Daily Market Analysis from ForexMart

The Japanese yen exhibited significant losses during Monday’s session following the release of a negative-leaning Merchandise Trade Balance data. Meanwhile, the USD has been subject to buying interests due to increasing expectations of an eventual Fed rate hike in December.


Although the USD/JPY pair was unable to increase further and reverted immediately after testing the 111.00 trading range, the currency pair was able to remain in the positive territory during the last trading session. As of now, the pair’s value is still in an upward direction and has somewhat shifted from its previous limit. The pair’s price went slightly higher in the USD/JPY’s 4-hour chart. Resistance levels for the currency pair can be found at 111.00 points, while support levels are expected to be at 110.00 points.


The MACD indicator for USD/JPY dropped, indicating a decrease in buyer positions. The MACD also exhibited a bearish stance for its hourly chart, while the RSI indicator for the pair was able to remain within its overbought readings. If the USD/JPY pair fails to go beyond 111.00, then this could cause the USD to drop in value and plummet to 110.00 points. If the pair breaches the 110.00 range, then this could lead to further decreases up to 109.00 points.

The Aussie continues its decline from 0.7778 level as is expected to stayed with the 0.7310 level to 0.7460 level in the following days. However, the climb from 0.7310 level is a form of consolidation. If the resistance level remains strong, the decline will persist and could even go lower at 0.7200 mark. The decline is supported when a break is seen at its Physiological levels.

The expected deal to be made at the OPEC meeting this week helped sustain oil prices and caused the USD/CAD pair to become muted for the majority of the trading session yesterday. The USD/CAD pair experienced a slight drop to 1.3400 points, triggering a decreasing in buying for the said pair. Since the OPEC meeting had a fairly good turnout, with the possibility of a deal being struck close, oil prices rose and this is expected to help in augmenting the strength of the Canadian economy. The effect of this increase in oil prices was reflected in the increase in the value of the CAD and the drop in the value of the USD/CAD pair. The currency pair traded tightly during the Tokyo and London trading sessions but was able to break through once the New York session began, with the pair dropping to 1.3380 where buying opportunities appeared and is now trading just over the 1.3400 range.


For today's trading session, the Canadian core retail sales data is expected to be released later within the day, with the data expected to come in at 0.6%. If the data fails to make it to this particular speculation then this could cause the currency pair increase to 1.3500. However, if the data manages to come in at the expected data then this could trigger a further decrease up to 1.3200. However, the uptrend is expected to continuously dominate the USD/CAD pair so any decrease in its value can be used by traders to buy the USD/CAD pair in the short-term.

Both the bulls and the bears have been struggling to take control of the EUR/USD pair even though this particular currency pair exhibited little activity during the past trading sessions. However, the USD has once again extended its recent strength, indicating that other USD-related pairs could experience a temporary recovery before again going downwards, and the EUR might find it hard to extend its profits through the 1.0675 trading range.


However, there is a substantial option interest within the 1.0600-1.0659 region and this could lead to the currency pair consolidating between this particular range. The minutes of the FOMC meeting is set to be released on Wednesday, and this particular data is expected to confirm market speculations of a Fed rate hike this coming December. The market expectations for the rate hike is currently at 90%, and speeches and comments from a number of Fed officials including Janet Yellen seem to point towards a confirmation of this rate hike.


However, there is also a possibility that the Fed rate hike might not immediately translate to an added strength in the USD and could possibly weaken the currency if the Federal Reserve refuses to give hints regarding rate hikes for 2017. For today’s trading session, there are no major economic releases expected today from the eurozone and the US, so the EUR/USD pair is expected to consolidate between 1.0600 and 1.0700.

The GBP/USD pair spent the majority of the previous trading session consolidating within the 1.2400 range as the USD kept on alternately losing and gaining its value for the past session. The value of the USD has been significantly uncertain for the past two sessions and this is an expected effect of a bullish market last Monday.


There are no major economic news releases expected for the latter part of November, and this is why a lot of currency pairs have been directed by option expiries and flows instead of fundamentals. The strength of the USD has been mostly attributed to the recent surge in US Treasury yields which was the result of Donald Trump’s victory in the US Presidential elections, but US Treasury yields have started tapering off its strength at the start of this week, causing the USD to lose some of its gains as well.


The minutes of the FOMC meeting are scheduled to be released later today, and this is expected to lend some measure of volatility to the GBP/USD pair even though the minutes are expected to confirm market speculations of an impending Fed rate hike this coming December, as well as give a general overview of the Fed’s future interest rate hikes. However, this could also induce a drop in the value of the USD once the minutes give the opposite of the market expectations.

The EUR/USD pair was expected to remain within the 1.0600-1.0650 trading range due to reports of large-scale options placed within this particular region and will remain until the options expire. The options within this range are scheduled to expire within the day and the minutes of the FOMC meeting are set to be released today, and the market is expecting an increase in the volatility of the EUR/USD pair which could possibly extend for the next few days.


There has been no major economic releases from the eurozone or the US from these past few days, and options players wielded their power during this period of low activity by attempting to control the financial market in order to safeguard their option entries. Unless other market players would have a good grasp on these very recent developments in the market, they might not be able to have a full understanding of the market movements during these past trading sessions.


For today’s session, the market is expecting quite a number of economic data to be released, such as the oil inventory data and unemployment claims data from the US. However, majority of market players are now waiting for the FOMC minutes which is scheduled to come out any time during the New York session. The market has a 95% expectation percentage for the December Fed rate hike, and the minutes from the FOMC is expected to confirm this particular speculation. Aside from confirmation of the rate hike, market players are also expecting to get hints regarding future rate hikes from the Federal Reserve. If the data fails to meet market expectations, then the USD could lose its strength and drop significantly.

The Japanese yen increased in value following the news release regarding the earthquake that hit the country, but quickly retreated after the Bank of Japan released a statement saying that the Japanese economy is still well on its way to improvement. The JPY remained within a tight trading range around multi-month highs during Tuesday’s trading session, with the pricing of the USD/JPY pair staying within the 110.00-110.50 region for the rest of the day. The currency pair was able to trade above its moving averages in its 4-hour chart, with the moving averages sustaining their bullish trend.


Resistance levels for the USD/JPY pair are expected to be at 112.00 points, while support levels for the pair are expected to come in at the 111.00 trading range. The MACD indicators for the currency pair weakened, indicating a drop in buyer positions. Meanwhile, its RSI indicators remained within the overbought territory. If the USD/JPY pair manages to sustain its bullishness, then the next short-term aim for the pair is located at 112.00 points. If the USD/JPY pair manages to go beyond this particular level, then the currency pair is expected to extend its gains towards the 113.00 trading range.

In the H4 chart, the price was seen to break at 1.01 handle that pushed the support levels higher within the 1.0155 - 1.0129 levels. The Resistance level showed a weaker stance from 1.02939 to 1.0131 levels. There are some facets to consider to sell this pair. One is the H4 handle steadied at 1.01 handle even though there are offered seen within the supply zone. Another is the uncertainty in the current daily support at 1.0086 mark.


The trend could shift downward when the price closed lower than 1.01 level while there is less volatility. However, when there is a break at 1.0037 daily Quasimodo line, the price could reach the 1.0029 level to 0.9994 and 1.0019 levels. The best stance would be the price lower by 14 pips towards the 1.01 handle then a retest within the resistance zone.


The downward trend will be validated when the price in the H4 chart reached the 1.0086 support level with a probability towards the Quasimodo line.


Major news to be declared today are the U.S. Core durable goods data and U.S. Jobless claims this afternoon while the Federal Open Market Committee minutes of the meeting will be disclosed in the evening.

The euro together with the greens had bounced again on Wednesday following the strengthening of the USD as it was boosted by the positive data regarding the much reinforced economy of the United States. The pair is sailing smooth during the morning session of the Asia and Europe, however, the inevitable volatility started amid the NY trading session.


The pair tested the level of 1.0600 ahead of the announcement of the Durable Goods data which has a better-than-expected result of 1%. The positive release signaled the market to begin the USD purchase again which enabled the pair to break the 1.0600 and touched 1.0525 prior to the stabilization of the pair that settled below the 1.0550 during closing day.


According to previous readings, the regions 1.0500 and 1.0600 is considered as a stable support for the pair which is also mentioned by profuse large banks, the aforesaid level will be the expected mark for the euro as the year ends.


At present, the price movement emphasized a continuous softening and the Thanksgiving celebration in the United States will not become a driving force for the euro to edged high against the dollar. Technically, the signs bring no good for the EUR, in this way the single currency is kept intact and wait for a strong support which include the 1.0500, 1.0440 and 1.0440 marks until we found a much stable support.


The latest German Ifo Business Climate caused a short period of volatility but things as of this moment remains unaffected. The price action is still on guarded and anticipates for a test within the 1.0500 level in order to recognize the final result whether this movement will progress or not.

The sterling pound continues to be the sole currency that has survived the far-reaching effects of the USD’s recent surges since the GBP has continuously inched higher against the US dollar even during the US elections. The GBP/USD pair consolidated and range for the majority of yesterday’s sessions but the USD further increased during the opening of the New York session as economic releases from the US such as the Durable Goods data came out exceeding initial market expectations.


The GBP/USD pair initially plummeted towards 1.2350 points but recovered immediately and broke through 1.2400 and is currently resting just below the 1.2450 region. The GBP is currently on the strong side and should the USD exhibit weakness in the coming days, then the GBP/USD is expected to rise to 1.2600 and could possibly go higher.


The FOMC meeting minutes were released yesterday and has confirmed the possibility of a Fed rate hike this coming December especially since its members talked about the urgent need to increase interest rates as soon as possible. The minutes did not add much volatility to the market since it met initial market speculations. For today’s trading session, there are no important economic releases expected from both the US and the UK, and the currency pair is expected to further consolidate with bullish biases enabling it to sustain its position over 1.2400. Market players are slowly regaining their confidence in the sterling pound, and is expected to further increase in the coming sessions.