Daily Market Analysis & Trading Ideas

[Analytix]

Dollar Rally Stalls Despite Rebound in Trump Victory Odds, FOMC Meeting in Focus


The US presidential election stands as the foremost event this week, with significant ramifications for the US Dollar, bond and equity markets. The Dollar's strength in October was largely attributable to market expectations of a potential victory for former President Donald Trump. His administration's preference for protectionist policies—such as tariffs, tax cuts, and deregulation—had previously supported the Dollar by fostering a perception of "US Exceptionalism". Polling data released this week showed Vice President Kamala Harris leading in traditionally Republican-leaning states, triggering a notable adjustment in Trump’s winning odds on the Polymarket betting website, where they dropped from 67% to 56%:

This shift also caused a sharp retracement of the US dollar against other currencies, with DXY dropping from 104.30 to 103.50. Although implied odds of a Trump victory began to rise again on Tuesday, the dollar showed little reaction, suggesting that the currency correction may have been technically driven, with the polling news serving as a catalyst for the technical profit-taking move:

Nevertheless, a Republican victory will likely reignite a substantial rally in the Dollar, reinforcing policies that may negatively impact the Eurozone and China's economic outlooks. Conversely, a Democratic win might usher in a more multilateral approach to trade, potentially softening the Dollar as global trade tensions ease.

Beyond the election, the Fed’s policy meeting on Thursday is a focal point for investors. The market consensus, as reflected by the interest rate futures, anticipates two 25 bp rate cuts in November and December, with implied odds changing slightly in the last two trading days (even after the NFP report). Fed Chair Jerome Powell's subsequent remarks at the press conference will be scrutinized for indications regarding the trajectory of monetary policy into December and beyond.
The release of the ISM Services PMI data for October is another critical piece of the puzzle regarding much discussed slowdown in the US pace of economic expansion. Forecasts suggest a slight decline to 53.8 from September's 54.9, indicating continued expansion of activity in the sector but at a decelerated pace. Given the rising trend in PMI readings over the past three months, the threshold for a hawkish surprise may be quite high. However, any downside in the upcoming report could trigger a significant dovish reaction, potentially putting downward pressure on the dollar:

In Europe, the Euro's performance against the Dollar remains subdued as market participants await the outcomes of US-centric events. Recent economic data has prompted a recalibration of expectations regarding the ECB policy actions. Improved third-quarter GDP growth figures and upward revisions in manufacturing PMI estimates have alleviated some recessionary fears, leading to diminished expectations for aggressive ECB rate cuts.
Nevertheless, the manufacturing sector's PMI remains below the critical 50 threshold, signaling ongoing contraction. The ECB faces a tough task to balance between stimulating economic activity and managing inflation, and future policy decisions will hinge on how these dynamics evolve.

The Pound Sterling remains stable as attention turns to the Bank of England's policy meeting. A 25 basis point rate cut to 4.75% is widely anticipated, marking the second reduction this year. The move reflects concerns over slowing economic momentum and inflation rates below target levels.

Notably, internal divisions within the Monetary Policy Committee highlight differing views on the appropriate policy path. While a majority may favor easing to support growth, dissenting voices like Catherine Mann caution against premature cuts that could undermine long-term inflation targets.

From a technical perspective, the Pound remains confined between the support trendline and the 1.30 level, as market participants appear to be awaiting the outcome of the U.S. elections. A breakout in either direction is likely to determine the price trend over the short term, potentially lasting for several days:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

EUR/USD Rebounds from Key Support; GBP/USD Defies Weak UK GDP


The EUR/USD pair staged a recovery on Friday, rebounding from the critical technical support level of 1.0500 reached the previous day. The Euro managed to erase Thursday's losses, climbing back to the 1.0600 range after enduring a five-day losing streak against the Dollar. As anticipated in our earlier discussion, this pullback was a plausible scenario.

The recovery seems to be fueled primarily by profit-taking, as traders lock in gains following the Euro’s recent slide. Additionally, the market appears to have fully digested and priced in the key developments of recent weeks, including President-elect Trump’s victory, the "Red Wave" in U.S. politics, the CPI report, and Powell’s comments. This confluence of factors has contributed to a temporary stabilization in the pair:

Economic data from France contributed modestly to the Euro's recovery. The Harmonized Consumer Price Index rose to 1.6% year-over-year in October, slightly higher than both the preliminary reading and market expectations. Despite this uptick, the increase is unlikely to prompt a shift in the ECB dovish monetary policy stance. The ECB is expected to proceed with a policy rate cut at its upcoming meeting in December, a move that could limit potential of Euro recovery in the medium-term.

In the United States, Federal Reserve Chairman Jerome Powell indicated a cautious approach toward additional rate cuts. While acknowledging the continued strength of the US economy and labor markets, he suggested that another rate cut in December is not a certainty. This tempered expectation has bolstered the US Dollar recently. However, markets are concerned about potential inflationary pressures resulting from President-elect Trump's proposed fiscal stimulus measures and possible tariffs on China and Europe. Such policies could lead to higher inflation rates, which might compel the Fed to adjust its monetary policy outlook.

Interestingly, Powell's comments triggered a notable drop in the implied odds of a December rate cut. Fed funds futures now reflect a 58.4% probability of a cut, down sharply from 72.2%. Despite this shift, the Dollar's reaction has been surprisingly muted, or even contradictory, as its major peers gained ground today. This suggests that traders may have already factored in a recalibrated Fed rate path, influenced by the inflationary implications of President-elect Trump's policy agenda:

The GBP/USD pair has defied expectations of a decline following disappointing economic data, trading in positive territory instead. This unexpected recovery comes despite weaker-than-anticipated UK GDP figures, which would typically weigh on the Pound. The UK economy contracted by 0.1% in September, while preliminary GDP growth for the third quarter was a subdued 0.1% quarter-over-quarter, falling short of the 0.2% forecast and marking a slowdown from the 0.5% expansion seen in the second quarter.

Under normal circumstances, such figures would prompt a sell-off in the Pound Sterling. However, the currency's resilience suggests that market participants are shifting their focus toward evaluating the sustainability of the recent sharp rise in the US Dollar. This recalibration may reflect a reassessment of whether the Dollar's bullish trend has become overheated, prompting traders to unwind positions and temper expectations for further parabolic gains in the Greenback.

Technically speaking, GBP/USD pair has reached a key support trendline, a level that's likely to catch the attention of many traders given its prominence on the daily chart. The timing of this touch, right before the weekend close, could amplify the potential for a rebound as market participants prepare for the upcoming week. Despite weak UK GDP data, the Pound has shown resilience, suggesting that selling momentum may be waning. This setup increases the likelihood of a technical pullback toward the 1.28 level in the near term:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

USD Rally Stalls; EUR/USD Holds Firm Above 1.05



The U.S. Dollar's recent rally has hit a pause, with the EUR/USD pair trading sideways just above the 1.0550 intraday support level. The Dollar Index hovers around the 106.50 support, searching for fresh catalysts to resume its upward momentum. Markets appear to be in a holding pattern, having already priced in significant risks and implications of expected Trump administration policies—particularly around US protectionism, tariffs, and trade deals. Investors now await further clarity to either validate these expectations or expose them as an overreaction to Trump’s reelection.

On the one hand, there are signals urging markets not to rush to conclusions and to wait for actual actions. For example, Fed officials are exercising caution in projecting the implications of President Trump's policies on monetary strategy for the upcoming December meeting and into 2025. Fed Chair Jerome Powell emphasized the premature nature of making policy judgments at a recent Dallas event, noting, "It's too early to reach conclusions."

On the other hand, there is information fueling those concerns, suggesting that the risks priced in by the market are, on the whole, justified. For instance, Stephen Moore a senior economic advisor to President Trump, hinted at potential escalation of trade tensions between the Eurozone and the United States. Moore indicated that the US might deprioritize a free trade deal with Britain if it favors EU relations over American ties.

The EUR/USD pair is currently trading within a narrow range of 1.05 to 1.06, reflecting a market in a holding pattern. Last Friday's attempt to rebound faced strong resistance around the 1.06 level, resulting in a daily candlestick that closed near its opening price, indicating the market's reluctance to move higher. Today, upward pressure is building again. Given that a bearish breakout would require significant triggers, which are not anticipated this week, the market may be inclined to engage in a technical upward correction targeting the 1.0650 area:

The British Pound is edging higher, attempting to claw back losses from Friday's sharp sell-off triggered by dismal economic data. The UK's economy unexpectedly contracted by 0.1% in September, with minimal growth in the third quarter. This unexpected downturn could prompt the Bank of England to consider more aggressive rate cuts to stimulate growth. Such a policy pivot could significantly impact interest rate differentials and, consequently, GBP valuations against its peers.

From a technical analysis perspective, GBP/USD is trading near a key ascending support line, which intersects with the horizontal level at 1.26. Technical buy signals seem sufficient; however, the market is waiting for signs of a broader dollar pullback to increase long positions on the pair. Overall, the risks are tilted to the upside, and short-term downward movements are highly likely to be met with active buying:

The Canadian Dollar remains on the back foot as market participants anticipate a 50 basis point rate cut from the Bank of Canada in December. Investors are closely watching the upcoming Canadian CPI data, expected to show a month-on-month increase of 0.3% in October after a 0.4% deflation in September. A year-on-year inflation uptick to 1.9% from 1.6% could influence the BoC's policy trajectory, forcing the central bank to slow down the pace of rate cuts or issue less dovish guidance.

The next significant move for the Australian Dollar is likely to be influenced by the release of the RBA minutes from its November 5 meeting. The RBA held its Official Cash Rate steady at 4.35%, with Governor Michelle Bullock delivering a hawkish outlook amid concerns over upside risks to inflationary pressures. The minutes could provide deeper insights into the central bank's thinking, affecting interest rate expectations and currency valuations.


Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

USD Edges Higher Amid French Political Uncertainty; Markets Eye Powell's Remarks





The US Dollar made modest gains on Wednesday, buoyed by political turbulence in Europe and cautious positioning ahead of key US economic indicators. As traders digest the potential fallout from France's looming no-confidence vote, the greenback is finding support amid a recalibration of risk appetites.

The latest ADP figures showed that private sector employment climbed by 146K in November, just shy of the 150K. The muted reaction in currency pairs suggests that the data hasn't thrown a wrench in traders' expectations. The DXY index remains perched above a key bullish trendline that's been in play since early November, indicating the rally hasn't run out of steam and a retest of recent peaks could be on the horizon:

On the economic docket, attention turns to the ISM’s upcoming release, which will shed light on the health of the US services sector. Market consensus anticipates a slight dip in the headline PMI to 55.5 from 56. Meanwhile, S&P Global is set to unveil its final November readings for the PMI. Expectations are for the services index to hold steady at 57, with the composite PMI anchoring at 55.3.

Investors are also zeroing in on Federal Reserve Chair Jerome Powell's speech at the New York Times DealBook Summit. His comments could offer fresh clues on the trajectory of interest rates. According to the interest rate futures, there's a 74% probability that the Fed will cut rates by 25 basis points to a range of 4.25%-4.50%, while the remaining odds favor leaving rates untouched. Recent Fed minutes and dovish remarks from several officials have tilted the scales toward easing, influencing yield curves and correlation dynamics across asset classes.

Technical picture of EURUSD on daily timeframe suggests that price continues to gravitate towards the horizontal support at 1.0450 (October 2023 low) after several recovery attempts with a possible breakout especially if the NFP data surprises on the upside:

The Pound Sterling has given up some ground after Bank of England Governor Andrew Bailey signaled the possibility of four interest-rate cuts in 2025 during an interview with the Financial Times. Bailey emphasized the need for a gradual approach to lowering rates and stressed that more work is needed to bring inflation to heel, even though the "disinflation process is well embedded." Market expectations for the BoE to stand pat are being propped up by persistent inflation concerns. October's inflation report revealed that the annual core Consumer Price Index—which strips out volatile items—accelerated to 3.3%, while services inflation ticked up to 5%.

GBPUSD daily chart also indicates growing weakness as rebound above the key trendline failed to gain traction and the price keeps pressing the trendline increasing chances that market will revisit recent lows at 1.25:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

DXY at Risk of Breakout on Second Test of Key Bullish Trendline



The US Dollar softened slightly on Thursday, easing as markets digest recent political changes in France. The biggest contribution to the greenback sell-off came from its major opponent, the Euro, with the EUR/USD pair striving to break above 1.0550 during European trading hours. This uptick comes as investors look past the expected collapse of France's short-lived government under former Prime Minister Michel Barnier, who lost a no-confidence vote supported by both far-right and left-wing coalitions. President Emmanuel Macron is now tasked with appointing a new prime minister, and the prospect of political stabilization appears to be buoying the Euro:

In the United Kingdom, the Pound Sterling strengthened against major currencies. This gain is attributed to firm expectations that the BoE will adopt a more gradual approach to lowering interest rates compared to other central banks. BoE Governor Andrew Bailey indicated that interest rates should be cut "gradually," noting that the process of reducing inflation is "well embedded." Despite some initial negative reactions, the Pound recovered as Bailey's comments suggested cautious optimism about the UK's monetary policy path.

European Central Bank President Christine Lagarde, in her testimony before the Parliamentary Committee, highlighted increasing risks to the Eurozone's economic outlook. She stated, "The medium-term economic outlook is uncertain and dominated by downside risks," citing elevated geopolitical tensions and growing threats to international trade. While Lagarde maintained a data-dependent stance on interest rates, traders anticipate that the ECB will make monetary policy even less restrictive, cutting Deposit Facility Rate by 25 basis points to 3% at the upcoming meeting on December 12.

In the United States, Fed’s Chair Jerome Powell warned that the nation's debt trajectory is "unsustainable" and requires immediate attention. Market expectations, as reflected by the interest rate derivatives, show a 74% probability of a 25 basis point rate cut at the FOMC’s December 18 meeting, influenced by recent Fed minutes and comments from officials. The remaining 26% anticipate that rates will remain unchanged.

Germany reported a 1.5% decline in factory orders for October, a contraction less severe than the expected 2% decrease and following a substantial 7.2% rise in September. While the decline indicates a slowdown in Europe's largest economy, the better-than-expected figure may mitigate some concerns about the region's economic health.

Looking ahead, the economic calendar is relatively calm compared to recent days. Key data releases include the US weekly Jobless Claims and the Challenger Job Cuts for November, as well as Trade Balance figures. These employment-related reports are particularly significant ahead of Friday's NFP release. The weekly Jobless Claims are projected to show a slight uptick to 215K from the previous week's 213K. Overall, Initial Claims have been trending downward for several months, which contrasts with the widely discussed disinflation narrative. Typically, disinflation should align with rising unemployment, making Initial Claims a crucial indicator to watch:

Consensus estimate regarding the NFP is that the US economy added 200K jobs in November, a significant increase from the modest 12K jobs added in October, which was impacted by hurricane-related disruptions. The unemployment rate is expected to edge up to 4.2% from 4.1%. Investors will also focus on the US Average Hourly Earnings data to gauge wage growth and its implications for wage-driven inflation.

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[usilboy]

A lot of good analysis I think a lot of traders can learn from the analysis. If a trader wants to make a profit in trading, he must acquire trading education. If trading education is not gained properly, it will be very difficult to make a profit. I have been trading for a long time, I have learned many new ideas, I am trying to learn more.