There’s no clear catalyst for the roughly 10 bps drop in yields from the highs yesterday. Perhaps month-end rebalancing flows are at play here? That’s definitely a consideration alongside the slew of US data for the week, which kicked off yesterday via the JOLTS job openings and consumer confidence data.

Coming up later, we’ll have the ADP employment change and Q3 advance GDP data to get through. And then tomorrow, there’s the PCE price index and weekly jobless claims. All that before the non-farm payrolls report on Friday.

Going back to yields, the 4.30% mark is a key threshold highlighted by Goldman Sachs here. So, perhaps that added some intrigue to the level in trading this week. But for now, yields are keeping above the 200-day moving average (blue line) still, seen at 4.183%. So, that’s one other key line in the sand to be mindful of.

I want to say that the fall in yields today have some part to do with month-end flows but we’ll only get a better sense of that come next week. And of course, depending on how the US data plays out in the days ahead.

But as yields are lower on the day, it is putting a stop to the recent dollar gains. USD/JPY especially is down 0.3% to 152.90 currently, with the antipodeans also sitting a little higher against the greenback now.

The pound is the main laggard on the day though but it owes to some nervous feels ahead of the UK budget announcement later. If the budget manages to avoid being fiscally irresponsible, that might trigger a relief rally for the quid. So, that’s something to look out for.

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

EURUSD: The EURUSD moved lower to start the US trading day yesterday, only to rebound higher into the European session and the start of the US session. The high prices yesterday moved up to once again test the 200-hour MA. On Friday, the price moved up to test that MA as well – and found willing sellers. The day closed with the price between the 100 hour MA below at 1.0802 and the 200-hour MA above near 1.08206. Something had to give.

And today, the „give“ did not happen until the European morning session. The price finally broke a MA target wth a break above the 200 hour MA, but instead of igniting more buying and a move to the upside, the initial move was higher but after reaching 1.08256 (the 200 hour MA was at 1.08179, the price reversed and starts the US session below the 100 hour MA at 1.08037. The buyers had their shot. The sellers are taking charge. The low yesterday reached 1.07814. The low from the early August reached 1.07767. Both are targets today.

USDJPY: The USDJPY had a volatile up, down and back up trading day yesterday closing higher on the day (the price did gap higher following Japan’s election, where the ruling coalition (LDP/Komeito) lost its majority. The pair rose by about 100 pips at the end of the day.

Technically, the pair in the US session moved up to test the 61.8% of the move down from the July high at 153.40 and found sellers. The high price in the US session stalled at 153.37, just 3 pips short of the retracement level. Sellers leaned.

In trading today, the USDJPY dipped modestly in the Asian session after Japan employment rate came in at 2.4% vs 2.5% last month (and 2.5% estimate), and continued that move into the early European session. The low reached 152.749, which like yesterday, approached the 100-hour MA, but still was quite short of the MA level. On Friday, the price moved to that MA and found willing buyers increasing that MAs level going forward. On the move back higher, the price is now trading back above and below the 61.8% retracement (at 153.40). Buyers and sellers are stalling new that retracement level and waiting for the next shove. The tilt is to the upside, but it needs that push with the high price from yesterday at 153.88 the next obvious target. It would open the door for more upside momentum.

Perhaps the best way to look at the market is if the price can stay above last week’s high at 153.18, the buyers are in firm control. Move below, and the buyers might give up and look for rotation back down toward the 100-hour moving average again.

GBPUSD: The GBPUSD buyers had their shot yesterday when the price moved above the 200-hour MA (green line on the chart below) but could not sustain momentum. The shot missed.

A week ago on Monday and the week before also saw the buyers take shots on the break of the 200-hour MA only to miss. Sp although the 200-hour MA has been moving lower and making it easier for buyers to take control, there still is an upside apprehension. Next week, the BOE meets with expectations for a cut in rates.

The failure gave the sellers the go-ahead to push lower (and they did). However, the low price in the US session stalled did move below the 100-day MA at 1.29723, but could not get below the 100-hour MA at 1.2967. I guess both buyers and seller had their shot and both missed. Today, the sellers tried to break lower with the 100-hour MA broken in the late Asian session, but that failed too. The price has moved back above the 200-hour MA (green line) again. The price action remains uncommitted with a failed break in the European session but buyers are trying again in the early US session. The high yesterday yesterday near 1.3000 (and from Friday too) if broken would give the buyers more confidence and have traders looking toward the 100 bar MA on the 4-hour chart at 1.30246. Get above it and 1.30488 would be eyed (50%). Fail….and the 100-day/100 hour MA restarts the „wash and rinse cycle“ seen recently. UGH.

USDCHF: The USDCHF moved higher in sympathy with the rising USDJPY in the Asian session yesterday and pushed above its 100-day MA in the process at 0.86841. The high reached 0.86995 – just short of the natural resistance target at 0.8700 and after moving back below the 100-day MA at 0.8641, turned buyers to sellers and closed near the low for the day.

The low from last week stalled at the broken 38.2% of the move down from the July high at 0.86318. Staying above that retracement level is key technically for the buyers if they are to keep some control.

In trading today, the price in the European session has extended higher. The price is back above the high from 2-weeks ago at 0.8668. The 100-day MA at 0.86843 is the next target to get to and through again to shift more of the bias to the upside. Support at 0.8649 and the 38.2% at 0.86318.

USDCAD: more

AUDUSD: more

NZDUSD: more

This article was written by Greg Michalowski at www.forexlive.com.

• Iranian revolutionary guards threaten Israelis with surprises they have never seen before
• UK September mortgage approvals 65.65k vs 65.00k expected
• China mulls approving fresh fiscal package worth over ¥10 trillion next week
• DIHK warns that German economy is set to stagnate in 2025
• European equities hold higher to start the session
• What are the main events for today?
• BlackRock CEO says Fed will cut at least by 25 bps before year-end
• Eurostoxx futures +0.2% in early European trading
• Germany November GfK consumer sentiment -18.3 vs -20.5 expected
• US futures stay more muted so far on the day
• US reportedly have been declining to change language when discussing Taiwan independence
• Another light one on the data docket in Europe today
• FX option expiries for 29 October 10am New York cut
• UK reportedly open to restarting key trade dialogue with China
• Heads up: It’s a big week on the earnings calendar

Markets:

• GBP leads, CHF lags on the day
• European equities higher;
  S&P 500 futures down -0.12%
• US 10-year yields up 1 bps to 4.300%
• Gold
  up 0.28% to $2,749
• WTI
  crude up 1.44% to $68.35
• Bitcoin up 2.15% to $71,444

It’s been a slow session in terms of data releases and market moves. The main highlight is the news about China mulling to approve a new fiscal package next week worth over 10
trillion yuan which is expected to be bolstered further if Trump wins the
US election. That gave copper and chinese stocks a boost.

Other than that, we didn’t get anything notable. The playbook in the markets remains the same as we head into the US election with Treasury yields pushing higher and the US Dollar remaining supported. The US stock market continues to display a rangebound price action while gold, and especially bitcoin, keep pushing into new highs.

In the American session, the US Job Openings and the US Consumer Confidence will be the data to watch alhough given the market’s focus on the election, weak data might be faded, while strong data could add more fuel to the Trump trade.

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

• Iranian revolutionary guards threaten Israelis with surprises they have never seen before.
• Threaten to deliver more „crushing“ strikes to Israel in coming days.

Crude oil is ticking higher on the news. I have a feeling that the Trump trade we’ve been seeing in other markets have also spilled into the crude oil market on higher supply fears. Nonetheless, the big gap lower we got on Monday open did look like an overreaction, so this news might provide a pullback to fill the gap.

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

The main culprit for the US
Dollar strength lately has been the rally in long term Treasury yields. The
yield curve has been bear-flattening which is what you would expect with higher
growth and potentially higher inflation expectations.

There’s a good argument
that the markets have been already positioning for a Trump’s victory which is
expected to strengthen the higher growth and less rate cuts expectations.

As previously mentioned,
this is the trend for now and it’s generally a bad idea to fight such trends
without a strong catalyst. The US Dollar will likely remain supported unless
Harris wins the US elections and we get a correction in Treasury yields.

On the CAD side, the BoC cut interest rates by 50 bps as expected recently and
signalled more rate cuts to come with the size of the cuts being guided by
incoming data. The market sees a 90% probability of a 25 bps cut in December (10%
for a 50 bps cut) and then three more 25 bps cuts in 2025.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD extended the rally into the 1.39 handle as it continues to
approach the 2-year high at 1.3977. At this point the market might need to see
the US election result to break the 2-year high but the momentum is still
favourable for the greenback.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum.
The buyers will likely lean on it to position for a rally into a new high,
while the sellers will look for a break lower to start targeting the 1.38
handle.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we now have a counter-trendline defining the current pullback. The
buyers will want to see the price breaking higher to increase the bullish bets
into new highs, while the sellers will likely lean on to ride the pullback into
the major trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Job Openings and the US Consumer Confidence report.
Tomorrow, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims, the US Employment Cost Index and the Canadian GDP data.
Finally, on Friday, we conclude the week with the US NFP and the US ISM
Manufacturing PMI.

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

The main culprit for the US
Dollar strength lately has been the rally in long term Treasury yields. The
yield curve has been bear-flattening which is what you would expect with higher
growth and potentially higher inflation expectations.

There’s a good argument
that the markets have been already positioning for a Trump’s victory which is
expected to strengthen the higher growth and less rate cuts expectations.

As previously mentioned, this
is the trend for now and it’s generally a bad idea to fight such trends without
a strong catalyst. The US Dollar will likely remain supported unless Harris
wins the US elections and we get a correction in Treasury yields.

USDCHF Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF is approaching a key resistance zone around the 0.8730 level where
we can also find the trendline for confluence.

That’s where we can expect
the sellers to step in with a defined risk above the trendline to position for
a drop into the 0.8333 level. The buyers, on the other hand, will look for a
break higher to increase the bullish bets into the 0.89 handle next.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that that the price has been making almost textbooks higher highs and
higher lows with the price retesting the previous resistance
turned support before making a new high. Right now, the price is testing
the 0.8668 level.

The buyers will want to see
the price breaking higher to extend the rally into the 0.87 handle, while the
sellers will look for a break below the 0.8641 level to target a drop into the
0.86 handle next.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a very noisy price action between the 0.8668 and 0.8641 levels.
We will likely need a breakout to see a more sustained trend but for now the
market participants might keep on playing the range by buying at support
and selling at resistance. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Job Openings and the US Consumer Confidence report.
Tomorrow, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims and the US Employment Cost Index data. Finally, on
Friday, we conclude the week with the Swiss CPI, the US NFP and the US ISM
Manufacturing PMI.

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

• Yen losses ease up a little in European morning trade
• Japanese yen in the spotlight after weekend election
• Japan parliament reportedly to convene special session to vote on prime minister post
• Crude Oil Technical Analysis – Israel spares Iran’s energy facilities
• Weekly update on interest rate expectations
• ECB’s Wunsch: It is premature to discuss December policy decision
• SNB total sight deposits w.e. 25 October CHF 457.4 bn vs CHF 462.3 bn prior
• UK October CBI retailing reported sales -6 vs 4 prior

Markets:

• EUR leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.5%
• US 10-year yields up 2.5 bps to 4.256%
• Gold down 0.6% to $2,731.59
• WTI crude down 5.7% to $67.65
• Bitcoin up 2.8% to $68,660

The main focus in FX was on the Japanese yen, as it opened with a striking gap lower after the weekend election.

Japan’s ruling LDP party surrendered their outright majority in the lower house and that triggered some uncertainty on the BOJ’s confidence to stick to policy normalisation. That as prime minister Ishiba’s position is called into question following the election outcome.

USD/JPY opened with a gap up at 153.23 in Asia before holding around 153.50-60 levels in the handover to Europe. But as the dust settles, traders are slowly getting a grip on the situation that Japan’s political landscape is still likely to remain as it is for the most part – at least for now.

That saw USD/JPY fall back to around 152.60 currently, eating into the opening gap higher but still up by 0.2% on the day.

Besides that, higher bond yields remain a focal point for broader markets. And that helped to underpin USD/JPY and the dollar as well. But yields did slide off a bit during the session, tempering with the dollar mood.

EUR/USD was keeping around 1.0790-00 mostly before nudging up slightly to 1.0815 now and still largely held back by its 200-hour moving average at 1.0825.

Besides that, other dollar pairs are more muted amid the mixed mood in markets to start the new week.

In the equities space, stocks are running higher as tensions in the Middle East abate following the developments over the weekend. That saw oil prices tumble lower by nearly 6% now and is breathing life into equities, with US futures set to run away with gains at the open later.

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

• Prior 4

After a brief respite in September, the UK retail sales balance heads back into negative territory for the month of October. The decline is marginal but it’s not a good start to Q4, which is typically seen as one of the hotter seasons in the run up to the year-end holidays.

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

Crude oil was one of the biggest
movers today as the price gapped sharply lower following the Israel’s
retaliation over the weekend. The reason for the drop is of course the lack
of attacks against energy facilities. That’s something that’s been already known, so we might see a pullack now that this story is in the rear view mirror.

In the big picture, central
bank easing generally leads the manufacturing cycle, so we can expect global
growth to pick up and support the crude oil market. One risk that might be
weighing on the market is the US election as a Trump victory might be bearish
due to increased supply expectations.

It’s worth remembering that
in 2016, crude oil did fall initially on Trump’s victory but eventually rallied
for more than 20% in the following three months on higher global growth
expectations. So, it’s going to be a tricky one, but global growth should
eventually prevail.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil couldn’t break above the key 71.67 level and eventually sold
off hard. The natural target for the sellers should be the support
zone around the 65 handle where we can expect the buyers to step in to position
for a rally back into the top of the yearly range.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor support level defined by the October swing low when
the Israel-Iran tensions began. This is where we can expect the buyers to step
in with a defined risk below the level to position for a pullback into the
downward trendline.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 65 handle.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the big gap lower today following the weekend news of Israel’s retaliation
and lack of energy infrastructure targets. There’s not much to add here as the
buyers will look for a bounce on the 66.50 swing level, while the sellers will
want to see the price breaking lower to increase the bearish bets into the 65
handle. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Job Openings and the US Consumer Confidence report. On
Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims and the US Employment Cost Index data. Finally, on
Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.

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

The pair is still up 0.4% on the day at around 152.90 but has fallen back below the opening gap of 153.23 upon the return from the weekend. The opening gap higher owes to the Japan election result. More on that from earlier: Japanese yen in the spotlight after weekend election

The losses in the yen are being arrested for now but it doesn’t materially alter the technical picture for USD/JPY.

The near-term chart above continues to see buyers remain in near-term control, holding well above its 100-hour moving average (red line). The key near-term level is seen at 152.13 currently, so there is some way to go in drawing another test of that again.

The opening gap higher in yen pairs owes much to traders pricing in „uncertainty“ with regards to the Japan lower house election outcome. That also sees prime minister Ishiba’s position get called into question.

However, the political landscape is not likely to change much and for the time being, Ishiba might just scrape through in the upcoming vote which is reported to be on 11 November. I mean, there are no major contenders to oust him for now – not least when the party itself is reflecting a more fragile look.

The LDP and Komeito are still likely to form a majority coalition with the help of the smaller parties. So, bigger picture politics won’t see that drastic a change; even if voters are growing increasingly more frustrated.

As the dust settles, that is perhaps what is leading to traders fading the earlier spike in USD/JPY at the open.

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