Bearish on CHFJPY Due to Increasing Expectations for Japanese Rate Hike

Forex

Central Bank

Summary:

The October CPI data of Switzerland fell short of expectations, indicating economic stress and increasing the likelihood of a rate cut by the Swiss National Bank. Meanwhile, the Bank of Japan maintains its interest rates steady, but market anticipation for a Japanese rate hike persists, potentially bolstering the yen's strength.

SELL CHFJPY

Close Time

CLOSED

174.908

Entry Price

164.700

177.500

174.238 +0.537 +0.31%

21.8

Pips

Profit

164.700

174.690

Exit Price

174.908

Entry Price

177.500

Fundamentals

Switzerland:

On November 1st, Switzerland's October CPI was released, showing a 0.1% MoM decrease and an annual growth rate of only 0.6%, below the Swiss National Bank's forecast of average 1.0% inflation for Q4.

The subpar inflation figures reflect certain pressures on Swiss economic growth, reinforcing the necessity for the Swiss National Bank to expedite the pace of rate cuts. Market expectations for a 50 bps rate cut by the Swiss National Bank in December are rising.

Additionally, the Swiss National Bank President indicated that further rate reductions may be necessary in the coming quarters to maintain price stability. The Vice President even suggested that, under certain conceivable scenarios, rates could be adjusted to negative territory.

Japan:

On October 31st, the Bank of Japan kept rates unchanged in its latest interest rate decision. However, the market widely anticipates that the Bank of Japan will raise the benchmark rate from the current 0.25% to around 1% before the end of the fiscal year in March 2026. Currently, a rate hike in January next year has become a general bet. Should the Bank of Japan raise rates, it would enhance the yen's appeal, potentially leading to a relative appreciation of the yen and affecting the CHFJPY exchange rate.

Overall, expectations for rate cuts by the Swiss National Bank are increasing, as are expectations for rate hikes by the Bank of Japan. In the short term, CHFJPY is bearish.

Technical Analysis

Bearish on CHFJPY Due to Increasing Expectations for Japanese Rate Hike_1

In the daily chart, CHFJPY has maintained a strong upward trend since mid-September and throughout October. However, recent price action suggests a waning in upward momentum. The short-term upward trend line on the daily chart has been breached. Concurrently, the daily chart has formed an irregular head and shoulders top pattern. This indicates that the price may be reaching a short-term peak. Market sentiment is gradually shifting to the bearish side.

We believe that CHFJPY may be inclined to decline in the short term, with the first target at 172.50. Should the asset price continue to decline, it could potentially set a new low since September, transitioning from a short-term decline to a medium-term one.

In conclusion, traders are advised to go short on CHFJPY at highs.

Trading Recommendations

Trading Direction: Sell

Entry Price: 175.10

Target Price: 164.70

Stop Loss: 177.50

Deadline: November 22, 2024, 15:00:00

Support: 174.00/172.39/171.12

Resistance: 176.65/177.28/180.00

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Winkelmann

Forex

Summary:

The Federal Reserve took a dovish step but with a hawkish tone and Trump won the election, which boosted the U.S. dollar and increased downward pressure on the euro.

SELL EURUSD

Close Time

CLOSED

1.07770

Entry Price

1.06000

1.08800

1.05410 +0.00043 +0.04%

177.0

Pips

Profit

1.06000

1.05996

Exit Price

1.07770

Entry Price

1.08800

Fundamentals

This week saw a flurry of major events overshadowing even the Fed meeting. Despite a scheduled 25 basis points rate cut, the U.S. economy maintained its resilience. The Fed removed language regarding progress in inflation, instead acknowledging it remained elevated. This slightly hawkish stance suggested to market investors that the Fed would have to slow its easing pace.

Simultaneously, Donald Trump's victory in the presidential election and his tariff policies may fuel inflation and keep rates higher for longer, propelling the U.S. dollar to near 105.5, and weighing on non-U.S. currencies including the euro. Moreover, Trump's potential continuation of pronounced trade protectionist policies threatens Europe, exacerbating economic woes there. Consequently, risks of further ECB rate cuts are rising, casting doubt over the euro's outlook.

Technical Analysis

Trump Trade Still in Play, Dragging on the Euro _1

In the 4H chart, EURUSD oscillated downward, and Trump's victory accelerated the decline. Despite some rebounds, EURUSD will depreciate further in the medium term, heading towards support at 1.06.

It is better to sell EURUSD at highs. Aggressive investors should sell the pair now or when EURUSD rebounds to 1.08. The short-term target price is 1.06, where support stays, and the stop-loss should be set at 1.087.

Trading Recommendations

Trading direction: Sell

Entry price: 1.08

Target price: 1.06

Stop loss: 1.088

Support: 1.060/1.077

Resistance: 1.087/1.092

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The market is awaiting a decision from the Federal Open Market Committee (FOMC) meeting on interest rate cuts. Meanwhile, the Euro remains under pressure from weak economic factors in the Eurozone...

SELL EURUSD

Close Time

CLOSED

1.07860

Entry Price

1.07300

1.09300

1.05410 +0.00043 +0.04%

1.6

Pips

Loss

1.07300

1.07876

Exit Price

1.07860

Entry Price

1.09300

On November 7, 2024, the EUR/USD pair was trading around 1.0786, after falling sharply from its recent high of 1.0925 earlier in the week. The euro's weakness was largely driven by the strong US dollar after Donald Trump won the US presidential election for a second time. Investors were expecting Trump's protectionist economic policies, including tax cuts and import tariffs, which boosted demand for the US dollar.

In addition, the market is also awaiting the FOMC meeting later today, where the Fed is expected to make a decision on cutting interest rates. Although many investors expect the Fed to lower interest rates to support the US economy, the recent recovery in the labor market with the October jobs report showing an increase of 12,000 jobs may prompt the Fed to maintain a more cautious stance. This has increased the strength of the USD and pushed EUR/USD lower.

In the Eurozone, recent economic data has been less positive, with both the services and manufacturing PMIs showing weakness. This has added further pressure on the Euro, making it unlikely to recover strongly in the short term.

Market psychology

The current market sentiment on the EUR/USD pair is skewed to the negative side, with the majority of traders predicting that the downtrend will continue in the near term. According to data from Forex Sentiment, more than 65% of investors are holding short positions on EUR/USD, indicating pessimism about the outlook for the euro amid continued strength in the US dollar.

The Fear Greed Index also shows that fear is dominating the foreign exchange market as investors seek safety in assets such as the US dollar and US government bonds. At the same time, uncertainty about the global economic outlook due to geopolitical tensions and protectionist trade policies from the US under Trump also makes investors worried about the resilience of the Eurozone.

Additionally, large investors are adjusting their positions by shifting capital flows away from risky assets such as stocks and cryptocurrencies to safer assets such as the USD and gold. This further adds to the pressure on EUR/USD in the short term.

Technical analysis

Liệu xu hướng EUR/USD giảm có tiếp tục?_1

On the EUR/USD M15 chart, we can see several important technical indicators that provide clear signals of the current downtrend.

Bollinger Bands show that the current price is hovering near the lower band of the indicator at 1.0786, signaling that the market may be oversold in the short term. The expanding Bollinger Bands indicate increased volatility recently, with the middle band (1.0918) acting as important resistance if the price begins to correct upwards again. However, if the price fails to break above this resistance zone, the possibility of further declines is high.

Ichimoku Kinko Hyo also shows a strong bearish trend as the price is currently below the Ichimoku Cloud (Kumo), a negative signal that suggests that selling pressure is still strong. The Tenkan-sen and Kijun-sen lines are both above the current price, further reinforcing the bearish signal. The front Ichimoku Cloud is also dense, warning that the downtrend could continue if there is no significant change in market sentiment or fundamentals.

The CCI is currently at 172.96, indicating a short-term overbought signal on the M15 timeframe. This suggests that a slight correction may occur before the downtrend continues. However, if the CCI returns to neutral or negative territory (100), this will further reinforce the signal that the downtrend is still very strong and the price may continue to break lower support levels.

Trading Recommendations

Based on technical analysis and current market situation:

Entry: Consider entering a SELL order around the current price of 1.0786 if price fails to break above the resistance at 1.0918 – 1.0925.

Take Profit: Set a take profit target at the nearest support zone around 1.0730 or deeper at 1.0700 if the downtrend continues.

Stop Loss: Place stop loss above the key resistance level at around 1.0930 to protect the position.

The SELL trade recommendation is based on technical signals that suggest a continuation of the downtrend after EUR/USD broke several key support levels and the USD maintained its strength thanks to policy expectations from the Fed and a more positive US economic outlook compared to the Eurozone.

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

Volatility in global financial markets, coupled with concerns about the economic outlook in the UK and Japan, has pushed the pound into a weaker position against the Japanese yen.

SELL GBPJPY

Close Time

CLOSED

199.000

Entry Price

197.350

200.000

195.484 +0.890 +0.46%

38.0

Pips

Profit

197.350

198.620

Exit Price

199.000

Entry Price

200.000

On November 7, 2024, the GBP/JPY pair was trading around 199.174, with an intraday high of 199.344 and a low of 199.067. The market is being influenced by key fundamentals, including the monetary policies of the Bank of England (BoE) and the Bank of Japan (BoJ). The BoE is expected to cut interest rates by another 0.25%, from 5% to 4.75%, to support the UK economy facing slowing growth and declining inflation. This has raised expectations that the pound will continue to maintain its upward momentum against the Japanese yen.

In contrast, the BoJ has maintained a tight monetary policy stance to control domestic inflation, but the Japanese economy is struggling with weak economic indicators, such as the service activity index falling to 49.7 in October 2024. The weakness of the Japanese Yen has caused the GBP/JPY pair to rise sharply in recent sessions. However, investors are still closely monitoring the next developments from the BoE and BoJ to determine the long-term trend of this currency pair.

Market psychology

Current investor sentiment on GBP/JPY reflects concerns about the global economic outlook and monetary policy from both the UK and Japan. According to data from the foreign exchange market, around 62% of investors are short GBP/JPY, suggesting that many believe the recent rally may not last. Expectations that the BoE will cut interest rates have boosted short-term buying interest in the pound, but overall sentiment remains cautious due to uncertainty about the BoJ's next moves.

The Fear Greed Index shows that market sentiment is leaning towards caution as investors seek safer assets such as gold and government bonds due to concerns about volatility in global financial markets. With the Japanese yen weakening due to the BoJ's easy monetary policy, large investors are also shifting capital flows away from risky assets such as stocks and cryptocurrencies to focus on more stable assets.

Technical analysis

GBP/JPY Giảm Mạnh Sau Bầu Cử Mỹ: Liệu Xu Hướng Giảm Có Tiếp Tục?_1

On the M15 chart of GBP/JPY, we can observe some important technical signals from indicators such as Bollinger Bands, Ichimoku Kinko Hyo and Stochastic. Bollinger Bands show that the current price is hovering near the upper band of the indicator at 199.344, signaling a possible overbought situation in the short term. The expanding Bollinger Bands indicate a recent increase in price volatility, with the middle band (198.956) acting as important support if the price starts to correct lower. If the price fails to break above the resistance at 199.344 – 199.380, a correction to the lower support zone is highly likely.

Ichimoku Kinko Hyo also shows a short-term bullish trend as the price is currently above the Ichimoku cloud (kumo), with the Tenkan-sen and Kijun-sen lines both below the current price, further reinforcing the bullish signal. However, the front Ichimoku cloud is quite thin, warning that if the price falls below the support zone around 198.97 – 199.00, the downtrend could intensify.

Stochastic is currently hovering around 71.66, near the overbought zone (80), warning that buying pressure may have weakened and a downside correction could occur if Stochastic turns lower below 50 in the coming hours.

Trading Recommendations

Based on technical analysis and current market situation:

Entry: Consider entering a SELL order around the current price of 199,000 if price fails to break above the resistance at 199,344 – 199,380.

Take Profit: Set a take profit target at the nearest support zone around 198.00 or deeper at 197.35 if the downtrend continues.

Stop Loss: Place stop loss above the important resistance level at around 200 to protect the position.

The SELL trade recommendation is based on technical signals suggesting a possible short-term correction after the recent strong rally in GBP/JPY due to weakening buying pressure and overbought signals from Stochastic along with widening Bollinger Bands warning of an upcoming strong move.

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

With the Bank of England (BoE) set to announce its interest rate decision later today, the market anticipates a 25-basis-point rate cut, likely approved by an 8-1 vote. However, the conflicting signals from the UK's expansionary fiscal policy and tight bond markets introduce uncertainty for the future rate path. The BoE will also release updated economic forecasts, which are expected to show improvements from the August projections.

BUY EURGBP

EXP

TRADING

0.83166

Entry Price

0.84650

0.82320

0.83424 -0.00051 -0.06%

0.0

Pips

Flat

0.82320

Exit Price

0.83166

Entry Price

0.84650

Fundamentals

The Bank of England (BoE) is anticipated to lower the benchmark interest rate by 25 basis points to 4.75% today. While this decision is likely to be passed with broad consensus, Catherine Mann, a prominent hawk within the BoE, is the only member who may oppose the rate cut. Despite this, the future direction of BoE policy has become more complex due to recent domestic and international developments.

Previously, BoE Governor Andrew Bailey expressed willingness to adopt more aggressive easing measures to support the slowing economy. However, after spending a week analyzing Chancellor of the Exchequer Rachel Reeves' recent budget, which is expected to increase inflationary pressures due to higher spending, Bailey might adopt a more cautious stance. This dynamic suggests a more gradual pace of future rate cuts than previously anticipated.

As a result, market expectations have shifted. Investors now foresee two to three additional 25-basis-point rate cuts by the end of 2025, revised down from four cuts before the budget announcement.

The central bank's updated economic forecasts will be closely scrutinized for insights into how it plans to balance these fiscal challenges. However, it is unclear to what extent these forecasts will take into account the potential inflationary effects of Reeves' budget. If the BoE fails to sufficiently factor in the budget's impact, market participants may find the central bank's guidance on future policy action limited, leading to further questions about the pace and scale of rate cuts.

Consolidation Likely to Continue Without a Quick Breakout_1

Technical Analysis

The main focus in the forex market today will be on how EURGBP reacts to the BoE's decision and communication.

EURGBP remains within a broader downward trend originating from its 2022 high of 0.9267. A break below 0.8294 would target the next support level at 0.8201, the 2022 low.

The key question is whether this support level will provide enough of a foundation for EURGBP to form a bottom and initiate a medium-term reversal.

On the upside, a break above 0.8446 would signal a recovery from the short-term bottom at 0.8294, opening the door for further gains toward the 0.8624 resistance level.

Trading Recommendations

Trading Direction: Buy

Entry Price: 0.8311

Target Price: 0.8465

Stop Loss: 0.8232

Valid Until: Nov 22, 2024 23:55:00

Support: 0.8308, 0.8293, 0.8250

Resistance: 0.8395, 0.8448, 0.8463

Risk Warnings and Disclaimers

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Alan

Central Bank

Forex

Summary:

The U.S. presidential election has concluded with Trump emerging victorious. As a result, the U.S. dollar surged significantly yesterday. If Trump assumes office and enacts the policies he advocated during his campaign, expectations for a Federal Reserve interest rate cut are likely to diminish further, or even cease altogether, providing ongoing support for a stronger U.S. dollar.

BUY USDX

EXP

TRADING

104.700

Entry Price

109.500

103.100

106.560 -0.020 -0.02%

0.0

Pips

Flat

103.100

Exit Price

104.700

Entry Price

109.500

Fundamentals

On November 6, the U.S. elections officially concluded with Trump successfully elected as the new president. As a result, the U.S. dollar was bolstered and continued to strengthen, with the U.S. Dollar Index (USDX) opening significantly higher and maintaining an upward trend, achieving a daily increase of 1.65%, marking the largest intraday rise this year.

Today, the Fed is set to announce its latest interest rate decision. In the context of a softening labor market and ongoing declines in inflation, the market widely anticipates that the Fed will maintain its course of rate cuts. However, with Trump's election victory, expectations for further rate cuts by the Fed have been diminishing.

During the campaign, Trump advocated for imposing increased tariffs on U.S. trade partners, particularly proposing a 60% tariff increase on China, along with extending the tax cuts from 2017. If these policies are implemented, they could exert upward pressure on prices, wages, and the federal deficit, potentially exacerbating inflation in the U.S. In the future, the Fed may slow down or even halt rate cuts, shifting towards rate hikes, which would further strengthen the U.S. dollar.

Technical Analysis

U.S. Dollar Could Continue Its Bullish Trend with Trump's Ascension to Power_1

In the 1D timeframe, the USDX experienced a significant gap up of 1.65% yesterday, influenced by expectations surrounding Trump's election victory, effectively breaking through the previous resistance level of 104.30, indicating that there is further potential for upward movement.

Currently, following yesterday's surge, the USDX is undergoing a technical correction today, which is building momentum for sustained growth in the future. The next resistance level for the USDX is at 105.76; if it continues to rise and surpasses this level, the subsequent target for the USDX will be to test the integer threshold of 110.00.

For short-term trading strategy, it is recommended to wait for the USDX to pull back to around 104.50 before going long at the lows.

Trading Recommendations

Trading Direction: Buy

Entry Price: 104.50

Target Price: 109.50

Stop Loss: 103.10

Deadline: November 21, 2024 15:00:00

Support: 104.30, 103.91, 103.24

Resistance: 105.31, 105.76, 106.34

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

The impact of Donald Trump's presidential win remains uncertain, with opposing forces at play, including the potential for stricter sanctions on Iran and the prospects of increased domestic drilling. Traders are awaiting this week's Fed rate decision for further direction.

BUY WTI

Close Time

CLOSED

70.812

Entry Price

77.670

68.000

67.028 +0.160 +0.24%

281.2

Pips

Loss

68.000

67.998

Exit Price

70.812

Entry Price

77.670

Fundamentals

WTI crude oil prices have been on a two-day losing streak, trading near $70.74 per barrel in Thursday's European session. From a daily chart perspective, the commodity has broken below a rising channel pattern, weakening bullish sentiment, though the overall uptrend remains intact.

The US election results seem to be influencing financial markets, with Donald Trump's pro-business policies expected to drive stronger domestic economic activity, potentially boosting energy demand. Despite this, equity markets are reflecting risk-on sentiment, and the US dollar has strengthened on expectations of a less dovish Fed stance.

The upcoming Fed rate decision is a key driver. Markets widely anticipate another rate cut, but signals of a potential pause in December could favor the dollar, potentially pressuring oil prices. Conversely, continued monetary easing could weaken the dollar, supporting commodities like oil.

"Head and Shoulders Bottom" Pattern Confirmed with Weak Momentum_1

Technical Analysis

WTI crude briefly broke a critical neckline on Tuesday but has since retraced, trading between $72.34 and a prior gap at $69.33. Compared to the significant volatility in September and October, the current range-bound price action reflects market indecision.

WTI is oscillating near the mid-range of this channel, with mixed signals from technical indicators. Moving averages are flattening, pointing to a neutral short-term trend. The latest price action shows a series of lower highs and higher lows, forming a compression pattern, which may signal a significant directional move.

The relative strength index (RSI) is hovering around the mid-zone without overbought or oversold conditions, though trending upwards, indicating modest bullish pressure. Meanwhile, the stochastic oscillator is rising to suggest potential upward momentum, but the oscillators are nearing overbought territory, signaling potential buyer fatigue and a possible pullback.

A clear breakout above $72.34 could target the next resistance at $77.67, with sustained momentum beyond moving averages confirming bullish strength. However, failure to hold the gap support at $69.33 could see a retest of key support at $66.65.

Trading Recommendations

Trading Direction: Buy

Entry Price: 70.00

Target Price: 77.67

Stop Loss: 68.00

Valid Until: Nov 22, 2024 23:55:00

Support: 70.68, 69.85, 69.33

Resistance: 71.96, 72.34, 73.40

Risk Warnings and Disclaimers

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Bearish on CHFJPY Due to Increasing Expectations for Japanese Rate Hike

Fundamentals

Technical Analysis

Trading Recommendations

Trump Trade Still in Play, Dragging on the Euro

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Market psychology

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Consolidation Likely to Continue Without a Quick Breakout

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Technical Analysis

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U.S. Dollar Could Continue Its Bullish Trend with Trump's Ascension to Power

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Technical Analysis

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"Head and Shoulders Bottom" Pattern Confirmed with Weak Momentum

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Trading Recommendations

Risk Disclosure