Daily Market Analysis From Forexmart

US stocks multi-directional at close of trade; Dow Jones Industrial Average down 0.17%

At the close in New York, the Dow Jones lost 0.17%, the S&P 500 gained 0.38% and the NASDAQ Composite rose 0.45%.

The leaders of growth among the components of the Dow Jones index at the end of today's trading were shares of Apple Inc., which rose in price by 4.38 points (2.85%), to close at 157.87. Home Depot Inc rose 2.79% or 11.00 points to end at 405.85. Walmart Inc rose 0.86% or 1.22 points to close at 143.16.

The biggest losers were Cisco Systems Inc, which fell 5.51% or 3.13 points to end the session at 53.63. American Express Company was up 1.89% or 3.40 points to end at 176.21 and 3M Company was down 1.70% or 3.09 points to 178. 77.

The leaders of growth among the components of the S&P 500 index at the end of today's trading were shares of Macy's Inc, which rose in price by 21.17% to 37.37, Kohls Corp, which gained 10.62%, to close at 62.48, and shares NVIDIA Corporation rose 8.25% to end 316.75.

The biggest losers were Helmerich and Payne Inc, which fell 16.48% to close at 26.16. Nektar Therapeutics shares lost 8.48% to 11.76 in the day.

The leaders of growth among the components of the NASDAQ Composite index at the end of today's trading were shares of Longeveron LLC, which rose 135.27% to 6.870, Dicerna Pharmaceuticals Inc, which gained 78.71%, to close at 38.03, as well as Virtuoso Acquisition Corp, which were up 43.95% to end at 14.510.

The biggest losers were Amtech Systems Inc, which fell 26.61% to close at 11,200. Femasys Inc shed 20.53% to end the session at 5.11. Gracell Biotechnologies Inc. decreased in price by 22.12% to the level of 8.98.

On the New York Stock Exchange, the number of securities that fell (2,145) exceeded the number of those that closed in positive territory (1,111), while the quotations of 123 shares remained practically unchanged. On the NASDAQ stock exchange 2610 companies fell in price, 1133 rose, and 179 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, was up 2.81% to hit 17.59.

Gold Futures for December delivery was down 0.45% or 8.45 to $ 1,861.75 a troy ounce. In other commodities, WTI crude oil futures for January delivery rose 0.99%, or 0.77, to $ 78.32 a barrel. Futures contracts for Brent oil for January delivery rose 1.03% or 0.83 to trade at $ 81.11 a barrel.

Meanwhile, on the Forex market, the EUR / USD pair was up 0.46% to hit 1.1371, while the USD / JPY was up 0.15% to hit 114.25.

The US Dollar Index Futures was down 0.30% at 95.537.

 

European equities tumble on news of Austrian lockdown

Earlier this week, Austria became the first European country to impose travel restrictions on people who have not been vaccinated against COVID-19. The republic has the lowest level of vaccination in the region, that is, 65%.

In addition, in Germany this week the record for the number of cases per day was broken - more than 65 thousand people. The country's health minister Jens Spahn did not rule out the possibility of introducing a nationwide lockdown. According to Spahn, the situation is now even more serious than it was a week ago.

The composite index of the largest enterprises in the region Stoxx Europe 600 fell by 0.3% and amounted to 486.08 points.

The German DAX dropped 0.3%, the French CAC 40 - 0.4%, the British FTSE 100 - 0.5%. Italy's FTSE MIB and Spain's IBEX lost 1.2% and 0.5%, respectively.

The European Central Bank (ECB) should not rush to tighten monetary policy, even in the face of "unwanted and painful" inflation, said ECB President Christine Lagarde. The main factors driving inflation - supply chain problems and rising energy prices - will ease over the medium term, she said.

Retail sales in the UK in October rose from the previous month for the first time in six months - by 0.8%, but decreased by 1.3% compared to October last year, according to the National Statistical Office (ONS) of the country.

At the same time, the consumer confidence index in the country in November rose by three points compared to the previous month and amounted to minus 14 points, according to data from GfK NOP Ltd., which calculates this indicator. The indicator increased for the first time in four months.

Producer prices in Germany in October increased by 18.4% compared to the same month last year, according to data from the Federal Statistical Office of Germany (Destatis). Growth was at its highest since November 1951.

British home improvement chain Kingfisher was down 4.4%. The company in the third quarter of this year reduced its revenue by 2.4%. However, the report marks a strong start to the fourth quarter.

Irish low-cost airline Ryanair Holdings lost 2.3%. The carrier is set to delist its shares from the London Stock Exchange on 20 December. Ryanair noted that the company's stock trading volume on the LSE does not justify the cost of maintaining the listing.

The banking sector lost the most at the end of trading: shares of Raiffeisen Bank International AG fell by almost 7%, Deutsche Bank AG - by 5%, Erste Group Bank AG - by 5.2%, UniCredit S.p.A. - by 4.5%.

The shares of the IT company Amadeus IT Group S.A. were also in the red. (-4.8%) and Wizz Air Holdings PLC (-4.6%).

The growth leaders in the Stoxx 600 were shares of the British online grocery chain Ocado Group (+ 6.8%), the Polish manufacturer of electronic check-in terminals InPost (+ 7.4%), the French luxury goods manufacturer Hermes International (+ 5.2% ), delivery service operators Just Eat Takeaway.com NV (+ 6.3%) and Deliveroo PLC (+ 4.4%).

 

European equity markets finished trading without a single dynamic

Traders have been closely monitoring the change in the number of cases in Europe after Austria last week decided to introduce a lockdown. German authorities have begun talking about the possibility of taking a similar measure due to record rates of morbidity per day. However, in Germany, so far, restrictions have been introduced only for those who have not been vaccinated against COVID-19. The French authorities over the weekend announced signs of a very rapid spread of the next, fifth wave of coronavirus infection.

The spotlight on Monday was the news that US President Joe Biden has nominated the current head of the Federal Reserve System (FRS) Jerome Powell for a second term in this post. This was announced by the White House. At the same time, Leil Brainard, a member of the Board of Governors of the Federal Reserve System, was nominated for the post of his deputy. "I have full confidence that Chairman Powell and Dr. Brainard will provide the strong leadership our country needs after having been" tested by fire "over the past 20 months, Biden said in a statement.

Powell's four-year term as head of the Fed expires in February 2022. The Senate vote is expected to proceed smoothly, with significant Republican support, and he will be confirmed in office before the current term expires, The Wall Street Journal reported.

The composite index of the largest enterprises in the region Stoxx Europe 600 by the close of trading lost 0.13% and amounted to 485.46 points.

The German DAX fell 0.27%, the French CAC 40 - 0.1%. Britain's FTSE 100 climbed 0.4%, Italy's FTSE MIB rose 0.2%, and Spain's IBEX climbed 0.8%.

Italy's largest telephony operator Telecom Italia rose 30.3%, supported by news that US investment firm KKR & Co. wants to buy Telecom Italia for 10.8 billion euros.

The value of the world leader in wealth management UBS Group AG increased by 0.9%. The company's board of directors has nominated former Morgan Stanley president Colm Kelleher for the chairmanship.

German bank Deutsche Bank AG fell 0.4%. The bank has nominated the ex-head of the Dutch insurance company Aegon NV Alexander Winandts to the post of chairman of the supervisory board.

Hochschild Mining Plc shares plunged 27.2% on reports that Peruvian authorities will ban new mining and exploration operations in the region where the company's two mines are located, due to environmental concerns.

Capitalization of the Swedish telecommunications equipment manufacturer Ericsson AB decreased by 5.2%. The company will buy US cloud service provider Vonage Holdings Corp. for $ 6.2 billion

 

Analysis and trading tips for EUR/USD on November 24

Analysis of transactions in the EUR / USD pair

There was a signal to buy in EUR / USD on Tuesday, but the increase was limited because the MACD line was far from zero. But when a signal to sell appeared, the pair rose even though the MACD line was already in the overbought area. This continued for the rest of the day. The upward movement was around 15 pips.

Euro rallied yesterday, thanks to better-than-anticipated reports on manufacturing and service PMI in the Euro area. Meanwhile, the statements of ECB Vice President Luis de Guindos were ignored even though he mentioned the need for stricter inflation control.

The observed bullish momentum may continue today if the data on business conditions, assessments of the current situation and economic expectations come out stronger than the forecasts. ECB board member Fabio Panetta will also speak, and it could push euro higher if he mentions inflationary pressures

In the afternoon, US will release a report on Q3 GDP, which could raise dollar demand if the figure is revised for the better. Data on jobless claims, income and expenses will also be published, followed by the minutes of the recent Fed meeting. If the protocol does not indicate aggressive intentions of the committee members, demand for dollar will decline.

For long positions:

Buy euro when the quote reaches 1.1253 (green line on the chart) and take profit at the price of 1.1299. Demand will increase if the Euro area reports very strong economic statistics.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1227, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1253 and 1.1299.

For short positions:

Sell euro when the quote reaches 1.1227 (red line on the chart) and take profit at the price of 1.1185. Demand will decline if the situation with COVID-19 escalates. Weak data from Germany and strong statistics from US will also provoke a decrease in EUR / USD.

Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1283, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1255 and 1.1216.

 

Forecast for USD/JPY on November 26, 2021

Yesterday, the dollar against the yen could not withstand the pressure from technical factors and this morning fell to the signal level of 114.71 (October 20 high). After the price drops below this level, the USD/JPY pair may continue to move to the magnetic point at 113.20 - to the point of intersection of the price channel line with the MACD line. The price can overcome the target, since below it is the second target level of 112.74, which is desirable for the bulls to work out if they intend to advance further - to create a false downward movement.

To complete the bearish picture, the signal line of the Marlin oscillator does not reach the negative area. Perhaps this will happen when the price goes below the signal level.

The price almost touched the MACD line on the four-hour chart. Settling below it, as well as below the level of 114.71, will become a condition for further price movement to the downside. The Marlin Oscillator is already in the negative zone.

Forecast for EUR/USD on November 26, 2021

The euro has finally started to form a slight reversal from the target level of 1.1170. The miniature double bottom figure at the Marlin Oscillator on the daily scale has worked.

We consider the observed growth so far as an upward movement within the framework of the sideways movement of 1.1170-1.1300. The range, of course, can be extended, the other upper boundary is the 1.1375 level - the peak on November 18. In the next two weeks, this level may be reached by the MACD indicator line. Then either the downward trend will resume, or the price will break above the MACD line and outline a mid-term growth.

On the chart of the four-hour scale, the signal line of the Marlin Oscillator has entered the positive area. The convergence is fully formed, but it remains to wait for the price to break above the MACD line, above 1.1250. This moment will confirm that the price is in a sideways trend.

 

Forecast for EUR/USD on November 29, 2021

The euro corrected upward by 120 points on Thursday and Friday last week, turning around without reaching the target level of 1.1170. Growth may continue to 1.1375 - the highs on November 18 or slightly higher towards the MACD line. The Marlin Oscillator has grown sharply, now it can be in free roaming for some time, which will affect the price in a wide-range sideways movement. So far, this range is defined by the levels 1.1170-1.1375.

On the four-hour scale chart, the price managed to get above both indicator lines - above the balance line and the MACD line. The Marlin Oscillator has grown up high, but it is not yet in the overbought zone, so the price has the prospect of reaching the level of 1.1375. The recovery of the bearish trend will occur when the price moves below the MACD line, below 1.1235. But taking into account the situation on the daily scale, there is a significant likelihood of a false price drift under the MACD line, and then, after the target level of 1.1170 has been worked out, the price may again turn into corrective growth.

Federal Reserve Chairman Jerome Powell will speak tonight at a social event in New York, tomorrow in the Senate before the Banking Committee, and the day after tomorrow in the House of Representatives. Also tomorrow we will have John Williams, Richard Clarida and Treasury Secretary Janet Yellen. It may very well be that the risks associated with the emergence of a new strain of the Omicron coronavirus will be affected, and then the maturing expectations of 2 or even 3 rate hikes next year will disappear, and the euro will begin to recover its lost positions.

Forecast for USD/JPY on November 29, 2021

As a result of Friday's collapse in the stock markets (Euro Stoxx 50 - 4.74%, S&P 500 -2.27%), the yen strengthened against the dollar by 1.72% (197 points). The first bearish target was reached, the price slowed down on the embedded price channel line of the weekly timeframe. Now, according to the main scenario, the price will have to overcome the support of the MACD indicator line at 113.06, after which the 110.75 target will open in front of it - the lower line of the price channel. The Marlin Oscillator has forcefully entered the territory of the downward trend, divergence with the price is formed and confirmed. We look forward to further price reductions.

On the four-hour chart, the price has consolidated below both indicator lines - below the balance line and the MACD line. The Marlin Oscillator is already leaving the oversold zone, which tells us about the impending price correction before its further decline. The limit of such a correction is seen as the Fibonacci level of 50.0% at 114.30, which is the November 12 high (checkmark).

 

Forecast for USD/JPY on November 30, 2021

Yesterday, the USD/JPY pair once again tested the strength of the embedded line of the price channel of the higher timeframe, it is shown in green on the chart. Now this support was strengthened by the MACD indicator line - the price rebound to the upside turned out to be qualitative. The Marlin Oscillator supports the reversal, but still remains in the negative area.

However, the reversal should be confirmed. A visually strong resistance level is the upper border of the consolidation on October 26-November 4 at 114.31. It is also desirable to receive confirmation from the Marlin Oscillator, which needs to move into the zone of positive values.

On the chart of the four-hour scale, the bulls' shortcomings, or rather the inadequacy of the work done by them, is seen more clearly. The price is still far below the balance and MACD indicator lines, the Marlin Oscillator is moving up slowly and is still in the negative area. Therefore, the likelihood of another attack on support at 113.13 remains high. We are waiting for the development of further events, the formation of any technical signals or the strengthening of the existing prerequisites.

Forecast for AUD/USD on November 30, 2021

The Australian dollar gained 23 points on Monday, the trading range stayed within the 0.7107-07171 levels. Overcoming any of these levels may mean a continuation of the short-term movement: downward to the 0.7065 target (June 2020 high), ascending to the target of 0.7227. The Marlin Oscillator is showing an upward reversal, but it looks weak.

On the four-hour scale, the price approaches the magnetic point - to the point where the target level of 0.7171 coincides with the balance (red) and MACD (blue) indicator lines. The Marlin Oscillator already anticipates this event with a transition to a positive area, entering a zone of a growing trend.

So consolidating above 0.7171 opens the target at 0.7227. This is the main option. If the price moves below the level of 0.7107, an alternative variant will open with a movement to 0.7065.

 

Technical analysis recommendations of EUR/USD and GBP/USD on December 1, 2021

EUR/USD

The bears descended to the area of the final border of the monthly Ichimoku gold cross (1.1290) last month. It was not possible to break through the level, the closing of the month was indicated by a long lower shadow of the monthly candle. Therefore, the bulls now have opportunities to develop the rebound from the encountered support. In this situation, it will be possible to make further plans and consider new upward prospects after the formation of a rebound from 1.1290 and consolidation above the important resistance zone of 1.1439 - 1.1492, where several of the strongest levels in the higher timeframes combined (monthly levels + weekly short-term trend + closing levels of the daily Ichimoku cross).

Yesterday, the nearest resistance along the way was tested – the daily Fibo Kijun (1.1379). Alternatively, the breakdown of the monthly support at 1.1290 and the update of the November low (1.1186), will allow us to consider continuing the decline and strengthening the bearish mood. In this case, the closest downward pivot point will be the weekly target for the breakdown of the cloud (1.0806 - 1.0960).

The bulls in the smaller timeframes limited themselves yesterday to testing the final border of the classic pivot levels and failed to continue the rise further. At the moment, they still have the advantage. Today, their intraday pivot points are set at 1.1402 - 1.1467 - 1.1550 (classic pivot levels). The key support levels, which are now located at 1.1319 (central Pivot level) and 1.1267 (weekly long-term trend), allow the bulls to defend their interests despite the long-term trading in the correction zone.

A consolidation below will change the current balance of power and bring back the relevance of bearish targets, such as the minimum extremum (1.1186) and the support of the classic pivot levels (1.1254 - 1.1171 - 1.1106).

GBP/USD

The bears tried to reach the monthly support (1.3164) at the end of the previous month but failed to test the level or close the month next to it. Nevertheless, November indicated the nearest bearish plans – entering the bearish zone relative to the weekly Ichimoku cloud (1.3248) and breaking through the monthly support (1.3164).

As for the bulls, it is important for them to keep their position above the current support and attraction zone 1.3248 (lower border of the weekly cloud) - 1.3164 (monthly Fibo Kijun), regain support for the daily short-term trend (1.3351), and also strive to restore their positions to weekly levels (1.3516-76), eliminate the daily dead cross (1.3503 - 1.3586) and rise to the daily Ichimoku cloud.

Bullish traders in the smaller intervals failed to consolidate above the key levels and reverse the moving average yesterday, which resulted in the continuing struggle for key levels. Today's key levels are at 1.3286 (central pivot level) and 1.3322 (weekly long-term trend). A movement below the levels gives preference to the bears. Their pivot points are currently set at 1.3203 - 1.3109 - 1.3026 (support for the classic pivot levels). It is worth noting that the aforementioned levels give preference to the bulls. Their upward targets are at 1.3380 - 1.3463 - 1.3557 (resistance levels of the classic pivot levels).

 

Is the pound sterling the restless hostage of Omicron?

The British currency has temporarily gone into the shadow of the aggressive US dollar and the volatile euro. At the same time, the pound is trying to assert itself, while resisting pressure from the new mutation of the Omicron coronavirus.

Before Omicron's appearance on the scene, the key drivers of the global market were traders' expectations about the early curtailment of incentives and a rise in rates. These sentiments have now intensified as the new strain has made its own adjustments. Jerome Powell, chairman of the Fed, announced his readiness to accelerate these processes amid off-scale inflation and general instability. He believes that the new COVID-19 mutation provokes prolonged inflationary pressure.

Earlier, the Fed's head agreed that the strongest growth in consumer prices was recorded in the United States, which could push the national economy into the pit of stagflation. Against the background of extremely high inflation in the US, the yield spread between ten-year and two-year Treasury bonds has sharply declined. This indicator turned out to be at a minimum over the past 10 months, which indicates a further downward trend in the GBP/USD pair.

In the current situation, the British currency is experiencing serious overloads. Some restlessness of the pound, bordering on confusion, destabilizes the market. According to analysts, it risks becoming a hostage of Omicron. Despite the current difficulties, the pound is trying to cope with the situation.

The danger of a new strain of coronavirus for the British economy was noted by one of the representatives of the Bank of England. According to the official, Omicron has called into question the further growth of consumer confidence in the country. Economists fear that the new COVID-19 mutation will provoke a drop in demand for consumer services and logistics problems. At the same time, experts believe that Omicron should not affect the Bank of England's plans for a possible tightening of the PEPP.

On Wednesday, global markets and risky assets remained stable. The British currency added 0.17%, reaching the level of 1.3318. However, the triumph was temporary: the pound remained near a one-year low against the US dollar, and then sharply fell to 1.3195. The reason for this fall was the market's doubts about the Bank of England's early interest rate hike. On Thursday morning, the GBP/USD pair was trading at the level of 1.3291. There is currently no clear trend in the pair, and the support level of 1.3263 restrains the bears' dominance.

Many market participants are quite optimistic. Investors believe that the new strain of coronavirus will not affect the further recovery of the global economy. The pound is trying to consolidate in this trend and strengthen its current positions. According to UOB Group analysts, the pound may decline to 1.3260 in the coming weeks, although this scenario is unlikely.

"A further drawdown of the GBP is possible, but a strong support level near 1.3195 will be a tough nut to crack," the UOB Group believes. According to analysts, the pound is not in danger of serious weakening in the short term.

 

Is USD dependent on stock market?

The US dollar is again undergoing a period of volatility, with rare periods of stability, as USD traders await the US labor market report.

Early on Friday, December 3, EUR/USD was trading at 1.1289, below the previous closing price of 1.1299. The US currency edged up slightly before the release of non-farm payrolls, fuelled by concerns over the new Omicron strain, which have now eased.

As markets remain relatively calm, the US dollar has strengthened its position in the run-up to the non-farm payroll release. Strong US labor market data would clear the way for the Federal Reserve to raise interest rates early, analysts say.

Recently, the US dollar has been moving largely under the influence of key interest rate changes, with safe-haven investment demand affecting it only negligibly. The American currency rate has been highly dependent on the global stock market - a new norm, according to some experts.

At this moment, the USD cash flow is determined by equity volatility, as well as risk hedging related to it. Earlier, the inverse correlation was in effect. The Fed's key interest rate is crucial for the market. The yield of US 2-year treasury bonds, which is closely connected with the Deutsche Bank volatility index, is used to determine the future rate. Amid spiraling inflation, investors expect an early rate hike, which would push up the bond yield and the US dollar.

The US non-farm payrolls are in focus at the end of the week. The unemployment rate is expected to go down to 4.5%, with non-farm employment projected to increase by 550,000. The amount of jobless claims fell below 2 million for the first time since the pandemic began.

Strong US labor market data are unlikely to propel the dollar upward, but it could limit the pessimistic sentiment over the spread of Omicron variant, and allow the Fed to go through with the plan to wind down QE and hike the rates in 2022.

While the markets remain somewhat volatile, with strong NFP expectations stabilizing it slightly, the greenback is likely to maintain upside potential. Satisfactory payroll data and the possibility of an earlier end of QE would push the dollar up.

According to an outlook by Goldman Sachs, the Fed is expected to raise interest rates by 25 basis points three times - in June, September, and December, followed by further monetary tightening. Downside risks for the global economy caused by Omicron would boost demand for USD as a safe-haven, giving it support, Goldman Sachs analysts note.