• I’m pretty confident inflation will hit 2% in 2025.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• USD/JPY extends gains to nearly 1% on the day now
• USDJPY Technical Analysis – Higher Treasury yields revive the carry trade
• Equities stay more sluggish as rising yields keeps optimism in check
• EUR/USD continues its descent to test the early August low
• ECB reportedly starting to debate whether rates need to go below neutral in latest cycle
• Germany turns to India as their next bet to reduce China reliance
• US MBA mortgage applications w.e. 18 October -6.7% vs -17.0% prior

Markets:

• USD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields up 1.4 bps to 4.219%
• Gold up 0.1% to $2,752.09
• WTI crude down 1.9% to $70.38
• Bitcoin down 1.5% to $66,491

The standout mover on the day is the Japanese yen as it stumbled lower, after an early move in Asia trading as well.

USD/JPY nudged up to near 152.00 in the handover from Asia to Europe and built on that during the session. The pair is now up over 1% to 152.80, holding near the highs. It wasn’t just USD/JPY that moved as it was broad-based yen weakness that prevailed.

Higher yields during the week were a catalyst but that has now led to key technical breaks across multiple yen charts as seen here.

Besides that, the dollar kept firmer across the board as it continues to enjoy a good run in October. EUR/USD dipped lower to test its early August low, not helped by a Reuters report highlighting the potential for the ECB to cut rates quicker and by more than anticipated.

The antipodeans also struggled amid a more dour risk backdrop. Higher yields is weighing on stocks and that in turn is pushing the aussie and kiwi lower. AUD/USD is down 0.5% to 0.6650 with NZD/USD down 0.4% to 0.6020 currently.

Coming up, we have the Bank of Canada policy decision to look out for. The central bank is expected to cut rates by 50 bps to 3.75%, with market odds showing a ~91% probability of such a scenario playing out.

USD/CAD is not too fazed on the day even with oil prices falling further though. The pair is little changed, up just 0.1% to 1.3830 currently and stuck in a 16 pips range.

This article was written by Justin Low at www.forexlive.com.

The break below the 200-day moving average (blue line) last week turned the bias in the pair to being more bearish. And sellers reaffirmed that by holding at the key level amid some pushing and pulling towards the end of last week. Flip over to the new week and it’s been rather one-way traffic with the dollar also keeping firmer.

For today though, the euro is also not really helped by this earlier report by Reuters here.

It’s not a direct shift in policy signal by the ECB but it certainly add to the recent dovishness. Money market odds are now showing near 40% probability of a 50 bps rate cut for December. That’s where we’re at right now.

As for the overall outlook, traders are still anticipating roughly five more 25 bps rate cuts by the ECB in the next five meetings through to June next year. So, that is the baseline scenario.

But if economic data continues to worsen and pressure the ECB to pick up the pace on rate cuts, don’t expect the euro to find much comfort amid a divergent outlook with the dollar.

Going back to EUR/USD, the pair is now circling back towards the 1 August low of 1.0777. A break there will see little else standing in the way of a push towards 1.0700 next. The June lows around the region of 1.0666-76 will also be a potential downside target to watch out for.

This article was written by Justin Low at www.forexlive.com.

The Nasdaq has been
consolidating around the all-time high as the lack of catalysts and the
pressure from rising Treasury yields kept the market at bay.

We are now near the US
elections and it’s going to be a major event for the market. A Trump victory
will likely give the stock market a boost on better growth expectations, while
a Harris triumph could be more bearish.

Treasury yields and the
stock market often move in the same direction as long as the move is led by
growth expectations. So, the data, the elections result and the Fed’s reaction
function will be key for the market in the next six months.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq is consolidating around the highs. From a risk management
perspective, the buyers will have a better risk to reward setup around the trendline. The sellers, on the other hand,
will want to see the price breaking lower to start targeting the next major
trendline.

Nasdaq Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent rangebound price action with the 20265 level acting
as support. If the price gets there, we can expect the
buyers to step in with a defined risk below the level to position for a rally
into a new high. The sellers, on the other hand, will want to see the price
breaking lower to pile in for a drop into the trendline around the 19800 level.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here. It’s unlikely that we’ll get a breakout today given
the lack of catalysts. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the US Flash PMIs and the US Jobless Claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior -17.0%
• Market index 214.8 vs 230.2 prior
• Purchase index 131.3 vs 138.4 prior
• Refinance index 672.6 vs 734.6 prior
• 30-year mortgage rate 6.52% vs 6.52% prior

Another week, another plunge in mortgage applications as higher rates continue to weigh on the market. Both purchases and refinancing activity fell sharply with the latter once again sliding hard in the past week.

This article was written by Justin Low at www.forexlive.com.