US stocks declined sharply on Monday, witnessing heavy selling and were dragged down by safe-haven demand as investors were concerned about a global slowing economy and the spread of coronavirus in China. Investors’ sentiment soured as Federal Reserve officials stressed that more rate hikes are coming, as New York Fed President John Williams on Monday said that he believes the Fed will need to raise rates to a level sufficiently restrictive to push down on inflation.

However, investors are now looking ahead to Jerome Powell’s speech Wednesday, with many economists expecting he’ll cement bets that the Fed will slow its pace of rate increases next month. Moreover, China’s prolonged Covid restrictions weighed on investor sentiment as local governments tightened Covid controls and case numbers last week hit records since the pandemic began. On the Eurozone front, European Central Bank (ECB) policymaker Peter Kazimir said earlier in the day that the risk of recession in the Eurozone was growing, which exerted bearish pressure on the Euro.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Monday as the S&P 500 pared its monthly gain amid hawkish comments from Fed Bank of St. Louis President James Bullard. The S&P 500 was down 1.5% daily and the Dow Jones Industrial Average dropped lower with a 1.4% loss for the day. All of the eleven sectors in the S&P 500 stayed in negative territory as the Real Estate sector and the Energy sector are the worst performing among all groups, losing 2.80% and 2.74%, respectively. The Nasdaq 100 meanwhile dropped with a 1.40% loss on Monday and the MSCI World index was down 1.4% for the day.

Main Pairs Movement

The US dollar advanced higher on Monday, regaining upside traction and extending its daily gains towards the 106.50 area amid a downbeat market mood. The hawkish comments from the Federal Reserve (Fed) policymakers and the Covid woes emanating from China both acted as a tailwind for the haven greenback. The President and CEO of the Federal Reserve Bank of St. Louis have said that rates need to go higher to bring inflation down.

GBP/USD retreated sharply on Monday with a 1.10% loss as the cable dropped to a daily low near the 1.1940 mark in the late US trading session amid a risk-off market sentiment. On the UK front, there will be several BoE members due to speak this week, including BoE governor Andrew Bailey on Tuesday and chief economist Huw Pill on Wednesday. Meanwhile, EUR/USD suffered from daily losses and retreated towards the 1.0360 level amid a stronger US dollar across the board. The pair was down almost 0.53% for the day.

Gold tumbled lower with a 0.77% loss for the day after extending its daily slide to the $1,741 area during the US trading session, as China’s Covid-19 riots across the country weighed on the precious metal. Meanwhile, WTI Oil advanced sharply with a 1.26% gain for the day as OPEC+ is seen considering deeper output cuts amid a faltering market.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD lost its traction in the second half of the day and declined below 1.0400, with Wall Street’s main indices pushing lower after the opening bell amid renewed China coronavirus jitters, the US dollar started to gather strength and forced the pair to turn south. Investors adopted a cautious stance to begin the week as China reported record-high coronavirus infections for the fifth straight day on Sunday. The Euro Stoxx 600 index is down nearly 1% on the day and US stock index futures are losing between 0.5% and 0.7%, reflecting the sour market mood.  At the meantime, European Central Bank policymaker Peter Kazimir said earlier in the day that the risk of recession in the Eurozone was growing. However, another ECB policymaker Klaas Knot argued that recession was not a “foregone conclusion.” The president of ECB, Christine Lagarde, will testify before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels. In case Lagarde acknowledges the rising risk of a prolonged economic downturn in the Eurozone, the pair could lose its traction, vice versa.

From the technical perspective, the four-hour scale RSI indicator fell sharply following the opening of American trading hour and 46 figured as of writing, suggesting that the pair was surrounded by heavy selling pressures. As for the Bollinger Bands, the pair was testing the lower band around the 1.0338 level. We think if the price fell below the lower band, the pair was more favoured to the downside path shortly.

Resistance: 1.0497, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD came under heavy bearish pressure and declined under the 1.2000 level as of writing. In the absence of high-impact data releases, the renewed US Dollar strength and the negative shift witnessed in risk mood force the pair to stay on the back foot. The president of the Federal Reserve bank of St.Louis has said that rates need to go higher to bring inflation down and the recession is not inevitable, which provides a boost for the US Dollar, which, in turn, weighs on the pair. Apart from this, Coronavirus-related news from China forced investors to adopt a cautious stance at the beginning of the week and caused the British Pound to edge lower. China’s National Health Commission reported over 40K new coronavirus cases on Sunday, reviving concerns over China’s zero-Covid policy weighing on global economic activity. The DXY index witnessed fresh transactions during the US trading session, rebounding from the daily low to 106.48 level at the moment of writing, further hurting the GBPUSD pair.

From the technical perspective, the four-hour scale RSI indicator dropped to 40 figures as of writing, suggesting that the pair was amid strong negative traction. As for the Bollinger Bands, the pair was pricing below the lower band, indicating that the downside tendency would persist until returning above the under the band.

Resistance: 1.2124, 1.2253

Support: 1.1765, 1.1645, 1.1363

XAUUSD (4-Hour Chart)

The XAUUSD tumbled after hitting a fresh weekly high at $1763 marks, as the US Dollar regained bullish momentum during the American trading session. The president of the Federal Reserve bank of St. Louis, James Bullard, has said that rates need to go higher to bring inflation down and recession is not inevitable. In addition, the New York Fed Bank president, John Williams, said that he believes the Fed will need to raise rates to a level sufficiently restrictive to push on inflation and keep them there for all of next year. These hawkish comments provide support for the US Dollar, which undermined the Dollar-denominated gold. Furthermore, global equities are trading in red, as China protesters take the streets sparked by the Covid-19 zero-tolerance policy and mass testing. According to Bloomberg, “the protests are shaping up one of the biggest threats to the Communist Party since the 1989 Tiananmen crackdown,” keeping the yellow metal defensive.

From the technical perspective, the four-hour scale RSI indicator dropped dramatically to 41 figures as of writing, suggesting there is a heavy bearish pressure weighing the XAUUSD pair. As for the Bollinger Bands, the gold was breaking through the lower band and aimed for the multi-week low of $1729 marks. Gold was more favoured to the downside path shortly unless there is any big change in the market risk sentiment.

Resistance: 1784, 1800

Support: 1748, 1704, 1671

Economic Data

The US Department of Labor reported that non-farm payrolls rose by 261,000 last month, more than economists had forecasted. The increase in hiring was driven by more people entering the labour force.

Meanwhile, private payrolls rose by 239,000 in October according to a report from ADP, with the leisure and hospitality industry seeing the most gains.

Here’s what to expect from the week ahead:

Canadian Gross Domestic Product M/M (29 November)

Preliminary estimates show that the Canadian economy grew by 0.4% in the third quarter of 2022, with 0.1% growth from August to September.

US ADP Non-Farm Employment Change (30 November)

The private sector produced 239,000 new jobs in October of 2022, the most since July. Analysts forecast another 200,000 new jobs in November.

OPEC Meetings (1 December)

The Organization of the Petroleum Exporting Countries (OPEC+) had no plans to ease production limits and could take further measures to balance the market should oil prices continue to slide downwards.

OPEC+ also announced that it will maintain the current two-million-barrel-per-day production cut until the end of 2023. The organization hinted that, in the future, they might reduce production further to balance supply and demand. They also suggested that they are always ready to intervene in the oil market.

Swiss Consumer Price Index (1 December)

The Swiss Consumer Price Index rose 0.10% in October over the previous month.

Analysts expect an increase of another 0.10% for November.

US Core PCE Price Index M/M (1 December)

In August, the core personal consumption expenditures index for the US, excluding food and energy, grew by 0.6%. Analysts expect this index will be at 0.4% in September.

US ISM Manufacturing PMI (1 December)

The US Institute for Supply Management’s Manufacturing PMI index fell from 50.9 in September to 50.2 in October.

This suggests that factory activity has expanded at its slowest rate since mid-2020. A PMI of 50 is expected for November.

Canadian Employment Data (2 December)

Canada’s economy added 108,300 jobs in October, the most since February. The unemployment rate remained at 5.2%.

Analysts had forecast a decrease of 20,000 jobs and an unchanged unemployment rate of 5.4%.

US Non-Farm Employment Change (2 December)

The US economy added 261,000 jobs in October, and economists expect 200,000 jobs to be added in November, according to recent estimates. The unemployment rate is expected to remain unchanged at 3.7%.

US stocks were little changed on Friday, having a shortened trading session following the US Thanksgiving holiday amid the prospect of the Federal Reserve moderating the pace of its policy tightening. Investors’ sentiment was boosted this week after the Federal Reserve’s Nov. 1-2 meeting minutes showed most officials backing slowing the pace of interest-rate hikes. Meanwhile, economic data somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

However, coronavirus fears in China joined the protest against the government’s Zero-Covid policy to add to the market’s woes. China has been using a stringent policy to limit the virus spread but the outcome hasn’t been a positive one so far, as the country reported an all-time high of COVID-19 daily cases with nearly 40,000 new infections on Saturday.

On the Eurozone front, investors are waiting for the structure of the price cap on Eurozone gas, as the EU authorities are planning to levy a ceiling on energy prices to safeguard households from a sheer decline in their real income.

The benchmarks, S&P 500 and Dow Jones Industrial Average both were little changed on Friday as the S&P 500 wavered for most of Friday’s shortened trading session. The S&P 500 was down 0.03% on a daily basis and the Dow Jones Industrial Average climbed higher with a 0.4% gain for the day. Seven out of eleven sectors in the S&P 500 stayed in positive territory as the Real Estate sector and the Utility sector are the best performing among all groups, rising 0.64% and 0.63%, respectively. The Nasdaq 100 meanwhile dropped the most with a 1.09% loss on Friday and the MSCI World index was up 0.4% for the day.

Main Pairs Movement

The US dollar advanced higher on Friday, failing to preserve its upside traction and surrendered some of its daily gains amid thin volumes on the Thanksgiving Day holiday. The US Dollar attracts some buyers on the last day of the week as investors digest Wednesday’s dovish FOMC meeting minutes. Investors seem convinced that the Fed will slow the pace of its policy tightening and have now fully priced in a 50 bps rate hike at the December meeting.

GBP/USD retreated lower on Friday with a 0.17% loss as the cable moved away from its highest level since August 12 around the 1.2150-1.2155 region amid a modest pickup in the USD demand. On the UK front, the market expects that the Bank of England will continue to raise borrowing costs to combat stubbornly high inflation. Meanwhile, EUR/USD dropped to a daily low below 1.0360 level but then rebounded slightly as the market mood is extremely quiet amid the holiday in the United States. The pair was down almost 0.14% for the day.

Gold was nearly unchanged with a 0.02% loss for the day after recovering from a daily low near the $1,748 area during the US trading session, as the modest US Dollar strength and a positive risk tone exerted bearish pressure on the precious metal. Meanwhile, WTI Oil declined sharply with a 2.13% loss for the day amid ongoing China’s Covid-19 outbreak.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD was struggling to hold the ground above the 1.0400 level during the US trading session and trading at 1.0401 as of writing. Trading conditions remain thin on Black Friday and the pair has a big chance to end the week in positive territory. Investors are punishing the US Dollar as Fed policymakers have stated a slowdown in the interest rate hike. Fed policymakers believe that headline the United States Consumer Price Index (CPI) has displayed signs of severe exhaustion, therefore, it would be optimal to go on a light note on policy rate. However, the core CPI that excludes oil and food prices has not shown a significant drop. The Federal Reserve’s dovish stance boosted the market risk sentiment and undermined the safe-haven greenback. The better tone in the risk complex also underpinned the pair’s price actions, while auspicious results from the German calendar also add to the optimism around the currency. In fact, final GDP figures saw the German economy expand 1.3% YoY in the July-September period and 0.4% vs. the previous quarter. In addition, December’s Consumer Confidence tracked by GfK improved to -40.2.

From the technical perspective, the four-hour scale RSI indicator figured 60 following a touching daily low around 50, suggesting that the pair now had not made a decisive movement. As for the Bollinger Bands, the pair was pricing in the upper area and supported by a 20-period moving average, meaning that the pair was more favoured to the upside path in the near term.

Resistance: 1.0479, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD slid below the 1.2100 level on Black Friday and remained on the back foot during the US trading session. As market participants digest Wednesday’s FOMC meeting minutes, the US Dollar attracts some buyers on the last day of the week and acts as a headwind for the pair. A modest uptick in the US Treasury bond yields turns out to be a key factor prompting some short-covering around the buck amid relatively thin trading conditions. However, the attempted greenback recovery lacks any obvious fundamental catalyst and runs the risk of fizzling out rather quickly. Apart from this, firming expectations that the Bank of England will continue to raise borrowing costs to combat stubbornly high inflation. This might provide support for the British Pound and boosts prospects for the emergence of some dip-buying around the GBPUSD pair. In the absence of any relevant economic data, the fundamental backdrop warrants caution before positioning for any further slide.

From the technical perspective, the four-hour scale RSI indicator fell below the overbought zone and 69 figured as of writing, suggesting that the pair was confronting a corrective pullback. As for the Bollinger Bands, the pair was stably pricing above the 20-period moving average, meaning the pair was surrounded by strong positive traction. As a result, we think they would move sideways in the near term unless breaking any critical level.

Resistance: 1.2159, 1.2253

Support: 1.1765, 1.1647, 1.1363

XAUUSD (4-Hour Chart)

The XAUUSD continues to move sideways at around the $1750 mark and ended the day with 0.13% losses, snapping a three-day winning streak. The US Dollar attracts some buying amid a modest uptick in the US Treasury bond yields, which, in turn, is seen as a critical factor acting as a headwind for the Dollar-denominated Gold price. Apart from this, a generally positive tone around the equity markets seems to dent demand for safe-haven Gold. However, firming expectations for a less aggressive policy tightening by the Federal Reserve keeps a lid on any meaningful gains for the USD. Apart from this, the worsening COVID-19 situation in China and the imposition of fresh lockdowns might also support the safe-haven XAUUSD. In the absence of any major market-moving economic releases, traders might also refrain from placing aggressive bets around gold prices amid relatively lighter trading volumes on the last day of the week.

From the technical perspective, the four-hour scale RSI indicator remained around 55 figures as of writing, suggesting that the pair are getting into the consolidation phase. As for the Bollinger Bands, the pair was supported by the 20-period moving average and pricing firmly in the upper area. Therefore, we think the yellow metal would hover in a range from 1747 to 1765, if successfully breaking through the $1785 mark, the bull has the chance to challenge the $1800 mark.

Resistance: 1784, 1800

Support: 1748, 1704, 1671

Economic Data

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US markets were closed due to the Thanksgiving holiday on Thursday, meanwhile, trading volumes are lower due to the holiday with no cash US equity market trading.

The Meeting Minutes from the Fed earlier this month indicated several officials backed the need to moderate the pace of rate hikes, which adds to expectations the central bank will raise rates by 50 basis points next month and end a run of jumbo 75 basis point increases. European stocks gained upside traction and climbed higher after Federal Reserve meeting minutes showed support for more moderate interest-rate increases.

The market mood was upbeat as Asian and European indexes closed in the green but some worrisome headlines may soon trigger a flip in investors’ sentiment. China reported that Beijing and other cities are going back into lockdown amid record coronavirus contagions in the country, which raised concerns that Chinese restrictions could interrupt global commerce and trigger fresh supply-chain issues.

On the Eurozone front, the German IFO Business Climate Index improves to 86.3 in November, which came in better than the market expectation of 85.0. Germany will release the December GFK Consumer Confidence Survey on Friday, foreseen at -39.6 from -41.9 in the previous month. On top of that, tensions between Russia and the EU continue to escalate, as  European Commission President Ursula von der Leyen announced they are working full speed on a 9th sanctions package on Moscow.

Main Pairs Movement

The US dollar declined slightly on Thursday, remaining under pressure and extended its weekly decline against most of its major rivals amid a generally upbeat market mood. The greenback was dragged down by the latest FOMC Meeting Minutes, which hinted at a potentially more discrete rate hike next December and the Fed might slow the pace of rate hikes after four 75 basis points hikes. The United States will not publish macroeconomic figures on Friday, and local markets are due to an early close.

GBP/USD advanced higher on Thursday with a 0.48% gain as the cable extended its daily gains towards three-month highs near the 1.2150 mark following the FOMC minutes. On the UK front, a hefty 75 bps rate hike from the BoE this month failed to support the pound as gloomy UK economic forecasts still remained. Meanwhile, EUR/USD failed to climb higher and stuck to a range of between 1.0380 and 1.0430 as liquidity is thinner than usual during the Thanksgiving holiday. The pair was up almost 0.13% for the day.

Gold advanced slightly with a 0.32% gain for the day after climbing towards the $1,758 area and remained sideways during the US trading session, as the optimism in the overall market and the falling greenback both provided support to the precious metal. Meanwhile, WTI Oil was nearly unchanged with a 0.03% gain for the day.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD continues to trade modestly higher on the day above 1.0400 at the moment of writing,  as trading action turns subdued on Thanksgiving day. The US celebrates the Thanksgiving holiday, which means all markets will be closed for the day. Activity will resume on Friday, although US markets are due to close early, meaning little to no activity could be expected ahead of the weekend, with no macroeconomic figures scheduled for these days. Apart from this, the ECB’s October meeting account showed that some members preferred a 50 bps rate hike, but this comment had no impact on the pair. Eurozone inflation data will be released next week, which is expected to show price growth slowed over the course of the month, but remains elevated. While energy prices have come down and supply chain disruptions have eased, natural gas supply disruptions have kept inflation well above European Central Bank’s target. Across the pond, Germany published the November IFO survey. The Business Climate improved by more than anticipated, hitting 86.3 after the October reading was confirmed at 84.5.

From the technical perspective, the four-hour scale RSI indicator figured 62 following touching the critical overbuying level of 70, suggesting that the pair amid strong bullish momentum. As for the Bollinger Bands, the pair was pricing in the upper area and the size between upper and lower bands became larger. Hence, we think the upside movement was the path with the least resistance in the near term.

Resistance: 1.0479, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD extended its rally and climbed above the highest level since mid-August 1.2152 on Thursday, and the pair now was trading at 1.2117 level as of writing. The British Pound preserved its rising for the third consecutive day, with the US Dollar remaining under the pressure following the FOMC meeting. Expectations that the US central bank might slow the pace of rate hikes after four 75 basis points hikes weighed on the Greenback and boosted Treasuries. The Federal Reserve will likely continue to raise rates as inflation remains elevated and far from the target. The UK’s first readings of S&P Global/CIPS Manufacturing PMI for November reprinted 46.2 figures versus 45.8 market forecasts while the Services counterpart also followed the suit while again flashing 48.8 numbers compared to the 48.0 expected figure. It’s worth noting that the cautious optimism surrounding China’s ability to overcome the Covid woes and readiness for further stimulus appeared to favour the risk-on mood. However, the off in the United States due to the Thanksgiving celebration limited any further movement.

From the technical perspective, the four-hour scale RSI indicator continued to stay in the overbought zone and figured pf crazily high 78, suggesting that the pair were surrounded by strong positive traction. As for the Bollinger Bands, the pair was pricing along with the upper band and the size between the upper and lower bands became larger, meaning that they would move upward if the pair could stand firmly above the two-month high 1.2159 level.

Resistance: 1.2081, 1.2147

Support: 1.1765, 1.1647, 1.1367

XAUUSD (4-Hour Chart)

The XAUUSD is up for a third consecutive day, trading near a fresh weekly high of $1,758 marks as of writing, with the US Dollar remaining on the back foot throughout Thursday and extending the negative traction post-FOMC Meeting Minutes. The document hinted at a slower pace of rate hikes coming, with market participants adding bets to price in a 50 bps increase in December. Nevertheless, investors should know that Federal Reserve Officials are uncertain how high rates will end, with most policymakers expressing that 5% could be the peak. In the meantime, US Treasury yields extended their losses, with the 10-year T-bond yield dropping six bps, down to 3.66%, acting as a tailwind for the non-yielding gold. The US Dollar index (DXY), a gauge of the buck’s value against a basket of rivals, tumbled by 0.2% and priced at 105.9 as of writing. The financial markets’ activity halted ahead of London’s close as a holiday in the US keeps all local markets closed. Wall Street will return on Friday for a shortened session, but Thanksgiving is usually seen as a long weekend holiday, and little could be expected in the upcoming hours.

From the technical perspective, the four-hour scale RSI indicator remained modest growth and printed 56, suggesting that the gold was moving upward at a mild pace. As for the Bollinger Bands, the yellow metal climbed along with the upper band, indicating that the pair was more favoured to the bullish path in the near term.

Resistance: 1748, 1784, 1800

Support: 1704, 1670

Economic Data

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US stocks advanced higher on Wednesday, preserving their upside momentum and ended the session higher after the Federal Reserve’s latest meeting minutes showed most officials backing slowing the pace of interest-rate hikes soon. Investors’ market mood improved as the Federal Reserve (Fed) officials discussed the need of slowing down the interest rate hikes.

The US FOMC Meeting Minutes showed that most participants agreed that a slower pace of interest rate hikes would be appropriate soon despite the risk of the inflation outlook remaining skewed to the upside. Most Fed officials also believe the monetary policy is approaching a sufficiently restrictive level. On the economic data front, the US Manufacturing PMI for November eased to 47.6 from 50.0 expected and 50.4 and the Services PMI declined to 46.1 compared to 47.9 market forecasts.

On the Eurozone front, the German Services PMI came to 46.4 and the Manufacturing PMI improved to 46.7. The November PMIs report showed that the Euro Area economy remains in contraction territory, although the figures beat the market expectations.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced higher on Wednesday as the S&P 500 notched gains for a second straight session as several Fed officials backed the need to moderate the pace of rate hikes. The S&P 500 was up 0.6% on a daily basis and the Dow Jones Industrial Average climbed higher with a 0.3% gain for the day. Ten out of eleven sectors in the S&P 500 stayed in positive territory as the Consumer Discretionary sector and the Communication Services sector are the best performing among all groups, rising 1.33% and 1.21%, respectively. The Nasdaq 100 meanwhile advanced the most with a 1.0% gain on Wednesday and the MSCI World index was up 1.1% for the day.

Main Pairs Movement

The US dollar declined sharply on Wednesday, coming under pressure and finished the day down against all of its major rivals amid poor growth-related data and dovish US FOMC Meeting Minutes. The greenback marked the biggest daily slump in two weeks as the Fed officials discussed the need of slowing down the interest rate hikes. Chances of a 50 bps hike rose to 79% following the release while the terminal rate is now seen at 5.03%.

GBP/USD surged higher on Wednesday with a 1.42% gain as the cable rallied back above the 1.2000 mark after the release of mixed economic data from the US. On the UK front, the UK S&P Global PMIs were better than anticipated but signal persistent economic contraction in the country. Meanwhile, EUR/USD maintained its bullish tone and traded near the 1.0410 level following the release of the FOMC Meeting Minutes and a weaker US dollar across the board. The pair was up almost 0.90% for the day.

Gold advanced slightly with a 0.54% gain for the day after extending its rally towards the $1752 area during the US trading session, as the dovish Federal Reserve Minutes helped the precious metal to find demand. Meanwhile, WTI Oil holds lower ground at a weekly low after the biggest daily fall in two months. Oil price remains bearish around the $77.50 area.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD regained bullish strength and was trading above the 1.0360 level as of writing, with the greenback losing upside momentum following the release of economic reports. On Wednesday, economic data showed an increase to a multi-week high in jobless claims, which printed 240K compared to the previous 223K, offset by a bigger-than-expected increase in Durable Goods Orders. Moreover, the November preliminary PMI S&P Global showed a decline in the Composite index to 46.3 from 48.3, below the 47.7 market consensus. New Home Sales jumped 7.5%, surpassing expectations. The University of Michigan Consumer Sentiment Index recovered from 54.7 to 56.8, above the 55 expected. The U.S. Crude Oil Inventories, which measures the weekly change in the number of barrels of commercial crude oil held by US firms, weakly gained too -3.691M, below the -1.055M of market forecast. While investors were pricing in the releases of a combination of data, the US dollar was losing ground across the board as US yields tumbled. The DXY index was falling by 0.73%, and the US 10-year yield slid to 3.73%, which underpinned the pair. Later, the FOMC will be released. Investors will look for clues about a potential slowdown in rate hikes, which may have a huge impact on the pair.

From the technical perspective, the four-hour scale RSI indicator surged to 62 figures as of writing, suggesting that the pair was amid strong bullish momentum. As for the Bollinger Bands, the euro is trading near the upper band, if successfully breaks through the upper band and there is no surprisingly bad news from FOMC, the pair has the chance to challenge the recent high of 1.0479 level.

Resistance: 1.0479, 1.0604

Support: 1.0228, 1.0163, 0.9961

GBPUSD (4-Hour Chart)

The GBPUSD surged and touched its highest level since mid-August above 1.2050 following the release of mixed economic data out of the United States, weighing on the US Dollar. At the same time, a risk-on impulse keeps European and US equities trading with gains ahead of the release of the Federal Reserve’s last meeting minutes this year. Data released from the US came mixed, undermining the US Dollar. The University of Michigan Consumer sentiment came at 56.9, above estimates but below the preliminary reading of November. Delving into the report, 1-year inflation expectations were lowered from 5.1% to 4.9%, while the 5-10 year horizon remained unchanged at 3.0%. Furthermore, US New Home Sales surprisingly jumped to 632K from 570K, even though higher mortgage rates, nearly 7%, were sparked by the Federal Reserve tightening monetary conditions. Earlier, S&P Global reported that October’s Manufacturing, Services, and Composite PMIs for the US, are flashing a recession, remaining each at 47.6, 46.1, and 46.3 respectively. Apart from this, the US Department of Commerce revealed that Durable Good Orders in October rose by 1%, above 0.4% estimates. After a combination of US data releases, investors now are awaiting for the later Federal Reserve meeting minutes to look for clues about the rate hikes policy.

From the technical perspective, the four-hour scale RSI indicator surged to 73 figures as of writing, suggesting that the pair has entered into an overbuying zone, and a corrective pullback could be expected. As for the Bollinger Bands, the pair was trading above the upper band and the size became larger, which is a signal that the upside momentum remained its strength.

Resistance: 1.2081, 1.2147

Support: 1.1765, 1.1647, 1.1367

XAUUSD (4-Hour Chart)

The XAUUSD registered minuscule gains of 0.19% and was trading at $1743 marks following the release of economic data from the United States, as the busiest day of the current week calendar failed to provide support for the US Dollar ahead of the Federal Reserve monetary policy meeting minutes. The Core Durable Good Orders rose sharply, by 1% compared to September’s 0.3%, showing consumers’ resilience amidst a time of high inflation, elevated borrowing costs, and a deteriorated economic outlook. Delving into the report, core Durable Orders, which exclude transportation and aircraft, rose 0.5% MoM for the same period, well above September’s -0.9% contraction, and expectations of coming unchanged. However, the US Department of Labor revealed that Initial Jobless Claims for the week ending on November 19 increased to 240K above estimates of 225K, amidst a period of high-tech companies laying off workers. Meanwhile, continuing claims climbed by 48K to 1..55 million in the week ended November 12, the highest since March, flashing signs that the labour market is easing. Later, Federal Reserve Open Market Committee (FOMC) minutes from the November meeting, which analysts will scrutinize.

From the technical perspective, the four-hour scale RSI indicator edged higher to 49 figures as of writing, suggesting that the gold has not made any decisive move. As for the Bollinger Bands, the yellow metal was trading around a 20-period moving average and the size between the upper and lower bands got closer. Hence, we think if there is no surprising news from FOMC minutes, the gold would put into sideway in the near future.

Resistance: 1748, 1784, 1800

Support: 1704, 1670

Economic Data

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US stocks rebounded sharply on Tuesday, regaining upside momentum and ending their previous slide as investors adjusted their expectations in response to Federal Reserve officials indicating that they’ll continue to raise interest rates but are open to slowing their tempo.

The market’s expectations of softer rate hikes from the Federal Reserve continued to provide support to the equity markets but activity was limited ahead of the FOMC Meeting Minutes and US Durable Goods Orders to be out on Wednesday. Market sentiment has improved despite the looming Covid woes from China and fears of economic slowdown in major economies challenge the energy demand. The focus now shifts to the FOMC Meeting Minutes, which may shed some light on whatever the Fed may do in December.

On the Eurozone front, most of the European Central Bank officials were paving the way for another 75 bps rate hike at the December meeting. ECB policymaker Robert Holzmann supported calls for a third straight 75 basis points (bps) rate increase.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced higher on Tuesday as the S&P 500 closed at its highest level since Sept. 12 following upbeat earnings from a handful of retailers. The S&P 500 was up 1.4% daily and the Dow Jones Industrial Average climbed higher with a 1.2% gain for the day. All of the eleven sectors in the S&P 500 stayed in positive territory as the Energy sector and the Materials sector are the best performing among all groups, rising 3.18% and 2.23%, respectively. The Nasdaq 100 meanwhile advanced the most with a 1.5% gain on Tuesday and the MSCI World index was down 0.8% for the day.

Main Pairs Movement

The US dollar declined lower on Tuesday, remaining under pressure and extended its daily losses amid the better performance of global equities and weaker US Treasury yields. The greenback has marked broad losses ahead of crucial catalysts scheduled for publication today. Meanwhile, the Fed’s latest meeting minutes will be closely observed to confirm the chatters surrounding the economic transition and the 50 bps rate hike chatters.

GBP/USD climbed higher on Tuesday with a 0.53% gain as the cable regained upside traction and aimed to recapture the 1.1900 level during the US session as the market mood soars ahead of FOMC minutes. On the UK front, the release of the S&P PMI numbers will be significant for the market participants. Meanwhile, EUR/USD manages to regain some composure and rebounded towards the 1.0310 area amid a weaker US dollar across the board. The pair was up almost 0.60% for the day.

Gold advanced slightly with a 0.13% gain for the day after retreating from a daily high near the $1750 mark during the US trading session, as the expectations for Fed’s 50 bps rate hike keep acting as a tailwind for the precious metal. Meanwhile, WTI Oil picked up bids with a 1.14% gain for the day amid the headlines surrounding the G7 nations’ discussions on the oil price cap on Russian exports.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD pair recovered some ground on Tuesday after shedding over 100 pips at the beginning of the week. The advance, however, was modest, with the pair trading around the 1.0280 level as of writing. The equities market performed better, with most stock indices holding on to modest gains and putting pressure on the US dollar. Meanwhile, US Treasury yields remain subdued, giving up most of their Monday’s gains. In Eurozone, European Central Bank officials continue to favour a 75 bps rate hike, and the move would raise the deposit rate to 2.25%. Furthermore, Finnish ECB policymaker Olli Rehn said the ECB would continue to raise interest rates, and the pace of its hikes will be determined by the rate of inflation and the overall economic situation. Elsewhere, concerns about the coronavirus situation in China remain the same. The country reported another increase in national cases, and Beijing shut down public places such as parks and museums. The potential economy limits high-yielding assets’ gains.

From the technical perspective, the four-hour scale RSI indicator modestly climbed to 50 figures as of writing, suggesting the pair was amid recovery momentum. As for the Bollinger Bands, the pair was pricing in the lower area and challenging the 20-period moving average resistance, which indicates that the pair have no decisive tendency. As a result, we think the pair would hover in a range from 1.0200 to 1.0400 shortly.

Resistance: 1.0475, 1.0604

Support: 1.0298, 1.0167, 0.9953

GBPUSD (4-Hour Chart)

The GBPUSD has managed to stage a rebound after having dropped below 1.1800 on Monday but confronting some sellings during the US trading session. The pair was priced at the 1.1870 level as of writing. In the absence of high-impact macroeconomic data releases, the risk perception is likely to drive the pair’s action. China reported more than 28000 new local cases on Monday and the city of Beijing announced that it will be shutting down parks and museums from Tuesday. Markets remain worried about a global economic downturn with China possibly refraining from moving away from its zero Covid policy. In domestic, the cables draw support from expectations that the Bank of England will continue to combat stubbornly high inflation. Moreover, reports that the UK government privately discussed the possibility of a Swiss-style relationship with the European Union further boosting the British pound. However, a bleak outlook for the UK economy could cap any further gain for the pair. The Uk Office of Budget Responsibility last projected the UK GDP to slump by 1.4% next year as compared to a growth of 1.8% forecast in March.

From the technical perspective, the four-hour scale RSI indicator rebounded to 56 figures as of writing, suggesting that the pair was surrounded by positive traction. As for the Bollinger Bands, the pair was breaking through the 20-period moving average and was trading in the upper area, and drawing support from the lower band of 1.1780 level, which is a signal that the pair has not made a decisive move.

Resistance: 1.2028, 1.2145

Support: 1.1765, 1.1647, 1.1366

XAUUSD (4-Hour Chart)

The XAUUSD regains some positive traction on Tuesday and snaps a four-day losing streak, as benefiting from the fresh US dollar selling. The US dollar was under some selling pressure and halts the recent rebound from its lowest level since August 12, which, in turn, is seen as a tailwind for the Dollar-denominated gold. Investors seem convinced that the Federal Reserve (Fed) will slow the pace of its rate-hiking cycle and have been pricing in a greater chance of a relatively smaller 50 bps lift-off at the December meeting. This is evident from a modest downtick in the US Treasury bond yields and weighs on the USD. However, the recent hawkish signals from several Fed officials suggest that the US central bank will continue to tighten its monetary policy to tame stubbornly high inflation. This should boost the US Treasury bond yields and help limit losses for the US dollar. In the meantime, worries about economic headwinds stemming from a new COVID-19 outbreak in China and the imposition of fresh lockdowns could benefit the greenback’s status as the global reserve currency. In addition, signs of stability in the financial markets might also contribute to capping the upside for the safe-haven precious metal.

From the technical perspective, the four-hour scale RSI indicator was wandering in a range from 35 to 50 as of writing, suggesting that the investors stay cautious for the day and the pair witnessed some negative traction. As for the Bollinger Bands, the pair was capped by a 20-period moving average and pricing at the lower area. Therefore, we think gold was more favoured to the downside path in the near term.

Resistance: 1784, 1800

Support: 1748, 1704, 1670

Economic Data

US stocks dropped lower on Monday, witnessing some downside traction and dropped as investors parsed comments from Federal Reserve officials who broadly remained steadfast in their fight against inflation. Investors are closely watching what Fed speakers say about the outlook for interest rates, as several central bank officials in recent days have restated their intention to remain relentless until inflation is under control.

On top of that, risk aversion dominated financial markets after China’s National Health Commission reported two deaths of Covid-19 patients in Beijing, which in turn raised doubts about the Chinese government’s easing of activity controls. Therefore, the worsening Covid conditions in China and indecision over Fed’s next move weighed on the market sentiment. On the Eurozone front, the mixed signals from Eurozone data and the European Central Bank (ECB) policymakers are acting as a headwind for the Euro. ECB Chief Economist Philip Lane favoured further rate hikes and expected the likely recession to be short-lived.

The benchmarks, S&P 500 and Dow Jones Industrial Average both edged lower on Monday as the S&P 500 was dragged down by the Technology stocks that are typically more sensitive to interest rates. The S&P 500 was down 0.4% daily and the Dow Jones Industrial Average retreated slightly lower with a 0.1% loss for the day. Four out of eleven sectors in the S&P 500 stayed in negative territory as the Consumer Discretionary and Energy sectors are the worst performing among all groups, losing 1.41% and 1.39%, respectively. The Nasdaq 100 meanwhile dropped the most with a 1.1% loss on Monday and the MSCI World index was up 0.6% for the day.

Main Pairs Movement

The US dollar advanced higher on Monday, continuing to find demand and extended its intra-day rally towards the 108 level amid fears of an economic downturn. The greenback rose the most in November the previous day as the market’s sentiment soured amid fresh fears of the Coronavirus. The 10-year US Treasury yields have rebounded to 3.83% despite a less-hawkish commentary from Cleveland Fed President Loretta Mester.

GBP/USD dropped lower on Monday with a 0.56% loss as the cable strumbled sharply below the 1.1900 figure in the North American session amid risk aversion. On the UK front, the UK Office for Budget Responsibility’s projection overshadows expectations that the Bank of England will continue raising rates to combat stubbornly high inflation. Meanwhile, EUR/USD retreated lower and held lower ground near a one-week low in the 1.0240 price zone amid a stronger US dollar across the board. The pair was down almost 0.80% for the day.

Gold declined lower with a 0.72% loss for the day after dropping to a daily low around the $1733 mark during the US trading session, as the precious metal is declining gradually amid a global correction in risk-perceived assets. Meanwhile, WTI Oil dropped slightly with a 0.09% loss for the day after Saudi Arabia denied an oil-production increase for the OPEC+ meeting next month.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD managed to erase a small portion of its daily losses but lost recovery momentum around 1.0250, as Wall Street’s main indices trade in negative territory after the opening bell, allowing the US Dollar to preserve its strength and limiting the pair’s an upside. At the beginning of the week, the greenback extends the recent bounce backed by the recent hawkish message from some Fed speakers, which lent renewed oxygen to both the buck and yields. Apart from this, concerns arose during the Asian session, as China reported two new coronavirus deaths and a spike in cases as the outbreak extends in Beijing. Stay-home orders have been issued in different cities, and market players are concerned the situation can trigger fresh supply-chain issues, one of the main reasons global inflation soared earlier in the year. In the Eurozone, European Central Bank Executive Board member Philip Lane was on the wires and said that any recession in the Union would be mild and soft. He also noted that the ECB would make another hike in December, progressing towards the levels needed.

From the technical perspective, the four-hour scale RSI indicator dropped sharply below 40 figures as of writing, suggesting that the pair was confronting strong selling pressure. As for the Bollinger Bands, the euro was pricing around the lower band and the size between the upper and lower band became larger, indicating that the pair was surrounded by severe headwinds. As a result, we think the pair was more favoured to the downside path shortly.

Resistance: 1.0475, 1.0604

Support: 1.0298, 1.0167, 0.9953

GBPUSD (4-Hour Chart)

The GBPUSD stays on the back foot in the US trading session on Monday and trades at around the 1.1800 level as of writing. The negative shift witnessed in risk mood amid renewed China Covid worries helps the safe-haven US Dollar outperform its rivals and weighs heavily on the pair. China’s Covid-related news that three people died during the weekend sparked fears that authorities could reimpose strict measures to curb the outbreak. The economic docket in the United States (US) revealed the Chicago National Activity index fell into negative territory in October, to -0.05 from 0.17 in September. Aside from this, even though US October COI and PPI reports were softer-than-expected, a solid US Retail Sales report and hawkish Fed rhetoric increased the chances that the Fed will continue tightening monetary conditions. Besides, the British Pound remains undermined by the UK Autumn Budget, which failed to impress amid recession warnings.

From the technical perspective, the four-hour scale RSI indicator edged lower to 48 figures as of writing, suggesting that the pair was amid strong bearish momentum. As for the Bollinger Bands, the pair was underpinned by the lower band and hovering between the lower band and 20-period moving average, which is a signal that the pounds have no clear trading tendency. Hence, the pair need to find more clues about future movement.

Resistance: 1.2028, 1.2145

Support: 1.1748, 1.1640, 1.1366

XAUUSD (4-Hour Chart)

The XAUUSD dropped close to 0.8% on a strong US dollar and was trading at the $1739 mark as of writing. Gold price grinds lower amidst a risk-off impulse, which triggered a flight to safe-haven assets. The US Dollar (USD) remains underpinned by investors’ concerns that the recent Covid-19 outbreak in China could spur authorities to reimpose restrictions. Furthermore, sentiment remains negative, as shown by Wall Street posting losses between 0.32% and 1.08%. The financial markets’ narrative has not changed since both October’s Consumer Price Index (CPI) report and Producer Prices from the United States cooled down. However, last week’s solid US Retail Sales data increased the likelihood that the Fed would continue tightening conditions. Moreover, the US Federal Reserve officials continued to express their commitment to taming inflation toward the 2% goal, but the pace of rate hikes could moderate as soon as the December meeting. Elsewhere, US Treasury bond yields are extending their gains, particularly the 10-year benchmark note rate yielding 3.83%, drawing support for the greenback, which, in turn, hurts the non-yielding gold.

From the technical perspective, the four-hour scale RSI indicator further fell to 35 figures as of writing, suggesting that the gold was surrounded by selling transactions. As for the Bollinger Bands, the yellow metal was pricing along with the lower band, which indicates that the pair was more likely to move downward in the near term.

Resistance: 1784, 1800

Support: 1748, 1704, 1670

Economic Data