Daily Price Outlook

The EUR/USD currency pair extended its upward rally and remained well bid above the 1.1000 level. However, the upticks were primarily driven by the weaker US Dollar (USD) and the hawkish stance of the European Central Bank, lifting the EUR/USD pair. Investors await November’s US Core Personal Consumption Expenditure Price Index (Core PCE) on Friday, projected to rise 0.2% MoM and 3.3% YoY.

ECB's Cautious Stance Favors Euro Amid Global Uncertainties

It is worth noting that the European Central Bank (ECB) Vice President, Luis de Guindos, mentioned on Thursday that it's too early to consider easing monetary policies. He assured that the ECB doesn't anticipate a technical recession in the Eurozone and expressed a positive stance on an EU fiscal reform deal, believing it would ease market uncertainties.

On a similar note, Martins Kazaks, a member of the ECB Governing Council, stated that maintaining current interest rates is necessary for a while. However, he suggested that the first rate cut might happen later than what investors are currently expecting, possibly not until around mid-2024.

Therefore, this news suggests a cautious approach by the ECB, supporting the Euro against the US Dollar.

Fed's Cautious Stance and Weaker US GDP Propel EUR/USD Pair

Moreover, the Federal Reserve (Fed) has taken a more cautious approach, hinting at possible 75 basis points (bps) in rate cuts in the latter part of 2024. On the economic front, the US Bureau of Economic Analysis (BEA) reported on Thursday that the country's Gross Domestic Product (GDP) in Q3 expanded by 4.9%, slightly below the market's 5.2% expectation.

Hence, this less-than-stellar US data, coupled with the Fed's expectation of three rate cuts, puts downward pressure on the US Dollar. This, in turn, provides support for the Euro against the Dollar (USD), benefiting the EUR/USD currency pair.

EUR/USD - Technical Analysis

On December 22, the EUR/USD pair presents a nuanced technical landscape as it trades slightly down by 0.09% at 1.1002. This subtle decline comes amid a complex interplay of economic factors and market sentiments. The pair is currently navigating a crucial juncture, with a pivot point set at $1.0765. On the upside, it encounters immediate resistance at $1.0885, with further barriers at $1.1025 and $1.1151. Conversely, the currency pair finds support at $1.0619, followed by lower levels at $1.0493 and $1.0366, which will be vital in cushioning any downward movement.

The Relative Strength Index (RSI) for EUR/USD stands at 64, suggesting a predominantly bullish market sentiment but still shy of overbought territory. This implies there might be some room left for upward momentum before any potential pullback. In contrast, the Moving Average Convergence Divergence (MACD) is at a modest 0.00017, just above its signal line at 0.00223, indicating that while there is potential for upward momentum, it might be limited.

A key observation in the chart patterns is the presence of a triple top pattern with resistance extending at $1.1006. This pattern usually signifies a critical resistance level, and its breach could pave the way for a bullish breakout. Currently, the EUR/USD pair is trading just above the 50-Day Exponential Moving Average (EMA) of $1.0984, reinforcing a short-term bullish bias. However, the triple top pattern's resistance level is crucial and needs to be closely monitored.

Given these technical indicators, the immediate outlook for EUR/USD is cautiously bullish, especially if it manages to break out above the $1.1008 mark. Such a breakout could lead the pair to test higher resistance levels in the short term. Conversely, failure to breach this critical resistance might see the pair retreating towards its support levels.

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The USD/JPY currency pair has struggled to stop its downward trajectory and continues to face selling pressure, hovering around the 143.00 level. However, this persistent decline can be attributed to a combination of factors, including a weakened US dollar, a more cautious risk sentiment in the market, and an upward adjustment of Japan's growth forecasts. These elements support the safe-haven appeal of the Japanese yen, contributing to the ongoing bearish trend in the USD/JPY pair.

Japanese Yen Strength Amidst Equities Weakness and BoJ's Ultra-Dovish Stance

It's important to highlight that the safe-haven Japanese Yen (JPY) is gaining strength due to a generally weaker tone in equity markets. This boost comes after the Japanese government increased its economic growth estimates. However, the Bank of Japan (BoJ) maintaining an ultra-dovish stance limits further JPY gains.

Meanwhile, the recent Wall Street slump also contributes to the USD/JPY pair facing pressure. Japan's Cabinet Office raised economic growth projections for fiscal 2023/24 to 1.6%, and for 2024/25 to 1.3%. Despite these positive signs, the BoJ's commitment to a loose monetary policy, which tend to undermine the JPY currency and may help the USD/JPY pair to limit its deeper losses.

Factors Influencing US Dollar Strength Amidst Federal Reserve Uncertainty and Positive Economic Data

Furthermore, the US Dollar is getting some support due to uncertainty about when the Federal Reserve will start easing, especially after positive US economic data on Wednesday. Despite talk from influential Fed officials downplaying a shift from their hawkish stance, the US Consumer Confidence Index saw a significant rise in December.

Surprisingly, Existing Home Sales in November went up by 0.8%, breaking a five-month decline trend. Investors are still anticipating a potential early interest rate cut in 2024, leading to lower US bond yields and limiting the strength of the Greenback. The focus now shifts to key economic indicators, including the final US Q3 GDP, Weekly Jobless Claims, and the Philly Fed Manufacturing Index.

Therefore, the uncertainty around the Federal Reserve's easing timeline and positive US economic data provide some support for the US Dollar. This, coupled with the potential for an early interest rate cut, may limit USD/JPY pair strength.

USD/JPY - Technical Analysis

The USD/JPY currency pair is presenting a subdued performance, recently dipping below the 143.00 psychological mark, and now trades at 142.939. This represents a modest retreat of 0.06% within a 24-hour window as observed in the 4-hour chart. Currently, the pair is grappling with a downward pressure that has nudged it beneath the 50-day Exponential Moving Average (EMA) pivot point of 143.827, potentially signaling a bearish shift in momentum.

Resistances lie overhead at 143.171 and a more pronounced one at 143.827, which coincides with the 50 EMA, followed by a stronger barrier at 144.936. To the downside, immediate support emerges at 141.009, with a further safety net at 138.977. The Relative Strength Index (RSI), a gauge of market sentiment, underscores this bearish inclination, registering at 44.69, below the neutral threshold of 50.

This technical configuration suggests the pair may be poised for further declines, with the current slip below the key EMA level reinforcing this outlook. Market participants are now closely monitoring these dynamics, with the potential for continued downward movement if bearish sentiment persists. Conversely, a recovery above the EMA could invalidate this bearish scenario, putting the aforementioned resistance levels back into play. In summary, the USD/JPY is at a technical crossroads, with its near-term trajectory hinging on its ability to either sustain below or recover above the 50-day EMA.

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Gold price (XAU/USD) has maintained its upward trajectory, holding strength around the 2,034 level. However, this positive movement is attributed to dovish expectations from the Federal Reserve (Fed), which have placed USD bulls on the defensive and provided substantial support to the precious metal. Concurrently, a softer risk tone in the market has further bolstered the safe-haven appeal of XAU/USD, particularly in anticipation of upcoming US macro releases.

Moving ahead, the focus is fixed on the upcoming release of the US Core Personal Consumption Expenditure (PCE) Price Index scheduled for Friday. This economic indicator holds significant influence over the Fed's future policy decisions, subsequently shaping the short-term path for this non-yielding commodity. Investors are observing these developments as they navigate the dynamic landscape of gold trading.

Impact of Fed's Policy Outlook on Dollar and Gold Markets

It is worth noting that the sentiment is gaining ground, suggesting that the US central bank is poised to transition from its firm stance early next year. This anticipated shift is anticipated to have a pronounced impact on the US Dollar, with a concurrent positive effect on Gold prices. In the meantime, the ongoing market trends signal an increasing probability of the Federal Reserve implementing interest rate cuts, with expectations leaning towards a potential move around March 2024.

Moreover, the dovish outlook from the Federal Reserve is exerting downward pressure on the yield of the 10-year US government bond, driving it to its lowest point since July. This downturn is leaving US Dollar bulls in a defensive position. Notwithstanding various attempts by several Fed officials to downplay the notion of swift rate cuts, the Conference Board's US Consumer Confidence Index surged to a five-month high in December.

US existing home sales defied expectations by unexpectedly rising by 0.8% in November, breaking a five-month streak of declines. These unexpected positive indicators underscore the complex dynamics influencing the market, introducing additional nuances to the overall economic narrative.

US Stock Market Shift, GDP Figures, and Key Economic Indicators

It's worth noting the sudden shift in US stock markets overnight, favoring the safe-haven precious metal and supporting its rise. Traders are now eagerly awaiting the final US GDP numbers, expected to reveal a 5.2% annualized growth in the third quarter, showcasing the strength of the largest global economy. Thursday's economic schedule includes the release of Weekly Initial Jobless Claims data and the Philly Fed Manufacturing Index during the US session.

However, the spotlight remains on Friday's Core PCE Price Index, a key factor influencing the Fed's future rate decisions and likely to stir up volatility in the markets. Investors are closely monitoring these indicators for insights into the economic landscape and potential market movements.

GOLD (XAU/USD) - Technical Analysis

In the recent sessions, Gold's technical picture has presented a nuanced narrative, with the precious metal navigating a delicate balance between bullish momentum and the specter of a bearish reversal. Currently, Gold spot prices (XAU/USD) are trading just above $2,037, marking a slight ascent from the previous day's valuation.

The persistence of buyers is evident, yet their momentum is challenged by a notable resistance near the $2,044 level—a ceiling that has proven resilient on multiple occasions, forming a triple top pattern on the 4-hourly timeframe. This pattern is typically indicative of a potential downturn, suggesting that Gold's upside may be curtailed without significant buying pressure.

The market's ambivalence is further reflected in the Relative Strength Index (RSI), which at a value of 57.91, indicates a market neither overextended in its reach nor retreating in caution. Meanwhile, the positioning above the 50-day Exponential Moving Average (EMA), with a current value of $2,025.774, supports the short-term bullish trend. However, the EMA also underscores the need for vigilance as Gold teeters at this pivotal juncture.

With traders eyeing the immediate resistance point, a decisive break above could invalidate the bearish implications of the triple top and propel prices towards the next resistance levels at $2,065 and potentially $2,088.

Conversely, should the pattern hold, a retest of the immediate support around $2,018 and possibly lower supports could ensue. As the market stands at the crossroads, the anticipation builds for a directional breakout, casting the upcoming sessions in a critical light for those tracking the lustrous metal's trajectory.

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Despite the bullish US dollar, the AUD/USD currency pair extended its upward trend, staying well bid around the 0.6732 level. The upward rally could be attributed to the RBA meeting minutes, which revealed that the central bank is considering further tightening amid encouraging signs of falling inflation. Traders appear cautious, refraining from placing strong bids as they await key economic indicators such as US weekly Jobless Claims, Q3 GDP, and the Philly Fed Manufacturing Survey.

Positive US Economic Indicators and Potential Impact on Currency Markets

It's worth noting that recently released US data, particularly on Wednesday, exceeded market expectations, signaling positive trends in the economic landscape. In November, US Existing Home Sales reached an annual rate of 3.82 million, surpassing the market consensus of 3.77 million. This marks a significant improvement in the housing market.

Moreover, in December, the Consumer Confidence Index from the Conference Board showed substantial growth, marking the most significant increase since early 2021. The index rose from 101.0 to 110.07, signaling a surge in consumer confidence. This positive shift suggests an optimistic outlook among consumers regarding economic conditions.

Hence, the positive US economic indicators have the potential to bolster the USD, which could, in turn, impact the AUD/USD. Traders might witness heightened demand for the USD as a result of improved economic sentiment.

RBA's Optimistic Stance and Potential Tightening: Impact on AUD/USD Pair and Factors Driving Uncertainty

Moreover, the Reserve Bank of Australia (RBA) has signaled a more positive stance in its recent minutes, leaning towards potential tightening. This shift is prompted by promising signs of decreasing inflationary pressures in the overall economy. The RBA, however, emphasizes that any decisions will hinge on incoming data and a careful evaluation of evolving risks. This cautious approach ensures a responsive strategy aligned with the dynamic economic landscape.

Therefore, the RBA's positive tone and potential tightening may initially bolster the AUD/USD pair. However, the impact will depend on future economic data and risk assessments, introducing an element of uncertainty for traders.

AUD/USD - Technical Analysis

The Australian Dollar has been on a steady incline against the US Dollar, with the AUD/USD pair recently trading at around 0.6752, a slight uptick of 0.09% as noted in the 4-hour chart. The currency duo has shown resilience, bouncing from a support level that had previously dipped to 0.65462, signaling a potential shift in momentum.

From a technical standpoint, the pair is buoyed by the 50-day Exponential Moving Average (EMA) at 0.66909, which has been instrumental in supporting the upward price movement. The Relative Strength Index (RSI), currently at 59.30, corroborates this bullish trend, suggesting that the pair has not yet reached overbought conditions and may have room to climb. Looking ahead, resistance levels at 0.67829 and 0.68251 await, with a more significant hurdle at 0.68996. Support, should the pair retreat, rests at 0.66806, with further support at 0.66180.

The current technical outlook for AUD/USD suggests a continuation of the bullish trend, underpinned by solid moving average support and a RSI that points to sustained upward potential. Investors and traders will be watching these resistance markers closely, as their breach could pave the way for further gains, while any pullback could test the resilience of underlying support levels.

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Despite the bearish trend in the US dollar, the GBP/USD currency pair continued its downward trajectory, reaching around 1.2720 on Wednesday. However, this decline can be attributed to the cautious sentiment prevailing ahead of a series of economic data releases from the United Kingdom (UK) on the same day. Notably, the UK Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index for November are all set to be unveiled.

It should be noted that the monthly consumer inflation is anticipated to grow by 0.01%, a slight increase from the flat 0.0% recorded previously. However, the year-on-year report may indicate a moderation, with an expected ease to 4.4% compared to the previous reading of 4.6%.

BoE Policy and Rate Cut Anticipation Impact on GBP/USD Pair

It's worth noting that the Bank of England (BoE) recently decided to keep the policy rate steady at 5.25%, its highest in 15 years, during the December meeting. Despite a gloomy economic outlook and more relaxed job market conditions, market experts anticipate four upcoming rate cuts, beginning in June 2024. This expected path suggests a potential drop in the key rate from 5.25% to around 4.25% by the end of the next year.

Deputy Governor Sarah Breeden emphasized the importance of maintaining restrictive policy levels to control inflation pressures. She mentioned that while these aren't predictions, a high inflation scenario would be more costly. This aligns with Governor Andrew Bailey's stance on the need to keep policy restrictive.

Looking ahead, the UK is set to release Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index for November. The monthly consumer inflation is expected to grow slightly, but the year-on-year report might show a decrease from the previous reading of 4.6% to 4.4%.

Therefore, the BoE's decision to maintain a high policy rate and the anticipation of future cuts may weigh on the GBP/USD pair.

US Dollar Recovery and Housing Data Impact on GBP/USD Pair

Moreover, the US Dollar Index (DXY) experienced a decline but is currently trading higher around 102.20 as it is making an effort to recover from recent losses amid a more cautious stance from the US Federal Reserve (Fed). The Fed's signals suggest a potential easing of monetary policy in early 2024.

On the economic front, US Housing Starts performed better than expected at 1.56 million, beating the consensus of 1.36 million. However, Building Permits dipped slightly to 1.46 million, just below the forecast of 1.47 million. Investors are keeping an eye on Wednesday's data, including Existing Home Sales Change and the CB Consumer Confidence survey.

Therefore, the US Dollar's recovery will likely pose downward pressure on the GBP/USD pair, impacting its strength. Meanwhile, the positive US housing data could provide support for the Dollar, potentially leading to a weaker GBP/USD pair.

GBP/USD - Technical Analysis

The GBP/USD pair on December 20 is illustrating the intricate dance between the British pound and the US dollar in the forex market. Currently, it stands at 1.27202, experiencing a slight decrease of 0.09%. This movement places the pair slightly above a significant pivot point at 1.2523. The pair faces immediate resistance at 1.2657, with subsequent levels at 1.2820 and 1.2954. On the flip side, support is found at 1.2359, followed by 1.2225 and 1.2086.

In the realm of technical indicators, the Relative Strength Index (RSI) is positioned at 58, indicating a moderately bullish sentiment, yet far from the overbought threshold. The Moving Average Convergence Divergence (MACD) shows a subtle positive value of 0.000080 against a signal of 0.002090, suggesting a potential for upward momentum, although the movement is not pronounced.

The 50-Day Exponential Moving Average (EMA) at 1.2710 is a crucial indicator, as the current price hovers around this mark. This positioning hints at a short-term bullish trend. From a chart pattern perspective, the GBP/USD pair appears to be maintaining a bullish stance above the 1.2710 level.

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Despite the Federal Reserve's (Fed) dovish stance, the Gold price (XAU/USD) failed to maintain its upward rally and lost some of its traction, hovering within a narrow trading range near the weekly high. However, the reason for its downward trend can be attributed to the modest US Dollar uptick and a risk-on sentiment across the global equity markets.

The Federal Reserve recently signaled that they are not planning to raise interest rates soon to fight inflation. This has kept the yields on US Treasury bonds low, which is good for gold prices. However, some Fed officials are saying that interest rates might not stay low for long. On the other hand, the US Dollar is slightly gaining value, and global stock markets are doing well. Therefore, this limits the rise in the price of gold, which is considered a safe investment.

Fed's Shifting Stance and its Impact on Gold Prices

It's worth noting that there is a growing belief that the Federal Reserve (Fed) will shift away from its strict approach early next year, and this is helping boost the price of Gold. Chicago Fed President Austan Goolsbee emphasized that the central bank isn't committing to lowering interest rates soon and shouldn't be pressured by market expectations.

Cleveland Fed President Loretta Mester pointed out that the financial markets might be getting ahead of themselves in predicting when interest rates will be cut next year. Despite this, the markets have already factored in a 60% chance of rate cuts starting in March 2024, totaling 140 basis points in reductions for the year. The yield on the 10-year US government bond remains below 4%, and the US Dollar is just above a recent low.

Therefore, the expectation of the Federal Reserve easing its strict stance has boosted gold prices. Market anticipation of rate cuts in 2024, coupled with a lower US Dollar and bond yields, contributes to gold's positive momentum.

Market Dynamics Impacting Gold Prices and Future Focus

Moreover, the risk-on sentiment in the market was seen as another key factor that cap further gains in the gold price. However, this risk-on trend is fueled by expectations of lower interest rates in the US, heightened stimulus efforts from China, and a more accommodative approach from the Bank of Japan. These factors limit the appeal of safe-haven assets like gold.

Moving ahead, traders are now keeping an eye on the US Consumer Confidence Index for potential market moves this Wednesday. However, the primary focus remains on Friday's release of the US PCE Price Index, which is expected to have a significant impact on market sentiment.

GOLD (XAU/USD) - Technical Analysis

As of December 20, the gold market presents a nuanced picture. The precious metal is trading at $2,040, marking a slight increase of 0.01%. This movement positions gold above its pivot point of $1,980, indicating a potential shift in market dynamics. Key resistance levels are set at $2,015, $2,054, and $2,089, while support levels are found at $1,939, $1,904, and $1,870.

The technical indicators offer a deeper insight into gold’s trajectory. The Relative Strength Index (RSI) stands at 62, suggesting a bullish sentiment but not in the overbought territory. This indicates room for further upward movement. The Moving Average Convergence Divergence (MACD) presents a value of 0.655 against a signal of 5.63, further pointing towards potential bullish momentum.

Notably, the 50-Day Exponential Moving Average (EMA) is at $2,034, with the current price slightly above this level, reinforcing a bullish outlook in the short term. The observed double-top pattern at the resistance of $2,042 is a critical point. A breakout above this level could propel gold towards $2,060 and potentially $2,085, signaling a robust upward trajectory.

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Despite the bearish bias of the US dollar, the EUR/USD currency pair was unable to break its previous-day losing streak. It experienced mild losses and continues to be held below the 1.1000 mark during the early European trading hours on Wednesday. However, the downward trend can be attributed to the downbeat Eurozone data. The Eurozone Harmonized Index of Consumer Prices (HICP) for November reported a -0.6% month-on-month (MoM) figure, compared to the previous -0.5%. This result was weaker than expected, raising concerns about economic health and potentially hindering the Euro's performance.

Eurozone Inflation Dynamics and ECB Meeting Highlights

It is worth noting that Eurozone inflation in November fell short of market expectations, primarily attributed to a decline in energy prices. The Harmonized Index of Consumer Prices (HICP) for November recorded a month-on-month decrease of -0.6%, slightly weaker than anticipated. The annual inflation rate stood at 2.4%, in line with analysts' predictions. However, examining core inflation (excluding food and energy prices), it registered at 3.6% year-on-year, marking the lowest figure since April 2022.

It should be noted that the European Central Bank (ECB) recently conducted a meeting and made it clear that they did not discuss the possibility of cutting interest rates. However, they did issue a caution regarding a potential spike in December inflation due to colder weather, which typically leads to increased energy demand and prices. This situation could constrain the strength of the Euro and present a challenge for the EUR/USD pair.

US Housing Data and Upcoming Economic Indicators in Europe and the US

Moreover, Building Permits in the US declined to 1.46 million in November, falling short of the expected 1.47 million, while Housing Starts rose to 1.56 million, surpassing the consensus of 1.36 million. The mixed US housing data with a decline in Building Permits and a rise in Housing Starts could influence the EUR/USD pair, potentially contributing to market volatility.

Looking forward, the focus in the market will be on several key economic indicators. In Germany, investors will be watching the Producer Price Index (PPI) for November. For the Eurozone, attention turns to October's Current Account and Construction Output. Additionally, investors will keep their eye on December's Consumer Confidence for the Eurozone. On the U.S. side, there will be the release of Existing Home Sales data.

EUR/USD - Technical Analysis

As of December 20, the EUR/USD pair is navigating a delicate balance in the forex market. Currently priced at 1.0969, it shows a modest decline of 0.1%. The pair finds itself fluctuating around significant technical levels, with a pivot point established at 1.0754. Resistance levels are observed at 1.0879, 1.1021, and 1.1146, while support is anchored at 1.0611, 1.0487, and 1.0362.

The technical indicators paint a mixed picture. The Relative Strength Index (RSI) at 65 leans towards a bullish sentiment but stops short of the overbought threshold, indicating potential room for growth. However, the Moving Average Convergence Divergence (MACD) shows a near-zero value of 0.00006 against a signal of 0.00263, suggesting a lack of strong momentum in either direction.

The 50-Day Exponential Moving Average (EMA) at 1.0957 slightly underpins the current price, reinforcing a short-term bullish trend. Nevertheless, a bearish engulfing candle pattern near 1.09770 signals potential bearish bias, indicating that the pair is likely to stay bearish below 1.1005.

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Despite the bullish trend in the US dollar and improved yields on US Treasury bonds, the AUD/USD currency pair has maintain its upward momentum, remaining well-bid around the $0.6715 level. However, this upward trajectory can be attributed to the recent release of the RBA meeting minutes. Furthermore, Australia's strong employment results and increasing incomes serve as indicators of economic resilience, offering some further support to the Australian Dollar and contributes to the AUD/USD pair gains.

Positive Outlook from RBA and Improved Economic Indicators

Australia's Reserve Bank (RBA) is hopeful about inflation getting better and wants it to keep going up. The RBA thinks it's crucial to wait for more information to understand the risks. They want to find the right balance between the possibility of inflation staying high for a long time and the risk of a slowdown in demand. According to RBA staff, they expect inflation to reach the upper range by 2025.

In economic news, Judo Bank's Composite PMI is better at 47.4, Manufacturing PMI is a bit higher at 47.8, and Services PMI increased to 47.6. Australia's Consumer Inflation Expectations for December went down to 4.5% from 4.9%. On a good note, Australian Trade Minister Don Farrell thinks China will remove tariffs on Australian wine, showing improved relations as China already lifted restrictions on most Australian exports.

Therefore, the positive outlook from Australia's Reserve Bank and improved economic indicators may strengthen the Australian Dollar (AUD). Additionally, the potential resolution of trade issues with China could positively impact the AUD/USD pair, leading to potential upward movement.

Potential Impact of US Economic Developments on AUD/USD Pair

The Federal Reserve (Fed) kept interest rates the same at 5.5% in December, just as people expected. However, there's talk about the possibility of lowering rates in the March meeting. Chicago Fed President Austan Goolsbee is open to the idea, and Atlanta Fed President Raphael Bostic thinks a rate cut might happen in Q3 2024, depending on how inflation goes.

On the data front, US S&P Global Services PMI went up to 51.3, but Manufacturing PMI dipped to 48.2. The US Dollar Index (DXY) is holding steady, waiting for news from the US economy. It might get a boost from better yields on US Treasury bonds. Investors are keeping an eye on Tuesday's Building Permits and Housing Starts in the US. On Wednesday, the People's Bank of China (PBoC) will reveal its Interest Rate Decision.

However, New York Fed President John Williams disagrees with the idea of a March rate cut. San Francisco Fed President Mary Daly says even with three rate cuts next year, the Fed will keep a somewhat restrictive stance. Deciding when policy changes might happen in the coming year is too early, according to Daly, as there's ongoing work, and it's not just about getting inflation to 2%.

Therefore, the potential for rate cuts and mixed economic indicators in the US may create uncertainty, impacting the AUD/USD pair. Positive developments, like improved US Treasury yields, could boost the US Dollar, potentially weakening the Australian Dollar against the USD.

AUD/USD - Technical Analysis

As of December 19, the Australian Dollar against the US Dollar (AUD/USD) presents an intriguing scenario in the foreign exchange market. The pair is witnessing a slight upturn, registering a 0.25% increase, with the current price hovering around 0.67226. This movement indicates a tentative bullish sentiment in the short-term outlook.

The technical landscape offers several key levels that traders are closely monitoring. The pivot point is established at 0.6587, serving as a baseline for the pair's movement. In terms of resistance, AUD/USD faces immediate challenges at 0.6658, with further resistance points at 0.6775 and 0.6846. Conversely, the support levels are positioned at 0.6470, 0.6399, and 0.6326, offering potential cushions for any downward trends.

The Relative Strength Index (RSI) is currently at 62, hovering above the neutral 50 mark, indicating a bullish market sentiment. This suggests that investors are showing a preference for the Australian Dollar over the US Dollar. The Moving Average Convergence Divergence (MACD) displays a reading of -0.00027 with a signal line at 0, implying a potential for both upward and downward momentum, adding a layer of uncertainty to the market's direction.

Notably, the 50-Day Exponential Moving Average (EMA) for AUD/USD stands at 0.6712. The pair trading slightly above this level suggests a short-term bullish trend, aligning with the overall market sentiment. Furthermore, the observed upward channel pattern supports the AUD/USD pair, indicating a continuation of the bullish momentum.

In conclusion, the AUD/USD pair displays a bullish trend above the 0.66822 level. The short-term forecast anticipates testing higher resistance levels in the coming days, especially if it sustains above the pivotal EMA and resistance points. However, traders should remain vigilant for any shifts in these technical indicators, which could signal a change in the market's direction.

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Gold price (XAU/USD) failed to maintain its previous upward rally and edged lower on Tuesday. However, the reason for its downward trend could be attributed to the combination of factors including bullish US dollar and positive sentiment in global stock markets. It should be noted that the slew of influential Federal Reserve (Fed) officials recently tried to push back against market bets for early interest rate cuts in 2024. This is making the US Dollar stronger and putting pressure on gold.

It's worth noting that the Gold price is currently facing pressure due to a positive sentiment in global stock markets, making it less attractive as a safe-haven asset. However, geopolitical tensions remain a significant concern for the markets. Meanwhile, the fears of a potential economic slowdown, especially in China and the Eurozone, could support gold prices. Traders are also being cautious ahead of a key US inflation report scheduled for Friday.

Looking ahead, traders seems cautious to place any strong position before a key US inflation report scheduled for Friday. This report, known as the Core PCE Price Index, will give insights into the Federal Reserve's future decisions, impacting the demand for the US Dollar and influencing Gold prices.

Fed Officials Resist Rate Cut Expectations, Impacting Gold Prices and USD

As we mentioned above that Chicago Fed President Austan Goolsbee and Cleveland Fed President Loretta Mester are against the idea of lowering interest rates, which is different from what the market expects. Goolsbee is puzzled by how the market reacted to the recent FOMC meeting and wants to make it clear that the central bank is not planning to quickly cut rates. Mester thinks the financial markets might be predicting rate cuts too soon.

New York Fed President John Williams warned against predicting rate cuts too early last Friday, which stopped gold prices from going up too much. However, the market still thinks the Fed will start making things easier in the first half of 2024. This belief is making the US Dollar weaker and helping gold.

As a result, investors are closely watching the US Core PCE Price Index on Friday for insights into the Federal Reserve's upcoming policy decisions, considering the potential impact of these geopolitical factors on the market.

Geopolitical Tensions in the Middle East Boost Safe-Haven Appeal of Precious Metals

In contrast to this, the ongoing worries about conflicts in the Middle East were seen as one of the key factor that cap further losses in the safe-haven precious metal. Yemen's Houthi militants, supported by Iran, attacked with drones and missiles because of what Israel did in Gaza. In reply, the US formed a coalition and started Operation Prosperity Guardian to deal with the Houthi threat in the Red Sea.

GOLD (XAU/USD) - Technical Analysis

As of December 19, Gold's market performance illustrates a delicate balance in the investment landscape. The precious metal has seen a slight decrease of 0.25% in 2022, currently positioning itself just below the pivot point of $1,979. Despite this minor dip, the outlook for Gold remains cautiously optimistic.

In terms of resistance, the immediate level is at $2,014, with subsequent ceilings at $2,054 and $2,089. On the support side, Gold finds a cushion at $1,940, followed by lower levels at $1,904 and $1,869. These key price levels play a pivotal role in determining Gold’s short-term movements.

The technical indicators offer a mixed view. The Relative Strength Index (RSI) stands at 50, precisely at the threshold that separates bullish sentiment from bearish. This neutrality in the RSI indicates an evenly balanced market sentiment. The Moving Average Convergence Divergence (MACD) presents a reading of -1.2300 against a signal of 3.8190, suggesting that bearish momentum could be on the horizon, despite the current stable market conditions.

A notable observation is Gold's relationship with the 50-Day Exponential Moving Average (EMA), currently at $2,026.00. Trading below this level, Gold indicates a potential bearish trend in the short term. However, the market remains vigilant for any shifts that could push the metal above this significant moving average.

In conclusion, the overall trend for Gold appears bullish above the $2,015 mark, offering a glimpse of potential upward movement in the coming days. Investors are advised to closely monitor these key technical levels and indicators, as they will play a crucial role in shaping Gold's market trajectory in the near term.

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Daily Price Outlook

Despite the dovish remarks by the Bank of Canada (BoC) Governor Tiff Macklem and the modest US Dollar (USD) uptick, the USD/CAD currency pair failed to stop its losing streak and remained well offered around below the 1.3390 level. However, the reason for its downward trend could be attributed to the recent goodish recovery in Crude Oil prices, which tends to underpin the commodity-linked Loonie and contributes to the USD/CAD currency pair.

Bank of Canada's Rate Cut Hints and Market Impact

It's worth noting that the Bank of Canada's Governor, Tiff Macklem, recently hinted at the possibility of lowering interest rates in 2024. This news has softened the potential downsides in the USD/CAD pair. People in the market quickly reacted, expecting rate cuts to begin around April, with a total cut of at least 1% by the end of next year. This, in turn, is likely to support the USD/CAD pair. Although, the upticks were short-lived and temporary amid the recent recovery in Crude Oil prices, which usually benefits the Canadian Dollar linked to commodities.

US Dollar Outlook and Fed Presidents' Views on Rate Cuts

Furthermore, Chicago Federal Reserve (Fed) President Austan Goolsbee and Cleveland Fed President Loretta Mester recently disagreed with the market's predictions of early interest rate cuts. This follows New York Fed President John Williams's statement on Friday that it's too early to talk about rate cuts. Moreover, the geopolitical risks are boosting the USD's safe-haven status against the Canadian Dollar. Traders are cautious about making big bets on the USD/CAD pair and are waiting for the latest consumer inflation figures from Canada for clearer direction later in the North American session.

Thus, the mixed views from Fed officials on early rate cuts and geopolitical risks favoring the USD's safe-haven status against the Canadian Dollar are making USD/CAD traders cautious. They're awaiting Canada's consumer inflation figures for clearer direction.

USD/CAD - Technical Analysis

The USD/CAD pair on December 19th exhibits a subtle yet complex trading pattern in the forex market. Currently, it records a marginal decline of 0.05%, trading at 1.3393. This level of trading activity indicates a cautious market sentiment towards the currency pair.

Analyzing the 4-hour chart, the pivot point is established at 1.3180. The pair faces immediate resistance at 1.3277, with further resistance expected at 1.3450 and 1.3550. On the other hand, support levels are found at 1.3012, followed by 1.2847 and 1.2670. These key price levels will be critical in dictating the near-term trajectory of the USD/CAD pair.

The technical indicators provide a nuanced view of the pair's potential direction. The Relative Strength Index (RSI) stands at 38, suggesting a bearish sentiment as it falls below the neutral 50 threshold. However, the Moving Average Convergence Divergence (MACD) presents a value of 0.00062 against a signal line of -0.00373, hinting at possible upward momentum. This contrast in indicators underscores the current market uncertainty.

The 50-Day Exponential Moving Average (EMA) at 1.3391 closely aligns with the current trading price, indicating a balanced market outlook. Notably, the Loonie has entered an oversold zone, and the closing of candles over the $1.3350 level could pivot the pair towards a bullish bias today.

In conclusion, the overall trend for the USD/CAD pair appears to be bullish above the 1.3390 level. The short-term forecast suggests that the pair may test higher resistance levels in the upcoming sessions, particularly if it sustains above the critical EMA and support points. Investors and traders should closely monitor these technical indicators and key levels for insights into potential market shifts.

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