The financial markets will be monitoring the Bank of Japan policy statement this week. The central bank is expected to keep its short-term interest rate at -0.1%, the same as the previous month. 

Meanwhile, Canada will also be under scrutiny, as its Consumer Price Index is expected to rise by 0.4% in November.

Here are the upcoming events for this week:

Bank of Japan Monetary Policy Statement (20 December)

In its October policy statement, the Bank of Japan kept its key short term interest rate at -0.1% and that for 10-year bond yields around 0%. However, it revised its inflation forecast to 2.9% from 2.3% in July, citing surging prices of energy, food, and durable goods.

Analysts expect the bank to keep its policy unchanged for this month.

Canada’s Consumer Price Index (21 December)

Canada’s Consumer Price Index (CPI) increased by 0.7% in October over the previous month. According to analysts, Canada’s CPI is expected to rise a further 0.4% in November.

Canada’s Gross Domestic Product (23 December)

The Canadian economy expanded by 0.1% in September, reversing an upwardly revised 0.3% increase in August.

Economists expect the country’s gross domestic product to be unchanged in October.

US Core PCE Price Index (23 December)

The US Core PCE Price Index, excluding food and energy, increased by 0.2% month-on-month in October compared with 0.5% in September.

Analysts expect the index to rise by another 0.2% in November.

US stocks confronted the longest weekly losing streak since September, as investors were concerned that the Federal Reserve’s resolve to keep raising rates could tip the economy into a recession. Market participants had cheered the softer-than-expected inflation data earlier this week.

However, that euphoria faded as Fed officials hammered home the message that rates will go higher for longer until they’re confident inflation has been subdued. While the Fed raised rates by an expected 50 basis points on Wednesday, risk assets have been on the back foot ever since policymakers signalled a peak rate that was above market expectations. A wave of rate hikes and hawkish outlooks from central banks across the globe, including the European Central Bank, further bruised sentiment this week.

The benchmarks, the S&P500 and the tech-heavy Nasdaq 100 closed the session lower for a third day. The S&P500 dropped lower with 1.11% on Friday and the Nasdaq 100 was down by 0.9% for the day. All eleven sectors of the S&P500 stayed in the negative territory, as the Real Estate sector performed the worst among all groups, falling by 2.96% on a daily basis. Meanwhile, the Dow Jones Industrial Average edged lower by 0.9% on a daily basis and the MSCI world index tumbled by 2.4% on Friday.

Main Pairs Movement

The US Dollar edged higher by 0.27% on a daily basis, as investors are consuming the Federal Reserve’s resolve to raise interest rates higher and longer. The DXY index extended its upside momentum since late UK trading and ended at a level above 104.8.

The GBPUSD slid by 0.25% for the day, as the Bank of England raised its policy rate by 50 basis points following the December policy meeting as expected. The pair dropped to a daily low level below 1.2120 during the UK trading session. Meanwhile, the EURUSD dropped nearly 0.55% during the US trading hour with investors consuming that European Central Bank announced that it raised key rates by 50 basis points. The pair fell 0.4% on Friday.

The XAUUSD surged by 0.91% for the day, managing to erase some losses from the biggest weekly loss in four. The gold price witnessed some positive traction during the UK trading hours, regaining the huge fall from last Thursday.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD traded lower on the last trading day of the week. Despite falling on the last two trading days of the week, EURUSD still posted a weekly gain of more than 0.5%. The Euro underperformed against the Dollar on the last two trading days as recessionary fears and risk-off sentiment prevailed across markets. Released during last Friday’s American trading session, the lower-than-expected U.S. PMI figure dragged on U.S. equities as market participants reassess the slowing down of purchasing and the U.S. economic outlook. Furthermore, the higher-than-anticipated European region CPI did little to boost sentiment surrounding the Euro. The ECB’s decision to hike rates on the 15th did not create the expected upward boost for the Euro, rather the decision is criticized as being a late reaction, which is proven by Friday’s CPI upside surprise. On the economic docket, U.S. GDP and weekly initial jobless claims will be released on the 22^nd, while no major economic data releases are scheduled for the Euro.

On the technical side, EURUSD continues to retreat from our previously estimated resistance level of 1.0785. The 76.4% Fibonacci retracement level of 1.0538 now presents itself as a short-term support level for the pair. RSI for EURUSD sits at 42.44, as of writing. On the four-hour chart, EURUSD is currently trading below its 50, 100, and 200-day SMA.

Resistance: 1.0785

Support: 1.0538,  1.031

GBPUSD (4-Hour Chart)

The pound looks set to be under severe pressure against the dollar by the end of the week, with weak economic data on Friday stoking fears of a recession. BoE raised interest rates by 0.5%, bringing the benchmark rate to its highest level since 2008 (3.5%). However, it was not strong enough to prevent the Cable from suffering the biggest decline in past six weeks in one day. Although six of the nine Monetary Policy Committee members were in favour of the decision, and one wanted stricter action, the market still interpreted the move as a dovish rate hike. BoE Governor Andrew Bailey said we may see a glimmer of hope that inflation may be slowing. But even so, he said that further rate hikes may still be appropriate given the tightness of local labour conditions. Nevertheless, the market made its choice and the pound fell. Also, the December PMI data showed that the dominant service sector remained in expansionary territory, while manufacturing improved slightly this month. Companies reported that price pressures eased further from this year’s record highs. However, these figures do not dispel market fears of a recession in the UK and have put pressure on the pound during the European session.

On the technical side, GBPUSD failed to reach our previously estimated resistance level of near the 1.26 price region. The short-term support level for the pair remains at around the 1.19 and 1.176 price region. RSI(14) for the pair sits at 44.77, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.2666, 1.3000

Support: 1.1900, 1.176

XAUUSD (4-Hour Chart)

Gold raise more than 0.5% as of writing during Friday’s trading session. After the hawkish message from the US Federal Reserve on Wednesday, the ECB followed right behind the pace, making it clear that there would be more than 50 basis points of rate hikes in the following meetings. This took markets surprised and triggered a rally in EURUSD, but was reversed immediately as the Fed remains in the lead. In other gold-related news, India plans to invite tenders to extract gold from 50 million tons of processed ore from colonial-era mines in the southern state of Karnataka, Reuters reported, citing a senior government official with direct knowledge of the matter. The potential increase in gold supply has negatively impacted the outlook for gold prices.

In other gold-related news, India plans to invite tenders to extract gold from 50 million tons of processed ore from colonial-era mines in the southern state of Karnataka, Reuters reported, citing a senior government official with direct knowledge of the matter. The potential increase in gold supply has negatively impacted the outlook for gold prices.

On the technical side, if the price stabilizes above $1,790 and confirms that level as support, it could test $1,800 in the near term and then aim for $1,830 (50% Fibonacci retracement of the long-term downtrend). RSI(14) for the yellow metal sits at 57.66, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, and 100-day SMA but above its 200-day SMA.

Resistance: 1800, 1810, 1830

Support: 1790, 1775

Economic Data

VT Markets, a global multi-asset broker, has announced their overall company performance for 2022. This year, they have further established their position as one of the fastest-growing, most innovative and best-performing brokerages in the industry. 

Significant growth was observed in two key areas of their trading platform — total number of active traders and total volume of trade. Since 2021, the total number of active traders on VT Markets surged by 140%, while the total trading volume saw a 125% increase.

VT Markets’ success was driven by an emphasis on innovation, product diversification and expansion into newer markets. The brokerage ventured beyond traditional trading products, and offered more diverse instruments such as indices, bonds, and ETFs. They also expanded their business operations globally. 

In the last quarter of the year, VT Markets also launched their exclusive loyalty program, VT Markets ClubBleu. This rewarding initiative was put in place as recognition for its clients  who have played a key role in contributing to the growth of the company. 

When reflecting upon the huge strides that VT Markets has taken the past year, Chris Nelson-Smith, Director at VT Markets, commented, “We’re proud of how far we’ve come as a brokerage, and of all the outstanding results we’ve achieved this year. Our customer-centric approach is testament to how much we recognise and value our clients who have unreservedly been an integral part of our long-term success. We are truly grateful for their support, and we promise to continue providing reliable products and personalised services to cater to their needs.”

“We are committed to continuing to develop our offerings to keep up with the changing markets and industry trends so that we can continue to be industry leaders. We look forward to emulating the successes we’ve achieved so far, and  would like to extend our sincerest thanks to all of our clients for their continued trust in VT Markets,” Chris Nelson-Smith added. 

This Friday, after hawkish signals from central banks, sparked a rout in US and European shares and a rally in the dollar. The S&P 500 closed at its lowest level in more than a month and the dollar climbed the most since September as investors sought haven assets after warnings by the Federal Reserve and the European Central Bank of more pain to come. The greenback rallied since early Asia, as China published discouraging macroeconomic figures. On Thursday, The Bank of England, the Switzerland National Bank and the European Central Bank announced their decisions. The three banks hiked rates by 50 bps, the risk-off mood comes as central banks this week eased back from the larger hikes seen for much of this year but revised up their expectations for how high rates may need to go, which cause US indexes to plummet, and the dollar soared.

The Dow Jones Industrial Average has dropped 2.25% to close at 33202.22. The S&P 500 dropped 2.49% to close at 3895.75. The tech-heavy Nasdaq Composite dropped 3.23% to close at 10810.53. China and Hong Kong no longer face an acute threat of being booted off American stock exchanges. Weakening sentiment though is the US government blacklisting Yangtze Memory Technologies Co. and dozens of other Chinese tech companies, leads the huge fall of U.S. equity. This year, the global economy could be pushed into a recession and weighed heavily on riskier assets such as equities. Further, the US Treasury bond yields raised. U.S. 10-year treasury yield sits at around 3.464%. The policy-sensitive 2-year treasury yield sits at 4.252%.

Main Pairs Movement

The US Dollar bounced back from its 4 months lowest point, the risk-aversion drowned the Wall Street benchmarks and favoured the US Treasury bond yields, which in turn allowed the US Dollar Index (DXY) to print the biggest daily gain in 10 weeks, moreover, renewed fears of higher rates and recession weigh on the price while preliminary readings of the December month PMIs for the UK, Europe and the US will be crucial to determine the risk-off currency further downside.

The Gold price had been pressured by the ascending trend of DXY, which dropped 1.69%, price closed at $ 1776.875, and still can’t break the resistance at $1810, besides, a broad gamut of 0.50% rate hikes by the US Federal Reserve, Bank of England, Swiss National and the European Central Bank raised fears of higher rates across the board and weighed on the market sentiment, as well as the Gold price.

EUR/USD has found an intermediate cushion around 1.0600, the downside remains favoured on risk-off mood, and ECB sees two more 50 bps interest rate hikes consecutively to combat ramp-up inflation. The commentary from ECB President that food and energy inflation will continue to rise from January has created havoc among investors in the Eurozone economy. The country will face tremendous pressure due to the higher headline Consumer Price Index (CPI) and further escalation in catalysts will dampen the market mood.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD saw an extremely turbulent trading session throughout Thursday’s trading. The ECB announced a 50 basis point interest rate hike and a signal for further tightening. The hawkish move by the ECB sent the Euro-Dollar pair to its highest level since June during the European trading session, but the pair could not preserve momentum and soon met selling pressure, which forced the pair down into correction territory. Another key economic event that worked against the Euro was the surprisingly low U.S. retail sales figure, which triggered a quick sell-off of the Dollar and a subsequent rally that overshadowed the first wave of selloffs. U.S. equities retreated dramatically after Fed Chair Jerome Powell’s statement yesterday echoed through markets. All three major U.S. equity indices saw a drop of more than 2% as recessionary fears continue to grow. On the economic docket, E.U. CPI will be released during the final hours of today’s European trading session.

On the technical side, EURUSD could not break through our previously estimated resistance level of 1.0785, despite hawkish signals from the ECB. An upside surprise from today’s CPI release could provide the momentum that is needed for the Euro to finally advance above its short-term resistance. The support level for EURUSD remains at around the 1.031 price region. RSI for the pair sits at 48.76, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1.0785

Support: 1.046,1.031
 
GBPUSD (4-Hour Chart)

Cable dropped more than 1.7% throughout Thursday’s trading. The BoE, which raised interest rates by 50 basis points, failed to fuel the Pound upwards; instead, the slightly less hawkish signal from the BoE combined with a downward surprise of the U.S.’ retail sales figure sent Cable tumbling below the 1.22 price region. Despite a 50 basis point interest rate hike by the BoE, who raised rates by 75 basis points last time, the central bank continues to echo the Fed and its determination to bring inflation down as soon as possible. The BoE faces unique domestic and regional price pressures that the U.S. has not had to deal with; furthermore, with a gloomy economic outlook on the horizon, the Bank of England has decided to take a more cautious route as the bank navigates the British economy into 2023. On the economic docket, Britain will release its PMI figures during the latter part of today’s European trading session.

On the technical side, GBPUSD failed to reach our previously estimated resistance level of near the 1.26 price region. The short-term support level for the pair remains at around the 1.19 and 1.176 price region. RSI for the pair sits at 35.95, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.2666, 1.3000

Support: 1.1900, 1.176

XAUUSD (4-Hour Chart)

Gold fell more than 1.5% throughout Thursday’s trading. The yellow metal failed to find any traction throughout Thursday as global central banks raise rates in unison. Moreover, the downbeat industrial production and retail sales data from China amplified the losses for the precious metal. The lower-than-expected U.S. retail sales figures also hurt Gold prices as recessionary fears rise with consumer spending dropping more than analyst estimates. The Dollar index snapped its two-day losing streak and gained more than 0.9% to close out Thursday. The Greenback has recently been on a steady downward trend as interest rate expectations ease; however, the tumbling equities market could attract market participants into other asset classes such as fixed-income securities, which have been trading at a discount over the past two months due to soaring treasury yields. The yellow metal, on the other hand, remains a non-yielding asset class whose pricing is highly dependent on global geopolitical tensions and the performance of the Greenback.

On the technical side, Gold successfully defended our previously estimated support level of $1775 per ounce. The lower support level for Gold forms around the $1736 per ounce price region. RSI for the yellow metal sits at 35.81, as of writing. On the four-hour chart, XAUUSD currently trades below its 50-day SMA but above its 100, and 200-day SMA.

Resistance: 1810,1830

Support: 1800, 1795, 1775

Economic Data

Dear Client,

Warmly reminds you that the component stocks in the stock index spot generate dividends. When dividends are distributed, VT Markets will make dividends and deductions for the clients who hold the trading products after the close of the day before the ex-dividend date.

Indices dividends will not be paid/charged as an inclusion along with the swap component. It will be executed separately through a balance statement directly to your trading account, the comment for which will be in the following format “Div & Product Name & Net Volume ”.

Please note the specific adjustments as follows:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Dear Client,

As part of our commitment to provide the most reliable service to our clients, there will be server maintenance this weekend.

Maintenance Hours :

2022/12/17 00:00 – 24:00 (Server time)

Please note that the following aspects might be affected during the maintenance:

1. The features on VT Markets app/MT4/MT5 will be temporarily unavailable. You will not be able to open new positions or close existing positions.

2. There might be a gap between the original price and the price after maintenance. The gaps between Pending Orders, Stop Loss and Take Profit will be filled at the market price once the maintenance is completed.

3. Certain features on the Client Portal will be temporarily unavailable.

4. Please refer to MT4/MT5 for the latest update on the completion and market opening time.

Our services will be back online once the maintenance is completed.

Thank you for your patience and understanding about this important initiative.

If you’d like more information, please don’t hesitate to contact [email protected]

US stocks turned lower after the Federal Reserve released the raise of rates by half a percentage point. However, while the Fed has downshifted the pace of tightening, the message given to the financial markets is that they’re not done yet.

While the Fed has signalled its plans to keep lifting rates next year to combat high inflation Fed chair Jerome Powell was speaking and his comments seemed to have given mixed messages to the market. In US Treasury yields, the flips with the 10-year falling back from a high of 3.5610% to print 3.477% currently and on the way towards the day’s low of 3.46%.

Though the raise is 50bps this time, its economic projections see higher rates for a more extended period. the data comes in hotter than expected, but the investors projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023, as well as a rise in unemployment and a near-stalling of economic growth.

The Dow Jones Industrial Average has dropped 0.42% to close at 33966.35. The S&P 500 dropped 0.61% to close at 3995.32. The tech-heavy Nasdaq Composite dropped 0.76% to close at 11170.89. Despite the Fed statement, U.S. Treasury yields were slightly lower after initially jumping in the wake of the announcement, and the strategy of aggressive interest rate increases by major central banks around the world this year has increased worries the global economy could be pushed into a recession and weighed heavily on riskier assets such as equities this year. Further, the US Treasury bond yields go up and down. U.S. 10-year treasury yield sits at around 3.503%. The policy-sensitive 2-year treasury yield sits at 4.247%.

Main Pairs Movement

The US Dollar is tailing off from the highs that were made on what was perceived to be a hawkish rate hike of 50 basis points by the United States Federal Reserve. The US Dollar is back on its backside following a mixed reaction to the Fed event. While the Fed has signalled its plans to keep lifting rates next year to combat high inflation, and this is a sign of two-way price action in asset classes, including the US Dollar and bonds.

The Gold price had fallen back to $1806, and still can’t break the resistance at $1810, though there were volatile moves over the interest rate decision and policy guidance by the Federal Reserve. The precious metal displayed wild gyrations in the $1.796-1,814 range and has now turned extremely quiet 4 hours after the speech.

The EURUSD is aiming at breaking 1.0700, as per the investors’ estimated, EUR/USD soars as US CPI comes in below expectations, 1.0700 is a key level where a measured move of -0.272% of the potential correction’s range to support meets the prior mid-summer resistance looking left, the next level is 1.0790.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD traded 0.47% higher throughout yesterday’s trading. The 50 basis points interest rate hike by the Fed FOMC sent the Greenback higher, initially, but tides quickly turned after Fed Chair Jerome Powell began his speech. The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, saw a whiplash of more than 1% during Chair Powell’s speech, and the index eventually headed south after his speech concluded. Market participants will now turn their attention to the ECB’s monetary policy statements and interest rate decisions that are scheduled to be released during the late European trading session. ECB president Christine Lagarde is also scheduled to speak during today’s trading day.

On the technical side, EURUSD continues to trade just below our previously estimated resistance level of 1.0785. The retreating Dollar has put the Euro on a steady upward trend over the past week. A hawkish ECB during today’s interest rate decision could spark another leg up for the Euro. RSI for the pair sits at 67.53, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1.0785

Support: 1.046,1.031

GBPUSD (4-Hour Chart)

Cable has successfully extended its winning streak into the sixth straight trading day after a turbulent American trading session on the 14th. The Dollar’s volatile price movements on the 14th eventually ended with the Dollar heading lower as market participants interpreted the latest interest rate hike as a dovish signal from the Fed. During Fed Chair Jerome Powell’s speech, he reiterated the central bank’s determination to bring price levels back to normal standards and cautioned market participants about the duration of tightening, which could be longer than many estimated but is highly dependent on future economic data releases. The Bank of England is scheduled to release its interest rate decision during today’s late European trading session with MPC meeting minutes released simultaneously. Markets are widely pricing in a 50 basis point interest rate hike by the BoE at today’s interest rate announcement.

On the technical side, GBPUSD edged close to our previously estimated resistance level of 1.26 but is still trading below that price region. Today’s BoE interest rate decision could spell great volatility for the British Pound as the nation faces hard a hard economic outlook for 2023. RSI for the pair sits at 69.39, as of writing. On the four-hour chart, GBPUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1.2666, 1.3000

Support:1.2290, 1.2100, 1.1900

XAUUSD (4-Hour Chart)

Gold traded slightly lower throughout Wednesday’s trading. The yellow metal recovered most of its intraday losses due to the volatile price movements of the Greenback. The initial interest rate release sent the Dollar soaring and the Dollar-denominated Gold falling; however, as Fed Chair Jerome Powell began his speech, the Dollar began retreating and sent Gold upwards. Geopolitical tensions around the globe and recessionary fears continue to anchor Gold prices at around the $1800 per ounce price region. U.S. 2-year treasury yields dropped 0.015 to 4.214%, while the U.S. 10-year treasury yield dropped 0.024 to 3.479%. The benchmark U.S. 10-year treasury yield falling below the psychological barrier level of 3.5% could explain the Dollar’s late session fall. On the economic docket, the ECB and the BoE will both announce their respective interest rate decisions during today’s late European trading session.

On the technical side, Gold currently hovers around the $1800 per ounce price region. Our previously estimated resistance level of $1810 per ounce is now within arms reach from current levels. Short-term support levels for Gold remain at $1795 per ounce and $1775 per ounce. RSI for Gold sits at 49.07, as of writing. On the four-hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1810, 1830

Support: 1800, 1795, 1775

Economic Data

US Dollar falls due to the lower-than-expected CPI which is 7.1%, and the Consumer Price Index in November of 0.1% below the 0.3% of market consensus, which is another moderation in monthly core CPI helps to reaffirm that the USD peak is here ($105.00).

The Fed is widely expected to hike the funds’ rate by 50 basis points (bps) on Wednesday, after four consecutive 75 bps hikes. If the data comes in hotter than expected, this will be problematic for the Fed eager to slow the pace of tightening and potentially weigh on risk assets and thus lead to a stronger US Dollar and the meeting is likely to be an increase in the projected peak for the funds’ rate in 2023.

The Dow Jones Industrial Average has raised 0.3% to close at 34108.64. The S&P 500 raised 0.73% to close at 4019.65. The tech-heavy Nasdaq Composite raised 1.01% to close at 11256.81. The surge of the stock market was the reaction of the CPI when the CPI was just released,  NAS 100 once reached 12223, then it falls back to 11776 after 3 hours,  Wall Street closed positive but the S&P 500 Futures struggle for clear directions. Further, the US Treasury bond yields go up and down. U.S. 10-year treasury yield sits at around 3.505%. The policy-sensitive 2-year treasury yield sits at 4.228%.

The decline of US inflation challenges the FOMC for the next announcement of the bps. Even with the pre-Fed caution, the DXY may witness further sidelined performance as the latest US CPI challenges the policy hawks. Also, the already-given 50 bps rate hike and lesser odds of witnessing any surprises from the FOMC added strength to the market’s inaction. However, a surprise from the Fed, either in the form of rate hike directions or economic projections, won’t be taken lightly.

Main Pairs Movement

The US Dollar dropped sharply on Tuesday, as all investors eyed the subdued US consumer price index reading.  The November Consumer Price Index was up by 7.1% YoY, below the 7.3% expected and shrinking from the previous 7.7%. The core reading in the same period was up by 6%, down from 6.3% in the previous month. The DXY index tumbled with nearly 1% losses and fell to a level below 103.7 when the weaker CPI was released.

The GBPUSD surged with 0.79% daily gains for the day as a weaker US CPI report deeply hurt the safe-haven greenback. The British Pound climbed above the 1.2440 level following the release of US consumer data. Meanwhile, the EURUSD rallied 0.9% after the announcement of critical data. The pair earned 0.91% on Tuesday.

The XAUUSD surged with a 1.65% gain daily, as the market anxiety ahead of today’s FOMC and a bit pale headlines from China. Gold rallied by almost 2% following the weaker-than-expected US CPI report.

 Technical Analysis

EURUSD (4-Hour Chart)

EURUSD soared more than 1% at the release of the U.S. CPI figure, which came in below market estimates at rising 0.2% over the month and 6% on an annual basis. The lower-than-expected CPI sent the U.S. Greenback lower as interest rate expectations fall just ahead of the FOMC’s key interest rate decision on the 14th. Markets are now pricing in a 50 basis point interest rate increase at tomorrow’s conference, but the streets are now suggesting a possible surprise of a 25 basis point rate hike. U.S. equities soared on the release of lowered price pressures but quickly retreated as uncertainty still looms across markets. On the economic docket, the Fed will release its interest rate decision during the late American trading session on the 14th, while the ECB will release its interest rate decision during the late European trading session on the 15th.

On the technical side, our previously estimated resistance level of 1.0595 has been thoroughly broken through. Near-term resistance for the Euro-Dollar pair now hovers around the 1.0785 price region. The Conservative support level for the pair remains around the 1.046 price region. RSI for the pair sits at 64.84, as of writing. On the four-hour chart, EURUSD is currently trading above its 50, 100, and 200-day SMA.

Resistance: 1.0785

Support: 1.046,1.031

GBPUSD (4-Hour Chart)

GBPUSD soared 1.23% in 15mins chart and rallied to a new six-month high at around $1.2440 after the release of the US CPI figure, which is 0.2% lower than forecast, 0.6% lower over the month. Lower CPI made the dollar plunge 0.89% at the release time. On Wednesday, the UK will also release inflation figures and the BoE will release its policy statement alongside the interest rate decision on Thursday. Hence, investors could move back to the sidelines following a strong initial reaction to the US CPI data. As we get closer to the release time, five major banks regarding the upcoming UK inflation print. They expected the headline at 10.9% YoY versus 11.1% in October. As for core figures are expected to remain steady at 6.5% YoY.

On the technical side, the previous estimated resistance level of $1.2400 has been broken through and the estimated new resistance level may be up to $1.2666, the high point of this May. RSI for the pair sits at 64.036, as of writing. On the four-hour chart, GBPUSD currently trades above its 10, 50, and 200-day SMA.

Resistance: 1.2666, 1.3000

Support:1.2290, 1.2100, 1.1900,

XAUUSD (4-Hour Chart)

U.S. CPI data again weaker than expected, dollar plunges to spur gold prices above $1,800.

On Tuesday, the inflation data released by the US showed that the annual CPI rate in November was 7.1%, less than the expected 7.3%, which is also the lowest level so far this year; meanwhile, the annual core CPI rate was 6%, less than the expected 6.1%, the lowest in the past four months. The data again showed that the U.S. inflation rate has fallen more than expected, and expectations that the Federal Reserve will further slow down or even stop raising interest rates have risen.

The weaker-than-expected CPI data led to a similar market as on November 10^th, when the US CPI data for October was also weaker than expected. The dollar index quickly plunged more than 1% after the release, while the 10-year U.S. bond yields fell nearly 5%, the corresponding gold prices were greatly boosted, gold prices quickly pulled up above the $1,800 mark, and continued to expand. The next market-focused incident is the statement of FOMC will release on December 14^th.

On the technical side, the daily chart shows that the gold price has broken through the key resistance of 1800, the level is not only a round number, it also served as key support or resistance in May, June and August this year, so it is a very respectable price level for the market. RSI for the pair sits at 67.03, as of writing. On the four-hour chart, XAUUSD currently trades above its 5, 10, and 20-day SMA.

Resistance: 1810, 1830

Support: 1800, 1795, 1775

Economic Data

Dear Client,

To provide you with a better trading condition, VT Markets will increase the leverage for oil products and indices on 19 December 2022.

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

Please note:

1. Other contract specifications will remain the same as before.

2. Clients can continue to hold their open positions during the optimisation.

3. This optimisation might affect the margin level. Please ensure you have enough funds in your account to cover any additional margin requirements.

If you’d like more information, please don’t hesitate to contact [email protected].

After the DXY snaps a two-day recovery, US Dollar fails to break the resistance of 105.00 and bounced back. DXY portrays the market’s cautious mood ahead of the United States’ key inflation numbers for November, the Consumer Price Index which is going to be released on Tuesday, since the inaction of DXY could be linked to the mixed prints of the early signals for it, as well as the mixed reaction to the headlines surrounding China and Russia.

Besides, while investors broadly expect the Fed to raise rates by 50 basis points, the market will be focused on the central bank’s projections for how high rates will ultimately rise and to what degree the U.S. economy can withstand monetary tightening and the CPI data has sparked explosive market gyrations, as surging inflation forced the Fed to embark on its most aggressive monetary policy.

The Dow Jones Industrial Average has raised 1.58% to close at 34005.04. The S&P 500 raised 1.43% to close at 3990.56. The tech-heavy Nasdaq Composite raised 1.26% to close at 11143.74. The surge in the stock market was the reaction to the coming of CPI, the estimated softer inflation was also seen from the PPI and the UoM Consumer Sentiment Index, moreover, the survey of consumer inflation expectations from the Fed also stated that the 1-year ahead inflation expectations slumped to their lowest level since 2021. Treasury yields drop,  U.S. 10-year treasury yield sits at around 3.6%. The policy-sensitive 2-year treasury yield sits at 4.381%.

US inflation expectations as per the 10-year and 5-year breakeven inflation rate, challenge the recently dovish bias over the Fed, as well as downbeat forecasts for the US Consumer Price Index, and the latest prints of the 5-year and 10-year inflation expectations portray a rebound to 2.28% and 2.35% respectively. The downbeat prints of the United States PPI also hinted at softer US inflation.

Main Pairs Movement

The US Dollar Index extends the previous weekly gains, the first time in three weeks, as it picks up bids to refresh its intraday high around 105.10 during early Monday. The DXY index fell sharply during the UK trading period to a daily low of 104.67 level ahead of the American session. The latest market inaction could be linked to the investors’ cautious mood ahead of the United States’ key inflation numbers for November, namely the Consumer Price Index (CPI).

The GBPUSD has little changed on Monday, as Gross Domestic Product (GDP) grew by 0.5% on a monthly basis in October following September’s 0.6% contraction. This reading came in much better than the market expectation for a contraction of 0.1% but the positive impact of the upbeat GDP data on the Pound Sterling remained short-lived. However, data failed to act as a tailwind for the pair, the pair erased most daily gains in the American session as market participants turned cautious. Meanwhile, EURUSD dropped dramatically in the early American trading session and the pair slid by 0.03% on a daily basis.

Gold dropped by 0.88% on a daily basis, the most in a week, as the US Dollar began the crucial week on a positive note despite downbeat inflation expectations and upbeat performance of the equities, as well as the Treasury bond yields.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR recorded solid gains against the greenback during the trading course of North America due to the overall weakness of the US dollar. The US inflation report may confirm that rate hikes are curbing inflation, which could pave the way at a faster pace. Last week’s US Department of Labor showed that US PPI rose for the third consecutive month, over 0.3% of expectations and increasing 7.4% YoY versus 7.2% expected. Meanwhile, the US CPI will be disclosed on Tuesday, expected to fall to a consensus of 7.3% YoY from 7.7% last month. If the figure shows that inflation is cooling off, this could trigger Euro buying and put pressure on the dollar.

In the Eurozone, ECB expected to raise interest rates by at least 50 basis points. The federal reserve may be responsible for the unexpected decline in the greenback, as the turning point in inflation has been proven. Conversely, it is too early to assert that the same is true for the ECB; thus, inflation in the EU remains high and there is little respite. These very different scenarios mean that this week’s central bank meeting could support EUR/USD.

The EURUSD has rebounded from a 20-year low of 0.9536 set in October and is trading at 1.0595 currently, but it has failed to rise above previous highs of 1.0615 and 1.0638, these levels may continue to act as resistance levels. The 260-day SMA is also in this area as a resistance level which is at 1.0596 currently. On the downside, support can be considered as 1.0443, 1.0290 and 1.0198 which are previous low and inflexion points.

Resistance: 1.06

Support: 1.0443, 1.0290, 1.0223 

GBPUSD (4-Hour Chart)

The GBP firmed on Monday in a bullish cycle that is targeting the 1.2400 area, which could be a measure up from the recent lows around 1.2100. On the fundamental side, the world is focusing on the Fed and BoE interesting rate announcements this week. Generally speaking, BoE is expected to raise by 50 points to 3.50%. As for the Fed, same as BoE, they are expected to rise by 50 points to 4.25%-4.50%. Meanwhile, world interest rate probabilities suggest that a 50 bp hike on December 14 by the FOMC is fully priced in, with only around 10% odds of a larger 75 points move. When we take a look at UK, uncertain growth outlook in the future growing domestically. Concerns about a prolonged recession in the U.K. are still weighing on sentiment. Analysts at Rabobank believe the U.K. recession is likely to have started since last quarter and is widely expected to continue throughout the next whole year. Another potential risk for the GBP lies in the vulnerability of the housing market. Some hawkish favoured upside in EURGBP, as the ECB has the wiggle room to deliver 75 points, based on the market’s expectations for 50 points raise.

GBPUSD managed to stay above its 200-day moving average after the decline in the first half of the week. On the daily chart, the RSI stays above 60 and the pair continues to trade within the rising regressing channel that has been in place since the end of September. 1.1200, the key support of 200-day SMA. If the pair falls below this level and becomes resistant, the pair would go south to 1.2000 or 1.1900.

Resistance: 1.2400, 1.2600

Support: 1.2100, 1.1900, 1.1760

XAUUSD (4-Hour Chart)

Start your Gold Trading journey with VT Markets

The US Department of Labor will release November inflation figures on Tuesday. The annual rate of core CPI, which excludes volatile food and energy prices, is expected to rise to 6.4% from 6.3% in October.

Market reaction to the inflation report is likely to be immediate, with a weaker core CPI reading suppressing the dollar and providing a boost to XAUUSD and vice versa. A rise in 50 point rate should not be surprising based on FOMC chairman Powell admitting in his last public statement that it would make sense to moderate the pace of interest rate hikes. However, if Fed chooses to raise by 75 points, which is very unlikely at this point, gold could come under heavy bearish pressure and fall sharply.

The New York Fed released its Survey of Consumer Expectations, which showed that inflation expectations for the year ahead have declined, although they remain high. Meanwhile, the survey showed that expected inflation marked a record MoM decline in November, while the median inflation uncertainty fell in the short and medium term.

The charts for gold still show a bullish bias, but the upside shows the difficulty in holding on above $1,800.

A clear sign is a daily close above $1,805 last week, which could open the door to the next strong resistance at $1,810. In the very short term, the bias is to the downside, with the next support level at

$1,775. The price has been down to $1,780 at this moment.

Resistance: 1800, 1810, 1830

Support: 1775, 1765, 1748, 1726

Economic Data