USD/JPY Price Analysis – Dec 12, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair struggled to gain any significant momentum, staying sluggish around the 152.44 mark and dipping to an intraday low of 151.95.
This decline comes despite an overall positive sentiment in equity markets and reports suggesting that the Bank of Japan (BoJ) is likely to keep rates steady in its upcoming meeting.
The downward trend is linked to a modest weakness in the US dollar, which lost its earlier traction even after strong US economic data.
Although, the latest US inflation report wasn’t enough to convince markets that the Federal Reserve will avoid cutting interest rates at its upcoming December meeting.
Traders are now almost certain of a 25-basis-point rate cut on December 18, with the CME FedWatch Tool showing a 99% probability.
Market participants are shifting their attention to the US November Producer Price Index (PPI), expected later on Thursday, for fresh insights.
BoJ Policy Uncertainty and US Dollar Strength Weigh on USD/JPY
On the BoJ front, investors remain doubtful about the Bank of Japan’s willingness to tighten its monetary policy further, which is weighing on the Japanese Yen (JPY).
Reports from Reuters suggest that the BoJ is likely to keep interest rates steady at its upcoming policy meeting, though it remains open to a hike depending on economic data and market conditions.
Mixed signals from BoJ officials show no rush to tighten policy, keeping traders cautious about placing big bets on the Yen.
Japan's economy is growing moderately, with rising wages and inflation staying above the BoJ’s 2% target, suggesting conditions may support future hikes.
However, with the Federal Reserve’s decision on a likely rate cut just hours before the BoJ meeting, traders are hesitant to take strong positions.
On the other side, the US dollar is finding some support from higher US Treasury yields, boosted by expectations that the Fed will take a cautious approach to further rate cuts.
The recent US Consumer Price Index (CPI) data showed inflation picking up slightly, with the core CPI rising 3.3% year-over-year in November.
However, progress toward the Fed’s 2% inflation target seems to have stalled, raising uncertainty about future rate decisions.
The US Producer Price Index (PPI) and Weekly Initial Jobless Claims, due later on Thursday, are expected to provide fresh market direction.
These factors, combined with a positive tone in equity markets, are keeping the USD/JPY pair steady despite the JPY's recent weakness.
USD/JPY – Technical Analysis
The USD/JPY pair is trading at 152.523, up 0.04%, reflecting modest upward momentum on the 4-hour chart. The pair is finding support near the pivot point at 151.960, a critical level that traders are monitoring for potential direction.
Immediate resistance is located at 152.749, followed by key levels at 153.605 and 154.558, suggesting room for bullish continuation if the pair can maintain momentum.
On the downside, immediate support lies at 150.994, with deeper levels at 149.836 and 148.883 providing a safety net in case of a pullback.
The 50-day Exponential Moving Average (EMA) at 151.279 underpins short-term bullish sentiment, reinforcing the ongoing upward trend.
The Relative Strength Index (RSI) at 59 indicates neutral-to-bullish momentum, suggesting the pair has room to rise before entering overbought territory.
Traders may consider a buy limit entry at 152.125, targeting 153.600 with a stop loss at 151.500 to manage downside risk.
The technical setup suggests a cautiously bullish outlook for USD/JPY, supported by a broader risk-on sentiment in the markets.
A decisive move above the 152.749 resistance could pave the way for further gains, while holding above the pivot will be crucial to maintaining positive momentum.
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- GOLD Price Analysis – Dec 12, 2024
GOLD Price Analysis – Dec 12, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its early-day bearish rally and remained under pressure around the 2,716 level, eventually dropping to an intra-day low of 2,700.
This decline is mainly driven by the stronger US dollar (USD) following the release of the upbeat US inflation data on Wednesday.
Despite this, the inflation report doesn’t seem to be enough to stop the Federal Reserve (Fed) from cutting rates at its meeting next week.
Traders are now pricing in a nearly 99% chance of a 25 basis point rate cut on December 18, according to the CME FedWatch Tool.
The focus now shifts to the US November Producer Price Index (PPI), set to be released later on Thursday, for further market direction.
Strong US Dollar and Economic Data Weigh on Gold Prices
On the US front, the broad-based US dollar gained strong bullish traction after the release of key economic data. On the data front, the seasonally adjusted Employment Change showed an increase of 35,600 jobs in November, pushing the total number of employed people to 14.54 million.
This was well above the previous month’s increase of 12,100 and also exceeded expectations of 25,000.
At the same time, the Unemployment Rate fell to 3.9%, marking the lowest level since March, and came in below market estimates of 4.2%. These positive employment figures supported the US dollar.
Meanwhile, the US Consumer Price Index (CPI) rose to 2.7% year-over-year in November, slightly up from 2.6% in October. The headline CPI showed a 0.3% month-over-month increase, matching market expectations.
The core CPI, which excludes food and energy prices, climbed 3.3% year-over-year, with a 0.3% month-over-month rise.
Despite these inflation figures, the market believes the Federal Reserve will still proceed with rate cuts in its December meeting.
Traders are currently pricing in a 99% chance of a 25 basis point rate reduction on December 18, according to the CME FedWatch Tool.
Turning to China, President Xi Jinping expressed confidence in achieving China’s economic targets, stating that the country remains a key driver of global growth. He also highlighted that there are no winners in trade or tariff wars.
In November, China’s Trade Balance rose to CNY 692.8 billion, up from CNY 679.1 billion the previous month.
Exports grew by 1.5% year-over-year, a slowdown compared to the 11.2% increase in October, while imports saw a slight recovery with a 1.2% increase.
Therefore, the strong US dollar and positive economic data, including low unemployment and CPI readings, put downward pressure on gold prices.
Market expectations of a Fed rate cut further fueled the dollar’s strength, leading to gold's inability to extend its gains.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,716.48, down slightly by 0.06% as it consolidates within a tight range on the 4-hour chart. Despite the recent dip, the price remains supported by the pivot point at $2,709.80, a crucial level for maintaining bullish momentum.
Immediate resistance is observed at $2,719.88, followed by $2,732.71 and $2,745.77. A breakout above these levels could signal a stronger upward trend, targeting higher levels in the near term.
On the downside, support is visible at $2,699.27, followed by deeper levels at $2,685.98 and $2,675.44. The 50-day Exponential Moving Average (EMA) at $2,674.10 offers robust technical support, reinforcing the broader uptrend.
The Relative Strength Index (RSI) stands at 50.48, reflecting neutral momentum with potential for upside. However, the RSI nearing oversold territory suggests that a bullish reversal may be imminent if support levels hold.
The current setup highlights an opportunity to enter long positions above $2,709, with a target of $2,732 and a stop loss at $2,700 to manage downside risks.
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GBP/USD Price Analysis – Dec 11, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair struggled to halt its bearish trend and stayed under pressure around 1.2725, hitting an intraday low of 1.2713.
The decline was mainly driven by the stronger US Dollar, which gained support ahead of the release of the US Consumer Price Index (CPI) data for November, scheduled at 13:30 GMT.
Investors are keenly watching this report as it could influence expectations for the Federal Reserve’s future interest rate decisions.
Meanwhile, the British Pound faced additional challenges due to a lack of significant economic events in the UK. With a relatively quiet economic calendar, the focus has shifted to the Bank of England’s upcoming policy meeting on December 19.
Market participants are speculating on whether the BoE will maintain its current stance or take further action on interest rates.
Until then, the Pound is likely to remain under pressure, especially as it struggles to find clear direction against major currencies like the Euro and US Dollar.
US Dollar Strengthened by CPI Data and Fed Rate Cut Expectations, Impact on GBP/USD
On the US front, the broad-based US dollar maintained its upward trend as investors awaited the release of the November Consumer Price Index (CPI) data, scheduled for 13:30 GMT.
The inflation report is expected to show that the annual headline CPI increased slightly to 2.7% from the previous 2.6%.
The core CPI, which excludes food and energy prices, is forecasted to rise steadily by 3.3%. On a monthly basis, both the headline and core CPI are expected to grow by 0.3%.
This inflation data is unlikely to change the Federal Reserve's interest rate plans for the meeting on December 18, unless the numbers differ significantly from expectations.
According to a recent Reuters poll, 90% of economists believe the Fed will cut interest rates by 25 basis points next week.
The poll also suggests that most economists expect the Fed to pause any further rate cuts starting in January 2025, assuming that US President-elect Donald Trump's policies, such as higher import tariffs and tax cuts, could lead to higher inflation.
Therefore, the expected CPI data and the Fed's likely interest rate cut may support the US dollar, potentially keeping the GBP/USD pair under pressure. If inflation figures align with expectations, the pair could remain in a consolidative range until further clarity.
BoE Rate Decision and Economic Data to Drive Market Sentiment
On the GBP front, the Pound Sterling is struggling to find direction against other major currencies due to a quiet UK economic calendar.
As a result, the British currency's movement will largely depend on market expectations for the Bank of England’s (BoE) interest rate decision on December 19.
Traders expect the BoE to keep interest rates unchanged at 4.75% next week as inflationary pressures persist.
However, upcoming economic data, such as the UK’s employment report for the three months ending in October and the November Consumer Price Index (CPI), could influence the BoE's future rate decisions.
At the same time, concerns about the UK labor market could lead the BoE to adopt a more cautious stance.
A recent survey showed that employment growth expectations for the next year have dropped to a four-year low.
Later this week, investors will focus on the UK’s monthly Gross Domestic Product (GDP) and Industrial Production data for October.
These reports will provide a clearer picture of the UK economy’s health, with expectations of a recovery in both factory output and GDP after a decline in September. These indicators could further shape expectations for the BoE’s policy direction.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.27680, reflecting a 0.6% gain on the day and signaling moderate bullish momentum on the 4-hour chart. The pivot point at $1.27356 serves as a critical level, with prices attempting to hold above it.
Immediate resistance is situated at $1.27986, followed by $1.28322 and $1.28665. On the downside, immediate support lies at $1.26955, with additional support levels at $1.26546 and $1.26169.
Technical indicators provide mixed signals. The RSI is at 53, indicating a balanced market sentiment, neither overbought nor oversold. The 50 EMA, positioned at $1.27529, aligns with current price action, reinforcing the bullish bias as long as prices remain above this level.
A sustained move above $1.27986 could propel GBP/USD toward the next resistance at $1.28322, signaling continued buying interest.
Traders may consider a buy-limit strategy at $1.27362, targeting $1.27979, with a stop-loss at $1.26958. This approach capitalizes on the bullish trend while managing downside risk in the event of a reversal.
However, a break below the pivot point could invalidate this outlook, opening the door for further declines toward $1.26955 or lower support levels.
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- GOLD Price Analysis – Dec 11, 2024
GOLD Price Analysis – Dec 11, 2024
Daily Price Outlook
Gold prices (XAU/USD) struggled to maintain upward momentum near $2,680 and slid to an intra-day low of $2,675, pressured by a stronger US dollar.
Traders are now awaiting the release of the US November Consumer Price Index (CPI) data, expected later in the North American session, for further market cues.
Meanwhile, geopolitical tensions, such as the ongoing Russia-Ukraine war and unrest in the Middle East, continue to bolster gold’s status as a safe-haven asset.
Furthermore, concerns about potential tariff policies under President-elect Donald Trump are adding to market uncertainty, further supporting gold’s appeal as a hedge.
Stronger US Dollar and Economic Data Pressure Gold Amid CPI and Fed Decision Uncertainty
On the US front, the broad-based US dollar has gained strength ahead of the release of November's Consumer Price Index (CPI) data, due later in the North American session.
Analysts expect inflation to rise to 2.7% year-over-year (YoY) in November, slightly up from 2.6% in October.
Core CPI, which excludes food and energy, is predicted to remain steady at a 3.3% YoY increase.
If inflation shows signs of slowing, it could reduce the chances of a Federal Reserve (Fed) rate cut, providing additional support to the US dollar.
Market participants are closely watching the Fed’s next move, with traders currently estimating an 85.8% likelihood of a 25-basis-point rate cut on December 18, according to the CME FedWatch Tool.
Adding to the dollar’s momentum, the US November Non-Farm Payrolls (NFP) report showed a strong 227,000 job gain, surpassing expectations, along with steady wage growth of 0.4% month-over-month.
These solid labor market indicators add complexity to the Fed’s decision-making as inflation data becomes a key focus.
Therefore, the stronger US dollar and robust economic data weigh on gold prices, as they reduce gold's appeal as a safe-haven asset.
However, uncertainty surrounding the upcoming CPI data and Fed decisions could keep gold supported amid market volatility.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) trades at $2,695.49, up 0.05%, holding its position within a steady upward trend on the 4-hour chart. The immediate pivot point at $2,676.07 underscores a critical threshold for maintaining bullish momentum.
Resistance levels are marked at $2,704.36 and $2,719.93, with a break above these thresholds paving the way for continued gains.
On the downside, immediate support lies at $2,656.82, followed by deeper support zones at $2,643.45 and $2,627.40, which could be tested if selling pressure intensifies.
The RSI at 66 indicates mildly overbought conditions, suggesting the potential for short-term consolidation before a renewed move higher. The 50 EMA at $2,656.89 reinforces the bullish outlook, acting as a strong support level.
From a strategic perspective, traders may consider entering long positions above $2,680, with a target of $2,703 and a stop-loss at $2,669. This setup balances risk and reward, capitalizing on sustained buying momentum within the channel.
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- EUR/USD Price Analysis – Dec 11, 2024
EUR/USD Price Analysis – Dec 11, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair continued to struggle, unable to break its bearish bias and remained under pressure near the 1.0495 level, dipping to an intra-day low of 1.0487.
This downward trend can be largely attributed to a combination of factors including the growing expectation that the European Central Bank (ECB) will lower its Deposit Facility rate by 25 basis points to 3% in its policy meeting on Thursday.
This move is seen as a response to economic challenges in the Eurozone, making the Euro less attractive to investors.
On the other hand, the US Dollar is gaining strength, supported by strong anticipation of the US Consumer Price Index (CPI) data for November, set to be released later in the day.
This has contributed to the US Dollar's ongoing rally, marking its fourth consecutive day of gains. The US Dollar Index (DXY), which measures the Greenback’s performance against a basket of other major currencies, rose above the 106.50 mark, adding further pressure on EUR/USD.
EUR/USD Weakened by ECB Rate Cut Expectations and Economic Concerns
On the EUR front, the major currency pair is weakening due to growing expectations that the European Central Bank (ECB) will cut its Deposit Facility rate by 25 basis points to 3% in its upcoming meeting on Thursday.
This would be the third consecutive rate cut and the fourth this year. Traders are anticipating this move as the ECB believes inflation is under control, but economic activity in the Eurozone is struggling.
Many ECB officials are also concerned that inflation might fall short of their target, partly due to possible tariffs from US President-elect Donald Trump and weak domestic demand.
As the market expects a rate cut, investors will pay close attention to ECB President Christine Lagarde’s comments after the decision.
Her words may provide hints about future interest rates. With political issues in Germany and France, along with concerns over Trump’s tariffs affecting European exports, Lagarde may take a more cautious approach. This uncertainty around the ECB’s actions is putting more pressure on the EUR/USD pair.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05270, holding steady despite subdued momentum on the 4-hour chart. The pivot point at $1.05392 serves as a key level for determining near-term direction.
Immediate resistance is positioned at $1.05685, with further barriers at $1.05973 and $1.06321. On the downside, immediate support lies at $1.04978, with subsequent levels at $1.04602 and $1.04270.
Technical indicators highlight a cautious sentiment. The RSI is at 42, signaling weak momentum, while the 50 EMA at $1.05537 suggests a bearish bias as prices remain below this key moving average.
A break below $1.05384 could intensify selling pressure, exposing the pair to potential declines toward $1.04978. Conversely, a recovery above $1.05685 would shift sentiment, opening the path to test $1.05973.
For traders, the recommended strategy is to enter short positions below $1.05384, targeting $1.04978, with a stop-loss set at $1.05697. This setup aligns with the prevailing bearish trend while managing downside risk effectively.
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USD/CAD Price Analysis – Dec 10, 2024
Daily Price Outlook
During the European trading session on Tuesday, the USD/CAD currency pair continued its upward momentum, reaching a fresh four-year high of 1.4200.
However, the reason for its upward trend could be linked to the bullish US Dollar, which saw gains ahead of the release of the highly anticipated US Consumer Price Index (CPI) data for November, scheduled for Wednesday.
At the same time, the Canadian Dollar (CAD) faced ongoing pressure, further weakened by investor expectations that the Bank of Canada (BoC) could announce another interest rate cut.
Many are forecasting a 50-basis-point reduction, potentially lowering the rate to 3.25% in the upcoming monetary policy meeting on Wednesday. This outlook for the BoC has kept sentiment around the CAD cautious, as traders brace for the possibility of a more dovish stance from the central bank.
US Dollar Strengthens Ahead of CPI Data, Impacting USD/CAD Outlook
On the US front, the broad-based US Dollar strengthened ahead of the release of the US Consumer Price Index (CPI) data for November, which will be published on Wednesday.
The US Dollar Index (DXY), which tracks the Greenback against six major currencies, hit a two-day high of 106.35. The upcoming inflation data is expected to play a big role in shaping market expectations for the Federal Reserve’s (Fed) interest rate decisions.
Investors are anticipating that the Fed will cut its key borrowing rates by 25 basis points, bringing them to a range of 4.25%-4.50% at its next policy meeting on December 18, according to the CME FedWatch tool.
Economists predict that the annual headline inflation will rise to 2.7% from 2.6% in October, while the core CPI, which excludes food and energy prices, is expected to increase by 3.3%. On a month-to-month basis, headline and core CPI are projected to rise by 0.2% and 0.3%, respectively.
If the inflation data shows signs of slowing down, it could lead to more bets on a dovish Federal Reserve, meaning more rate cuts. On the other hand, if inflation remains high, it could reduce these expectations, keeping the Fed’s rate cut plans in question.
Therefore, the inflation data will likely impact the USD/CAD pair, with signs of slowing inflation boosting expectations for a Fed rate cut, strengthening the USD. Conversely, higher inflation could weaken these expectations, potentially limiting the USD’s strength against the CAD.
Weak Outlook for the Canadian Dollar as Investors Anticipate BoC Rate Cut
On the other hand, the outlook for the Canadian Dollar (CAD) remains weak as investors expect the Bank of Canada (BoC) to cut interest rates by 50 basis points to 3.25% in its upcoming meeting on Wednesday.
This expectation is driven by the current economic conditions in Canada, where the BoC is focusing on maintaining a balanced economy.
The Canadian labor market has shown a significantly lower unemployment rate, and inflation pressures are staying within the BoC's target of 2%. These factors have led to expectations that the BoC might adopt a more dovish stance, potentially lowering interest rates to support growth.
If the BoC follows through with a rate cut, it could further weaken the CAD, making the currency less attractive to investors compared to the US Dollar.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.4174, down 0.01%, as price action consolidates just below its pivot point at $1.41888.
The pair is exhibiting a cautious bearish tone, reflecting mixed sentiment as traders assess near-term catalysts, including broader dollar strength and oil price fluctuations, which directly influence the Canadian dollar.
The RSI at 64 signals strong momentum but suggests the pair is approaching overbought territory, potentially capping further upside.
Immediate resistance is observed at $1.42266, with additional levels at $1.42657, highlighting significant barriers for bullish advances.
On the downside, immediate support lies at $1.41456, with further safety nets at $1.41004 and $1.40660. A decisive break below the $1.41456 level could signal a continuation of bearish momentum, targeting deeper retracements.
Technical indicators support a cautious outlook. The 50-day EMA at $1.40959 aligns closely with support levels, providing a key reference for potential pullbacks.
If the pair sustains trading below the pivot, bearish pressure could intensify, targeting the $1.41409 region. Conversely, a break above $1.41888 could shift sentiment to the upside, opening the door to retest $1.42266 and higher levels.
Traders are advised to monitor the $1.41841 level for entry opportunities. Selling below this threshold with a target of $1.41409 and a stop-loss at $1.42178 aligns with the current technical landscape, offering a favorable risk-reward setup.
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- GOLD Price Analysis – Dec 10, 2024
GOLD Price Analysis – Dec 10, 2024
Daily Price Outlook
Gold prices (XAU/USD) lost some of their intraday gains but remained supported around the $2,663 level, having reached a high of $2,673 earlier.
The recent upward movement can largely be attributed to growing concerns in the global landscape, especially amid the ongoing Russia-Ukraine war and political instability in South Korea and France. These uncertainties have pushed investors toward safe-haven assets like gold.
Meanwhile, the US Dollar has gained some strength, bouncing back from a nearly one-month low after the positive Non-Farm Payroll (NFP) data.
There’s also speculation that the Federal Reserve will take a cautious approach to interest rate cuts, which has somewhat pressured gold’s rise.
On the other hand, China’s central bank resumed gold purchases after a seven-month pause, adding further support.
Additionally, the expectation that the Fed will lower interest rates later this month is keeping US Treasury yields suppressed, helping to limit any significant downside for gold.
China's Economic Confidence and Gold Buying Boost Market Stability
On the China front, the central bank's decision to resume gold buying for the first time in seven months is expected to provide strong support to gold prices, which are seen as a safe-haven asset.
This move, along with positive economic signals from China, has boosted investor confidence. Chinese President Xi Jinping stated on Tuesday that China is fully confident in meeting its economic targets for the year.
He also reassured the world that China will continue to be the biggest driver of global economic growth. His comments aimed to calm concerns about China’s economic slowdown, emphasizing that the country’s role in the global economy remains vital.
In addition, China’s trade balance showed a positive trend, expanding to CNY 692.8 billion in November, up from the previous month’s CNY 679.1 billion.
Exports grew by 1.5% year-over-year in November, although this was slower than October’s 11.2% increase. Imports also rose by 1.2% YoY, recovering from a 3.7% drop earlier.
Xi Jinping further stressed that there would be no winners in tariff, trade, or tech wars, highlighting China’s stance on avoiding conflict in these areas and seeking peaceful economic growth.
These developments have helped maintain stability in the market, supporting both the Chinese economy and gold prices.
USD Gains Momentum Ahead of CPI Data and Fed Rate Cut Speculations
On the US front, the US Dollar (USD) is on a three-day winning streak as traders remain cautious ahead of the US Consumer Price Index (CPI) data release on Wednesday.
The market is closely watching the data, as it could influence the Federal Reserve’s next move on interest rates. Currently, traders are betting on an 85.8% chance that the Fed will lower rates by 25 basis points on December 18, based on the CME FedWatch Tool.
The recent US jobs report for November showed strong growth, with 227,000 new jobs added, far surpassing expectations. Additionally, Average Hourly Earnings grew by 0.4% month-over-month, showing steady wage growth.
These positive employment figures have added to the anticipation of a rate cut by the Fed, but traders are waiting for the CPI data to get more clarity on future monetary policy.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,668.80, up 0.31%, maintaining a bullish stance above its pivot point at $2,658.36. The 4-hour chart reflects strong upward momentum, supported by the 50-day EMA at $2,647.36, which serves as a robust near-term support level.
The Relative Strength Index (RSI) at 65 indicates sustained buying interest but warns of approaching overbought territory, suggesting possible consolidation ahead.
Immediate resistance is observed at $2,676.72, with further hurdles at $2,688.97 and $2,704.36. These levels present critical milestones for continued bullish momentum.
On the downside, immediate support is situated at $2,646.20, with deeper safety nets at $2,635.36 and $2,617.67. A break below these levels could trigger increased selling pressure, potentially challenging the broader bullish outlook.
The price action reflects a well-defined upward trajectory, driven by geopolitical uncertainty and renewed interest in gold as a safe-haven asset.
A sustained break above $2,676.72 would solidify the bullish narrative, targeting $2,688.97 as the next key level. Conversely, a failure to hold $2,658.36 could signal a bearish retracement, testing immediate support zones.
Gold traders should closely monitor resistance at $2,688.97 and RSI levels to anticipate potential reversals. A cautious approach is advised, with strategic entries above $2,658 and stops placed at $2,646 to manage risk effectively.
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- AUD/USD Price Analysis – Dec 10, 2024
AUD/USD Price Analysis – Dec 10, 2024
Daily Price Outlook
During the European trading session, the AUD/USD pair continued to struggle, staying under pressure near 0.6394. This drop came after the Reserve Bank of Australia (RBA) decided to keep the Official Cash Rate (OCR) at 4.35% during its final policy meeting of the year.
RBA Governor Michele Bullock, addressing the media, explained why the central bank held the rate steady at its 12-year high for the ninth straight meeting in December.
On the other side, the US Dollar remained strong, marking its third day of gains. This was driven by cautious market sentiment ahead of the US Consumer Price Index (CPI) data release on Wednesday.
According to the CME FedWatch Tool, traders are betting on an 85.8% chance of the Federal Reserve reducing rates by 25 basis points in its December 18 meeting.
On the bright side for the Aussie Dollar, China’s improved economic sentiment provided some relief. Chinese leaders announced plans for proactive fiscal measures and looser monetary policies in 2024 to boost domestic consumption, offering a glimmer of hope for Australia’s trade-reliant economy.
RBA's Steady OCR and China's Economic Stimulus Create Mixed Outlook for AUD/USD
As we mentioned, the Reserve Bank of Australia (RBA) decided to keep its Official Cash Rate (OCR) at 4.35% during its final meeting of the year.
This marks the ninth consecutive meeting at this 12-year high, as Governor Michele Bullock emphasized the need to stay vigilant about inflation risks despite some improvement.
Australia’s economy faces challenges, with GDP growth slowing to 0.3% in the September quarter, missing expectations.
Meanwhile, unemployment remained steady at 4.1% in October, with a modest addition of 15,900 jobs. Inflation eased slightly to 3.5% in the third quarter but remains above the RBA’s 2%-3% target, fueling debates over potential rate cuts next April.
China’s economic developments also influenced the Australian Dollar (AUD). Chinese President Xi Jinping expressed confidence in achieving economic targets, reinforcing China’s role as a global growth driver.
Although China’s trade balance improved to CNY 692.8 billion in November, exports and imports grew at slower rates compared to October.
In the meantime, the weak inflation data (-0.6% in November) highlights challenges but has led to expectations of further stimulus.
Chinese leaders plan to boost domestic consumption in 2024 through fiscal and monetary policies, which has supported AUD sentiment, given Australia’s strong trade ties with China.
Therefore, the RBA's decision to maintain the OCR at 4.35% and China's economic stimulus plans have mixed effects on the AUD/USD pair.
While China's stimulus expectations support the AUD, Australia's economic slowdown and inflation risks keep the pair under pressure, limiting gains.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.63942, down 0.70% in the latest session, pressured by a stronger U.S. Dollar and risk-off sentiment in global markets. The price remains below its pivot point of $0.64289, signaling continued bearish momentum.
The 50-day EMA at $0.64259 serves as a key resistance level, aligning closely with the pivot, further restricting any upward attempts. Meanwhile, the RSI at 39 reflects bearish momentum, but it has yet to reach oversold conditions, leaving room for further declines.
Immediate support is located at $0.63729, with stronger levels at $0.63435 and $0.63174 providing additional safety nets.
On the upside, immediate resistance lies at $0.64719, followed by higher hurdles at $0.65030, presenting challenges for any recovery attempts. The bearish sentiment is further reinforced by the descending trendline, which caps upward moves.
The current setup indicates a high probability of further downside pressure unless the price can reclaim the $0.64289 pivot. A break below $0.63729 could open the door to sharper declines, testing $0.63435 and beyond.
Conversely, a close above $0.64289 would challenge the bearish narrative and target $0.64719 as the next key level.
For traders, selling below $0.64040 with targets near $0.63717 remains a favorable strategy, while maintaining stops above $0.64300 to mitigate risk.
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GBP/USD Price Analysis – Dec 09, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair continued its upward movement, gaining momentum around the 1.2778 level and reaching an intraday high of 1.2784.
This bullish trend can largely be attributed to a weakening US dollar, which lost strength as investors grew more confident that the Federal Reserve would likely cut interest rates during its December 18 meeting.
At the same time, the GBP/USD pair benefited from expectations that the Bank of England will adopt a slower pace of policy easing due to ongoing concerns about persistent inflation pressures.
Looking ahead, all eyes are on the upcoming US Consumer Price Index (CPI) data for November, set to be released on Wednesday. Analysts expect headline CPI inflation to edge up to 2.7% from the previous 2.6%.
In the meantime, the core CPI, which excludes volatile food and energy prices, is forecast to remain steady at 3.3%. Investors are hoping these numbers will provide more insight into the current inflation situation.
US Dollar Weakened by Growing Fed Rate Cut Expectations, Boosting GBP/USD
On the US front, the broad-based US dollar has been under pressure as market participants grow increasingly confident that the Federal Reserve (Fed) will cut interest rates in its meeting on December 18.
There’s an 83% chance that the Fed will lower its key borrowing rate by 25 basis points to 4.25%-4.50% next week, according to the CME FedWatch tool. This is up from 62% a week ago, signaling rising expectations for a rate cut.
However, the speculation about the Fed’s rate cut strengthened after the release of the US Nonfarm Payrolls (NFP) data for November. The report showed the economy added 227,000 jobs, beating the 200,000 forecast.
However, the unemployment rate also rose slightly to 4.2%, as expected. Additionally, average hourly earnings grew by 0.4% month-over-month and 4% year-over-year, both higher than estimates, suggesting continued inflation pressures.
Despite this strong data, Federal Reserve Governor Michelle Bowman indicated on Friday that she would prefer a cautious and gradual approach to cutting rates, as inflation remains high.
This comment contrasts with the growing market expectation for rate cuts and highlights the ongoing debate within the Fed about the best approach to tackle inflation while supporting the economy.
Therefore, the growing expectation of a Fed rate cut has supported the GBP/USD pair, as the US dollar weakens. Investors anticipate that the Fed's actions could make the dollar less attractive, boosting the British pound's value against the Greenback.
GBP Strengthened by BoE’s Gradual Policy Easing, but Weakened by Declining UK Labor Demand
On the GBP front, the British pound is generally strong against its major counterparts, except for some Asia-Pacific currencies, as the Bank of England (BoE) is expected to take a more gradual approach to easing its monetary policy. This is due to concerns that inflationary pressures remain persistent.
BoE's Monetary Policy Committee (MPC) member Megan Greene mentioned that the bank could reach its inflation target by the end of its three-year forecast period.
BoE Governor Andrew Bailey also stated that while there’s still work to do to bring inflation down to the 2% target, the disinflation process is progressing well.
Investors are keeping a close eye on the BoE's next steps, especially with the upcoming speech by Deputy Governor Dave Ramsden, scheduled for 13:00 GMT on Monday.
Ramsden has been one of the BoE policymakers who has leaned towards reducing interest rates, which could influence market sentiment on the pound. His comments may provide more clarity on the BoE's stance regarding future rate cuts or increases.
On the economic front, a recent survey by the Recruitment and Employment Confederation (REC) and KPMG showed a decline in demand for workers in the UK.
This came after the government raised Employer’s National Insurance Contributions (NIC) to 15%. The survey revealed that demand for staff fell to its lowest level since August 2020, highlighting ongoing concerns in the labor market.
Thus, the British pound remains strong against the US dollar, supported by the Bank of England's cautious approach to monetary policy easing. However, the decline in UK labor demand could weigh on the pound, limiting further upside against the US dollar.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.27340, down 0.03%, as the pair remains range-bound near the pivot point of $1.27551. The 50-day EMA at $1.27437 reflects slight bearish pressure as the price hovers just below this level, signaling caution among traders.
Immediate resistance is noted at $1.27957, with subsequent levels at $1.28367, suggesting that a recovery above the pivot could open the door for further gains.
On the downside, immediate support lies at $1.27171, with additional safety levels at $1.26875 and $1.26595. A break below $1.27171 could indicate further selling pressure, potentially driving the pair toward the $1.26298 zone.
The RSI at 45 signals neutral momentum, leaning slightly bearish but not yet oversold, leaving room for either direction depending on market catalysts.
A sustained break above $1.27551 would reinforce bullish momentum, targeting $1.27957 as the first resistance. Conversely, failure to hold $1.27171 could shift the focus to the next support levels.
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GOLD Price Analysis – Dec 09, 2024
Daily Price Outlook
Gold price (XAU/USD) extended its early-day bullish rally and drew further bids around the $2,642 level, hitting an intra-day high of $2,650.
The rally is mainly linked to expectations surrounding the Federal Reserve’s monetary policy, as Friday’s US Nonfarm Payrolls (NFP) report strengthened hopes for a rate cut in December, keeping US Treasury bond yields in check and boosting gold’s appeal.
Furthermore, the ongoing geopolitical tensions and political instability in South Korea, along with concerns about a trade war, have strengthened gold's appeal as a safe-haven asset.
In contrast to this, the hopes surrounding Trump's expansionary policies could lead to inflation, prompting the Fed to adopt a less dovish stance. This may limit gold's gains, as rising rates reduce its appeal as a non-yielding asset.
Gold Gains Support from Weakened US Dollar and Global Economic Uncertainty
On the US front, there are no Federal Reserve (Fed) speakers this week due to the media blackout, so all attention is on the US economic data.
On the data front, US Nonfarm Payrolls (NFP) data, released last Friday, showed a strong increase of 227,000 jobs in November, far above the revised 36,000 in October and exceeding expectations of 200,000. However, the Unemployment Rate rose slightly to 4.2% from 4.1% in October.
Despite the stronger job growth, financial markets are now pricing in a 70% chance of a 25 basis point rate cut by the Federal Reserve at its December 17-18 meeting, following a series of comments from Fed officials who noted that while the labor market is cooling, it remains healthy.
However, the US dollar dropped after the NFP data, reflecting concerns over a possible rate cut. This reaction indicates that investors are betting on the Fed lowering rates soon, which would likely impact the value of the Greenback.
Therefore, the recent labor market data showed strong growth but also pointed to a slight increase in unemployment, signaling some softening in the economy. As a result, the outlook for the US Dollar will depend on upcoming economic data and the Fed’s policy stance on interest rates.
On the other hand, China’s National Bureau of Statistics (NBS) released inflation data for November. The country’s Consumer Price Index (CPI) rose year-on-year but saw the smallest increase in five months, mainly due to lower travel demand and warmer weather.
Meanwhile, China’s Producer Price Index (PPI) showed signs of improvement, reversing its decline from the previous month and narrowing its year-on-year drop. Core CPI, excluding food and energy, continued to rise, indicating steady underlying inflation pressures.
Hence, the mixed US labor market data and Fed rate cut expectations weakened the US Dollar, supporting gold as a safe-haven asset. Meanwhile, China's improving PPI and steady core inflation suggest economic stability, further boosting gold's appeal amid global uncertainties.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,644.26, up 0.42%, maintaining its bullish momentum above the pivot point of $2,635.82. The 50-day EMA at $2,642.45 aligns closely with the price, reinforcing a short-term bullish bias.
Immediate resistance is observed at $2,666.85, followed by $2,688.97 and $2,707.52, indicating potential upside if momentum sustains.
On the downside, immediate support is situated at $2,617.61, with additional safety nets at $2,595.99 and $2,575.78.
The RSI at 53 signals neutral momentum, providing room for further gains without entering overbought territory.
A break below $2,635.82 could challenge the bullish structure, but maintaining above this level keeps the focus on upward targets.
Traders should monitor the $2,666.85 resistance closely, as a breach could accelerate gains toward $2,688.97. Conversely, a move below $2,617.61 could attract selling pressure, targeting lower supports.
Current market sentiment suggests a cautious yet optimistic outlook, driven by technical stability and broader macroeconomic factors.
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