EUR/USD Faces Pressure as ECB Shifts Focus Toward Growth Amid Economic Concerns

Economic

Summary:

EUR/USD struggles near the 1.0600 level, as the European Central Bank (ECB) prioritizes economic growth over inflation control.

SELL EURUSD

EXP

TRADING

1.05300

Entry Price

1.04000

1.06500

1.05484 +0.00058 +0.06%

0.0

Pips

Flat

1.04000

Exit Price

1.05300

Entry Price

1.06500

The EUR/USD currency pair is under significant pressure on Wednesday, hovering near the 1.0600 mark, struggling to maintain the upward momentum it saw last week. The pair's inability to break past this critical level highlights the growing challenges for the Euro as the European Central Bank (ECB) shifts its focus from inflation control to addressing a more pressing economic slowdown. While the Federal Reserve (Fed) is expected to ease interest rates gradually, the Eurozone is facing a far more complicated situation, resulting in a stark divergence in monetary policy approaches between the two central banks.

At the heart of the current market dynamics is the ECB’s increasingly dovish stance. Despite inflation hovering close to the bank’s target, ECB policymakers have expressed concern that economic growth in the region remains tepid. ECB’s Fabio Panetta, speaking at Bocconi University in Milan on Tuesday, emphasized that “restrictive monetary conditions are no longer necessary” given the subdued growth prospects. The focus, he argued, should shift to supporting the economy by moving interest rates into more neutral or expansionary territory, underscoring the bank's current priority: growth preservation rather than inflation control. Panetta also warned that inflation could remain below the ECB’s target if economic recovery fails to materialize.

In line with this dovish rhetoric, market participants are now pricing in further monetary easing from the ECB, with expectations of a 25 basis point cut to the Deposit Facility Rate at the central bank's December meeting. This would mark the fourth rate cut of the year, following a consistent series of reductions as the bank aims to stimulate demand in the face of stagnant domestic growth. However, this dovish outlook for the Eurozone contrasts sharply with the Fed's data-dependent approach, which seems more focused on managing inflation and sustaining economic momentum in the US.

On the other side of the Atlantic, the Fed remains more cautious in its monetary policy approach, with market consensus suggesting a 25-basis point rate cut at the December meeting. This is in line with the Fed’s gradual pivot toward easing but reflects the central bank’s determination not to rush its policy changes amid still-robust economic data from the US. Analysts at Deutsche Bank point out that while the rate cut is anticipated, it is by no means a certainty and will likely be a “close call” depending on data closer to the time. In this context, the US Dollar (USD) remains relatively strong, buoyed by investor confidence that inflation will not dissipate as quickly as some had expected.

Compounding the challenges for EUR/USD is the ongoing geopolitical volatility, particularly in Eastern Europe. The market saw heightened fluctuations on Tuesday, with the US Dollar gaining ground as geopolitical tensions escalated following Russia’s moves to revise its nuclear doctrine, which could have far-reaching implications for global stability. Although Russian Foreign Minister Sergei Lavrov later downplayed the immediate risk of nuclear escalation, the initial safe-haven demand sent the USD soaring. The US Dollar Index (DXY), which measures the Greenback’s strength against a basket of six major currencies, bounced back to 106.30 from an earlier low of 106.10, signaling renewed investor appetite for the dollar.

In addition to these geopolitical risks, the economic outlook for the Eurozone remains precarious. The region faces numerous headwinds, from sluggish growth to ongoing political uncertainties in Germany and other major economies. These factors, combined with lingering concerns about the broader global economy, have fueled negative sentiment toward the Euro. The Eurozone's struggles are compounded by the possibility of additional tariffs imposed by the US under President Donald Trump's administration, which could further strain European exports and weaken the region’s economic performance. Trump’s promises to raise import tariffs by 10% across the board could undermine the ECB’s efforts to stimulate growth, further complicating the currency pair's outlook.

Technical Analysis

The technical picture for EUR/USD also remains bearish, with the pair showing signs of weakness just below the 1.0600 resistance level. A downward rebound from this level has reinforced the expectation that the pair will continue its downward trajectory in the coming days. The stochastic oscillator is providing negative signals, suggesting more downside ahead. If the pair breaks below the 1.0495 support level, it could pave the way for a further decline towards the next target at 1.0400. A sustained recovery above the 1.0600 mark would be needed to shift the trend and open up potential for an upward move, but for now, the bias remains firmly bearish.

Looking ahead, the trading range for EUR/USD is expected to be confined between the 1.0500 support and the 1.0650 resistance. Given the negative technical indicators and the prevailing economic conditions in the Eurozone, the outlook for the currency pair remains cautious, with the potential for further downside in the short term.

TRADE RECOMMENDATION

SELL EURUSD

ENTRY PRICE: 1.0530

STOP LOSS: 1.0650

TAKE PROFIT: 1.0400

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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Eva Chen

Central Bank

Summary:

Due to the strengthening of the U.S. dollar and concerns regarding the direction of the European Central Bank's (ECB) policies, the EURUSD is under pressure. The interest rate differential between the Federal Reserve and the ECB is a critical factor to monitor. The market anticipates that the rate cuts in the eurozone will exceed those in the UK and the U.S., with Friday's PMI data being particularly noteworthy.

BUY EURUSD

EXP

PENDING

1.04480

Entry Price

1.07600

1.03200

1.05484 +0.00058 +0.06%

Pips

PENDING

1.03200

Exit Price

1.04480

Entry Price

1.07600

Fundamentals

At the beginning of this week, U.S. dollar bulls continued to hold their ground; previously, there were indications that the U.S. dollar might weaken. However, so far, this prediction has proven to be incorrect, as the declines during the Asian session were immediately erased in the European session.

The Eurostat released a revised version of the October Harmonized Index of Consumer Prices (HICP) inflation data, confirming that the eurozone's inflation rate for October stands at 2.0% YoY, up from 1.7% YoY in September. The core Consumer Price Index (CPI), which excludes volatile components such as energy, food, alcohol, and tobacco, remained steady at 2.7% YoY.

The overall inflation rate for the EU is 2.3%, slightly higher than the 2.1% recorded in September. There is significant variation in inflation rates among member states.

The currency market anticipates that the ECB will implement a more significant rate cut compared to the U.S. and the UK, with this divergence notably accelerating since Trump's election victory. There has been a scarcity of available data since then, so if the interest rate differential continues to widen, the market may not be surprised.

According to data from the London Stock Exchange Group, the currency market currently estimates a 77% probability that the ECB will reduce rates by 25 basis points in December, and a 23% probability of a 50 basis point cut. The results of the purchasing managers' survey to be released on Friday "could be a crucial piece in solving the puzzle," thereby increasing the likelihood of a more substantial rate cut by the ECB.

Focus on Seasonal Fluctuations in Positions_1

Technical Analysis

The EURUSD continues to face selling pressure, with trading prices dipping below 1.0600 on Tuesday. As long as the support level at 1.0760 turns into a resistance level, the outlook remains bearish.

On the downside, if the price stabilizes at 1.0495, it will recover from the drop from 1.1213 to the support level of 1.0447, and then potentially decline to the critical Fibonacci level at 1.0404.

Indeed, the U.S. dollar is also at a crucial juncture, requiring a breakout in a significant upward range relative to the euro, but positioning may pose the greatest threat to the U.S. dollar at this time. Although we may hear about seasonal fluctuations in the U.S. dollar again, historically, the U.S. Dollar Index has declined in 8 out of the last 10 Decembers and has experienced a continuous decline for the past 7 Decembers. One must question whether this trend will persist. It is recommended to focus on testing the market.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.0448

Target Price: 1.0760

Stop Loss: 1.0320

Deadline: December 5, 2024 23:55:00

Support: 1.0496, 1.0448, 1.0430

Resistance: 1.0606, 1.0664, 1.0681

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The dollar's gains were driven by positive economic data from the US, including better-than-expected retail sales, while the CHF was pressured by Switzerland's weaker economic outlook and the Swiss National Bank's (SNB) low interest rate stance...

BUY USDCHF

Close Time

CLOSED

0.88220

Entry Price

0.88400

0.88000

0.88263 -0.00149 -0.17%

18.0

Pips

Profit

0.88000

0.88401

Exit Price

0.88220

Entry Price

0.88400

USD/CHF had a volatile trading day but remained bullish. The USD continued to assert its position as the strongest currency in the G10 group thanks to positive economic data. US retail sales rose 0.7% in October (vs. 0.3% forecast), indicating that the world's largest economy maintained good growth momentum despite tight monetary policy. In addition, the industrial production report increased 0.5%, higher than the forecast of 0.2%, further strengthening the Fed's outlook for higher interest rates.

Meanwhile, Switzerland has not provided any support for the CHF. Recent economic indicators have shown growth pressures, especially a slowdown in exports, which account for a large share of Swiss GDP. This has prompted the SNB to continue to maintain a negative interest rate policy to support the economy, reducing the CHF's appeal on the international market.

Market psychology

The market is currently reflecting a clear shift towards lower risk assets, with the US dollar being the preferred choice due to the stability of the US economy. Although the CHF is often seen as a safe haven, market sentiment has changed in recent weeks due to uncertainty over Switzerland’s economic outlook.

Net long positions in the USD increased by 3% over the past week, reflecting strong investor optimism, according to CFTC data. At the same time, capital outflows from the CHF continued to increase, reflecting a shift of funds to higher-yielding assets.

Technical analysis

USD/CHF cho thấy tín hiệu mua rõ ràng trong bối cảnh đồng USD vượt trội nhờ dữ liệu kinh tế Mỹ mạnh mẽ_1

On the M15 chart, USD/CHF is trading in a clear bullish channel with technical signals favoring the continuation of the uptrend:

Stochastic (5,3,3): The %K and %D lines are currently crossing each other in the overbought zone (level 89.63), indicating that the bullish momentum remains strong, although caution is needed against the possibility of a short-term correction.

Bollinger Bands: Price is sticking to the upper band, indicating dominance by buyers. The expansion of the Bollinger bands also reflects increased volatility, consistent with an uptrend.

Ichimoku Kinko Hyo: Price is currently above the Tenkan-Sen and Kijun-Sen lines, with the Kumo cloud sloping up, confirming a clear uptrend.

Resistance and support: The current short-term support level is at 0.8810, while the nearest resistance level is at 0.8840. If this resistance level is broken, the next target could be 0.8875.

Trading Recommendations

Based on fundamentals and technicals, today's USD/CHF trading strategy is BUY at the following levels:

Entry: Buy at 0.88220 when price holds above support at 0.8810.

Take Profit: Set target at 0.8840, with potential to extend to 0.8875 if the bullish momentum continues.

Stop Loss: Set stop loss at 0.8800 to protect capital in case price reverses.

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

After a slight gain in the early session, the AUD has been under pressure as the USD has recovered, supported by better-than-expected US economic data. Meanwhile, internal factors from the Australian economy continue to put downward pressure on the AUD, making the bearish trend likely to continue...

SELL AUDUSD

EXP

EXPIRED

0.65021

Entry Price

0.64700

0.65150

0.65173 +0.00124 +0.19%

Pips

EXPIRED

0.64700

0.65146

Exit Price

0.65021

Entry Price

0.65150

AUD/USD had a volatile trading day. Prices opened at 0.64638 and quickly rose to a high of 0.65055 in the morning session, supported by positive sentiment in commodity markets. However, the rally was short-lived. The AUD came under pressure as a report from the US showed retail sales rose sharply by 0.7% last month, far exceeding the forecast of 0.3%. The USD quickly recovered, becoming the strongest currency in the basket by the end of the session.

Meanwhile, from Australia, poor economic data continued to extend the downward trend. The latest report from the Reserve Bank of Australia (RBA) showed a decline in business confidence and consumer spending, reflecting concerns about the country's potential economic slowdown. The country's heavy dependence on iron ore and energy exports also added to the pressure, especially as China - Australia's main trading partner - faces the risk of a deeper recession.

Market psychology

The current market sentiment reflects investor caution. For the AUD, concerns about economic stagnation and uncertainty in the commodity markets are reducing the attractiveness of the currency. In particular, capital flows have been rapidly shifting away from the AUD as the USD has been supported by better-than-expected economic reports.

Markets are also focused on the RBA’s policy expectations. With core inflation falling below the 4% target, the RBA’s ability to raise interest rates further in the coming months has been limited. This has weakened the AUD against the USD, which is currently benefiting from the prospect of higher interest rates from the US Federal Reserve (Fed).

Technical analysis

AUD/USD: Liệu xu hướng giảm giá có tiếp diễn trong bối cảnh dữ liệu kinh tế toàn cầu yếu?_1

On the M15 chart, AUD/USD shows a clear bearish trend after failing to overcome the strong resistance at 0.65055. Technical signals also support this view:

Stochastic indicator (5,3,3): Currently at 19.26, the pair is entering the oversold zone, but the bearish momentum is still dominant. The %K line crosses below the %D line, confirming a short-term sell signal.

Bollinger Bands: Price is trading near the lower band of the Bollinger Bands at 0.64800, indicating increased selling pressure. If price breaks this lower band, the possibility of a deeper decline is very high.

Ichimoku Kinko Hyo: The price has broken below the Tenkan-Sen and Kijun-Sen lines, signaling strong bearish momentum. Meanwhile, the upper Kumo cloud is acting as a key resistance zone, preventing any recovery attempts.

Resistance and support: The nearest resistance level is identified at 0.65100, while the important support level is located at 0.64700. A break below this support level could push the price further down, with the next target being 0.64550.

Trading Recommendations

Based on fundamental and technical signals, a SELL trading strategy for AUD/USD is proposed:

Entry: SELL at 0.65021 when price remains below 0.65050, confirming downtrend.

Take Profit: Set the take profit target at 0.64700, corresponding to the nearest support zone.

Stop Loss: Place stop loss at 0.65150 to protect capital in case price reverses to the upside.

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

Regardless of the circumstances, gold possesses a significant allure; technical indicators suggest that gold prices are likely to regain an uptrend.

BUY XAUUSD

EXP

TRADING

2635.76

Entry Price

2732.00

2584.00

2660.03 +9.98 +0.38%

0.0

Pips

Flat

2584.00

Exit Price

2635.76

Entry Price

2732.00

Fundamentals

The weakening of the U.S. dollar and the decline in US Treasury yields have led to a significant increase in gold prices. Previously, Trump's victory in the U.S. presidential election caused the U.S. dollar to surge, suppressing demand for gold; however, the recent sharp drop in gold prices has allowed it to recover some of its lost ground.

Geopolitical risks have resurfaced, driving a renewed demand for gold as a safe-haven asset, thereby reinforcing its status as a reliable hedging tool. However, market opinions on the future trajectory of gold prices remain divided. If the Federal Reserve tightens U.S. monetary policy, gold prices may fall to lower levels; conversely, if central banks continue to maintain strong purchasing activity before 2025, gold prices could reach new highs.

In either scenario, the ongoing monetary policy and the overall economic outlook continue to enhance gold's appeal as a hedge against volatility.

Technical Analysis

On Monday, the robust increase in gold prices was attributed to a rebound below the 100-day SMA last week. This momentum propelled gold prices past the 23.6% Fibonacci retracement level of the recent pullback from historical highs, bolstering the prospects for further gains.

However, the strong resistance around the US$2,635 range may lead to a market pullback. Concurrently, the overbought indicators are suggesting a potential return of bearish sentiment; following the anticipated formation of a head and shoulders bottom pattern, some subsequent buying could trigger short covering, pushing prices up to the high-volume area of US$2,655-US$2,675, before ultimately targeting the range of US$2,700-US$2,730. A break of this resistance level would enhance market sentiment.

Trading Recommendations

Trading Direction: Buy

Entry Price: 2610, 2605

Target Price: 2732

Stop Loss: 2584

Deadline: December 3, 2024 23:55:00

Support: 2617, 2605, 2589

Resistance: 2635, 2643, 2674

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

Due to investors adopting a cautious stance ahead of the Bank of England's (BOE) monetary policy report hearing, the GBPJPY fell. Meanwhile, Putin has approved a new nuclear doctrine, and geopolitical tensions have led to a rise in safe-haven assets, bolstering the yen.

SELL GBPJPY

Close Time

CLOSED

194.614

Entry Price

192.000

196.550

195.858 -0.785 -0.40%

193.6

Pips

Loss

192.000

196.557

Exit Price

194.614

Entry Price

196.550

Fundamentals

On Tuesday, the GBPJPY retraced its recent gains, falling below the 194.00 threshold during the European trading session. Investors are adopting a cautious stance ahead of the Bank of England's (BOE) monetary policy report hearing. During the hearing, the pound may encounter resistance in its short-term upward movement, as BOE officials, including Governor Bailey, will respond to questions from the House of Commons Treasury Committee regarding recent interest rate decisions.

Meanwhile, during the Asian trading session, the yen remains strong against other G-10 and Asian currencies, bolstered by prior verbal warnings from Japanese authorities. Finance Minister Katsunobu Kato stated that the authorities are monitoring the foreign exchange market, including speculative activities, with a high sense of urgency.

The yen is under pressure due to uncertainty surrounding the timing of the Bank of Japan's (BOJ) next interest rate hike. On Monday, BOJ Governor Kazuo Ueda emphasized that any rate increases will be gradual and based on economic performance, but did not provide a specific timeline for future adjustments.

Additionally, Russian President Vladimir Putin approved an updated nuclear doctrine on Tuesday, permitting Russia to broaden the scope of its nuclear weapon usage. This geopolitical conflict has once again triggered a rise in safe-haven assets, bolstering the value of the yen.

A few days prior, the U.S. granted Ukraine permission to conduct limited long-range missile strikes on Russian territory. Documents released online indicate that Russia will regard aggression against itself or its allies by non-nuclear states supported by other nuclear powers as a collective attack. In September of this year, Putin stated that Russia would amend its doctrine in response to the "aggression" of non-nuclear states backed by nuclear powers.

During periods of geopolitical conflict, typical safe-haven assets such as U.S. Treasury securities, the yen, and the Swiss franc have all experienced increases. Russian leaders have cautioned the U.S. and its European allies against allowing Ukraine to utilize Western long-range precision weapons to strike within Russian territory, asserting that such actions would lead to a direct confrontation with Russia.

Technical Analysis

The GBPJPY has recently entered a recovery phase after breaching the 194.00 threshold during the European session.

In the preceding decline, the market initiated downward impulse waves following the breakdown of the critical level at 195.37. The absence of a test at the 196.65 level during the wave 4 rebound has solidified the downward impulse waves, leading to expectations that the GBPJPY will test below 192.00.

As for the trend, as long as the resistance level at 198.43 remains intact, further declines are anticipated.

From a broader perspective, the price trend starting from 208.09 is viewed as a correction of the entire rebound that began from the low of 123.94 in 2020. The consolidation range should be set between the 38.2% retracement level of 123.94 to 208.09, specifically between 175.94 and 208.09. However, a decisive break below 175.94 would indicate that a deeper correction is underway; otherwise, an upward continuation is expected.

Trading Recommendations

Trading Direction: Sell

Entry Price: 195.22

Target Price: 192.00

Stop Loss: 196.55

Deadline: December 4, 2024 23:55:00

Support: 193.58, 192.90, 191.74,

Resistance: 195.34, 196.18, 196.65

Risk Warnings and Disclaimers

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Alan

Central Bank

Forex

Summary:

With the "Trump trade" propelling the U.S. dollar to continue strengthening, the USDCAD has officially broken through the 1.40 threshold, further opening up upward potential.

BUY USDCAD

EXP

TRADING

1.40174

Entry Price

1.44100

1.38100

1.39645 -0.00097 -0.07%

0.0

Pips

Flat

1.38100

Exit Price

1.40174

Entry Price

1.44100

Fundamentals

With the conclusion of the U.S. elections, Trump has successfully won, and the "Trump trade" has propelled the U.S. dollar to continue strengthening. The U.S. Dollar Index (USDX) has reached a peak of over 107.00, and the USDCAD has also risen significantly, successfully breaking through the 1.40 threshold.

However, due to the rapid increase in the USDX in the short term, a pullback has begun, and the USDCAD has also retraced. Since the uptrend of the U.S. dollar has not yet ended, we believe that after Trump takes office in January next year, the policies he is likely to implement will continue to bolster the strength of the U.S. dollar, providing support for the ongoing rise of the USDCAD.

It is worth noting that later today, Canada will release the October CPI. If inflation in Canada continues to decline, this may lead to further weakening of the Canadian dollar. Conversely, if inflation rises, it would indicate resilience in inflationary pressures within the Canadian economy. This could provide support for the exchange rate of the Canadian dollar, as the Bank of Canada's (BOC) dovish stance may be alleviated.

Technical Analysis

Pullbacks Present Opportunities as Uptrend Continues_1

In the 1W timeframe, the USDCAD has strongly broken through the previous fluctuation range and simultaneously surpassed the 1.40 threshold, indicating robust bullish momentum and a strong continuation of the uptrend, with the potential to test new highs.

Pullbacks Present Opportunities as Uptrend Continues_2

In the 4H timeframe, after breaking through the 1.40 threshold, the USDCAD has continued to rise; however, following a significant short-term increase, it has temporarily retraced. As it retraced to the 1.40 support level, it has consecutively closed with bullish candles, suggesting that the pullback may be nearing its end and that the uptrend may continue.

Currently, we can observe whether the USDCAD will stabilize at the 1.40 support level. If it holds, the USDCAD will likely continue its uptrend and push towards new highs; if it declines, we should keep an eye on the 1.3960 support level. It is recommended to go long at the lows.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.4020

Target Price: 1.4410

Stop Loss: 1.3810

Deadline: December 3, 2024 15:00:00

Support: 1.4000, 1.3976, 1.3897

Resistance: 1.4105, 1.4264, 1.4667

Risk Warnings and Disclaimers

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