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Key Highlights

• EUR/USD extended losses and tested the 1.0500 support.
• A key bearish trend line is forming with resistance at 1.0585 on the 4-hour chart.
• GBP/USD also extended losses and traded below the 1.2720 support.
• Oil is consolidating losing and trading near the $67.25 zone.

EUR/USD Technical Analysis

The Euro started a fresh decline below the 1.0650 support against the US Dollar. EUR/USD traded below 1.0580 to move into a negative zone.

Looking at the 4-hour chart, the pair settled below the 1.0600 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). There was also a move below the 1.0550 level.

A low was formed at 1.0496 and the pair is now consolidating losses. On the upside, the pair could face resistance near the 1.0565 level. There is also a key bearish trend line forming with resistance at 1.0585 on the same chart.

The first key resistance is near the 1.0600 level or the 23.6% Fib retracement level of the downward move from the 1.0939 swing high to the 1.0496 low.

A close above the 1.0600 level could set the tone for another increase. The next major resistance could be 1.0650, above which the price could accelerate higher toward the 1.0765 resistance. It is near the 61.8% Fib retracement level of the downward move from the 1.0939 swing high to the 1.0496 low.

On the downside, immediate support sits near the 1.0500 level. The next key support sits near the 1.0465 level. Any more losses could send the pair toward the 1.0420 level or even 1.0380 in the near term.

Looking at GBP/USD, the bears gained strength, and they were able to push the pair below the 1.2650 and 1.2600 support levels.

Upcoming Economic Events:

• Fed's Goolsbee speech.

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.

Full speech of BoJ's Ueda here.

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”.

Full NZ BNZ PSI release here.

Latest Political News

President-elect Donald Trump has begun shaping his administration, starting with a White House meeting with outgoing President Joe Biden, symbolising the peaceful transfer of power. His cabinet picks have sparked debate, including Rep. Matt Gaetz as Attorney General, a move that drew mixed reactions from Republicans and Justice Department officials. Trump also nominated Robert F. Kennedy Jr. to lead the Department of Health and Human Services (HHS), attracting attention for Kennedy's controversial views on vaccines. As the transition continues, Trump's bold choices are shaping the direction and priorities of his upcoming term.

Volatility Index

VIX Last Week

Open: 15.80 High: 16.33 Low: 14.47 Close: 15.53

Summary

The continued effects of Trump’s win influenced the VIX at the start of the week, pushing the index lower. However, by the end of the week, the VIX found support around the 15 level as controversial cabinet picks and weakness in U.S. equities added uncertainty. While concerns over Trump’s leadership choices persist, market volatility remains lower than pre-election levels.

VIX Weekly Chart

Market Analysis (Technical, Sentiment, and Fundamental Analysis)

The VIX has found support at the critical 15 level, with the downside appearing limited due to the continued risk of controversial decisions by Trump. If U.S. equities continue to decline, the VIX is likely to rebound toward the 17.5 level, making a move higher in volatility a possibility in the short term.

Potential Impact of the Trump Presidency

With Trump’s clear majority victory, the VIX is expected to settle at lower levels as market confidence grows around continued business-friendly and market-stabilizing policies. However, anticipate periods of quick VIX spikes as new policies, especially those related to trade and international relations, are introduced.

Stock Indices

Dow Jones Index Last Week

Open: 44,077 High: 44,526 Low: 43,374 Close: 43,483

Nikkei 225 Last Week

Open 39,125 High 39,862 Low 37,756 Close 38,039

Summary

The Dow Jones fell last week as the "Trump Effect" continued to fade, with market attention shifting to Fed Chair Jerome Powell's cautious approach to rate cuts. Powell emphasised that the central bank was "not in a hurry" to lower rates, citing strong economic growth as a reason for patience, while avoiding comments on how Trump’s potential policies might influence future decisions. October retail sales data showed a 0.4% increase, slightly above the 0.3% forecast, following an inflation report that met expectations, signalling steady economic conditions. Meanwhile, the Nikkei failed again to break the 40,000-yen resistance, despite the USD/JPY testing higher levels, as the market prepares for possible Bank of Japan intervention to address yen weakness and the potential of a December rate hike.

Dow Weekly Chart

Nikkei 225 Weekly Chart

Market Analysis (Technical, Sentiment, and Fundamental Analysis)

The Dow Jones has returned to support at levels that previously acted as resistance before Trump’s victory, making the start of the week’s price action crucial. In the short term, the market appears more likely to test lower, suggesting that selling into weakness could be the best strategy this week. Meanwhile, another failure by the Nikkei to break above the 40,000 Yen level reinforces the focus on selling opportunities in the Nikkei for the week ahead.

Potential Impact of the Trump Presidency

A Trump win is expected to benefit the Dow, with the market anticipating tax cuts and deregulation. However, Trump’s ‘America First’ policies and potential tariff increases could pose challenges. This outcome may be less favorable for the Nikkei, as Trump could push for a stronger yen to support U.S. exports, which may hurt Japanese exporters and place downward pressure on the index.

Energy

Oil (WTI) Last Week

Open: 70.31 High: 70.65 Low: 66.91 Close: 67.06

Summary

WTI remained under pressure throughout the week as the bearish trend following Trump’s victory continued, negatively impacted by a strengthening USD. Additional pressure came from increasing supply from non-OPEC producers, particularly the US, Brazil, and Canada. Meanwhile, weak economic data from China encouraged selling, reducing demand expectations and contributing to the downward momentum.

Oil (WTI) Weekly Chart

Market Analysis (Technical, Sentiment, and Fundamental Analysis)

Support at $67 just held last week, but with the negative close, a break of this level seems likely at some point this week. Predicting the exact timing of a support break can be challenging, so selling around $69 could be the most effective strategy for the week ahead.

Potential Impact of the Trump Presidency

The Trump victory is expected to boost US oil production, potentially putting downward pressure on prices as supply rises. Additionally, Trump’s efforts to end unrest in the Middle East could further soften prices if successful. A strong USD under his presidency could also weaken WTI prices.

Crypto

Bitcoin Last Week

Open: 76,379 High: 93,346 Low: 76,318 Close: 90,894

Summary

The post-Trump rally continued last week, with Bitcoin surging past $90,000 as the market eyes the $100,000 milestone. While Trump’s pro-crypto stance fuels optimism, concerns are growing over the size of U.S. government debt, raising fears of dollar devaluation and inflation. Additionally, Elon Musk’s growing influence within the Trump administration is being viewed as a positive development for Bitcoin’s prospects.

Bitcoin Weekly Chart

Market Analysis (Technical, Sentiment, and Fundamental Analysis)

With Bitcoin up over 30% in the past month, concerns about the market being overbought in the short term are growing. A break below $90,000 could trigger profit-taking and lead to a test of support at $85,000, offering short-term traders an opportunity to sell this week. However, the medium-term uptrend remains strong, and a decline toward the $80,000 to $85,000 support zone could present a solid medium-term buying opportunity.

Potential Impact of the Trump Presidency

A Trump victory is clearly bullish for Bitcoin, as Trump and his team are openly crypto-friendly. This supportive stance could drive Bitcoin toward $100,000 or higher in a favourable policy environment.

Upcoming Political & Economic Events

It’s a relatively quiet week for economic releases, aside from Friday's U.S. PMI data, leaving the market to digest the impact of Trump’s election win and the Federal Reserve’s potential slowdown in the pace of interest rate cuts. With significant recent market movements, trader and investor sentiment will play a key role in driving market direction this week.

Potential Market Impact

The market is currently evaluating the effects of President Trump's election victory and the potential for the Federal Reserve to decelerate its interest rate cuts. The VIX has stabilised around the 15 mark, with limited downside as traders monitor Trump's controversial decisions and their potential impact on market volatility. Should U.S. equities continue to weaken, the VIX could rise toward 17.5, presenting short-term trading opportunities. Meanwhile, the Dow Jones has returned to pre-election support levels, making early-week price action crucial. Selling into weakness appears to be the most effective short-term strategy, while the Nikkei's repeated failure to breach the 40,000 Yen level reinforces selling opportunities in that index.

WTI remains under pressure after just holding the $67 support level. The close near the lows of the week increases the likelihood of a breakdown, making selling near $69 a favourable short-term approach. Bitcoin has surged over 30% in the past month, driven by speculation on the pro-crypto stance of Trump's administration and its potential to boost demand. However, concerns about overbought conditions are rising. A break below $90,000 could lead to profit-taking, testing support at $85,000 and presenting a short-term selling opportunity. Despite this, Bitcoin's medium-term uptrend remains strong, with a pullback to the $80,000–$85,000 range potentially offering a compelling buying opportunity for longer-term investors.

This Week's Trump Trades

The initial shine of Trump’s victory is beginning to fade as the market shifts its focus to potential drawbacks of a Trump presidency. This is a natural progression, as markets are shaped by competing opinions and rarely move in a straight line. Investors will now closely watch for any new policy announcements or cabinet appointments that could signal a more optimistic direction for the market.

Tesla Inc. (TSLA)

Tesla surged higher last Monday, but momentum reversed midweek as profit-taking and broader U.S. stock market weakness pushed the stock lower. This week, support near the 10-day moving average and the $300 level may provide another buying opportunity to capitalise on the uptrend. With elevated volatility and strong momentum, traders are advised to target large gains while managing risk with small losses, as multiple opportunities are expected to arise throughout the week.

Tesla Daily Chart

Bitcoin

Bitcoin has surged over 30% in the past month, raising concerns that the market may be overbought in the short term. A break below $90,000 could spark profit-taking, potentially driving the price down to test support at $85,000, creating a short-term selling opportunity for traders this week. Despite these short-term risks, the medium-term uptrend remains intact, and a pullback into the $80,000 to $85,000 support zone could offer a strong buying opportunity for medium-term investors looking to capitalise on Bitcoin’s continued momentum.

Bitcoin Daily Chart

S&P 500

While the medium and long-term uptrend remains bullish, the S&P 500 is at a critical turning point in the short term. The index has returned to support at 5,875, a level that previously acted as resistance before the election. How the market reacts at the start of the week will be crucial. Short-term traders should follow momentum, buying if the market rebounds from support or taking advantage of a short-term selling opportunity if the market breaks below this level. Medium- to long-term traders should remain buyers if support holds or wait for a significant drop to establish new positions.

S&P 500 Daily Chart

Next week, more countries will release their estimates for October consumer inflation.

Canada will do so on Tuesday. The pace of price increases here is below the 2% target, allowing the Bank of Canada to cut interest rates by 50 basis points at the end of October. But how will the economy react to the 4% drop in the Canadian dollar against the US dollar since the beginning of October? With USDCAD reaching 1.40, its highest level since 2020, traders will also be keeping a close eye on inflation data.

The UK will release its inflation figures on Wednesday. Here, headline inflation is well below 2%, with core inflation, which excludes food and energy, hovering between 3.2-3.5% and 3.5% for the past five months. This is despite the negative annual rate of producer prices due to the impact of services prices.

The Japanese inflation estimate will be released on November 22nd, which may also play a key role in the future dynamics of the Yen and the Bank of Japan’s sentiment.

In the European session, all eyes will be on the preliminary business activity estimates for November. The release of the PMI indices often causes volatility in the Euro, and this time, it may determine the fate of the single currency for the next month.

Gold has been under consistent selling pressure since the end of October, as investors take profits following a prolonged rally. This week alone, gold prices have fallen nearly 5%, marking the steepest weekly decline in almost three years. From its peak, the metal has now lost over $250 or approximately 9%, making this the most sustained downturn since the start of the month.

Despite the sharp pullback, gold’s recent rally since last October means that even a drop to $2,400 would represent only a correction, bringing the price back to the 200-day moving average. At the current pace of decline, gold could reach this level before the end of the year.

Technical Analysis

On the weekly charts, a significant bearish signal has emerged: a sharp drop after gold exited the overbought zone, accompanied by the RSI (Relative Strength Index) turning down from levels above 80. This kind of reversal at extreme levels often signals a shift in momentum.

To understand the implications, we can look to historical precedents. The last two instances of a sharp bearish reversal from overbought conditions at all-time highs occurred in 2009 and 2011:

• 2009: Gold experienced a 15% peak-to-trough loss before renewed buying pushed the price to fresh all-time highs. This bull market lasted nearly two years, with only brief pauses.
• 2011: The initial drop in momentum was almost 20%. While gold rebounded 17% afterwards, the bull market’s backbone had already broken. Over the next four years, gold lost 45% of its peak value.

In both cases, the 50-week moving average served as a key medium-term support level during the sell-offs. Currently, this moving average is at $2,330 but is trending upward and could reach $2,400 by the end of the year. A decisive break below this level may trigger an even deeper decline.

Dollar regained its dominance in the currency markets last week, surging ahead despite US Treasury yields struggling to break through resistance levels. Investors continued to adjust their expectations for Fed's monetary policy, increasingly anticipating a slower pace of interest rate cuts with fewer adjustments in the coming year. This shift in sentiment was also reflected amplified by the late selloff, which provided additional support for the greenback. However, with the Dollar Index now sitting inside a critical resistance zone, the currency may face significant hurdles in sustaining its upward momentum.

In an unexpected development, Japanese Yen emerged as the second-best performer of the week. Yen's strong rebound occurred even in the absence of aggressive verbal intervention from Japanese authorities. While there are no clear signs of a reversal against Dollar yet, Yen is making notable progress against other major currencies. Canadian Dollar also demonstrated robust performance, ranking third among the top currencies. This strength persisted despite market expectations of interest rate cuts by BoC and the selloff in oil.

On the other hand, British Pound ended the week as the worst performer, with Australian and New Zealand Dollars not far behind. All three currencies were pressured by deterioration in risk sentiment across global markets. For the Pound, the latest GDP data revealed weaker-than-expected growth, and an uptick in the unemployment rate has strengthened the position of dovish policymakers within BoE for another interest rate cut in the near future. Australian and New Zealand Dollars were dragged down as traders grew increasingly frustrated with the lack of concrete action in China's fiscal stimulus measures.

Dollar Gains Persist Despite Yield Struggles, Stocks Signal Reversal Amid Fed Reassessment

Investor sentiment in the US appears to be turning last week, with bearish reversal signals emerging in two major stock indexes. The change reflects recalibrated expectations around Fed’s interest rate strategy for 2025. October’s CPI data, which showed persistent inflationary pressures, coupled with concerns over the inflationary effects of President-elect Donald Trump’s fiscal and trade policies, are reinforcing the view that rate cuts would be slower and more limited.

The change in sentiment was reinforced by Fed Chair Jerome Powell's comment that there is "no hurry" to lower rates Chicago Fed President Austan Goolsbee echoed this sentiment, while Boston Fed President Susan Collins suggested that while a December rate cut remains possible, it is far from certain.

Currently fed funds futures still imply a 61.9% likelihood of a 25 bps rate cut in December. However, odds of another one in January dropped below 20%. Markets are already betting on a pause at the start of 2025.

Technically, Dollar Index made significant progress with last week's strong rally and it's now sitting in an important long term resistance zone. That comes even though 10-year yield struggled to break through a medium term fibonacci resistance cleanly. Looking ahead, whether Dollar Index could confirm long term bullish trend reversal would hinge on the renewed strength of 10-year yield, or correction in stocks, or both.

Looking at the details, an island top pattern was formed in S&P 500 with November 7's gap up and November 15's gap down. It's still early to confirm that a sizeable correction is underway. Another rally would remain in favor as long as 55 D EMA (now at 5765.03) holds. However, sustained break of the 55 D EMA would likely bring deeper correction through 5969.51 support to medium term channel line (now at 5535).

Similarly, an island top is also seen in NASDAQ with gaps on the same days. Further rise would remain in favor as long as 55 D EMA (now at 18312.93) holds. But sustained break there will bring deeper correction through 18085.95 support to medium term trend line (now at 16893).

10-year yield continued to struggle at around 4.45 last week, facing strong resistance from medium term falling trend line, as well as 61.8% retracement of 4.997 to 3.603 at 4.464. Nevertheless, the retreat has so far been shallow and further rally will remain in favor as long as 4.264 support holds.

Sustained trading above the mentioned resistance zone will solidify the bullish case that whole correction fro 4.997 has completed with three waves down to 3.603. Further rally should then be seen to 4.737 and then 4.997.

However, break of 4.264 will confirm short term topping, and bring deeper pull back to 55 D EMA (now at 4.137) and possibly below.

Dollar Index accelerated with strong upside momentum last week, as seen in D MACD, and entered into 106.51/107.34 resistance zone. Near term outlook will stay bullish as 105.44 resistance turned support holds, for 107.34, and possibly above. However, the key hurdle is 100% projection of 99.57 to 107.34 from 100.15 at 107.92.

In the background, Dollar Index has seen strong support from 55 M EMA this year, which keeps the long term up trend from 70.69 (2008 low) intact. Sustained break of 107.92 will strength the case that corrective fall from 114.77 (either as a whole correction pattern or just the down leg of a three wave pattern), has completed. In this case, Dollar Index could target 114.77 (2022 high) next. But that would need substantial progress in 10-year yield and selloff in stocks.

Yen Rebounds as Sentiment Shift, AUD/JPY Reversing?

Yen has been the worst performer for most of last week. Japanese Prime Minister survived a parliament vote and stayed in position. But the road ahead would be challenging for his minority government.

BoJ's summary of opinions reaffirmed the core stance that rate hikes to proceed gradually if economic outlook holds. But the timing of the steps remain higher uncertain, with divided opinions within the board.

Besides, Japan was unusually quiet as USD/JPY surged past 156 market. That's taken by some as an indication that Japan might tolerate further depreciation in Yen until it hits 160 mark. Nevertheless, Yen staged a strong rebound on Friday as US market sentiment turned sour, probably reducing some need for Japan to intervene imminently.

AUD/JPY's break of and close below 55 D EMA last week is taken as the first sign of rejection by 61.8% retracement of 109.36 to 90.10 at 102.00. Immediate focus is now on 99.42 support. Decisive break there will strengthen the case that whole corrective rebound from 90.10 has already completed with three waves up to 102.39. Near term outlook will then be turned bearish towards 90.10/93.58 support zone.

From Aussie's side, the depth of it's decline would depend on sentiments towards China's economy and markets. The extended decline in Hong Kong HSI was a vote of no confidence toward China's stimulus announcement since September. Immediate focus is now on 61.8% projection of 23141.74 to 19977.35 from 21355.44 at 19338.04. Strong rebound from this level will keep the up trend from 1479.16 low intact.

However, decisive break of 19338.04 could prompt downside acceleration to next key cluster support level at around 18000 (100% projection at 18091.04, and 61.8% retracement of 14794.16 to 23241.74 at 18021.14). That would be the last line of defense for the up trend.

USD/CAD Weekly Outlook

USD/CAD's break of 1.3976 key resistance last week confirms larger up trend resumption. Initial bias remains on the upside this week. Next near term target is 61.8% projection of 1.3418 to 1.3958 from 1.3841 at 1.4175. On the downside, below 1.4032 minor support will turn intraday bias neutral and bring consolidations first. But outlook will stay bullish as long as 1.3841 support holds, in case of retreat.

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

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as long as 1.3418 support holds.

EUR/USD's decline from 1.1213 resumed last week and fell to as low as 1.0495, before recovering just ahead of 100% projection of 1.1213 to 1.0760 from 1.0936 at 1.0483. Initial bias stays neutral this week for consolidations. But outlook will remain bearish as long as 1.0760 support turned resistance holds. On the downside, firm break of 1.0495 will target 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.

In the long term picture, a long term bottom is in place at 0.9534 (2022 low). But for now, EUR/USD is struggling to sustain above 55 M EMA (now at 1.1011). Outlook is neutral at best at this point.

USD/JPY's rise from 139.57 continued last week and hit as high as 156.74 before retreating. Initial bias stays neutral this week first and some consolidations could be seen. But further rally is expected as long as 151.27 support holds. Above 156.74 will target 61.8% projection of 141.63 to 153.87 from 151.27 at 158.83.

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.

In the long term picture, it's still early to conclude that up trend from 75.56 (2011 low) has completed. However, a medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 134.54).