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Daily Pivots: (S1) 153.82; (P) 154.64; (R1) 155.36; More...

USD/JPY is still bounded in range trading and intraday bias stays neutral. On the upside, break of 156.74 will resume the whole rally from 139.57 towards 161.94 high. On the downside, though, break of 153.27 will resume the correction towards 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.

Daily Pivots: (S1) 0.8835; (P) 0.8854; (R1) 0.8886; More…

USD/CHF's rally from 0.8374 resumed by breaking 0.8916 resistance. Intraday bias is back on the upside. Further rise should be seen towards 0.9223 key resistance next. For now, outlook will stay bullish as long as 0.8800 support holds, in case of retreat.

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) 1.2557; (P) 1.2609; (R1) 1.2641; More...

GBP/USD's accelerates lower today and intraday bias stays on the downside for 100% projection of 1.3433 to 1.2842 to 1.3047 at 1.2456. Decisive break there will extend the fall from 1.3433 to 1.2298 cluster support zone. For now, risk will stay on the downside as long as 1.2713 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) 1.0439; (P) 1.0497; (R1) 1.0532; More...

EUR/USD's decline accelerated to as low as 1.0330 so far and there is no sign of bottoming yet. Sustained trading below 1.0404 key fiboncci level will carry larger bearish implications. Next target will be 161.8% projection of 1.1213 to 1.0760 from 1.0936 at 1.0203. Nevertheless, strong rebound from current level, followed by break of 1.0609 resistance, will confirm short term bottoming.

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 and below.

• USDCAD is edging higher today, a tad above 1.3977
• It bounced off the September 25, 2024 trendline
• Momentum indicators are gradually turning bearish

USDCAD is edging higher today, trading a tad above the October 13, 2022 high at 1.3977. CAD bulls’ latest attempt to push USDCAD below the September 25, 2024 ascending trendline failed, with the pair quickly climbing higher. The US dollar also got a boost from Thursday’s stronger US data prints, geopolitics and the hawkish rhetoric from Fed members. For the current bullish trend to remain in place, a new peak, above the four-year high of 1.4104, is probably needed.

Meanwhile, momentum indicators are gradually turning bearish. Specifically, the Average Directional Movement Index (ADX) is edging lower towards its midpoint, and thus pointing to a weaker bullish trend in USDCAD. Additionally, the stochastic oscillator has broken below its oversold territory (OS) and is heading aggressively lower. Should this move continue, it would be seen as a strong bearish signal. Interestingly, the RSI remains above its midpoint, but it shows little appetite for a sizeable move higher.

Should the bears remain confident, they could try to finally push USDCAD below both the October 13, 2022 high at 1.3977 and the September 25, 2024 trendline. They could then test the support set by the November 1, 2024 high at 1.3898. Even lower, the busy 1.3807-1.3854 region could prove tougher to overcome than currently imagined.

On the other hand, the bulls will try to drive USDCAD above the 1.3977 level and then gradually push it higher towards the November 15 high at 1.4104. If successful in breaking above this level, they could have the chance to record a new cycle high.

To sum up, USDCAD bears tried to have staged another selloff, but the US dollar-positive newsflow and a key upward sloping trendline have pushed USDCAD higher.

The Canadian dollar is lower on Friday. In the North American session, USD/CAD is trading at 1.3998 at the time of writing, up 0.16% on the day. On the data calendar, Canada releases retail sales and the US publishes the services and manufacturing PMIs.

Canada’s retail sales expected to fall

Canada’s retail sales for September are expected to ease to 0.9% y/y, down from 1.4% in August. Monthly, retail sales are projected to remain unchanged at 0.4%. Consumer spending is expected to improve in the third quarter, in part due to the Bank of Canada’s three quarter-point cuts between June and September.

Despite the BoC’s easing cycle, consumers have remained cautious in the uncertain economic climate and the central bank will have continue to aggressively cut rates in order to boost consumer spending, a critical engine of growth. The BoC chopped rates by a half-point in October and there are calls for another half-point cut at the Dec. 11 meeting.

Still, the most likely scenario is a modest quarter-point cut, as this week’s inflation report showed that October inflation unexpectedly rose to 2%. If the November employment report is weaker than expected, pressure will rise on the Bank of Canada to deliver a half-point cut at the December meeting.

In the US, the manufacturing sector has been struggling and has contracted for four consecutive months. The Manufacturing PMI is expected to improve to 48.8 from 48.4, but a reading below 50 indicates contraction. The services sector is in much better shape and has expanded continuously since January 2023. Business activity has been the linchpin of the US economy, which has cooled down but remains in decent shape.

USD/CAD Technical

• USD/CAD is testing resistance at 1.3994. Above, there is resistance at 1.4013
• There is support at 1.3963 and 1.3944

GBPUSD dipped below 1.2500 handle and hit new lowest in 6 ½ months on Friday, after disappointing UK October retail sales and November PMI numbers further weakened sterling, adding to worsened geopolitical picture on threats of stronger escalation of war in Ukraine.

Strengthening dollar on euphoria of Trump trades, as well as increased safe-haven demand on deteriorating geopolitics contributes to negative near-term outlook to the British currency.

Cable is on track for the eighth consecutive weekly loss and also to end the second straight month in red, adding to developing reversal signals on larger timeframes (week / month).

Technical picture remains firmly bearish on daily chart, with strengthening negative momentum (14-d momentum continues to head south, deeply in negative territory) and MA’s in full bearish configuration (formation of 5/200; 10/200 and 20/200DMA’s death crosses).

However, RSI entered oversold territory and may contribute to week-end profit-taking that would provide stronger headwinds to bears and push the price higher.
Initial resistances lay at 1.2600 zone (today’s high / former lows of short consolidation / 100WMA), with upticks to be ideally capped under 1.2700 barrier (falling 10DMA / psychological) and guard upper breakpoint at 1.2818 (200DMA).

Res: 1.2600; 1.2624; 1.2680; 1.2700.
Sup: 1.2487; 1.2445; 1.2400; 1.2299.

Gold returned to growth after nearly three weeks of decline, reversing last week’s drop. The desire for a safe haven for global capital is so strong that it far outweighs the effect of a stronger dollar. The growing tension around the Russia-Ukraine conflict has brought gold back into the focus of investors due to pressure in equity markets.

Since the beginning of the week, the price has gained 5.3%, returning above $2,700. Technically, the price found buyers again shortly after falling below the 50-day moving average, which acts as a significant indicator of the medium-term trend. The ability to rise further would be an important price signal.

A quick reversal from down to up makes the scenario workable. The decline in early November is a technical correction from October 2023’s rally, which ended with a decline to 76.4% of the total gain. Such shallow corrections are characteristic of strong markets. If gold manages to rewrite the highs soon, the long-term target will be the $3,400 per troy ounce area.

The weakness of the single currency, caused both by geopolitics and the sharp cooling of the economy and political crisis in Germany, is also a serious reason to move into gold.

The chart of the gold price in euro paints an even more technically beautiful picture. On Friday, gold surpassed the €2,600 per ounce mark, hitting an all-time high, adding every day this week. The turning point that attracted buyers was the touching of the 50-day moving average towards the end of last week. For more than a year, this curve has provided tactical support: localised selloffs stop there.

The drawdown at the beginning of the month also fits into a classic Fibonacci retracement, with a pullback to 61.8% of the rise from the August lows to the late October highs. Movement within this pattern suggests the next shakeout near €2,840, which could well be a bullish target. At the current exchange rate, this roughly puts the price at $3,000. Given the decline of the single currency, these could be lower levels as well.

Today’s PMI figures were released and came in worse than analysts’ expectations. The Flash Manufacturing PMI and Flash Services PMI for both Germany and France fell below the 50.0 threshold, indicating that Europe’s economy is slowing down.

This weakened the euro further and exacerbated the situation on the EUR/USD chart, which has been in a downtrend since early October (as indicated by the red channel):

→ Earlier, support near the 1.0800 level (drawn through the spring-summer lows) was breached.

→ Today, the pair fell below the psychological level of 1.0500 and beneath the 2023 low.

Bears appear to be in control, with EUR/USD trading near the lower boundary of the channel. Arrows on the chart highlight that both the channel median and the 1.0500 level are acting as resistance.

On the other hand, bulls might find hope in the long lower shadow on today’s candle, which could signal emerging demand capable of providing support for the weakened euro.

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The British pound is lower for a straight third trading day on Friday. In the North American session, GBP/USD is trading at 1.2543, down 0.36% on the day.

UK retail sales weaker than expected

UK retail sales disappointed in October, with a sharp decline of 0.7% m/m. This follows a downwardly revised 0.1% gain in September and missed than the market estimate of 0.3%. Annually, retail sales rose 2.4%, well below the market estimate of 3.2%. The September reading was revised downwards from 3.9% to 3.2%.

The sharp drop in retail sales can be attributed to low consumer confidence and the recent Budget. The GfK consumer confidence index showed an improvement, rising from -21 to -18, but this points to a very pessimistic British consumer who is thinking twice before making discretionary purchases.

The Reeves Budget on Oct. 31 dampened consumer spending, as the government had warned about “difficult decisions” and proceeded to deliver a Budget with some 40 billion pounds worth of tax increases. Understandably, consumers held back on spending in October and retail sales were down across most categories.

The economy has slowed since the July election and services and manufacturing activity have decelerated for three straight months. The UK releases the Services and Manufacturing PMIs later today. The Services PMI is expected to remain unchanged at 52.0, while the Manufacturing PMI if projected to inch up to 50.0, up from 49.9. If the PMIs are weaker than expected, the pound could respond with losses.

The US will also publish manufacturing and services PMIs on Friday, with little change expected. The Manufacturing PMI is expected to rise from 45.5 to 45.8, and the Services PMI, which has been showing solid growth, from 55 to 55.2.

GBP/USD Technical

• GBP/USD is testing support at 1.2557, followed by support at 1.2525
• There is resistance at 1.2609 and 1.2641