The following is a technical analysis of the US Dollar (USD) using an exchange rate and time frame for tomorrow’s announcement of data on new claims for unemployment. This technical analysis focuses mainly on news surrounding the release of jobless claims
The main focus of this technical analysis is to evaluate the impact that weaker treasury yields are having on our currency. As indicated in previous times, this analysis also discusses the effects of potential market disturbance. In particular, we discuss how long treasury bond yields have had an effect on our overall interest rates and how to manage them. Our detailed discussion of these matters in more detail here.
The United States Federal Reserve released its monthly outlook report for December 4th and said “We expect U.S. inflation (the fastest increase on record) to move into negative territory in November; however, we see no sign of deflation in November. However, as economic activity slowly normalizes, we foresee the Consumer Price Index (CPI) remaining below the pre-pandemic level. Moreover, we anticipate that the pace of the recovery will pick up over the next two months. Overall, this should be a decent start to the year, but we remain cautious about progress in employment growth and inflation expectations.”
The Euro/US Dollar Technical Analysis
The EUR/USD Technical Analysis uses fundamental tool sets to analyze how the euro and USD are trading relative to each other and to identify short term bullish or bearish sentiment. It shows how the pair is moving against the USD-Yens Yield Curve and how the pairs are trading at different levels of resistance or support.
The chart above shows the daily price movements for both cryptocurrencies versus USD-Yens Yield Curve for today, using historical prices as well as an exponential smoothing of current price action. This analysis is performed with buyback, stop loss and entry signals, which can help you identify key technical points that would signal a break up or formation of new buying opportunities at any given point in time.
Let us try to make some predictions based on what is happening right now here and see whether recent developments may signal a shift in our view. After doing a quick summary of how the USD-Yens Yield curve has been performing for both the last week and month, let us look into specific events for Europe and the Americas:
Global Economic Data (December 4th): U.S. House Prices
U.S. House Prices European Union Economy Stabilization (December 5th): German Jobs Cut, UK GDP Cuts (December 6th): UK Household Price Growth
UK Household Price Growth U.S. Unemployment Rate Forecast Today (December 7th): U.S. unemployment
U.S. Unemployment Rate Today Germany Credit Default Swap Risk Rating (FRR-IT) (December 10th) Bank of England Monetary Policy Meetings
Bank of England Monetary Policy Meetings Spain FBR Approves EMBARMO +1% & ECB -5% Target Currencies
FBR Approves EMBARMO +1% & ECB -5% Target Currencies ECB May Raise 0.25% To 0.75%
Bank of England May Raise 0.25% To 0.75% M3+ Outlook For Global Equity Markets And Currency Flows
M3+ Outlook For Global Equity Exchange Rates At A Bull Market Or Bear?
M3+ Outlook For Local FX Currencies Expected To Rise More Than 1 Percent This Year With Potential Risks Like Supply Chain Delays
Expectations For Daily FX Currencies: $USD-Yens Yield Curve Trending Towards Resistance
Expected Risks Could Drive Higher Earnings Next Week
Expectations For Weekly FX Currencies Expectedly Rising More Than What Should Have Been Reported
Expectations For Cash Flow Expectations For 2020
Expected Bitcoin Transactions Expectedly Will Be About 8.6 Million Times Last Year Due To Mining Volatility & Lending Restrictions
The following factors can affect future success with our trading ideas and recommendations:
The major one that influences our views and forecasts is the direction that the dollar (USD) is moving relative to the yellow (Yen) currency. While we’ve only discussed the Yens Yield in this article, a number of variables can play a role in what direction that USD will move in the weeks to come. Some of the most notable changes include those listed below:
The first one is the fact that China’s central bank could push higher interest rates if there isn’t enough Chinese liquidity to pay debts of local companies, which could drive foreign investment into the country, affecting domestic economies as they adjust. If this happens, the possibility exists of further supply chain disruptions or even full-blown stagflation. Another significant factor could be another global recession which would lead to lower consumption at home and exports, leading to less income for Chinese consumers and businesses. There’s also the possibility of hyperinflation or worse where demand drops because people can’t afford basic goods due to limited money supply. Therefore, we’re expecting a decline in demand which lowers the purchasing power of currencies like ours. Meanwhile, we see a possible risk of a weakening of greenback which could have a devastating effect on the economy of a large portion of the world.
Last, there’s the possibility that a surge in coronavirus infections could result in more bankruptcies and layoffs. If so, this could be the spark that breaks off the global economy from the brink of collapse. Additionally, we anticipate a continued drop in oil prices which would put pressure on government budgets, reducing the ability of governments to spend.
Finally, the last big news we could expect is a slowdown in the adoption of digital payments because consumers might prefer cash. Although digital wallets have led to an increase in sales, since many countries still haven’t made it mandatory for customers to use them, they still aren’t seeing massive transactions on their platforms. So, even though crypto is growing fast amongst various countries, it still remains to be one of the least popular currencies.
All in all, the trend we’ve seen recently is bullishness until the time when a correction takes place.
The charts above show that we’ve entered the peak of the upside potential, the top of a bottomless cup, so to speak. From our perspective, while the bulls have got a lot of room to keep pushing forward, any correction would signal that the rally is beginning to stall.
This Technical Analysis Has Only Appeared This Week
If you’ve made it this far, you’ll know that I don’t tend to do technical analyses too often, but in today’s post I thought we’d take a look at Euro/US Dollar Technical Analysis. Since I think that my previous posts were fairly straightforward with my commentary and general overview around this topic let me write it down in plain language.
Since I’m using historical prices and graphs, some information that is not yet available can be used. You’d need to understand what we’re discussing to get the full picture so be sure you thoroughly understand the idea behind the chart before jumping on it without understanding it first. Also, if the graph below doesn’t exactly fit your needs, consider looking at my other articles here: