It’s Friday and we have major data today - FOMC Member Collins Speaks
Due to participate in a fireside chat at the Mass Black Expo, in Boston;
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GBP Recovers to 1.2960 on Reeves’ Borrowing Plans
The British Pound is trading at 1.2960 on Friday morning, recovering from a two-month low following reports that Finance Minister Rachel Reeves may permit increased borrowing in the upcoming budget, potentially delaying rate cuts by the Bank of England. Reeves aims to revise fiscal rules to focus on public sector net financial liabilities (PSNFL), which could free up tens of billions for capital expenditure. The Institute for Fiscal Studies suggested this change could have allowed for an additional £53 billion in borrowing last March, although the Treasury has indicated it won’t utilize this capacity right away. Bank of England Governor Andrew Bailey expressed concerns about ongoing inflation, noting that while inflation is lower than anticipated, structural economic changes and high inflation in services are still pressing issues. Consequently, market expectations for a rate cut by the BoE in November have fallen from 100% to 86%. Additionally, flash PMI data indicated slower growth in the UK manufacturing and services sectors for October.
For GBP/USD, the initial support lies at 1.2920, followed by 1.2865 and 1.2805 below. On the upside, the first resistance is at 1.2985, with subsequent levels at 1.3050 and 1.3100 if the pair breaks above this resistance.
Hello,
Last week we closely monitored statements from various Fed members, and there has been no change in tone since the meeting that resulted in a 50 basis point rate cut. Overall, all members emphasized the need for caution in implementing further rate cuts, with some suggesting that natural interest rates are likely to remain higher than in the past.Looking at the flow of economic data from the U.S., we see information that supports these views. Last week’s CPI data came in above expectations, and labor market indicators have improved compared to pre-rate cut levels. This suggests that there is no need to rush into further rate cuts and highlights the ongoing risk of inflation.Regarding tonight’s speech, we do not anticipate significant changes in market expectations ahead of the growth and inflation data to be released next week, as well as the upcoming U.S. elections. Currently, the expectation is that Trump, who advocates inflationary policies, may return to power. Alongside the mentioned economic data, the likelihood of a subsequent 25 basis point rate cut has risen to 95%. We believe that next week’s data and the election results are more likely to influence this situation. Focusing on gold, we believe it will be beneficial to monitor geopolitical risks in both the Middle East and Asia in light of these developments.
zForex Team
Yen Falls on Election Risks, Dollar Gains Ground
The USD strengthened on positive US data, keeping EUR/USD steady at 1.0790.
The yen weakened below 153.5 after Japan’s ruling coalition lost its majority, raising potential BoJ intervention. Gold consolidated near $2,730 amid global uncertainties, and silver traded at $33.60, pressured by a strong dollar. GBP/USD hovered at 1.2960 as UK inflation fell below target, increasing BoE rate cut expectations. Markets await China’s National People’s Congress and key US economic data to calculate upcoming global market impacts.
Dollar Strengthens on Positive US Data
The EUR/USD pair remained stable at around 1.0790 in Monday’s Asian session, following losses. It may encounter pressure from a stronger US dollar, supported by positive US economic data hinting at a cautious Fed stance in November. The US Michigan Consumer Sentiment Index rose to 70.5 in October, beating the 69.0 forecast, while Durable Goods Orders fell 0.8% in September, less than the expected 1.0% drop. Israel’s recent airstrikes on Iran, coordinated with Washington and targeting missile and air defense sites, were more restrained than expected.
The US dollar’s strength is supported by uncertainties around the upcoming presidential election, where Trump’s Republican allies have lost at least 10 court cases in key states, potentially affecting the November 5 outcome.
ECB Governing Council member Klaas Knot stressed the importance of keeping “all options open” to manage growth and inflation risks, maintaining flexibility as a safeguard against economic suspense. He highlighted the ECB’s effective, data-focused, meeting-by-meeting approach, per Reuters.
Technically, the EUR/USD pair is testing support around the 1.0790 midpoint of its weekly horizontal range. If this level fails, the price may target the daily trendline at 1.0760, where it found support last Wednesday. A break below this trendline could push the pair toward 1.0700.
On the upside, the first resistance stands at the double top of 1.0840 on the 4-hour chart. Above this, the 200-day and 50-week moving averages create a second resistance zone at 1.0870-1.0880. A breakout here would make 1.0900 the third resistance level.
Gold Consolidates Near $2,730
Gold fell below $2,730 per ounce on Monday as safe-haven demand eased after restrained Israeli airstrikes on Iran with no immediate retaliation. Markets are focused on US economic data, such as PCE inflation and Q3 GDP, which may impact Fed rate expectations. Despite stronger economic data lowering rate cut expectations, uncertainties around the US election and easing by other central banks continue to support gold prices.
Since its recent peak last Wednesday, gold has traded within a horizontal range. After a gap down at the open, it quickly recovered. If the upward move persists, Friday’s high at 2747 marks the first resistance, followed by the previous peak at 2758, and then 2770 as the third resistance level.
On the downside, the midpoint of the range at 2735 is initial support. Below this, key support levels include the rising trendline at 2723 and the lower boundary of the range at 2715.
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Great Analysis!
Dollar Steady Amid Uncertainty; Yen Pressured by Instability
The EUR/USD holds at 1.0810 as a cautious Fed outlook and upcoming US election boost the dollar’s safe-haven appeal.
The yen trades near 153, weakened by Japan’s political shifts and potential BoJ policy delays. Gold reaches $2,750 per ounce on strong safe-haven demand, driven by Fed policy expectations and US data releases. The GBP/USD slides amid diverging Fed and BoE paths, while silver eyes $34.00, supported by Middle East tensions and the upcoming US election.
Pound Weakens as Fed, BoE Rate Paths Diverge
The GBP/USD pair faces renewed selling pressure in Tuesday’s Asian session, drifting toward the mid-1.2900s but still above last week’s lows. The US dollar’s strength, supported by expectations of a cautious Fed approach to policy easing, has halted its recent decline, weighing on the GBP/USD pair. Speculation around potential BoE rate cuts in November and December further supports a bearish outlook.
Technically, initial support is at the daily trendline at 1.2930. A break could shift focus to 1.2865, followed by the 200-day moving average at 1.2800. Resistance levels to watch are at 1.2990, 1.3015, and the 20-day moving average at 1.3040.
EUR/USD Holds as Dollar Gains on Fed, Election Uncertainty
The EUR/USD pair remains steady around 1.0810 early Tuesday, with the US dollar consolidating as investors await Germany’s GfK Consumer Confidence data. Anticipation of a slower pace of Fed rate cuts is likely to support the dollar near-term, with key US economic releases ahead, including Q3 GDP, ISM Manufacturing PMI, and employment data.
The US election on November 5 adds uncertainty, as FiveThirtyEight polls show Trump with a 52% chance of winning versus 48% for Harris, potentially bolstering the dollar as a safe-haven. In the ECB, Belgian bank chief Wunsch sees no rush to cut rates further, while Portugal’s Centeno suggests a 50-basis-point cut may be on the table for December
Resistance levels to watch are 1.0840, then 1.0865–1.0880 (where the 200-day and 50-week SMAs converge), and 1.0930. On the downside, support stands at 1.0770, followed by 1.0750 and then 1.0700 if pressure continues.
Markets Mixed Ahead of Key US Data, ECB Decision, and Election Uncertainty
Global markets traded cautiously on Wednesday with the EUR/USD near 1.0810 as ECB rate cut expectations pressured the euro. USD/JPY hovered around 153.4 as Japan’s election added political uncertainty ahead of the BOJ’s policy announcement.
Gold surged close to $2,780 amid rising Middle East tensions and US election concerns, while GBP/USD held near 1.3010 awaiting the UK’s Autumn Budget. Silver stayed above $34.00, driven by safe-haven demand. Investors focus on US Q3 GDP and ADP data for clues on Fed policy.
EUR/USD Pressured Ahead of ECB Rate Decision
The EUR/USD pair has lost momentum after two days of gains, trading around 1.0810 in the Asian session on Wednesday. The Euro is pressured as the European Central Bank (ECB) is expected to lower its Deposit Facility Rate again, with a nearly 50% chance of a 50-basis-point cut at the December meeting.
Investors are focused on preliminary GDP figures from Germany and the Eurozone, along with Germany’s initial Harmonized Index of Consumer Prices (HICP) data due Wednesday. Attention also turns to US Q3 GDP data and October’s ADP Employment Change report.
ECB officials have voiced mixed views on policy. Belgium’s Pierre Wunsch suggested no need for aggressive cuts, while Portugal’s Mario Centeno supported a 50-basis-point cut in December.
The recent EUR/USD dip is linked to a stronger US Dollar, driven by rising Treasury yields. The Dollar Index (DXY) is around 104.30, with 2-year and 10-year Treasury yields at 4.09% and 4.24%
Uncertainty around the US presidential election may add pressure on the pair, as a new Reuters/Ipsos poll shows a close race, with Kamala Harris narrowly leading Donald Trump, 44% to 43%.
After pulling back to the daily trendline, 1.0770 serves as key support for EUR/USD, followed by 1.0750 and 1.0700. Resistance levels to watch are 1.0840, 1.0880, and 1.0930.
Gold Rises to $2,780 on Safe-Haven Demand
Gold surged to nearly $2,780 per ounce on Wednesday, setting a new record as investors weighed recent labor data and geopolitical risks ahead of the US elections. The JOLTS report showed US job openings at their lowest since 2021, contrasting with September’s data on economic resilience, which has moderated expectations for aggressive Fed rate cuts. Markets still anticipate a 25 basis point cut in each remaining Fed meeting this year, as lower rates boost the appeal of non-yielding assets like gold. Focus now turns to upcoming PCE inflation, Q3 GDP, and payroll figures for further Fed insights. Ongoing tensions in the Middle East and Ukraine, alongside the US election, are also driving safe-haven demand.
For technical levels, gold’s next resistance stands at the psychological $2,800, with $2,820 and $2,850 as subsequent targets. In case of a pullback, the first support is at $2,770, with $2,758 and $2,735 acting as further support levels.
USD Gains on Treasury Yields, Precious Metals Rally
The USD dollar strengthened against the euro and pound as resilient US economic data and rising Treasury yields dampened expectations of aggressive Fed easing.
The EUR/USD fell below the mid-1.0800s, facing resistance around 1.0880, while GBP/USD declined near 1.2950 with budget concerns and cautious sentiment ahead of the US elections. Meanwhile, precious metals like gold and silver held steady at high levels, supported by the upcoming US election. Gold stayed near $2,780, with resistance at $2,790, and silver hovered around $33.60, with key levels awaiting potential stimulus announcements from China.
USD Gains Ground on Yield Rise
The EUR/USD pair faced selling pressure during the Asian session on Thursday, retreating from the previous day’s gains near 1.0870, a one-and-a-half-week high. This pullback came as renewed demand for the USD drove spot prices below the mid-1.0800s.
Recent US economic data indicates a resilient economy, which dampens expectations of aggressive Fed easing. For instance, ADP reported that private employers added 233,000 jobs in October, likely boosting consumer spending. Additionally, the US Bureau of Economic Analysis estimated a 2.8% annualized growth for April-June, down slightly from the prior quarter’s 3% but having minimal effect on the Fed rate-cut outlook. Rising concerns over the US fiscal deficit have also increased Treasury yields, supporting the USD and pressuring EUR/USD.
Eurozone data on Wednesday showed continued inflationary pressure in Germany, where the economy grew unexpectedly by 0.2% quarter-on-quarter in Q3. This has led investors to temper expectations of significant ECB rate cuts, offering some support for the euro and EUR/USD ahead of Thursday’s Eurozone inflation data.
The EUR/USD pair has support from a daily trendline and faces resistance in the 1.0870-1.0880 range, where it previously encountered resistance near the 200 SMA. If this level is broken, the next resistances are at 1.0910 and 1.0940, the latter aligning with the 0.38 Fibonacci retracement of the last correction wave starting September 25. On the downside, the initial support level is 1.0850 (20-day moving average), with further support at 1.0825. If this level fails, 1.0770 could act as additional support.
USD/JPY Breaks Triangle Pattern, Eyes 152.40 Support
The Japanese yen remained around 153.2, close to a three-month low, following the Bank of Japan’s decision to maintain its policy rate at 0.25%, as expected. The central bank also reiterated its projection that inflation will stay near the 2% target in the coming years, demonstrating its commitment to ongoing policy normalization. Traders are now eager to hear insights from BoJ Governor Kazuo Ueda’s post-meeting briefing for clues on the potential pace and timing of future rate hikes.
Over the past month, the yen has experienced nearly a 7% decline against the dollar, marking its largest monthly loss since November 2016. This depreciation has been primarily driven by strong gains in the dollar and rising Treasury yields. Additionally, a political shake-up in Japan has increased uncertainty regarding the country’s fiscal and monetary policy outlook, further contributing to the yen’s decline.
The triangle pattern we discussed yesterday has been broken to the downside. As a result, the first support level for USD/JPY is at 152.40, corresponding to a weekly gap closure. If the price cannot hold above this level, subsequent support levels to monitor are 151.40, aligning with the 200-day moving average, and 150.60.
On the upside, the 0.618 Fibonacci retracement level from the movement that began in July, located at 153.30, will serve as the initial resistance level. If this level is surpassed, the next resistance levels to watch are 154.50 and 156.60.
Markets Eye US NFP Report as Dollar Strength Pressures Majors
The EUR/USD reached 1.0885 on Friday as the dollar softened. Attention is on the US Nonfarm Payrolls (NFP) report, with stronger data potentially lifting the dollar. In Japan, the yen strengthened near 152.2 following hints at a rate hike from BOJ’s Governor Ueda. Gold held at $2,750, balanced between Fed signals and geopolitical tensions.
Meanwhile, the GBP/USD dipped to 1.2895 amid UK tax hike plans, while silver traded near $30.75, impacted by dollar strength. Key US economic data today will guide expectations for future Fed moves, shaping sentiment across currencies and commodities.
Gold Stabilizes, Balancing Fed Tone and Safe-Haven Demand
Gold stabilized around $2,750 per ounce on Friday after a more than 1% decline in the previous session, as markets weighed the demand for safety against pressure from a less dovish Federal Reserve. Recent US economic data showed strong personal income and spending figures, a rise in underlying inflation above target levels, and an unexpected decline in jobless claims. This supported the view that the US economy can withstand higher borrowing costs, giving the Fed more leeway to avoid aggressive rate cuts.
However, political uncertainty in the US continued to support gold prices, as the possibility of another Trump presidency raised expectations for expansionary fiscal policies and higher tariffs. This prompted investors to seek gold as a hedge against long-term inflation risks. Additionally, ongoing tensions in the Middle East and the war in Ukraine further increased gold’s attractiveness as a safe-haven asset.
On the downside, the first support level for gold is at $2,735, followed by $2,714 and $2,685. On the upside, $2,758 serves as a key resistance level, with $2,770 and $2,790 as the next levels to monitor if this resistance is surpassed.
GBP/USD Softens to 1.2895 Amid UK Tax Hike Plans
The GBP/USD pair trades defensively around 1.2895 in early Asian hours on Friday, marking a low since August 16. The pair has softened following the UK Labour government’s Autumn Forecast Statement, which announced £40 billion in tax hikes to address public finance gaps and support public services.
In the U.S., the Personal Consumption Expenditure (PCE) Price Index for September slightly exceeded expectations, with headline PCE rising 2.1% year-on-year, while core PCE rose 2.7%, above the forecasted 2.6%. Markets expect the Fed to implement 25 basis point rate cuts in both November and December.
Investors await the US Nonfarm Payrolls (NFP) report, expected to add 113,000 jobs, with the Unemployment Rate anticipated to hold at 4.1%.
In the UK, the Office for Business Responsibility revised its 2024 inflation forecast to 2.5% from 2.2%, leading markets to expect fewer BoE rate cuts, which may support the Pound.
For GBP/USD, key support levels are 1.2865, 1.2810, and 1.2750, while resistance levels stand at 1.2910, 1.2945, and 1.2980.
Markets Await the U.S. Elections Amid China’s Stimulus Actions
The dollar index retreated on Monday as investors braced for the U.S. presidential election and the Federal Reserve’s interest rate decision.
The yen strengthened due to dollar weakness and the BOJ’s hint at a future rate hike. Gold remained stable amid U.S. political uncertainty and safe-haven demand. The British pound stabilized after a recent decline, while silver prices rose on China’s potential stimulus measures and a weaker dollar.
