Daily Market Analysis from ForexMart

Euro sadness is growing: macro data makes you sad. And the dollar is no stranger to: either retreat, or win

The US currency has once again bypassed the European one, which is seriously puzzled by a new batch of news about inflation. At the same time, the dollar draws confidence in the Federal Reserve's actions, which allows the completion of the current cycle of rate hikes.

The greenback significantly strengthened at the beginning of this week, restoring some of the positions lost over the past month. This was largely facilitated by the expectation of another interest rate hike from the Fed, whose two-day meeting is scheduled for November 1-2. According to preliminary calculations, on Wednesday, November 2, the central bank will raise the key rate by 75 bps, to 3.75-4.00%. This will be the fourth step on the Fed's part in raising rates.

However, many analysts and market participants doubt the continuation of the Fed's harsh rhetoric. According to experts, after the fourth rate hike by 75 bps, the central bank will take a less aggressive position on this issue. Michael Wilson, currency strategist at Morgan Stanley, is sure of this. He believes that the Fed's rate hike cycle is nearing completion. In support of his words, Wilson cites the inversion of the yield curve of ten-year and three-month US Treasury bonds. Recall that this is one of the key indicators indicating the need for a reversal of the central bank's tight monetary policy to a softer one.

However, some experts do not share the optimism of the Morgan Stanley representative. Currency strategists at UBS Global Wealth Management are confident that a reversal in the Fed's policy is unlikely, since the inflation rate in the US remains high. Against this background, the central bank will have to raise the rate until inflation recedes, the bank emphasizes.

The current situation puts pressure on the dollar, which, despite the current tension, is gradually strengthening. Against this background, the EUR/USD pair has been declining for the third consecutive day, continuing to struggle with the pull of the downward trend. On the morning of Tuesday, November 1, the EUR/USD pair was cruising near 0.9911. This is a difficult situation for the euro since it has to resist negative macro data.

Recall that reports on inflation in the eurozone were published on the evening of Monday, October 31, which again demonstrated its sharp rise. As a result, the inflation rate in the region soared to a new historical high, and the euro bloc economy lost its growth momentum. According to analysts, consumer prices in the EU rose by 10.7% in October 2022 compared to October 2021, exceeding forecasts. In the third quarter of this year, the volume of production in the eurozone decreased to 0.2% compared to the same period last year.

According to experts, the current situation is aggravated by a sharp increase in the European Central Bank's interest rates. At the same time, many analysts believe that the central bank should continue to actively fight inflation, which includes raising rates. It is possible that after the recent rate hike, the ECB will raise it again by 75 bps at the next meeting, which is scheduled for December 15. However, such a scenario is still in question, as well as a possible pause in the process of raising rates by the Fed.

Some analysts do not expect dovish decisions from the US central bank, although the current situation requires revision. According to experts, the aggressive tightening of the monetary policy contributes to the early onset of a recession in the United States, as well as a large-scale drop in treasury state bonds and stocks over the past few years. Take note that as rates rose and the economic downturn that followed the tightening of the monetary policy, the markets were gripped by a crisis. It was followed by an increase in the number of defaults, which seriously hit investors. In the current situation, the leading central banks will have to solve the issues that provoked such problems.

The current situation significantly affected the dynamics of the EUR/USD pair, provoking a correction at the end of September. However, the pair is gradually returning to a relatively stable course. According to experts, a new round of risk appetite in the markets will save the EUR/USD pair from further decline. At the same time, experts expect a New Year rally on the US stock market and the growth of risky assets in the near future.

GBP/USD: dollar and pound in the ring. Waiting for the last knockout?

The British currency has cheerfully started November, but experts fear that its ardor will fade in the near future. The prerequisites for this are economic instability in the UK and the long-term strengthening of the US currency, which is not going to give up its position.

Sterling ended October on a negative note, losing 1% shortly before the decisive meeting of the Federal Reserve, which will end on Wednesday, November 2. According to its results, an additional increase in the interest rate by 75 bps is expected. The implementation of such a scenario will be the first step for the Fed to slow down the pace of rate hikes starting in December 2022, economists believe.

The past month was a time of recovery for the pound, experts believe. Against this background, the GBP/USD pair gained 3%, simultaneously reaching an impressive 1.1646. In many ways, this improvement is due to the curtailment of the economic policy of Liz Truss, the former prime minister of Great Britain, and her resignation. However, it was not only the rejection of the "mini-budget" that helped GBP get out of the price hole. The expectation of positive changes in the Fed's policy played a significant role. In addition, at the end of October, the US currency weakened.

At the beginning of the last month of autumn, the pound behaved cautiously, occasionally trying to rise. On Wednesday morning, November 2, the GBP/USD pair was trading at 1.1513, significantly retreating from the previous high positions. This was facilitated by the strengthening of the greenback, which continues its victorious march in the global market.

According to currency strategists at Bank of America (BofA), in the short and medium term, the dollar will still be the leader. Analysts are confident in the dollar's dominance. However, the implementation of such a scenario can dramatically limit the recent recovery of the pound. A similar development is likely with the next increase in the Fed's interest rate, according to BofA.

By the end of 2022, the market expects an additional rise in the Fed rate (the total volume of these increases is 135 bps). At the same time, by the first quarter of 2023, the peak of the federal funds rate will be 5%, BofA is confident. The bank believes that the Fed's decision in November will provide significant support to the greenback. According to John Skeen, currency strategist at Bank of America, at the moment the US currency is at 40-year highs. At the same time, "the strength of the dollar will remain at such levels at the beginning of 2023," the expert emphasizes.

The current sterling losses are due to the release of positive macroeconomic data from the United States, which provided significant support to the greenback, but pushed the pound and the euro into the abyss. According to reports, business activity in the US manufacturing sector (PMI) soared to 50.4 points in October (against the expected 49.9 points), and the ISM business activity index in the manufacturing sector rose to 50.2 points, exceeding the projected 50 points. Before the release of the reports, the GBP lost almost 100 points, falling sharply to 1.1550. In the future, sterling lost almost all the positions won earlier and fell into a downward spiral, reaching 1.1455. Later, the British currency managed to recover, but the consequences of such a "knockout" received from the dollar seriously affected the further dynamics of the GBP.

However, UOB currency strategists remain positive about the GBP/USD pair, believing that the pound will stand until the 1.1440 level is broken. If this stronghold falls, then sterling will be in a price hole for a long time. However, this is unlikely now, the UOB emphasizes. Earlier, analysts predicted the pound's growth to 1.1700, but the chances of this are melting every day.

According to experts, in the coming weeks, the euro and the pound will remain under pressure against the USD. Nevertheless, market participants do not lose hope for the pound's recovery in the long term. Many large hedge funds have raised their bets on the pound's growth, although asset managers have reduced their short positions against the GBP. However, the majority of market participants, taking into account the positive changes in the UK fiscal policy, support the position of hedge funds. At the same time, many analysts believe that optimism about the pound is justified.

USD slides down after Fed interest rate hike

The US currency reacted negatively to another Fed funds rate increase following the FOMC meeting. USD slumped significantly, losing many of its earlier gains. However, market players and analysts believe that the US dollar is strong enough to recoup its losses.

USD decreased late on Wednesday after the Federal Reserve increased the interest rate by 75 basis points. Fed policymakers stated that future rate hikes, which are aimed at decreasing galloping inflation, could be smaller than the previous ones.

Analysts noted that the market regarded this statement as quite dovish. Investors assumed that the regulator will slow down the pace of rate hikes in the current situation. Many analysts believe that the Fed would increase the rate by only 50 bps in December.

While some market players expected the Fed to slow down monetary tightening significantly, these expectations were dispelled by Fed chairman Jerome Powell. At the press conference following the meeting he said that the Federal Reserve does not plan to slow down the pace of rate hikes. "It is very premature to be thinking about pausing," Powell added. The Fed chairman said the regulator will present a new summary of interest rate trajectory projections.

Furthermore, Powell pointed out the steady rise of the US dollar and called it "a challenge" for many countries. Expectations of an excessively high rate hike strongly pressured USD. Early on Thursday, November 3, EUR/USD traded near 0.9825. Earlier, the pair rose to 0.9832, but retreated slightly afterwards.

Market players hoped the Fed would slow down interest rate hikes this year and ultimately end the tightening cycle in the first quarter of 2023. However, the Fed's actions did not match their expectations. A 50 bps rate increase in December is the only likely policy adjustment the regulator can do.

Rising employment in the US became a key indicator signalling that the Fed would not soften their stance. According to the latest data by ADP, the US economy added 239,000 new jobs in October, well above 192,000 new jobs reported in September. The Federal Reserve uses such data to determine the level of inflation and interest rate adjustments. Strong US labor market data gives the Fed more room for maneuver, allowing the regulator to tighten its monetary policy more aggressively to fight soaring inflation.

Amid such developments, experts note that the US dollar rally can potentially continue in 2023, fuelled by concerns over a global recession and the hawkish Fed. FX strategists at Capital Economics believe that the Fed's tightening cycle is close to an end. The research firm's chief economist Jonas Goltermann predicts that the US dollar will continue to climb in the first half of 2023.

Goltermann believes that if interest rates reach their peak, it will not be an obstacle for a USD rally in the future. The economist said falling risk appetite in the global markets and rising demand for safe haven assets have given support to the US dollar. According to Goltermann, the US currency went up during earlier tightening cycles.

Earlier outlooks by some analysts saw the Fed increase interest rates up to 5% in 2023. Bloomberg predicts that the effective Fed funds rate could hit a peak of 5.1% by May 2023. Market players expect the key interest rate to decrease afterwards in the first or second quarters of the year.

EUR/USD: USD likely to rise higher; EUR weak due to risk-off sentiment​​​​​​​

The US dollar has kicked off the new week with a rapid increase. The euro, on the contrary, was unable to rebound. The greenback is gaining momentum despite a short-term drop last week.

On Monday morning, it advanced significantly against the euro. Its growth was facilitated by positive US macro stats published at the end of last week and the latest economic reports from China. By the end of October, the Chinese authorities announced an unexpected contraction in imports and exports. After the release of disappointing data from China, fears about a looming recession increased in markets, fueling demand for safe-haven assets, including the US dollar.

As the risk-on sentiment decreased, the US dollar won luster win investors again. The US dollar, the most popular safe-haven asset, rose the most. Its further growth may be stimulated by the US inflation report for October, which is due on Thursday, October 10. According to preliminary estimates, inflation is expected to slow down to 8%, logging the fourth decline in the indicator.

Analysts are confident that the Fed mainly takes into account inflation figures when making monetary policy decisions. Since early 2022, the Fed has raised the key rate six times to curb galloping inflation. It has started to slow down thanks to monetary tightening. However, after moving away from an all-time high of 9.1%, inflation still remains above the 2% target level.

Inflation will hardly drop considerably because of high wages in the United States. According to the Nonfarm Payrolls report for October, the economy added 261,000 new jobs, exceeding the previous forecast readings. At the same time, last month the unemployment rate rose to 3.7% from 3.5%. Economists at Capital Economics said that given the wage growth, it would be hard to push inflation to the 2% target. For this reason, the Fed is likely to stick to aggressive tightening.

The greenback was somewhat stuck in the narrow range due to market uncertainty. Judging by the data on the US dollar index (USDX), last week large traders significantly reduced their long positions on USD. If this trend persists, the US currency may lose momentum. However, many analysts are betting on a further rally of the greenback. On November 7, the EUR/USD pair was trading at 0.9962, showing steady growth. However, UBS analysts stress that in March 2023, the pair may fall to 0.9600. It is quite curious given that now there are plenty of fundamental factors for a rise to 1.0000 and above.

Alan Greenspan, the former Fed Chairman, expects a buoyant rally of the US dollar in 2023. Such a scenario is possible even if the regulator makes smaller rate hikes. If inflation peaks in early 2023, the US currency will continue to grow, Greenspan stressed.

This year, the US dollar has been rising mainly amid more aggressive tightening compared to other central banks. Many USD rivals, in particular the euro and the pound sterling, have reached multi-year lows due to the divergence in monetary policy. In addition, the Fed is actively shrinking its balance sheet, boosting the US dollar in the long term.

Analysts at UBS assume that next year the greenback is likely to retain its upside potential. At the moment, it is too early to talk about the end of the rally as inflation remains high. UBS believes that the central bank will continue to aggressively raise rates until a steady decrease in inflation. In the fourth quarter of 2022, the greenback is projected to grow and in the first quarter of 2023, it may reach new highs. This might be the first step towards the possible slowdown of the Fed's tightening hike cycle, analysts believe.

Hot forecast for EUR/USD on 10/11/2022

The first thing you should pay attention to is that since the beginning of the week, the dollar has fallen sharply in price, and the rebound was asking for it. Moreover, it was only the political factor that put pressure on it, in the form of uncertainty about the results of the midterm elections. So as soon as it became clear that the Democrats were apparently gaining control of the Senate, the US currency immediately began to actively rise in price. Although the counting of votes is still ongoing, and less than half of the ballots have been counted at some polling stations. Nevertheless, so far everything is going to the fact that the Democrats take the Senate, while the Republicans take the House of Representatives. The main driver of the dollar's weakening was the assumption that the Republican Party would win a crushing victory and gain control of both chambers of Congress.

There is a high probability that the dollar will be able to further strengthen its position today. The reason for this may be the US inflation report. And although the growth rate of consumer prices is likely to slow down from 8.2% to 8.1%, this still means that the Federal Reserve will continue to raise interest rates. Firstly, inflation remains at an extremely high level. Secondly, on a monthly basis, consumer prices should increase by 0.5%, whereas a month earlier they increased by 0.4%. In other words, prices continue not only to grow, but there are signs of even a possible acceleration of this process. Consequently, the US central bank will continue to pursue an extremely tight monetary policy.

Inflation (United States):

The EURUSD currency pair bounced precisely from the area of the local high in October. As a result, there was a pullback in the direction of the parity level.

During the price rebound, the RSI H4 indicator came out of the overbought zone. This is a fairly good technical signal about the regrouping of trading forces. It is worth noting that the indicator has not gone below the average line of 50, which indicates the bullish mood in the market.

The moving MA lines on Alligator H4 and D1 are directed upwards, which corresponds to an ascending cycle.

Expectations and prospects

In this situation, the parity level serves as a support in the market. Thus, it is possible to strengthen long positions. We expect the euro to rise only if the price stays above October's local high in a four-hour period.

As for the downward scenario, in order to consider it, the quote must first stay below the 0.9950 mark. This price move may restart short positions.

Comprehensive indicator analysis in the short-term and intraday periods has a sell signal due to the recent price rebound. In the medium term, the signal from the indicator is focused on an upward corrective move from the low of the trend.

Hot forecast for GBP/USD on 11/11/2022

Inflation, or rather the reassessment of the Federal Reserve's succeeding actions, turned out to be much more important for the market than the results of the midterm elections in the United States. Moreover, the counting of votes is still ongoing. So as soon as it became known that the growth rate of consumer prices in the United States slowed from 8.2% to 7.7%, a real rally began in almost all markets. The only exception was probably the oil market. But the pound jumped by more than three hundred points. After all, if inflation slows down much faster than forecasts, and the most desperate optimists expected it to fall to 8.0%, then the Fed has no reason to further tighten monetary policy. In other words, the US central bank may well start lowering interest rates next year. It was this change in expectations that caused the dollar to fall sharply.

Inflation (United States):

But the movement turned out to be so impressive that a rebound, or even a local correction, would only take a matter of time. And it is quite possible that today's preliminary data on UK GDP will just be an excellent reason for this. Indeed, according to forecasts, the economic growth rate of the United Kingdom should slow down from 4.4% to 2.3%.

GDP growth Rate (UK):

The pound has strengthened in value by more than 350 points against the US dollar. This strong inertial move led to a control tracking of the price with subsequent resistance levels of 1.1750.

The RSI H1 technical instrument entered the overbought zone during such an intense price move, which corresponds to a convergence with the resistance level. RSI D1 is moving confidently in the upper area of the 50/70 indicator, which indicates ongoing upward interest in the market.

The MA moving lines on Alligator H4 and D1 are directed upwards, this signal corresponds to the general mood of market participants.

Expectations and prospects

In this situation, the technical signal about the overbought pound still takes place on the market. For this reason, traders are considering the scenario of a price pullback from the resistance level of 1.1750.

As for the subsequent upward cycle, market participants will consider it in case the price stays stable above the 1.1750 level. With this development, the overbought signal will be ignored by traders.

Complex indicator analysis in the short, intraday and medium-term periods has a buy signal due to the upward cycle.

Tips for beginner traders in EUR/USD and GBP/USD on November 14, 2022

Details of the economic calendar of November 11
The macroeconomic calendar focused only on statistics from the UK, which came out better than expected. The final estimate of GDP for the 3rd quarter reflected a slowdown in the economy from 4.40% to 2.40%, with forecast of 2.10%. Meanwhile, the rate of decline in industrial production is slowing down from -4.3% to -3.1%, although forecast assumed that the indicators would remain at the same level.

As a result, the pound sterling, overbought in recent days, continues to hold its positions in the market.

As for the US ballot count, the preliminary totals are:

House of Representatives: Democrats 204 - Republicans 212. Control requires 218 seats out of 435.

Senate: Democrats 50 - Republicans 49. Control requires 51 seats out of 100.

The data is not final, the ballots are still being counted.

Analysis of trading charts from November 11
The EUR/USD currency pair appreciated more than 450 points during the past week. This strong inertial move led to the update of the corrective cycle from the low of the downward trend. As a result, the euro reached the subsequent resistance level of 1.0350.

The GBP/USD currency pair gained more than 550 points during the past week. This unprecedented inertial move overcame the local autumn highs. As a result, the corrective movement from the low of the downward trend was prolonged, where the overall scale of the strengthening of the pound sterling is about 14.5%, which is about 1500 points.

Economic calendar for November 14
The new trading week starts with data on the industrial production of the European Union, whose growth rate may accelerate from 2.5% to 3.3%. This is a positive factor for the EU economy, which can stimulate the euro.

Trading plan for EUR/USD on November 14
In view of the clear signal that the euro is oversold, a price rebound from the 1.0350 resistance level is allowed. In this case, sellers will receive local support in the market, and buyers will be able to regroup their positions.

Traders will consider the subsequent upward movement if the price holds above the level of 1.0350, at least in a four-hour period. In this case, we will receive a technical signal about the prolongation of the ascending cycle.

Trading plan for GBP/USD on November 14
The new trading week was opened with a downward GAP, where the overbought pound sterling entered the stage of a technical pullback. The previously passed 1.1750 resistance level now serves as support, where the quote returned during the pullback.

Presumably, the upward inertial mood still takes place in the market. For this reason, a price return above 1.1855 could restart long positions. As for the current pullback, for its prolongation and transition to the correction mode, it is necessary to be consistently below the level of 1.1750.

What is shown in the trading charts?
A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each candle in detail, you will see its characteristics of a relative period: the opening price, closing price, and maximum and minimum prices.

Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.

Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.

The up/down arrows are the reference points of the possible price direction in the future.

Is the yen deflating?

The dollar-yen pair is gradually recovering from a collapse that happened last week. At the start of Tuesday, the major pair received a new breath from the economic data of Japan.

Recall that last week the USD/JPY pair experienced the most dramatic fall in 14 years. According to the results of five sessions, it sank by almost 6% and fell below 139.

The ground from under the dollar's feet was knocked out by data on inflation in the United States. The statistics for October turned out to be much softer than the forecast, which increased traders' fears about a possible slowdown in the pace of tightening in America.

The greenback was able to return to life only after the weekend. It was revived a bit by a hawkish commentary by Christopher Waller.

On Sunday, a member of the Federal Reserve's Board of Governors said it's unreasonable to judge the weakening of inflation by just one month. The central bank will need to get some more hard evidence before moving to a less aggressive policy.

Hints of further sharp rate hikes in the US helped USD/JPY recover slightly. Yesterday, the quote rose by more than 0.5% and crossed the threshold of 140.

This morning, the pair has confidently settled above this level, having received support from Japan's macro statistics. Shocking data on GDP for the third quarter came out at the beginning of the day, which not only fell short of the forecast, but also turned out to be much worse than preliminary estimates.

The report showed that on a quarterly basis, the Japanese economy fell by 0.3% against expectations of growth of 0.3%. And in annual terms, the indicator fell by 1.2%, while an increase of 1.1% was predicted.

According to analysts at Bloomberg, the unexpected contraction in Japan's GDP reflects the impact of a weaker yen on the economy.

This year, the JPY has fallen by more than 20% against the dollar due to the strong divergence in the monetary policy of the Bank of Japan and the Fed.

Unlike its American counterpart, which actively fights inflation by raising rates, the Japanese central bank adheres to an ultra-soft rate and maintains ultra-low rates.

The weakness of the currency led to an increase in the country's spending on imports, which significantly undermined the growth of Japan's economy, which was already very fragile.

Japan has yet to recover from the COVID-19 pandemic. It is for this reason that the BOJ continues to go the dovish route and pump liquidity into the economy.

Recall that last month, Japanese Prime Minister Fumio Kishida developed another stimulus package, and his cabinet approved an additional budget of $207 billion to fund these measures.

As you can see, the circle is closed: the soft monetary rate necessary for GDP growth weakens the yen, and this further slows down the economy. Japan has found itself in a trap into which it has driven itself, and is unlikely to find a way out in the near future.

Now, as fears of a global recession are rising amid a massive increase in rates, it is becoming increasingly clear that the recovery of the Japanese economy is once again being postponed.

And given the latest data on GDP, many analysts have no doubt that the BOJ can further strengthen the dovish rhetoric at its next meeting. This will be another blow to the yen.

Experts predict that the JPY's downtrend will continue despite speculation about a possible slowdown in US rate hikes, especially since the market has already taken this risk into account.

Most investors are well aware that the US central bank has not yet finished its fight against rising prices. To return inflation to its target, it will have to raise rates a few more times.

But even if the central bank does it less abruptly than before, the dollar-yen pair should still get at least the slightest benefit from each round of rate hikes.

Gold breaks the trend

Dashing trouble began. After Jerome Powell's fiery speech about a higher peak federal funds rate, who would have thought that gold would not just bounce back but return to 3-month highs? In fact, the slowdown in the rate of tightening of the Fed's monetary policy is a bullish driver for XAUUSD. If inflation remains at elevated levels for a long time, and the Central Bank slows monetary restrictions and eventually pauses, real yields on Treasury bonds will fall, allowing the precious metal to rise above $1,800 an ounce.

The main catalysts of the 9.5% November gold rally were the releases of data on consumer prices and producer prices. Both indicators slowed down more than Bloomberg experts predicted, which gave rise to talk that the Fed is doing its job well and can afford less aggression. In the end, the tightening of monetary policy affects the economy with a time lag, rates are already at restrictive levels, so you can not go as fast as before.

However, in order to defeat inflation, you need to understand its causes well. The Fed and the White House have gone too far with stimulus in response to the pandemic. As a result, domestic demand grew by 21.4% in the three years to the end of the second quarter of 2022, which is equivalent to an annual GDP growth of 6.7%. No wonder inflation is so high and the job market is strong as a bull. Americans sitting on a mountain of dollars are in no hurry to return to work.

Dynamics of domestic demand in the US, Britain and the Eurozone

Sooner or later, the money runs out, which will lead to a slowdown in consumer prices in the US by itself. The Fed's aggressive monetary restriction can strengthen their decline. There will be a risk of deflation on the horizon, as in Japan. Ark Invest agrees with this scenario. The company sets the example of the beginning of the 20th century, which was overshadowed by the First World War and the Spanish flu epidemic. Inflation in 1920 in the United States exceeded 20%, but thanks to an aggressive increase in the federal funds rate from 4.6% to 7%, it fell to -15% in 2021.

Current conditions have much in common with the period of a hundred years ago. The same scenario of the development of events is not excluded, but in my opinion, it is unlikely. Its implementation would be disastrous for gold, returning its quotes to $1,610 per ounce.

On the contrary, a scenario where the Fed slows down and eventually pauses while inflation remains at elevated levels creates a tailwind for the precious metal. Simultaneously with the fall in real yields of Treasury bonds, the US dollar is also weakening.

Technically, on the daily chart of gold, due to the implementation of the triple bottom pattern the long-term bearish trend was broken. Quotes have gone beyond the descending trading channel and are moving away from the moving averages. I recommend holding the longs formed on the decline to the support at $1,702 and periodically increasing on pullbacks. The targets are $1,790 and $1,815 per ounce.

Tips for beginner traders in EUR/USD and GBP/USD on November 17, 2022

Details of the economic calendar of November 16
Inflation in the UK reached a 41-year high. The consumer price index rose from 10.1% to 11.1%. Consequently, the Bank of England will continue to raise interest rates at the same pace.

Prime Minister Rishi Sunak said on this occasion that inflation control is a key goal of the government.

As for the US ballot count, the preliminary totals are:

House of Representatives: Democrats 211 - Republicans 218. Control requires 218 seats out of 435.

Senate: Democrats 50 - Republicans 49. Control requires 51 seats out of 100.

Although counting of votes is still ongoing, President Joe Biden officially congratulated the future House speaker Kevin McCarthy on his election victory.

The Republican Party gains control of the US House of Representatives in the midterm elections.

Analysis of trading charts from November 16

The GBPUSD currency pair is in the stage of a pullback-stagnation relative to the psychological level of 1.2000. The absence of a transition to a full-size correction suggests that traders' interest in long positions on the pound sterling is still maintained in the market.

The EURUSD currency pair formed a stagnation at the conditional peak of the ascending cycle. This occurred after the quote came close to the 1.0500 resistance level.

Economic calendar for November 17
Today, the final data on inflation in the European Union is expected, the growth rate of which should accelerate from 9.9% to 10.7%. The market is more ready for these indicators, so if they coincide, you should not expect anything drastic. In any case, rising inflation is a clear signal that the ECB will continue to raise interest rates at the current pace.

During the American trading session, weekly data on jobless claims in the United States will be published, where figures are expected to rise. This is a negative factor for the US labor market.

Statistics details:

The volume of continuing claims for benefits may increase from 1.493 million to 1.5 million.

The volume of initial claims for benefits may remain at the same level of 225,000.

Time targeting:

EU Inflation – 10:00 UTC

US Jobless Claims – 13:30 UTC

Trading plan for EUR/USD on November 17
In this situation, the stagnation of the past day can serve as a catalyst for trading forces, in which there was a regrouping of working positions. In this case, subsequent price jumps are not excluded. The following values are considered as signal levels: 1.2050, in case of an upward scenario, which may lead to the prolongation of the current cycle; 1.1750, while holding below this value, a transition from the pullback stage to the full-size correction stage is possible.

Trading plan for GBP/USD on November 17
Little has changed on the chart compared to the previous day—the quote is standing still. This means that there is a process of accumulation of trading forces before a new speculative price jump.

From a technical analysis point of view, the signal levels are in the values: 1.0500 for an upward scenario and 1.0300 for a downward price development.

What is shown in the trading charts?
A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each candle in detail, you will see its characteristics of a relative period: the opening price, closing price, and maximum and minimum prices.

Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.

Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.

The up/down arrows are the reference points of the possible price direction in the future.