EUR/CAD shows bearish trend with impetus from macro data

Forex

Summary:

The EUR/CAD pair fell to 1.4753 in trading on December 3, 2024 after a slight increase at the beginning of the session. Selling pressure appeared due to weakness in Eurozone economic data, especially the November services PMI was revised down to 46.8, lower than the forecast...

SELL EURCAD

EXP

EXPIRED

1.47500

Entry Price

1.47050

1.47850

1.49667 +0.00555 +0.37%

Pips

EXPIRED

1.47050

1.47911

Exit Price

1.47500

Entry Price

1.47850

The EUR/CAD pair continued its downward trend today, currently trading around 1.4752. The euro has been under pressure from recent weak economic data, notably the Eurozone services PMI for November, which was revised down to 46.8 – a two-year low, indicating a clear contraction in the services sector. At the same time, expectations of no further ECB rate hikes in the near future continue to weaken the common currency.

On the contrary, the CAD is receiving positive support from crude oil prices. With Brent crude oil prices trading steady around $72.50/barrel, the CAD – which is highly correlated with oil prices – has become an attractive option for investors. The stability comes as OPEC+ confirmed its commitment to continue production cuts to maintain oil prices amid weak demand from China.

Market sentiment

Current market sentiment suggests investors are looking for safe havens linked to commodities rather than riskier assets like the euro. The VIX index eased slightly to 17.5, reflecting a more stable sentiment after the market overcame interest rate concerns. However, investors remain concerned about the eurozone economic outlook, with fourth-quarter GDP forecast to grow by just 0.1% or worse, adding to selling pressure on the euro.

Meanwhile, the appeal of the Canadian dollar has been boosted by a slight recovery in global oil demand expectations. The latest data from the API (American Petroleum Institute) showed that US crude oil inventories fell by 1.8 million barrels last week, reinforcing expectations of rising oil prices.

Technical Analysis

EUR/CAD shows bearish trend with impetus from macro data _1

On the 30-minute (M30) timeframe, EUR/CAD shows a clear bearish trend. The current price is trading below the Ichimoku cloud, with the Tenkan-sen (9-period) and Kijun-sen (26-period) lines crossing down, confirming a strong sell signal. The short-term moving average (20 SMA) is also sloping down, reflecting a short-term downtrend.

The Bollinger Bands are widening, indicating increased volatility. Currently, the price is testing the important support level at 1.4730 – a level formed from the previous accumulation zone. If the price breaks below this level, the next target will be 1.4700.

The Stochastic indicator (5,3,3) is giving an oversold signal, with the %K line below 20. However, there are no signs of a reversal yet,showing that selling pressure still dominates in the short term.

Trading Recommendation

Entry: 1.4750

Take Profit: 1.4705

Stop Loss: 1.4775

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The CAD/CHF pair continues to fluctuate around 0.6300 with a clear bullish bias. The CAD benefits from Brent crude oil prices recovering to nearly $73/barrel, while the CHF is pressured by positive market sentiment and lack of surprises in European economic data. With expectations of OPEC+ continuing to maintain production cuts, the CAD may find further support in the coming period...

BUY CADCHF

Close Time

CLOSED

0.63055

Entry Price

0.63400

0.62700

0.62578 +0.00001 +0.00%

5.5

Pips

Loss

0.62700

0.63000

Exit Price

0.63055

Entry Price

0.63400

The CAD/CHF pair is showing a solid upward trend on December 3. Brent crude oil, one of the factors that determine the strength of the CAD, rose to $72.80/barrel, supported by expectations that OPEC+ will continue to tighten supply to stabilize the oil market. Rising oil prices not only strengthen Canada's foreign exchange earnings from oil exports but also support the domestic economy thanks to increased production.

Meanwhile, the CHF struggled as PMI data from the Eurozone showed stability but was not enough to boost the CHF. Optimism about the European Central Bank's (ECB) stimulus measures also reduced demand for safe-haven assets. Markets are focused on expectations that the Swiss National Bank (SNB) policy meeting will not bring any major changes, reinforcing the bearish view on the CHF.

Market sentiment

Global investor sentiment improved significantly in the first trading session of the week, with the VIX index (a measure of market volatility) falling to 13, its lowest level since early November. Investors are moving away from defensive assets such as the CHF and into commodity-linked currencies such as the CAD. CAD trading volumes have also increased significantly, especially on European exchanges, as investors poured money into oil markets.

Moreover, Canadian employment data last week beat expectations, with 24,000 new jobs added compared to the forecast of 15,000, further bolstering confidence in the country's economic recovery. In contrast, Switzerland reported a 0.3% increase in Q3 GDP, below expectations of 0.5%, weakening the appeal of CHF.

Technical Analysis

CAD leads as oil prices recover, while CHF comes under pressure from global optimism_1

The M30 chart shows that CAD/CHF is maintaining a steady uptrend. The price has broken above the 20- and 50-period moving averages, indicating strong buying pressure. The Bollinger Bands are showing signs of widening, signaling the possibility of higher price volatility in the coming period. The current support level is at 0.6280, while the important resistance level is at 0.6320.

The Stochastic indicator is currently at 79/80, approaching the overbought zone but showing no signs of a reversal yet. The Stoch line has crossed above the signal line, reinforcing the uptrend. At the same time, the Ichimoku cloud continues to act as strong support, with the price above the Senkou Span A line.

Trading Recommendation

Entry: Buy at 0.6305,with the expectation that the price will continue to break the resistance.

Take Profit: 0.6340, where there is a large potential selling pressure.

Stop Loss: 0.6270, below the nearest support zone.

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

After breaking through 107.00 the previous week, the U.S. Dollar Index (USDX) opened this Monday below that level, which may indicate that bearish sentiment around this threshold still holds some influence, potentially posing challenges for bulls in the short term.

SELL USDX

Close Time

CLOSED

106.170

Entry Price

103.360

108.400

107.990 +0.030 +0.03%

73.0

Pips

Loss

103.360

106.900

Exit Price

106.170

Entry Price

108.400

Fundamentals

The USDX has retreated after reaching a two-year high of 108.11 in the previous week. The underlying reason for this decline is President Trump's announcement of a 25% tariff on "all products" imported from Canada and Mexico, which was one of his first executive orders following the election. China is also a target in Trump's trade agenda, with an additional 10% tariff imposed on top of the existing tariffs.

The USDX briefly surpassed the adjustment threshold, achieving a 61.8% increase since Trump's election and a total rise of 76.4% from the low at the end of September. It is currently in a retracement phase, seemingly testing the upper limit of a two-year trading range before undergoing a corrective adjustment. From a technical perspective, the current state of the U.S. dollar resembles a tactical pullback prior to a new round of peak testing.

On the other hand, the Federal Reserve's shift towards a less hawkish stance supports the notion of the U.S. dollar's current decline. The Fed is revising its interest rate cut expectations for next year, with the market following suit. Last week, the prevailing scenario suggested that rates would remain unchanged in December. However, by the weekend, the likelihood of this outcome had dropped to 30%.

During a speech yesterday, New York Fed President John Williams stated that monetary policy needs to "gradually shift towards a more neutral policy environment over time." However, he did not provide explicit guidance on the timing of interest rate cuts, including whether adjustments in December would be appropriate.

Williams emphasized the inherent uncertainty in economic forecasts and noted that "the policy path will depend on the data."

Despite this uncertainty, Williams maintained a relatively optimistic outlook on the U.S. economy, describing it as being in "good shape" with a "strong" labor market.

He projected that the economic growth rate would reach 2.5% or higher this year, with the unemployment rate expected to stabilize between 4% and 4.25% in the coming months. Additionally, he anticipates that the inflation rate will reach 2.25% by the end of the year, with no significant upward pressure on the labor market.

Head and Shoulders Pattern Poses Challenges for Bulls_1

Technical Analysis

This week, the USDX has continued to retreat from its two-year high of 108.11, currently trading around 106.25. Analyzing the movement of the USDX, it opened lower this week and has formed two consecutive doji candlesticks in the 1D timeframe, which typically indicates a potential weakening of bullish momentum for the U.S. dollar in the near term.

Although it suggests that the U.S. dollar remains in an overall upward trend in the 4H timeframe and may continue to rise in the short term, it has spent most of the time below 107.00 after testing the two-year high last week. Meanwhile, the formation of a head and shoulders pattern indicates that the upward momentum for the U.S. dollar may have diminished, suggesting a market demand for a pullback to the demand zone.

Trading Recommendations

Trading Direction: Sell

Entry Price: 106.54

Target Price: 103.36

Stop Loss: 108.40

Valid until: December 18, 2024 23:55:00

Support: 106.09, 105.60, 105.32, 105.00

Resistance: 106.50, 106.81, 107.10, 107.46

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The NZD/USD remains under pressure, trading near 0.5880 in Tuesday's Asian session amid ongoing concerns over US tariffs and global trade.

SELL NZDUSD

EXP

EXPIRED

0.59000

Entry Price

0.57400

0.59500

0.56302 -0.00054 -0.10%

Pips

EXPIRED

0.57400

0.58442

Exit Price

0.59000

Entry Price

0.59500

The New Zealand Dollar (NZD) continued to struggle during the Asian trading session on Tuesday, with the NZD/USD pair trading near 0.5880 as it grapples with various headwinds. Chief among these is the ongoing uncertainty surrounding global trade relations, exacerbated by US President-elect Donald Trump’s tariff threats, which have cast a shadow over the Kiwi dollar. Investors are also keeping a keen eye on upcoming economic data from the United States, including the JOLTs Job Openings report for October, set for release later today, as well as speeches from Federal Reserve officials Adriana Kugler and Austan Goolsbee.

The persistent pressure on the NZD/USD can be traced to a broader set of economic concerns. As the trade war between the United States and its global partners continues to intensify, Trump’s threats of additional tariffs have become a central theme in financial markets. On the eve of assuming office, the President-elect proposed a blanket 25% tariff on all imports from Mexico and Canada, coupled with a further 10% duty on goods from China. With China being a significant trading partner for New Zealand, this tariff escalation raises fears of a global trade war that could have far-reaching implications for global growth, particularly in emerging markets and commodity-dependent economies like New Zealand. As a result, the NZD has faced a persistent downturn in recent trading sessions.

While the external factors weigh heavily on the NZD, US economic data has been mixed, leading to a somewhat cautious outlook for the US dollar. On Monday, the Institute for Supply Management (ISM) released its manufacturing PMI for November, showing a surprising uptick to 48.4 from the previous reading of 46.5. Although this signals that the manufacturing sector in the US is still in contraction territory, the data beat expectations, which had forecasted a more modest increase to 47.5. This slight improvement suggests that the US economy is showing some resilience, even amid global economic slowdowns.

At the same time, investors are awaiting more comprehensive data on the US labor market, with the highly anticipated Nonfarm Payrolls (NFP) report due on Friday. Market consensus is predicting an addition of 195,000 jobs in November, a figure that will provide further clues on the strength of the labor market and the broader US economic outlook. Strong NFP data could influence the Federal Reserve’s stance on interest rates, potentially giving the US dollar a boost if it supports expectations of further tightening from the central bank.

Indeed, Federal Reserve officials have signaled that the need to continue lowering interest rates into 2025 remains a priority, but there is no definitive commitment to a rate cut at the upcoming policy meeting later this month. Fed Governor Christopher Waller mentioned on Monday that while he is inclined to vote for a rate reduction when the Fed meets in December, data released before then will be crucial in shaping the final decision. This hawkish tone from the Fed, combined with recent signs of resilience in US manufacturing, suggests that market participants may not see significant changes to US monetary policy in the short term.

Technical Analysis

From a technical standpoint, the NZD/USD currency pair remains under pressure, with a bearish bias continuing to dominate price action. The pair has been trading below key resistance levels, and there is growing momentum for further declines. As of now, the NZD/USD is testing the 50-period exponential moving average (EMA50), which is positioned as a significant support level near 0.5865. Should the price break below this level, the next support targets lie around 0.5850, with a potential move toward 0.5740 in the medium term.

A continued bearish trend will be contingent upon the price remaining below 0.5935. If the NZD/USD fails to reclaim this level, the outlook for the pair remains negative, and further declines could be expected. However, should the price breach the 0.5935 resistance, the pair could see a corrective rally toward the 0.6020 region, which would mark a shift in the near-term trend.

The anticipated trading range for today is between support at 0.5820 and resistance at 0.5910, with the overall trend forecasted to remain bearish unless a reversal occurs above the 0.5935 mark.

TRADE RECOMMENDATION

SELL NZDUSD

ENTRY PRICE: 0.5900

STOP LOSS: 0.5950

TAKE PROFIT: 0.5740

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Last Saturday, US President-elect Trump warned the G20 countries that if they attempted to escape from the U.S. dollar and support other currencies to replace it, they would face 100% tariffs. This led to a strengthening of the U.S. dollar, putting pressure on gold.

SELL XAUUSD

Close Time

CLOSED

2645.48

Entry Price

2580.00

2670.60

2626.67 +9.96 +0.38%

251.2

Pips

Loss

2580.00

2670.63

Exit Price

2645.48

Entry Price

2670.60