Article by: ETO Markets
The Japanese yen extended its downward trend for the second day in a row, giving up some of its recent substantial gains versus the US dollar. Better-than-expected US job market data and an increase in consumer inflation expectations helped the USD pull away from its lowest level since late August against the backdrop of Tuesday's hawkish FOMC minutes. As a result, the USD/JPY pair was able to continue its strong rebound from the 147.15 region, or from a two-month low that was struck on Tuesday.
US Jobless Claims data released on Wednesday showed a greater-than-expected decline in Initial Claims for the week ending on November 17, falling from 233K to 209K. Furthermore, October's Durable Goods Orders fell 5.4% as opposed to the projected 3.1%, which was a bigger decrease than anticipated. The University of Michigan Consumer Sentiment Index for November, however, beat forecasts and came in at 61.3 rather than 60.5.
On Thursday, the UK's preliminary S&P Global / CIPS Purchasing Managers Index data for November will be made public. Additionally, Thanksgiving Day, US markets will be closed. The preliminary S&P Global Manufacturing and Services PMI for November will be released in the US on Friday; a drop is anticipated.
The largest oil exporter in the world, Saudi Arabia, intends to continue reducing oil output by one million barrels per day until the end of the year, and other OPEC+ members are also thinking about reducing production in reaction to falling oil prices. The market climate, however, was challenging for the next conference due to escalating tensions over the Israel-Hamas conflict and a slower-than-anticipated rebound in Chinese demand.
Important information including the preliminary November PMI are due on Thursday. Although projections indicate more progress, all numbers are anticipated to stay below 50. The markets may be impacted by this info. A bad surprise could put more pressure on the EUR/USD's current drop. There is an anticipated increase in the Manufacturing PMI from 43.1 to 43.3 and the Flash Services PMI from 47.8 to 48.0. The minutes of the European Central Bank's most recent meeting on monetary policy will also be made public today.
The EUR/USD fell even more after failing to stay above ... The pair faced resistance on Wednesday at …, which was followed by another leg down. At …, the pair found support. With … as the next significant support level, the fall might continue. The short-term downtrend line is located at …, thus a move above it would rekindle the EUR/USD pair momentum.
Technical indicators on the 4-hour chart are still biased downward, but they don't seem very convinced. Bearish indications can be seen in the MACD, and the Relative Strength Index is flattening, suggesting that there may be consolidation between … and … or in the vicinity of ... A drop below the latter mark would heighten the pessimistic sentiment and leave the EUR/USD pair vulnerable to more losses.
British Finance Minister Jeremy Hunt will provide the autumn budget statement. Hunt is anticipated to announce large tax breaks for companies in an effort to boost economic expansion, increase the National Living Wage, and roughly 10% increase the pay of low-paid workers. Although it is challenging to evaluate how these actions would affect inflation and inflation expectations, recent remarks from Bank of England officials indicate that they are still hesitant to rule out further tightening in the future.
On the 4-hour chart, the Relative Strength Index remains comfortably above 50, indicating that sellers are still cautious to gamble on a steady slide despite the recent pullback. The psychological level of the 20-SMA …, is the first level of support before the 50-SMA …, and the Fibonacci 38.2% retracement of the July–October downturn, ... Upward, the August static level of … and the … Fibonacci 50% retracement can serve as temporary resistance levels before them.
