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
GOLD Price Analysis – Dec 06, 2024
Daily Price Outlook
Gold price (XAU/USD) maintained its upward rally and drew some further bid around the $2,639 level, hitting an intra-day high of $2,645. The reason for this upward trend can be attributed to anticipation surrounding the upcoming US Nonfarm Payrolls (NFP) data for November, which is set to be released at 13:30 GMT.
Traders are keenly awaiting this key data to gauge the direction of US interest rates, as it could provide further insights into the Federal Reserve's actions at its policy meeting on December 18.
At the same time, geopolitical tensions are helping gold price, with the situation in the Middle East escalating. The ceasefire between Israel and Hezbollah appears weak, as both sides accuse each other of breaching the truce. This uncertainty continues to support gold’s safe-haven appeal, adding volatility to the precious metal’s price.
US Economic Data and Fed Rate Cut Expectations Boost Gold's Appeal
On the US front, the broad-based US dollar, as measured by the US Dollar Index (DXY), has been holding strong at the key support level of 105.70. This comes ahead of the highly anticipated US Nonfarm Payrolls (NFP) data, due for release at 13:30 GMT.
Investors are closely watching this data to gain insights into the future direction of US interest rates, particularly with the Federal Reserve’s (Fed) policy meeting scheduled for December 18.
There is a 72% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool. Lower interest rates are generally positive for gold, as they reduce the opportunity cost of holding the precious metal.
Economists expect the US economy to have added 200,000 jobs in November, a sharp rise from the 12,000 added in October, which was affected by hurricanes. The unemployment rate is expected to tick up slightly to 4.2% from 4.1%.
Investors are also paying close attention to the Average Hourly Earnings data, which is forecasted to have increased by 3.9% year-on-year, slower than the 4% growth seen in October. This could give further clues about wage growth and inflationary pressures.
Consequently, the anticipation of a 25 basis point rate cut by the Fed could boost gold prices, as lower interest rates make holding gold more attractive by reducing the opportunity cost. Strong job growth and slower wage growth could further support gold's appeal.
Geopolitical Tensions Drive Demand for Gold as a Safe-Haven Asset
On the geopolitical front, tensions in the Middle East are escalating as the ceasefire agreement between Israel and Hezbollah begins to unravel. Both sides are accusing each other of violating the truce terms.
The Israeli military launched a series of airstrikes on Hezbollah in response to an attack, where two projectiles targeted an Israeli military post near Lebanon. This renewed conflict is adding to the region’s instability, with the potential to cause further volatility.
At the same time, the ongoing war between Russia and Ukraine continues to heighten global uncertainty.
Russian Foreign Minister Sergey Lavrov recently warned that Russia would use all available means to prevent the West from achieving its goal of a “strategic defeat” of the country.
This statement adds to the already tense situation, as the war shows no signs of de-escalating, keeping investors on edge.
These heightened geopolitical risks contribute to a growing sense of uncertainty around the world, which boosts the appeal of safe-haven assets like gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,638.45, down 0.24% in the session, reflecting cautious sentiment as the price hovers below the critical pivot point at $2,644.33.
Technical indicators point to a neutral bias, with the Relative Strength Index (RSI) at 50, suggesting equilibrium between buyers and sellers.
Immediate resistance is seen at $2,666.85, followed by $2,688.97 and $2,707.52, which represent significant hurdles for bullish momentum.
On the downside, support levels are positioned at $2,617.61, $2,595.99, and $2,575.78, marking areas to watch for potential bearish pressure. The 50-day EMA at $2,641.72 reinforces short-term resistance near the pivot, indicating a key zone for directional shifts.
Traders should monitor the $2,644.33 pivot closely. A sustained move above this level could target resistance at $2,666.85, validating a bullish breakout. Conversely, a break below $2,617.61 may trigger further declines, with $2,595.99 as the next support level.
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EUR/USD Price Analysis – Dec 06, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to break its downward trend, remaining under pressure around the 1.0579 level and hitting an intra-day low of 1.0566.
The recent weakness in the pair can largely be attributed to ongoing political turmoil in France, which has kept investors on edge. Additionally, cautious sentiment ahead of the upcoming US Nonfarm Payrolls (NFP) report is offering some support to the US Dollar.
The Greenback saw some selling pressure on Thursday, as a positive risk sentiment and a larger-than-expected rise in weekly Jobless Claims weighed on the USD.
This came after a string of disappointing US data, including weaker-than-expected performance in the services sector and disappointing ADP employment figures, further adding to the selling pressure on the Dollar.
As a result, the EUR/USD pair remains in a tight range, waiting for fresh catalysts to drive its next move.
Impact of US Labor Market Data and Fed's Rate Cut Speculation on EUR/USD Pair
On the US front, the broad-based US Dollar has been under some pressure as markets await the November Nonfarm Payrolls (NFP) report, with expectations for a solid increase of 200,000 jobs.
This comes after a much lower reading of 12,000 jobs in October, which was heavily impacted by hurricanes and strikes. Despite this positive outlook, some concerns remain about the strength of the labor market due to other recent data.
On the data front, the US Unemployment Rate is expected to rise slightly to 4.2% in November, up from 4.1% in October. This increase is likely to keep hopes alive for a 25 basis point interest rate cut by the Federal Reserve (Fed) in December.
In addition, data released on Thursday showed a rise in weekly Jobless Claims, which increased to 224,000 from the previous week's 215,000. This, along with a disappointing ADP employment report on Wednesday, has led to some doubts about the strength of the upcoming NFP data.
Federal Reserve Chairman Jerome Powell, however, remains cautious about cutting rates too quickly. He mentioned earlier this week that the US economy is stronger than the Fed had anticipated when it started easing rates.
Powell emphasized that any interest rate cuts will be gradual, signaling a more measured approach as the central bank assesses the economic outlook.
Therefore, the uncertainty around the US labor market and potential Fed rate cuts could weigh on the US Dollar, potentially supporting the EUR/USD pair. A weaker Dollar could boost the Euro, especially if the Nonfarm Payrolls report underperforms expectations.
Political Instability in France Weighs on Euro Recovery Prospects
On the other hand, French President Emmanuel Macron is facing growing challenges as his leadership is increasingly questioned. He is struggling to find a prime minister amid a deeply divided parliament, with far-right candidate Marine Le Pen gaining more support.
This political instability adds uncertainty to the country’s future direction. While markets have become less worried about France’s debt risk, the ongoing political tension creates a difficult environment for the Euro to recover significantly.
As a result, the overall outlook for the Euro remains cautious, and any substantial recovery seems unlikely in the near term.
EUR/USD – Technical Analysis
EUR/USD is trading at 1.05769, down 0.08%, showing mild bearish momentum as it approaches the key pivot point at 1.06053. Despite the slight decline, the pair remains supported by broader market sentiment favoring a weaker dollar amid cautious optimism surrounding global economic conditions.
On the upside, immediate resistance is seen at 1.06545, followed by 1.06927 and 1.07292, marking key levels to confirm further bullish momentum.
Conversely, support is positioned at 1.05221, with additional cushions at 1.04738 and 1.04254, where traders may look for stabilization if selling pressure intensifies.
The 50-day EMA at 1.05306 provides robust near-term support, reinforcing the broader outlook. A decisive break below 1.06053 could trigger selling pressure, targeting support at 1.05221 and lower.
However, regaining ground above the pivot point may signal a recovery, with a breakout above 1.06545 opening the path to higher resistance zones.
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S&P500 (SPX) Price Analysis – Dec 06, 2024
Daily Price Outlook
The S&P 500 index has been under pressure, currently trading around 6,075, after hitting an intra-day low of 6,072. This bearish performance is largely driven by a mix of economic uncertainty and investor caution.
However, the Federal Reserve's ongoing stance on interest rates and the overall outlook for the economy are contributing to this downward movement. The index has faced increased selling pressure, with many investors concerned about inflationary pressures, the potential for further rate hikes, and the overall health of the US economy.
Anticipated Fed Rate Cut and Strong Job Growth Could Provide a Boost to the S&P 500
Looking ahead, traders are anticipating that the Federal Reserve will cut interest rates by 25 basis points in its December meeting, with a 72% chance of this outcome according to the CME FedWatch tool.
The expectation of a rate cut is largely due to concerns over slowing economic growth and the Fed’s desire to preserve labor demand.
If the Fed does indeed reduce interest rates, it could provide a much-needed boost to the S&P 500 index, which has been struggling with bearish sentiment.
Lower rates are generally seen as favorable for stocks, as they reduce borrowing costs and increase liquidity in the market. This would make equities like those in the S&P 500 more attractive, potentially reversing some of the recent downward trend.
On the data front, economists expect the US economy to have added 200,000 new jobs, a significant increase from just 12,000 in October. The previous month’s jobs report was affected by hurricanes. The unemployment rate is also predicted to rise slightly to 4.2% from 4.1%.
If the Fed cuts interest rates by 25 basis points, it could boost the S&P 500 by making stocks more attractive due to lower borrowing costs and increased liquidity. Additionally, strong job growth may improve investor confidence, supporting the index.
Geopolitical Tensions and Their Impact on the S&P 500
In addition to economic factors, geopolitical tensions are also influencing the performance of the S&P 500 as the renewed conflicts in the Middle East, particularly between Israel and Hezbollah, have added to global uncertainty. These tensions, along with the ongoing war between Russia and Ukraine, are creating a risk-averse environment for investors.
Therefore, the fear of escalation in these conflicts can make markets more volatile, and the S&P 500 is no exception, as it faces downward pressure from the growing risk sentiment.
S&P 500 – Technical Analysis
The S&P 500 (SPX) is trading at $6,075.10, down 0.19%, as the index continues to face resistance near its pivot point of $6,093.28. Despite maintaining an overall bullish trajectory, the session reflects cautious sentiment amid broader market consolidation.
The RSI at 69 indicates the index is approaching overbought territory, suggesting potential for a short-term pullback.
Immediate resistance is observed at $6,122.27, with subsequent levels at $6,153.89 and $6,186.17. These levels represent critical barriers for further upside momentum.
On the downside, immediate support lies at $6,053.76, followed by $6,024.77 and $5,989.86, offering key areas for potential stabilization in case of a pullback.
The 50-day EMA at $5,937.87 underpins the broader bullish sentiment, indicating strong underlying support for the index.
However, a decisive move below the pivot point at $6,093.28 could trigger selling pressure, targeting support at $6,053.76 or lower. Conversely, a break above $6,122.27 may validate further gains toward the next resistance level of $6,153.89.
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USD/JPY Price Analysis – Dec 05, 2024
Daily Price Outlook
During the European session, the USD/JPY currency pair has been experiencing a bearish trend, with the Japanese Yen (JPY) building on its intraday gains amid the growing expectations that the Bank of Japan (BoJ) may deliver an interest rate hike in December.
Moreover, the ongoing geopolitical tensions, especially in Ukraine, and concerns about the US President-elect Donald Trump's potential tariff plans have driven some safe-haven flows towards the Yen.
US Dollar and its Impact on the USD/JPY Pair
On the US front, the recent dip in US Treasury yields has put some pressure on the USD, although the downside has been relatively contained. The 10-year US Treasury bond yield recently fell to its lowest level since October 21, which has made the USD less attractive to investors.
However, despite this downward pressure, Federal Reserve officials remain optimistic about the economy. Fed Chair Jerome Powell noted that the central bank may adopt a more cautious approach to further rate cuts.
Additionally, other Federal Reserve members, including St. Louis Fed President Alberto Musalem and San Francisco Fed President Mary Daly, emphasized that more work is needed to bring inflation down to the 2% target.
These comments suggest that the Fed might not rush into rate cuts, which could provide some support for the USD.
These comments are fueling speculation that the Federal Reserve could pause its rate cuts at the upcoming meetings, potentially supporting the USD in the medium term.
The latest economic data, including the ISM Services PMI's weaker-than-expected performance, adds to the complexity of the situation.
As a result, traders will continue to monitor the upcoming Nonfarm Payrolls report for more insights into the US economy, which could sway the USD and, in turn, the USD/JPY pair's direction.
Japanese Yen Attracts Fresh Buyers Amid BoJ Rate Hike Speculation
The Japanese Yen has recently seen increased demand due to wavering expectations surrounding a potential rate hike by the Bank of Japan (BoJ) in December. Last week, BoJ Governor Kazuo Ueda's hawkish comments fueled speculation that the central bank could act sooner than expected, supporting the Yen.
However, BoJ board member Toyoaki Nakamura's recent dovish remarks, stating concerns about the sustainability of wage growth and inflation, have dampened the likelihood of an immediate rate hike.
Despite this, the strong Tokyo Consumer Price Index for November continues to raise the chances of further tightening in Japan's monetary policy, especially with inflation not yet at the targeted 2% level.
Furthermore, investors are increasingly concerned that US President-elect Trump's tariff plans could escalate global trade conflicts, which would further drive uncertainty and bolster demand for the Yen as a defensive asset.
These factors combined have led to fresh buying interest in the Yen, pushing the USD/JPY pair lower as the outlook for the BoJ’s policy remains in flux.
This uncertainty, along with the market's focus on Japan's economic recovery, is likely to keep the USD/JPY pair volatile in the short term. (edited)
USD/JPY – Technical Analysis
USD/JPY is trading at 149.81, down 0.48% during the session, reflecting bearish sentiment as the pair hovers below its pivot point at 150.76. Immediate resistance is located at 152.00, with additional barriers at 153.36 and 154.73.
On the downside, support is at 148.83, followed by key levels at 147.72 and 146.67, marking critical zones for potential bearish extensions.
Technical indicators suggest bearish momentum in the near term. The RSI stands at 42, highlighting a lack of upward momentum and a tilt toward oversold conditions.
The 50-day EMA, positioned at 150.02, aligns with the pivot point, acting as a dynamic resistance level. Failure to reclaim the pivot point could reinforce downward pressure, increasing the likelihood of a retest of lower support levels at 148.83.
The broader trend appears influenced by Federal Reserve policy expectations and yen-specific fundamentals, including intervention risks.
A break below 150.427 supports a bearish outlook, targeting 148.806, with a stop-loss set at 151.429 for risk management. Conversely, a sustained recovery above 152.00 may signal a reversal, though current market conditions suggest limited upside potential.
Traders should monitor macroeconomic developments and market sentiment closely as the pair consolidates near critical levels. The immediate bias remains bearish, with short positions recommended below 150.427.
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- GOLD Price Analysis – Dec 05, 2024
GOLD Price Analysis – Dec 05, 2024
Daily Price Outlook
Gold prices (XAU/USD) are struggling to find a clear direction due to mixed factors. However, the geopolitical risks from the Russia-Ukraine conflict, trade wars, and political instability in France and South Korea are supporting gold as a safe-haven asset.
Apart from this, the weaker US dollar also helps, but expectations for the Federal Reserve to take a less dovish stance are keeping gold from rising too much.
Although, the comments from Fed officials suggest they won’t rush to cut rates, which is limiting gold’s gains. Traders are waiting for the US Nonfarm Payrolls (NFP) report on Friday for more direction.
Mixed US Economic Signals and Global Risks Weigh on Gold Prices
On the US front, the broad-based US sollar has struggled to gain traction despite some positive signals from the Federal Reserve. The Beige Book revealed that US economic activity grew slightly in most regions, with inflation rising modestly.
Fed Chair Jerome Powell highlighted the economy’s strength, which exceeded expectations, suggesting the Fed could slow its pace of rate cuts.
Similarly, San Francisco Fed President Mary Daly noted no urgency for rate reductions, emphasizing the need to focus on achieving the 2% inflation target and steady growth. Markets are now pricing in a 77.5% chance of a December rate cut but remain cautious.
Meanwhile, US bond yields rebounded slightly after recent lows, putting some pressure on non-yielding assets like Gold. Speculation about President-elect Donald Trump’s policies potentially driving inflation adds to expectations that the Fed may pause or even reverse its rate cuts.
However, weaker-than-expected US economic data, such as the ISM Services PMI and S&P Global Composite PMI, reflects some slowing momentum, keeping the market outlook uncertain.
Traders are now closely watching upcoming economic reports for more direction. Thursday’s US Weekly Initial Jobless Claims could provide short-term momentum, but the spotlight remains on Friday’s Nonfarm Payrolls (NFP) report for clearer signals on the economy and Fed policy.
Therefore, the mixed US economic signals, with slower growth and uncertain Fed actions, put downward pressure on Gold due to rising bond yields. However, ongoing concerns about global trade wars and inflation risks continue to support Gold as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,645.99, down 0.17% during the session, reflecting a cautious sentiment as the price remains slightly below its pivot point at $2,639.81. This indicates a neutral to bearish outlook in the short term, with traders watching for a breakout or sustained directional move.
Immediate resistance is located at $2,666.19, with subsequent levels at $2,686.65 and $2,704.46. On the downside, support rests at $2,621.48, with additional levels at $2,604.95 and $2,586.53.
Technical indicators suggest a mixed outlook. The Relative Strength Index (RSI) at 53 indicates neutral momentum, while the 50-day EMA at $2,646.06 aligns closely with the current price, acting as a short-term resistance.
A symmetrical triangle pattern signals potential for a breakout, with a move above $2,666.19 likely triggering bullish momentum toward higher resistance levels. Conversely, failure to hold above $2,639.81 could invite selling pressure, targeting key support at $2,621.48.
Traders should monitor market sentiment and global economic data for further cues. Entry is recommended above $2,640, targeting $2,666, with a stop-loss set at $2,625 to mitigate downside risk.
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AUD/USD Price Analysis – Dec 05, 2024
Daily Price Outlook
The AUD/USD pair continues to struggle, staying under pressure near the 0.6421 mark. The main reason for its downward trend seems to be weak Australian economic data and growing expectations that the Reserve Bank of Australia (RBA) might cut interest rates soon, which has been dragging the Aussie lower.
Additionally, worries about potential tariffs on imports from President-elect Donald Trump are adding to the pressure on the AUD.
Traders are closely watching the upcoming US data, including the Initial Jobless Claims and Goods Trade Balance report on Thursday, for any new clues. If the US labor market shows signs of weakness, it could weaken the US dollar and ease the losses for the pair.
On Friday, the US Nonfarm Payrolls (NFP) report for November will be in focus, as it could give a clear direction for the market.
Mixed Economic Data and RBA Rate Cut Expectations Weigh on AUD/USD Pair
On the data front, Australia’s trade surplus rose to 5.953 billion AUD in October, up from 4.532 billion AUD in September (revised from 4.609 billion AUD). This was better than the expected 4.500 billion AUD, showing a positive trade performance.
However, Australia’s GDP growth for the third quarter (Q3) was only 0.3% compared to 0.2% in the previous quarter (Q2). This was below the market expectation of 0.4% growth, signaling weaker-than-expected economic performance.
In contrast, Australia’s Judo Bank Services PMI improved to 50.5 in November from 49.6 in October, surpassing the forecast of 49.6. While this suggests some growth in the services sector, the overall economic data has been disappointing.
This, along with rising expectations of an interest rate cut by the Reserve Bank of Australia (RBA), has been pushing the Australian dollar (AUD) lower.
On top of that, concerns over potential tariffs on imports from President-elect Donald Trump are adding to the pressure on the AUD. These factors combined make the outlook for the Aussie currency appear uncertain.
Therefore, the mixed economic data, along with expectations for an RBA rate cut and concerns over potential tariffs, have put pressure on the Australian dollar. This has contributed to the ongoing weakness of the AUD/USD pair, pushing it lower.
US Economic Data Shows Slower Growth, Fed Signals Possible Slowdown in Rate Cuts
On the US economic data front, the ISM Services PMI dropped to 52.1 in November, down from 56.0 in October. This was weaker than the expected 55.5, indicating a slowdown in the services sector.
Similarly, the S&P Global Composite PMI fell to 54.9 from 55.3, and the Services PMI decreased to 56.1 from 57.0. All of these figures were below expectations, pointing to a slowdown in economic activity.
Despite this, Fed Chair Jerome Powell stated that the US economy is performing stronger than expected, allowing the Federal Reserve to possibly slow down the pace of interest rate cuts.
He mentioned that the economy is in a better position than when the Fed started reducing rates in September. Additionally, San Francisco Fed President Mary Daly emphasized that the central bank doesn’t need to rush with rate cuts, as there is still work to be done to reach 2% inflation and sustained growth.
The CME FedWatch Tool suggests there is a 77.5% chance that the Fed will cut rates by 0.25% in December, while a 22.5% chance remains for no change.
Traders will closely watch the US Initial Jobless Claims and Goods Trade Balance reports on Thursday for any new signs of weakness. The US Nonfarm Payrolls (NFP) report on Friday will also be key for market direction.
Therefore, the weaker US economic data may limit the US dollar's strength, potentially offering some support for the Australian dollar (AUD). However, ongoing rate cut expectations from the Reserve Bank of Australia (RBA) could keep the AUD/USD pair under pressure.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.64402, up 0.16% during the session, showing mild bullish momentum while hovering near the pivot point at $0.64472.
The pair is navigating a cautious market, with immediate resistance at $0.64927, followed by higher levels at $0.65259 and $0.65575.
On the downside, support lies at $0.64154, with additional levels at $0.63763 and $0.63475, marking critical areas to watch for potential bearish moves.
Technical indicators highlight a mixed outlook. The RSI at 43 reflects a lack of strong momentum, leaning slightly toward bearish sentiment.
The 50-day EMA at $0.64712 acts as a resistance barrier, keeping upward movements in check. A failure to break above this EMA may signal continued pressure on the pair.
Price action suggests traders should watch for a potential breakdown below the pivot point of $0.64472, which could expose AUD/USD to lower support levels around $0.64154.
The pair’s performance aligns with broader market themes, including Federal Reserve policy expectations and commodity price dynamics. Entry is recommended below $0.64473 for short positions, targeting $0.63959 with a stop-loss set at $0.64775 to mitigate risk.
On the flip side, a sustained move above $0.64927 could trigger bullish momentum, though current indicators favor a neutral-to-bearish trajectory.
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EUR/USD Price Analysis – Dec 04, 2024
Daily Price Outlook
During European trading on Wednesday, the EUR/USD pair is slightly down but holding steady around 1.0511. However, the currency pair is mostly moving sideways as traders await a no-confidence vote against Prime Minister Michel Barnier, led by French far-right and left-wing parties.
This vote has raised concerns about political instability in France, which could weigh on the Euro (EUR) if the government collapses.
On the other hand, the US Dollar is also seeing a slight dip, providing the EUR/USD pair with some support. However, the outlook for the Euro is uncertain, as European Central Bank (ECB) officials hint at possible interest rate cuts. Traders expect a rate cut at the ECB’s meeting on December 12.
US Economic Data and Federal Reserve Outlook Impact Dollar Strength
On the US front, investors are closely watching the upcoming economic data, including the ADP Employment Change and the ISM Services PMI for November.
Economists predict that the US private sector added 150,000 jobs in November, a significant drop from 233,000 in October.
The Services PMI, which measures activity in the services sector, is expected to decline slightly to 55.5 from 56.0, indicating slower growth in this sector.
These data points will influence expectations for the Federal Reserve's interest rate decision on December 18.
According to the CME FedWatch tool, there's a 74% chance the Fed will cut rates by 25 basis points, bringing them to 4.25%-4.50%, and a 26% chance that rates will remain unchanged.
Investors will also be paying attention to the Fed’s Beige Book and comments from Chairman Jerome Powell for more clues on future rate actions.
Meanwhile, the US Dollar is showing a muted trend ahead of the economic releases. The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, is fluctuating around 106.30.
The outlook for the Dollar remains generally positive, especially after US President-elect Donald Trump threatened to impose 100% tariffs on BRICS countries, a move that could further strengthen the Dollar's dominance.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.05132, up 0.08%, as it consolidates above its immediate support at $1.04622. The pair remains below its pivot point of $1.05655, signaling a cautious tone amid mixed market sentiment.
Immediate resistance lies at $1.05973, with further levels at $1.06321, while on the downside, support is seen at $1.04255, followed by $1.03930.
The RSI at 49 indicates neutral momentum, suggesting that the pair lacks a clear directional bias. The 50-day EMA at $1.05290 acts as a key resistance level, aligning with the broader downward trend.
A sustained break below $1.05280 could confirm bearish momentum, targeting $1.04622 or lower. Conversely, a recovery above $1.05655 would shift the focus toward higher resistance levels.
Technical indicators suggest that traders remain cautious, with the pair trading near pivotal levels. Entry points below $1.05280 provide an opportunity for bearish plays, with a target of $1.04622 and a stop-loss at $1.05667.
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GOLD Price Analysis – Dec 04, 2024
Daily Price Outlook
Gold (XAU/USD) continues to rise on Wednesday, pushing above the 2,650 level. The main driver behind this upward movement is the growing geopolitical tension, sparked by Israel's largest airstrike campaign since its truce with Lebanon.
This came in response to two rockets fired at Israeli-occupied territory by Hezbollah, the Iran-backed group. These developments have added pressure to the market, contributing to gold's positive momentum.
Looking forward, traders will keep their eyes on Fed Chair Jerome Powell’s speech later today and the US Nonfarm Payrolls (NFP) report on Friday. These events will give clues about the Federal Reserve's next move on interest rates.
Traders are waiting for this information before deciding on their next steps. This will also help determine where gold prices are headed in the short term.
US Dollar Weakness and Geopolitical Tensions Support Gold Prices Amid Fed Uncertainty
On the US front, the broad-based US dollar has faced pressure despite positive economic data. On the data front, the US Job Openings and Labor Turnover Survey (JOLTS) report showed job openings increased to 7.74 million in October, easing fears of a slowdown in the labor market.
However, the market is still focused on whether the Federal Reserve will cut rates soon. Despite solid labor market data, the market is pricing in a 70% chance of a 25-basis point rate cut at the Fed’s upcoming meeting in December, according to the CME Group's FedWatch Tool.
Fed officials have offered mixed views on the economy. San Francisco Fed President Mary Daly stated that the US economy is in a good place, with a balanced labor market not contributing to inflation.
Chicago Fed President Austan Goolsbee added that rates remain restrictive and may need to be lowered next year if inflation approaches the target.
Fed Governor Adrianna Kugler also noted that progress on inflation is ongoing, but decisions on monetary policy will be made on a meeting-by-meeting basis. This uncertainty about future rate cuts is keeping traders cautious.
Meanwhile, the US has imposed new export controls on China, aiming to curb its technological progress, particularly in semiconductor manufacturing.
These measures come after President-elect Donald Trump threatened to impose a 100% tariff on BRICS nations—Brazil, Russia, India, China, and South Africa—if they try to undermine the US dollar.
These actions, along with concerns over a potential trade war, are also impacting market sentiment. While the US dollar remains under pressure, gold prices are being supported by ongoing geopolitical tensions.
Therefore, the US dollar's weakness, coupled with geopolitical tensions and trade concerns, is supporting gold prices. Traders remain cautious, awaiting Fed decisions on rate cuts, which could influence gold's near-term trajectory as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,648.94, up 0.19%, maintaining a bullish bias above its pivot point of $2,666.19. The immediate resistance at $2,686.65 remains a key level to watch, with further resistance at $2,704.46 suggesting potential upside targets.
On the downside, immediate support lies at $2,621.48, followed by $2,604.95 and $2,586.53, forming a strong support zone in case of retracement.
The Relative Strength Index (RSI) sits at 55, signaling neutral momentum but tilting toward a bullish outlook. The 50-day EMA at $2,643.97 aligns closely with the current price, reinforcing near-term support and indicating the uptrend is intact.
A decisive move above $2,666.19 could confirm further upward momentum, targeting $2,686.65 and beyond. Conversely, a break below $2,621.48 could expose the metal to sharper losses toward the $2,604.95 level.
Traders are closely monitoring the symmetrical triangle pattern, which suggests a breakout is imminent. Entry points above $2,640 could yield profits, with targets near $2,666, while a stop-loss at $2,625 offers downside protection.
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GBP/USD Price Analysis – Dec 04, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair struggled to recover and stayed bearish around 1.2671, briefly touching an intra-day low of 1.2630.
This downward momentum was primarily driven by the strength of the US Dollar, which gained traction as investors remained focused on upcoming US Nonfarm Payrolls (NFP) data due Friday.
The anticipation of this report has heightened market expectations about the Federal Reserve’s policy direction. With the Fed initiating a policy-easing cycle in September due to concerns over slowing labor demand, confidence remains strong that inflation will stay on track toward the 2% target.
Meanwhile, the Pound Sterling faced additional pressure after Bank of England (BoE) Governor Andrew Bailey hinted at potential interest rate cuts in 2025, forecasting four reductions as he expects the disinflation trend to solidify.
This dovish outlook has dampened the Pound’s appeal against its major peers, including the US Dollar. As a result, the GBP/USD pair experienced volatility, reflecting uncertainty in market sentiment.
US Economic Data and Fed Insights Weigh on GBP as Market Awaits Key Releases
On the US front, the Pound Sterling remained under pressure mainly due to the strengthening US Dollar, supported by rising investor confidence ahead of key economic data releases.
The Pound’s appeal was further weighed down by cautious market sentiment, especially after recent remarks by Bank of England Governor Andrew Bailey, who hinted at potential rate cuts in 2025.
Meanwhile, attention is turning toward US Nonfarm Payrolls (NFP) data, set to be released on Friday.
This report is crucial as the Federal Reserve has already begun a policy-easing cycle, driven by concerns over slowing labor demand. Markets remain optimistic that inflation will stay on course toward the Fed’s 2% target.
On Wednesday, all eyes are on Fed Chair Jerome Powell’s speech at the New York Times DealBook Summit, where investors hope to gain fresh insights into the Fed’s interest rate plans. Current market expectations suggest a 74% chance of a rate cut to 4.25%-4.50% in the coming months.
Economic data releases on Wednesday, including the US ADP Employment Change and ISM Services PMI, are also key focal points. Analysts predict the US private sector added 150K jobs in November, a notable drop from October’s 233K.
The ISM Services PMI is expected to ease slightly to 55.5 from 56.0, signaling a slower pace of growth but still reflecting an expanding economy. These figures will provide further clues about the state of the US economy and the potential direction of Federal Reserve policy.
Pound Sterling Pressured as BoE Signals Future Rate Cuts Amid Persistent Inflation Concerns
On the GBP front, the Pound Sterling faced selling pressure on Wednesday after Bank of England (BoE) Governor Andrew Bailey predicted four interest-rate cuts in 2025 during an interview.
He highlighted the need to reduce rates gradually while emphasizing that more effort is needed to bring inflation down, even though the disinflation process is already underway.
When asked about the potential impact of US tariffs under President-elect Donald Trump on UK inflation, Bailey said the effects are challenging to predict.
Bailey did not provide any clear signals about the BoE’s next move at its upcoming monetary policy meeting on December 19. However, traders widely expect the central bank to keep interest rates steady at 4.75%.
This expectation is driven by concerns over the persistence of UK inflation, which remains a key focus for policymakers.
Meanwhile, the UK’s October inflation report showed that core inflation, excluding volatile items, rose to 3.3%, while services inflation climbed to 5%.
The BoE closely monitors services inflation as it reflects underlying price pressures in the economy. These figures have added to the cautious sentiment, making it likely that the BoE will hold off on any immediate rate changes.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.26866, up 0.11%, maintaining a mildly bullish tone as it hovers just above its 50-day EMA at $1.26799. The pair is consolidating below its pivot point of $1.27106, with immediate resistance at $1.27496.
Further resistance levels are noted at $1.27833, suggesting potential upside targets if the pair sustains momentum. On the downside, support is seen at $1.26169, followed by $1.25817 and $1.25386.
The RSI stands at 53, reflecting modest bullish momentum but not yet signaling overbought conditions. A decisive move above the pivot point could validate the bullish bias, targeting $1.27496 and beyond.
However, a break below $1.26645 may expose the pair to further declines, targeting the $1.26169 support zone.
Entry opportunities above $1.26645 align with the current trend, with profit targets near $1.27098 and a prudent stop-loss at $1.26323 to manage downside risks.
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