US stocks were dragged lower for a second day, as stocks in Asia headed for declines on Wednesday with fresh concerns about the spread of Covid-19 from China unnerved investors. Market appetite for risk waned on news that the US would require inbound airline passengers from China to show a negative Covid-19 test before entry.

In Italy, health officials said they would test arrivals from China and said almost half of passengers on two flights from China to Milan were found to have the virus. However, Hong Kong removed limits on gatherings and testing for travellers in a further unwinding of its last major Covid rules, offering a boost to the global economy but sparking concerns it would amplify inflation pressures and prompt US policymakers to maintain tight monetary settings.

The benchmarks, the S&P500 dropped 1.2% for the day, to the lowest level in more than a month. All eleven sectors stayed in the negative territory, especially the Energy sector fell dramatically with 2.22% daily losses after the several-day surge. The tech-heavy Nasdaq 100 further declined by 1.3% daily, and the Dow Jones Industrial Average slid 1.10% on Wednesday.

Main Pairs Movement

The US Dollar edged higher with a 0.27% daily gain on Wednesday, as the concerns about the outbreak of Covid-19 from China attracted some risk-aversion flow to the safe-haven greenback. The DXY index confronted some mild selling during the first half of Wednesday, then managed to rebound above the 104.4 level during the US trading session.

The GBPUSD has little change lower for the day, as the strong US Dollar is across the board. The cables dropped hugely during the early American trading session as the US administration announced mandatory Covid tests for travellers from China. In the meantime, EURUSD tumbled by almost 0.36% undermining market risk sentiment. The pair ended the day with 0.26% daily losses.

The Gold price remains defensive around the $1805 mark after printing the first daily negative closing in three, as the market’s fresh fears of inflation, emanating from China, as well as geopolitical tension surrounding Russia and Ukraine, which in turn provide support for US Treasury bond yields and the greenback. The XAUUSD slumped during the UK trading hour and once fell below the $1800 mark, then regain upside momentum and stand firmly around the $1805 mark.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD edged lower throughout Wednesday’s trading and could not extend the pair’s three-day winning streak. The Euro-Dollar pair witnessed large volatility at the start of the American trading session as the Dollar dipped before starting an impressive rally that altered the course of EURUSD. The renewed Dollar strength comes after U.S. equities continue to sell off as the year comes to a close. Market participants are looking for safety as both equities and bonds continue to lose ground since trading began after the holidays. The benchmark U.S. 10-year treasury yield is now trading above the 3.87% mark, while the 2-year treasury yield was last seen trading at 4.357%. Yield curve inversion, often seen during late-cycle economies,  will continue to be the norm as global economies head into a grim 2023. The nature of late-cycle economies could favour the U.S. Greenback in 2023 as global market participants look to protect asset valuations.

On the technical side, EURUSD has continued to trade below our previously estimated resistance level of 1.0695. Short-term support remains at 1.0585 and 1.04591. RSI for the pair sits at 61.97, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1.0695

Support: 1.0585, 1.0459

GBPUSD (4-Hour Chart)

The pound rose sharply after a choppy European session, rebounding from an intra-day low near $1.2000 to challenge the $1.2100 figure in the American session. China is lifting Covid-19 restrictions on tourists, while it has started issuing travel permits to Hong Kong residents. In addition, authorities are starting to issue passports and will officially reopen the border on Jan. 8. Even though sentiment has turned positive, concerns about rising inflationary pressures are keeping traders on their toes. the U.S. Dollar Index, which measures the value of the greenback against a basket of peers – was down 0.28% at 103.984, weighed down by lower yields on U.S. Treasuries. There are no particular market events by this week for the UK.

Looking at the daily chart, GBP/USD is testing the 20 and 200-day EMA at 1.2113 after bouncing off the weekly lows near 1.2000. If the former is cleared, nest resistance would be the previous support-transfer-resistance of the uptrend line near 1.2180, followed by the 1.2200 figure. Conversely, failure to stay above 1.2100 could pave the way towards the weekly low at 1.2000 and the 50-day EMA at 1.1935. RSI for the pair sits at 48.71, as of writing. On the four-hour chart, GBPUSD currently trades above its 50, 100 day SMA but above its 200-day SMA.

Resistance: 1.2320, 1.2600

Support: 1.19, 1.176

XAUUSD (4-Hour Chart)

XAUUSD gave back gains after surging higher on Tuesday and fell further on Wednesday, basically having spit out all gains so far. The prices edged lower by nearly 1% to the lowest price at $1,797 during the American trading session.  It is hovering around $1,800 with bearish trends. As the price broke through the last estimated support of $1,812 and $1,800, it would make gold vulnerable to a decline to test an uptrend line around $1,795. A break below could trigger more losses, to the $1,785 zone. Below the next support is located at $1,773, which is Dec 15 & 16 low. As equity prices in Wall Street turned negative and amid a rebound in US yields to fresh daily highs, and the US Dollar Index rose from the lowest level in almost a week at 103.84 to 104.45, the strongest since Friday. The context put pressure on the gold price.

On the technical side, The four-hour chart shows that gold prices have slowed since mid-November, with the centre of gravity gradually rising, but the trend is gradually forming a rising wedge that warrants caution, as this is often a signal for a reversal to the downside. RSI sits at 57.47 as of writing. On the four-hour chart, gold price trades above its 50, 100, and 200-day SMA.

Resistance levels: 1805, 1820, 1830

Support levels: 1792, 1785, 1773

Economic Data

US stocks fall to start the final week of 2022 trading. Tesla Inc. shares led to losses as a report of a plan to temporarily halt production at its China factory rekindled fears about demand risks. Besides, Apple Inc. touched the lowest since June 2021 amid a slump in big tech. Moreover, Southwest Airlines Co. led declines in airline stocks after cancelling flights, hobbled by a massive winter storm that battered the US.

The yield on 10-year Treasuries climbed 10 basis points to the highest since mid-November, as China moved to end the quarantine for inbound visitors.

The benchmark, the S&P 500 fell with 0.40% daily losses with trading about 20% below the 30-day average. Six of eleven sectors of the S&P500 stayed in the negative territory, and the Consumer Discretion section got the worst performance among all groups, recording 1.64% losses daily. Apart from this, the tech-heavy Nasdaq underperformed, dropping more than 1%. The Dow Jones Industrial Average surprisingly edged higher by 0.1%, and the MSCI world index moved lower by 0.1% for the day.

Main Pairs Movement

The US Dollar index edged lower on Tuesday, as trading volume is low with investors just coming back from the Christmas holidays. The DXY index hovered in a narrow range from 103.9 to 104.4 during the first trading day of the last week of this year.

The GBPUSD stayed on the defensive since the UK trading session, with China announcing earlier in the day that it will lift quarantine obligations for travellers from January 8 as part of its reopening efforts. The pair dropped around 0.78% in the period of European trading hours. In the meantime, the EURUSD was pricing with wild moves on Tuesday. The pair dropped hugely ahead of the US trading hour but managed to erase most losses and ended with a 0.03% daily gain.

The gold is benefiting from recent positive headlines surrounding Beijing. China’s easing of the Coronavirus-linked activity restrictions joined an upward revision to the 2021 GDP forecast to favour gold bulls amid a sluggish holiday season. The XAUUSD surged and once climbed above the $1830 mark in the early American trading session, then pullback and ended with a 0.86% daily gain on Tuesday.

Technical Analysis

EURUSD (4-Hour Chart)

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EURUSD edged higher on the first day of the holiday-shortened trading week. The Euro fared better against the Dollar as market participants continue to sell the Greenback while U.S. interest rate expectations trim lower. Furthermore, the Dallas Fed’s December Texas Manufacturing Outlook Survey indicates a further drawdown of business activity and demand, thus prompting market participants to ditch the U.S. Greenback as markets lower interest rate expectations from the Fed.

The lowered business activity indicator furthers the recession rhetoric as markets brace for pending economic slowdown. On the economic docket, no major data releases are scheduled for the E.U., while the U.S. will release its pending home sales figures during today’s American trading session.

On the technical side, EURUSD continues to trade below our previously estimated resistance level of 1.065, but the pair has witnessed a steady upward momentum over the past four days. A new short-term support level around the 1.0585 price region. RSI for the pair sits at 56.95, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1.0650, 1.0695

Support: 1.0580, 1.0500, 1.0459, 1.0228

GBPUSD (4-Hour Chart)

GBPUSD edged lower on the first trading day of the week. Cable has been trading extremely range-bound over the past 3 trading sessions as the year ends. The British Pound continues to be plagued by the U.K.’s economic outlook and inflation; however, losses for Cable should be contained as no significant market-moving news is scheduled before 2023. The U.S. Greenback has shown weakness over the holiday weekend as China loosened its Covid restrictions and prompted a gain for the CNY.

The Dollar index lost 0.2% throughout Tuesday’s trading. While the U.S. 10-year treasury yield has resumed above 3.8%, market participants are not piling into U.S. treasury bonds as they expect flows to favour the equity market. On the economic docket, the U.K. has no significant news scheduled for the 28th, while the U.S. will release its pending home sales figures for November during the American trading session.

On the technical side, GBPUSD continues to trade below our previously estimated resistance level of 1.232. A steady downward trend has formed for Cable over the past week. The short-term support level for Cable remains at around the 1.19 and 1.176 price region. RSI for the pair sits at 43.51, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.2320, 1.2600

Support: 1.19, 1.176

XAUUSD (4-Hour Chart)

After dropping toward $1,800 in the early American session on Tuesday, yellow metal prices hiked nearly 1.9% up to a fresh December high of $1,833 during the intraday trading. The markets’ atmosphere started the week in an optimistic mood amid news from China, which is the biggest country producing gold, indicating that the local government will focus on economic growth, further moving away from its zero-covid policy. Meanwhile, the 10-year US Treasury bond yield holds positive territory above 3.8% but does little to nothing to derail the gold price’s rally.

On the technical side, according to the four-hour chart, technical indicators head north almost vertically, although the Momentum stands at neutral levels, while the RSI is near overbought readings. At the same time, XAUUSD has accelerated north after meeting buyers around a flat 20 SMA, currently at $1,805, which remains above the longer ones. RSI sits at 64.28 as of writing. On the four-hour chart, gold price trades above its 50, 100, and 200-day SMA.

Resistance levels: 1833, 1845, 1864

Support levels: 1812, 1805, 1792, 1785

Economic Data

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US stock ended Friday’s session with gains as investors digested data showing inflation is continuing to ease and the Federal Reserve’s rate hikes are serving their purpose. Data on Friday showed the Fed’s closely watched measure of inflation cooling and consumer spending stagnating. Consumers’ year-ahead inflation expectations also dropped this month to the lowest since June 2021. Both sets of data calmed the market sentiment on Friday. While central bank officials have repeatedly said that they’ll keep raising rates this year, markets have often shrugged off these warnings. However, robust economic data has continued to keep investors on edge.

The benchmarks, the S&P 500 edged higher with a 0.59% daily gain on Friday, and all eleven sectors stayed in the positive territory. Especially for the Energy sector, surging with 3.16% daily for the day, performed the best among all groups. However, the S&P 500 and the tech-heavy Nasdaq 100 still suffered their third week of losses, the longest losing streak since late September, as investors this month grappled with a hawkish Fed and data pointing to a resilient economy that can handle more rate-hike pain.

Main Pairs Movement

The US Dollar index edged lower with 0.11% daily losses, as the US inflation figure declined further than expected. The Personal Consumption Expenditure (PCE) Price Index rose a modest 0.1% in November, missing expectations for a reading of 0.3%.  Additional details showed that the Core PCE Price Index (the Fed’s preferred inflation gauge) climbed by 0.2% MoM in November and decelerated to a 4.7% YoY rate from 5.0% previous. The DXY index was wandering in a range from 104.1 to 104.5 level all day, except the moment when the data was released climbing above 104.5 level.

The GBPUSD has little changed on Friday, as trading volume dropped lower ahead of the Christmas holidays. The pair was hovering between the 1.2020 to 1.2090 levels on the last day of the week. In the meantime, the EURUSD mildly moved upward with large volatility, and the pair ended the day with 0.20% daily gains.

The Gold regained upside tractions and rose 0.32% for the day, as US consumer data has shown the inflation is cooling. The XAUUSD witnessed some fresh transactions during the early US trading hours and surged by 0.35% in an hour.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD traded 0.27% higher throughout Friday’s trading as of writing. It continues to trade in positive territory slightly above $1.0600. The data released by the US for hew home sales (Nov.) increased by 5.8%, core PCE inflation rate declined to 4.7% (Nov.) which all looks a favour in Euro. However, it failed to trigger a reaction. Core PCE’s impact should be straight forward with a weaker-than-forecast print weighing on the US dollar and helping the pair push higher. It probably could be affected by the thinning trading conditions into the Christmas holidays, which failed to gather enough momentum to make a decisive move in either direction.

On the technical side, the pair faces strong support at around the $1.0580 area, where the Fibonacci 23.6% retracement of the latest uptrend and the 100-period SMA on the four charts align. The next estimated level could be seen as $1.0500. RSI for the pair sits at 52.13, as of writing. On the four-hour chart, EURUSD currently trades above its 50 and 100-day SMA but below its 200-day SMA.

Resistance: 1.0650, 1.0695

Support: 1.0580, 1.0500, 1.0459, 1.0228

GBPUSD (4-Hour Chart)

The cable pair raised around 0.28% after two consecutive days of a downtrend, struggling to retain the $1.2000 price level. US PCE inflation eased as anticipated in November and core durable goods orders data is better than expected with 0.2% which is higher than the forecast 0.1%.

The pound edged higher on Friday against the backdrop of a modestly weaker dollar. The UK GDP (annual and quarterly) results released on Thursday were weaker than expected, with the UK economy posting negative growth in the third quarter of 2022 and will add to the focus on the fourth quarter data to be released next year – a technical recession that includes two consecutive quarters of negative growth. In addition, strike action in the U.K., which has reduced household incomes amid rising inflation, puts the Bank of England (BoE) in a difficult position but could end rate hikes sooner than the Federal Reserve, making the outlook for the pound against the dollar unfavourable in 2023.

On the daily chart of GBP/USD, the currency pair is trading near its 200-day SMA after yesterday’s daily close below the psychological barrier of 1.2000 and even a brief break below it. RSI for the pair sits at 53.54, as of writing. On the four-hour chart, GBPUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1.2320, 1.2600

Support: 1.20, 1.19, 1.176

XAUUSD (4-Hour Chart)

Gold price remains mildly bid as bears take a breather after a two-day downtrend. As of writing, the price has back to the $1,800 price level and up to the highest $1,802.75 as of today’s trading. Even so, mixed catalysts challenge the metal buyers in consolidation the biggest daily in over a week.

By the end of 2022, a brief annual review and prospect in 2023 of gold price. Gold prices started in 2022 in an indecisive way after fluctuating around $1,800 in the last quarter of 2021. In late February, gold rose sharply and reached its highest level since August 2020 at $2,070 in early March. However, in the second and third quarters, the gold price fell sharply and fell for seven months in a row, approaching $1,600 in September for the first time since April 2020. In November, gold prices recovered decisively, rising more than 8%, and continued higher in the first few weeks of December, returning to the midpoint of the annual range of around $1,800. Gold prices in 2023 will be driven by two important factors: the Fed’s monetary policy and China’s economic performance.

On the technical side, nothing seems to have changed as gold price still yearns for acceptance above trendline resistance at $1,825. RSI for the precious metal sits at around 55.45, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100 day SMA but above the 200-day SMA.

Resistance: 1825, 1840

Support: 1785, 1777, 1765

Dear Client,

Please note that the following instruments’ trading hours will be affected by the upcoming holidays.

Note: The dash sign (-) indicates normal trading hours.

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].

US equities dropped on Thursday, as investors digested data validating the Federal Reserve’s assertion that the economy is robust enough to withstand more tightening.

Technology stocks were battered after a gloomy outlook from chipmaker Micron Technologies Inc. weighed on sentiment. Data released on Thursday painted a picture of a resilient economy, stoking concern that the Fed has a long way to go to subdue inflation. Initial jobless claims rose less than forecast in the week ended Dec. 17, underscoring the strength in the labour market. Third-quarter gross domestic product was revised to 3.2% – compared with a previously reported 2.9% advance – on firmer spending.

The benchmarks, the S&P500 dropped by 1.45% daily for the day, and the tech-heavy Nasdaq 100 declined as much as 4% but pared its drop to end Thursday down 2.5%. All eleven sectors in the S&P 500 stayed in the negative territory, and Consumer Discretion performed the worst among all groups, falling with 2.59% daily losses on Thursday. The Dow Jones Industrial Average fell 1%, but the MSCI world index rose 1.2% for the day.

Main Pairs Movement

The US Dollar edged higher by 0.23% daily on Thursday, as US third quarter Gross domestic product showed the resilience of the US economy, which mounting the bets of aggressive tightening policy. The DXY index witnessed some selling in the first half of Thursday, then managed to rebound to a daily high level around 104.6 during the middle of US trading hours.

The GBPUSD tumbled with 0.36% daily losses for the day, as strong-than-expected US economic data weighed on the British pounds pair. The pair had slid since the middle of the UK trading session and dropped as much as 1%, but mildly climbed back to the 1.2030 level. In the meantime, the EURUSD was moving lower with 0.08% daily losses for the day.

The gold fell dramatically by 1.21% daily on Thursday, as strong US GDP data triggered a plunge in the dollar-denominated gold. The XAUUSD has fallen below the $1800 critical level during the American trading session.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD traded 0.12% lower throughout Thursday’s trading. The recovering Dollar limited any upward momentum that the Euro exhibited during early Asia and European trading sessions on the 22nd. The better-than-expected U.S. GDP figure further eroded any upward mobility for the Euro. U.S. Q3 GDP came in at 3.2%, beating consensus estimates of 2.9%. The surprisingly higher U.S. GDP figure triggered interest rates and recessionary fears across markets. U.S. equities closed lower as short-term interest rate expectations once again climbed. The benchmark U.S. 10-year treasury yield rose above 3.68%, while the 2-year yield rose above 4.2%.

On the technical side, EURUSD has continued to trade below our previously estimated resistance level of 1.065. Short-term support for the pair remains at around the 1.0459 price region. EURUSD has been steadily consolidating around the 1.059 price region. RSI for the pair sits at 61.79, as of writing. On the four-hour chart, EURUSD currently trades below its 50-day SMA but above its 100 and 200-day SMA.

Resistance: 1.0650, 1.0695

Support: 1.0459, 1.0228

GBPUSD (4-Hour Chart)

The cable broke out of the coils and saw the next move towards 1.1900 and 1.1760. Greenback is being pursued as a higher prospect for Fed in 2023. GBPUSD is under pressure from a rally in the dollar, which is getting a boost from stronger-than-expected data, supporting the Fed’s hawkish outlook and higher interest rate expectations for 2023. DXY recovered to 104.5 from a low of 103.75 but remained well below 107.2, which is this month’s high. Ukrainian President Volodymyr Zelensky’s trip to the US and Russian President Putin’s readiness to increase the country’s military potential challenged risk appetite. On the other hand, China’s readiness for more stimulus measures and a second unscheduled bond purchase by the BoJ keep the Us stock still moderate buying the latest in the future.

On the technical side, GBP/USD extended its daily losses, falling below 1.2050. The pair struggled to stage a rally in the early US session after the dollar remained resilient against its rivals following better-than-expected Q3 GDP data, 1.9% compares to the forecast 2.4%. RSI for the pair sits at 34.12, as of writing. On the four-hour chart, GBPUSD currently trades below its 50 and 100-day SMA but above its 200-day SMA.

Resistance: 1.2320, 1.2600

Support: 1.19, 1.176

XAUUSD (4-Hour Chart)

The gold price hovers around at 1,812 to 1,820 area since the opening of the Q3 Final Gross Domestic Product and weekly Jobless Claims data released during the trading course yesterday. After the data was released the Q3 GDP was 3.2% which is 0.3% higher than the forecast 2.9%. This led the US dollar to rise nearly 0.5% to 104.50, as XAUUSD plunged immediately below 1,810 right away. As of writing, the current price fits at 1,787 and reaching a level under 1,800, the next estimated is 1,765. However, on the other hand, the pre-Christmas holiday mood is also set in, with liquidity thinning, which could also offer a helping hand to Gold buyers. Gold price’s technical setup on the daily chart also remains in favour of the optimists.

On the technical side, gold pressures intraday lows in the 1,795 price zone, further losing its bullish potential according to the daily chart but falling short of suggesting a steeper decline. For that, the pair would need to extend its current slump below 1,785, where 20 and 200-day SMAs coverage. In the near term, the risk is skewed to the downside. RSI for the precious metal sits at around 19.66, as of writing. On the four-hour chart, XAUUSD currently trades above its 5 to 200-day SMA.

Resistance: 1840

Support: 1777, 1765

Economic Data

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US equities rallied for a second day, as an improvement in consumer confidence and better-than-expected earnings boosted sentiment. Treasuries were mixed after Tuesday’s selloff following the Bank of Japan’s unexpected increase in its yield trading band ebbed. Market participants did not hear from Fed speakers this week, which also helped fuel the so-called ‘Santa rally’ in stocks.

The central bank’s policymakers are expected to become incrementally more dovish in 2023 with a new roster of senior officials. Apart from this, fresh US data on Wednesday also indicated that the Fed’s persistent rate hikes are serving their purpose by slowing the economy, but a recession may still be at bay. It’s also worth noting that Micron Technology, the largest US maker of memory chips, reported earnings after the markets closed on Wednesday.

The benchmark, both the S&P500 and the Dow Jones Industrial Average rose and the Nasdaq 100 snapped a five-day drop on Wednesday. All eleven sectors in S&P 500 stayed in the positive territory, especially the Energy sector performed the best among all groups, rising 1.89% daily for the day. Besides, the MSCI world index edged higher by 0.2% on Wednesday.

Main Pairs Movement

The US Dollar index edged higher by 0.27% daily for the day, as investors reassessed the Bank of Japan’s surprising increase in yield limit. The DXY index mildly moved upward on Wednesday, erasing part of the losses caused by a sudden policy adjustment by the Bank of Japan.

The GBPUSD tumbled by 0.83% daily for the day. In absence of an economic calendar, the pessimistic economic outlook dominated the movement of the pounds pair. The cables dropped hugely during the early US trading session. In the meantime, the EURUSD also edged lower by 0.18% on Wednesday.

The gold slid by 0.20% for the day, as the pair entered into a consolidation phase following a surge on Tuesday. The yellow metal has not made any decisive move on Wednesday, as the investors are awaiting more economic data for more clues.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD traded lower throughout Wednesday’s trading. The Euro struggled against the Dollar as U.S. treasury yields recovered. The benchmark U.S. 10-year treasury yield recovered above 3.6% after BoJ unexpectedly loosened its yield cap on the 10-year Japanese government bonds to 0.5%. The surprising hawkish tone from the BoJ triggered a global bonds market sell-off that pushed yields higher. Ahead of the holidays, the U.S. will release its quarterly GDP figures and weekly initial jobless claims figures during today’s American trading session, while no major economic data releases are coming out of the E.U.

On the technical side, EURUSD continues to trade below our previously estimated resistance level of 1.065. The pair is consolidating around the 1.06 price region as volatility remains subdued before the holidays. The short-term support level for the pair remains at around the 1.058 price region. RSI for the pair sits at 62.02, as of writing. On the four-hour chart, EURUSD currently trades below its 50-day SMA but above its 100 and 200-day SMA.

Resistance: 1.0650, 1.0695,  1.0785

Support: 1.0580, 1.0538,  1.0480

GBPUSD (4-Hour Chart)

GBPUSD gave up all gains from Tuesday and headed lower throughout Wednesday’s trading. The British Pound fared worse against the Dollar, which was buoyed by rising treasury yields and better-than-expected consumer spending. Positive earnings results from Nike and FedEx temporarily relieved recessionary fears that have loomed across markets since last week. The Dollar index snapped its two-day losing streak and rose more than 0.3% as demand for the Greenback returned. Volatility for Cable has subsided as markets head into the holidays. On the economic docket, Britain and the U.S. are both scheduled to release GDP figures during the European trading session and the American trading session, respectively.

On the technical side, GBPUSD continues to face strong selling pressure at around the 1.26 price region. Cable has exhibited a downward trending path over the last two weeks as the pair closes in on our previously estimated support level of 1.19. Short-term support levels for Cable remain at around 1.19 and 1.176. RSI for the pair sits at 33.54, as of writing. On the four-hour chart, GBPUSD currently trades below its 50 and 100-day SMA but above its 200-day SMA.

Resistance: 1.2320, 1.2600

Support: 1.19, 1.176

XAUUSD (4-Hour Chart)

Gold, the haven asset, has continued to remain above $1800 per ounce after BoJ’s surprise yield move roiled markets. The yellow metal continues to find support at current price levels as market participants weigh recessionary fears and continued geopolitical tensions. As of writing, Ukrainian president Volodymyr Zelensky is on his way to meet with U.S. President Joe Biden. President Zelensky is also scheduled to address the U.S. Congress on his first known foreign trip since the Russian invasion began. The scheduled visit by President Zelensky comes ahead of the U.S. congress’ vote on a key spending bill which will exclude approximately $45 billion to aid Ukraine in military and economic spending for the coming years.

On the technical side, XAUUSD could not breach our previously estimated resistance level of $1824 per ounce. The short-term support level for the yellow metal remains at around the $1777 per ounce price region. RSI for the precious metal sits at around 66.54, as of writing. On the four-hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMA.

Resistance: 1840

Support: 1800, 1790

Economic Data

The US Dollar index dropped 0.73% daily on Tuesday, tumbling following a sudden announcement from the Bank of Japan(BoJ). Despite the Bank of Japan keeping their policy rate unchanged, the increase in the upper band limit on the yield target caused the surge of Yen and weighed on the DXY index.

US stocks oscillated between gains and losses throughout a volatile session on Tuesday, with technology shares still under pressure after last week’s hawkish central bank turn. Treasuries slumped, with the global bond market digesting the Bank of Japan’s sudden increase in its yield trading band.

FedEx Corp. and Nike Inc. reported earnings after the markets closed. FedEx posted fiscal second-quarter earnings that beat analysts’ estimates, buoyed by price increases and cost cuts that helped make up for a decline in package volume. While Nike Inc. reported another quarter of inventory buildup, its quarterly sales and gross margin exceeded Wall Street’s estimates. Shares of both firms rose postmarket. Treasuries broadly held losses, with the 10-year rate climbing to around 3.69%. Yields rose after a hawkish move from the Bank of Japan sent the yen soaring more than 4% against the dollar at one point.

The benchmark, the S&P500 ended the session with a modest gain, snapping a four-day losing streak. Seven out of eleven sectors stayed in the positive territory, and the Energy sector got the best performance among all groups, rising 1.52% daily for the day. It’s also worth noting that Consumer Discretion performed the worst among all groups, falling 1.13% on Tuesday.  The Dow Jones Industrial Average edged higher by 0.3%, the Nasdaq 100 little moved lowed 0.1%, and the MSCI World index dropped by 0.7% on Tuesday.

Main Pairs Movement

The DXY index dropped almost 0.6% during the BoJ Press Conference and further declined during the US trading hour to end below the 104 level.

The GBPUSD edged higher by 0.28% daily for the day, the positive traction mainly comes from the US Dollar pullback. The pair climbed to a daily high above the 1.2200 level when BoJ’s surprising policy adjustment, then rapidly retreated to the 1.2150 level. In the meantime, the EURUSD ended with mild growth on Tuesday, as the weak greenback provide some support.

The gold surged by 1.70% daily, benefiting from risk-aversion sentiment caused by BoJ’s surprising policy adjustment. The XAUUSD suddenly gained strong fresh transactions during UK trading sessions and stand firmly above the $1800 mark in the US trading hours.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD surged on Tuesday, trading higher to 1.0651, as the dollar sold off during the Asian trading course following the BoJ monetary policy decision. The Boj left its benchmark interest rate unchanged at -0.1% and kept the 10-year JGB yield at 0.00%, which fits the expectation. However, they allowed the 10-year JGB yield to fluctuate between -0.5% and 0.5%, compared to -0.25% and 0.25% previously and noted that they will review yield curve control operations. On Wednesday, Germany will release the GFK Consumer Confidence Survey, to be expected at -38 in January. US will publish December CB consumer Confidence, foreseen at 101 in December.

On the technical side, the 4-hour chart shows that the pair is neutral, swinging around a slightly bearish 20-day SMA, while the longer moving averages hold a bullish slope below the shorter ones. Meanwhile, technical indicators are stuck near the midline with no directional strength. However, it is worth adding that buyers continue to defend the downside as it slips below the 1.0600 thresholds.

RSI(14) for the pair sits at 50.79, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100 day SMA, but below 200 days SMA.

Resistance: 1.0650, 1.0695,  1.0785

Support: 1.0580, 1.0538,  1.0480

GBPUSD (4-Hour Chart)

The cable is recovering ground above 1.2150 in the European trading course. It extends recovery, as the US dollar loses further ground across the board. Markets remain unnerved after the surprise of the BoJ policy move, spiking up US treasury yields. On the monetary policy side, Fed remained relatively hawkish, while the BoE’s MPC was split on the extent of interest rate hikes, with two members voting to keep rates unchanged. This pushed GBPUSD sharply lower, down 1.99% on the day. The Fed’s firm hawkish stance is likely to continue to support the dollar trend, putting further downward pressure on the cable. In terms of economic data and event risks, UK’s final annualized GDP for the third quarter is due on Thursday. In addition, the release of the US core PCE data on Friday could be a catalyst for the cable’s post-market movement, as the Fed’s preferred measure indicator of inflation, the core PCE data will help confirm whether the US inflation has peaked.

Cable is holding in about the middle of the past week’s range between support at 1.2090/00 and resistance at 1.2240/50. Trend signals are mixed and weak across the shorter-term studies, suggesting more sideways-range trade in the near term. RSI(14) for the pair sits at 48.13, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.2320, 1.2600

Support: 1.2100, 1.2000, 1.1940

XAUUSD (4-Hour Chart)

Tuesday’s surprise move by the BoJ to widen the target range for the 10-year government bond yield from -0.5% to 0.5%, was seen as a sign of softening its easing stance, causing the dollar to plummet against the yen and dragging down the performance of the dollar index. The retreat in the dollar index supported a rebound in gold prices, which have now regained stability at the 1800 level.

However, the US Treasury bond yields are rallying 3.50% to 4% across the curve, with the benchmark 10-year US rates above 3.70%, at the moment. Surging US Treasury yields are acting as a big hurdle to Gold’s upswing. On the other hand, as the world’s biggest gold consumer, China. The country reported five new Covid deaths on Monday, this made markets remained unnerved.

On the technical side, the gold price surged over 1.5% from today’s opening to now, the price has broken through the last estimated resistance level of 1,820 and dropped at current today’s high of 1,821. RSI(14) for the yellow metal sits at 48.13, as of writing. On the four-hour chart, XAUUSD currently trades below its 100 and 200-day SMA but above its 50-day SMA.

Resistance: 1840

Support: 1800, 1790

Economic Data