Market Focus

After the last two consecutive days of impressive rally, the market was relatively quiet on Wednesday. U.S. stocks have been hesitant after determining their direction in the first hour of opening. At the end of the market, the Dow Jones Industrial Average rose 0.10% to 35,754.76 points, the S&P 500 index rose 0.31% to 4,701.22 and the Nasdaq Composite Index, rose 0.45% to 15,757.04 points. In the absence of economic data, the index has no additional impetus, but the number of initial jobless claims and CPI will be announced in the next two days, which may provide some momentum for the index trend. In the bond market, the 10-year Treasury bond yield rose to 1.528%, the third consecutive rise. Investors are waiting for the Fed’s meeting next week to see whether officials will accelerate the pace of reducing asset purchases.

In the S&P 500 index sector, the communications services sector and the healthcare sector were the two biggest winners on Wednesday. In the communications sector, Roku Inc. and Stagwell Inc. rose 18.23% and 10.28%, respectively. On the other hand, in the Nasdaq Composite Index, which is dominated by technology stocks, Apple’s stock price rose 2.28% to a record high, Meta rose 2.4%, and Zillow Group rose 4.25% to lead the rise of technology stocks.

Main Pairs Movement:

Since the opening of the London trading hours, the U.S. dollar has been weakening, but it closed stronger than most major competitors. Currently, market full of the anxiety on the new coronavirus, Omicron, trading has been fluctuating throughout the day. At present, the market is still full of anxiety about the new coronavirus Omicron, and the trading market fluctuates throughout the day. With the escalation of infectious diseases in Europe, France, the United Kingdom and Germany announced restrictions. Fortunately, Pfizer stated that its booster injection of the coronavirus vaccine is effective for the Omicron variant.

Despite the lack of macroeconomic data release, the EUR/USD has recently rebounded to the 1.1350 area, while the AUD/USD has returned to above the 0.71435 level and continues to try to return to the 0.72 area.

After the British Prime Minister announced his so-called “Plan B” to contain the latest coronavirus outbreak. GBP/USD weakened and maintained a downward trend, and may continue to refresh the lowest level this year.

Gold is still at a familiar level and is currently trading at approximately $1,786.00 per troy ounce. Crude oil prices rose slightly, and WTI is currently quoted at $72.40 per barrel.

Technical Analysis:

AUDUSD (4- Hour Chart)

The Aussie extends its rally, currently challenging its immediate hurdle at 0.7170. From the At present, the market is full of anxiety about the new coronavirus Omicron, and trading fluctuates throughout the day. With the escalation of infectious diseases in Europe, France, the United Kingdom and Germany announced restrictions.

On the other hand, Pfizer stated that the booster injection of its coronavirus vaccine is effective for the Omicron variant. Early studies have shown that people who have been infected with the new coronavirus and have been vaccinated twice or the third dose are highly protected by the highly mutated virus strain. From a technical aspect, the outlook of AUDUSD turns upside after it breaches the bearish channel on the 4- hour chart. The pair is facing the critical resistance at 0.7170; the breach of the latter will expose a one- month down slope trendline, previous resistance- turned- support. Nonetheless, the breach would be difficult as the RSI has hit the overbought territory and the pair has reached the upper bounce of Bollinger Band, suggesting a pullback. To the downside, if the pair fails to break 0.7170 level, then it is expected to head toward 0.7116 for an adjustment. On the contrary, if the pair successfully penetrates 0.7170, then it is expected to head further north, toward 0.7227.

Resistance: 0.717, 0.7227

Support: 0.7116, 0.6997

GBPUSD (4- Hour Chart)

The Cable plummets to fresh 2021 lows around sub- 1.3200 as the greenback recovers. In the meantime, impending Brexit risks and new variant Covid weigh on the British Pound. From the technical perspective, the outlook of GBPUSD looks bearish on the 4- hour chart as it continues to trade within the descending channel. Despite of hitting the lower bounce of Bollinger Band, the bearish momentum seems unstoppable as the RSI has not reached the oversold territory and the MACD is still negative. As the time of writing, the pair is aiming for the next immediate support at 1.3163 before the bearish momentum takes a break.

Resistance: 1.3321, 1.3419, 1.3499, 1.3578

Support: 1.3163

EURUSD (4- Hour Chart)

EURUSD recovers the 1.1300 threshold while the US 10- year yield hovers around 1.5%. From the technical perspective, the pair turns bullish in the near term since the pair is currently extending above the 20 and 100 simple moving averages in the 4- hour chart, but not yet overcoming its resistance at 1.1357. The pair needs to trade above the acceptance level at 1.1357 to maintain its bullish trend. At the moment, the RSI indicator has not yet crossed the overbought line, providing more rooms to extend further north; in the meantime, the bullish momentum is supported by the positive MACD. To the downside, if the pair falls below its 20 and 100 simple moving averages, then it might head toward its support at 1.1186, turning back to the bearish mode.

Resistance: 1.1357, 1.1462, 1.1548

Support: 1.1186

Economic Data

Market Focus

US stock advanced on Tuesday, making the biggest rally in nine months amid risk-on market sentiment. Investors’ mood turned more upbeat this week as several health experts have said that Omicron symptoms appear milder, and the variant seems won’t derail the global economic recovery. However, the new restrictions to stop the spread of Omicron could still put some pressure on market mood. Meanwhile, US Treasury yields surged on the back of the market’s optimism, with the 10-year Treasury note yielding 1.48% by the end of the day.

The benchmarks, S&P 500, Dow Jones and Nasdaq both rose on Tuesday as risk assets recovered and the encouraging news about easing Omicron fears acted as a tailwind for the equity markets. S&P 500 was up 2.1% on a daily basis and the Dow Jones Industrial Average climbed with a 1.4% gain for the day. All eleven sectors stayed in positive territory as the information technology and consumer discretionary sectors are the best performing among all groups, rising 3.51% and 2.36%, respectively. The Nasdaq 100 gained the most with 3%.

In Asia, China has pledged measures to support economic growth. Moreover, China’s Trade Balance has eased to $71.72B while the Exports improved from 17.2% to 22.0%, led by a record on external demand and an easing power crunch. In Australia, the RBA decided to keep the benchmark rate unchanged at 0.1% and the weekly bond purchases of $4.0 billion intact until at least mid-February 2022, which is in line with market expectations.

Main Pairs Movement:

The US dollar edged higher on Tuesday, staying in positive territory amid upbeat market sentiment. The DXY index gained bullish traction and touched a weekly high near 96.6 area, but then started to see some selling while surrendered most of its intraday’s gains during American session. Markets now become more optimistic that Omicron will not derail the global economic recovery. However, it’s still too early to say as long as the omicron strain remains a new source of uncertainty.

GBP/USD declined on Tuesday, dropping below 1.325 level amid steady US dollar across the board. The pair reached a daily top in early European session but failed to preserve its bullish momentum. EUR/USD also dropped to a daily low below 1.123 level, as the EU Q3 GDP data failed to impress and made the EUR was the weakest USD rival, losing 0.13% on a daily basis.

Gold recovered some of Monday’s losses and edged higher to $1785 area, holding steady amid upbeat market mood and positive Omicron related-news. The precious metal is now rising 0.13% on a daily basis. WTI oil stayed in positive territory and surged 2.48% for the day, supporting by upbeat sentiment and the fact that the EIA raised its forecast for 2022 world oil demand growth by 200K barrels per day in its latest report.

Technical Analysis:

AUDUSD (4- Hour Chart)

The Aussie rebounds from sub- 0.70000 region for the second successive day. From the technical point of view, the pair looks bullish in the near term as its intraday outlook has breached the bearish channel. The upside momentum is expected to continue, heading toward the immediate hurdle at 0.7116. Afterward, the momentum might need to adjust as the pair is going to hit the upper bounce of Bollinger Band while the RSI is going to reach the overbought condition, due to a pullback.

Resistance: 0.7116, 0.717, 0.7227

Support: 0.6997

BTCUSD (Daily Chart)

Bitcoin edges higher for a third successive day following a devastating weekend’s slump. From the technical aspect, Bitcoin seems to be ready to test its immediate barrier at $55,000. Even though the near term outlook of Bitcoin remain bearish as it still falls below the bullish trend, the upside momentum is supported by the oversold RSI, which is currently at the 30ish mark. Bitcoin needs to climb above $55,000 in order to regain strength. If Bitcoin fails to break through and falls below its support at $46,510, then it will accelerate toward $39,566.

Resistance: 55,103, 58,000, 68,991

Support: 46,530, 39,566, 32,621

EURUSD (4- Hour Chart)

EURUSD trades at fresh weekly lows near 1.1200 region amid tepid EU data. From the technical perspective, the outlook of the pair leans to more sellers’ side on the 4- hour chart as the seller side of the MACD intensifies, reflecting strong selling interest. EURUSD is poised to accelerate its slump toward the next support at 1.1186 after it falls below its moving average. From the RSI indicator, it has not yet reached the oversold territory, providing rooms for further downside. The pair needs to climb all the way above its moving average and the midline of Bollinger Band to regain bullish momentum in the near term.

Resistance: 1.1357, 1.1462, 1.1548

Support: 1.1186

Economic Data

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Market Focus

After the White House’s chief medical adviser, Dr. Anthony Fauci, eased concerns about the severity of the new Covid-19 virus, Wall Street decided to put aside omicron’s concerns on Monday. Besides, there are reports that China is considering easing its monetary policy. In terms of Fed policy, the latest report indicates that the central bank may announce its plan at the next meeting to withdraw from the bond purchase plan more quickly.

The Dow Jones Industrial Average rose 646.95 points to 35,227.04 points, the S&P 500 index rose 1.17% to 4,591.68. The Nasdaq Composite Index, which is dominated by technology stocks, rose 0.9% to 15,225.15 points.

With the news that the epidemic has eased, the aviation industry finally rebounded on Monday.

The American Airlines Group rose 7.9%, US Global Jets exchange-traded fund rose 5.3% and United Airlines Holdings rose 8.3%. Moreover, the post-pandemic reopening stocks have also achieved good results, the Carnival and Royal Caribbean Cruises rose 8.0% and 8.3%, respectively. Marriott International rose 4.5%, Live Nation Entertainment rose 6.1%, and Cinemark Holdings rose 7.7%. However, in the technology sector, not as strong as other sectors, Apple rose more than 2% on Monday, while Microsoft fell 0.3%, and the leader in electric vehicles, Tesla, fell more than 5%.

Main Pairs Movement:

The U.S. dollar closed mixed on Monday. On Friday, the United States released a Nonfarm Payrolls report, which was lower than market expectations and raised doubts about further aggressive reductions in the US.

Regarding the Omicron coronavirus variant, although the virus is still spreading in many countries and communities, at the same time, there have been no deaths related to this variant so far, which raises people’s hopes for a milder illness to prevent lockdowns and restrictions, and this also avoid an economic slowdown.

The euro is one of the weakest opponents of the US dollar, closed at 1.1265 against the greenback on Monday. High-yield currencies rose slightly, with GBP/USD rising 0.23% to close at 1.32624. On the other hand, commodity-related currencies rose the most, Aussie up 0.8% and CAD went up 0.62% against the dollar. The yen and Swiss franc fell slightly due to weakening concerns, but all major currency pairs remained within familiar levels.

Gold fell slightly and closed at $1,778 per troy ounce. On the other hand, crude oil prices rose sharply with the stock market, and WTI closed at $69.70 per barrel and Brent oil closed at 73.64, both up 5%.

Technical Analysis:

XAUUSD (4- Hour Chart)

The outlook of the precious metal, Gold, remains subdued as it continues to fall within the descending channel. However, today’s bulls seems to push gold upside, toward its immediate hurdle at $1,789 and the edge of the descending trendline. Gold looks to hover around $1,780 recently as the RSI is currently neutral, setting at the 50^th mark. To the upside, gold needs to breach the descending line and the 60 days- simple moving average in order to regain bullish momentum. On the contrary, if gold fails to break through the barrier, then it is expected to head toward the next support at $1,770.

Resistance: 1,780, 1,797, 1,808

Support: 1,770, 1,761

BTCUSD (Daily Chart)

Bitcoin bounces back and stands nearly $50,000 after a devastating weekend, tumbling more than 17%. From the technical perspective, the support around $49,000 looks steady and robust, Bitcoin’s bearish momentum stops here as the time of writing. The outlook of Bitcoin turns bearish on the daily chart as it has breached the ascending trendline. To the upside, Bitcoin needs to climb above the acceptance level of $55,103 to regain strength. As the time of writing, Bitcoin looks to rebound as the RSI has reached the oversold territory, which is due to a pullback. To the dowside, if the current support at $46,530 fails to hold, then Bitcoin is expected to head toward the next support at $39,566.

Resistance: 55,103, 58,000, 68,991

Support: 46,530, 39,566, 32,621

EURUSD (4- Hour Chart)

EURUSD trades below 1.1300 as the US dollar is comparably stronger. From the technical aspect, the outlook of EURUSD remains bearish on the 4- hour chart after meeting sellers around the resistance level at 1.1357. In the meantime, EURUSD continues to fall within the descending channel while it falls below its simple moving averages. It is expected to see the pair consolidates in the range from 1.1357 and 1.1.1186 as the RSI is currently in the midline, suggesting a directionless within negative levels and maintaining the risk skewed to the downside.

Resistance: 1.1357, 1.1462, 1.1548

Support: 1.1186

Economic Data

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Market Focus

US stock fall last Friday amid a sharp selloff witnessed in huge technology companies, extending their weekly slide. The concerns about the new Omicron variant remained, as investors worry about that an outbreak could slowdown the recovery in global economy. Moreover, US Nonfarm Payrolls released last Friday rose by 210K in November, which is lower than market’s expectation of 550K. But the Federal Reserve is likely to follow through with faster tapering despite the dismal jod data, as the pressure of elevated inflation continues to rise.

The benchmarks, S&P 500, Dow Jones and Nasdaq both declined last Friday as the mixed US jod report increased the volatility of equity markets. S&P 500 was down 0.8% on a daily basis and the Dow Jones edged lower with a 0.2% loss for the day. Eight out of eleven sectors stayed in negative territory as the consumer discretionary and information technology sectors are the worst performing among all groups, dropped 1.84% and 1.65%, respectively. Consumer staples and utilities were the only major groups to climb higher on the day. The Dow Jones lost the most with 1.7%.

In Asia, shares of Chinese companies traded in the US tumbled on Friday, as the The Chinese ride-hailing company, DiDi, decides to delist its American depositary shares from the New York Stock Exchange and pursue a listing in Hong Kong. The announcement adds even more uncertainty to the prospects for other US-listed Chinese firms.

Main Pairs Movement:

The US dollar edged higher last Friday, gathering some pace and retests the daily highs around 96.45 at the end of the week. After touching a fresh three-day high, the DXY index retreated to 96 level during mid American session and posted a 0.02 gain on a daily basis. The hawkish tone from Fed chair Powell continued to acted as a tailwind for the greenback, as he suggested that the Fed will discuss adopting a quicker tapering pace at the December meeting, all pointing to a rates lift-off at some point in mid-2022.

GBP/USD declined last Friday, dropping below 1.324 level amid rebounding US dollar. The pair reached a daily top in late European session but failed to preserve its bullish momentum. EUR/USD rebounded slightly amid the decline in US yields, rising 0.06% on a daily basis.

USD/JPY touched a fresh daily top after the release of US job reports, but then started to see heavy selling and dropped below 112.6 area. The pair is now trading at 112.88, rising 0.11% for the day.

Gold gained upside traction and rebounded above $1782, as the downbeat market sentiment lend some supports to the precious metal. Gold is now rising 0.02% on a daily basis. WTI stayed in negative territory and slumped 1.65% for the day.

Technical Analysis:

EURUSD (4- Hour Chart)

After previous day’s slide to 1.129 area, the pair EUR/USD consolidated in a range between 1.128 and 1.131 on Friday. The pair was flirting with 1.130 level during the Asian Session, then touched a daily high above 1.133 after US Nonfarm Payrolls released. However, the recovery witnessed in US dollar weighed on the pair, which surrendered most of its intraday gains and currently losing 0.17% on a daily basis. Nonfarm Payrolls rose by 210K in November, which is lower than market’s expectation of 550K and dragged the US dollar below 96 level right after the release. Despite the dismal data, the greenback has rebounded and posted a 0.22% gain at the moment. In Europe, European Central Bank President Christine Lagarde said that it is very unlikely to see rate hikes in 2022, therefore the dovish comments acted as a headwind for EUR/USD.

For technical aspect, RSI indicator 44 figures as of writing, suggesting tepid bear movement ahead. Looking at the MACD indicator, the MACD is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, the price is dropping out of lower band, therefore a trend continuation could be expected. In conclusion, we think market will be bearish as long as the 1.1383 resistance line holds.

Resistance: 1.1383, 1.1464, 1.1606

Support: 1.1236, 1.1186

GBPUSD (4- Hour Chart)

The pair GBP/USD declined sharply and refreshed 2021 low on Friday, staying under pressure amid renewed US dollar strength. The pair flirted with 1.329 level in early trades and edged lower during European session. After the release of US Nonfarm Payrolls, the cable touched the lowest level since December 2020 below 1.322, currently staying in negative territory with a 0.60% loss for the day. The US dollar remained its bullish traction despite downbeat NFP report, as the hawkish Fed continued to lend support to the greenback with the aspects of a rate hike in 2022. In the UK, UK Final Services PMI downwardly revised to 58.5 in November. On top of that, the UK-EU impasse over the Northern Ireland Protocol and the worsening row over the post-Brexit fishing rights both acted as a headwind for the British pound.

For technical aspect, RSI indicator 32 figures as of writing, reflecting that the bearish momentum should persist for a while before there’s a trend reversal. As for the Bollinger Bands, the price moved out of the lower band, therefore a strong downward trend continuation could be expected. In conclusion, we think market will be bearish as the pair is eyeing a test of the 1.3195 support. The next target on the downside aligns at 1.3106.

Resistance: 1.3370, 1.3514, 1.3607

Support: 1.3195, 1.3106

USDCAD (4- Hour Chart)

The pair USD/CAD advanced amid falling oil prices on Friday, rebounding back from daily lows that touched earlier in the session. The pair saw some buying and touched a daily top in mid European session, but then dropped to below 1.275 level amid dismal NFP report. USD/CAD now climbs towards 1.284 area and stays in positive territory, currently rising 0.22% on a daily basis. At the time of writing, WTI crude oil is losing 0.54% on a daily basis, as the OPEC+ decided to follow through on their plan to increase production by 400kb/d in January. The bearish news from oil market weighed on the commodity-linked loonie and pushed USD/CAD higher. In Canada, the Employment Change showed that the economy added 153.7K new jobs for November, which is a lot better than economists’ expectations of 35K.

For technical aspect, RSI indicator 57 figures as of writing, suggesting that the upside appears more favored as the RSI sits above the midline. As for the Bollinger Bands, the price rose sharply towards the upper band, therefore the bullish momentum could persist. In conclusion, we think market will be bullish as the pair is testing the 1.2849 resistance, and the next resistance sits at 1.2949.

Resistance: 1.2849, 1.2949

Support: 1.2714, 1.2645, 1.2493

Economic Data

Market Focus

After falling sharply for two consecutive days, the three major stock indexes finally rebounded strongly on Thursday. Main reason comes from the cyclical stocks have recovered some of their recent declines. The Dow Jones Industrial Average rose 617.75 points to 34,639.79 points, the S&P 500 index rose 1.42% to 4,577.10. The Nasdaq Composite Index, which is dominated by technology stocks, rose 0.8% to 15,381.32 points. However, the market is still facing doubts about the latest variant of COVID-19, Omicron, and the risk that the US government may shut down. In terms of data, as of the week of November 27, a total of 222,000 people had applied for initial jobless claims, which was better than expected, implying labor shortages, and employers’ willingness to lay off employees is getting lower and lower.

As price levels rise, labor shortages, and supply chains are blocked, the Fed no longer uses the term “temporary” to describe inflation, suggesting that the Fed may accelerate the pace of interest rate hikes.

In terms of stocks, after the Chinese aviation authority issued the 737 MAX airworthiness directive, Boeing rose 3.5%, which will pave the way for the aircraft to resume service in China. Kroger Co rose 9.9% after the retailer raised its full-year sales and profit forecasts due to continued demand for groceries. In addition, Okta’s encouraging earnings increased by 11.66%, and retail company Duluth Holdings also rose 18.40% due to its outstanding revenue.

Main Pairs Movement:

The U.S. dollar gained some momentum on Thursday, thanks to optimistic data and the rise in the US government bond yields, putting concerns on hold for the time being. In addition, there is news that the Fed may need to reduce the scale of asset purchases faster than expected. Due to the virus, vaccines and financial support, inflation is rising faster than expected. On the other hand, ECB policymaker Fabio Panetta stated that inflation and the new pandemic wave are endangering the EU’s early recovery, although earlier this week he pointed out that there is no need to tighten monetary policy to control inflation because all this is “temporary”. Last but not least, the United States will release a Nonfarm Payrolls report on Friday, and investors should pay close attention.

The EUR/USD continued to stay above the 1.13000 level, but fell for two consecutive trading days. Basically, the currency pair is still in a downward trend. If the European Central Bank maintains a loose monetary policy, it will be difficult for the euro to rebound. After testing the 1.32210 level on Tuesday, the GBP/USD is currently hovering around 1.1330, but like the euro, it is in a weak and sharp downward trend, but it rose by 0.17% on Thursday.

Gold fell to a new one-month low of 1,761.87 and rebounded moderately before the close. Crude oil prices fell to a new low in several months but rebounded. WTI is currently trading at $66.10 per barrel.

Technical Analysis:

EURUSD (4- Hour Chart)

After previous day’s tepid slide to 1.130 level, the pair EUR/USD regained upside traction and rebounded above 1.133 area on Thursday. The pair was trading higher before pulling back to a daily low in early European session. During the American session, the pair saw fresh buying and continued to climb higher. The renewed US dollar weakness lend support to EUR/USD, which currently rising 0.02% on a daily basis. For the greenback, investors seems to have already digested Powell’s hawkish testimony on Wednesday, as the DXY index drops 0.15% despite a further strong US macro data. The Weekly Initial Jobless Claims showed a better-than-expected reading with 222K, but failed to support the greenback. In Europe, October’s Unemployment Rate in the euro area eased to 7.3%.

For technical aspect, RSI indicator 54 figures as of writing, suggesting tepid bull movement ahead. But looking at the MACD indicator, the MACD is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, the price dropping slowly from the upper band to moving average, therefore the bearish traction could persist for a while. In conclusion, we think market will be slightly bearish as long as the 1.1374 resistance line holds.

Resistance: 1.1374, 1.1464, 1.1608

Support: 1.1258, 1.1186

GBPUSD (4- Hour Chart)

Following the rebound from the lowest level since December 2020 under 1.320 level, the pair GBP/USD hold steady above 1.330 area amid mixed market sentiment on Thursday. The pair reached a daily top above 1.33 during European session, but it has pulled back and surrendered some of its intraday gains since then. At the time of writing, the cable stays in positive territory with a 0.25% gain for the day. The weaker US dollar across the board acted as a tailwind for the cable, as concerns about new Omicron variant seems to ease after WHO official said that some of the early indications showed that most cases are mild. Therefore market mood moderately improved and favored the risk-sensitive Sterling. On top of that, Brexit woes still remained as there are real gaps between the UK and European Union in their disagreement over the Northern Ireland Protocol.

For technical aspect, RSI indicator 48 figures as of writing, reflecting the pair’s indecisiveness in the near term. As for the Bollinger Bands, the price is falling from the moving average, indicating that the pair may experience some bearish momentum. In conclusion, we think market will be slightly bearish as long as the 1.3370 resistance line holds. Technical indicators for cable have lost directional strength, bears may have a chance if the pair break below the next support at 1.3195.

Resistance: 1.3370, 1.3514, 1.3607

Support: 1.3195, 1.3106

USDCAD (4- Hour Chart)

The pair USD/CAD advanced amid falling oil prices on Thursday, continuing its previous day’s rally to 1.283 area. The pair was trading lower during Asian session, but then rebounded moderately to a daily top in early American session. USD/CAD now remains steady under the 1.283 area amid improving risk appetite, currently rising 0.11% on a daily basis. The rebound witnessed in US dollar pushed the pair higher, as more Fed policymakers now favoring a faster taper and added to the hawkish list. Meanwhile, WTI Crude Oil posts a 0.01% loss today after OPEC+ agreed to go ahead with its planned 400K barrel per day output hike in January, acting as a headwind for the commodity-linked loonie.

For technical aspect, RSI indicator 61 figures as of writing, suggesting that the upside appears more favored as the RSI still above the midline. Looking at the MACD indicator, a golden cross just formed on the histogram, which indicated upward trend for the pair. As for the Bollinger Bands, the price is rising from the moving average to upper band, therefore the upside traction could persist. In conclusion, we think market will be bullish as the pair is eyeing a test of the 1.2849 resistance, and the next resistance sits at 1.2949.

Resistance: 1.2849, 1.2949

Support: 1.2645, 1.2493, 1.2387

Economic Data

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Market Focus

US equities underwent their worst back-to-back collapse since October 2020 as Fed Chair Jerome Powell reiterated his pivot to inflation vigilance and the omicron variant continued to spread, with the U.S. confirming its first case on Wednesday. In a very volatile session, the S&P 500 erased gains after climbing almost 2% in the first half of the Wall Street hours. Dow Jones slid 1.34% to 34022.07, and Nasdaq Composite plummeted 1.83% to 15,254.05. Airlines, cruise operators and hotels also slumped. Investors flocked to the relative safety of Treasuries, with the yield on the 10-year note down to 1.404%.

On the market front, professional traders bailing from stocks as anxiety over the omicron variant and monetary policy roil markets. Hedge funds have gone risk-off in a major way just as the S&P 500 endured a massive two-day pullback. Net leverage, a measure of industry risk appetite that takes into account long versus short positions, fell to a one-year low this week, according to data compiled by Goldman Sachs’ prime brokerage.

The move is in contrast to retail traders, who renewed their manic dip buying after Tuesday’s rout, pushing stocks higher by almost 2% earlier in Wednesday’s session. Then Jerome Powell reinforced his message that the Federal Reserve would keep inflation in check and officials confirmed the first case of the omicron variant in the U.S. That sparked an afternoon selloff that left the S&P 500 with its biggest reversal since April 2020.

Few corners of the market were spared, as small caps gave up a 2.5% surge to end lower by more than 2%. Bitcoin dropped below $57,000, oil hit $65 a barrel and Treasuries rallied on demand for safety. The S&P 500 is now down 3.1% in two sessions and more than 4% from its last record on Nov. 18.

Main Pairs Movement:

Unlike the dismal stock markets, fears seem to cool down a bit for forex on Wednesday, resulting in major pairs holding into familiar levels. The greenback ended the day mixed, firmer against commodity-linked peers but down against other safe-haven currencies.

The cautious optimism came from the World Health Organization, as it said that current vaccines could still offer protection against the new Omicron coronavirus variant, preventing severe illness. Also, the WHO reported that so far, the new strain seems to be causing milder symptoms and illness. However, risk of Fed’s earlier taper remains, as Chief Powell said they need to remove the word “transitory” while describing the U.S. inflation issue.

The EUR/USD pair trades around 1.1320, while GBP/USD stands at 1.3280, both at risk of falling further. The AUD/USD pair trades at around 0.7110, while USD/CAD is pressuring daily highs in the 1.2830 price zone. USD/JPY and USD/CHF posted mild gains, up 0.15% and 0.21% respectively.

Gold remains under pressure, currently trading at $1,780 a troy ounce. Crude oil prices edged lower, with WTI now at around $65.75 a barrel, and Brent at $68.50.

Technical Analysis:

EURUSD (4- Hour Chart)

After dropping to a weekly low around 1.124 area, the pair EUR/USD saw some buying and rebounded slightly on Wednesday. The pair was flirting with 1.133 area most of the day, now sitting in negative territory and holding above 1.132 level. The renewed strength witnessed in the greenback weighed on EUR/USD, which currently losing 0.06% on a daily basis. Stronger US dollar across the board today dragged the pair lower, as the DXY index rose 0.02% amid upbeat market sentiment. The US ADP Employment Change for November showed that private payrolls rose by 534K, which is more than market’s expectations. In Europe, concerns about the new omicron variant and the likeliness of lockdown in many countries may dampen the near-term outlook for the European currency and cap the upside for the EUR/USD pair.

For technical aspect, RSI indicator 59 figures as of writing, suggesting that the upside appears more favored as the RSI still above the midline. As for the Bollinger Bands, the price is consolidating between the moving average and upper band, therefore the bullish traction could persist for a while. In conclusion, we think market will be slightly bullish as the pair is heading to re-test the 1.1374 resistance. A break above that level would target 1.1464.

Resistance: 1.1374, 1.1464, 1.1608

Support: 1.1258, 1.1186

GBPUSD (4- Hour Chart)

The pair GBP/USD edged higher on Wednesday, ending its previous slide to the lowest level since December 2020. The pair stayed steady to the north of the 1.330 level for most of the day and touched a daily top in American session. At the time of writing, the cable stays in positive territory with a 0.08% gain for the day. The recovery in sentiment for global equity and commodity markets acted as a tailwind for the British pound, which is one of the risk-sensitive currencies. On the economic data side, the UK Manufacturing PMI came at 58.1 for November, which is slightly lower than estimates but did little impact to the cable. Meanwhile during the testimony earlier in the session, Fed Chair Jerome Powell also reiterates that it is appropriate to consider a faster QE taper before the House Financial Services Committee.

For technical aspect, RSI indicator 46 figures as of writing, suggesting that sellers remain in control of the pair’s action in the near term. As for the Bollinger Bands, the price is sitting between the moving average and lower band, therefore the downside momentum should be stronger. In conclusion, we think market will be bearish as long as the 1.3369 resistance line holds. The hawkish tone from Powell could limit any further gains for the cable.

Resistance: 1.3369, 1.3514, 1.3607

Support: 1.3195, 1.3106

USDCAD (4- Hour Chart)

After previous day’s rally to a two-month high near 1.284 level, the pair USD/CAD preserved its upside traction and edged higher on Wednesday. The pair was surrounded by bearish momentum during Asian session, but then rebounded back above 1.278 area amid renewed US dollar strength. USD/CAD now continues to climb higher, currently rising 0.26% on a daily basis. Rising expectations for a Fed rate hike continue to lend support to the greenback and USD/CAD, as Powell said that Fed will have a discussion about accelerating taper by a few months at their next meeting. On top of that, the pullback in crude oil prices from earlier session peaks weighed on the commodity-linked loonie and pushed USD/CAD higher, as WTI oil dropping 1.43% for the day.

For technical aspect, RSI indicator 60 figures as of writing, suggesting that the upside appears more favored as the RSI still above the midline. Looking at the MACD indicator, a golden cross is forming on the histogram, which indicated upward trend for the pair. As for the Bollinger Bands, the price is from the moving average to upper band, therefore the upside traction could persist. In conclusion, we think market will be bullish as the pair is eyeing a test of the 1.2849 resistance.

Resistance: 1.2849, 1.2896

Support: 1.2641, 1.2493, 1.2387

Economic Data