• I hope and expect that in Q1, inflation will come down
• Pricing power is more limited
• I am still seeing progress on inflation
• We are a long way from knowing what will happen with tariffs

This article was written by Adam Button at www.forexlive.com.

Ten-year Treasury yields touched the highest since May earlier today at 4.50% but have since turned around and are now down 1.6 bps on the day to 4.40%.

That’s a solid rejection but the next hurdle is yesterday’s low. A drop below that would end a series of higher lows and if it comes with more equity selling it could be part of a broader flight to safety.

USD/JPY will also key off of yields and could further retrace if this move continues.

Interestingly, the big jump in yields started after the Fed cut 50 bps and now the turn lower is coinciding with Powell saying the FOMC is in no hurry to cut rates. Other officials have taken a similar less-dovish tone.

The thinking in the bonds market is about that reaction function. When the Fed cut 50 bps it cut tail risks around a recession and added to inflation risks, particularly after waves of strong data following the cut.

In contrast, the Fed pausing now would work to squash inflation and curb growth.

So there is a bit of a dance going on here that’s worth keeping an eye on.

This article was written by Adam Button at www.forexlive.com.

Is this where the train stops for the dollar? The post-election run higher has been without much pause but finally we might be getting that today. The greenback is down across the board, retracing just a slight bit of the gains from this week. USD/JPY is the biggest loser, down 0.6% to 155.33 currently. However, it is still not quite meeting any key near-term levels just yet.

The 100-hour moving average (red line) is lining up with the 155.00 mark now. And that’s the key level to watch for any shifts in near-term momentum for the pair.

Similarly, EUR/USD may be up 0.4% to 1.0575 but is not yet contesting its own 100-hour moving average of 1.0595 at the moment. That’s a key pair that has arguably played a role in the turnaround against the dollar today, owing to a rebound off the 1.0500 mark from yesterday. For some context on the importance of said level: EUR/USD feels the inevitable pull towards 1.0500 next

Besides that, GBP/USD is up 0.2% to 1.2690 and USD/CAD down 0.2% to 1.4035 currently. And AUD/USD is up 0.4% to 0.6475 with NZD/USD up 0.4% to 0.5870. It’s pretty much a case of a very light pullback in the dollar gains since the election result. The greenback is still poised to end the week comfortably higher.

That being said, it’s still worth keeping an eye out in case we see any shifts in near-term biases. That might help to indicate a top in the dollar, at least for this latest rally.

In other markets, stocks are also down with S&P 500 futures lower by 0.5%. Are Trump trades getting a bit of a check back? Bitcoin is up 1.4% to $89,490 but still holding below the $90,000 mark on the day. Meanwhile, 10-year yields are flat at 4.44% and gold is up slightly by 0.2% to $2,572 currently. So, there’s definitely some suggestion there.

The next key risk event on the day will be the US retail sales data release. With Fed chair Powell highlighting the potential for a pause yesterday, a strong report here may well keep market players inclined to lean towards that if other data in the weeks ahead also falls in line.

The expectation is for retail sales to come in at +0.3% month-on-month with the control group reading also estimated at +0.3%.

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

The S&P 500 rallied
into a new all-time high following Trump’s victory and the red sweep as the
market started to look forward to bullish drivers like tax cuts and
deregulation.

The only bearish reason
people were looking at was the rise in Treasury yields. That’s generally
bearish only when the Fed is tightening policy not when yields rise on positive
growth expectations.

Right now, the Fed’s
reaction function is that a strong economy would warrant an earlier pause in
the easing cycle and not a tightening. That should still be supportive for the
stock market.

If the Fed’s reaction
function changes to a potential tightening, then that will likely trigger a big
correction in the stock market on expected economic slowdown.

For now, the current
pullback looks as something healthy given the very strong rally following Trump’s
victory, so the dip-buyers should be happy about it.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 is pulling back to the key support level around the previous all-time high at 5927.
This is where we can expect the buyers to step in with a defined risk below the
level to position for a rally into a new all-time high. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the trendline
around the 5800 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a 38.2% Fibonacci
retracement level standing right around the support level. This should
technically strengthen the support and give the buyers a good level where to
lean at and protect their stops. The sellers will look for a break lower to
increase the bearish momentum into the trendline.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the current pullback. The
sellers will likely continue to lean on it to position for new lows, while the buyers
will look for a break higher to increase the bullish bets into new highs. The
red lines define the average daily range for today

Upcoming
Catalysts

Today we conclude the week with the US Retail Sales report.

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

The US Dollar yesterday
weakened across the board despite a higher than expected US Core PPI and Fed Chair Powell acknowledging the need to proceed
more carefully with rate cuts from here on.

This might be a signal that
the market could be fine with just two rate cuts priced in for 2025 and will
need some stronger reasons to price out those as well. This could trigger a
bigger pullback in the US Dollar after the incredible run since the beginning
of October.

On the GBP side, this week
we got the UK labour market report and although the data was
mostly mixed, it leant more on the dovish side. The UK
GDP this morning missed expectations slightly but overall the week didn’t
change much for the BoE.

The market sees just a 17%
chance of a 25 bps cut in December and a total of 61 bps of easing by the end
of 2025.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is testing a key swing low level at 1.2660. This is where the
buyers are stepping in with a defined risk below the level to position for a
pullback into the major downward trendline.

The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into new lows although a break below the major upward trendline will give them
much more conviction.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the consolidation around the key level. There’s not much else
we can glean from this timeframe so we need to zoom in to see more details.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price is breaking out of the minor downward trendline that was
defining the bearish momentum on this timeframe. The buyers will likely start
to pile in here to position for the pullback into the major trendline and will
likely increase the bullish bets on the break of the minor resistance zone
around the 1.2715 level.

The sellers, on the other
hand, will likely step in around the resistance to position for the break below
the major upward trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today, we conclude the week with the US Retail Sales data.

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

• There is more data that we will see between now and December
• Have to continue to weigh what makes sense
• Fed could eventually slow down pace of rate cuts but too soon to say if it will be in December
• Fed policy is restrictive
• Don’t see evidence of new price pressures
• Full transcript (may be gated)

After Powell’s comments yesterday, the odds of a 25 bps rate cut have dwindled to ~63% and is keeping that way now. Collins‘ remarks reaffirms that there is a likelihood of a pause next month and that is keeping markets on their toes.

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

The US Dollar yesterday
weakened across the board despite a higher than expected US
Core PPI and Fed
Chair Powell acknowledging the need to proceed more carefully with rate
cuts from here on.

This might be a signal that
the market could be fine with just two rate cuts priced in for 2025 and will
need some stronger reasons to price out those as well. This could trigger a bigger
pullback in the US Dollar after the incredible run since the beginning of
October.

On the EUR side, not much
has changed with the market continuing to price in a 31% chance of a 50 bps cut
in December and a total of 148 bps of easing by the end of 2025. This could
turn out to be too much if the data picks up.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD bounced from the key support zone around the 1.05 handle. That’s where the buyers
stepped in with a defined risk below the level to position for a rally back into
the 1.08 handle. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into new lows.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a downward trendline defining the current bearish
momentum. We can expect the sellers to lean on it to position for the break
below the 1.05 handle, while the buyers will look for a break higher to
increase the bullish bets into the 1.08 handle.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance zone around the 1.0590 level where we have
the trendline for confluence.
This is where the sellers are likely to step in with a defined risk above the resistance
to position for the break below the 1.05 handle.

The buyers, on the other
hand, will look for a break higher to increase the bullish bets into the 1.08
handle. The red lines define the average daily range for today.

Upcoming
Catalysts

Today, we conclude the week with the US Retail Sales data.

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

The US CPI yesterday came in line with expectations
leading to a bit of a “sell the fact” reaction in the US Dollar.

The bullish momentum picked
up a bit later though as Fed’s Logan delivered a hawkish comment saying that “models show that Fed funds could
be very close to neutral” basically implying a lot more cautious approach on
rate cuts in 2025.

The market is viewing all
of this in light of the recent US election as Trump’s policies are likely to
spur growth and potentially keep inflation above target for longer, making the
Fed’s job of bringing inflation back to target a bit harder.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD is testing a key support zone around the 0.5850 level. This is where
the buyers will likely step in with a defined risk below the level to position
for a rally back into the 0.6050 resistance. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
0.5773 level next.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a downward trendline
defining the bearish momentum. If we get a pullback, the sellers will likely lean
on the trendline to position for more downside, while the buyers will look for
a break higher to increase the bullish bets into new highs.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor downward trendline defining the bearish momentum
on this timeframe. If we were to get a pullback, the buyers will likely lean on
it to position for the break below the 0.5850 level, while the buyers will look
for a break higher to increase the bullish bets into the next major trendline. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US PPI and the US Jobless Claims figures. Tomorrow, we
conclude the week with the US Retail Sales data.

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

All aboard now. The dollar train is marching forward on the session, stretching gains across the board. The post-election momentum continues to play out and it’s still not the time to be guessing the top just yet. EUR/USD is now down 0.5% to 1.0508 as it corroborates with the inevitable pull towards 1.0500.

As mentioned in the linked post above, this is where the real test comes in for the pair as we look towards the end of this week. EUR/USD has been more or less stuck within a range of around 1.0500 to 1.1200 since the start of 2023. So, this makes the latest downside shove a major one to watch as price reaches a critical technical juncture.

Besides that, USD/JPY is once again trading back above 156.00 to 156.20 now. Then, we have GBP/USD slumping to its lowest since July – down 0.5% to 1.2635 currently. AUD/USD is also feeling the pressure as it is down 0.5% to 0.6455 currently and poised for its lowest daily close since April.

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

• Fed: 20 bps (81% probability of rate cut at the upcoming meeting)

2025: 75 bps

• ECB: 34 bps (62% probability of 25 bps rate cut at the upcoming meeting)

2025: 145 bps

• BoE: 4 bps (85% probability of no change at the upcoming meeting)

2025: 56 bps

• BoC: 33 bps (67% probability of 25 bps rate cut at the upcoming meeting)

2025: 95 bps

• RBA: 2 bps (92% probability of no change at the upcoming meeting)

2025: 40 bps

• RBNZ: 55 bps (80% probability of 50 bps rate cut at the upcoming meeting/20% for a 75 bps cut)

2025: 170 bps

• SNB: 32 bps (72% probability of 25 bps rate cut at the upcoming meeting)

2025: 70 bps

Rate hikes by year-end

• BoJ: 13 bps (51% probability of 25 bps rate hike at the upcoming meeting)

2025: 44 bps

*where you see 25 bps rate cut, the rest of the probability is for a 50 bps cut

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