EUR/USD Price Analysis – Nov 22, 2024
Daily Price Outlook
During European trading session on Friday, the EUR/USD managed to recover some of its losses after hitting a fresh two-year low around 1.0330. However, the outlook for the pair remains bearish.
This is due to the disappointing preliminary HCOB Eurozone Purchasing Managers Index (PMI) for November, which showed a surprising contraction in business activity. Meanwhile, the US Dollar continues its bullish run, pushing the US Dollar Index to nearly 108.00, intensifying the selling pressure on EUR/USD.
Weak Eurozone Data and Growing Economic Concerns Heighten Expectations for ECB Rate Cut, Weighing on EUR/USD
On the data front, the Eurozone's Composite PMI fell to 48.1, much lower than the expected 50.0, which signals a contraction in economic activity. A PMI below 50.0 indicates that the economy is shrinking.
The decline was mainly driven by a weaker-than-expected Services PMI, which dropped to 49.2, far below the forecast of 51.8. This marks the first time since January that the service sector has contracted. The Manufacturing PMI also continued to decline, falling to 45.2, worse than both expectations and the previous reading of 46.0.
Meanwhile, the slowdown in business activity has raised concerns among European Central Bank (ECB) officials. They are already worried about weak growth and potential risks, especially with the possibility of a trade war with the United States.
ECB Chief Economist Philip Lane warned that a global trade war, triggered by President-elect Donald Trump’s potential tariffs, could cause significant damage to the global economy. He stressed that trade disruptions would result in major output losses.
As a result of the weak data, traders now believe there is a greater than 50% chance that the ECB will cut its Deposit Facility Rate by 50 basis points (bps) to 2.5%. Before the PMI data was released, the chances of such a large rate cut were less than 20%. This shows growing expectations for the ECB to take action to support the economy.
Therefore, the weak Eurozone data and growing concerns about economic risks increase the likelihood of an ECB rate cut, which could weaken the euro further. As a result, EUR/USD may face additional downward pressure, with the US dollar strengthening in comparison.
US Dollar Strengthens on Optimistic Economic Outlook and Eased Fed Rate Cut Expectations
On the US front, the broad-based US dollar is gaining strength, with EUR/USD facing heavy selling pressure. The US Dollar Index is nearing a two-year high, fueled by expectations that the Federal Reserve (Fed) will cut interest rates less than previously thought.
Investors now expect the US economy to grow faster, particularly with President-elect Donald Trump's economic plans, which include cutting taxes and raising import tariffs, especially on countries like the Eurozone and China.
Trump’s plans to raise tariffs and cut taxes are expected to boost business investment, demand for labor, and domestic goods. This could lead to higher inflation, which would make the Fed more cautious about cutting interest rates too quickly.
As a result, market expectations for rate cuts have eased. The chance of a 25-basis point reduction in December has dropped to 56% from 70% just a month ago.
Looking ahead, investors are waiting for the US S&P Global PMI data for November, which will be released at 14:45 GMT. The report is expected to show stronger business activity, with growth in both the manufacturing and service sectors, which could further support the dollar’s bullish momentum.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04841, marking a modest gain of 0.10%, as the pair consolidates near critical support levels. Immediate resistance lies at $1.05129, with higher targets at $1.05767 and $1.06083. On the downside, immediate support is set at $1.04516, followed by $1.04300 and $1.03999, signaling the potential for bearish pressure if the pair breaches key levels.
The pivot point at $1.05548 serves as a key marker for directional bias. Currently, the pair trades below the 50-day EMA at $1.05494, indicating a bearish trend in the short term. The RSI at 38 suggests weak momentum, leaning toward oversold conditions but not yet signaling a reversal.
Traders are advised to consider selling below $1.05122, targeting $1.04501 with a stop-loss at $1.05629. A break below $1.04516 could lead to further declines toward $1.04300, while a recovery above $1.05129 would challenge bearish dominance and open the path to $1.05767.
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S&P500 (SPX) Price Analysis – Nov 22, 2024
Daily Price Outlook
The global market has been showing positive signs, with the S&P 500 reaching impressive levels, hitting around 5,963. Despite worries about inflation and slower-than-expected rate cuts, the index has been on a strong upward trajectory. This surge could be linked to growing investor optimism about a potential rate cut in December.
Meanwhile, people are also feeling hopeful about the potential economic boost from a possible Trump administration, which seems to be giving investors confidence. Besides this, the latest jobless claims data has been solid, and many see this as a good sign for corporate profits, keeping the index on an upward path.
US Dollar Strength and Fed Rate Expectations Create Mixed Outlook for S&P 500
On the US front, the broad-based US dollar has been on an upward trend and is currently trading near 107.00, just below its highest level of the year. This increase followed the release of the previous week's Initial Jobless Claims data, which showed a slight decrease in jobless claims.
Futures traders are now predicting a 57.8% chance that the Federal Reserve will cut interest rates by 0.25% in December, a drop from 72.2% last week. Traders are also looking forward to the upcoming US S&P Global Purchasing Managers’ Index (PMI) data and the final Michigan Consumer Sentiment report on Friday for further market direction.
The recent PMI data showed a slight contraction in the private sector, with the Judo Bank PMI Composite Output Index dropping to 49.4 in November from 50.2 in October. This marks the second contraction in three months.
However, Initial Jobless Claims dropped to 213,000 for the week ending November 15, which was lower than expected and better than the previous week's revised data. This gave the US dollar some support, especially as Fed officials have expressed cautious remarks about interest rate cuts.
Furthermore, the Reuters poll shows that most economists expect the Fed to cut rates by 0.25% in December, but they predict smaller cuts in 2025 due to concerns over inflation from President-elect Trump's policies.
Whereas, some Fed officials have suggested that more rate cuts are necessary, they want to proceed carefully to avoid making moves too quickly. Fed Chair Jerome Powell also downplayed the chances of immediate rate cuts, pointing to the strong economy and ongoing inflationary pressures.
Therefore, the US dollar's strength and expectations of slower rate cuts could create uncertainty for the S&P 500, as higher rates may pressure corporate earnings. However, the strong labor market and resilient economy may continue to support investor confidence in the index.
S&P 500 – Technical Analysis
The SPX index is trading at $5,948.70, up 0.53% on the day, as the market shows signs of sustained upward momentum. The immediate resistance at $6,017.29 is within reach, with additional targets at $6,056.54. On the downside, immediate support is at $5,926.35, followed by key levels at $5,838.15 and $5,808.52, forming a solid base for potential pullbacks.
The pivot point at $5,987.87 serves as a critical threshold for continued bullish momentum. A decisive move above this level could propel the index further into resistance territory, while a breach below would signal caution.
The 50-day EMA, currently at $5,939.36, is providing dynamic support, reinforcing the index's underlying strength. Traders are advised to consider entry points above $5,925 with a target of $6,000 and a stop-loss at $5,882.
A breakout above $6,017.29 could drive the index toward $6,056.54, though short-term corrections remain possible if broader market sentiment shifts.
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GOLD Price Analysis – Nov 22, 2024
Daily Price Outlook
Gold (XAU/USD) continues to shine, finally hitting the $2,700 mark, thanks to escalating tensions between Russia and Ukraine. Investors see gold as a safe bet, especially during uncertain times like these, and they’re confident it could climb even higher.
Many believe President-elect Donald Trump’s policies might push inflation up, which could weaken the dollar and make gold more appealing.
Interestingly, even though the US dollar has hit its strongest level since October 2023, gold prices are still on the rise. Higher inflation fears and the possibility that the Federal Reserve might hold back on cutting interest rates are fueling this rally.
US Dollar Strengthens Amid Rate Cut Uncertainty, But Gold Continues to Rise as a Safe Haven Amid Inflation Concerns
On the US side, the dollar has been on the rise, hitting its highest point since October 2023. This surge comes as investors are starting to think the Federal Reserve might not cut interest rates as quickly as they originally expected. A big reason for this is the worry that US President-elect Donald Trump's policies could push inflation higher, which might make the Fed hesitate on rate cuts.
Recently, some top Federal Reserve officials, including Chairman Jerome Powell, have raised concerns about the risks of inflation and warned against easing policies any further. As a result, traders are now betting on a 55% chance that the Fed will cut interest rates by 0.25% in December, according to the CME Group’s FedWatch Tool.
However, Chicago Fed President Austan Goolsbee recently pointed out that inflation is moving closer to the Fed’s 2% target and suggested it might be a good idea to slow down the rate cuts. Similarly, New York Fed President John Williams mentioned that the labor market is in a good place and isn't contributing to rising inflation.
On the economic front, US weekly jobless claims fell by 6,000 last week, dropping to 213,000, which is the lowest number in seven months. Existing home sales also bounced back in October, marking their first annual increase since mid-2021.
However, the Philly Fed Manufacturing Index revealed an unexpected decline in manufacturing activity in the Philadelphia area this November. Investors will be closely watching Friday’s flash PMIs for more clues about the global economy, as they could have an impact on gold prices.
Despite the rising US dollar and expectations of slower rate cuts, gold continues to rise strongly. This is driven by ongoing inflation concerns and the demand for gold as a safe haven, with investors seeking protection from economic uncertainties.
Escalating Russia-Ukraine Tensions Boost Gold Prices as Investors Seek Safe Haven Amid Market Uncertainty
On the other hand, the escalating tensions between Russia and Ukraine are driving more investors to gold as a safe haven. As a result, gold prices climbed for the fifth straight day on Friday, even with the US dollar remaining strong. Recently, Russian forces launched a new intermediate-range missile at Ukraine, retaliating against Ukraine’s use of US and UK-made missiles to target sites in Russia.
The ongoing conflicts are adding more uncertainty to the market, making gold a more appealing choice for those wanting to shield their investments from risk.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,695.58, marking a 0.97% increase as bullish momentum strengthens. The metal is nearing immediate resistance at $2,711.09, with further levels at $2,726.95 in focus.
On the downside, immediate support lies at $2,673.90, followed by $2,645.52 and $2,635.05, providing a safety net for price corrections. The pivot point at $2,691.73 is crucial for maintaining upward momentum. A sustained move above this level would bolster bullish sentiment and validate further gains.
The RSI stands at 81, signaling overbought conditions that could trigger a short-term pullback. Despite this, the 50-day EMA at $2,639.13 continues to act as strong dynamic support, reinforcing the broader uptrend. Price action remains aligned with a bullish channel, and the upward trajectory is expected to persist as long as prices hold above the pivot.
Traders are advised to consider buying above $2,684 with a take-profit target at $2,710 and a stop-loss at $2,666. A breakout above $2,711.09 could push prices toward $2,726.95, but caution is warranted due to overbought signals from the RSI.
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USD/JPY Price Analysis – Nov 21, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair struggled to reverse its downward trend, staying under pressure around 154.41 and hitting a low of 154.09.
The main driver behind this decline was the weakening US dollar, which lost momentum due to a positive shift in market sentiment.
However, the downtrend could be short-lived, as expectations grow that the Federal Reserve may take a less dovish stance in the coming months.
Moreover, the Japanese yen gained further strength as Bank of Japan Governor Kazuo Ueda refrained from commenting on immediate monetary policy but left the door open for a potential interest rate hike as early as next month.
This uncertainty, coupled with ongoing geopolitical tensions from the Russia-Ukraine conflict, continues to fuel demand for safe-haven assets like the yen, with fears of intervention playing a role. These factors together could keep the USD/JPY pair under pressure in the near term.
BoJ's Uncertainty and Geopolitical Risks Boost Safe-Haven Yen Demand
On the JPY front, Bank of Japan (BoJ) Governor Kazuo Ueda did not give any clear comments on the bank’s future monetary policy.
However, he did leave the door open for a possible interest rate hike as early as next month. This uncertainty about the BoJ's next move has kept investors on edge, especially since the central bank decides its policy based on the latest available data.
As a result, investors are now betting on a 50-50 chance that the BoJ will either raise rates by 25 basis points or keep them unchanged at its final policy meeting of the year on December 18-19. This has added to the pressure on the yen, with many seeing it as a safe-haven currency amid ongoing global risks.
In addition to the BoJ’s stance, persistent geopolitical tensions, particularly the worsening Russia-Ukraine conflict, are also supporting the yen. These risks make investors more likely to turn to safe-haven assets like the yen, increasing demand for the currency.
Meanwhile, reports suggest that Japan's government is considering an economic package worth ¥21.9 trillion to support the economy, which could have further effects on the yen's performance.
Therefore, the uncertainty around the Bank of Japan’s policy, along with ongoing geopolitical tensions, is likely to keep the yen in demand as a safe-haven currency. This could put further downward pressure on the USD/JPY pair, potentially pushing it lower.
USD/JPY – Technical Analysis
USD/JPY is trading at 155.08, down 0.22%, reflecting a modest pullback from recent highs. The pivot point at 155.86 is a critical level for bulls to reclaim in order to regain upward momentum.
Immediate resistance stands at 156.56, followed by 157.31, while on the downside, support is seen at 154.11, with additional levels at 153.29 and 152.62 offering a cushion against deeper declines.
The 50-day EMA, currently at 154.87, aligns closely with the pair’s immediate support, reinforcing the importance of the 154.11 level. The RSI at 48 indicates neutral momentum, leaving room for either consolidation or a potential directional breakout based on upcoming market catalysts.
A break above the pivot point of 155.86 would signal bullish momentum, targeting resistance at 156.56 and 157.31. Conversely, a drop below immediate support at 154.11 could increase bearish pressure toward 153.29.
Traders may consider an entry above 154.86, with a stop loss at 154.28 to mitigate downside risks. Profit targets can be set at 155.87 for a balanced risk-reward scenario.
In summary, USD/JPY is navigating a critical range, with near-term direction hinging on its ability to break above 155.86. Traders should monitor technical levels and market conditions closely for further cues.
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AUD/USD Price Analysis – Nov 21, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its upward trend, trading near the 0.6520 level.
This rise was due to a weaker tone in the US Dollar, as buyers stepped back to assess US President-elect Donald Trump's proposed policies before making new moves.
Moreover, the recent market reaction to Russian President Vladimir Putin’s approval of a lower threshold for nuclear strikes initially caused concern. However, this quickly faded after comments from both Russian and US officials eased fears of a nuclear conflict.
This helped boost market sentiment, which in turn put pressure on the safe-haven USD, benefiting risk-sensitive currencies like the Australian Dollar.
RBA's Hawkish Stance Boosts AUD/USD as Inflation Concerns Support Australian Dollar
Furthermore, the upticks in the AUD/USD pair gained extra support from the Reserve Bank of Australia's (RBA) recent comments. However, the RBA has maintained a hawkish stance, which means it is focused on keeping inflation under control by using stricter monetary policies.
This approach has been helping the Australian Dollar remain strong against other currencies, including the US Dollar.
Earlier this week, the RBA's November meeting minutes showed that the board is concerned about rising inflation. They highlighted the need to keep interest rates high to prevent inflation from getting worse.
This cautious approach from the RBA reassures investors and boosts confidence in the AUD. Together with the overall positive market mood, this has helped lift the AUD/USD pair.
US Dollar Faces Bearish Pressure Amid Policy Uncertainty and Market Sentiment, Capping AUD/USD Gains
On the US front, the broad-based US dollar was unable to maintain its upward trend and turned bearish due to a softer market tone. Traders have decided to wait on the sidelines for more clarity on US President-elect Donald Trump’s proposed policies before making fresh moves.
Despite this, the expectations that the Federal Reserve (Fed) may adopt a less dovish stance are still supporting the USD. The market is now pricing in a 50% chance that the Fed will cut interest rates by 25 basis points in December, mainly due to concerns that Trump's potential tariffs and tax cuts could push inflation higher.
This outlook is supporting US Treasury bond yields, which is encouraging some buying of the USD. As a result, this keeps a lid on the upside potential for the AUD/USD pair. Traders are now waiting for US economic data and comments from key Federal Reserve officials for further direction.
AUD/USD - Technical Analysis
The AUD/USD is trading at $0.65119, up 0.10% in the 4-hour timeframe, as the pair shows signs of recovery from earlier lows.
The pivot point at $0.65456 serves as a key level to watch, with a bullish breakout above this potentially opening the door to immediate resistance at $0.65918.
Further upside targets include $0.66399, aligning with improving market sentiment for the Australian dollar amid recent positive economic data.
On the downside, immediate support is located at $0.64497, followed by $0.64154 and $0.63763, where buyers may step in if the pair experiences any pullbacks. The 50-day EMA at $0.64945 is acting as a critical support level, reinforcing the bullish outlook while keeping short-term risks contained.
The RSI at 54 reflects neutral momentum, indicating room for both upside or downside movements depending on broader market catalysts.
Traders should monitor any break above $0.65456 for confirmation of further gains, while a drop below $0.64896 could negate the current upward bias and bring the $0.64497 support level into play.
For a strategic approach, an entry above $0.64895 is recommended, with a stop loss at $0.64503 to minimize downside risks. Profit targets are set at $0.65463 and potentially higher levels if resistance is breached.
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GOLD Price Analysis – Nov 21, 2024
Daily Price Outlook
Gold (XAU/USD) has maintained its bullish trend for the fourth day and remained well-bid around the 2,662 level, However, the ongoing tensions in the Russia-Ukraine conflict have been a major driver behind this bullish trend, as investors seek the safety of gold amid growing geopolitical risks.
On top of that, a weaker US Dollar has also helped push gold prices higher. This combination of factors has supported gold’s steady rise throughout the week.
Investors are worried that President-elect Donald Trump's proposed tariffs could drive up inflation, making it harder for the Federal Reserve to lower interest rates.
There are also concerns that his tax cuts, funded by debt, could lead to larger budget deficits, keeping US Treasury bond yields high. This could boost the US Dollar and make traders less likely to bet heavily on gold, which doesn’t pay interest.
US Dollar Strength and Rising Bond Yields Weigh on Gold Prices
On the US front, the broad-based US Dollar managed to stay strong, supported by worries that President-elect Donald Trump’s policies could boost inflation and limit the Federal Reserve’s ability to cut interest rates.
Recently, several key Fed officials, including Lisa Cook and Michelle Bowman, warned that the central bank may have to slow or pause its rate cuts if inflation progress stalls.
This caution from the Fed has kept US Treasury bond yields high, helping to keep the Dollar near its year-to-date high. As a result, the possibility of further rate cuts seems uncertain, which is adding to the strength of the Greenback.
In addition, the yield on the 10-year US government bond rose sharply this week, which, combined with a positive market sentiment, is putting pressure on gold prices.
Investors will be closely watching upcoming US economic data, including jobless claims and home sales, as well as speeches from Fed officials for clues about the future of rate cuts.
These factors will likely influence the Dollar and impact gold’s performance, as gold, being a non-yielding asset, tends to struggle when bond yields and the Dollar rise.
Gold (XAU/USD) is trading at $2,660.89, up 0.39% for the day, supported by strong bullish sentiment on the 4-hour chart. Prices remain comfortably above the pivot point at $2,646, suggesting sustained momentum.
Immediate resistance lies at $2,675.25, followed by $2,691.73 and $2,711.09, as gold continues to push toward higher levels amid global uncertainty and robust safe-haven demand.
On the downside, immediate support is at $2,619.22, with additional levels at $2,592.86 and $2,571.02 providing safety nets for potential retracements. The RSI is currently at 73, indicating overbought conditions, though the strong trend suggests this may persist in the short term.
The 50-day EMA at $2,613.76 offers solid support, reinforcing the bullish case. Traders are advised to monitor the $2,646 pivot closely, as a break below this level could reverse the trend and open the door to sharper declines toward $2,619 or lower.
A potential entry point is identified at $2,646, with a suggested stop loss at $2,630 to manage downside risks. Profit targets are set at $2,674 and above, as technical indicators align with bullish market conditions.
Overall, gold’s technical landscape remains favorable above $2,646, bolstered by geopolitical risks and investor appetite for safe-haven assets. Traders should watch resistance at $2,691.73 for confirmation of further upside momentum.
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GOLD Price Analysis – Nov 20, 2024
Daily Price Outlook
Gold prices (XAU/USD) continue to struggle, staying weak around the $2,624 mark on Wednesday. Despite this sluggish trend, the ongoing Russia-Ukraine tensions still support gold as a safe-haven asset.
However, easing concerns about a potential nuclear war and the strong performance of the US dollar are keeping gold's gains in check.
Investors are growing more optimistic that US President-elect Donald Trump's policies will drive economic growth and inflation, making it less likely for the Federal Reserve to cut interest rates.
This has led to higher US Treasury bond yields, boosting the US dollar and putting pressure on gold. As a result, traders are staying cautious, waiting for upcoming speeches from Federal Reserve officials to get a clearer picture of future monetary policy.
Stronger US Dollar and Rising Treasury Yields Weigh on Gold's Outlook
On the US front, the dollar has been gaining strength, fueled by market expectations of potential tariffs and tax cuts under the incoming Trump administration. These measures are expected to drive up inflation, making it less likely for the Federal Reserve to cut interest rates in the future. As a result, the stronger dollar has added pressure on gold, contributing to its recent losses.
According to the CME Group's FedWatch Tool, traders now see less than a 60% chance of a 25-basis-point rate cut in December. At the same time, US Treasury yields are climbing, keeping the dollar strong and limiting gold's (XAU/USD) potential for gains.
Investors are also keeping a close eye on speeches from key FOMC members today, hoping for insights into the Fed's rate plans, which could influence gold’s next move.
Therefore, the stronger US dollar and rising Treasury yields are pressuring gold prices, limiting its upside potential. Reduced rate cut expectations and investor focus on FOMC speeches further weigh on gold, as monetary policy clarity could impact its safe-haven appeal.
Geopolitical Tensions and the Russia-Ukraine Conflict Drive Increased Demand for Gold
On the other hand, rising geopolitical tensions, particularly the worsening Russia-Ukraine conflict, are increasing gold's appeal as a safe-haven investment. Investors are concerned about the situation escalating, leading more money into gold. Recently, Russian President Vladimir Putin updated the country's nuclear policy, outlining when Russia might consider using nuclear weapons.
In response, Ukraine, with US support, launched ATACMS missiles at a Russian military site near Bryansk. Despite the escalating tensions, Russian Foreign Minister Sergei Lavrov reassured that Russia is focused on avoiding nuclear war, while the White House confirmed no changes to its own nuclear stance.
Therefore, the escalating Russia-Ukraine conflict and rising geopolitical tensions are boosting gold's appeal as a safe-haven investment. Investors, concerned about further escalation, are increasingly turning to gold, driving demand and supporting its value amid uncertainty.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) are trading at $2,629.60, down 0.09% as bearish momentum emerges below the pivot point at $2,640.77. Immediate resistance is positioned at $2,663.57, with higher barriers at $2,684.85 and $2,707.65, forming a challenging upward path.
The 50-day EMA at $2,593.63 aligns with the immediate support level of $2,612.40, providing key downside protection. Additional support levels include $2,590.11 and $2,561.23.
The Relative Strength Index (RSI) at 59 suggests neutral momentum, leaving room for further selling pressure if prices fail to reclaim $2,640.77. A break below $2,612.40 would likely intensify the downward trajectory, targeting $2,590.11.
Conversely, a sustained push above $2,663.57 could signal renewed bullish interest, but near-term sentiment leans bearish.
Traders are advised to consider selling below $2,641, targeting $2,598 with a stop loss at $2,664. With the strong US dollar and rising Treasury yields weighing on gold, the path of least resistance appears downward.
Gold is bearish below $2,641, with selling opportunities targeting $2,598. A break below $2,612.40 could accelerate losses, while resistance at $2,663.57 holds the key to any bullish recovery.
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GBP/USD Price Analysis – Nov 20, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair struggled to maintain its bullish momentum and dropped to around the 1.2663 level, hitting an intraday low of 1.2649. This decline occurred despite stronger-than-expected inflation data from the UK.
However, the GBP/USD pair surrendered its gains as the US Dollar regained strength. The US Dollar Index (DXY) surged to approximately 106.50, driven by expectations that the Federal Reserve will implement fewer interest rate cuts in 2025.
BoE's Inflation Concerns Spark Shift in Rate Cut Expectations for December
On the data front, the Consumer Price Index (CPI) revealed that annual inflation jumped to 2.3%, higher than the 2.2% forecast and the previous month's 1.7%. Compared to September, inflation rose by 0.6%, exceeding the expected 0.5% increase.
Core CPI, which excludes food, energy, oil, and tobacco, grew by 3.3%, higher than the previous 3.2% and above the 3.1% expected. Services inflation, which the Bank of England (BoE) closely monitors, also rose to 5% from 4.9%.
As a result, traders have started to rethink expectations for future interest rate cuts by the BoE. Just a day earlier, markets had priced in an 80% chance that the BoE would cut rates by 25 basis points in December.
Several BoE policymakers, including Governor Andrew Bailey, warned that inflation pressures are still strong. Bailey said that services inflation is too high to reach the BoE's target, and Catherine Mann, a BoE member known for her hawkish stance, pointed out that the BoE may struggle to bring inflation down to 2% anytime soon. These comments suggest the BoE might delay rate cuts if inflation remains stubborn.
Impact of Stronger US Dollar and Diminished Fed Rate Cut Expectations on GBP/USD
On the US front, the GBP/USD pair lost its gains as the US Dollar strengthened sharply, with the US Dollar Index (DXY) rising to around 106.50. This increase came from expectations that the Federal Reserve (Fed) will take a slower approach to interest rate cuts in 2025.
With President-elect Donald Trump about to take office, markets believe his policies, such as higher import tariffs and lower taxes, will boost the US economy, raising inflation and encouraging domestic demand and employment. This is causing investors to adjust their expectations for future Fed rate cuts.
As a result, the chances of a 25 basis point rate cut by the Fed in December have dropped from over 82% last week to 59%, according to the CME FedWatch tool. This shift in expectations followed remarks from Fed Chair Jerome Powell, who said the economy isn’t showing signs that the central bank needs to rush into rate cuts.
Looking ahead, investors will focus on the flash S&P Global Purchasing Managers' Index (PMI) data for November, which is due on Friday. The data is expected to show growth in the US private sector, while activity in the UK is expected to remain steady.
Therefore, the strengthening US Dollar and reduced expectations for Fed rate cuts in December have put downward pressure on the GBP/USD pair, leading to a loss of gains and a pullback from higher levels.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.27004, up 0.18%, showing modest bullish momentum as it hovers near the pivot point at $1.27205. Immediate resistance lies at $1.27565, followed by $1.27926, marking key levels for potential upward continuation.
The 50-day EMA at $1.26601 acts as a critical support zone, closely aligned with the immediate support level at $1.26714. Further downside support levels to watch are $1.26272 and $1.25630.
The Relative Strength Index (RSI) stands at 61, suggesting that bullish momentum is gaining traction but remains below overbought conditions. The pair is trading above the 50-day EMA, reinforcing the short-term bullish bias. However, failure to sustain above $1.27205 could push prices back toward support zones, risking a shift in sentiment.
Traders are advised to consider buying above $1.26814, targeting $1.27281 with a stop loss at $1.26592. A sustained break above $1.27565 could confirm further gains, while a move below $1.26714 would test the pair’s resilience.
GBP/USD maintains a bullish bias above $1.27205, targeting $1.27565. A break above resistance could signal further gains, while failure to hold above $1.26714 may shift the trend to bearish.
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EUR/USD Price Analysis – Nov 20, 2024
Daily Price Outlook
During Wednesday’s European session, the EUR/USD currency pair continued its downward trend, dropping to around 1.0555 level. However, the pair weakens as the US dollar gained strength, supported by expectations of fewer interest rate cuts from the Federal Reserve (Fed) in its ongoing policy-easing cycle.
Moreover, the EUR/USD losses accelerated further amid growing negative sentiment towards the Eurozone, driven by ongoing geopolitical tensions, a weakening economic outlook, and political uncertainty in Germany.
US Dollar Strengthens Amid Slower Fed Rate Cuts and Geopolitical Tensions, Pressuring EUR/USD
On the US front, the broad-based US dollar strengthened as expectations grow that the Federal Reserve (Fed) will cut interest rates more slowly. Experts predict a rebound in US inflation and faster economic growth, especially with President-elect Donald Trump's victory.
Trump’s plans to raise import tariffs by 10% and lower taxes could limit the Fed’s ability to make deeper rate cuts. For December, the Fed is likely to cut rates by 25 basis points, bringing them to the 4.25%-4.50% range, though this decision is still uncertain, according to analysts at Deutsche Bank.
Moreover, the Greenback gained further traction after Russian President Putin's approval to revise nuclear doctrine in response to the US's approval of long-range missiles for Ukraine. This boosted demand for the USD as a safe haven. However, safe-haven demand weakened after Russian Foreign Minister Sergei Lavrov stated that Russia would avoid nuclear war if possible.
Therefore, the bullish US Dollar, driven by expectations of slower Fed rate cuts and geopolitical tensions, puts pressure on the EUR/USD pair. As the USD gains, the EUR/USD continues to weaken, reflecting negative sentiment towards the Eurozone and broader market uncertainty.
EUR/USD Struggles Amid Weak Eurozone Outlook and ECB Policy Focus on Growth
On the EUR front, the losses in the EUR/USD pair bolstered further by negative sentiment surrounding the Eurozone weighed on the currency. However, the geopolitical tensions, weak economic outlook, and uncertainty in German politics contributed to the Euro’s struggle. European Central Bank (ECB) officials are more focused on supporting growth than controlling inflation.
ECB policymaker Fabio Panetta stated that since inflation is close to the target and domestic demand is weak, there is no need for strict monetary policies. He also warned that if the economy doesn't improve, inflation could stay below the ECB’s target.
Looking ahead, the ECB is expected to cut its Deposit Facility Rate by 25 basis points to 3% in its December meeting. This would be the fourth interest rate cut this year and the third consecutive one.
In addition, recent data showed that Eurozone wage growth, measured by Negotiated Wage Rates, increased to 5.42% in Q3, up from 3.54% in the previous quarter.
This wage growth could help boost consumer spending, but it also highlights ongoing challenges in the Eurozone economy. As a result, the EUR continues to face pressure, limiting its recovery against the USD.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.05874, down 0.06%, with bearish sentiment as the pair holds below the pivot point at $1.06083. Immediate resistance is positioned at $1.06367, with further resistance levels at $1.06620 and $1.06874, marking potential reversal zones for a bullish recovery.
The 50-day EMA at $1.05623 aligns closely with immediate support at $1.05472, forming a key short-term floor. Deeper support levels include $1.05176 and $1.04867, providing targets for sellers if the bearish trend persists.
The Relative Strength Index (RSI) is at 52, reflecting neutral momentum with no clear overbought or oversold signals. The pair is trading above the 50-day EMA, suggesting slight underlying bullish strength, but failure to break above $1.06083 could trigger a retreat.
Traders should watch the $1.05793 pivot closely—staying above this level favors bullish strategies, while a sustained break below $1.05472 would open the door for deeper corrections.
For now, a buy position above $1.05793 is recommended, targeting $1.06254 with a stop loss at $1.05565. However, sustained resistance at $1.06083 could limit gains, keeping the pair in a tight trading range.
EUR/USD remains range-bound below $1.06083, with opportunities for buying above $1.05793. However, failure to clear resistance levels could prompt further selling toward $1.05176.
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AUD/USD Price Analysis – Nov 19, 2024
Daily Price Outlook
Following the release of the Reserve Bank of Australia's (RBA) November Meeting Minutes on Tuesday, the Australian Dollar (AUD) remained stable against the US Dollar (USD). According to the minutes, the RBA board is concerned about the possibility of increased inflationary pressures, which underlined the importance of restrictive monetary policy.
Despite recent aggressive pronouncements by Federal Reserve (Fed) officials, the US Dollar (USD) is in a downward correction. However, the Greenback's downside may be limited since investors expect the next Trump administration to prioritize tax cuts and raise tariffs. These policies may increase inflation, limiting the pace of Fed rate decreases.
The US Dollar Index (DXY), a gauge of the USD against a basket of currencies, is presently trading at approximately 106.27. The greenback is struggling to gain ground as the Trump trade appears to be losing steam. However, stronger US economic statistics and cautionary words from the Federal Reserve (Fed) may limit the downside for the USD in the immediate term.
Australian Dollar Gains as RBA Maintains Hawkish Stance on Interest Rates
The Australian Dollar strengthened following hawkish remarks from the Reserve Bank of Australia (RBA). Domestically, the Reserve Bank of Australia (RBA) kept interest rates at 4.35%. RBA Governor Michele Bullock emphasised that existing interest rates are adequately restrictive and will remain so until the central bank is confident in its inflation forecast.
Potential Impact of US-China Trade Tensions on the Australian Dollar
On the Australian front, Donald Trump has threatened to impose 60% tariffs on Chinese products in order to defend US companies and employment. Because China is Australia's largest trading partner, the probable negative spillovers from Trump's policies may cause the Australian Dollar (AUD) to fall.
Meanwhile, China's retail sales increased by 4.8% year on year in October, exceeding the projected 3.8% and the 3.2% growth witnessed in September. Meanwhile, industrial production increased by 5.3% year on year, falling short of the predicted 5.6% and the 5.4% growth seen in the prior period.
Australia's Labor Market Steady, Inflation Expectations Decline
On the economic front, Australia's most recent labour market report showed that the unemployment rate remained stable at 4.1% in October, with a minor gain in employment of 15.9K, all of which supported the perception of a relatively strong labour market.
Australia's seasonally adjusted unemployment rate remained at 4.1% in October, matching market expectations. However, employment change data revealed that just 15.9K new positions were created in October, falling short of the expected 25.0K.
Consumer inflation expectations in Australia fell to 3.8% in November, down from 4.0% the previous month, and reached their lowest level since October 2021.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.65108, up 0.05% as modest bullish momentum dominates the 4-hour chart. The pair is currently holding above the pivot point at $0.64941, signaling a constructive tone.
The 50-day EMA at $0.64805 reinforces the bullish outlook, acting as a dynamic support level, while the RSI at 62 suggests the pair has room for further upside before entering overbought territory. A successful test and hold above $0.64941 could set the stage for an advance toward $0.65463 in the short term, but a failure to maintain this level might lead to a deeper correction.
Traders may look to initiate long positions near the pivot point at $0.64944, targeting $0.65463 with a stop-loss placed at $0.64513 to manage downside risks effectively. However, caution is warranted as the broader market sentiment remains influenced by global risk factors and economic data releases.
Consider a buy limit at $0.64944, with a take-profit target at $0.65463 and a stop-loss at $0.64513 to capitalize on the bullish potential while managing downside risks.
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