading to a drop to the first support.
The first support at 4265.6 is related to the 38.20% Fibonacci Retracement, suggesting a level where the price might find support during its potential decline in the bearish trend.
On the resistance side, the first resistance at 4368.2 is identified as an overlap resistance and coincides with the 50% Fibonacci Retracement, indicating a significant barrier to the price’s upward movement in the current bearish scenario.
Furthermore, the second resistance at 4438.8 aligns with pullback resistance and the 61.80% Fibonacci Retracement, suggesting it as another potentially strong level that could act as a significant barrier to the price’s upward movement within the bearish trend.
BTC/USD:
The BTC/USD chart currently suggests a bullish momentum, indicating a potential scenario for a bullish break through the first resistance at 34460, potentially rising towards the second resistance.
The first support at 31541 is considered a pullback support, signifying a level where the price might find support during its upward movement or retracement.
On the resistance side, the first resistance at 34460 is recognized as pullback resistance and aligns with the 61.80% Fibonacci Retracement level. This level indicates a significant hurdle that the price may need to break through for its further upward movement.
Additionally, the second resistance at 41042 is associated with the 78.60% Fibonacci Retracement, indicating a potentially stronger level that could act as a substantial barrier to the price’s upward movement within the bullish trend.
ETH/USD:
The ETH/USD chart currently exhibits a bullish momentum, driven by the breakthrough above a descending resistance line, which has triggered the potential for a bullish move.
There’s a potential for a bullish continuation towards the first resistance at 2017.14.
The first support at 1828.41 is identified as a pullback support, indicating a level where the price might find support during any potential retracement or decline in its upward movement.
The second support at 1743.27 is recognized as an overlap support, providing an additional level that might offer support during the bullish trend.
On the resistance side, the first resistance at 2017.14 is characterized as multi-swing high resistance, signifying a level that could potentially act as a significant barrier to the price’s upward movement within the current bullish scenario.
WTI/USD:
The WTI chart currently exhibits an overall bearish momentum. However, there is a potential for price to make a bullish continuation towards the 1st resistance before resuming the downturn.
The 1st resistance level at 82.29 is noted as an overlap resistance.
To the downside, the 1st support level at 77.48 is identified as an overlap support. Additionally, the 2nd support level at 73.84 is also marked as an overlap support, reinforcing a potential support zone.
XAU/USD (GOLD):
The XAU/USD chart currently has a bullish overall momentum, suggesting the potential for a bullish continuation towards the 1st resistance.
The 1st support at 1981.79 is identified as an overlap support, indicating it could be a significant level where the price might find some buying interest.
The 2nd support at 1945.66 is considered a pullback support, further reinforcing its potential as a support level.
On the resistance side, the 1st resistance at 2047.23 is categorized as a multi-swing high resistance, suggesting it could act as a level where the price may face selling pressure.
BoJ Governor Ueda affirms commitment to easing amid uncertain inflation-wage dynamics
BoJ Governor Kazuo Ueda reaffirmed today the central bank's commitment to its accommodative stance.
"We're seeing more positive signs than before in corporate wage and price-setting behavior," Ueda stated, acknowledging the nascent signs of a healthier inflation-wage cycle. However, he also underscored the prevailing uncertainties, admitting, "there's still uncertainty on whether the positive cycle will strengthen, as we predict."
With an eye on supporting economic activity, Ueda emphasized the central bank's resolve, "We will patiently maintain monetary easing," indicating no immediate shift from BoJ's long-standing dovish position.
Last week's decision to relax the 1% cap on 10-year JGB yield, allowing greater movement in long-term borrowing costs, was a nod to flexibility in BoJ's approach. Today, Ueda elaborated, "We will conduct nimble market operations when interest rates rise, depending on the level and speed of moves of long-term rates."
Ueda also sought to temper market expectations regarding the potential for sharp rises in long-term yields. "Even if long-term rates come under upward pressure, don't expect the 10-year JGB yield to sharply exceed 1%," he stated.
The Governor's comments reflect a deep consideration of the "real" interest rate, which factors in inflation expectations. He explained, "Long-term rates may rise somewhat but what's important is to look at the real interest rate that takes into account inflation expectations."
He reassured markets, "Even if long-term rates rise, real interest rates will move in negative territory so monetary conditions will be sufficiently accommodative."
Japan’s PMI services finalized at 51.6, growth is on the wane
Japan's PMI Services was finalized at 51.6 in October, down from previous month's 53.8. PMI Composite figure similarly declined to 50.5 from September's 52.1.
Andrew Harker of S&P Global Market Intelligence highlighted the subdued performance: "While the PMI data continue to make positive reading for the Japanese service sector, the recent trends suggest that growth is on the wane."
He elaborates that the slowdown is notably marked by the softest increases in activity and new orders witnessed since the year's inception, which could herald a persistent deceleration as we edge closer to the year's end.
This softening expansion has raised concerns regarding the service sector's capacity to buoy the broader economy, particularly as manufacturing continues to lag. Harker notes the stagnation of new orders in October, halting an eight-month stretch of growth and presenting a cautionary backdrop for the upcoming months.
ECB’s Lagarde determined to bring inflation down to 2%
In an interview with Kathimerini, ECB President Christine Lagarde enunciated the bank's determined path: "We are determined to bring inflation down to 2%. According to our projections, we will get there in 2025."
This determination comes against a backdrop of soaring prices affecting economies worldwide, with ECB focusing not just on the broader inflationary metric but also on its constituent parts. "When we measure inflation, we pay attention to the headline rate,"
Delving into the specifics, Lagarde acknowledged the significant volatility in food prices, a primary concern for policy-makers and consumers alike. She highlighted a future clouded by environmental uncertainty: "Is the price of food going to be higher in the future? That's a possibility if you look at the impact of climate change."
Lagarde also touched on the societal impact of inflation, particularly the strain on the vulnerable populations. "Let me say that our mandate is to ensure price stability, and this is the best contribution we can make to social peace and to society, to the most vulnerable of its members in particular."
A Decisive Turn for US Labour Market
The US employment outcomes of the past six months point to balance between demand and supply. For the outlook, downside risks are growing.
The abrupt upturn in nonfarm payrolls employment witnessed in September and Q3’s (very) strong GDP print led the market to question whether the US economy was re-accelerating, warranting additional tightening by the FOMC. Just a month on however, a benign view for inflation has emerged. Indeed, there is now evidence of downside risks forming for both employment and consumption.
October’s 150k payroll gain was half September’s increase and also below August’s 165k. More to the point, it leaves the 3-month average at 204k, a long way short of the 342k average of the same period a year ago, and 667k a year before that (2021). 204k is still twice the 100k pace FOMC members have tabled as consistent with balance between labour demand and supply. But current population growth provides enough supply for 130k new jobs a month. And, if the trend rise in participation is also accounted for, supply has been sufficient over the past year for around 250k new jobs per month. Note as well that, during the past 12 months, total hours worked have declined 0.9%. As such, the creation of 105k new jobs has been required each month to offset hours lost by existing workers.
The household survey in contrast points to slack already building, the number of employed having risen just 32k per month May to October, including an average decline of 13k the past three months. This lack of employment growth – while the labour force has grown by around 170k per month – is behind the unemployment rate’s 0.5ppt rise since April, and the U6 measure of underemployment’s 0.6ppt gain. At 3.9%, the unemployment rate is now above the year-end forecast of FOMC members at the time of their September meeting and just 0.2ppts below the peak rate the Committee expects through 2024 and 2025. Available detail from the business surveys points to a further deterioration in the current pace of employment, making a continuation of the six month uptrend in unemployment and underemployment likely.
The consequences for wage growth of the resetting of demand and supply have already been significant, average hourly earnings growth decelerating from a recent peak of 5.9%yr in mid-2022 to 4.1%yr currently. With the current rate only marginally above core PCE inflation of 3.7%yr at September, the current nominal wage pulse points to a slow healing of real wages from their pandemic lows.
Overall, the US labour is still in robust structural health, yet it is evident that the heat has come out and downside risks for employment and household incomes are forming. To be clear, this is not an assessment based on October’s data alone, but rather the outcomes of the past six months, with the full effect of tight financial and credit conditions still to be felt.
We remain of the view that the FOMC will soon have to shift to a much more balanced view of the outlook and begin making real-time assessments of the appropriate degree of policy restrictiveness. Through 2024, with growth below-trend, this will certainly lead to a lower level of interest rates than today. As has been the case on the way up however, how the term premium and other elements of financial conditions evolve will dictate the precise scale and timing of adjustments to the fed funds rate by the FOMC.
Forex and Cryptocurrencies Forecast
EUR/USD: A Bad Week for the Dollar
Throughout the week, the Dollar Index DXY, along with EUR/USD, appeared to be riding the waves, moving up and down. At the beginning of the week, preliminary data for Europe was released. In terms of annual growth, the GDP of the Eurozone in the third quarter was only 0.1%, which fell short of both the forecast of 0.2% and the previous figure of 0.5%. In addition, inflation took a downward turn – in October, the Consumer Price Index (CPI) stood at 2.9% (year-on-year), missing the forecast of 3.1% and the previous month's 4.3%.
The European Central Bank meeting took place on October 26, during which the members of the Governing Council unsurprisingly left the interest rate unchanged at 4.50%. Now, market participants were eagerly anticipating the decision of the Federal Open Market Committee (FOMC) of the Federal Reserve, scheduled for Wednesday, November 1. On the eve of the FOMC meeting, the dollar, regarded as a safe-haven asset, received support due to increased geopolitical tensions in the Middle East. Additionally, strong macroeconomic data from the United States favoured the American currency. The country's GDP in the third quarter surged by 4.9%, significantly surpassing the previous figure of 2.1%. Another surprise came from the ADP private sector employment data: the change in the number of employed individuals in the private sector reached 113K, compared to 89K the previous month.
Market participants had a sense that in such a situation, the Federal Reserve (FOMC) might well continue tightening monetary policy, especially since inflation is still far from the target level of 2.0%. Against this backdrop, the yield on 10-year Treasury bonds once again approached the 5.0% level, and the Dollar Index (DXY) rose to 107.00.
However, November 1 brought complete disappointment to the dollar bulls. For the second consecutive month, the FOMC left the key interest rate unchanged at 5.50%. What's worse is that if after the September meeting, the market believed that the cost of borrowing would rise to 5.75% by the end of this year, the probability of such an increase has now plummeted to 14%. The Dollar also received no support from the rhetoric of Federal Reserve Chairman Jerome Powell during the press conference following the current meeting.
The situation could have been rectified by the data from the U.S. Bureau of Labor Statistics (BLS), traditionally published on the first Friday of the month, which was on November 3. However, the number of non-farm payroll (NFP) employees in the country only increased by 150K in October. This figure turned out to be lower than both the market's expectations of 180K and the revised September growth, which was adjusted from 336K to 297K. The unemployment rate rose during the same period from 3.8% to 3.9%. The annual inflation, measured by the change in the average hourly wage, decreased from 4.3% to 4.1%. As a result of this disappointing data for Dollar bulls, the Dollar Index (DXY) plummeted to 105.09, while EUR/USD reached a six-week high at 1.0718.
Towards the end of the workweek, the publication of the ISM Services PMI index revealed that business activity in the U.S. services sector was growing at a slower pace in October. The PMI declined to 51.8 from 53.6 in September. This value was below the market's expectation of 53.0. More detailed data showed that the index of service prices (the inflation component) decreased slightly from 58.9 to 58.6, and the employment index dropped from 53.4 to 50.2. As a result, the Dollar continued its descent, and the final note of the week for the currency pair was heard at the level of 1.0730.
According to strategists at the Canadian Scotiabank, in the short term, EUR/USD could rise to 1.0750. In general, expert opinions regarding the near future of the currency pair are divided as follows: 45% voted for a stronger Dollar, while 60% sided with the Euro. As for technical analysis, 35% of the D1 oscillators are pointing south, while 65% are pointing north, although a third of them signal overbought conditions for the pair. Among trend indicators, priorities are clearer: 85% are looking north, with only 15% looking south. The nearest support for the pair is located around 1.0675-1.0700, followed by 1.0600-1.0620, 1.0500-1.0530, 1.0450, 1.0375, 1.0200-1.0255, 1.0130, and 1.0000. Bulls will encounter resistance around 1.0745-1.0770, then 1.0800, 1.0865, 1.0945-1.0975, and 1.1090-1.1110.
Unlike the past five days, the economic calendar for the upcoming week anticipates significantly fewer important events. On Wednesday, November 8, data on inflation (CPI) in Germany and retail sales in the Eurozone will be released. Additionally, on this day, Federal Reserve Chairman Jerome Powell is scheduled to give a speech. He can also be heard again on Thursday, November 9. As is customary, Thursday will also bring data on the number of initial jobless claims in the United States.
GBP/USD: A Good Week for the Pound
Looking at the results of central bank meetings in many countries, there is a sense that the global trend of tightening monetary policy has come to an end. Both the ECB and the Fed left interest rates unchanged. The Bank of England (BoE) also did the same on November 2 at its meeting, leaving the key rate unchanged for the second consecutive time at 5.25%. According to the regulator, such a decision should support the recovery of the economy and employment levels in the United Kingdom. The short-term inflation forecast was revised upwards. However, the central bank leaders noted that inflation in the third quarter had decreased to 6.7%, which was better than expected in August, and its target level of 2.0% is likely to be reached by the end of 2025.
Despite the BoE keeping the rate unchanged, the market perceived this decision as hawkish because three out of nine members of the bank's leadership voted for an increase. Furthermore, the Governor of the Bank of England, Andrew Bailey, emphasized during a press conference that considering a rate cut would be premature. He stated, "Monetary policy is likely to remain restrictive for an extended period." Investors are aware that central banks use such forward guidance as a tool to influence the market, so it is unlikely that the regulator will switch to a soft monetary policy anytime soon. Of course, there are no guarantees that the BoE will stick to its promises if inflation does not move towards the target level. However, at the moment, the market believes Andrew Bailey, which has supported the British currency.
The pound received its strongest bullish impulse after the release of US labor market data on November 3. At that moment, GBP/USD surged upwards, continued its ascent, and closed the week at 1.2380. According to Scotiabank economists, the short-term trading model for the British currency looks promising. They note an increase in demand for the pound amid its weakening since mid-July and do not rule out a rise of GBP/USD to the 1.2450 level. As for the median forecast for the near future, 35% of analysts voted for the pair's rise, 50% believe that the pair will resume its movement towards the 1.2000 target, and the remaining 15% remain neutral. On the D1 timeframe, 75% of trend indicators point to a pair's rise and are coloured green, while the remaining 25% are red. Oscillators show the same readings: 75% point upwards (a quarter of them are in the overbought zone), and 25% voted for a decline. In case the pair moves south, it will encounter support levels and zones at 1.2330, 1.2210, 1.2145, 1.2040-1.2085, 1.1960, and 1.1800-1.1840, 1.1720, 1.1595-1.1625, 1.1450-1.1475. In the event of an upward movement, the pair will face resistance at levels 1.2390-1.2425, 1.2450-1.2520, 1.2575, 1.2690-1.2710, 1.2785-1.2820, 1.2940, and 1.3140.
The speech by the Governor of the Bank of England, Andrew Bailey, scheduled for November 8, and the release of preliminary GDP data for the country for Q3 on November 10 can be highlighted in the events of the upcoming week related to the United Kingdom's economy.
USD/JPY: A Middling Week for the Yen
If the ECB, the Federal Reserve, and the Bank of England have left interest rates unchanged, what could be expected from their Japanese counterparts? Of course, the Bank of Japan (BoJ) made the decision to maintain the parameters of its monetary policy during its meeting on Tuesday, October 31. They have been in this position for a very long time. The regulator not only retained the interest rate at a negative level of -0.1% but also kept the yield on 10-year government bonds (JGB) unchanged. Some market participants had hoped that after the inflation growth data, BoJ would raise their yield ceiling from 1% to at least 1.25%. (It's worth noting that the yield on similar US securities is close to 5.0%). However, instead, the Bank of Japan continued to ignore obvious signs of increasing inflationary pressure. Although in the Tokyo region, the CPI rose from 2.8% to 3.3% (YoY) in October. Additionally, despite assurances from high-ranking officials about the priority of industrial production growth, this indicator declined from -4.4% to -4.6% in annual terms.
All of this pushed USD/JPY to a high of 151.71. It would have likely remained there if not for the results of the Federal Reserve's meeting and US labor market data. As a result, it started the week at 149.63 and finished at 149.34. Considering the pair's high volatility, the outcome can be considered neutral.
Economists from the largest banking group in the Netherlands, ING, believe that the pair will end the year not far from 150.00. Regarding its near-term prospects, 65% of analysts expect the yen to strengthen, 35% take a neutral position, and there were no votes for it to rise above 151.00 at the time of writing this review. Technical analysis indicators appear quite mixed this time. On the D1 timeframe, 50% of trend indicators are in green, and the same percentage is in red. Among oscillators, one-third voted for the pair's rise, one-third for its fall, and one-third remained neutral-gray. The nearest support level is located in the range of 148.45-148.80, then 146.85-147.30, 145.90-146.10, 145.30, 144.45, 143.75-144.05, and 142.20. The closest resistance is 150.00-150.15, followed by 150.40-150.80, 151.90 (October 2022 high), and 152.80-153.15.
There is no significant economic data regarding the state of the Japanese economy scheduled for release in the coming week.
CRYPTOCURRENCIES: Important Insights into the Past and Future
First, a few words about the past month. Firstly, on Tuesday, October 31, bitcoin celebrated its birthday. It was on this day in 2008 that someone using the pseudonym Satoshi Nakamoto published (or it was published) a document titled "Bitcoin: A Peer-to-Peer Electronic Cash System." At the same time, it's worth noting that bitcoin itself emerged as a cryptocurrency on the market only on January 3, 2009. On that day, a block was mined, in which the date and a brief excerpt from an article in The Times were written: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." On January 12, 2009, Nakamoto made the first transaction on the network, sending cryptocurrency to developer Hal Finney. In the same year, bitcoin was listed on the New Liberty Standart exchange. On it, you could buy 1309 BTC for just $1 (which is nearly $55 million today).
The second significant event was not the last day of October but the entire month. We are talking about the "Uptober effect" (a term formed from the English words "up" and "October"). According to observations by CoinGecko experts, in eight of the last ten years, the cryptocurrency market has shown growth in October compared to the previous month. On average, the "Uptober effect" led to a 14% increase in the total capitalization of digital assets, ranging from 7.3% in 2022 to 42.9% in 2021. The exceptions were 2014 and 2018 when the market fell by 12.7% and 8.3% in one month, respectively.
This year, starting at $27,000 on October 1, bitcoin tested the $35,000 level on October 24, showing an increase of approximately 30%. The final note of October placed the flagship cryptocurrency at $34,545. Several altcoins like Solana (SOL) and Chainlink (LINK) also demonstrated significant rallies. All these cryptocurrencies, paired with USD, are available for trading on the NordFX broker.
We have already mentioned that lately bitcoin has lost its inverse and direct correlation and has "decoupled" from both the US dollar and major risk assets. This was the case in the past week as well. Digital gold rose along with the US dollar's ascent and didn't react to the rise of stock indices like the S&P500. As a result, BTC/USD showed modest growth over the course of seven days.
According to Michael Van De Poppe, the founder of the venture company Eight and CEO of MN Trading, bitcoin has officially entered a bull market phase. The expert believes that the asset is ready for a rally to $50,000, followed by a correction, and then a new all-time high (ATH). Van De Poppe noted that bitcoin might face resistance at $38,000 but is likely to continue its rise and reach $45,000-50,000 in January 2024. However, the specialist also points out that a drop below $33,000 is still possible, and he sees it as an excellent opportunity to open long positions. The creators of the information resource Look Into Bitcoin also believe that after surpassing the $34,000 price level, the early phase of a bull market has begun. The next targets are $41,900 and $65,050.
What events in the near and not-so-distant future could have a significant impact on the crypto market? Let's list the most important ones, noting that many of them are happening or will happen in the United States.
First, of course, is the monetary policy of the Federal Reserve (FRS). The "golden times" for digital gold were during the peak of the COVID-19 pandemic when the regulator literally flooded the market with streams of cheap money to support the economy, some of which went to risky assets like cryptocurrencies. Starting at $6,500 in March 2020, a year later in April 2021, BTC/USD reached a high of $64,800, showing a 900% increase. Then, the American regulator shifted towards tightening its policy and raising interest rates, and by 2022, the pair was trading around $16,000. Now, crypto investors are waiting for the Federal Reserve to pivot towards easing again and hope that this will happen in the next year.
The US government regulatory bodies have lately been exerting significant negative pressure on the crypto industry. Perhaps something will change with the arrival of a new president in the White House in 2024. At least some of the candidates for this position promise support for the industry. For now, all the attention is focused on the SEC (Securities and Exchange Commission). The head of the SEC, Gary Gensler, has repeatedly stated that he is willing to recognize only bitcoin as a commodity, and in his opinion, all altcoins should be regulated under securities laws. Under this pressure, Ethereum, for example, significantly lagged behind bitcoin in terms of price dynamics. This year, at the time of writing this review, ETH has gained about 52%, while BTC has grown by twice as much, around 102%.
Legal battles between the SEC and representatives of the crypto industry are also drawing attention. Recently, Reuters and Bloomberg reported that the Commission will not appeal a court decision in favor of Grayscale Investments. There is also information that the SEC is ending its legal process against Ripple and its executives. However, the cold war with major crypto exchange Binance and its leadership continues. As a result, Binance's share in the spot market has already fallen from 55% to 34% this year. If the US Department of Justice joins forces with more severe charges on the SEC's side, it could deal a significant blow to the crypto market.
The appearance of spot BTC-ETFs also depends on the SEC. According to JPMorgan bank experts, a positive decision by the SEC on registering the first such funds can be expected "within months." "The timing of approval [...] remains uncertain, but it is likely to happen [...] before January 10, 2024 - the final deadline for the applications of ARK Invest and 21 Co. This is the earliest of the various final deadlines that the SEC must respond to," note JPMorgan experts. At the same time, experts also emphasize that the Commission, by supporting fair competition, may approve all applications at once.
The anticipation of the imminent launch of spot BTC-ETFs in the US is fuelling institutional interest in cryptocurrency. According to some estimates, this interest is around $15 trillion, which could eventually lead to BTC/USD rising to $200,000. Skybridge Capital's strategists even mention a larger figure of $250,000. However, due to obstacles from the SEC, according to Ernst & Young analysts, institutional interest is mainly deferred.
Peter Schiff, the CEO of Euro Pacific Capital and a prominent gold bug, holds the opposite view. According to him, the final approval of spot bitcoin ETFs will mark the end of the bull run for the leading cryptocurrency. Currently, bitcoin is trading around $35,000 because speculators are driving up the price, betting on a positive regulator decision. When the decision is made, there will be no more room for such speculation, which could mark the peak of the rally if bitcoin doesn't crash before that. In Schiff's opinion, cryptocurrency traders may start selling their coins and taking profits even before the SEC makes any decision.
Something that doesn't depend on the regulator is the halving. Recall that in April 2024, the block reward will be halved, reducing from 6,250 BTC to 3,125 BTC, which is expected to lead to reduced issuance. According to some experts, this is a powerful deflationary factor that creates supply shortages and contributes to the rise in the value of bitcoin. Since the coin supply is limited, co-founder of Morgan Creek Digital, Anthony Pompliano, not only expresses optimism about a bull run for bitcoin but also calls it the "most disciplined central bank in the world." According to an optimistic forecast from Ark Invest, BTC could rise to $1.5 million by 2030.
However, the CEO of MN Trading, Van De Poppe, predicts that before bitcoin starts setting new highs, there will first be consolidation and sideways movement for an extended period after the April halving. Even more pessimism is added by a trader and analyst with the pseudonym Rekt Capital, who expects a sharp drop in BTC/USD by March 2024. After the halving, this specialist also anticipates consolidation, but in a very low range of $24,000-30,000, and only after that, in his opinion, the pair will enter a parabolic growth phase towards six-figure levels.
At the time of writing this review, on Friday, November 3, BTC/USD is trading at $34,590. The total market capitalization of the crypto market is $1.29 trillion ($1.25 trillion a week ago). The Crypto Fear & Greed Index remains in the Greed zone, though it has dropped from 72 to 65 points.
To conclude this review, in our irregular crypto life hacks section, we have an interesting tip. Where can you use the heat generated from cryptocurrency mining? The answer is in a sauna. A sauna in Brooklyn, New York, has started using the heat generated by mining equipment as a source of water heating. Saunas are becoming increasingly popular among Americans, and this twist benefits miners as it provides an additional argument in discussions about the public utility or significance of such entrepreneurial activities. And this is in New York, near the 40th parallel. Just imagine how useful this life hack could be in northern countries like Norway!
Dollar Dives on Risk Appetite Revival and Sliding Yields
In a week marked by a significant shift in investor sentiment, Dollar found itself at the bottom of the currency heap. A rapid shift to a risk-on attitude was catalyzed by sharp decline in benchmark Treasury yields, fueling an aggressive uptick in stock prices. The surge in equity investments was further amplified when the latest non-farm payroll data bolstered the belief that Fed might have reached the peak of its tightening cycle. Market participants are now keenly watching the extent of the stock market's rally and the depth of the decline in 10-year yield, which will likely be pivotal factors for Dollar's short-term direction.
Japanese Yen trailed closely behind Dollar in terms of weak performance, suffering from the dual forces of robust risk appetite and BoJ's (BoJ) decision to maintain its yield curve control with just tweak, contrary to some investors' expectations for a significant policy adjustment. Swiss Franc also succumbed to the uplifted risk mood, ranking as the third weakest.
Conversely, New Zealand and Australian Dollars emerged as frontrunners in the currency race, propelled by the narrowing yield gap and escalating risk tolerance. British Pound also capitalized on the upbeat market mood, though to a slightly lesser degree. Meanwhile, Euro and Canadian Dollar displayed a mixed finish.
Optimism abounds as markets cheer dipping yields and goldilocks job data
The mood in financial markets was decidedly bullish last week, with investors piling into stocks, propelling major US indexes to their most robust rally in a year. This surge in risk appetite followed spurred by a substantial decline in Treasury yields from their recent highs. Increased expectation that Fed interest have peaked was further reinforced by weaker than expected job data.
DOW concluded the week with a substantial gain of 5.07%, marking its best performance since October of 2022. S&P 500 and NASDAQ followed suit, jumping 5.85% and 6.61%, respectively, charting their best weeks since November 2022. 10-year Treasury yield nosedived to a low of 4.484% before ending the week slightly higher at 4.558%. This decline in yields was stark, considering the flirtation with 5% level just a week prior. Simultaneously, Dollar Index retreated steeply to a six-week trough, buffeted by a combination of shifting Fed expectations, burgeoning risk-on sentiment, and descending yields.
The spark for the market's bullish turn was first ignited by the Treasury Department's announcement of smaller-than-anticipated increases in the issuance of longer-dated Treasury securities. When the Fed maintained its interest rate unchanged at 5.25-5.50% for the second month in a row and Chair Jerome Powell refrained from signaling any additional hawkish intent, it only bolstered the prevailing risk-on mood.
Moreover, the latest non-farm payroll report delivered a surprise to the markets with its underwhelming job growth numbers, a slight uptick in the unemployment rate, and wage growth that lagged expectations. These indicators are seen as signs that Fed's rigorous efforts to temper the economy and curb inflation are bearing fruit, reducing the need for further rate hikes.
In the aftermath, Fed funds futures are now indicating a mere 4.8% likelihood of a 25 basis point hike at the December meeting. Market conversations are progressively turning towards the prospects of a rate cut, with futures markets pricing in a 64% chance of a cut by May next year, and an 86% probability by June.
S&P 500 index sidestepped the much-feared "October Crash", with last week's strong rally suggesting that correction from 4607.07 has possibly concluded 4103.78. Immediate focus is now on 4393.57 resistance. Decisive break there will strengthen near term bullishness, to push S&P 500 through 4607.07 resistance to resume the whole up trend from 3491.58 (2022 low).
Even if this year-end "Santa Claus rally" realizes, it's uncertain whether bullish momentum is strong enough to push S&P 500 through 4818.62 (2022 high). We'll leave the assessment for a later stage until there's clearer evidence of the index's ability to maintain its upward course.
10-year yield's break of 4.532 support last week suggests that rise from 3.253 has completed at 4.997, failing to conquer 5% level. It's now turned into a period of consolidation, with deeper decline in favor. Nevertheless, strong support could emerge around 4.330/333 (38.2% retracement of 3.253 to 4.997 at 4.330). Should TNX find solid ground and rebound from these levels, the current pattern could be interpreted as a mere sideways consolidation, setting the stage for another attempt at challenging the 5% mark in the future. However, sustained break of 4.330 will argue that TNX is already in a larger scale correction, with target on 55 W EMA (now at 3.865) in the medium term.
While Dollar Index's decline was deep, price actions from 107.34 could still be seen as a correction to the rise from 99.57 only. As long as 38.2.% retracement of 99.57 to 107.34 at 104.37 holds, rise from 99.57 should still resume through 107.34 at a later stage. However, firm break of 104.37 will raise the chance of bearish reversal, or as a correction, drag DXY through 55 W EMA (now at 103.89) to 61.8% retracement at 102.53.
BoJ's tepid policy tweaks fail to support Yen, NZD/JPY soars
Last week's highly anticipated BoJ policy meeting concluded with results that fell short of market expectations. Despite widespread speculation of a significant shift in its yield curve control policy, the central bank limited its actions to a minor adjustment in its language, effectively softening the previously rigid cap on the 10-year bond yield. This move was seen as a bid to permit a moderate rise in long-term borrowing costs, diverging slightly from the strict ceiling imposed just a quarter ago.
Governor Kazuo Ueda held firm on BoJ's longstanding dovish stance, committing to "patiently" maintain its stimulative monetary approach. The underwhelming response from BoJ disappointed investors who had bet on a more substantial policy shift, and as a result, Yen experienced renewed selling pressure. This decline was further exacerbated by the prevailing risk-on mood in global markets.
NZD/JPY was among the top movers in the week, up 2.95%. Current development argues that rise from 80.42 is ready to resume. Further rise is expected as long as 88.45 support holds, to retest 90.18 first. Firm break of 90.18 will confirm this bullish case, and target 61.8% projection of 80.42 to 89.67 from 86.75 at 92.46 next.
GBP/CHF rallies on risk-on sentiment, overcoming BoE
Sterling has managed to hold its ground amidst a dynamic week in the financial markets, drawing strength from a global risk-on mood which has somewhat cushioned the blow from BoE's latest policy decision. The MPC concluded with a split 6-3 vote to maintain Bank Rate at its current level of 5.25%. BoE provided a projection path for the Bank Rate, suggesting it would hover around the 5.25% mark until the third quarter of 2024 before anticipating a gradual decline to 4.25% by the end of 2026. The overall announcement aligned with growing consensus that interest rate in the UK have peaked.
GBP/CHF's strong break of 55 D EMA (now at 1.1065) suggests that fall from 1.1502 has completed at 1.0779. Further rise is expected as long as 1.0994 support holds. Firm break of 1.1212 will bolster the case that whole corrective pattern from 1.1574 has finished too. Stronger rally should then be seen to 1.1502/1574 resistance zone next.
EUR/USD Weekly Outlook
EUR/USD's rebound from 1.0447 resumed last week and the break of 55 D EMA argues that fall from 1.1274 has completed. Initial bias stays on the upside this week for 1.0764 cluster resistance (38.2% retracement of 1.1274 to 1.0447 at 1.0763). Decisive break there will pave the way to 61.8% retracement at 1.0958 next. On the downside, below 1.0609 minor support will turn intraday bias neutral first.
In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Rise from 1.0447 is tentatively seen as the second leg. Hence while further rally could be seen, upside should be limited by 1.1274 to bring the third leg of the pattern.
In the long term picture, sustained trading above 55 M EMA (now at 1.1087) is needed to be the first sign of bullish trend reversal. Decisive break of 1.2348 structural resistance is needed to confirm. Otherwise, outlook will be neutral at best.
