US stocks rallied sharply on Wednesday, witnessing fresh buying and extending the daily rally as Jerome Powell signalled a slowdown in the pace of tightening as early as December while indicating more hikes to fight inflation. The dovish comments from Federal Reserve (Fed) Chairman Jerome Powell provided strong support to the equity markets, as he was dovish while saying it makes sense to moderate the pace of interest rate increases and added that the monetary policy would need to remain restrictive for some time.

Additionally, Powell said that the time to slow the pace of rate hikes could come as soon as the next meeting in December and he does not want to over-tighten. Powell’s comments likely cement expectations for the Fed to hike by 50 basis points in December, following four straight 75 basis-point moves. However, rates are likely to reach a somewhat higher level than officials estimated in September. On the Eurozone front, European inflation fell for the first time in seventeen months, as the Euro Area annual Harmonized Consumer Price Index printed at 10% in October.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced higher on Wednesday as the S&P 500 hit a two-month high and notched the longest monthly winning streak since August 2021 amid all the optimism. The S&P 500 was up 3.1% on a daily basis and the Dow Jones Industrial Average climbed higher with a 2.2% gain for the day. All of the eleven sectors in the S&P 500 stayed in positive territory as the Information Technology sector and the Communication Services sector are the best performing among all groups, losing 5.03% and 4.91%, respectively. The Nasdaq 100 meanwhile advanced the most with a 4.6% gain on Wednesday and the MSCI World index was up 2.5% for the day.

Main Pairs Movement

The US dollar slumped sharply on Wednesday, suffering from daily losses and dropped towards the 105.80 level amid US Federal Reserve Chair Jerome Powell’s dovish comments. The policymaker stated that it makes sense to moderate the pace of interest rate increases while also suggesting that the time to slow the pace of rate hikes could come as soon as the next meeting in December. Therefore, the chances of a 50 bps rate hike in December increased from 69.9% ahead of the speech to above 75%.

GBP/USD advanced higher on Wednesday with a 0.89% gain after jumping above the 1.2030s area as the Fed pivots to lower hikes. On the UK front, the Bank of England (BoE) Chief Economist Huw Pill said inflation is expected to fall quickly in the second half of 2023 while supply chain issues are being solved. Meanwhile, EUR/USD regained upside traction and jumped from weekly lows of 1.0290 amid a weaker US dollar across the board. The pair was up almost 0.74% for the day.

Gold rallied sharply with a 1.07% gain for the day after posting the biggest daily jump in three weeks around the $1,775 level during the US trading session, as the dovish comments from Fed Chairman Jerome Powell and optimism surrounding China both support the precious metal. Meanwhile, WTI Oil advanced sharply with a 3.01% gain for the day.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD turned south and witnessed heavy selling pressure during the US trading session, as the US Dollar Index gathered strength following the mixed macroeconomic data releases while investors await FOMC Chairman Jerome Powell’s speech. The pair was trading at the 1.032 level at the moment of writing. Earlier, the National Association of Realtors (NAR) released the United States Pending Home Sales Report, which printed -4.6%, compared to market expected -5.0% and the previous -8.7%. Apart from this, the United States ADP Nonfarm Employment Change shows an increase of 127K in November, far from the forecast 200K and the previous 239K. Furthermore, the second estimate of the Q3 Gross Domestic Product (GDP) rallied to 2.9%, higher than the expectation of 2.7% and the previous 2.6%. The better market mood helps the EUR amid news suggesting China’s government has decided to ease coronavirus-related restrictions in Zhengzhou and Guangzhou. The country has continued to report record daily contagions, but massive protests across the country have forced the decision. Now, the US Dollar regained bullish strength ahead of FOMC Chairman Jerome Powell’s speech.

From the technical perspective, the four-hour scale RSI indicator surged to 54 figured following the dovish speech by Fed Chairman Jerome Powell, suggesting that the pair was amid an upbeat market mood. As for the Bollinger Bands, the euro was priced above the 20-period moving average, in a case that successfully breaks through the upper band, the bull has the chance to challenge the multi-month high 1.0497 level.

Resistance: 1.0497, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD has reversed its direction and declined toward 1.1900 after having climbed above 1.2000 earlier in the day, as the safe-haven greenback benefits from the cautious mood ahead of Powell’s speech. The market sentiment remained fragile, as shown by US equities wavering. Latest Federal Reserve officials commented that the US central bank is ready to moderate the pace of rate hikes but also stated that rates would end higher than September projections. Therefore, any hawkish tilt remarks by Jerome Powell could rock the boat and bolster the US Dollar. On the data side, the ADP Employment Change report for November disappointed investors as the economy added just 127K jobs below expectation and trailed the 239K employees hired by private companies in October. Moreover, the US Gross Domestic Product (GDP) for the third quarter, on its second estimate, increased by 2.9% above forecasts of 2.7%, smashing Q3’s advanced reading of 2.6%. The higher-than-expected report sent recession speculations in the United States to the trash can. In the domestic, the BoE’s chief economist Huw Pill foresees rates to peak lower than the market projections and echoed the BoE’s Governor Andrew Bailey’s remark at the last monetary policy meeting. Therefore, further GBP weakness is expected.

From the technical perspective, the four-hour scale RSI indicator rallied to 54 figures after a less aggressive remark by Federal Reserve Chairman, Jerome Powell, suggesting that the pair were surrounded by positive market sentiment. As for the Bollinger Bands, the pair was priced above the 20-period moving average, meaning that the pair was more favoured to the upside path.

Resistance: 1.2124, 1.2253

Support: 1.1764, 1.1645, 1.1366

XAUUSD (4-Hour Chart)

The Gold was holding on to modest intraday gains after hitting a fresh weekly high, as investors await US Federal Reserve Chair Jerome Powell’s words to move more aggressively and mixed US data showed better-than-anticipated growth but tepid employment performance.  The intraday US Dollar selling was witnessed following the disappointing release of the ADP report, showing that the US private-sector employers added 127K jobs in November. The headline print was well below the previous month’s reading of 239K and 200K anticipated. This tempered expectations for any positive surprise from the official jobs report (Nonfarm Payroll) on Friday. However, the upbeat GDP report capped the upside for the yellow metal ahead of Powell’s speech. The preliminary report released by the US Bureau of Economic Analysis showed that the economy expanded by 2.9% annualized pace during the third quarter against 2.6% reported previously. Traders will look for clues about future rate hikes upon Jerome’s speech and provide a fresh directional impetus to the non-yielding gold.

From the technical perspective, the four-hour scale RSI indicator rose to 59 figures after Powell’s dovish speech, suggesting that the yellow metal was attracting some flow from the greenback. As for the Bollinger Bands, the pair was challenging the upper band and two-week high $1767 mark at the moment of writing. As a result, we think the gold would move upward in the near future and target the $1784 mark if successfully stand firmly above $1767.

Resistance: 1785, 1800

Support: 1740, 1704, 1671

Economic Data

US stocks edged lower on Tuesday, regaining upside traction and paring most of their daily losses with traders unwilling to make big bets ahead of Jerome Powell’s speech Wednesday. Jerome Powell is expected to cement expectations the Fed will slow its pace of hikes next month and remind investors that its fight against inflation will run into 2023.

The need for more measured rate rises will also take account of increased two-way economic risks as policy becomes restrictive. Meanwhile, the US central bank is expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14, though the odds of a 75-basis-point increase have risen over the past several weeks and now stand at a 37% probability.

Moreover, market mood improved slightly as Chinese authorities announced multiple measures to ease the strict lockdown in the key areas after witnessing a retreat in the daily Covid infections from a record high. On the Eurozone front, the sentiment remains supportive of the Euro in that the European Central Bank remains committed to raising interest rates to dampen high inflation.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Tuesday as the S&P 500 rebounded back slightly with gains in energy and financial firms tempered a slide in big tech. The S&P 500 was down 0.2% on a daily basis and the Dow Jones Industrial Average was little changed with a 0.1% loss for the day. Six out of eleven sectors in the S&P 500 stayed in negative territory as the Information Technology sector and the Utility sector are the worst performings among all groups, losing 0.98% and 0.73%, respectively. The Nasdaq 100 meanwhile dropped the most with a 0.7% loss on Tuesday and the MSCI World index was unchanged for the day.

Main Pairs Movement

The US dollar advanced higher on Tuesday, preserving its upside momentum and extending its daily gains towards the 106.80 area amid a cautious market mood. The 10-year US Treasury yields have accelerated to 3.75% as Fed policymakers see no halt in rate hike culture in the near term, which helped the US Dollar Index (DXY) to print a three-day uptrend despite softer statistics from the United States. This week, the US Nonfarm Payrolls (NFP) is the key event that investors will focus on.

GBP/USD retreated slightly on Tuesday with a 0.06% loss as the cable dropped to a daily low near the 1.1940 mark in the late US trading session amid a cautious market mood. On the UK front, the speech from Bank of England (BOE) Governor Andrew Bailey on Tuesday failed to provide support for the British Pound. Meanwhile, EUR/USD suffered from daily losses and pared the biggest monthly gains since September 2010 amid a stronger US dollar across the board. The pair was down almost 0.10% for the day.

Gold advanced higher with a 0.49% gain for the day after struggling around the $1,750 level ahead of Fed Powell’s speech during the US trading session, as expectations for a less aggressive policy tightening by the Federal Reserve underpinned the precious metal. Meanwhile, WTI Oil advanced sharply with a 1.24% gain for the day.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD was having difficult time gathering upside strength and hovering around the 1.0335 level as of writing, with Wall Street’s main indices declining further after the opening bell, the US Dollar was trying to attract positive traction and weighing on the pair. Earlier, the euro was initially boosted by the hopes of a potential easing in China’s strict pandemic restrictions following an unprecedented episode of unrest in the country. However, the pair failed to preserve its daily gain during the US trading session. The Conference Board’s (CB) index shaved off 2 points to come in at 100.2, a hair above the 100 consensuses. In the meantime, flash euro zone inflation figures for November are due on Wednesday, with economists polled by Reuters expecting inflation to come in at 10.4% year-on-year. The key event, however, for Wednesday will be in the comments from Fed Chair Jerome Powell. These will be scrutinised for new signals on further tightening. The Fed is widely expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14.

From a technical perspective, the four-hour scale RSI indicator edged lower to 43 figures as of writing, suggesting that the pair was amid negative traction. As for the Bollinger Bands, the pair was priced in the lower area and supported by the lower band. As a result, in case the pair was falling below the lower band, the bears have the chance to test the weekly low 1.0228 level.

Resistance: 1.0497, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD has turned south and fell below the 1.2000 level in the second half of the day on Tuesday, as the negative shift witnessed in risk sentiment seems to be helping the US Dollar find demand and forcing the pair to stay on the back foot. The US equities wavered as Wall Street opened, as the St.Louis Fed President James Bullard said that the Fed has “a ways to go to get a too restrictive policy,” adding that the first 250 bps was to get rates neutral. He emphasized that rates need to be at around 5% to 7% through 2023 and 2024. In fact, money market futures have priced in a 50 bps hike in December, with odds of a 75 jumbo increase at 15%. Apart from this, the Covid-19 outbreak has not escalated as initially thought, as global equities remained mixed but tilted to the upside on early Tuesday. According to the Wall Street Journal, the National Health Commission urged local governments to avoid unnecessary and lengthy lockdowns.  On the data side,  the Conference Board (CB) Consumer confidence, decreased to 100.2 a 4-month low. Lynn Franco, senior director of economic indicators at the Conference of Board, said that the combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023.

From the technical perspective, the four-hour scale RSI indicator edged lower to 39 figures as of writing, suggesting that the pair was surrounded by strong bearish momentum. As for the Bollinger Bands, the pair was pricing along with the lower band and trying to find some support from it, meaning that the British Pound is likely to move downward in the near future.

Resistance: 1.2123, 1.2253

Support: 1.1765, 1.1647, 1.1366

XAUUSD (4-Hour Chart)

The XAUUSD rallied on Tuesday, recovering after Monday’s slide. The gold price has almost reversed the previous day’s losses, having captured the $1750 mark amid a renewed sell-off in the US Dollar across its main rivals. Earlier on Tuesday, the three-day coronavirus lockdown-induced protests across China eased. Chinese equity markets rebounded firmly on expectations that the government will further relax its zero-Covid policy after the weekend protests. China’s authorities announced new property market measures while Global Times tweets suggested that the government could do away with its stringent zero-Covid policy sooner. These developments from China improved the market risk sentiment and triggered a sharp retreat in the safe-haven greenback, which, in turn, boosted the dollar-denominated gold. Nevertheless,  the further recovery in Gold prices could be capped by the buoyant tone seen around the US Treasury bond yields, which recovered sharply on Monday after the hawkish commentary from the US Federal Reserve officials.

From the technical perspective, the four-hour scale RSI indicator recovered to neutral level 48 figured as of writing, suggesting that the gold has not made a decisive move. As for the Bollinger Bands, the pair was fluctuating around the 20-period moving average, signalling that the yellow metal would get into a consolidation phase ahead of any surprising event.

Resistance: 1785, 1800

Support: 1740, 1704, 1671

Economic Data

US stocks declined sharply on Monday, witnessing heavy selling and were dragged down by safe-haven demand as investors were concerned about a global slowing economy and the spread of coronavirus in China. Investors’ sentiment soured as Federal Reserve officials stressed that more rate hikes are coming, as New York Fed President John Williams on Monday said that he believes the Fed will need to raise rates to a level sufficiently restrictive to push down on inflation.

However, investors are now looking ahead to Jerome Powell’s speech Wednesday, with many economists expecting he’ll cement bets that the Fed will slow its pace of rate increases next month. Moreover, China’s prolonged Covid restrictions weighed on investor sentiment as local governments tightened Covid controls and case numbers last week hit records since the pandemic began. On the Eurozone front, European Central Bank (ECB) policymaker Peter Kazimir said earlier in the day that the risk of recession in the Eurozone was growing, which exerted bearish pressure on the Euro.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Monday as the S&P 500 pared its monthly gain amid hawkish comments from Fed Bank of St. Louis President James Bullard. The S&P 500 was down 1.5% daily and the Dow Jones Industrial Average dropped lower with a 1.4% loss for the day. All of the eleven sectors in the S&P 500 stayed in negative territory as the Real Estate sector and the Energy sector are the worst performing among all groups, losing 2.80% and 2.74%, respectively. The Nasdaq 100 meanwhile dropped with a 1.40% loss on Monday and the MSCI World index was down 1.4% for the day.

Main Pairs Movement

The US dollar advanced higher on Monday, regaining upside traction and extending its daily gains towards the 106.50 area amid a downbeat market mood. The hawkish comments from the Federal Reserve (Fed) policymakers and the Covid woes emanating from China both acted as a tailwind for the haven greenback. The President and CEO of the Federal Reserve Bank of St. Louis have said that rates need to go higher to bring inflation down.

GBP/USD retreated sharply on Monday with a 1.10% loss as the cable dropped to a daily low near the 1.1940 mark in the late US trading session amid a risk-off market sentiment. On the UK front, there will be several BoE members due to speak this week, including BoE governor Andrew Bailey on Tuesday and chief economist Huw Pill on Wednesday. Meanwhile, EUR/USD suffered from daily losses and retreated towards the 1.0360 level amid a stronger US dollar across the board. The pair was down almost 0.53% for the day.

Gold tumbled lower with a 0.77% loss for the day after extending its daily slide to the $1,741 area during the US trading session, as China’s Covid-19 riots across the country weighed on the precious metal. Meanwhile, WTI Oil advanced sharply with a 1.26% gain for the day as OPEC+ is seen considering deeper output cuts amid a faltering market.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD lost its traction in the second half of the day and declined below 1.0400, with Wall Street’s main indices pushing lower after the opening bell amid renewed China coronavirus jitters, the US dollar started to gather strength and forced the pair to turn south. Investors adopted a cautious stance to begin the week as China reported record-high coronavirus infections for the fifth straight day on Sunday. The Euro Stoxx 600 index is down nearly 1% on the day and US stock index futures are losing between 0.5% and 0.7%, reflecting the sour market mood.  At the meantime, European Central Bank policymaker Peter Kazimir said earlier in the day that the risk of recession in the Eurozone was growing. However, another ECB policymaker Klaas Knot argued that recession was not a “foregone conclusion.” The president of ECB, Christine Lagarde, will testify before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels. In case Lagarde acknowledges the rising risk of a prolonged economic downturn in the Eurozone, the pair could lose its traction, vice versa.

From the technical perspective, the four-hour scale RSI indicator fell sharply following the opening of American trading hour and 46 figured as of writing, suggesting that the pair was surrounded by heavy selling pressures. As for the Bollinger Bands, the pair was testing the lower band around the 1.0338 level. We think if the price fell below the lower band, the pair was more favoured to the downside path shortly.

Resistance: 1.0497, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD came under heavy bearish pressure and declined under the 1.2000 level as of writing. In the absence of high-impact data releases, the renewed US Dollar strength and the negative shift witnessed in risk mood force the pair to stay on the back foot. The president of the Federal Reserve bank of St.Louis has said that rates need to go higher to bring inflation down and the recession is not inevitable, which provides a boost for the US Dollar, which, in turn, weighs on the pair. Apart from this, Coronavirus-related news from China forced investors to adopt a cautious stance at the beginning of the week and caused the British Pound to edge lower. China’s National Health Commission reported over 40K new coronavirus cases on Sunday, reviving concerns over China’s zero-Covid policy weighing on global economic activity. The DXY index witnessed fresh transactions during the US trading session, rebounding from the daily low to 106.48 level at the moment of writing, further hurting the GBPUSD pair.

From the technical perspective, the four-hour scale RSI indicator dropped to 40 figures as of writing, suggesting that the pair was amid strong negative traction. As for the Bollinger Bands, the pair was pricing below the lower band, indicating that the downside tendency would persist until returning above the under the band.

Resistance: 1.2124, 1.2253

Support: 1.1765, 1.1645, 1.1363

XAUUSD (4-Hour Chart)

The XAUUSD tumbled after hitting a fresh weekly high at $1763 marks, as the US Dollar regained bullish momentum during the American trading session. The president of the Federal Reserve bank of St. Louis, James Bullard, has said that rates need to go higher to bring inflation down and recession is not inevitable. In addition, the New York Fed Bank president, John Williams, said that he believes the Fed will need to raise rates to a level sufficiently restrictive to push on inflation and keep them there for all of next year. These hawkish comments provide support for the US Dollar, which undermined the Dollar-denominated gold. Furthermore, global equities are trading in red, as China protesters take the streets sparked by the Covid-19 zero-tolerance policy and mass testing. According to Bloomberg, “the protests are shaping up one of the biggest threats to the Communist Party since the 1989 Tiananmen crackdown,” keeping the yellow metal defensive.

From the technical perspective, the four-hour scale RSI indicator dropped dramatically to 41 figures as of writing, suggesting there is a heavy bearish pressure weighing the XAUUSD pair. As for the Bollinger Bands, the gold was breaking through the lower band and aimed for the multi-week low of $1729 marks. Gold was more favoured to the downside path shortly unless there is any big change in the market risk sentiment.

Resistance: 1784, 1800

Support: 1748, 1704, 1671

Economic Data

The US Department of Labor reported that non-farm payrolls rose by 261,000 last month, more than economists had forecasted. The increase in hiring was driven by more people entering the labour force.

Meanwhile, private payrolls rose by 239,000 in October according to a report from ADP, with the leisure and hospitality industry seeing the most gains.

Here’s what to expect from the week ahead:

Canadian Gross Domestic Product M/M (29 November)

Preliminary estimates show that the Canadian economy grew by 0.4% in the third quarter of 2022, with 0.1% growth from August to September.

US ADP Non-Farm Employment Change (30 November)

The private sector produced 239,000 new jobs in October of 2022, the most since July. Analysts forecast another 200,000 new jobs in November.

OPEC Meetings (1 December)

The Organization of the Petroleum Exporting Countries (OPEC+) had no plans to ease production limits and could take further measures to balance the market should oil prices continue to slide downwards.

OPEC+ also announced that it will maintain the current two-million-barrel-per-day production cut until the end of 2023. The organization hinted that, in the future, they might reduce production further to balance supply and demand. They also suggested that they are always ready to intervene in the oil market.

Swiss Consumer Price Index (1 December)

The Swiss Consumer Price Index rose 0.10% in October over the previous month.

Analysts expect an increase of another 0.10% for November.

US Core PCE Price Index M/M (1 December)

In August, the core personal consumption expenditures index for the US, excluding food and energy, grew by 0.6%. Analysts expect this index will be at 0.4% in September.

US ISM Manufacturing PMI (1 December)

The US Institute for Supply Management’s Manufacturing PMI index fell from 50.9 in September to 50.2 in October.

This suggests that factory activity has expanded at its slowest rate since mid-2020. A PMI of 50 is expected for November.

Canadian Employment Data (2 December)

Canada’s economy added 108,300 jobs in October, the most since February. The unemployment rate remained at 5.2%.

Analysts had forecast a decrease of 20,000 jobs and an unchanged unemployment rate of 5.4%.

US Non-Farm Employment Change (2 December)

The US economy added 261,000 jobs in October, and economists expect 200,000 jobs to be added in November, according to recent estimates. The unemployment rate is expected to remain unchanged at 3.7%.

US stocks were little changed on Friday, having a shortened trading session following the US Thanksgiving holiday amid the prospect of the Federal Reserve moderating the pace of its policy tightening. Investors’ sentiment was boosted this week after the Federal Reserve’s Nov. 1-2 meeting minutes showed most officials backing slowing the pace of interest-rate hikes. Meanwhile, economic data somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

However, coronavirus fears in China joined the protest against the government’s Zero-Covid policy to add to the market’s woes. China has been using a stringent policy to limit the virus spread but the outcome hasn’t been a positive one so far, as the country reported an all-time high of COVID-19 daily cases with nearly 40,000 new infections on Saturday.

On the Eurozone front, investors are waiting for the structure of the price cap on Eurozone gas, as the EU authorities are planning to levy a ceiling on energy prices to safeguard households from a sheer decline in their real income.

The benchmarks, S&P 500 and Dow Jones Industrial Average both were little changed on Friday as the S&P 500 wavered for most of Friday’s shortened trading session. The S&P 500 was down 0.03% on a daily basis and the Dow Jones Industrial Average climbed higher with a 0.4% gain for the day. Seven out of eleven sectors in the S&P 500 stayed in positive territory as the Real Estate sector and the Utility sector are the best performing among all groups, rising 0.64% and 0.63%, respectively. The Nasdaq 100 meanwhile dropped the most with a 1.09% loss on Friday and the MSCI World index was up 0.4% for the day.

Main Pairs Movement

The US dollar advanced higher on Friday, failing to preserve its upside traction and surrendered some of its daily gains amid thin volumes on the Thanksgiving Day holiday. The US Dollar attracts some buyers on the last day of the week as investors digest Wednesday’s dovish FOMC meeting minutes. Investors seem convinced that the Fed will slow the pace of its policy tightening and have now fully priced in a 50 bps rate hike at the December meeting.

GBP/USD retreated lower on Friday with a 0.17% loss as the cable moved away from its highest level since August 12 around the 1.2150-1.2155 region amid a modest pickup in the USD demand. On the UK front, the market expects that the Bank of England will continue to raise borrowing costs to combat stubbornly high inflation. Meanwhile, EUR/USD dropped to a daily low below 1.0360 level but then rebounded slightly as the market mood is extremely quiet amid the holiday in the United States. The pair was down almost 0.14% for the day.

Gold was nearly unchanged with a 0.02% loss for the day after recovering from a daily low near the $1,748 area during the US trading session, as the modest US Dollar strength and a positive risk tone exerted bearish pressure on the precious metal. Meanwhile, WTI Oil declined sharply with a 2.13% loss for the day amid ongoing China’s Covid-19 outbreak.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD was struggling to hold the ground above the 1.0400 level during the US trading session and trading at 1.0401 as of writing. Trading conditions remain thin on Black Friday and the pair has a big chance to end the week in positive territory. Investors are punishing the US Dollar as Fed policymakers have stated a slowdown in the interest rate hike. Fed policymakers believe that headline the United States Consumer Price Index (CPI) has displayed signs of severe exhaustion, therefore, it would be optimal to go on a light note on policy rate. However, the core CPI that excludes oil and food prices has not shown a significant drop. The Federal Reserve’s dovish stance boosted the market risk sentiment and undermined the safe-haven greenback. The better tone in the risk complex also underpinned the pair’s price actions, while auspicious results from the German calendar also add to the optimism around the currency. In fact, final GDP figures saw the German economy expand 1.3% YoY in the July-September period and 0.4% vs. the previous quarter. In addition, December’s Consumer Confidence tracked by GfK improved to -40.2.

From the technical perspective, the four-hour scale RSI indicator figured 60 following a touching daily low around 50, suggesting that the pair now had not made a decisive movement. As for the Bollinger Bands, the pair was pricing in the upper area and supported by a 20-period moving average, meaning that the pair was more favoured to the upside path in the near term.

Resistance: 1.0479, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD slid below the 1.2100 level on Black Friday and remained on the back foot during the US trading session. As market participants digest Wednesday’s FOMC meeting minutes, the US Dollar attracts some buyers on the last day of the week and acts as a headwind for the pair. A modest uptick in the US Treasury bond yields turns out to be a key factor prompting some short-covering around the buck amid relatively thin trading conditions. However, the attempted greenback recovery lacks any obvious fundamental catalyst and runs the risk of fizzling out rather quickly. Apart from this, firming expectations that the Bank of England will continue to raise borrowing costs to combat stubbornly high inflation. This might provide support for the British Pound and boosts prospects for the emergence of some dip-buying around the GBPUSD pair. In the absence of any relevant economic data, the fundamental backdrop warrants caution before positioning for any further slide.

From the technical perspective, the four-hour scale RSI indicator fell below the overbought zone and 69 figured as of writing, suggesting that the pair was confronting a corrective pullback. As for the Bollinger Bands, the pair was stably pricing above the 20-period moving average, meaning the pair was surrounded by strong positive traction. As a result, we think they would move sideways in the near term unless breaking any critical level.

Resistance: 1.2159, 1.2253

Support: 1.1765, 1.1647, 1.1363

XAUUSD (4-Hour Chart)

The XAUUSD continues to move sideways at around the $1750 mark and ended the day with 0.13% losses, snapping a three-day winning streak. The US Dollar attracts some buying amid a modest uptick in the US Treasury bond yields, which, in turn, is seen as a critical factor acting as a headwind for the Dollar-denominated Gold price. Apart from this, a generally positive tone around the equity markets seems to dent demand for safe-haven Gold. However, firming expectations for a less aggressive policy tightening by the Federal Reserve keeps a lid on any meaningful gains for the USD. Apart from this, the worsening COVID-19 situation in China and the imposition of fresh lockdowns might also support the safe-haven XAUUSD. In the absence of any major market-moving economic releases, traders might also refrain from placing aggressive bets around gold prices amid relatively lighter trading volumes on the last day of the week.

From the technical perspective, the four-hour scale RSI indicator remained around 55 figures as of writing, suggesting that the pair are getting into the consolidation phase. As for the Bollinger Bands, the pair was supported by the 20-period moving average and pricing firmly in the upper area. Therefore, we think the yellow metal would hover in a range from 1747 to 1765, if successfully breaking through the $1785 mark, the bull has the chance to challenge the $1800 mark.

Resistance: 1784, 1800

Support: 1748, 1704, 1671

Economic Data

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US markets were closed due to the Thanksgiving holiday on Thursday, meanwhile, trading volumes are lower due to the holiday with no cash US equity market trading.

The Meeting Minutes from the Fed earlier this month indicated several officials backed the need to moderate the pace of rate hikes, which adds to expectations the central bank will raise rates by 50 basis points next month and end a run of jumbo 75 basis point increases. European stocks gained upside traction and climbed higher after Federal Reserve meeting minutes showed support for more moderate interest-rate increases.

The market mood was upbeat as Asian and European indexes closed in the green but some worrisome headlines may soon trigger a flip in investors’ sentiment. China reported that Beijing and other cities are going back into lockdown amid record coronavirus contagions in the country, which raised concerns that Chinese restrictions could interrupt global commerce and trigger fresh supply-chain issues.

On the Eurozone front, the German IFO Business Climate Index improves to 86.3 in November, which came in better than the market expectation of 85.0. Germany will release the December GFK Consumer Confidence Survey on Friday, foreseen at -39.6 from -41.9 in the previous month. On top of that, tensions between Russia and the EU continue to escalate, as  European Commission President Ursula von der Leyen announced they are working full speed on a 9th sanctions package on Moscow.

Main Pairs Movement

The US dollar declined slightly on Thursday, remaining under pressure and extended its weekly decline against most of its major rivals amid a generally upbeat market mood. The greenback was dragged down by the latest FOMC Meeting Minutes, which hinted at a potentially more discrete rate hike next December and the Fed might slow the pace of rate hikes after four 75 basis points hikes. The United States will not publish macroeconomic figures on Friday, and local markets are due to an early close.

GBP/USD advanced higher on Thursday with a 0.48% gain as the cable extended its daily gains towards three-month highs near the 1.2150 mark following the FOMC minutes. On the UK front, a hefty 75 bps rate hike from the BoE this month failed to support the pound as gloomy UK economic forecasts still remained. Meanwhile, EUR/USD failed to climb higher and stuck to a range of between 1.0380 and 1.0430 as liquidity is thinner than usual during the Thanksgiving holiday. The pair was up almost 0.13% for the day.

Gold advanced slightly with a 0.32% gain for the day after climbing towards the $1,758 area and remained sideways during the US trading session, as the optimism in the overall market and the falling greenback both provided support to the precious metal. Meanwhile, WTI Oil was nearly unchanged with a 0.03% gain for the day.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD continues to trade modestly higher on the day above 1.0400 at the moment of writing,  as trading action turns subdued on Thanksgiving day. The US celebrates the Thanksgiving holiday, which means all markets will be closed for the day. Activity will resume on Friday, although US markets are due to close early, meaning little to no activity could be expected ahead of the weekend, with no macroeconomic figures scheduled for these days. Apart from this, the ECB’s October meeting account showed that some members preferred a 50 bps rate hike, but this comment had no impact on the pair. Eurozone inflation data will be released next week, which is expected to show price growth slowed over the course of the month, but remains elevated. While energy prices have come down and supply chain disruptions have eased, natural gas supply disruptions have kept inflation well above European Central Bank’s target. Across the pond, Germany published the November IFO survey. The Business Climate improved by more than anticipated, hitting 86.3 after the October reading was confirmed at 84.5.

From the technical perspective, the four-hour scale RSI indicator figured 62 following touching the critical overbuying level of 70, suggesting that the pair amid strong bullish momentum. As for the Bollinger Bands, the pair was pricing in the upper area and the size between upper and lower bands became larger. Hence, we think the upside movement was the path with the least resistance in the near term.

Resistance: 1.0479, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD extended its rally and climbed above the highest level since mid-August 1.2152 on Thursday, and the pair now was trading at 1.2117 level as of writing. The British Pound preserved its rising for the third consecutive day, with the US Dollar remaining under the pressure following the FOMC meeting. Expectations that the US central bank might slow the pace of rate hikes after four 75 basis points hikes weighed on the Greenback and boosted Treasuries. The Federal Reserve will likely continue to raise rates as inflation remains elevated and far from the target. The UK’s first readings of S&P Global/CIPS Manufacturing PMI for November reprinted 46.2 figures versus 45.8 market forecasts while the Services counterpart also followed the suit while again flashing 48.8 numbers compared to the 48.0 expected figure. It’s worth noting that the cautious optimism surrounding China’s ability to overcome the Covid woes and readiness for further stimulus appeared to favour the risk-on mood. However, the off in the United States due to the Thanksgiving celebration limited any further movement.

From the technical perspective, the four-hour scale RSI indicator continued to stay in the overbought zone and figured pf crazily high 78, suggesting that the pair were surrounded by strong positive traction. As for the Bollinger Bands, the pair was pricing along with the upper band and the size between the upper and lower bands became larger, meaning that they would move upward if the pair could stand firmly above the two-month high 1.2159 level.

Resistance: 1.2081, 1.2147

Support: 1.1765, 1.1647, 1.1367

XAUUSD (4-Hour Chart)

The XAUUSD is up for a third consecutive day, trading near a fresh weekly high of $1,758 marks as of writing, with the US Dollar remaining on the back foot throughout Thursday and extending the negative traction post-FOMC Meeting Minutes. The document hinted at a slower pace of rate hikes coming, with market participants adding bets to price in a 50 bps increase in December. Nevertheless, investors should know that Federal Reserve Officials are uncertain how high rates will end, with most policymakers expressing that 5% could be the peak. In the meantime, US Treasury yields extended their losses, with the 10-year T-bond yield dropping six bps, down to 3.66%, acting as a tailwind for the non-yielding gold. The US Dollar index (DXY), a gauge of the buck’s value against a basket of rivals, tumbled by 0.2% and priced at 105.9 as of writing. The financial markets’ activity halted ahead of London’s close as a holiday in the US keeps all local markets closed. Wall Street will return on Friday for a shortened session, but Thanksgiving is usually seen as a long weekend holiday, and little could be expected in the upcoming hours.

From the technical perspective, the four-hour scale RSI indicator remained modest growth and printed 56, suggesting that the gold was moving upward at a mild pace. As for the Bollinger Bands, the yellow metal climbed along with the upper band, indicating that the pair was more favoured to the bullish path in the near term.

Resistance: 1748, 1784, 1800

Support: 1704, 1670

Economic Data

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US stocks advanced higher on Wednesday, preserving their upside momentum and ended the session higher after the Federal Reserve’s latest meeting minutes showed most officials backing slowing the pace of interest-rate hikes soon. Investors’ market mood improved as the Federal Reserve (Fed) officials discussed the need of slowing down the interest rate hikes.

The US FOMC Meeting Minutes showed that most participants agreed that a slower pace of interest rate hikes would be appropriate soon despite the risk of the inflation outlook remaining skewed to the upside. Most Fed officials also believe the monetary policy is approaching a sufficiently restrictive level. On the economic data front, the US Manufacturing PMI for November eased to 47.6 from 50.0 expected and 50.4 and the Services PMI declined to 46.1 compared to 47.9 market forecasts.

On the Eurozone front, the German Services PMI came to 46.4 and the Manufacturing PMI improved to 46.7. The November PMIs report showed that the Euro Area economy remains in contraction territory, although the figures beat the market expectations.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced higher on Wednesday as the S&P 500 notched gains for a second straight session as several Fed officials backed the need to moderate the pace of rate hikes. The S&P 500 was up 0.6% on a daily basis and the Dow Jones Industrial Average climbed higher with a 0.3% gain for the day. Ten out of eleven sectors in the S&P 500 stayed in positive territory as the Consumer Discretionary sector and the Communication Services sector are the best performing among all groups, rising 1.33% and 1.21%, respectively. The Nasdaq 100 meanwhile advanced the most with a 1.0% gain on Wednesday and the MSCI World index was up 1.1% for the day.

Main Pairs Movement

The US dollar declined sharply on Wednesday, coming under pressure and finished the day down against all of its major rivals amid poor growth-related data and dovish US FOMC Meeting Minutes. The greenback marked the biggest daily slump in two weeks as the Fed officials discussed the need of slowing down the interest rate hikes. Chances of a 50 bps hike rose to 79% following the release while the terminal rate is now seen at 5.03%.

GBP/USD surged higher on Wednesday with a 1.42% gain as the cable rallied back above the 1.2000 mark after the release of mixed economic data from the US. On the UK front, the UK S&P Global PMIs were better than anticipated but signal persistent economic contraction in the country. Meanwhile, EUR/USD maintained its bullish tone and traded near the 1.0410 level following the release of the FOMC Meeting Minutes and a weaker US dollar across the board. The pair was up almost 0.90% for the day.

Gold advanced slightly with a 0.54% gain for the day after extending its rally towards the $1752 area during the US trading session, as the dovish Federal Reserve Minutes helped the precious metal to find demand. Meanwhile, WTI Oil holds lower ground at a weekly low after the biggest daily fall in two months. Oil price remains bearish around the $77.50 area.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD regained bullish strength and was trading above the 1.0360 level as of writing, with the greenback losing upside momentum following the release of economic reports. On Wednesday, economic data showed an increase to a multi-week high in jobless claims, which printed 240K compared to the previous 223K, offset by a bigger-than-expected increase in Durable Goods Orders. Moreover, the November preliminary PMI S&P Global showed a decline in the Composite index to 46.3 from 48.3, below the 47.7 market consensus. New Home Sales jumped 7.5%, surpassing expectations. The University of Michigan Consumer Sentiment Index recovered from 54.7 to 56.8, above the 55 expected. The U.S. Crude Oil Inventories, which measures the weekly change in the number of barrels of commercial crude oil held by US firms, weakly gained too -3.691M, below the -1.055M of market forecast. While investors were pricing in the releases of a combination of data, the US dollar was losing ground across the board as US yields tumbled. The DXY index was falling by 0.73%, and the US 10-year yield slid to 3.73%, which underpinned the pair. Later, the FOMC will be released. Investors will look for clues about a potential slowdown in rate hikes, which may have a huge impact on the pair.

From the technical perspective, the four-hour scale RSI indicator surged to 62 figures as of writing, suggesting that the pair was amid strong bullish momentum. As for the Bollinger Bands, the euro is trading near the upper band, if successfully breaks through the upper band and there is no surprisingly bad news from FOMC, the pair has the chance to challenge the recent high of 1.0479 level.

Resistance: 1.0479, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD surged and touched its highest level since mid-August above 1.2050 following the release of mixed economic data out of the United States, weighing on the US Dollar. At the same time, a risk-on impulse keeps European and US equities trading with gains ahead of the release of the Federal Reserve’s last meeting minutes this year. Data released from the US came mixed, undermining the US Dollar. The University of Michigan Consumer sentiment came at 56.9, above estimates but below the preliminary reading of November. Delving into the report, 1-year inflation expectations were lowered from 5.1% to 4.9%, while the 5-10 year horizon remained unchanged at 3.0%. Furthermore, US New Home Sales surprisingly jumped to 632K from 570K, even though higher mortgage rates, nearly 7%, were sparked by the Federal Reserve tightening monetary conditions. Earlier, S&P Global reported that October’s Manufacturing, Services, and Composite PMIs for the US, are flashing a recession, remaining each at 47.6, 46.1, and 46.3 respectively. Apart from this, the US Department of Commerce revealed that Durable Good Orders in October rose by 1%, above 0.4% estimates. After a combination of US data releases, investors now are awaiting for the later Federal Reserve meeting minutes to look for clues about the rate hikes policy.

From the technical perspective, the four-hour scale RSI indicator surged to 73 figures as of writing, suggesting that the pair has entered into an overbuying zone, and a corrective pullback could be expected. As for the Bollinger Bands, the pair was trading above the upper band and the size became larger, which is a signal that the upside momentum remained its strength.

Resistance: 1.2081, 1.2147

Support: 1.1765, 1.1647, 1.1367

XAUUSD (4-Hour Chart)

The XAUUSD registered minuscule gains of 0.19% and was trading at $1743 marks following the release of economic data from the United States, as the busiest day of the current week calendar failed to provide support for the US Dollar ahead of the Federal Reserve monetary policy meeting minutes. The Core Durable Good Orders rose sharply, by 1% compared to September’s 0.3%, showing consumers’ resilience amidst a time of high inflation, elevated borrowing costs, and a deteriorated economic outlook. Delving into the report, core Durable Orders, which exclude transportation and aircraft, rose 0.5% MoM for the same period, well above September’s -0.9% contraction, and expectations of coming unchanged. However, the US Department of Labor revealed that Initial Jobless Claims for the week ending on November 19 increased to 240K above estimates of 225K, amidst a period of high-tech companies laying off workers. Meanwhile, continuing claims climbed by 48K to 1..55 million in the week ended November 12, the highest since March, flashing signs that the labour market is easing. Later, Federal Reserve Open Market Committee (FOMC) minutes from the November meeting, which analysts will scrutinize.

From the technical perspective, the four-hour scale RSI indicator edged higher to 49 figures as of writing, suggesting that the gold has not made any decisive move. As for the Bollinger Bands, the yellow metal was trading around a 20-period moving average and the size between the upper and lower bands got closer. Hence, we think if there is no surprising news from FOMC minutes, the gold would put into sideway in the near future.

Resistance: 1748, 1784, 1800

Support: 1704, 1670

Economic Data

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