Trading Analysis

Trading Recommendations and Analysis for GBP/USD on November 6; The British Pound Seizes the Opportunity

GBP/USD 5-Minute Analysis

The GBP/USD currency pair traded upward on Tuesday, although there was no significant reason for this other than the need to correct after a month-long decline. On the contrary, the ISM services PMI in the U.S. was more positive than expected, which should have strengthened the dollar. However, this did not happen. The market may be betting on Kamala Harris's victory, leading to a U.S. dollar sell-off. The latest exit polls are conflicting, with neither presidential candidate holding a clear advantage. The market may also be preparing for the Federal Reserve meeting. As the dollar weakens, market participants may anticipate a more dovish stance from Powell and the Fed.

That being said, these are only speculations and assumptions. It is challenging to pinpoint why the dollar declined on Tuesday. This week's fundamental background is rich and impactful; the market could react to any event. What exactly it expects from these events remains unclear. We still view this as a correction within a new downtrend. We expect the correction to end within a week or two and for the British currency to resume its decline. However, we must consider the U.S. election results.

Two trading signals were generated yesterday in the 5-minute timeframe. First, the pair broke through the 1.2981-1.2987 area and the Senkou Span B line and bounced off them from above. Therefore, traders had two opportunities to open long positions. By the end of the day, the price had increased by about 35 pips, which is a decent gain. This upward movement could continue if the market continues to sell off the dollar in anticipation of upcoming events.

COT Report

The COT reports for the British pound show that commercial traders' sentiment has constantly shifted in recent years. The red and blue lines representing the net positions of commercial and non-commercial traders intersect frequently and mostly remain near the zero mark. We also see that the latest downward trend coincided with the period when the red line was below zero. The red line is above zero, and the price has breached the key level of 1.3154.

According to the latest report on the British pound, the non-commercial group closed 11,300 BUY contracts and 100 SELL contracts, resulting in a net position reduction of 11,300 contracts for the week. The market is still hesitant to sell the pound in the medium term.

The fundamental backdrop provides no support for long-term buying of the pound, which still has a significant chance of resuming its global downtrend. However, an ascending trend line has formed on the weekly time frame, making a long-term decline unlikely until it is breached. The pound continues to rise despite almost all indicators suggesting otherwise (again, in the medium term), and even when COT reports show big players selling the pound, it still manages to rise.

GBP/USD 1-Hour Analysis

The GBP/USD pair is still in a general downtrend on the hourly time frame. The upward trend has been nullified, so we expect only a strong and prolonged decline in the British currency. Although a correction has begun, it may end quickly, given this week's fundamental background. In any case, there are currently no strong reasons to expect a dollar decline.

For November 6, we highlight the following key levels: 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050, 1.3119, 1.3175, 1.3222, 1.3273, 1.3367, and 1.3439. The Senkou Span B line (1.2990) and the Kijun-sen line (1.2942) may also serve as signal levels. It is recommended to place a Stop Loss at break even if the price moves 20 pips in the intended direction. Remember that Ichimoku lines may shift throughout the day, so consider this when defining trade signals.

No significant reports or events are scheduled in the U.K. on Wednesday, and the U.S. macroeconomic calendar is also empty. However, volatility may remain elevated, and a trending movement could occur as the first U.S. presidential election results may be announced today.

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 #

Trading Recommendations and Analysis for EUR/USD on November 6; The Market Reacts to the Elections

EUR/USD 5-Minute Analysis

The EUR/USD currency pair unexpectedly showed an upward movement on Tuesday. However, there's no reason to be surprised by this movement since an upward correction is underway, and the U.S. presidential elections have started. We warned that this week might see many inexplicable movements, and Tuesday proved that true. It's challenging to say what the market is preparing for or which candidate it is betting on more heavily. The latest polls indicate no clear lead for either Kamala Harris or Donald Trump, making these movements unpredictable. Nonetheless, we believe the correction will end, and the market will return to the downtrend.

It's also worth noting that Tuesday's key report—the ISM services PMI—was ignored. The report exceeded forecasts, which should have supported the dollar, but the market is now entirely focused on the elections, the Federal Reserve meeting, and the Bank of England meeting. These unpredictable movements have started and may continue through the end of the week.

At this point, we have an ascending trend line, so there's no reason to sell the pair, at least in the short term. We should expect the primary trend to resume and consider selling options only after breaking below the trend line.

On Tuesday, there was precisely one trade signal. During the European session, the price broke above the 1.0889 level, which traders could have used for buying. By the end of the day, the pair reached the 1.0935 level, where profits could be taken. Since there are no signs of the correction ending, staying in long positions is possible. But volatility may spike today and tomorrow, with prices potentially swinging in both directions.

COT Report

The latest COT report, dated October 29, shows that the net position of non-commercial traders has remained bullish for a long time, with the bears' latest attempt to gain control failing spectacularly. However, two weeks ago, the number of short positions opened by professional traders increased sharply, and the net position became negative for the first time in a long while. This indicates that the euro is now being sold more frequently than bought.

We still see no fundamental factors supporting the euro's strength, while technical analysis shows the price in a consolidation zone—essentially, a flat trend. Regarding the weekly time frame, it is clear that the pair has been trading between the 1.0448 and 1.1274 levels since December 2022. In other words, a seven-month flat has extended to 18 months, making further decline more likely—at least down to the 1.0448 level.

The red and blue lines have crossed and switched positions relative to each other. In the last reporting week, the number of longs in the non-commercial group rose by 6,100, while shorts increased by 27,900, reducing the net position by 21,800. There is still strong potential for the euro's decline.

EUR/USD 1-Hour Analysis

The pair started an upward correction within a downtrend on the hourly time frame. There's little reason to discuss fundamental and macroeconomic grounds for a new decline in the dollar—they don't exist. In the medium term, we expect nothing but a decline in the euro. The short-term outlook is for a correction, the strength of which will largely depend on the Fed meeting this week. The market may also react strongly to the election results, which could be known by the end of the week.

For November 6, we have identified the following trading levels: 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, and 1.1147, along with the Senkou Span B line (1.0816) and Kijun-sen line (1.0867). 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.

On Wednesday, another speech by Christine Lagarde is scheduled in the Eurozone, but there are no major events in the U.S. While Lagarde made no significant comments on Tuesday, the market will entirely focus on the elections today.

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 #

Overview of EUR/USD on November 5; The Euro Restores Fair Value

The EUR/USD currency pair displayed a highly unusual move on Friday (as we noted over the weekend). To recap, key reports that the market had been anticipating all week (or possibly even longer) failed dramatically. The Nonfarm Payrolls (NFP) figure fell far short of even the lowest forecasts, and although factors like U.S. hurricanes that affected the October figure are discussed, the result remains disappointing. As we mentioned over the weekend, the dollar's rise on poor NFP results was illogical, so a subsequent decline was expected—precisely what happened on Monday.

Thus, the EUR/USD pair has finally started a corrective upward movement. This development is unsurprising, as various indicators have been signaling this for the past two to three weeks. We still expect a downward trend in the medium term, but the pair may correct by another 100 pips this week.

Of course, everything now depends on the upcoming Federal Reserve meeting. Given the poor labor market report, we can expect a more dovish tone, perhaps even a rate cut of 0.5% (although unlikely) or any action that could increase pressure on the dollar. However, we believe the market has already wholly or almost entirely priced in the Federal Reserve's monetary easing cycle, meaning there are no grounds for a significant drop in the U.S. dollar. We anticipate a correction, followed by the resumption of the downtrend that has been forming over the past month.

It's worth noting that another key report, the ISM Manufacturing PMI, also missed expectations badly. Although seeing this indicator below the 50.0 threshold is no longer surprising, October's figure fell even further. While the ISM index doesn't currently impact the economic outlook, it certainly doesn't help the dollar. Thus, there were ample reasons for a dollar decline on Friday. Monday saw a "restoration of fair value." Everything depends on the Fed's actions and the U.S. presidential election results, and both are happening this week.

The average volatility of the EUR/USD pair over the last five trading days is currently at 61 pips, classified as "low." On Tuesday, we expect the pair to move between the levels of 1.0828 and 1.0950. The higher linear regression channel has turned downward, indicating that the global downtrend remains intact. The CCI indicator has formed several bullish divergences, signaling a potential correction.

Nearest Support Levels:

S1 – 1.0864
S2 – 1.0803
S3 – 1.0742

Nearest Resistance Levels:

R1 – 1.0925
R2 – 1.0986
R3 – 1.1047

Trading Recommendations:

The EUR/USD pair has started a correction. Over recent weeks, we've emphasized our medium-term expectation for euro weakness, so we fully support the downtrend. It's possible that the market has priced in all or almost all expected Fed rate cuts. If that's the case, the dollar may lack further bearish catalysts. Short positions remain valid with targets at 1.0761 and 1.0742 as long as the price stays below the moving average. If you're trading based on pure technicals, long positions are currently relevant with targets of 1.0925 and 1.0950, though this is only a corrective phase.

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.

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Trading Recommendations and Analysis for EUR/USD on November 5; Euro Gradually Corrects

EUR/USD 5-Minute Analysis

On Monday, the EUR/USD currency pair continued its upward movement, which is purely corrective. We had been anticipating this correction recently, though it was unclear when it would start. Nonetheless, it was expected, and on the hourly time frame, that the first significant signal indicating a change in the local trend was the pair's consolidation above the descending trend line. This was the start of the upward movement that continues today. Expecting strong moves on Monday was challenging, yet the pair's growth was almost the only logical outcome. We had noted that Friday's illogical dollar rise could end quickly, given that the most crucial reports on the U.S. labor market and business activity had disappointed. On Monday, the market merely restored the fair rate.

Now, all eyes are on the Federal Reserve, which will announce the results of its meeting on Thursday, November 7. Given the weak labor market data, which remains a trend, even more dovish rhetoric from Fed Chair Jerome Powell and his colleagues can be expected. This suggests that with a high degree of probability, the U.S. dollar's decline will continue this week. However, we must remember that this week also brings the U.S. presidential election, an unpredictable event that could lead to a dollar rally. There is an ascending trend line, and unless the price consolidates below it, we should expect the pair to rise. Nonetheless, we do not anticipate strong growth.

There were several trading signals on Monday, but none were significant. Despite the pair's growth, there was almost no movement during the European and U.S. sessions, and all signals formed didn't yield profits. Most of the pair's rise was due to a gap at the opening and overnight growth, while a flat movement was observed during the day.

COT Report

EUR/USD 1-Hour Analysis

The pair has started an upward correction within a downtrend on the hourly time frame. There is no need to discuss the fundamental and macroeconomic reasons for a new dollar decline, as none exist. In the medium term, we expect nothing but the fall of the euro. The short-term outlook involves correction, largely dependent on the Fed's meeting this week.

For November 5, the following trading levels are highlighted: 1.0658-1.0669, 1.0757, 1.0797, 1.0843, 1.0889, 1.0935, 1.1006, 1.1092, 1.1147, along with the Senkou Span B (1.0832) and Kijun-sen (1.0843) lines. The Ichimoku lines may shift throughout the day, so consider this when identifying trading signals. Remember to place a Stop Loss order at break even if the price moves 15 pips in the intended direction to protect against potential losses if the signal is false.

On Tuesday, European Central Bank President Christine Lagarde is scheduled to speak in the Eurozone, while the ISM Services PMI will be released in the U.S. Both events are crucial for the market. If the ISM index falls short of expectations, the dollar may decline.

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 4, 2024

The Australian dollar started Monday with upward solid momentum, preceded by a gap of about 30 pips. As the price is now within the comfortable range of 0.6570-0.6640 (the consolidation from August 9-15), resistance at 0.6640 might not be reached if the price decides to close the gap. The price could also remain in this range until the first results of the U.S. presidential election are announced.

The daily Marlin oscillator is showing significant upward movement. This is a serious indicator of upcoming price movement, shifting the likelihood of the price rising above 0.6640 to more than 50%. Whether the rate reaches 0.6727 is a rhetorical question, as the initial election results could lead to unexpected and strong market moves.

The price has consolidated above the balance indicator line on the four-hour chart. The Marlin oscillator is also showing strong growth. The nearest target for the aussie is 0.6640.

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

How to Trade the EUR/USD Pair on November 4? Simple Tips and Trade Analysis for Beginners

Analysis of Friday's Trades:

1H Chart of EUR/USD Pair

The EUR/USD currency pair displayed interesting movements on Friday, allowing for several important conclusions. The key report of the day and the week, Nonfarm Payrolls, failed dramatically. Only 12,000 new jobs were created in October. Additionally, the ISM Manufacturing PMI also fell short. Despite this, the U.S. dollar appreciated by the end of the day. Such movement is illogical, suggesting that we might expect the continuation of the correction next week. However, as often noted, the euro should only fall in the medium term. The market has already priced in the entire or almost entire cycle of monetary policy easing in the U.S., so it doesn't matter how quickly the Federal Reserve will lower rates now. This may explain the dollar's growth on Friday. If so, the pair has formally corrected and can continue its medium-term decline.

5M Chart of EUR/USD Pair

On the hourly timeframe, the EUR/USD pair continues to correct after a month-long decline. At least, there are some grounds for the euro to rise. We believe the correction is unlikely to be strong, as continuous supportive news is required for the euro. Even then, such news may not always benefit the euro, given that the market is now set on buying the dollar.

On Monday, novice traders can trade around the 1.0845-1.0851 area. The price has consolidated below this area, allowing for a potential continuation of the decline.

On the 5-minute timeframe, consider the following levels: 1.0678, 1.0726-1.0733, 1.0797-1.0804, 1.0845-1.0851, 1.0888-1.0896, 1.0940-1.0951, 1.1011, 1.1048, 1.1091, 1.1132-1.1140. No significant events are planned for Monday in the U.S. or the Eurozone. We will watch to see if the pair can remain below the 1.0845-1.0851 area, allowing it to continue falling.

Basic Trading System Rules:

The strength of a signal is determined by the time it takes to form (whether a bounce or breakthrough of a level). The quicker the formation, the stronger the signal.
If two or more trades have been made near a level due to false signals, any further signals from that level should be ignored.
In a flat market, a pair can generate many false signals or none at all. In any case, it's best to stop trading at the first signs of a flat market.
Trading occurs between the start of the European and middle of the US sessions, after which all trades should be manually closed.
On the hourly time frame, it's recommended to trade MACD indicator signals only when there is good volatility and a trendline or trend channel confirms a trend.
If two levels are too close together (5 to 20 pips apart), they should be treated as support or resistance areas.
After the price moves 15 pips in the intended direction, set the Stop Loss to breakeven.

What's on the Charts:

Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed around these areas.

Red Lines: Channels or trend lines that indicate the current trend and the preferred trading direction.

MACD Indicator (14,22,3): Histogram and signal line—an auxiliary indicator that can also be used as a source of signals.

Major speeches and reports (always found in the news calendar) can significantly impact currency pair movements. Therefore, it's advised to trade cautiously or exit the market during their release to avoid sharp price reversals against prior movements.

Beginners trading on the forex market should remember that not every trade will be profitable. A clear strategy and money management are the keys to success in long-term trading.

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

Technical Analysis of Daily Price Movement of Ripple Cryptocurrency, Friday November 01, 2024.

The condition of the Ripple cryptocurrency on its 4-hour chart is currently under Seller pressure, as seen by the EMA 50 & EMA 200 still intersecting the Death Cross, coupled with the appearance of the Bearish 123 pattern followed by several Ross Hooks (RH) and its price movements forming Higher-Low and Lower-Low coupled with the appearance of hidden deviations between Ripple's price movements and the MACD Histogram indicator (osMA 12,26,9), then confirm that Sellers are currently dominating Ripple on its 4-hour chart, but with the appearance of the Descending Broadening Wedge pattern, it is also worth being aware that in the near future there will be temporary strengthening where there is potential for Ripple to retrace up to the level of 0.5369, but as long as the strengthening does not penetrate and close above the level of 0.5594, Ripple will continue its weakening back to the level of 0.4908 as its main target and if momentum and volatility support it, 0.4799 will be the next target to be aimed of.

(Disclaimer)

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

Overview of GBP/USD on October 31; ADP Impresses, but Non-Farm Payrolls Await

The GBP/USD currency pair started to rise but quickly dropped as the U.S. ADP report—considered a precursor to Non-Farm Payrolls—was released. It's worth noting, however, that there is no consistent correlation between ADP and Non-Farm Payrolls. The ADP report might come in twice as strong as forecast, while Non-Farm Payrolls could be twice as weak, and the job creation figures often don't align. Ultimately, the non-farm data will shape the market and the Federal Reserve's perspectives on the labor market. Therefore, while the dollar received a boost yesterday, the actual tests lie ahead.

The British pound, meanwhile, took the opportunity to weaken further, which is reasonable. Unlike the euro, supported by positive GDP data, the pound had no such backstop. Once the U.S. reports were out, the market quickly resumed buying the dollar. The GBP/USD pair is currently holding near its local low, but if the upcoming U.S. data is strong, further declines in the pound could be imminent.

We believe that this downtrend will ultimately continue. The pound, like the euro, remains overbought and unjustifiably expensive. The Bank of England's prolonged hawkish stance is now weighing on the pound. The logic is simple: the longer the BoE delays easing, the faster and more aggressively it will likely need to cut rates in the future, which may be imminent. While the U.S. easing cycle is primarily factored into the market, the UK has yet to begin this process. Therefore, we believe the pound has substantial room to fall, with significant downside potential.

The state of the British economy, which has been struggling for at least the past two years, deserves particular attention. The downturn traces back to 2016 when the UK narrowly voted to leave the European Union. The British pound has been in a downtrend for 16 years. At present, we see no compelling reason to consider this trend complete.

We still anticipate a technical correction in the short term, but the market will likely respond to macroeconomic factors rather than technical ones for the rest of the week. Movements will thus depend on U.S. data. Once these reports are fully released, the market will predict the Fed's next steps in its meeting scheduled for next week. If rates are cut by 0.25%, it's unlikely to put significant pressure on the dollar. The U.S. currency could only come under pressure if the Fed begins to accelerate easing, which would require strong justification.

The average volatility over the past five trading days was 68 pips, considered "moderate" for the pair. Thus, on Thursday, October 31, we expect movement within the 1.2914 to 1.3050 range. The higher linear regression channel is tilted upward, indicating a continued uptrend. The CCI indicator has entered oversold territory and formed several bullish divergences, suggesting a potential upward correction.

Nearest Support Levels:

S1 – 1.2970
S2 – 1.2939
S3 – 1.2909

Nearest Resistance Levels:

R1 – 1.3000
R2 – 1.3031
R3 – 1.3062

Trading Recommendations:

The GBP/USD pair remains in a downtrend. We still do not consider long positions as we believe the factors supporting the pound have already been largely priced in. Long positions are feasible if trading purely on technicals, with targets at 1.3062 and 1.3092 if the price moves above the moving average. However, short positions are currently more relevant, with targets at 1.2909 and 1.2878, but will require confirmation with a move below the moving average. Due to a strong macroeconomic backdrop, mixed movements may occur toward the end of the trading week.

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 current 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 #

EUR/USD Analysis: Eurozone GDP, US GDP, German Inflation, and ADP Report

The Eurozone GDP grew by 0.4% in the third quarter, while most experts had forecasted a 0.2% increase. This is the strongest growth rate since early 2022 when the European economy grew by 0.8% in Q2 2022. Annually, GDP rose by 0.9% (forecast: 0.8%), the strongest growth rate since Q1 2023. The report shows that Spain's GDP grew by 0.8% in Q3, France by 0.4%, and Germany by 0.2%.

The stronger-than-expected growth in the Eurozone economy has provided substantial support to the euro.

On the other side of the equation are US macroeconomic reports and... Donald Trump gained ground a week before the US presidential elections. Kamala Harris' lead over the Republican candidate has narrowed to just one percent. Harris currently has 44% voter support, while Trump has 43%. Her lead has been shrinking since late September, and the candidates are nearly tied. Growing concerns that a potential Trump victory may lead to increased tariffs and a renewed trade war with China have prevented EUR/USD buyers from capitalizing on their gains.

Contradictory US macroeconomic data have also put pressure on the pair. On one side, we have data showing US economic growth in Q3 (falling short of expectations), and on the other, a stronger-than-expected ADP report.

In Q3, the US GDP grew by 2.8%, compared to a forecast of 3.0%. Recall that the US economy grew 3.0% in Q2 and 1.4% in Q1 this year. This means that while the GDP didn't meet forecasts, it still reflects a strong performance. The Core Personal Consumption Expenditures (Core PCE), which excludes energy and food prices, remained in the green, declining to 2.2% year-over-year, against an expected drop to 2.0%.

The US GDP report can be interpreted positively and negatively for the dollar (in my view, the release favors the dollar). However, the ADP report leaves no such room for doubt. Here, dollar bulls are clear winners. Most experts had anticipated that the ADP release, which often serves as an indicator before the official labor data, would disappoint EUR/USD sellers. The forecast was indeed weak—only 110,000 new jobs. However, ADP reported a 230,000 job increase, signaling that Friday's Nonfarm Payrolls could also land in the green, giving the dollar strong support. Nonfarm Payrolls are projected to increase by 111,000 in the non-farm sector for October. If the official release exceeds 200,000, we may see another dollar rally. The latest ADP report has heightened the likelihood of this scenario.

Interestingly, EUR/USD buyers reacted little to the stronger-than-expected Eurozone GDP and German inflation data. For instance, Germany's Consumer Price Index (CPI) rose to 2.0% year-over-year. The harmonized index accelerated to 2.4% after two months of decline. German inflation data often correlates with broader Eurozone figures, so expecting an uptick in Eurozone inflation is logical. Early projections suggest the overall Eurozone CPI should rise to 1.9% (from 1.7%), with the core index reaching 2.7%. This report is due on Thursday, October 31.

Thus, the EUR/USD pair is in limbo. On the buyers' side, there is growth in the Eurozone economy, accelerating German inflation and possible Eurozone inflation acceleration. On the sellers' side, there is relatively strong data on US economic growth and a robust ADP report.

In my view, the "golden card" in this scenario will be the US October labor market data, which could either pull the pair down to the 1.07 range or enable EUR/USD buyers to break through the 1.0880 resistance level (the middle line of the Bollinger Bands on the daily chart) and test the 1.09 range. There are no strong arguments—neither in favor of long positions (despite the ongoing correction) nor short positions. The fundamental picture is too contradictory to support a sustainable price movement in either direction.

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The Dollar Watches a Remake

With less time remaining until the U.S. presidential election, macroeconomic data are fading into the background. A typical example was the GDP report for Eurozone countries. While growth in Ireland and Belgium in the third quarter didn't impress investors much, the recession in Latvia drew their attention. This fact catalyzed EUR/USD's return to a bearish trend. Sellers just needed an excuse!

Eurozone Countries' GDP Trends

In 2016, Donald Trump's chances of winning the presidency were one in three; now they're two in three. His policies haven't changed much: the Republican still focuses on tax cuts, deregulation, tariffs, and immigration restrictions. But in 2024, he's more determined, and his plans are more ambitious, causing considerable concern.

According to BlackRock, global economies are experiencing the highest level of embedded inflation in decades. Under these conditions, aggressive rate cuts by central banks are unlikely. A key difference between Trump 2.0 and Trump 1.0 is the higher prices, as evident from the U.S. Treasury bond yields.

U.S. 10-Year Bond Yield Trends

If Trump's ideas weren't as damaging to the global economy after 2016, they could be now. Large-scale fiscal stimulus and trade wars would drive up national debt and disrupt supply chains—a perfect setup for accelerating inflation. Theoretically, the Federal Reserve must keep the federal funds rate steady or resume monetary tightening.

How does Trump plan to address this? Will he again label Jerome Powell as "America's enemy number one"? Will he consider currency interventions like the 1985 Plaza Accord? Or aim to take control of the Fed? That approach would dangerously mirror last year's scenario in Turkey, where the president and the central bank he controlled fought high inflation by lowering rates—problems Turkey still hasn't resolved.

Turkey isn't the U.S., and the scales are vastly different. The global economy could face serious trouble if Washington follows Ankara's path. Thus, who occupies the White House matters, but so does which party controls Congress. A "red wave" would allow Trump to reshape international trade, but if the Democrats hold legislative power, Trump trade supporters may start cashing in their gains.

HSBC notes that market movements before and after the election could drastically differ, with investors closely watching fiscal policy and import tariffs.

Technically, on the EUR/USD daily chart, the bulls' inability to realize the 1-2-3 reversal pattern shows their weakness. The bears have regained the initiative, and targets for previously formed shorts at 1.071 and 1.060 are getting closer.

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