Tesla, EUR/USD Forecast: Two trades to watch

TeslaQ3 earnings - what to watch

• Revenue is expected to rise to $25.41 billion
• EPS is forecast to slip to $0.48 from $0.53
• Tesla trades down13% YTD, underperforming the broader market

Tesla is due to report earnings after the closing bell today. The results come as the EV maker’s share price hovers around a six-week low and following the disappointing Robotaxi unveiling event, which left investors and analysts with more questions than answers.

Wall Street expects Tesla's quarterly revenue to increase to $25.41 billion, up from $23.35 billion in Q3 last year. Meanwhile, Tester is expected to report a slight fall in profit to $1.68 billion from $1.85 billion a year earlier. This equates to EPS of $0.48c, down from $0.53c.

We already know that Tesla's Q3 deliveries increased 6% year-on-year to 462,890 vehicles, although this was below Wall Street's expectations amid stiff competition from rivals in China and Europe. The share price fell 3% following the delivery data.

Tesla's share price has also been hit in the wake of the EV maker's Robotaxi event, where it showcased Cybercab and Robovan along with projections from CEO Elon Musk on when Tesla's self-driving software could be approved. The lack of details surrounding when Tesla will begin to operate its fleet of Robotaxis or even sell them to customers also sent the share price lower.

 As the hype surrounding Robotaxi fades, attention will be firmly on profit margins which have been deteriorating for several quarters owing to aggressive price cuts in 2023 and earlier in the year

The share price is down 13% year to date compared to a 22% gain for the S&P over the same period.

Tesla forecast - chart analysis

Tesla ran into resistance at 262 before correcting lower. The price has fallen below the 50 SMA and is testing support of the rising trendline dating back to May.

Sellers supported by the RSI below 50 will look to break below the rising trendline support at 215 and the falling trendline dating back to April 2022, at 210. Below here, the 200 SMA comes into focus at 202, ahead of the August low of 184.

Should buyers successfully defend the 215, a recovery will need to retake the 50 SMA at 227 to bring 263 back into focus.

EUR/USD falls below 1.08 as more ECB rate cuts are expected

• Lagarde said inflation is set to cool to target quicker than expected
• Eurozone consumer confidence is due to rise to -12.5
• USD trades at a 2.5-month high against its major peers
• EUR/USD has fallen below 1.08

EUR/USD has fallen to its lowest level since the start of August on expectations that the ECB will be cutting rates at a faster pace while the Federal Reserve will adopt a gradual approach to rate cuts.

Yesterday, ECB president Christine Lagarde said that inflation is set to fall below the 2% target more quickly than initially expected, paving the way for a potentially more aggressive approach to rate cuts. Her comments come after the ECB cut rates by 25 basis points in October, marking the third rate cut by the central bank this year. The market expects the ECB to cut rates by 25 basis points in December and then at every meeting towards the spring.

Today, ECB president Christine Lagarde is due to speak again along with chief economist Philip Lane. Eurozone consumer confidence data are also being focused on and are expected to rise to -12.5, up from -12.9. Unless there is a notable improvement in consumer confidence, the data is likely to support the view that the ECB needs to cut rates to boost the eurozone economy.

Meanwhile, the US dollar is rating it a 2.5-month high against its major peers when expectations that the Fed will cut interest rates more gradually after a slew of upbeat U.S. data has highlighted the resilience of the economy. Treasury yields are also trading higher, with the 10-year at its highest level since late July and above 4%.

Investors are also eyeing the US elections, which have just two weeks to go. A Republican sweep would be the most bullish scenario for the US dollar, but the polls are still close.

The U.S. economic calendar is quiet again today, with just The Fed Beige Book and existing home sales due to be released.

EUR/USD forecast – technical analysis

EUR/USD corrected lower from 1.12 at the start of the month, falling below the 200 SMA and taking out 1.08 support, keeping sellers hopeful of further losses.

Sellers will look to test 1.0770, the rising trendline dating back to October last year. Below here 1.07 comes into play.

Buyers will need to rise above 1.08 to stage any form of recovery and the 200 SMA at 1.0870. Above here 1.09 round number comes into play. A rise above 1.10 is needed to negate the downturn.