KVB Market Analysis | 13 Nov: Yen Weakens as BoJ Holds Back, USD/JPY Targets Multi-Month Highs

Product: XAU/USD

Prediction: Decrease

Fundamental Analysis:

On Tuesday, November 12, gold prices fell sharply to a nearly two-month low as the U.S. Dollar Index hit a four-month high. This makes holding gold more costly for buyers using non-dollar currencies. Analysts also noted a large outflow of funds from gold ETFs, which is a major downside for gold prices. By the close of the day, gold dropped $21.20, or 0.81%, to $2,598.03 per ounce, with a low of $2,589.40. The market now expects the Federal Reserve to be less likely to cut rates in December. Gold ETFs saw large withdrawals, indicating that investors are moving towards riskier assets. Gold was boosted earlier by “Trump trade” excitement before the election but is now dropping due to optimism about economic growth. Trump's aggressive appointments may help him negotiate, reinforcing the likelihood of his promised tariffs.

Technical Analysis:

After gold prices fell below the October 10 low of $2,603 per ounce, it seems ready to continue dropping. With prices now under $2,600 per ounce, the next support level is the psychological level of $2,550, followed by the 100-day Simple Moving Average (SMA) at $2,537. If gold breaks below these levels, the next target could be $2,500. If gold recovers and stays above $2,600, buyers will focus on the 50-day moving average at $2,647 and then $2,650. If prices break above these levels, the next resistance is $2,710, the high from November 7. With the Relative Strength Index (RSI) moving away from neutral, momentum is now bearish, meaning prices may keep falling.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis:

The Japanese Yen (JPY) is having a hard time gaining strength and keeps moving up and down with small gains and losses against the US Dollar. As the European trading session starts on Tuesday, many believe Japan‘s political situation may prevent the Bank of Japan (BoJ) from tightening its monetary policy. In fact, the BoJ’s October meeting showed policymakers were divided on raising interest rates again. Meanwhile, expectations that the new US President-elect Donald Trumps policies might raise inflation are helping to keep US bond yields high. This situation supports the US Dollar and weakens the JPY. However, concerns that Japan might step in to support the Yen could limit its losses.

Technical Analysis:

Looking at the technical side, the recent move above the 200-day Simple Moving Average (SMA) and the close above the 61.8% Fibonacci retracement level from the July-September drop supports the outlook for USD/JPY to go up. Indicators on the daily chart are in a positive range and not close to the “overbought” level, which suggests more room for upward movement in the near term. This could mean the USD/JPY pair might climb toward its recent multi-month high near $154.70. After that, it could reach the important $155.00 level, and if it breaks above this, it might push up further to around $155.65-$155.70, then possibly to the $156.00 level. On the downside, if prices fall, the first level of support is around $151.75, with the next at last weeks low around $151.25. A clear break below this could lead to more selling, potentially pushing the pair below $151.00 and down toward the next support around $150.35-$150.30, eventually aiming for the key $150.00 level.

Product: EUR/USD

Prediction: Decrease

Fundamental Analysis:

Due to the U.S. election, currency strategists have revised their euro forecasts, suggesting a new view: the euro may fall to parity with the U.S. dollar. This shift in the currency market comes from expectations that, with Trump back in the White House, global trade restrictions will be a key part of his economic policy. As major European economies face political uncertainty, tariffs could hurt European exports, leading investors to sell euros. Since Trump's win, the euro has dropped nearly 3%, nearing this year‘s low. Analysts tracked by Bloomberg now predict the euro’s median price for next year to be $1.08, down from $1.13 before the election. Tariffs could further harm Europes economy, possibly pushing the European Central Bank to cut rates faster than the U.S. Federal Reserve. Meanwhile, U.S. growth policies could increase inflation, slowing rate cuts.

Technical Analysis:

The EUR/USD daily chart clearly shows a downward trend, with the pair trading well below the 50-day EMA ($1.0895) and the 200-day EMA ($1.0888). The drop has sped up after EUR/USD fell below these levels, which are now acting as resistance. The fact that the shorter-term EMA is below the longer-term EMA also points to a strong bearish trend, confirming that the market is likely to keep moving lower in the near term. Looking at support levels, EUR/USD is nearing the key $1.0600 level, which could help limit further drops. If this level doesnt hold, the pair may drop to $1.0500, where more buyers could step in.