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US stocks turned lower after the Federal Reserve released the raise of rates by half a percentage point. However, while the Fed has downshifted the pace of tightening, the message given to the financial markets is that they’re not done yet.
While the Fed has signalled its plans to keep lifting rates next year to combat high inflation Fed chair Jerome Powell was speaking and his comments seemed to have given mixed messages to the market. In US Treasury yields, the flips with the 10-year falling back from a high of 3.5610% to print 3.477% currently and on the way towards the day’s low of 3.46%.
Though the raise is 50bps this time, its economic projections see higher rates for a more extended period. the data comes in hotter than expected, but the investors projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023, as well as a rise in unemployment and a near-stalling of economic growth.
The Dow Jones Industrial Average has dropped 0.42% to close at 33966.35. The S&P 500 dropped 0.61% to close at 3995.32. The tech-heavy Nasdaq Composite dropped 0.76% to close at 11170.89. Despite the Fed statement, U.S. Treasury yields were slightly lower after initially jumping in the wake of the announcement, and the strategy of aggressive interest rate increases by major central banks around the world this year has increased worries the global economy could be pushed into a recession and weighed heavily on riskier assets such as equities this year. Further, the US Treasury bond yields go up and down. U.S. 10-year treasury yield sits at around 3.503%. The policy-sensitive 2-year treasury yield sits at 4.247%.
Main Pairs Movement
The US Dollar is tailing off from the highs that were made on what was perceived to be a hawkish rate hike of 50 basis points by the United States Federal Reserve. The US Dollar is back on its backside following a mixed reaction to the Fed event. While the Fed has signalled its plans to keep lifting rates next year to combat high inflation, and this is a sign of two-way price action in asset classes, including the US Dollar and bonds.
The Gold price had fallen back to $1806, and still can’t break the resistance at $1810, though there were volatile moves over the interest rate decision and policy guidance by the Federal Reserve. The precious metal displayed wild gyrations in the $1.796-1,814 range and has now turned extremely quiet 4 hours after the speech.
The EURUSD is aiming at breaking 1.0700, as per the investors’ estimated, EUR/USD soars as US CPI comes in below expectations, 1.0700 is a key level where a measured move of -0.272% of the potential correction’s range to support meets the prior mid-summer resistance looking left, the next level is 1.0790.
Technical Analysis
EURUSD (4-Hour Chart)
EURUSD traded 0.47% higher throughout yesterday’s trading. The 50 basis points interest rate hike by the Fed FOMC sent the Greenback higher, initially, but tides quickly turned after Fed Chair Jerome Powell began his speech. The Dollar index, which tracks the U.S. Greenback against a basket of major foreign currencies, saw a whiplash of more than 1% during Chair Powell’s speech, and the index eventually headed south after his speech concluded. Market participants will now turn their attention to the ECB’s monetary policy statements and interest rate decisions that are scheduled to be released during the late European trading session. ECB president Christine Lagarde is also scheduled to speak during today’s trading day.
On the technical side, EURUSD continues to trade just below our previously estimated resistance level of 1.0785. The retreating Dollar has put the Euro on a steady upward trend over the past week. A hawkish ECB during today’s interest rate decision could spark another leg up for the Euro. RSI for the pair sits at 67.53, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.
Resistance: 1.0785
Support: 1.046,1.031
GBPUSD (4-Hour Chart)
Cable has successfully extended its winning streak into the sixth straight trading day after a turbulent American trading session on the 14th. The Dollar’s volatile price movements on the 14th eventually ended with the Dollar heading lower as market participants interpreted the latest interest rate hike as a dovish signal from the Fed. During Fed Chair Jerome Powell’s speech, he reiterated the central bank’s determination to bring price levels back to normal standards and cautioned market participants about the duration of tightening, which could be longer than many estimated but is highly dependent on future economic data releases. The Bank of England is scheduled to release its interest rate decision during today’s late European trading session with MPC meeting minutes released simultaneously. Markets are widely pricing in a 50 basis point interest rate hike by the BoE at today’s interest rate announcement.
On the technical side, GBPUSD edged close to our previously estimated resistance level of 1.26 but is still trading below that price region. Today’s BoE interest rate decision could spell great volatility for the British Pound as the nation faces hard a hard economic outlook for 2023. RSI for the pair sits at 69.39, as of writing. On the four-hour chart, GBPUSD currently trades above its 50, 100, and 200-day SMA.
Resistance: 1.2666, 1.3000
Support:1.2290, 1.2100, 1.1900
XAUUSD (4-Hour Chart)
Gold traded slightly lower throughout Wednesday’s trading. The yellow metal recovered most of its intraday losses due to the volatile price movements of the Greenback. The initial interest rate release sent the Dollar soaring and the Dollar-denominated Gold falling; however, as Fed Chair Jerome Powell began his speech, the Dollar began retreating and sent Gold upwards. Geopolitical tensions around the globe and recessionary fears continue to anchor Gold prices at around the $1800 per ounce price region. U.S. 2-year treasury yields dropped 0.015 to 4.214%, while the U.S. 10-year treasury yield dropped 0.024 to 3.479%. The benchmark U.S. 10-year treasury yield falling below the psychological barrier level of 3.5% could explain the Dollar’s late session fall. On the economic docket, the ECB and the BoE will both announce their respective interest rate decisions during today’s late European trading session.
On the technical side, Gold currently hovers around the $1800 per ounce price region. Our previously estimated resistance level of $1810 per ounce is now within arms reach from current levels. Short-term support levels for Gold remain at $1795 per ounce and $1775 per ounce. RSI for Gold sits at 49.07, as of writing. On the four-hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMA.
US Dollar falls due to the lower-than-expected CPI which is 7.1%, and the Consumer Price Index in November of 0.1% below the 0.3% of market consensus, which is another moderation in monthly core CPI helps to reaffirm that the USD peak is here ($105.00).
The Fed is widely expected to hike the funds’ rate by 50 basis points (bps) on Wednesday, after four consecutive 75 bps hikes. If the data comes in hotter than expected, this will be problematic for the Fed eager to slow the pace of tightening and potentially weigh on risk assets and thus lead to a stronger US Dollar and the meeting is likely to be an increase in the projected peak for the funds’ rate in 2023.
The Dow Jones Industrial Average has raised 0.3% to close at 34108.64. The S&P 500 raised 0.73% to close at 4019.65. The tech-heavy Nasdaq Composite raised 1.01% to close at 11256.81. The surge of the stock market was the reaction of the CPI when the CPI was just released, NAS 100 once reached 12223, then it falls back to 11776 after 3 hours, Wall Street closed positive but the S&P 500 Futures struggle for clear directions. Further, the US Treasury bond yields go up and down. U.S. 10-year treasury yield sits at around 3.505%. The policy-sensitive 2-year treasury yield sits at 4.228%.
The decline of US inflation challenges the FOMC for the next announcement of the bps. Even with the pre-Fed caution, the DXY may witness further sidelined performance as the latest US CPI challenges the policy hawks. Also, the already-given 50 bps rate hike and lesser odds of witnessing any surprises from the FOMC added strength to the market’s inaction. However, a surprise from the Fed, either in the form of rate hike directions or economic projections, won’t be taken lightly.
Main Pairs Movement
The US Dollar dropped sharply on Tuesday, as all investors eyed the subdued US consumer price index reading. The November Consumer Price Index was up by 7.1% YoY, below the 7.3% expected and shrinking from the previous 7.7%. The core reading in the same period was up by 6%, down from 6.3% in the previous month. The DXY index tumbled with nearly 1% losses and fell to a level below 103.7 when the weaker CPI was released.
The GBPUSD surged with 0.79% daily gains for the day as a weaker US CPI report deeply hurt the safe-haven greenback. The British Pound climbed above the 1.2440 level following the release of US consumer data. Meanwhile, the EURUSD rallied 0.9% after the announcement of critical data. The pair earned 0.91% on Tuesday.
The XAUUSD surged with a 1.65% gain daily, as the market anxiety ahead of today’s FOMC and a bit pale headlines from China. Gold rallied by almost 2% following the weaker-than-expected US CPI report.
Technical Analysis
EURUSD (4-Hour Chart)
EURUSD soared more than 1% at the release of the U.S. CPI figure, which came in below market estimates at rising 0.2% over the month and 6% on an annual basis. The lower-than-expected CPI sent the U.S. Greenback lower as interest rate expectations fall just ahead of the FOMC’s key interest rate decision on the 14th. Markets are now pricing in a 50 basis point interest rate increase at tomorrow’s conference, but the streets are now suggesting a possible surprise of a 25 basis point rate hike. U.S. equities soared on the release of lowered price pressures but quickly retreated as uncertainty still looms across markets. On the economic docket, the Fed will release its interest rate decision during the late American trading session on the 14th, while the ECB will release its interest rate decision during the late European trading session on the 15th.
On the technical side, our previously estimated resistance level of 1.0595 has been thoroughly broken through. Near-term resistance for the Euro-Dollar pair now hovers around the 1.0785 price region. The Conservative support level for the pair remains around the 1.046 price region. RSI for the pair sits at 64.84, as of writing. On the four-hour chart, EURUSD is currently trading above its 50, 100, and 200-day SMA.
Resistance: 1.0785
Support: 1.046,1.031
GBPUSD (4-Hour Chart)
GBPUSD soared 1.23% in 15mins chart and rallied to a new six-month high at around $1.2440 after the release of the US CPI figure, which is 0.2% lower than forecast, 0.6% lower over the month. Lower CPI made the dollar plunge 0.89% at the release time. On Wednesday, the UK will also release inflation figures and the BoE will release its policy statement alongside the interest rate decision on Thursday. Hence, investors could move back to the sidelines following a strong initial reaction to the US CPI data. As we get closer to the release time, five major banks regarding the upcoming UK inflation print. They expected the headline at 10.9% YoY versus 11.1% in October. As for core figures are expected to remain steady at 6.5% YoY.
On the technical side, the previous estimated resistance level of $1.2400 has been broken through and the estimated new resistance level may be up to $1.2666, the high point of this May. RSI for the pair sits at 64.036, as of writing. On the four-hour chart, GBPUSD currently trades above its 10, 50, and 200-day SMA.
Resistance: 1.2666, 1.3000
Support:1.2290, 1.2100, 1.1900,
XAUUSD (4-Hour Chart)
U.S. CPI data again weaker than expected, dollar plunges to spur gold prices above $1,800.
On Tuesday, the inflation data released by the US showed that the annual CPI rate in November was 7.1%, less than the expected 7.3%, which is also the lowest level so far this year; meanwhile, the annual core CPI rate was 6%, less than the expected 6.1%, the lowest in the past four months. The data again showed that the U.S. inflation rate has fallen more than expected, and expectations that the Federal Reserve will further slow down or even stop raising interest rates have risen.
The weaker-than-expected CPI data led to a similar market as on November 10th, when the US CPI data for October was also weaker than expected. The dollar index quickly plunged more than 1% after the release, while the 10-year U.S. bond yields fell nearly 5%, the corresponding gold prices were greatly boosted, gold prices quickly pulled up above the $1,800 mark, and continued to expand. The next market-focused incident is the statement of FOMC will release on December 14th.
On the technical side, the daily chart shows that the gold price has broken through the key resistance of 1800, the level is not only a round number, it also served as key support or resistance in May, June and August this year, so it is a very respectable price level for the market. RSI for the pair sits at 67.03, as of writing. On the four-hour chart, XAUUSD currently trades above its 5, 10, and 20-day SMA.
After the DXY snaps a two-day recovery, US Dollar fails to break the resistance of 105.00 and bounced back. DXY portrays the market’s cautious mood ahead of the United States’ key inflation numbers for November, the Consumer Price Index which is going to be released on Tuesday, since the inaction of DXY could be linked to the mixed prints of the early signals for it, as well as the mixed reaction to the headlines surrounding China and Russia.
Besides, while investors broadly expect the Fed to raise rates by 50 basis points, the market will be focused on the central bank’s projections for how high rates will ultimately rise and to what degree the U.S. economy can withstand monetary tightening and the CPI data has sparked explosive market gyrations, as surging inflation forced the Fed to embark on its most aggressive monetary policy.
The Dow Jones Industrial Average has raised 1.58% to close at 34005.04. The S&P 500 raised 1.43% to close at 3990.56. The tech-heavy Nasdaq Composite raised 1.26% to close at 11143.74. The surge in the stock market was the reaction to the coming of CPI, the estimated softer inflation was also seen from the PPI and the UoM Consumer Sentiment Index, moreover, the survey of consumer inflation expectations from the Fed also stated that the 1-year ahead inflation expectations slumped to their lowest level since 2021. Treasury yields drop, U.S. 10-year treasury yield sits at around 3.6%. The policy-sensitive 2-year treasury yield sits at 4.381%.
US inflation expectations as per the 10-year and 5-year breakeven inflation rate, challenge the recently dovish bias over the Fed, as well as downbeat forecasts for the US Consumer Price Index, and the latest prints of the 5-year and 10-year inflation expectations portray a rebound to 2.28% and 2.35% respectively. The downbeat prints of the United States PPI also hinted at softer US inflation.
Main Pairs Movement
The US Dollar Index extends the previous weekly gains, the first time in three weeks, as it picks up bids to refresh its intraday high around 105.10 during early Monday. The DXY index fell sharply during the UK trading period to a daily low of 104.67 level ahead of the American session. The latest market inaction could be linked to the investors’ cautious mood ahead of the United States’ key inflation numbers for November, namely the Consumer Price Index (CPI).
The GBPUSD has little changed on Monday, as Gross Domestic Product (GDP) grew by 0.5% on a monthly basis in October following September’s 0.6% contraction. This reading came in much better than the market expectation for a contraction of 0.1% but the positive impact of the upbeat GDP data on the Pound Sterling remained short-lived. However, data failed to act as a tailwind for the pair, the pair erased most daily gains in the American session as market participants turned cautious. Meanwhile, EURUSD dropped dramatically in the early American trading session and the pair slid by 0.03% on a daily basis.
Gold dropped by 0.88% on a daily basis, the most in a week, as the US Dollar began the crucial week on a positive note despite downbeat inflation expectations and upbeat performance of the equities, as well as the Treasury bond yields.
Technical Analysis
EURUSD (4-Hour Chart)
The EUR recorded solid gains against the greenback during the trading course of North America due to the overall weakness of the US dollar. The US inflation report may confirm that rate hikes are curbing inflation, which could pave the way at a faster pace. Last week’s US Department of Labor showed that US PPI rose for the third consecutive month, over 0.3% of expectations and increasing 7.4% YoY versus 7.2% expected. Meanwhile, the US CPI will be disclosed on Tuesday, expected to fall to a consensus of 7.3% YoY from 7.7% last month. If the figure shows that inflation is cooling off, this could trigger Euro buying and put pressure on the dollar.
In the Eurozone, ECB expected to raise interest rates by at least 50 basis points. The federal reserve may be responsible for the unexpected decline in the greenback, as the turning point in inflation has been proven. Conversely, it is too early to assert that the same is true for the ECB; thus, inflation in the EU remains high and there is little respite. These very different scenarios mean that this week’s central bank meeting could support EUR/USD.
The EURUSD has rebounded from a 20-year low of 0.9536 set in October and is trading at 1.0595 currently, but it has failed to rise above previous highs of 1.0615 and 1.0638, these levels may continue to act as resistance levels. The 260-day SMA is also in this area as a resistance level which is at 1.0596 currently. On the downside, support can be considered as 1.0443, 1.0290 and 1.0198 which are previous low and inflexion points.
Resistance: 1.06
Support: 1.0443, 1.0290, 1.0223
GBPUSD (4-Hour Chart)
The GBP firmed on Monday in a bullish cycle that is targeting the 1.2400 area, which could be a measure up from the recent lows around 1.2100. On the fundamental side, the world is focusing on the Fed and BoE interesting rate announcements this week. Generally speaking, BoE is expected to raise by 50 points to 3.50%. As for the Fed, same as BoE, they are expected to rise by 50 points to 4.25%-4.50%. Meanwhile, world interest rate probabilities suggest that a 50 bp hike on December 14 by the FOMC is fully priced in, with only around 10% odds of a larger 75 points move. When we take a look at UK, uncertain growth outlook in the future growing domestically. Concerns about a prolonged recession in the U.K. are still weighing on sentiment. Analysts at Rabobank believe the U.K. recession is likely to have started since last quarter and is widely expected to continue throughout the next whole year. Another potential risk for the GBP lies in the vulnerability of the housing market. Some hawkish favoured upside in EURGBP, as the ECB has the wiggle room to deliver 75 points, based on the market’s expectations for 50 points raise.
GBPUSD managed to stay above its 200-day moving average after the decline in the first half of the week. On the daily chart, the RSI stays above 60 and the pair continues to trade within the rising regressing channel that has been in place since the end of September. 1.1200, the key support of 200-day SMA. If the pair falls below this level and becomes resistant, the pair would go south to 1.2000 or 1.1900.
The US Department of Labor will release November inflation figures on Tuesday. The annual rate of core CPI, which excludes volatile food and energy prices, is expected to rise to 6.4% from 6.3% in October.
Market reaction to the inflation report is likely to be immediate, with a weaker core CPI reading suppressing the dollar and providing a boost to XAUUSD and vice versa. A rise in 50 point rate should not be surprising based on FOMC chairman Powell admitting in his last public statement that it would make sense to moderate the pace of interest rate hikes. However, if Fed chooses to raise by 75 points, which is very unlikely at this point, gold could come under heavy bearish pressure and fall sharply.
The New York Fed released its Survey of Consumer Expectations, which showed that inflation expectations for the year ahead have declined, although they remain high. Meanwhile, the survey showed that expected inflation marked a record MoM decline in November, while the median inflation uncertainty fell in the short and medium term.
The charts for gold still show a bullish bias, but the upside shows the difficulty in holding on above $1,800.
A clear sign is a daily close above $1,805 last week, which could open the door to the next strong resistance at $1,810. In the very short term, the bias is to the downside, with the next support level at
$1,775. The price has been down to $1,780 at this moment.
The upcoming financial week will be filled with economic data and speculation, as inflation and interest rate decisions will be announced by most central banks.
The CPI inflation figures in the US are expected to rise by 0.3% in November, which might signify another slowdown in inflation. The financial markets will pay close attention to these figures as they could impact the Fed interest rate decision.
The UK Consumer Price Index annual inflation rate is expected to rise to 11.3% in November.
Meanwhile, the Swiss National Bank (SNB), Bank of England (BoE), and European Central Bank (ECB) are scheduled to announce their monetary policy decisions this week.
Here are the financial market updates for the week ahead:
UK Gross Domestic Product (12 December)
In September, UK Gross Domestic Product contracted by 0.6% month-on-month, following a downwardly revised 0.1% decline in August.
UK GDP is expected to increase by 0.4% in October.
US Consumer Price Index (13 December)
October’s US CPI increased 0.4% month-on-month, slowing the annual inflation rate in the US to 7.7% in October, the lowest since January 2022.
Analysts predict that November’s CPI will increase slightly by 0.3%, to 7.6%.
UK Consumer Price Index (14 December)
The CPI annual inflation rate in the UK jumped from 10.1% in September to 11.1% in October, and analysts expect that it will further rise to 11.3% in November.
Fed Interest Rate Decision (15 December)
The Federal Reserve increased its benchmark interest rate by 75bps, to 3.75% – 4% in November, which marks the sixth consecutive hike and the fourth three-quarter point increase.
Jerome Powell, the current Fed chairman, has hinted that the Fed may scale back the pace of its interest rate hikes come December. Analysts believe the Fed will raise the federal funds rate by 50bps this month.
SNB, BoE, ECB Rate Statement (15 December)
Monetary policy decisions by the SNB, BoE, and ECB are being closely monitored this week.
SNB increased its interest rate by 75bps and is forecast to increase by a further 50bps in December to 1%.
BoE voted to raise interest rates by 75bps to 3% in November, with interest rates expected to increase by 50bps to 3.5%.
ECB increased its key interest rate by 75bps. Analysts forecast ECB to raise another 50bps in December.
US Retail Sales (15 December)
The US retail sales rose 1.3% month-on-month in October after a flat reading in September.
According to analysts, retail sales is either expected to maintain at 0.0%, or fall by 0.1% in November.
Eurozone, UK, and US Flash Services and Manufacturing PMI (16 December)
French and German Flash Services PMI declined in November. However, an increase was recorded in their manufacturing PMI.
On the other hand, UK Flash Services and Manufacturing PMI remained the same in November from the previous month. In the US, Flash Services PMI fell from October to November.
Flash Services PMI in France and Germany is expected to decline in December, with UK and US figures forecast to rise. Manufacturing PMI in the UK, France, and Germany may also decline for this month.
The DXY and the US equity market moved in an inverse correlation, the U.S. Michigan Consumer Sentiment and PPI released last Friday both showed a positive future for the U.S. Dollar, the greenback had little bounce that raised 0.11%, sits at $104.932, moreover, the December CPI report scheduled to release on Tuesday, might lead to further gains for US stocks the turning point for stock market of this week, the market expects inflation to cool down further and the annual CPI to drop to 7.3% from 7.7% and a drop of monthly CPI from 0.4% to 0.3%, both shows a bearish in the USD market.
The Dow Jones Industrial Average has dropped 0.9% to close at 33476.46. The S&P 500 dropped 0.73% to close at 3934.38. The tech-heavy Nasdaq Composite dropped 0.7% to close at 11004.62. The fall of the stock market was the reaction to the decline of the annual PPI, also Consumer sentiment indicated the bearish for the stock market. Treasury yields rose, U.S. 10-year treasury yield sits at around 3.567%. The policy-sensitive 2-year treasury yield sits at 4.33%.
According to last week, the headline CPI is expected to remain stable at 7.7%. While the core inflation could display a slight improvement to 6.4% from the former release of 6.3%. The inflationary pressures could display a surprise jump as labour demand remained extremely tight in November and the service sector is booming led by solid demand, S&P500 faced heat on Friday and is expected to remain precautionary ahead as a further rate hike by the Fed is going to escalate recession fears in the United States economy.
Main Pairs Movement
GBP/USD has failed to surpass the resistance of 1.23 and dropped to near 1.2250, the US Dollar index is failing to recapture the round-level resistance of 105.00 as investors have shifted to the sidelines amid a cautious market mood. On the United Kingdom front, the BOE is set to hike its interest rates further by 50 bps, the United Kingdom’s economy is in a recession led by an extreme debt crisis, weak economic prospects, and an absence of exhaustion in inflation.
EUR/USD remains in a bullish structure with a focus on a break above 1.0600, before that, it has to break 1.055 first, overall the US data is firmer than Europe, which in turn could help the EUR/USD pair bears to keep the reins. However, major attention will be given to the ECB versus Fed drama for clear directions.
Gold price is aiming to recapture a five-month high at around $1,800.00 as the risk-on profile is regaining traction. The precious metal is aiming to extend its recovery above the round-level resistance of $1,800.00 as the risk-appetite theme has regained strength. Besides, investors have shifted their focus toward the release of the US Consumer Price Index (CPI), which is scheduled for Tuesday
Technical Analysis
EURUSD (4-Hour Chart)
EURUSD has traded mostly sideways on the last trading day of the week. The Euro found bidding at the start of the European trading session but soon came under selling pressure as the U.S. released its PPI data, which came in above market expectations. The hotter-than-expected PPI figure buoyed the Greenback but bidding did not sustain into the American trading session; on the other hand, U.S. equities continued to fall after the impact of the hotter-than-expected PPI figure and closed the week on a low note. On the economic docket, the U.S. FOMC interest rate decision will be announced during the late U.S. trading session on the 14th, while the ECB interest rate decision will be announced at the start of the American trading session on the 15th.
On the technical side, EURUSD has attempted to break above our previously estimated resistance level of 1.0595 but was ultimately successful. EURUSD continues to hover slightly below that level. The support level for the pair remains at around the 1.031 price region. RSI for the pair sits at 53.98, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMA.
Resistance: 1.06
Support: 1.031, 1.0265
GBPUSD (4-Hour Chart)
Cable edged higher on the last trading day of the week. The British Pound was able to gain against the rising Dollar due to a major reformation proposed by the British government on Friday. The new reformation, the Edinburgh Reforms, is set to relax some of the stringent restrictions the U.K. financial sector had to follow under EU rules. The new reformation is expected to spur growth and competitiveness in the U.K. financial sector and hopefully attract foreign investments. However, the reformation has also attracted criticism, which reminded the public of the catastrophe, that happened more than 15 years ago, triggered by unbalanced favouring of the financial sector. On the economic docket, the Bank of England will announce its interest rate decision during the late European trading session on the 15th, while the Fed’s interest rate decision will be announced during the late American trading session on the 14th.
On the technical side, GBPUSD currently trades below our previously estimated resistance level of 1.234. The short-term support level for the pair remains at 1.177. The 23.6% Fibonacci retracement level of 1.2065 indicates another near-term support level. RSI for the pair sits at 62.28, as of writing. On the four-hour chart, GBPUSD currently trades above its 50, 100, and 200-day SMA.
Resistance: 1.2400, 1.2600
Support: 1.2154, 1.1927, 1.1765
XAUUSD (4-Hour Chart)
Gold continued its upward trend on the last trading day of the week. The precious metal is entering its third straight day of gains as the Dollar continues to retreat ahead of the FOMC interest rate decision. The yellow metal closed out the week with modest gains and consolidated around the $1800 per ounce price level. Market participants will now turn their attention to a heavily packed economic data release week with releases from the Fed, BoE and ECB. A spike in volatility for Gold is expected around the time of the key interest rate decisions by these three major central banks. Gold prices were able to advance despite negative signs of higher inflation still slipping out at key economic data such as China’s PPI and the U.S. PPI, indicating higher price pressure for November. Geopolitical tensions around the globe and recessionary fears have both acted as tailwinds for the yellow metal.
On the technical side, Gold continues to hover slightly below our previously estimated resistance level of $1800 per ounce. The weaker Dollar has allowed Gold to break through this key psychological level a couple of times on Friday, but the yellow metal fails to consolidate above $1800 per ounce this week. RSI for the pair sits at 56.54, as of writing. On the four-hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMA.
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