GBP/USD: UK Inflation Accelerates, but the Pound Remains Under Pressure

#

The GBP/USD pair hit a weekly high on Wednesday but failed to hold within the 1.27 range. The UK inflation report provided only temporary support to the pound, although almost all components of the release were in the green zone. But the dollar again turned out to be stronger—after a temporary surge to the 1.2713 mark, it later retreated to the 1.26 range.

Notably, GBP/USD traders have ignored favorable fundamentals for the pound for two consecutive days. On Tuesday, Bank of England officials voiced concerns about inflation risks, and Wednesday's report further highlighted inflationary pressures in October, as if confirming the voiced concerns. However, the pair struggled to capitalize on these factors, although it tested the 27th figure.

Let's start with the inflation report. First, the inflation data surprised markets with stronger-than-expected headline numbers. For example, the monthly Consumer Price Index rose to 0.6% (forecast: 0.4%), marking the highest growth rate since March. Annual CPI increased to 2.3% (forecast: 2.2%). The indicator was in the green zone, exceeding the BoE's target range and hitting a multi-month high (October saw the strongest growth rate since April this year).

The Core CPI, excluding food and energy prices, also supported the pound, climbing to 3.3% YoY (forecast: 3.1%).

The Retail Price Index (RPI), used in wage negotiations, matched forecasts but still demonstrated an upward trend. In monthly terms, the RPI returned to positive territory at 0.5%. In annual terms, the index rose to 3.4% in October after falling to 2.7% in September.

The monthly producer purchase price index left the negative zone for the first time since April this year, rising to 0.1%. In annual terms, the indicator came in at -2.3% y/y (with a forecast of a decline to -3.0%).

The producer selling price index also ended up in the green zone: 0.0% m/m (with a forecast of -0.1%), -0.8% y/y (with a forecast of -1.0%).

The data confirms that the BoE will likely maintain its current monetary policy stance at its next meeting. Recent speeches by BoE Governor Andrew Bailey and other committee members (Claire Lombardelli, Catherine Mann, Alan Taylor) were moderately hawkish, emphasizing concerns about inflation risks without signaling imminent rate hikes. The latest inflation data reinforces the likelihood of a December pause in rate cuts as the BoE monitors inflation sustainability.

The October report on inflation growth in the UK should be viewed through the prism of these speeches: there is no doubt that if the release had been made public the day before the parliamentary hearings, the rhetoric of the BoE's management would have been more rigid. However, it is easy to put 2 + 2 together here, concluding that the central bank will pause in reducing the interest rate in December.

Why do GBP/USD traders react so calmly to such a unipolar information flow? In my opinion, there are several reasons.

Let's start with the fact that a probable pause at the December meeting of the BoE is not a sensation. This has been discussed for a long time. Cautious assumptions have given way to confident forecasts, especially after Donald Trump's victory and following the results of the November meeting of the English central bank. Let me remind you that Andrew Bailey made it clear at the final press conference that the BoE may take a wait-and-see position at the next meeting. According to him, the central bank needs to ensure that inflation remains close to the target level on a sustainable basis, "so the pace of easing should not be too fast or too sharp." The latest inflation report only confirmed the assumptions of many analysts.

The dollar remains a significant anchor for GBP/USD, which is still in high demand. After a three-day decline, the US Dollar Index (DXY) rebounded to 106.65, supported by risk-off sentiment and increased confidence that the Fed will hold rates steady in December. According to the CME FedWatch Tool, the probability of no rate cut in December has risen to 45%, up from just 10-15% last week, following Powell's hawkish remarks in Dallas, where he said that the central bank should not rush to lower the interest rate). Such a significant decline in dovish sentiment supports the American currency.

The UK inflation report provided only a brief boost for the pound, which surged to 1.2713 before retreating. The pound closely mirrors the dollar's movements and is unlikely to establish a solid independent trend soon. Corrective spikes should be viewed without significant catalysts as opportunities to open short positions. The nearest (and so far the main) target of the downward movement is the 1.2600 mark, aligning with the lower Bollinger Bands line on the H4 chart.

The material has been provided by InstaForex Company - www.instaforex.com #

The Euro Shoots Without Thinking

#

Markets often "shoot first and ask questions later." Investors started buying the euro against the US dollar following the escalation of armed conflict in Eastern Europe. However, the consequences of this development are more detrimental to the Eurozone economy than to its American counterpart. The European Central Bank's biennial review highlights a slowdown in European GDP in the face of heightened geopolitical risks. And that's not even the most striking insight in the report.

This summer, the Federal Reserve shifted from high inflation to supporting the labor market and ensuring a "soft landing" for the US economy. This change in priorities from Jerome Powell and his colleagues weakened the US dollar. Now, as autumn wanes, the ECB appears to be following suit. It has been noted that the risks of an economic slowdown in the eurozone currently outweigh the risks of accelerating inflation.

Trade wars and geopolitical tensions could further stifle Eurozone GDP. The currency bloc exports more goods to the US than it imports, making it vulnerable to tariffs on imports imposed by Donald Trump. Moreover, Europe's reliance on exports means that disruptions to international trade and a slowing global economy would be a severe blow. Unsurprisingly, the euro was declining sharply before the Eastern European conflict escalated.

Eurozone Trade Balance Dynamics with the US

Geopolitical risks tend to have short-term effects, as evidenced by the oil market. Thus, the drop in US Treasury yields and the accompanying EUR/USD rally could be temporary. Buying in such a market is extremely risky.

Fundamentally, the case for selling the euro against the US dollar remains strong. Bank of Italy President Fabio Panetta states that demand in the Eurozone is stagnating, and inflation has reached its target. Keeping interest rates high in this scenario makes little sense. They should be moved to a neutral—or perhaps even accommodative—zone as soon as possible. If European business activity data shows further slowdown, the odds of a 50 basis point ECB deposit rate cut in December will rise, putting additional pressure on the euro.

Meanwhile, the market doubts that the Fed will ease monetary policy at the end of the year. The federal funds rate has been above 5% for most of the past two years. However, the US economy is strong, with unemployment at 4.1%—still modest by historical standards—and third-quarter GDP expanding by 2.8%. Inflation could resurface. Why take risks?

The battle for the key level of 1.0545 continues on the daily chart. The most the bulls managed was to push the pair toward 1.0600, where sellers took over. A drop in the euro below 1.0525 would heighten the risks of resuming the downward trend, providing a basis for adding to medium-term shorts with a target of 1.0350.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for AUD/USD on November 20, 2024

#

The Australian dollar has been rising for four consecutive days, outpacing the market, heavily supported by convergence on the daily timeframe. However, signs of exhaustion in this movement are beginning to emerge. The Marlin oscillator is about to touch the boundary of the uptrend territory, and the price is approaching the target level of 0.6570. At this point, we may see a synchronized reversal of both the price and the oscillator downward.

If the price consolidates above 0.6570, it could climb further to 0.6640. This level is very strong, coinciding with the 38.2% Fibonacci retracement. It's worth noting that the 0.6570 resistance is also close to the 23.6% retracement level.

On the H4 chart, the price is currently battling with the MACD line. The Marlin oscillator shows signs of weakening. While the 0.6570 level could still be tested, a reversal from this point is highly likely, leading to a medium-term bearish move.

The material has been provided by InstaForex Company - www.instaforex.com #

Overview of EUR/USD Pair on November 20: Eurozone Inflation Fails to Surprise, and So Does the Euro

#

The EUR/USD currency pair continued to trade below the moving average line on Tuesday. While it avoided another drop this time, the price still struggles to stage even a minimal correction. This situation highlights several critical points: The absence of significant buying interest suggests that market participants are not inclined to push the euro higher. The euro remains highly overbought, lacking substantial demand. Our conclusions and forecasts throughout the year's first half appear accurate. We continue to expect a medium-term decline for the euro.

On Monday, European Central Bank President Christine Lagarde delivered a speech, followed by Tuesday's Eurozone inflation report for October. While these events might seem significant at first glance, they ultimately had little impact on the euro. Lagarde refrained from discussing monetary policy, and the inflation report, being the second estimate, rarely deviates from the initial numbers. Thus, neither event influenced market sentiment.

The market continues to be driven by global factors we've repeatedly highlighted. These factors are unlikely to change in the short term. It would also be useful to recall global technical factors. For example, in the weekly timeframe, the pair has been trapped in a horizontal channel for nearly two years. The global downtrend, lasting 16 years, remains intact. Given these conditions, significant downward movements are far more likely. If the pair exits the flat trend, it will likely do so through the lower boundary, and the current price is near this level.

While the fundamental backdrop could change, imagining a scenario where the market starts abandoning the dollar is difficult. Under Donald Trump, U.S. policy is expected to be inflationary, and the Federal Reserve is likely to lower rates less aggressively than anticipated. Furthermore, the pace of rate cuts has already been slower than the market priced in. The euro's two-year rally has merely been a correction, and we anticipate further declines toward the 1.00–1.02 range. With limited news this week, we don't expect sharp movements or reversals. Even crossing above the moving average remains a significant hurdle for the euro.

The average volatility of the EUR/USD pair over the last five trading days, as of November 20, is 80 pips, indicating "average" activity. On Wednesday, we expect the pair to trade between 1.0505 and 1.0665. The higher linear regression channel is directed downwards; the global downtrend is still intact. The CCI indicator entered the oversold area, warning about the beginning of a new round of correction, but the round of correction turned out to be weak and has already been completed. A new bullish divergence has been formed at this time, which again warns of a correction, but the price cannot go even above the moving average.

• Support Levels:
  • S1: 1.0498
  • S2: 1.0376
  • S3: 1.0254
• Resistance Levels:
  • R1: 1.0620
  • R2: 1.0742
  • R3: 1.0864

Trading Recommendations:

The EUR/USD pair maintains its downtrend. Over the past months, we have reiterated expectations for the euro to decline in the medium term, fully supporting the bearish trend. While the market may have already factored in most, if not all, future Federal Reserve rate cuts, there is still little reason for the dollar to experience a medium-term decline, although there were few of them before. Short positions remain relevant with a target of 1.0498 if the price remains below the moving average. For those trading based solely on technicals, long positions are possible if the price breaks above the moving average, with targets at 1.0665 and 1.0742. However, we currently do not recommend long positions.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

The material has been provided by InstaForex Company - www.instaforex.com #

Overview of EUR/USD Pair on November 19: A Calm Start to the Week

#

The EUR/USD pair mainly remained stagnant throughout Monday. This is unsurprising since no macroeconomic events except European Central Bank President Christine Lagarde's speech were scheduled for the day. However, as anticipated, Lagarde delivered no significant or impactful statements. Lagarde has made several public appearances recently, offering no new insights for the market. The latest ECB meeting occurred not long ago, so any shift in sentiment or rhetoric from ECB representatives would require fresh data.

With no substantial news to drive the market, EUR/USD maintained its downtrend, and we expect further declines. This could mark the beginning of a new leg in the global bearish trend. A quick look at the weekly timeframe reveals that the pair's upward movement over the past two years has merely been a correction. Since there are no indications that the long-term bearish trend has ended, a significant and prolonged decline remains plausible.

And there are still a considerable number of fundamental reasons for this. The most crucial factor is the market working through the entire cycle of easing the Fed's monetary policy. The second most important factor is the market's complete ignoring of the ECB's monetary policy easing in 2024. The third factor is the illogical rise of the euro in 2024, which requires balancing the pair's exchange rate. The fourth factor is Donald Trump's rise to power, under which inflation in the United States may be higher, requiring a more hawkish monetary policy from the Federal Reserve. The fifth factor is possible trade wars between the United States, the EU, and China. We are not very interested in China, but the EU economy has hardly grown in the last two years, even without trade wars. Therefore, its chances of growth in the coming years are also minimal.

With these factors in play, the U.S. dollar maintains a strong advantage over its competitors. This explains why bullish divergences and oversold indicators have failed to work, and the dollar continues to strengthen. Corrections can occur unpredictably, but the price currently struggles to consolidate above the moving average, limiting the potential for meaningful corrections.

The average volatility of the euro/dollar currency pair over the last five trading days as of November 19 is 78 pips, characterized as "medium." We expect the pair to move between the levels of 1.0507 and 1.0663 on Tuesday. The higher linear regression channel points downward, confirming the global bearish trend. The CCI indicator entered oversold territory, warning about the beginning of a new round of correction, but the round of correction turned out to be weak and has already been completed. A new bullish divergence is forming, yet the price remains below the moving average.

Support Levels:

S1: 1.0498

S2: 1.0376

S3: 1.0254

Resistance Levels:

R1: 1.0620

R2: 1.0742

R3: 1.0864

Trading Recommendations:

The EUR/USD pair continues its downtrend, which aligns with our medium-term bearish outlook. We believe that the market has already priced in most, if not all, future Fed rate cuts. As such, the dollar has little reason for a sustained medium-term decline, although there were few before. Short positions can still be considered with a target of 1.0498 if the price remains below the moving average. If you are trading on a "pure" technique, long positions can be considered when positioned above the moving average, with targets at 1.0663 and 1.0742. However, long positions are not recommended under current conditions.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

The material has been provided by InstaForex Company - www.instaforex.com #

Trading Recommendations and Trade Analysis for EUR/USD on November 19: Has the Euro Found a Bottom?

#

EUR/USD 5-Minute Analysis

The EUR/USD currency pair attempted to initiate a new upward correction on Monday. These attempts appear relatively weak, but they still offer some hope for the euro. Currently, we see no substantial justification, not even for a correction. However, it's also true that corrections don't always require clear reasons or justifications. Bears might start taking profits on short positions, resulting in an upward retracement.

This week, very few significant events are scheduled in the U.S. and the Eurozone, which means the euro has limited support opportunities. The market will likely use any correction as a chance to resume selling. We don't believe this marks the end of the euro's downward trend. Furthermore, European Central Bank President Christine Lagarde's Monday remarks failed to provide any notable market catalysts.

Trading signals on Monday were relatively good. With high accuracy, the price rebounded twice from the 1.0533 level, allowing traders to open long positions. While sell orders remain risky at this time, the signals were very precise. The price failed to reach the nearest target zone in the first instance. In the second, it succeeded. Consequently, the first trade might have closed at breakeven with a Stop Loss, while the second trade could have closed with a profit at Take Profit. If the price consolidates above the Kijun-sen line, carefully considering long positions could continue.

COT Report

The latest COT report, dated November 12, shows that the net position of non-commercial traders has remained bullish for a long time. The last attempt by bears to gain dominance failed. However, a month ago, professional traders significantly increased their short positions, leading to the net position turning negative for the first time in a long period. This indicates that the euro is now being sold more frequently than bought.

We still see no fundamental reasons for strengthening the euro, and technical analysis suggests the price remains in a consolidation zone—essentially a flat trend. On the weekly timeframe, it's clear that since December 2022, the pair has traded between 1.0448 and 1.1274. The market has transitioned from a seven-month flat phase to a 22-month phase. Thus, further decline remains likely toward 1.0448, which is only a short distance away.

Over the last reporting week, the number of long positions among the non-commercial group increased by 100, while short positions decreased by 14,100, causing the net position to grow by 14,200. The euro's downside potential remains significant.

EUR/USD 1-Hour Analysis

The pair continues to form a downward trend on the hourly time frame. There is little point in discussing fundamental and macroeconomic factors behind the dollar's medium-term decline—they are largely absent. We expect nothing but a continuation of the euro's decline in the medium term. Each day reinforces our belief that the market has fully priced in the Fed's monetary easing cycle, and the Fed shows no urgency to cut rates further. The euro can only hope for a correction.

On November 19, we highlight the following levels for trading - 1.0340-1.0366, 1.0485, 1.0581, 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, as well as the Senkou Span B (1.0767) and Kijun-sen (1.0575) lines. The Ichimoku indicator lines may shift throughout the day, which should be considered when identifying trading signals. Remember to set a Stop Loss order to break even if the price moves 15 pips in the intended direction. This will protect against potential losses if the signal proves false.

Only a few secondary events are scheduled in the Eurozone and the U.S. on Tuesday, which is unlikely to capture the market's attention. The EU inflation report may appear significant, but it will be a second estimate, which rarely deviates from the first. If it does, a market reaction could occur. However, inflation trends are no longer a critical focus for the ECB.

Chart Explanations:

Support and resistance levels: thick red lines around which movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines: Ichimoku indicator lines transferred from the 4-hour to the 1-hour timeframe. These are strong lines.

Extreme levels: thin red lines where the price previously rebounded. They are sources of trading signals.

Yellow lines: Trend lines, trend channels, and other technical patterns.

Indicator 1 on COT charts: The net position size for each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com #

Forecast for AUD/USD on November 18, 2024

#

Despite the price settling below the 0.6482 level, it is turning upward under pressure from a convergence with the Marlin oscillator. If the price consolidates above 0.6482, the target level of 0.6570 may not be reached, as the 0.6482–0.6570 range has frequently been a zone of consolidation over the past two years, containing numerous other levels within it.

Once the correction is complete, we expect the price to reverse downward toward 0.6410, with a potential attempt to test 0.6351.

On the four-hour chart, the Marlin oscillator's signal line has surged ahead of the price, breaking out of its range and approaching positive territory.

With such rapid growth, Marlin may quickly lose momentum and reverse downward. The nearest strong resistance level is 0.6515, corresponding to the November 6 low. The MACD line has shifted below 0.6570, providing an additional barrier to the price's upward movement.

The material has been provided by InstaForex Company - www.instaforex.com #

How to Trade the GBP/USD Pair on November 18? Simple Tips and Trade Analysis for Beginners

#

Analysis of Friday's Trades

1H Chart of GBP/USD

The GBP/USD pair didn't even attempt to correct on Friday. As noted, two macroeconomic indicators were released from the US, with retail sales being more influential for the market. The UK also published two reports: Q3 GDP grew by 0.1% in the second estimate, down from 0.2% in the initial estimate—a negative factor. Industrial production declined, as usual, and more than traders had expected. Three out of four reports supported the US dollar, which continues to rise effortlessly, even without macroeconomic support. We maintain our view that the USD will appreciate further, as we've been highlighting for two months. Since the beginning of the year, we pointed out the illogical rise of the euro and the pound, predicting the market would rebalance these pairs to fair value. That process is now underway.

5M Chart of GBP/USD

On the 5-minute chart, two sell signals were formed near the 1.2680-1.2685 area. Novice traders could have executed these trades. Toward the end of the day, the price broke through the 1.2633 level, allowing short trades to remain open. While volatility wasn't the highest on Friday, short positions yielded a profit of 20–30 pips.

Trading Strategy for Monday:

On the hourly timeframe, GBP/USD continues its downward trajectory. We fully support the pound's decline in the medium term, as it seems to be the only logical outcome. The pound may attempt another correction soon, but such a move would require substantial support. Neither Powell on Thursday nor UK macroeconomic data on Friday provided such support. Everything points to further declines for the pound.

On Monday, novice traders can anticipate a continuation of the downtrend since the price has breached another support level at 1.2633.

You can trade using the following levels: 1.2502-1.2508, 1.2547, 1.2633, 1.2680-1.2685, 1.2754, 1.2791-1.2798, 1.2848-1.2860, 1.2913, 1.2980-1.2993. On Monday, there will be no macroeconomic or fundamental background in the UK or the US. However, this doesn't mean the pound cannot continue falling. The market is currently set on buying the dollar, so another decline in the pair could occur even without corresponding news or data.

Core Trading System Rules:

1. Signal Strength: The strength of a signal is measured by the time it takes to form (a rebound or level breakthrough). The shorter the time, the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, all subsequent signals from that level should be ignored.
3. Flat Markets: Pairs may generate numerous false signals or none during a flat market. Stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session. Close all trades manually afterward.
5. MACD Signals: Trade MACD signals on the hourly timeframe only when there is good volatility and a trend confirmed by trendlines or channels.
6. Close Levels: If two levels are close (5–20 points apart), treat them as a support or resistance area.
7. Stop Loss: Place a Stop Loss at breakeven after the price moves 20 points in the desired direction.

Key Chart Elements:

Support and Resistance Levels: Target levels for opening or closing positions. Take Profit orders can also be set here.

Red Lines: Channels or trendlines that show the current trend and the preferred trading direction.

MACD Indicator (14,22,3): A histogram and signal line that serve as supplementary trading signals.

Important Events and Reports: Found in the economic calendar, these can strongly influence price movements. During their release, trade cautiously or exit the market to avoid sharp reversals against the preceding trend.

Forex beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are critical for long-term success in trading.

The material has been provided by InstaForex Company - www.instaforex.com #

How to Trade the EUR/USD Pair on November 18? Simple Tips and Trade Analysis for Beginners

#

Analysis of Friday's Trades

1H Chart of EUR/USD

On Friday, the EUR/USD currency pair continued trading within the range formed on Thursday. The price attempted another correction, but again, it failed. The euro couldn't even consolidate above the nearest level of 1.0596. As a result, it appears the price may linger in place for a while before resuming its decline. Currently, the macroeconomic and fundamental background is unimportant to market participants. In other words, the euro may continue falling, and the dollar may keep rising even without relevant news or reports. Regarding Friday's US reports, retail sales grew by 0.4%, beating the forecast of 0.3%, while the previous month's figure was revised upward from 0.4% to 0.8%. On the other hand, industrial production declined by 0.3%, aligning with forecasts, but the previous month's figure was revised downward from -0.3% to -0.5%. However, the retail sales report outweighed the impact of industrial production.

5M Chart of EUR/USD

On the 5-minute chart, two nearly perfect trading signals were formed on Friday. First, the price slightly rebounded from the 1.0596 level and later tested and rebounded from 1.0526. Novice traders could have opened short positions first and then long positions. At the same time, long trades didn't yield much profit, short positions allowed for gains of around 20–30 pips.

Trading Strategy for Monday:

The EUR/USD pair might attempt another correction on the hourly timeframe. However, the market shows no signs of buying the euro or taking profits in short positions. If it happens soon, we believe any new correction will likely be weak and require supportive news for the euro. Even then, such news might not always help, as the market currently favors the US dollar.

On Monday, we expect the decline to resume, especially after Powell's hawkish comments last week, and given the euro's inability to break above the 1.0596 level.

Consider the following levels for trading: 1.0433-1.0451, 1.0526, 1.0596, 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, 1.0888-1.0896, 1.0940-1.0951. The only significant event scheduled for Monday is a speech by European Central Bank President Christine Lagarde. However, given the recent dovish signals from the ECB, it's unlikely Lagarde will provide much support for the euro.

Core Trading System Rules:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 points apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15 points in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.

The material has been provided by InstaForex Company - www.instaforex.com #

Overview of EUR/USD on November 15; The Euro Remains at Rock Bottom

#

The EUR/USD currency pair continued its downward trend on Thursday. Nearly every analysis begins with the same statement because nothing has fundamentally changed in the market. The euro depreciates rapidly, losing 50-60 pips almost daily. In our view, this collapse cannot be attributed to a single event or even multiple factors. We maintain that the market had long priced in the entire cycle of monetary policy easing, and once fully accounted for, the reverse reaction began. Simply put, the dollar fell for too long and unjustifiably, and now we are witnessing a logical correction, even though there are no immediate catalysts.

On Thursday, two reports were released in the Eurozone that contributed to the euro's decline. Currently, the market doesn't need local macroeconomic or fundamental reasons to sell the euro and buy the dollar. However, when such reasons exist, the trend accelerates. The second estimate of GDP for Q3 in the Eurozone remained unchanged from the first, at +0.4%. While this may seem like a solid number, comparing it to U.S. GDP paints a starkly different picture. Since the euro competes against the dollar, it's logical to compare the European economy's state to the U.S. economy's, where the euro consistently falls short.

Industrial production volumes, as usual, also declined. This time, the contraction was -2%, while the market had anticipated a more optimistic -1.4% year-over-year. Thus, the euro once again had no grounds for growth on Thursday. Although losses were insignificant during the day, pauses in a downtrend are normal. Corrections within a downtrend are also expected. Therefore, if the euro doesn't exhibit a sharp drop on a particular day, this doesn't mean the downtrend has ended.

In just a month and a half, the euro has lost 650 pips. Before this, it gained 1,600 pips over nearly two years. It's clear where the trend lies and where the correction occurred. Based on this understanding, we anticipate a further decline in the euro. Our near-term target range remains $1.02–$1.04, a forecast we've held since the beginning of the year. In the long term, the euro could easily return to parity with the dollar. If the global downtrend persists, the euro may fall significantly below parity, but such a scenario would require substantial new fundamental drivers.

The average volatility for EUR/USD over the last five trading days as of November 15 is 94 pips, categorized as "high." On Friday, we expect the pair to move between 1.0466 and 1.0654. The higher linear regression channel is pointed downward, maintaining the global bearish trend. The CCI indicator has recently dipped into oversold territory, signaling the start of a correction, but that correction has been weak and already concluded. A new bullish divergence has now formed.

Key Support Levels:

• S1: 1.0498
• S2: 1.0376
• S3: 1.0254

Key Resistance Levels:

• R1: 1.0620
• R2: 1.0742
• R3: 1.0864

Trading Recommendations:

The EUR/USD pair continues its downward movement. For months, we've maintained that a decline in the euro is the most likely scenario in the medium term, fully supporting the bearish trend. Likely, the market has already priced in all or nearly all future Fed rate cuts. If this is true, the dollar has little reason for a medium-term decline, although it hasn't had many reasons to fall in the past. Short positions remain relevant with targets at 1.0466 and 1.0376 as long as the price stays below the moving average. For those trading solely based on technical setups, long positions could be considered if the price rises above the moving average, targeting 1.0742 and 1.0864, but we currently advise against long positions.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

The material has been provided by InstaForex Company - www.instaforex.com #