2024.12.02 FXON Market Analysis (November 25 to December 1)
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Weekly FX Market Review and Key Points for the Week Ahead
In the foreign exchange market for the week that ended on December 1st, the USDJPY and the yen crosses saw significant drops.
The USDJPY started the week trading in the 154 yen range. However, spurred by economic indicators and political developments in the U.S., as well as increasing speculation that the Bank of Japan (BOJ) may raise interest rates, the pair fell to the 149 yen range.
November 25 (Mon)
The USDJPY started the week trading in the lower 154 yen range. After U.S. President-elect Donald Trump appointed Scott Bessent as his Treasury Secretary on November 22, the dollar weakened, and the pair fell to the mid-153 yen range.
However, after Bessent commented that he would prioritize tax cuts, the dollar strengthened against the yen, and the pair rebounded to the upper 154 yen range.
November 26 (Tue)
The dollar briefly strengthened following Trump's comment that he may impose a 25% tariff on goods from Mexico and Canada. However, growing concerns over trade conflicts led to the yen buying.
Meanwhile, U.S. new home sales for October, released this day, fell far short of expectations of 725,000, registering 610,000 on an annualized basis. This is 17.3 percent below the September's figure. The disappointing result led to widespread concerns over the outlook for the U.S. economy, and the USDJPY fell to the lower 153 yen range.
November 27 (Wed)
The revised U.S. GDP for the July-September period met expectations at 2.8% year-on-year. However, the decline in U.S. long-term interest rates pushed the yen higher.
Also, the U.S. personal consumption expenditure (PCE) deflator for October met market expectations at 2.3% year-on-year. However, this figure did not spur traders to buy the dollar, as the USDJPY briefly fell to the mid-150 yen range.
November 28 (Thu)
As the U.S. market was closed for the Thanksgiving holiday, the market became quiet. The USDJPY briefly rebounded to just under 152 yen, but the lack of news limited the rally.
November 29 (Fri)
The Tokyo area's November Consumer Price Index (CPI) dominated the market as the higher-than-expected figure fueled speculation that the BOJ may raise interest rates in December. The USDJPY briefly plunged to the upper 149 yen range.
Meanwhile, the Eurozone's Harmonized Index of Consumer Prices (HICP) inflation rate increased by 2.3% year-on-year in November. As the figure was in line with expectations, the EURUSD rose.
Economic Indicators and Statements to Watch this Week
(All times are in GMT)
December 2 (Mon)
15:00 U.S.: November ISM Manufacturing PMI
December 4 (Wed)
13:15 U.S.: November ADP National Employment Report
15:00 U.S.: November ISM Non-Manufacturing PMI (composite)
18:45 U.S.: Conference by Federal Reserve Chairman Jerome Powell
December 6 (Fri)
10:00 Europe: July-September quarterly regional gross domestic product (revised regional GDP)
13:30 U.S.: November change in nonfarm payrolls
13:30 U.S.: November unemployment rate
13:30 U.S.: November average hourly earnings
This Week's Forecast
The following currency pair charts are analyzed using an overlay of the ±1σ and ±2σ standard deviation Bollinger Bands, with a period of 20 days.
USDJPY
Growing speculation that the BOJ will raise interest rates in December pushed the yen higher against the dollar, and the USDJPY briefly broke below the 150 yen level on November 29th.
In the coming week, the U.S. employment data will be released on December 6th. In addition, Federal Reserve Chairman Jerome Powell and other key figures will make statements ahead of the blackout period. Furthermore, it is necessary to keep an eye on factors that could trigger unexpected dollar selling, such as the development in Ukraine and comments made by U.S. President-elect Donald Trump.
Next is an analysis of the USDJPY daily chart.
The pair broke below the middle line and briefly dropped below -2σ on November 27th. After rebounding the next day and forming a positive candlestick on the daily chart, the pair fell sharply on November 29th. It seems likely that the downtrend will continue, as the 149.08 level set on October 21st is the fresh support line.
We continue with an analysis of the USDJPY weekly chart.
The weekly chart shows that the pair has failed to break above the previous week's high for three consecutive weeks. Last week's sharp decline formed a larger bearish candlestick. The momentum to sell the dollar is so strong that once the pair dips below the middle line, the downtrend will be accelerated. As with the daily chart, it will be important to watch whether the pair breaks below the 149.08 yen level.
EURUSD
Trump vowed to impose tariffs on goods from Mexico, Canada and China. In addition, traders took a risk-off stance as the situation in Ukraine worsened. These factors triggered dollar selling, and the EURUSD has turned upward. The FOMC minutes showed that Fed members support gradual interest rate cuts. The dollar is expected to weaken further.
Next is an analysis of the EURUSD daily chart.
The pair broke above -1σ and is approaching the middle line, which still shows a downtrend. If the pair breaks above the 1.0609 level, the high set on November 20th, a trend reversal may occur.
We continue with an analysis of the EURUSD weekly chart.
A long bullish candlestick follows three consecutive bearish candlesticks. However, while the pair ended last week's trading with its weekly low higher than the previous week's, it failed to break the previous week's high. Also, the middle line remains downward. Therefore, it is recommended to keep in mind that the downtrend may continue.
GBPUSD
Like the EURUSD, the GBPUSD turned upward as the dollar weakened. The dollar's behavior will likely continue to dominate the market.
Now, we analyze the daily GBPUSD chart.
The pair broke above -1σ and is approaching the middle line, thanks to three consecutive days of rally. During the rally, the pair closed with its daily low higher than the previous day's. It may be time to turn to the uptrend.
Now, we analyze the daily GBPUSD chart.
The weekly chart shows that the downtrend has finally come to an end after eight consecutive bearish weeks. Last week's high and low for the pair were higher than the previous week's. The longer lower wick suggests that if the pair can maintain its uptrend, the 1.2761 level, the high set on May 22nd, will turn out to be the updated target.
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