AUD/USD and NZD/USD Fundamental Daily Forecast – Kiwi Surges as Specs Bet on Aggressive RBNZ Rate Hikes

The Australian and New Zealand Dollars are edging higher following a strong surge the previous session.

Aussie traders are downplaying the weak manufacturing data in November and are instead focusing on the less-hawkish comments from Federal Reserve Chair Jerome Powell the previous session.

Kiwi buyers are playing the bullish divergence in monetary policy between the hawkish Reserve Bank of New Zealand (RBNZ) and the not-so-hawkish U.S. Federal Reserve.

At 03:08 GMT, the AUDUSD is trading .6799, up 0.0011 or +0.17% and the NZD/USD is at .6320, up 0.0023 or +0.36%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $67.13, up $0.94 or +1.42%.

Powell Ignites Late Session Rally after Signaling Smaller Rate Hikes

The AUDUSD and NZD/USD are being underpinned early Thursday after Federal Reserve Chairman Jerome Powell confirmed Wednesday afternoon that smaller interest rate increases are likely ahead even as he sees progress in the fight against inflation as largely inadequate.

Echoing recent remarks from other prominent central bank policymakers and comments at the November Fed meeting, Powell said he sees the Fed in position to reduce the size of rate hikes as soon as next month.

Ahead of Powell’s speech, the markets were pricing in about a 65% chance that the Fed would step down its interest rate increases to half of a percentage point in December. Following Powell’s speech, the probability for a half-point move rose to 77%.

Australian PMI:  Demand Drags Down Manufacturing in November

The Australian Industry Group Australian Performance of Manufacturing Index (Austrian PMI) fell 4.9 points to 44.7 in November, indicating deteriorating conditions. This is the first month of contraction following three months of flat conditions.

“There are now signs of a slowdown in Australian manufacturing. Demand conditions in the market declined in November as deteriorating national and global economic conditions weighed on the industry, “Innes Wilcox, Chief Executive of Ai Group said.

Kiwi Buying Strong as Specs Bet on Another Aggressive RBNZ Rate Hike

Last week, the Reserve Bank of New Zealand (RBNZ) raised its official cash rate by a record 75 basis points to a near 14-year peak of 4.25% as it struggles to contain inflation currently running near three-decade highs.

At this time, the financial markets are leaning toward another hike of 75 basis points in February, and have fully priced in a peak of 5.5% by July next year.

With the RBNZ raising rates in 75 basis point increments and the Fed likely to hike only 50 basis points in December. The NZD/USD has become the most attractive currency, which is why we are seeing it strengthen.

For a look at all of today’s economic events, check out our economic calendar.

Daily Economic Review and Outlook for AUD/USD, EUR/USD and US Dollar

Australian Annual Inflation Eases

Early hours witnessed annual inflation (CPI) slow in October to 6.9%, following a 7.3% increase in September, according to the Australian Bureau of Statistics. Price rises were greatest in housing (10.5%), food and non-alcoholic beverages (+8.9%), furnishings, household equipment and services (+7.8%) and transport (+7.4%).

The aftermath of the release observed a moderate spike lower in the AUD/USD currency pair to a low of $0.6670, though price retested pre-announcement levels shortly after and rallied to dethrone $0.67. Post the inflation print, the ASX 200 also observed an acceleration to the upside, rallying 0.6% in the space of 20 minutes before levelling off around 7,279.

Michelle Marquardt, ABS Head of Prices Statistics, said:

“This month’s annual movement of 6.9 per cent is lower than the 7.3 per cent movement in September, however CPI inflation remains high.”

“Typically, annual updates to the weights have limited impact on the overall CPI. This year, however, the significant changes in spending patterns over 2021 and 2022 meant that the reweight had a larger impact on the CPI than usual. The annual movement of the monthly CPI indicator in October, using the previous weights, would have been 7.1 per cent compared to 6.9 per cent using the new weights.”

Euro Area Annual Inflation Slows

Mid-morning trading in London greeted the latest euro area inflation. On a year-over-year basis, the consumer prices index (CPI) eased to 10.0% in November, down from 10.6% in October and beating economists’ estimates of a 10.4% increase. According to Eurostat, energy prices slowed to 34.9% in November from October’s 41.5% print.

There was, however, a moderate increase in prices for food, alcohol and tobacco, rising to 13.6% on the month from 13.1% in October. This underpins the possibility for a smaller rate hike at 15 December meeting, with markets currently pricing in a 56.5% probability for a 50 basis-point increase over a 43.5% chance of another 75 basis-point hike.

Netherlands saw the largest deceleration in consumer price increase, slowing from 16.8% for October to 11.2% in November. Latvia, Lithuania and Estonia currently have the highest annual inflation—all in the low 20s—with France, Malta and Luxembourg boasting the lowest annual inflation rates of between 7.1% and 7.3%.

US ADP Payrolls Surprises to the Downside

Over in the US, we saw that payrolls, according to the payroll processing firm ADP, slowed considerably in November, adding a paltry 127,000 new payrolls, down from 239,000 in October, and far under the consensus median estimate of 200,000.

“Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains,” said Nela Richardson, chief economist, ADP. “In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting and the post-pandemic recovery is stabilizing.”

US Job Openings and Labour Turnover Survey (JOLTS) Elbows Lower

Job openings—the total number of open and available positions—in the US nudged lower to 10.3 million in October, according to the US Bureau of Labour Statistics. This follows September’s downwardly revised increase of 10.69 million and almost matched economists’ median estimate of 10.3 million. This also shows the labour market is displaying signs of cooling as the US Federal Reserve is poised to raise the Fed Funds Target range in mid-December by 50 basis points to 4.25-4.50%, according to Fed Funds futures data.

US Federal Reserve Jerome Powell Speech

Key comments from speech (Reuters):

  • Inflation remains too high.
  • We will stay the course until the job is done.
  • We have a long way to go in restoring price stability.
  • History cautions strongly against prematurely loosening policy.
  • Likely to need to hold policy at restrictive level for some time.
  • It seems to me likely rates must ultimately go somewhat higher than policymakers thought in September.
  • Have made substantial progress toward sufficiently restricting policy; have more ground to cover.
  • Time to moderate pace of rate hikes may come as soon as December meeting.
  • Price stability is Fed’s responsibility.
  • Moderation in labour demand growth will be required to restore labour market balance.
  • Have so far seen only tentative signs of moderation in labour demand, wage growth.
  • Expect housing services inflation to begin falling sometime next year.
  • Job’s data today show a continued imbalance between demand and supply of workers.

The US Dollar Index pushed lower following Powell’s comments.

(TradingView)

Economic Calendar Today

  • Annual Swiss Inflation Rate for November at 7:30 am GMT (Expected: 3.0%; Previous: 3.0%).
  • Year-Over-Year US PCE Price Index for October at 1:30 pm GMT (Expected: 5.9%; Previous: 6.2%).
  • US Weekly Jobless Claims for the Week Ending 26 November at 1:30 pm GMT (Expected: 235,000; Previous: 240,000).
  • US ISM Manufacturing PMI for November at 3:00 pm GMT (Expected: 49.8; Previous: 50.2).

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

U.S. Dollar Rebounds After JOLTs Job Openings Report

Key Insights

  • Euro Area Inflation Rate declined from 10.6% to 10%.
  • USD/CAD pulled back as WTI oil managed to climb above the $80 level. 
  • USD/JPY is moving towards the psychologically important 140 level. 

U.S. Dollar Rebounds From Session Lows

U.S. Dollar Index moved away from session lows after JOLTs Job Openings report indicated that job offers declined from 10.69 million in September to 10.33 million in October, mostly in line with the analyst consensus.

Traders also had a chance to take a look at the Pending Home Sales report, which indicated that Pending Home Sales declined by 4.6% month-over-month in October. High interest rates continue to put pressure on the housing market. This report served as an additional positive catalyst for the U.S. dollar.

Earlier, ADP Employment Change report indicated that private businesses added 127,000 jobs in November, compared to analyst consensus of 200,000. The second estimate of the third-quarter GDP Growth Rate report showed that GDP increased by 2.9% quarter-over-quarter, compared to analyst consensus of 2.7%.

EUR/USD Faced Strong Resistance Near 1.0400

EUR/USD made another attempt to settle above the 1.0400 level but lost momentum and pulled back towards 1.0350.

Today, traders focused on inflation data from the EU. Euro Area Inflation Rate declined from 10.6% in October to 10% in November, compared to analyst consensus of 10.4%. It remains to be seen whether one data point will change ECB’s plans.

EUR/USD

The nearest support level for EUR/USD is located at 1.0320. In case EUR/USD declines below this level, it will head towards the next support at 1.0280. A successful test of the support at 1.0280 will push EUR/USD towards the support at the 20 EMA at 1.0250.

On the upside, the nearest resistance level for EUR/USD is located at 1.0360. If EUR/USD climbs above this level, it will head towards the resistance at 1.0400. This resistance level has already been tested several times and proved its strength. A move above 1.0400 will open the way to the test of the resistance at 1.0440.

GBP/USD Tests Support At 1.1950

GBP/USD continues its attempts to settle below the support level at 1.1950. In case GBP/USD manages to settle below this level, it will have a good chance to gain additional downside momentum.

The recent comments of BoE chief economist Huw Pill, who said that inflation could fall rapidly in the second half of 2023, may put some additional pressure on GBP/USD.

USD/CAD Pulls Back After Yesterday’s Rally

USD/CAD settled in the 1.3500 – 1.3550 range as WTI oil moved above the $80 level.

Other commodity-related currencies are mostly flat today. NZD/USD is trading near the 0.6200 level, while AUD/USD has settled near 0.6700.

USD/JPY Is Heading Towards The Key 140 Level

USD/JPY gained upside momentum and managed to get above the 139.50 level. Today, USD/JPY traders focused on the Housing Starts report from Japan. The report indicated that Housing Starts declined by 1.8% year-over-year, compared to analyst consensus of -1.3%. The disappointing report served as a bearish catalyst for the yen.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – The Australian Dollar Continues to Consolidate

AUDUSD Forecast Video for 01.12.22

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar rallied a bit during the trading session on Wednesday, as we have broken above the 0.67 level yet again, but ultimately this is a market that is trying to figure out what is going to do next. It could be consolidating, but it could also be forming some type of rising wedge. On the other hand, if we break above the 0.68 level, we will threaten the 200-Day EMA, which of course is a major indicator that a lot of people pay attention to.

Given enough time, I do think that we are going to see some type of bigger move, but if we were to break above the 200-Day EMA, it’s likely that the Australian dollar will continue to go much higher. We don’t necessarily have a macro environment to think that it’s going to happen, but at the end of the day the market will do whatever it wants to do. If we break down from here, the 50-Day EMA could come into the picture and cause a bit of noisy behavior, with the noise over the last couple of weeks showing just how difficult this is going to be.

If we break down below there, then we could be looking at the 0.65 level. That is a major area of interest as it was previous support. Anything below there could break down rather significantly, perhaps ending the Australian dollar down to the 0.63 level. Ultimately, this is a market that is also highly influenced by the global growth situation, which looks somewhat anemic, as the Aussie will move based upon the demand for commodities.

For a look at all of today’s economic events, check out our economic calendar.

Euro Area Inflation Data and Powell Speech Eyed

Underpinned amid hopes of China reopening Covid lockdowns on the back of progress in their vaccination program, the risk-sensitive AUD/USD attempted to secure position north of the $0.67 psychological figure. Note that China remains Australia’s largest trading partner, therefore the Australian dollar’s price movement is closely tied to China’s economy. For a technical view, check out the AUD/USD outlook below.

US consumer confidence was also released in the early hours of US trading, showing consumer confidence slipped for a second consecutive month in November, dipping to 100.2 from October’s 102.2 print (marginally beating economists’ estimates), according to the Conference Board.

“Consumer confidence declined again in November, most likely prompted by the recent rise in gas prices,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down. Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated.”

“Inflation expectations increased to their highest level since July, with both gas and food prices as the main culprits. Intentions to purchase homes, automobiles, and big-ticket appliances all cooled. The combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023.”

What’s Ahead Today?

Euro area inflation is a key watch, following the lower-than-expected annual change in consumer prices for Spain and Germany yesterday. Economists project a slowing in the annual inflation rate for the Euro area to 10.4% after October’s downwardly revised 10.6% print. Importantly, the forecast range sits between 11.0% and 9.8%.

US Chair Jerome Powell’s speech is another event to monitor, expected during the US morning session (around 6:00 pm GMT). The topic of his speech is centred on the economic outlook, inflation and the labour market. A number of Fed members remain hawkish ahead of Powell’s speech, with many desks believing Powell will echo a similar tone.

AUD/USD Eyeing $0.66 as Support?

Out of the weekly timeframe, buyers and sellers are seen battling for position off resistance-turned support from $0.6673. This follows an impressive pullback from just north of demand coming in at $0.5975-0.6166. While the technical long-term trend favours sellers (bearish since the mid-February peak at $0.8007), scope to print further outperformance remains on the table until resistance puts in an appearance at $0.7022.

Out of the daily timeframe, price shook hands with the underside of supply from $0.6857-0.6776 in mid-November. As you can see, the fight is now between the aforementioned supply and the noted weekly support (with daily support calling for attention below at $0.6536).

Directly beyond the supply zone is a pattern profit objective for an inverted head and shoulders at $0.6875 that was formed off daily support from $0.6212 (just above weekly demand) in October. In terms of trend structure on the daily scale, early signs of an uptrend are visible: a series of higher highs and higher lows.

Across the page on the H1 timeframe, the $0.67 psychological figure was recently cleared to the downside, perhaps paving the way back to $0.66. Of technical relevance here is a 100% projection and a 1.27% Fibonacci extension at $0.6611; this represents an AB=CD support, the simplest harmonic formation.

Going on the above chart studies, sellers are unlikely to remain in control beneath $0.67 on the H1. This is largely due to the support plotted on the weekly chart at $0.6673 and the early uptrend emerging on the daily timeframe. Consequently, buyers are expected to remain in command, zeroing in on the upper range of daily supply from $0.6857-0.6776 and perhaps taking aim at the daily inverted H&S pattern’s profit objective at $0.6875. This would also imply H1 price reclaiming position above $0.67.

If sellers do maintain short-term control, on the other hand, buyers may step in from $0.66, bolstered by the H1 AB=CD formation at $0.6611.

Australian dollar charts. Source: TradingView

Dow Jones Industrial Average: RSI Bearish Divergence

Leaving the underside of Quasimodo support-turned resistance at 34,555 unchallenged, sellers stepped in on Monday, with Tuesday seeing little follow-through downside. Upside momentum showed signs of levelling off at the beginning of the week, according to the relative strength index (RSI) which displayed negative divergence within overbought space. As evident from the indicator, the value trades just above the 60.00 level.

Technically, further selling in this market is possible on the price chart until the unit greet support from 33,275, closely shadowed by a trendline resistance-turned support, taken from the high 36,952.

DJIA chart. Daily timeframe. Source: TradingView

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

USD/CAD Tests Resistance At 1.3550 As Canada’s Economy Is Slowing Down

Key Insights

  • USD/CAD is moving higher as traders bet that BoC will be more dovish to support the economy. 
  • EUR/USD moved below 1.0350 as Germany’s inflation has started to slow down. 
  • USD/JPY rebounded above the 138.50 level.

USD/CAD Rallied To New Highs After Canada’s GDP Reports

USD/CAD gained upside momentum after the release of Canada’s GDP reports. GDP Growth Rate report indicated that third-quarter GDP increased by 0.7% quarter-over-quarter, compared to analyst forecast of 0.4%. On an annualized basis, third-quarter GDP grew by 2.9%, compared to analyst consensus of 1.5%. Preliminary data showed that Canada’s GDP was flat in October.

USD/CAD

USD/CAD is currently trying to settle above the resistance at 1.3550. In case this attempt is successful, USD/CAD will move towards the next resistance level, which is located at 1.3570. A move above this level will open the way to the test of the resistance at 1.3600.

On the support side, the nearest support level for USD/CAD is located at 1.3500. If USD/CAD declines below this level, it will head towards the next support at 1.3470. A successful test of the support at 1.3470 will push USD/CAD towards the support at 1.3450.

Other commodity-related currencies are moving higher today as commodity markets rebound. AUD/USD made an attempt to settle above 0.6750, while NZD/USD tested the 0.6250 level.

U.S. Dollar Moved Away From Session Lows

U.S. Dollar Index managed to rebound from session lows and is currently trying to settle above the 106.70 level.

House Price Index declined from 11.9% in August to 11% in September, compared to analyst forecast of 10.5%.

Meanwhile, Treasury yields are moving higher, and the yield of 10-year Treasuries is trying to settle above the 3.75% level. In case this attempt is successful, the U.S. dollar will get more support.

EUR/USD Pulls Back As Germany’s Inflation Declined To 10% In November

EUR/USD faced resistance near 1.0400 and pulled back below the 1.0350 level. Today, EUR/USD traders focused on inflation data from Germany.

Germany’s Inflation Rate declined from 10.4% in October to 10% in November. The report served as a negative catalyst for the euro.

GBP/USD Tests Support At 1.1950

GBP/USD  declined towards the 1.1950 level as traders focused on the broad rebound of the U.S. dollar in today’s trading session.

If GBP/USD manages to settle below 1.1950, it will gain additional downside momentum and move towards the next support level, which is located at 1.1900.

USD/JPY Is Moving Towards The 139 Level

USD/JPY received support near the 138 level and is moving towards 139. Japan’s Unemployment Rate remained unchanged at 2.6% in October, compared to analyst consensus of 2.5%.

Japan’s Retail Sales increased by 4.3% year-over-year in October, while analysts expected that Retail Sales would grow by 4.8%.

In the near term, the general dynamics of the U.S. dollar will remain the key catalyst for USD/JPY as the ultra-dovish policy of the BoJ is not expected to change.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – Australian Dollar Fills the Gap

AUDUSD Forecast Video for 30.11.22

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has rallied quite nicely during the trading session on Tuesday, breaking above the 0.67 level. The 0.67 level is an area that has been important multiple times in the past, so the fact that we are paying attention to it right now makes quite a bit of sense. In fact, it’s very likely that we continue to see a lot of back and forth over the next couple of days, because we have so many major announcements this week.

We have Federal Reserve chairman Jerome Powell speaking at the Brookings Institute, the ADP employment figures, the Core PCE figures, and then of course the BLS employment figures. Because of this, it’s very likely that the US dollar will be somewhat noisy this week, and that lends itself to a situation where the market spends its wheels and goes back and forth.

It’s worth noting that we are between the 50-Day EMA underneath and the 200-Day EMA above. That typically allows for the market to squeeze given enough time and go lower or higher quite rapidly. We are still technically in a downtrend, so if we break down below the bottom of this market it’s likely that we could go down to the 0.65 level. On the other hand, if we turn around and take out the 200-Day EMA to the upside, then we have a situation where we could go looking to the 0.70 level, an area that has a lot of psychology attached to it as it is a large, round, psychologically significant figure.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Rebounding after China Reports Drop in COVID Infections

The Australian and New Zealand Dollars are edging higher on Tuesday after stocks in Hong Kong led gains alongside Chinese indexes. The rebound in Asia and the Pacific Rim areas started when mainland China reported the first decline in daily COVID infections in more than a week on Monday.

The country said local infections, mostly asymptomatic, totaled 38,421, down from a record high of 40,052 reported for Sunday, according to CNBC calculations of Wind Information data.

The last time the daily case count fell from the prior day was on November 19, the data showed.

Additionally, there was no indication of new protests on Monday. Over the weekend, students and groups of people across China held public demonstrations to protest the country’s stringent zero-COVID policy.

At 04:45 GMT, the AUDUSD is trading .6702, up 0.0050 or +0.75% and the NZD/USD is at .6209, up 0.0044 or +0.71%. On Monday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $65.80, down $0.96 or -1.44%.

Both the Aussie and Kiwi have recovered more than half of yesterday’s plunge that was fueled by concerns about unrest over COVID restrictions in China and as hawkish Federal Reserve officials laid out the case for further rate hikes.

NZ Faces ‘Shallow’ Recession as Rates Need to Rise More – Senior Central Banker

New Zealand is likely facing a “shallow” recession as interest rates need to rise further to tame inflation, a top central banker said on Monday, suggesting that a pause in the policy tightening streak was still a distant prospect, Reuters reported.

In an interview, Reserve Bank of New Zealand (RBNZ) Assistant Governor Karen Silk said the central bank would be closely monitoring high frequency data including on spending, business investment and housing when deciding on how much to hike rates when it next meets in February.

Silk said the projected 1% decline in gross domestic product over four quarters would be a “relatively shallow and technical” recession, partly reflecting a weaker global growth outlook.

RBA’s Lowe Sees Better Chance of Australia ‘Soft Landing’ Than Peers

Australia has a stronger probability of bringing its economy in for a “soft landing” than almost any other developed-world counterpart, Reserve Bank Governor Philip Lowe said, citing the nation’s still-contained wage growth, Bloomberg reported.

“It’s not guaranteed but where I sit today I think we have a better chance than most other countries of pulling it off,” Lowe told a parliamentary panel in Canberra on Monday. The best outcome for Australia would be for wages to pick up as they have, but not go too much further, he said.

Short-Term Outlooks

AUDUSD and NZD/USD traders are likely to continue to respond to the friendly news out of China regarding the drop in COVID infections. Prices are likely to remain firm, but we could see an even stronger rally if the news develops into a trend.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – China Growth Concerns, Hawkish Fed Remarks Weigh

The Australian Dollar is edging higher against its U.S. counterpart early Tuesday after sinking the previous session on concerns about unrest over COVID-19 restrictions in China and hawkish comments from a prominent Federal Reserve official.

At 01:48 GMT, the AUDUSD is trading .6666, up 0.0013 or 0.20%. On Monday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $65.80, down $0.96 or -1.44%.

The Aussie’s gains are being capped amid rising risk aversion, as stringent virus curbs in China triggered clashes in many cities, including Beijing.

The Australian currency was also pressured by a stronger U.S. Dollar, which rebounded on Monday after St. Louis Fed President James Bullard said the Federal Reserve needs to raise interest rates quite a bit further and then hold them there throughout next year and into 2024 to gain control of inflation and bring it back down toward the U.S. central bank’s 2% goal.

Daily AUDUSD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through .6585 will change the main trend to down. A move through .6798 will reaffirm the uptrend.

On the downside, the nearest support is a short-term Fibonacci level at .6631, followed by a short-term 50% level at .6543 and a longer-term Fibonacci level at .6466.

On the upside, the nearest resistance is a pivot at .6692, followed by a long-term 50% level at .6760.

Daily Swing Chart Technical Forecast

Trader reaction to .6631 is likely to determine the direction of the AUD/USD on Tuesday.

Bullish Scenario

A sustained move over .6631 will indicate the presence of buyers. This could trigger a surge into the pivot at .6692. Overtaking this level will indicate the buying is getting stronger with the nearest resistance clustered at .6760 to .6798.

Bearish Scenario

A sustained move under .6631 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the main bottom at .6585.

A trade through .6585 will change the main trend to down. This could trigger an acceleration into the retracement zone at .6543 to .6466.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Rebounds From Session Lows

Key Insights

  • U.S. dollar managed to gain upside momentum after testing new lows. 
  • Christine Lagarde said she believed that inflation had not peaked. 
  • USD/JPY moved back above the 138.50 level after testing new lows. 

U.S. Dollar Moves Away From Session Lows As Demand For Safe-Haven Assets Increases

U.S. dollar rebounded from session lows as traders were ready to buy the American currency near multi-month lows.

Currently, the U.S. Dollar Index is trying to settle above the 106 level. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance at 106.40.

EUR/USD Pulls Back After An Unsuccessful Test Of The 1.0500 Level

EUR/USD faced resistance near the 1.0500 level and pulled back towards 1.0430. ECB President Christine Lagarde has recently said that she would be surprised if the Eurozone inflation peaked in October. This comment has not provided additional support to the European currency.

EUR/USD

The nearest resistance level for EUR/USD is located at 1.0440. In case EUR/USD manages to settle above this level, it will move towards the next resistance at 1.0480. A successful test of this level will open the way to the test of the resistance at 1.0500.

On the support side, EUR/USD needs to stay below 1.0440 to have a chance to gain downside momentum in the near term. The next support level for EUR/USD is located at 1.0400. In case EUR/USD declines below this level, it will move towards the support at 1.0360.

GBP/USD Faced Resistance Near 1.2100

GBP/USD  has recently made an attempt to settle above the 1.2100 level but lost momentum and pulled back towards the support at 1.2050.

Today, traders focused on the CBI Distributive Trades report, which declined from 18 in October to -19 in November, compared to analyst forecast of -7. The report highlighted the weakness in the retail sales segment.

USD/CAD Gains Ground As WTI Oil Tests New Lows

USD/CAD tried to settle above the resistance at 1.3470 as WTI oil tested new lows amid protests in China. The protests were triggered by strict COVID-related measures. Oil rebounded from session lows, and USD/CAD pulled back towards 1.3430.

Other commodity-related currencies have also found themselves under pressure today. AUD/USD declined towards the 0.6700, while NZD/USD pulled back towards 0.6200.

USD/JPY Moved Back Above The 138.50 Level

USD/JPY tested new lows at 137.50 but lost momentum and rebounded above the 138.50 level. The broad rebound of the U.S. dollar served as the key driver behind the move.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – Australian Dollar Continues Consolidating

AUDUSD Forecast Video for 29.11.22

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has initially fallen during the trading session on Monday, to reach down to the 0.6670 level before bouncing a bit to show signs of life around the 0.67 handle. Ultimately, this is a market that is trying to figure out whether or not it is going to continue to consolidate, or if it is ready to make a bigger move.

Another thing that you need to keep in the back of your mind is that we are not only hanging around a large, round, psychologically significant figure in the form of 0.67, but we are also between the 50-Day EMA underneath, with the 200-Day EMA above.

Quite often, being between these 2 moving averages can cause quite a bit of noise. With that in mind, I think you have a situation where there will be a lot of choppiness, which does make quite a bit of sense considering that the core PCE numbers, which is the Federal Reserve members favorite inflation metric, and the jobs number both come out this week.

This suggests that there could be a lot of choppy and volatile behavior, as we try to determine what the next major move is going to be. Keep in mind that this is also through the backdrop of a lot of economic concerns. In this environment, you would have to assume that we could go in either direction rather quickly. I do believe that there are a lot of people out there trying to determine whether or not we go “risk on”, or if we start to sell off again. I think we have the potential to make a violent move this week, but the first couple of days might be a bit choppy.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – Pressured as China’s COVID Protests Grow

The Australian Dollar is sharply lower on Monday as investors shed higher riskier currencies amid concerns that growing protests in China against the government’s zero COVID-policy would further undermine the world’s second-largest economy.

Over the weekend, waves of protests against China’s zero-COVID approach spread to many parts of the country as the number of COVID cases continued to hit record highs. That fueled concerns about the health of China’s economy and cast a pall over the global growth outlook, according to Reuters.

At 06:15 GMT, the AUDUSD is trading .6677, down 0.0078 or -1.15%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $66.77, up $0.05 or +0.07%.

In economic news, traders showed little reaction to a report that showed Australia’s retail sales suffered the first decline of the year. This provided proof that the Reserve Bank’s (RBA) interest rate hikes were working to cool red-hot demand.

Looking ahead, financial market traders are factoring in another quarter-point hike to 3.10% at the Reserve Bank of Australia’s December policy meeting next week.

Daily AUDUSD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of Friday’s closing price reversal top.

A trade through .6798 will reaffirm the uptrend. A move through .6585 will change the main trend to down.

The minor range is .6798 to .6585. The AUD/USD is currently straddling its pivot at .6692.

On the upside, the nearest resistance is a long-term 50% level at .6760. On the downside, the nearest support is a Fibonacci level at .6631, followed by a 50% level at .6543.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at .6692 is likely to determine the direction of the AUDUSD on Monday.

Bearish Scenario

A sustained move under .6691 will indicate the presence of sellers. The first downside target is .6631, followed by the main bottom at .6585. A trade through this level will change the main trend to down with .6543 the next target.

Bullish Scenario

A sustained move over .6692 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into .6760, followed by a pair of main tops at .6781 and .6798. Taking out the latter could trigger a surge into the Sept. 13 main top at .6916.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Gains Ground As Treasury Yields Rebound

Key Insights

  • U.S. dollar rebounds after the recent pullback. 
  • EUR/USD pulls back despite better-than-expected GDP report from Germany. 
  • USD/JPY managed to settle back above the 139 level.

U.S. Dollar Moves Higher Ahead Of The Weekend

U.S. Dollar Index managed to get back above the 106 level as traders rushed to buy the U.S. dollar after the recent pullback.

There are no important economic reports scheduled to be released in the U.S. today, so traders will focus on general market sentiment.

Treasury yields have moved higher today as the probability of a 50 bps rate hike at the next Fed meeting declined to 71.1%. This move served as a bullish catalyst for the U.S. dollar.

EUR/USD Settled Below 1.0400

EUR/USD declined below the 1.0400 level as traders took profits after the recent rally.

Today, traders focused on the economic data from Germany. The final reading of the third-quarter GDP Growth Rate report indicated that Germany’s GDP increased by 0.4% quarter-over-quarter, compared to analyst consensus of 0.3%.

Consumer Confidence improved from -41.9 in November to -40.2 in December, compared to analyst consensus of -39.6. The better-than-expected GDP Growth Rate report failed to provide enough support to the euro as traders focused on profit-taking ahead of the weekend.

GBP/USD Pulls Back As Traders Take Some Profits Off The Table

GBP/USD pulled back below the 1.2100 level as traders failed to find sufficient catalysts to continue the rebound.

From a big picture point of view, it looks that Rishi Sunak managed to calm markets. GBP/USD has already returned to August levels.

USD/CAD Rebounds After Pullback

USD/CAD managed to gain upside momentum as traders focused on the general strength of the U.S. dollar.

GBP/USD

Currently, USD/CAD is trying to settle above the 1.3400 level. In case this attempt is successful, USD/CAD will move towards the next resistance, which is located near the 50 EMA at 1.3450. A move above 1.3450 will open the way to the test of the resistance at 1.3470.

On the support side, the nearest support level for USD/CAD is located at 1.3360. If USD/CAD declines below this level, it will move towards the next support level at 1.3300. A successful test of the support at 1.3300 will open the way to the test of the support at 1.3230. No important levels have been formed between 1.3230 and 1.3300, so this move may be fast.

Other commodity-related currencies are also under pressure today. AUD/USD declined below 0.6750, while NZD/USD settled below 0.6250.

USD/JPY Settled Back Above The 139 Level

USD/JPY received support near the 138 level and rebounded towards 139.50. The broad rebound of the U.S. dollar served as the main catalyst for the move. In case USD/JPY manages to settle above 139.50, it will move towards the psychologically important 140 level.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Weekly Price Forecast – Australian Dollar Continues to Pressure Upside

AUD/USD Forecast Video for 28.11.22

Australian Dollar vs US Dollar Weekly Technical Analysis

During the past week, the 0.66 level has offered support, while the 0.68 level has offered resistance. At this point, we are trying to figure out whether or not the shooting star from the previous week has any teeth, or if it was just a sign of exhaustion. It is worth noting that the Australian dollar is either consolidating, or it’s running out of momentum from its massive bounds. The 0.67 level has been important multiple times in the past, so it should not surprise you to see a lot of noise here. If we were to break down below the bottom of the weekly candlestick, meaning going below the 0.66 level, it’s likely that we will continue the overall downtrend.

On the other side of the equation, if we take out the 0.68 level handily, perhaps on a daily close, we could see an attempt to get back to the 0.70 level. The Australian dollar of course is highly levered to commodity markets so you will have to pay attention to those, and the general attitude of the US dollar overall. Keep in mind that this is not only a play on the Australian dollar and commodities, but also a play on the central banks.

The RBA has already stepped back a bit, while the Federal Reserve still has a meeting in December. It’ll be interesting to see how hawkish the Fed is, or if traders start to focus on global economies, which certainly favor the United States at the moment. All things being equal, the next week or 2 could be rather important, but as we head into December it will be about the Federal Reserve meeting more than anything else. Keep in mind that the jobs number is on Friday of this coming week.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – Australian Dollar Gives Up Early Gain

AUDUSD Forecast Video for 28.11.22

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has initially tried to rally during the trading session on Friday but has given back quite a bit of the gain to end up forming a relatively negative candlestick. At this point, we have to wonder whether the market is forming a major double top, or if we are going to pull back into consolidation? That is still an open question but it’s obvious that there are quite a few concerns out there, and as a result it does make a certain amount of sense that the Australian dollar struggles in this general vicinity. After all, the 0.67 level is an area that a lot of people paid attention to for quite some time. It is a major level on long-term chart, so you need to keep that in the back of your head.

The 50-Day EMA sits right around the 0.66 level, and is rising, meaning that it could offer a bit of support. Nonetheless, it also makes for a nice target for those willing to short the Aussie. Interest rates in America have been falling, but at the same time there are a lot of concerns out there about the way economies are performing. If we do in fact see a switch from interest-rate differential to economic growth, the United States dollar will find a fresh set of reasons to go higher.

On the other hand, if we do take off to the upside, we could see the Aussie dollar rally all the way to the 200-Day EMA, near the 0.6850 level. Anything above there then starts the process of turning the entire trend around, perhaps opening up quite a bit of buying pressure.

For a look at all of today’s economic events, check out our economic calendar.

Week Ahead: How Likely Will EUR/USD Hit 1.05?

Economic Calendar for Next Week

Monday, November 28

  • AUD: Australia October retail sales
  • EUR: European Central Bank President Christine Lagarde speech
  • USD: Speeches by New York Fed President John Williams, St. Louis Fed President James Bullard

Tuesday, November 29

  • JPY: Japan October unemployment, retail sales
  • GBP: Bank of England’s Catherine Mann speech
  • EUR: Germany November inflation, Eurozone November economic confidence
  • CAD: Canada September GDP
  • USD: US November consumer confidence
  • Twitter to relaunch blue-tick verification

Wednesday, November 30

  • JPY: Japan October industrial production
  • CNY: China November PMIs
  • AUD: Australia October inflation
  • EUR: Eurozone November inflation, Germany November unemployment
  • GBP: Bank of England Chief Economist Huw Pill speech
  • USD: Fed Chair Jerome Powell speech, Fed Beige Book, US 3Q GDP (second estimate)
  • US crude: EIA weekly oil inventory report

Thursday, December 1

  • JPY: Bank of Japan Governor Haruhiko Kuroda speech
  • CNY: China November Caixin manufacturing PMI
  • EUR: Eurozone October unemployment, November manufacturing PMI, speech by ECB Chief Economist Philip Lane
  • GBP: UK November manufacturing PMI (final)
  • USD: US weekly initial jobless claims; October personal income/spending, PCE deflator; November manufacturing
  • USD: Speeches by Dallas Fed President Lorie Logan, Fed Governor Michelle Bowman

Friday, December 2

  • USD: US November jobs report, Chicago Fed President Charles Evans speech
  • CAD: Canada November unemployment

The coming week appears set up for a major move in EURUSD, as markets await key data out of the Eurozone and the US economies.

  • The Eurozone’s November consumer price index (CPI) is expected to remain at painful levels, with the CPI from the month prior hitting a record high of 10.7%.
  • The headline US November nonfarm payrolls figure is forecasted to come in at 200,000 (lower than October’s 261k), while the unemployment rate is set to hold at 3.7%.

Ultimately, such economic data will be filtered the global tightening lens.

That means that markets will interpret the data based on whether or not they allow either the European Central Bank of the US Federal Reserve to carry on with larger interest rate hikes.

Raising Interest Rates Has Been the Best Tool To Fight Against Inflation

Keep in mind that inflation has been enemy #1 for major central banks, and their primary weapon in fending off the inflation beast is by raising interest rates.

  • The stronger the inflationary pressures, the larger the rate hike (typically).
  • The larger the rate hike (relative to other economies), the stronger its currency.
  • However, aggressive hikes also carry the risk of triggering an economic recession.
  • Hence, central banks may start to ease up on their rate hikes (either by opting for smaller rate hikes, or pausing, or even making a u-turn with a rate cut instead) if they grow concerned about incurring too much economic damage.

Hence, it’s the above narrative that will guide investors and traders, as they asses the EURUSD’s prospects over the week ahead, in light of the incoming data.

Potential Scenarios

  1. EURUSD may move higher if Eurozone’s November inflation punched its way to a fresh record high above 10.7% + a higher-than-expected US unemployment rate/lower-than-expected headline US NFP number (<200k)
  2. EURUSD may move lower if Eurozone inflation eases below October’s 10.7% + a lower-than-expected US unemployment rate/higher-than-expected headline US NFP (>200k)

Will EUR/USD Stay Above or Below its 200-day SMA?

EURUSD’s 200-day simple moving average (SMA) has exerted strong resistance over the world’s most popularly traded FX pair in recent sessions.

Note also that the 1.04 region was a key battleground between bulls and bears back in May/June, twice repelling euro bears (those who believe that EURUSD will fall).

Based on current levels, markets are forecasting a likelier-than-even chance (61%) that EURUSD would move northward and touch 1.05 by this time next week, as opposed to the 43% chance that EURUSD would moderate back down to 1.03 over the same period.

However, further gains may tip EURUSD over into ‘overbought’ territory, with its 14-day relative strength index now threatening to cross over the 70 threshold.

Such a technical event may signal an immediate pullback.

Ultimately, whether EURUSD can stay either above or below its 200-day SMA next week is set to depend on which central bank has been allowed to persist with supersized rate hikes.

For more information visit FXTM.

AUDUSD Forecast – Aussie Approaching Major Resistance Levels

The Australian Dollar is trading flat Friday but holding on to solid gains for the week. The buying seems to be subsiding as the Aussie approaches some major chart barriers. Meanwhile, its U.S. counterpart is providing the upside momentum as it continues to succumb to severe broad-based selling pressure.

At 06:30 GMT, the AUD/USD is trading .6760, down 0.0004 or -0.05%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $66.72, up $0.91 or +1.38%.

The U.S. Dollar extended losses on Thursday after the minutes from the Federal Reserve’s November meeting supported the view that the central bank would downshift and raise rates in smaller steps from its December meeting.

The Reserve Bank of Australia (RBA) is on a similar path, having slowed the pace of hikes precisely because it wants to avoid a recession except its rate hikes will be in 25 basis points increments while the Fed is expected to raise rates by 50 basis points.

Investors are wagering the RBA will lift rates by another quarter point to 3.10% in December and top out at just 3.85%.

Daily AUDUSD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6798 will reaffirm the uptrend. A move through .6585 will change the main trend to down.

The AUD/USD is currently testing a long-term 50% level at .6760.

On the downside, the nearest support is a minor 50% level at .6691, followed by a main Fibonacci level at .6631.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at .6760 is likely to determine the direction of the AUD/USD on Friday.

Bullish Scenario

A sustained move over .6760 will indicate the presence of buyers. The first upside target is a main top at .6798. Taking out this level will reaffirm the uptrend and could trigger an acceleration to the upside with the September 13 main top at .6916 the next major target.

Bearish Scenario

A sustained move under .6760 will signal the presence of sellers. This could trigger an acceleration into the pivot at .6691.

For a look at all of today’s economic events, check out our economic calendar.

Technical Outlook in Key Markets: US Dollar, WTI, AUDUSD and Dow Jones

Charts: TradingView

US Dollar Index: Support Calling at 105.05

Daily timeframe

The US Dollar Index—measures the dollar’s value against six major currencies—finished lower for a third consecutive session on Thursday. This shines the technical spotlight on Quasimodo support coming in at 105.05, a base accompanied by the widely watched 200-day simple moving average (currently fluctuating around 105.27). Therefore, this, coupled with the relative strength index (RSI) nearing oversold space, remains a key technical zone to be mindful of going forward.

Relating to the greenback’s current trend, a number of lower lows/highs have emerged since price peaked at 114.78 in late September and indicates a downtrend. The caveat here, however, is the dominant uptrend in play since June 2021.

Consequently, as aired above, current support at 105.05 and the 200-day SMA is a key area. A break swings the technical pendulum in favour of further selling, in line with the downtrend. Alternatively, of course, a rebound from the aforementioned support area adds weight to buying, consistent with the longer-term uptrend we’ve seen since mid-2021.

Oil (WTI): Double-Top Profit Objective in Sight

It has been quite the rollercoaster for oil prices in 2022. Year to date, WTI is trading 3.0% higher. This follows a heavy-handed ascent in Q1 and early Q2 to a high of $129.42, followed by a decline to near-unchanged levels in Q4.

Technically speaking, price action on the monthly timeframe is shaking hands with long-term support from $74.81-78.11. The month of October did witness price attempt to secure some grip from the aforementioned area, though slipped in November as price is poised to dethrone the zone and perhaps approach support from $65.23.

Noting that monthly support is potentially fragile, the daily timeframe forging a fresh lower low and completing a double-top pattern from resistance at $93.58 is likely to draw attention. The neckline ($82.10) for the pattern experienced a breach last Friday, leading to a Quasimodo support level entering the fight at $75.39.

Though considering the lacklustre bid seen from the level (the hammer candlestick reaction failed to persuade buyers and instead appears to have trapped those who entered on a buy-stop above the hammer pattern’s high), technical studies suggest further selling could be on the table in this market. This is corroborated by the non-existent response from the relative strength index (RSI) trendline resistance-turned support, taken from the high 83.24.

Therefore, a break of $75.39 on the daily scale could inspire breakout selling in the direction of $70.59.

AUD/USD: Higher Price Levels?

Week to date, the AUD/USD has rallied 1.4%. This is bolstered by a resistance-turned support on the weekly timeframe at $0.6673. Should further outperformance materialise, weekly resistance is at $0.7022, with a break of here possibly unlocking the door to prime resistance at $0.7849-0.7599. Therefore, although the price on the weekly chart remains within a downtrend, technical structure shows support for additional buying.

From the daily timeframe, knowing that the weekly timeframe indicates further upside is in the offing, supply from $0.6857-0.6776 is in a vulnerable location.

In recent writing, the research team underlined an inverted head and shoulders pattern ($0.6363; $0.6170; $0.6272) as a possible reversal signal. Since then, the pattern’s neckline, pencilled in from the high $0.6547, was breached as was resistance from $0.6536 (now a marked support).

As noted above, supply is in the firing range, and a break could lead to the double-top pattern’s profit objective making a show at $0.6875, a level sheltered just south of the 200-day simple moving average at $0.6936.

Dow Theory: Uptrend?

Weekly timeframe

Using the weekly closing prices of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA covers 20 stocks in the transportation industry using a price-weighted method), we can see the DJIA forged a higher high in recent trading, yet this remains unconfirmed on the DJTA.

Should the above come to fruition: DJTA establishes a higher high, a pullback in one of the averages of at least 3-4% would need to form in one of the averages according to Dow Theory. Following this, only when a break of the previous high on both averages is seen will an uptrend be confirmed.

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GBP/USD Tests New Highs As Rally Continues

Key Insights

  • U.S. dollar continues to move lower as traders believe that the Fed would slow the pace of rate hikes. 
  • USD/JPY gained strong downside momentum and moved towards the 138 level. 
  • Commodity-related currencies enjoy support in today’s trading session. 

U.S. Dollar Remains Under Pressure

U.S. Dollar Index  remains under pressure as traders stay focused on the recent FOMC Minutes, which indicated that the Fed is leaning towards a “moderate” 50 bps rate hike at the next Fed meeting.

There are no economic reports scheduled to be released in the U.S. today, so traders will focus on general market sentiment. Currently, the U.S. Dollar Index is trying to settle below the 105.70 level. In case this attempt is successful, the U.S. Dollar Index will gain additional downside momentum and move towards the 105.50 level.

EUR/USD Settled Above The 1.0400 Level

EUR/USD managed to get above the 1.0400 level and is trying to gain additional upside momentum.

Today, EUR/USD traders focused on the Ifo Business Climate report from Germany. The report indicated that Germany’s Business Climate improved from 84.5 in October to 86.3 in November, compared to analyst consensus of 85.

It should be noted that Germany’s business sentiment remains at extremely low levels, but the market is ready to interpret any improvement as a bullish catalyst for the European currency.

GBP/USD Tested New Highs

GBP/USD continues to move higher as traders react to the dovish FOMC Minutes.

GBP/USD

Currently, GBP/USD is trying to settle above the resistance at 1.2130. RSI is close to the overbought territory, but there is enough room to gain additional upside momentum in case the right catalysts emerge. If GBP/USD settles above 1.2130, it will move towards the next resistance level at 1.2150. A successful test of this level will push GBP/USD towards the resistance at 1.2185.

On the support side, the nearest support level for GBP/USD is located at 1.2100. A move below this level will open the way to the test of the support at 1.2080. If GBP/USD declines below 1.2080, it will head towards the next support at 1.2050.

Commodity-Related Currencies Continue To Rebound

FOMC Minutes provided material support to commodity-related currencies, which continued to move higher.

AUD/USD managed to settle above the 0.6750 level, while NZD/USD moved above 0.6250. USD/CAD declined towards 1.3325.

USD/JPY Retreats Despite Disappointing PMI Data From Japan

USD/JPY declined towards 138.20 as the strong pullback continued. Today, USD/JPY traders had a chance to take a look at the flash Manufacturing PMI report from Japan.

The report indicated that Japan’s Manufacturing PMI declined from 50.7 in October to 49.4 in November, compared to analyst consensus of 50.8. Numbers below 50 show contraction.

While the report indicated that Japan’s economy was slowing down, the Japanese yen gained ground against the U.S. dollar as traders focused on the potential shift in Fed’s rhetoric after the release of the FOMC Minutes.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – Australian Dollar Pushes Higher

AUDUSD Forecast Video for 25.11.22

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has rallied a bit during the trading session on Thursday, as Americans were away for Thanksgiving. At this point, we are running into a bit of resistance so it’ll be interesting to see whether or not we can continue the breakout. At this point, it looks like we are consolidating in a large area near the 0.67 level, an area that has been important multiple times in the past. We are also stuck between the 50-Day EMA underneath and the 200-Day EMA above. This suggests that we are going to get a squeeze sooner or later, and it will be interesting to see how this plays out.

On Wednesday, the FOMC Meeting Minutes were released, which suggested that some Federal Reserve governors are warming up to the idea of slowing down rate increases, and now that the market has gotten a sniff of that, it’s starting to run away with that idea. At this point, the market breaking above the 200-Day EMA would confirm everything from a technical analysis standpoint, opening up the possibility that we could be in the midst of a major trend change. On the other hand, if we turn around a break down below the 0.66 level, it’s likely that we will continue the overall downturn.

The next couple of weeks could be rather crucial, so we will have to wait and see how this plays out, but all eyes now will be on the Federal Reserve meeting in December, trying to get an idea as to how everything plays out. If we see the Federal Reserve start to talk about slowing down, that will probably be the end of the uptrend for the dollar.

For a look at all of today’s economic events, check out our economic calendar.