• 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.

• Prior +1.8%; revised to +1.5%

Looking at the details, the drop here is largely driven by a decline in capital goods (-3.8%) and energy production (-1.5%). The former is seen declining back after a surge higher in August (+3.8%). The declines for the month are partially offset by increases in output for durable consumer goods (+0.5%) and non-durable consumer goods (+1.6%). The production for intermediate goods was flat on the month.

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

• Prior +0.3%
• GDP +0.9% vs +0.9% y/y second estimate
• Prior +0.6%

No changes to the initial estimates as this just reaffirms more modest growth in the euro area in Q3. But this is old news, as the focus is on the outlook next year with Trump tariffs set to come into the picture.

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

The picture in the major currencies space is not much changed at all from over five hours ago here. There have been some light extension of the ranges but overall, it’s more or less where we left off at the end of Asia trading. The dollar continues to stay more poised on the week, keeping its post-election momentum.

As mentioned earlier, USD/JPY and EUR/USD are two of the more interesting pairs as they are nearing key technical junctures.

The former is taking a run at the 155.00 mark for the first time since the end of July. On a firm break above the key level, there is little to no technical resistance in that pocket until the 160.00 level.

As for EUR/USD, the pair is down to test the 1.0600 mark with the April low of 1.0601 in play. For now, large option expiries at 1.0600 is also adding another defensive layer. But all of this is tentative up until we get to the US CPI report later.

That will be the next key risk event to watch with a stronger report potentially stirring up further dollar gains and a trigger to breach the technical levels above.

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

The puzzling weakness in
the US Dollar following Trump’s victory looks more and more like it was just a
“sell the fact” reaction. The greenback is now back in the driving seat, and we
might have also seen some pre-positioning in the past couple of days into a
potentially hot US CPI report today.

At the latest Fed’s decision,
Fed Chair Powell said that they expect bumps on inflation and that one or two
bad data months on inflation won’t change the process. This keeps the 25 bps
cut in December in place even if we get higher inflation readings.

The market though is
forward-looking, and the rise in Treasury yields showed that the market sees
risks to the inflation outlook. Moreover, the red sweep could increase those
fears if the progress on inflation stalls, or worse, reverses.

The market might have
already assigned some premium to a higher than expected print, so there’s some
risk of a short-term „sell the fact“ reaction on a higher than
expected number.

It goes without saying that
a bigger than expected upside surprise should see the momentum increasing
immediately with the US Dollar likely rallying across the board and Treasury
yields shooting higher.

On the other hand, a soft
print will likely see the US Dollar and Treasury yields falling, although one
can argue that it’s just going to provide a pullback to go long the US Dollar
and short bonds again at even better levels as future conditions will likely
see inflation getting stuck above the target or even moving back higher.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD is once again back at the 2-year high amid USD strength. The
buyers will want to see the price breaking higher to increase the bullish bets
into new highs, while the sellers will look for a rejection to position for a
drop back into the 1.38 handle.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a strong support zone around the 1.3825 level where the price
got rejected from several times in the past weeks. We may now have a range
between the 1.3825 level and the 1.3950 level. The market participants will
continue to play the range until we get a breakout on either side.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much else we can add here as the rangebound price action makes all the
technical levels between the main support and resistance zones pretty weak. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today, we have the US CPI report. Tomorrow, we get the latest US Jobless
Claims figures. On Friday, we conclude the week with the US Retail Sales data.

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

• An ‚activist‘ approach means to cut less until it is clear inflation persistence has been purged
• I would be ready to cut rates in bigger steps when inflation risks have gone

As mentioned, she’s arguably the most hawkish member on the policy committee. So, these comments need to be taken with that in consideration. Her comments are also reflected by her bank rate vote last week here, as she was the only member to dissent against the rate cut decision.

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