The US dollar came under pressure on Thursday, rewriting monthly lows on the DXY index.
It is worth noting that the Dollar has not yet crossed the line, continuing to receive support on a slide towards the 50-day moving average. This support could turn out to be the starting point for a new impulse for the Dollar to rise, as it was in September.
Additionally, it is worth paying attention to how the American markets are closing the regular session where selling dominated for the previous three days. This signals that market professionals are locking in gains in equities, despite mostly upbeat corporate earnings reports.
On the other hand, traders may not give too much importance to these worrying signs until the comments of the Fed or even until the publication of the US jobs report next week. The situation could change dramatically in the light of new data. One thing is sure - the coming week set to be nerve-racking and volatile.
It is worth noting that the Dollar has not yet crossed the line, continuing to receive support on a slide towards the 50-day moving average. This support could turn out to be the starting point for a new impulse for the Dollar to rise, as it was in September.
Additionally, it is worth paying attention to how the American markets are closing the regular session where selling dominated for the previous three days. This signals that market professionals are locking in gains in equities, despite mostly upbeat corporate earnings reports.
On the other hand, traders may not give too much importance to these worrying signs until the comments of the Fed or even until the publication of the US jobs report next week. The situation could change dramatically in the light of new data. One thing is sure - the coming week set to be nerve-racking and volatile.
A trend of rising short-term bond yields is developing worldwide. It promises to be a stiff test for developing countries from Brazil to Turkey, whose currencies remain vulnerable despite severe weakening in recent weeks.
The Brazilian Real has lost 15% against the Dollar in the past four months as investors withdrew money from an economy where inflation has risen faster than the key interest rate. In recent months, the Brazilian central bank was forced to stretch out the tightening cycle to avoid an unnecessary shock to the economy. But simultaneously, rising interest rates, inflation, a falling currency, and logistical problems have caused a shock freeze in the economy.
The situation is no better in Turkey, where the central bank is cutting rates sharply against rising inflation, sending the national currency into a tailspin.
The Brazilian Real has lost 15% against the Dollar in the past four months as investors withdrew money from an economy where inflation has risen faster than the key interest rate. In recent months, the Brazilian central bank was forced to stretch out the tightening cycle to avoid an unnecessary shock to the economy. But simultaneously, rising interest rates, inflation, a falling currency, and logistical problems have caused a shock freeze in the economy.
The situation is no better in Turkey, where the central bank is cutting rates sharply against rising inflation, sending the national currency into a tailspin.
In recent days the situation has been worsened by a sharp rise in yields on short-term government bonds of developed countries. The Bank of Canada and the Bank of Australia have halted QE rather abruptly in the last two days.
Although its size was small, investors took it as a signal that the Fed would announce a reduction in its balance sheet purchases next week.
When short-term yields in developed country bonds are rising, so-called yield currencies risk coming under increasing pressure. The carry trade, popular in global financial markets, could find itself in reverse traction mode. The pressure on the Real and Lira continues.
The Brazilian real has been trading at 6.54 per Dollar, near the top of its trading range since May 2020. The impending storm due to Fed policy changes is potentially not only able to push the USDBRL above 5.8 but also above 6.0 before the end of the year, which would be a new all-time high.
The Turkish Lira could then end up in an area above 10 per Dollar, continuing to look for its bottom to push off from.
Although its size was small, investors took it as a signal that the Fed would announce a reduction in its balance sheet purchases next week.
When short-term yields in developed country bonds are rising, so-called yield currencies risk coming under increasing pressure. The carry trade, popular in global financial markets, could find itself in reverse traction mode. The pressure on the Real and Lira continues.
The Brazilian real has been trading at 6.54 per Dollar, near the top of its trading range since May 2020. The impending storm due to Fed policy changes is potentially not only able to push the USDBRL above 5.8 but also above 6.0 before the end of the year, which would be a new all-time high.
The Turkish Lira could then end up in an area above 10 per Dollar, continuing to look for its bottom to push off from.
#EURCHF broke support levels – 1.0660 and 1.0600
• Likely to fall to support level 1.0500
EURCHF continues to fall after the price broke through the two multi-month support levels – 1.0660 (multi-month low from November) and 1.0600 (former monthly low form July of 2020).
The breakout of these support levels accelerated the active intermediate impulse wave (3).
Given the clear daily downtrend, EURCHF currency pair can be expected to fall further toward the next support level 1.0500 (former support from the middle of 202 and the target for the completion of impulse wave (3)).
• Likely to fall to support level 1.0500
EURCHF continues to fall after the price broke through the two multi-month support levels – 1.0660 (multi-month low from November) and 1.0600 (former monthly low form July of 2020).
The breakout of these support levels accelerated the active intermediate impulse wave (3).
Given the clear daily downtrend, EURCHF currency pair can be expected to fall further toward the next support level 1.0500 (former support from the middle of 202 and the target for the completion of impulse wave (3)).
#Gold reversed from resistance level 1806.00
• Likely to fall to support level 1760.00
Gold recently reversed down sharply from the key resistance level 1806.00 (which has been reversing the price from the start of September) – strengthened by the upper daily Bollinger Band.
The downward reversal from the resistance level 1806.00 started the active short-term corrective wave (ii).
Given the safe haven outflows from gold, Gold can be expected to fall further toward the next support level 1760.00 (low of wave 2 and the likely end for the active correction (ii)).
• Likely to fall to support level 1760.00
Gold recently reversed down sharply from the key resistance level 1806.00 (which has been reversing the price from the start of September) – strengthened by the upper daily Bollinger Band.
The downward reversal from the resistance level 1806.00 started the active short-term corrective wave (ii).
Given the safe haven outflows from gold, Gold can be expected to fall further toward the next support level 1760.00 (low of wave 2 and the likely end for the active correction (ii)).
#KO (Coca-Cola) broke daily down channel
• Likely to rise to resistance level 56.85
Coca-Cola continues to rise inside the minor impulse wave 3 which previously broke the wide daily down channel from July.
The active impulse wave 3 belongs to the higher level impulse wave (3) – which started at the bottom of the aforementioned down channel.
Given the clear daily uptrend , Coca-Cola can be expected to rise further toward the next resistance level 56.85 (target price for the completion of the impulse wave 3, top of wave B from September).
• Likely to rise to resistance level 56.85
Coca-Cola continues to rise inside the minor impulse wave 3 which previously broke the wide daily down channel from July.
The active impulse wave 3 belongs to the higher level impulse wave (3) – which started at the bottom of the aforementioned down channel.
Given the clear daily uptrend , Coca-Cola can be expected to rise further toward the next resistance level 56.85 (target price for the completion of the impulse wave 3, top of wave B from September).
FX got a bullish sign for the USD with a 1% jump on Friday
On Friday, the currency market ensured that the dollar bulls were far from giving up important ground and only made a tactical retreat. The Dollar’s 1% strengthening in one day against the euro, its main rival, was a clear demonstration of strength.
Currency traders crashed back the EURUSD as it approached 1.1700, a former significant support area. The pair’s recovery stopped just below the 50 simple moving average, which often indicates medium-term trends. It is worth noting how persistently the EUR has been selling from 50 SMA since June.
On the daily charts, the currency market got a significant signal of domination by the dollar bulls, forming a bearish takeover on the EURUSD.
Interestingly, on Friday, buyers in the stock markets managed to pull them into the green zone and close the month near all-time highs. Simultaneous buying in equities and a rising dollar is a rare and volatile combination.
On Friday, the currency market ensured that the dollar bulls were far from giving up important ground and only made a tactical retreat. The Dollar’s 1% strengthening in one day against the euro, its main rival, was a clear demonstration of strength.
Currency traders crashed back the EURUSD as it approached 1.1700, a former significant support area. The pair’s recovery stopped just below the 50 simple moving average, which often indicates medium-term trends. It is worth noting how persistently the EUR has been selling from 50 SMA since June.
On the daily charts, the currency market got a significant signal of domination by the dollar bulls, forming a bearish takeover on the EURUSD.
Interestingly, on Friday, buyers in the stock markets managed to pull them into the green zone and close the month near all-time highs. Simultaneous buying in equities and a rising dollar is a rare and volatile combination.
We tend to think of the currency market as a more reliable indicator of changing trends. However, cautious traders would surely prefer to wait for a confirmation in EURUSD, falling below the local lows at 1.1530.
Investors, in general, would prefer to wait for signals from the fundamentals, with plenty of them happening this week.
On Wednesday, the US Fed will announce a decision on the key rate and the QE programme. The latter is expected to start tapering in November. Markets and Fed officials now expect QE to be entirely over by the middle of next year. These expectations are setting the trend for higher debt market interest rates. However, investors and traders will be watching the comments closely to adjust their expectations. And these changes have the potential to fundamentally affect the dynamics of the markets.
The other big news this week is the monthly labour market report. Market analysts are very cautious about employment growth, expecting to see around 400K new jobs -- twice as many as was in September and above the long-term average. However, we cannot rule out upside surprises, as the end of additional unemployment benefits and higher inflation should stimulate the US to go back to work.
Investors, in general, would prefer to wait for signals from the fundamentals, with plenty of them happening this week.
On Wednesday, the US Fed will announce a decision on the key rate and the QE programme. The latter is expected to start tapering in November. Markets and Fed officials now expect QE to be entirely over by the middle of next year. These expectations are setting the trend for higher debt market interest rates. However, investors and traders will be watching the comments closely to adjust their expectations. And these changes have the potential to fundamentally affect the dynamics of the markets.
The other big news this week is the monthly labour market report. Market analysts are very cautious about employment growth, expecting to see around 400K new jobs -- twice as many as was in September and above the long-term average. However, we cannot rule out upside surprises, as the end of additional unemployment benefits and higher inflation should stimulate the US to go back to work.
This is a favourable environment for the Dollar, which buyers could support in the coming weeks, developing an advance towards 1.1200 before the end of the year in the EURUSD and up to 97.5 in the USD Index from the current 1.1550 and 94.2 respectively. However, the biggest blow could come in emerging market currencies, where we could see a simultaneous winding down of the carry trade, profit-taking from previous gains and a shift of capital into dollar assets, which have become more profitable in recent weeks.
The Brazilian stock market developed its decline last week, losing 2.6%, closing at mid-November 2020 lows. Since June this year, this market has remained under sustained pressure, following a reversal in metals while Bovespa has lost more than 20% from its peak, flirting with the Bear Market territory.
From the tech analysis side, the Brazilian market looks oversold on the daily charts, i.e. potentially attractive for buying in anticipation of a rebound. But it might be a false start, as there are some important tests ahead.
Investors should pay attention to the continuing fall in metal and coal prices, as well as the strength of the American Dollar.
The Bovespa is now on the way to the 200-week moving average, which coincides with the psychologically important 100,000 level. If a fall below those levels attracts mass buyers, it could be the beginning of a prolonged bull rally and keep the Bovespa index out of the bear market phase.
From the tech analysis side, the Brazilian market looks oversold on the daily charts, i.e. potentially attractive for buying in anticipation of a rebound. But it might be a false start, as there are some important tests ahead.
Investors should pay attention to the continuing fall in metal and coal prices, as well as the strength of the American Dollar.
The Bovespa is now on the way to the 200-week moving average, which coincides with the psychologically important 100,000 level. If a fall below those levels attracts mass buyers, it could be the beginning of a prolonged bull rally and keep the Bovespa index out of the bear market phase.
#WaveAnalysis
#FTSE100 broke key resistance level 7285.00.
Likely to rise to resistance level 7400.00.
FTSE 100 index continues to rise after the price broke the key resistance level 7285.00 (previous monthly high from October).
The breakout of the resistance level 7285.00 accelerated the active intermediate impulse wave (5).
Given the clear multi-month uptrend, FTSE 100 index can be expected to rise further toward the next resistance level 7400.00.
#FTSE100 broke key resistance level 7285.00.
Likely to rise to resistance level 7400.00.
FTSE 100 index continues to rise after the price broke the key resistance level 7285.00 (previous monthly high from October).
The breakout of the resistance level 7285.00 accelerated the active intermediate impulse wave (5).
Given the clear multi-month uptrend, FTSE 100 index can be expected to rise further toward the next resistance level 7400.00.
#WaveAnalysis
#CHFJPY broke key resistance level 124.5
• Likely to rise to the resistance level of 126.00
CHFJPY continues to rise after the price broke the key resistance level 124.5 (which stopped the previous sharp upward impulse wave 1 in the middle of October, as can be seen below).
The breakout of the resistance level 124.5 accelerated the active impulse waves 3 and (3).
Given the clear daily uptrend, the CHFJPY currency pair can be expected to rise further toward the next resistance level of 126.00 (target price for the completion of the active impulse wave 3).
#CHFJPY broke key resistance level 124.5
• Likely to rise to the resistance level of 126.00
CHFJPY continues to rise after the price broke the key resistance level 124.5 (which stopped the previous sharp upward impulse wave 1 in the middle of October, as can be seen below).
The breakout of the resistance level 124.5 accelerated the active impulse waves 3 and (3).
Given the clear daily uptrend, the CHFJPY currency pair can be expected to rise further toward the next resistance level of 126.00 (target price for the completion of the active impulse wave 3).
📈Crypto Price Prediction: Bitcoin Could Hit $100,000 Before The End Of 2021 - FxPro Analyst Team comment in Forbes: https://www.forbes.com/sites/billybambrough/2021/11/02/crypto-price-prediction-bitcoin-could-hit-100000-before-the-end-of-2021-but-lacks-ethereum-intensity/?sh=1ae0a4776b7d
Forbes
Crypto Price Prediction: Bitcoin Could Hit $100,000 Before The End Of 2021—But Lacks Ethereum ‘Intensity’
Despite the huge gains made by bitcoin and ethereum already this year, many investors expect prices to continue to climb, with one crypto executive predicting the bitcoin price will hit $100,000 before the end of 2021...
Gold added 1.5% during October, closing the month at $1783. In the last couple of weeks, it has been frequently above its 200-day moving average. So far, it is hard to talk about a bulls’ victory, but there are increasing signs that the peak of Gold’s pessimism is over.
A consolidation during this week above the 200-day moving average (now near $1791) promises to be the first meaningful signal of a break in the long-term downtrend.
Should it succeed, it would be much easier for the bulls to push Gold above the October highs area. A rate lock above $1830 could signal a break in the downtrend that has been ongoing since August 2020.
Globally, the entire momentum of Gold’s rise from the 2018 lows to the 2020 highs and the subsequent correction fits confidently into the Fibonacci retracement pattern, giving up 38.2% of the initial rally.
Confirming signals for a bullish reversal open the prospect for Gold to rise 161.8% from the initial momentum into the $2600 area by July-August 2022.
A consolidation during this week above the 200-day moving average (now near $1791) promises to be the first meaningful signal of a break in the long-term downtrend.
Should it succeed, it would be much easier for the bulls to push Gold above the October highs area. A rate lock above $1830 could signal a break in the downtrend that has been ongoing since August 2020.
Globally, the entire momentum of Gold’s rise from the 2018 lows to the 2020 highs and the subsequent correction fits confidently into the Fibonacci retracement pattern, giving up 38.2% of the initial rally.
Confirming signals for a bullish reversal open the prospect for Gold to rise 161.8% from the initial momentum into the $2600 area by July-August 2022.
#WaveAnalysis
#Costco rising inside impulse waves 3 and (5)
• Likely to test round resistance level 500.00
Costco continues to rise inside the minor impulse wave 3 of the intermediate impulse sequence (5) from the start of October.
The price earlier broke through the key resistance level 468.00 (former Double Top from September).
#Costco rising inside impulse waves 3 and (5)
• Likely to test round resistance level 500.00
Costco continues to rise inside the minor impulse wave 3 of the intermediate impulse sequence (5) from the start of October.
The price earlier broke through the key resistance level 468.00 (former Double Top from September).
#WaveAnalysis
#AUDJPY reversed from resistance level 85.75
• Likely to fall to support level 84.00
AUDJPY currency pair continues to fall after the price reversed down from the major resistance level 85.75 (which has been reversing the price from the start of May).
The resistance zone near the resistance level 85.75 was strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 85.75, strong yen inflows, AUDJPY can be expected to fall further toward the next support level 84.00.
#AUDJPY reversed from resistance level 85.75
• Likely to fall to support level 84.00
AUDJPY currency pair continues to fall after the price reversed down from the major resistance level 85.75 (which has been reversing the price from the start of May).
The resistance zone near the resistance level 85.75 was strengthened by the upper daily Bollinger Band.
Given the strength of the resistance level 85.75, strong yen inflows, AUDJPY can be expected to fall further toward the next support level 84.00.
Late stages of Crude Oil rally
Oil has lost its upside momentum. Despite reports of record gasoline prices in the UK and the US, crude prices are losing around 0.6% on Wednesday morning on speculation that the supply-demand balance point is approaching.
The price of Brent crude has retreated 3% and WTI 3.8% from late October peaks.
Graphical analysis suggests that the latest rally in oil prices, which started in August, has moved into its final stage, and we probably already saw a local price peak at the end of last month.
The oil market will likely need a reset in the coming weeks, potentially correcting to $78.5-81.5/bbl for Brent and $75.7-79 for WTI. Such a pullback could clear the way for further buying as part of the bullish momentum.
But it also cannot be ruled out that a more aggressive production build-up by the US and OPEC+ is on the way while the pace of demand growth slows. In that case, we could see a deeper correction with downside potential at $74 and $73, respectively.
Oil has lost its upside momentum. Despite reports of record gasoline prices in the UK and the US, crude prices are losing around 0.6% on Wednesday morning on speculation that the supply-demand balance point is approaching.
The price of Brent crude has retreated 3% and WTI 3.8% from late October peaks.
Graphical analysis suggests that the latest rally in oil prices, which started in August, has moved into its final stage, and we probably already saw a local price peak at the end of last month.
The oil market will likely need a reset in the coming weeks, potentially correcting to $78.5-81.5/bbl for Brent and $75.7-79 for WTI. Such a pullback could clear the way for further buying as part of the bullish momentum.
But it also cannot be ruled out that a more aggressive production build-up by the US and OPEC+ is on the way while the pace of demand growth slows. In that case, we could see a deeper correction with downside potential at $74 and $73, respectively.
The annual growth rate in UK house prices fell to 9.9%, returning to the single-digit territory after five months. At the same time, a 0.7% jump in prices in October signalled increased buyer’s demand.
Buyer interest is based both on accelerating inflation (actual and felt considering the jump in energy prices), which lowers the value of money, as well as a desire to lock in the current low mortgage interest rate. Financial markets are banking on a 0.15 percentage point rate hike by the Bank of England as early as tomorrow.
Yields on 10-year government bonds have doubled since August. Although long-term interest rates remain broadly in a multi-year bearish cycle, Britons generally follow Ray Dalio’s strategy of preferring to borrow in the current macroeconomic process, betting that inflation will eat away at the purchasing power of money.
Buyer interest is based both on accelerating inflation (actual and felt considering the jump in energy prices), which lowers the value of money, as well as a desire to lock in the current low mortgage interest rate. Financial markets are banking on a 0.15 percentage point rate hike by the Bank of England as early as tomorrow.
Yields on 10-year government bonds have doubled since August. Although long-term interest rates remain broadly in a multi-year bearish cycle, Britons generally follow Ray Dalio’s strategy of preferring to borrow in the current macroeconomic process, betting that inflation will eat away at the purchasing power of money.
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At FxPro, we pride ourselves on developing strong and long-lasting partnerships with our valued Introducing Brokers & affiliates.
✅Earn up to 62.5% Spread Revenue
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