positive territory

GBP/USD: Yesterday, the British pound tried to fall below the MACD line on the daily chart but was pushed back up towards the resistance level at 1.2443. The signal line of the Marlin oscillator is moving up along with the price but is providing noticeable resistance to this movement.     A consolidation above 1.2443 with the oscillator transitioning into positive territory can potentially lead the price to the target level of 1.2583. At the moment, a new level has formed at yesterday's low of 1.2367 (coinciding with the April 21 low, where there was also a sharp rebound). Falling below this level will open up the target of 1.2273. The bearish scenario persists     On the four-hour chart, the price has bounced off the support of the MACD indicator line. Currently, the price is consolidating near the level of 1.2443.   The Marlin oscillator is in the downtrend area. Here, the earliest bearish signal is also the support level at 1.2367, reinforced by the MACD line. We await further developments.          

USD/JPY The Bank of Japan unexpectedly purchased 300 billion yen worth of government bonds yesterday in order to maintain low yield on long-term debt securities. This led to yen weakening by 0.86%.     On the daily chart, the price approached a strong resistance formed by three lines: the target level at 142.82, the MACD line, and the embedded line of the price channel. A slight rebound may occur from this area, after which there will be a new and successful attempt to break through it. If the price consolidates above 142.82, the next target would be 144.73, with further potential growth towards 145.90. The Marlin oscillator being in the positive territory indicates a tendency for further price increases.     A strong upward movement can be seen in the four-hour chart. There may be a rebound towards the support at 141.96 (July 21 high), followed by a resumption of the upward trend. The Marlin oscillator, continuing to rise, will likely withstand corrective declines without moving into the negative zone when the price falls.

BRL: 25bp or 50bp to start the easing cycle? There is fevered speculation that Brazil’s central bank, BCB, will start its easing cycle later today. Having been pressured by the Lula administration for most of the year to cut rates, it now seems the BCB has sufficient ammunition to deliver a credible rate cut. Brazil’s congress has passed important fiscal reforms (fiscal policy always proving Brazil’s Achilles Heel) and a sharp decline in inflation has allowed inflation expectations to drop close to BCB’s target near the 3.50% area. The only question it seems for the market is whether the BCB will kick off the cycle with a 25bp or 50bp cut. Historically, when BCB makes the decision to adjust policy, it moves in large increments. Equally, BCB has been fighting the government all year and with two new additions to its board may not want to be seen as acting overly aggressively. Even though BCB has not provided much signalling on this easing (unlike the recent telegraphed cuts in Chile), we would not rule out a 50bp rate cut. The interest rates market already prices close to 500bp of easing over the next year – so may not drop too much further – but we think the Brazilian real may not need to sell off too harshly. After all, real interest rates remain hugely in positive territory and a recent sovereign rating upgrade – and lower volatility – suggest the Brazilian real will continue to be a recipient of carry trade flow.  

EUR/USD Yesterday, the euro broke through the key support level at 1.0834. By the end of the day, the euro had risen by 17 points. The nature of this movement suggests that this breakthrough was false. This morning, the price continues to rise above the 1.0865 level. The Marlin oscillator continues its upward turn. Market participants are concerned that tomorrow, Federal Reserve Chairman Jerome Powell will confirm the idea of a strong American economy and hint at another rate hike(possibly by 0.50%).   The concern arises from the fact that seemingly obvious things might be interpreted differently by the Fed itself, implying that there might be no further tightening. Generally, the Jackson Hole conference doesn't discuss specific issues, such as a rate hike in a month or two, so there will be opportunities for speculation in interpreting Powell's words. Considering the increased volatility of the EUR/USD pair, it might reach the target range of 1.0924/42 regardless of the tone set by the Fed chair. The question is about the euro's medium-term perspective.   On the four-hour chart, following the false downward movement, the price returned above the MACD line, and the Marlin oscillator entered the positive territory. An uptrend in the short-term, and the target range of 1.0924/42 is in sight. Consolidating above this range will open up the next target at 1.1012.  

Technical Market Outlook: The GBP/USD pair has bounced from the technical support located at the level of 1.2620 for the third time, so this level had been established as very important support level.   The recent momentum breakout into the positive territory on the H4 time frame chart supports the short-term bullish outlook for GBP, however, current momentum is neutral again. Only a strong reversal and a breakout above the local supply zone would change the short-term bearish outlook. Reversal confirmation comes with the level of 1.2826 breakout (100 DMA level).     Weekly Pivot Points: WR3 - 1.27925 WR2 - 1.27651 WR1 - 1.27528 Weekly Pivot - 1.27377 WS1 - 1.27254 WS2 - 1.27103 WS3 - 1.26829   Trading Outlook: The bulls keep continuing the up trend towards the key technical resistance located at the level of 1.3163 and a breakout above this level is needed to extend the up trend towards the last Weekly swing high seen at 1.4248. Only a sustained breakout blow the technical support seen at the level of 1.1775 would change the outlook to bearish.   Read more: https://www.instaforex.eu/forex_analysis/336146

New Zealand retail sales expected to decline by 0.8% US markets closed for Thanksgiving The New Zealand dollar is in positive territory on Thursday. Early in the North American session, NZD/USD is trading at 0.6042, up 0.34%. Will New Zealand retail sales continue declining? Retail sales are a key gauge of consumer spending and the New Zealand consumer has been holding tightly to the purse strings. In the second quarter, retail sales fell 1% q/q, with most retail industries showing lower sales volumes. This marked a third consecutive losing quarter. The markets are bracing for another decline for Q3, with a consensus estimate of -0.8%. The soft retail sales data isn’t really surprising as consumers are being squeezed by high inflation and elevated borrowing costs. The decrease in household purchasing power has meant a decline in spending. High interest rates are still filtering through the economy, which could further dampen consumer spending in the fourth quarter. The Reserve Bank of New Zealand has put a pause on rates for three straight times, which has naturally raised speculation that the central bank has completed its tightening cycle, which has brought the cash rate to 5.5%. Inflation in the third quarter eased from 6.0% to 5.6% y/y in the third quarter and this decline means that there is a strong likelihood that the RBNZ will hold rates at the November 27th meeting. US markets are closed for the Thanksgiving holiday, which means we’re unlikely to see much movement today with the US dollar. That could change on Friday, with the release of US manufacturing and services PMIs. The consensus estimates for November stand at 49.8 for manufacturing (Oct: 50.0) and 50.4 for services (Oct. 49.8). If either of the PMIs miss expectations, that could translate into volatility from the US dollar.   NZD/USD Technical NZD/USD is putting pressure on resistance at 0.6076. The resistance line 0.6161 There is support at 0.5996 and 0.5885