AUD/USD Price Analysis – Dec 24, 2024
Daily Price Outlook
During the European trading session, the AUD/USD pair continued its downward slide, staying under pressure near the 0.6237 level and even hitting an intra-day low of 0.6224.
This drop can largely be attributed to the release of the Reserve Bank of Australia’s (RBA) Meeting Minutes for its December policy meeting.
The minutes suggested that the RBA might start cutting rates in February, which has weighed on the Australian dollar.
On top of that, trading activity remained light ahead of the Christmas holiday, adding to the subdued market mood.
Meanwhile, the US dollar made a strong comeback after a sharp sell-off, as Federal Reserve officials hinted at fewer rate cuts next year due to a slower-than-expected decline in inflation.
The rebound in the US dollar played a key role in supporting the downward trend of the AUD/USD pair.
RBA’s Cautious Stance and Strong US Dollar Weigh on AUD/USD
On the AUD front, the release of the Reserve Bank of Australia's (RBA) Meeting Minutes for December’s policy meeting caused the Australian Dollar to weaken against the US Dollar for the second day in a row.
The minutes revealed that the RBA board is now more confident about inflation compared to earlier meetings but acknowledged ongoing risks.
They stressed the importance of keeping monetary policy tight until there’s more certainty that inflation is under control. Meanwhile, trading activity is expected to remain quiet as markets slow down ahead of the Christmas holiday.
The RBA also mentioned that if upcoming data matches or falls below expectations, it could build confidence in inflation trends and support easing policy. However, stronger-than-expected data may require keeping policy restrictive for a longer period.
Governor Michele Bullock pointed to the strong labor market as a key reason why the RBA has taken a slower approach to monetary easing compared to other countries. This cautious stance reflects the need to balance economic growth while managing inflation effectively.
Therefore, the cautious stance of the RBA and the possibility of prolonged restrictive policies, combined with the US Dollar's strength, has pressured the AUD/USD pair. This led to the Australian Dollar weakening for a second consecutive day, reflecting bearish sentiment.
Mixed US Economic Data and Fed's Cautious Stance Weigh on AUD/USD
On the US front, the broad-based US Dollar remained firm as Federal Reserve (Fed) policymakers signaled fewer interest rate cuts next year due to slowing disinflation.
However, soft US PCE inflation data eased some concerns, presenting a mixed economic outlook. The core PCE inflation, the Fed’s preferred measure, rose 2.8% year-over-year, slightly below expectations of 2.9%. Monthly core inflation increased by 0.1%, less than the 0.2% forecast.
According to the CME FedWatch tool, markets see a 93% chance of the Fed holding interest rates steady in January within the 4.25%–4.50% range. Weak US Durable Goods Orders for November, which fell by 1.1% versus the expected 0.4% drop, further signaled economic challenges.
Meanwhile, US Consumer Confidence declined sharply in December, with the index dropping by 8.1 points to 104.7, reflecting uncertainty about the economy.
Concerns about tariffs and inflationary pressures were highlighted, with households expressing worries over the impact of President-elect Trump’s policies.
Fed officials, including Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee, also hinted at a cautious approach to rate changes, emphasizing the need to monitor inflation closely.
These developments underline the mixed sentiment in the US economy, balancing inflation concerns with weakening economic indicators.
Consequently, the mixed economic outlook in the US, with soft inflation data and weaker consumer confidence, may have limited the US Dollar's strength. However, the Fed's cautious stance on interest rate cuts could still support the US Dollar, putting pressure on the AUD/USD pair.
AUD/USD – Technical Analysis
The AUD/USD pair remains under pressure, trading at $0.62451, a slight decline of 0.03%. The pair is currently hovering near the pivot point of $0.62762, which will play a crucial role in determining the short-term trend.
Immediate resistance is found at $0.63375, with additional resistance levels at $0.63899 and $0.64509. On the downside, immediate support is located at $0.61761, with further critical support at $0.61232 and $0.60746.
The 50-day Exponential Moving Average (EMA) stands at $0.62502, closely aligned with the current price, suggesting consolidation in this range. The Relative Strength Index (RSI) at 49 indicates neutral momentum, with no clear bias toward either direction.
A break above the $0.62762 pivot point could see the pair testing higher resistance levels, while a failure to hold above support may trigger further downside movement, with the next support target at $0.61761.
Traders should be cautious as market volatility remains heightened, particularly during the holiday season with reduced liquidity. A sustained break above $0.62762 could shift the bias towards the upside, while a dip below $0.61761 might lead to further declines toward $0.61232.
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USD/CAD Price Analysis – Dec 24, 2024
Daily Price Outlook
During the European trading session on Tuesday, the USD/CAD pair saw some upward movement, climbing to an intraday high of 1.4400 after starting around 1.4396.
This increase can mainly be traced back to the US dollar, which gained momentum following comments from Federal Reserve policymakers suggesting fewer interest rate cuts next year due to a slowdown in disinflation.
However, the situation isn't all straightforward. Soft US PCE data have eased some of the inflation concerns, leaving a mixed outlook for the economy.
On the other hand, Canada’s economy showed stronger-than-expected GDP growth, while the Raw Material Price Index unexpectedly dropped, which could lend some support to the Canadian dollar. This positive economic data might help the CAD, potentially leading to a weaker USD/CAD pair in the short term.
US Economic Data and Consumer Confidence Point to Mixed Outlook for the Economy
On the US front, the broad-based US dollar saw support as Federal Reserve officials suggested there might be fewer interest rate cuts next year. This was due to a slowdown in the disinflation process, which keeps inflation concerns lingering.
Hon for October, which showed a 0.8% increase, much higher than the initial 0.2% reported. This data reflects some challenges in the US economy and could affect future economic expectations.
Meanwhile, consumer confidence also took a hit. The US Consumer Confidence Index fell by 8.1 points in December, dropping to 104.7. This decline shows that the recent rise in confidence was not sustained, with many households concerned about President-elect Trump's economic policies.
Nearly half of those surveyed feared that tariffs could raise the cost of living. These worries, along with the Federal Reserve's cautious stance on interest rate cuts in 2025 due to inflation, contribute to a more uncertain outlook for the US economy.
Canada's Mixed Economic Data Signals Potential Slowdown Ahead
On the CAD front, Canada’s GDP rose by 0.3% in October, which was better than the expected 0.1% decline. This unexpected growth shows some strength in the Canadian economy.
However, the Raw Material Price Index dropped by 0.5% in November, a sharp fall from October's 4.0% increase. This was also much lower than the anticipated 0.6% rise.
Looking ahead, Canada’s economy is expected to shrink slightly by 0.1% in November. This would mark the first monthly contraction of the year, which aligns with the Bank of Canada’s recent warnings about slower growth.
The central bank had also revised its growth forecasts downwards, reflecting concerns about weaker economic conditions.
These mixed data points suggest that while Canada’s economy showed some positive signs, there are still challenges ahead, and growth may slow in the coming months.
USD/CAD – Technical Analysis
The USD/CAD pair remains under modest downward pressure, trading at $1.43750, a slight decrease of 0.01%.
The key pivot point for this pair is at $1.43872, which will be critical in determining the next move. Immediate resistance is located at $1.44635, with subsequent resistance levels at $1.45197 and $1.45741.
On the downside, immediate support is found at $1.43228, followed by $1.42559 and $1.41957.
The 50-day Exponential Moving Average (EMA) is at $1.43833, very close to the current price, signaling a consolidation phase.
The Relative Strength Index (RSI) at 47 suggests neutral market sentiment, with neither bulls nor bears having a clear advantage.
A sustained break above $1.43872 could push the price toward higher resistance levels, whereas a failure to hold above immediate support at $1.43228 may lead to further declines towards the next key support at $1.42559.
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- GOLD Price Analysis – Dec 24, 2024
GOLD Price Analysis – Dec 24, 2024
Daily Price Outlook
Gold (XAU/USD) has managed to defy the strong US dollar, maintaining its upward trend around the 2,618 level on the day.
This resilience is largely due to rising geopolitical tensions and concerns about a potential trade war, which have pushed investors toward gold as a safe-haven asset.
In addition, recent statements from the Federal Reserve indicating a slower pace of interest rate cuts in 2025 have bolstered the US dollar, keeping it near a two-year high.
This strengthening of the dollar is likely to support US bond yields, which in turn could limit further upside for gold.
Looking ahead, gold is supported by external uncertainties, the continued strength of the US dollar and the Fed's cautious stance on rate cuts may prevent significant gains for gold in the short term.
Investors should stay alert to shifts in both the geopolitical landscape and US monetary policy, as these will play a key role in determining gold's next move.
Mixed Economic Outlook and Strong US Dollar Weigh on Gold's Upside Potential
On the US front, the broad-based US dollar has been flashing green after a sharp sell-off, following signals from the Federal Reserve (Fed) that fewer interest rate cuts are expected next year.
This comes amid a slowdown in the disinflation process. However, the latest soft US PCE data have eased inflation concerns, creating a mixed outlook for the economy.
Markets now expect a nearly 93% chance that the Fed will keep rates unchanged at 4.25%–4.50% in January.
Despite this, US Durable Goods Orders for November fell more than expected, dropping by 1.1%, much worse than the projected 0.4% decline.
Meanwhile, the US Consumer Confidence Index also dropped in December, falling by 8.1 points to 104.7, showing that optimism among households has weakened.
Concerns over President-elect Trump’s economic policies, particularly the potential rise in living costs due to tariffs, have contributed to this dip.
Furthermore, the Fed’s projections suggest fewer rate cuts in 2025, reflecting caution due to ongoing inflation pressures.
Cleveland Fed President Beth Hammack indicated that rates should remain steady until inflation shows signs of returning to the 2% target.
Chicago Fed President Austan Goolsbee also revised his 2025 rate cut projection, now expecting fewer reductions.
Therefore, the mixed economic outlook, with fewer rate cuts expected and concerns over inflation, may limit gold's upside potential. A strong US dollar and steady interest rates reduce gold's appeal as a safe-haven asset, potentially capping its price growth.
Geopolitical Tensions Drive Investors Towards Gold as a Safe-Haven Asset
On the geopolitical front, tensions remain high as the Israel Defense Forces (IDF) reported that sirens were sounded in central and southern Israel after intercepting a projectile fired from Yemen.
This comes as Israeli forces continue their attacks in the northern Gaza region, which has been under siege. The situation in Gaza remains critical, with ongoing military actions causing widespread concern.
Meanwhile, in Ukraine, Russian forces have captured two villages and are making steady progress in the Donetsk area. The conflict between Russia and Ukraine continues to escalate, with Russia strengthening its hold on key regions. In response to the situation,
US President-elect Donald Trump has urged Ukrainian President Volodymyr Zelenskyy to focus on securing peace and stability, reflecting ongoing international efforts to address the war’s impact. These developments add further uncertainty to global markets, as geopolitical tensions remain a major concern.
Hence, the ongoing geopolitical tensions in Israel and Ukraine could drive more investors towards gold as a safe-haven asset. As conflicts escalate, the demand for gold may increase, potentially pushing its price higher as investors seek stability amidst uncertainty.
GOLD (XAU/USD) – Technical Analysis
Gold prices have maintained upward momentum, trading at $2,620.17, bolstered by safe-haven demand amid geopolitical tensions and economic uncertainty.
The pivot point lies at $2,609.49, which has been a critical level for determining short-term direction. Immediate resistance is seen at $2,633.23, followed by $2,651.64 and $2,670.44, with higher targets forming in case of continued bullish pressure.
On the downside, immediate support is at $2,588.03, with further key support levels at $2,573.39 and $2,556.29.
The 50-day Exponential Moving Average (EMA) sits at $2,615.77, reinforcing the current support level near $2,610. The Relative Strength Index (RSI) is at 53, indicating a neutral market stance, with a slight bullish bias.
A break above $2,633.23 would open the door to further gains, potentially targeting the next resistance at $2,651.64. Conversely, if gold fails to hold above $2,610, it could test lower support levels, with $2,588.03 acting as a critical point of defense.
Traders should remain cautious with thin holiday liquidity, as it can amplify market moves. A sustained breach above $2,610 is likely to sustain upward momentum, while a failure to maintain support could lead to a retracement toward lower levels.
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EUR/USD Price Analysis – Dec 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend, struggling to break above Friday’s high of 1.0445. The pair remained under pressure, trading around the 1.0398 level and hitting an intraday low of 1.0387.
Meanwhile, the shared currency faced challenges after European Central Bank (ECB) President Christine Lagarde expressed confidence in the ongoing progress of reducing inflation during an interview with the Financial Times.
Her remarks suggested the ECB might not need to take an aggressive stance on tightening monetary policy, which weighed on the Euro’s performance.
Apart from this, the EUR/USD pair is expected to trade in a limited range this week due to low trading activity in a holiday-shortened period.
With Christmas Eve and Boxing Day falling midweek, thin market volumes have kept the currency pair constrained.
Traders remain cautious, as the holiday season often limits volatility and market opportunities.
EUR/USD Struggles as ECB's Rate Cuts and Inflation Outlook Weigh on Euro
On the EUR front, the currency pair is struggling as the euro continues to underperform. European Central Bank (ECB) President Christine Lagarde expressed confidence in reducing inflation, stating that the ECB is close to reaching its target of a 2% inflation rate.
She mentioned in an interview with the Financial Times that they are nearly at a point where they can declare inflation under control. However, the euro’s weakness is still visible as the market reacts to this cautious optimism.
The ECB has already reduced its Deposit Facility rate by 100 basis points this year and is expected to cut it by another 100 basis points next year.
This is largely due to concerns over the Eurozone's economic risks and the need to keep inflation in check.
Most ECB officials are aligned with the market's expectations for gradual rate cuts until inflation hits the 2% target, which they see as a neutral rate to avoid the risks of inflation falling too low.
Meanwhile, the economic calendar remains light, with investors looking ahead to Tuesday’s US Durable Goods Orders data, which is expected to show a decline of 0.4% in November after a 0.3% rise in October.
US Dollar Steady Amid Slower PCE Growth and Uncertainty Over Fed Rate Cuts
On the US front, the broad-based US dollar is steady after a sharp drop on Friday due to slower-than-expected growth in the US Personal Consumption Expenditure (PCE) Price Index.
The US Dollar Index (DXY), which tracks the dollar against six major currencies, is hovering just below 108.00. Core PCE inflation, which the Federal Reserve (Fed) watches closely, rose by 2.8%, slightly below the expected 2.9%.
Both headline and core PCE inflation increased by 0.1% month-on-month, leading to some uncertainty about whether the Fed will continue with its plans for gradual rate cuts in 2025.
Fed officials are now expecting fewer interest rate cuts next year, mainly due to the slower progress in reducing inflation and uncertainties around President-elect Donald Trump's policies on immigration, trade, and taxes.
Cleveland Fed President Beth Hammack, who voted to leave interest rates unchanged, said she prefers to wait for more evidence that inflation is returning to the 2% target.
Meanwhile, Chicago Fed President Austan Goolsbee mentioned that the uncertainty surrounding Trump’s policies has led to a shift in expectations, projecting fewer rate cuts than initially expected. Monday’s economic calendar is light, but investors will focus on the US Durable Goods Orders data for November, which is expected to show a decline of 0.4%.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.04331, marginally up 0.04%, showing consolidation below the $1.04455 pivot point.
The immediate resistance is seen at $1.04799, with additional hurdles at $1.05318 and $1.05677, which align with Fibonacci retracement levels, suggesting potential for a short-term rally if these levels are breached.
On the downside, immediate support lies at $1.03865, with further levels at $1.03430 and $1.03033 providing a robust safety net.
The RSI at 57 indicates neutral-to-bullish momentum, but the pair is struggling to gain traction above its 50 EMA at $1.04313, signaling a lack of decisive trend direction.
The broader trend remains bearish as long as EUR/USD trades below the $1.04799 pivot point. Sellers dominate the market, with price action reflecting caution amid lingering uncertainty in the Eurozone and USD dynamics.
A move below $1.04449 could accelerate declines toward the $1.03853 take-profit target, while a sustained break above $1.04799 would shift momentum to the upside.
Sell positions are favored below $1.04449, targeting $1.03853, with a stop-loss at $1.04927. Watch for a breakout above $1.04799 to reassess sentiment.
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GBP/USD Price Analysis – Dec 23, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair started the week on a quiet note, moving in a narrow range just above the mid-1.2500s.
However, the US Dollar had pulled back from a two-year high last Friday, following the release of the Personal Consumption Expenditure (PCE) Price Index for November. The report showed signs of inflation easing, but also highlighted ongoing economic struggles.
However, there are still factors working in favor of the USD. The Federal Reserve's recent hawkish stance continues to support the greenback, as markets anticipate further tightening. This keeps the safe-haven USD in demand, limiting any significant gains for the GBP.
On the other hand, the British Pound faces its own challenges. The Bank of England's (BoE) recent decision to leave interest rates unchanged, along with a more dovish outlook, has created a sense of caution in the markets.
The BoE’s split vote shows a lack of consensus among policymakers, which leaves traders hesitant to make aggressive bullish bets on the GBP.
As a result, the pair's movement remains restrained, with neither the USD nor GBP dominating the direction in the early hours of the week.
USD Remains Supported by Hawkish Fed and Global Tensions, Capping GBP/USD Gains
On the US front, the broad-based US Dollar (USD) eased from its two-year high on Friday after the November Personal Consumption Expenditure (PCE) Price Index hinted at slowing inflation and ongoing economic challenges.
This has kept USD buyers cautious, giving some support to the GBP/USD pair. However, the Federal Reserve’s (Fed) hawkish outlook still favors the USD.
While the Fed recently lowered interest rates by 25 basis points (bps), it signaled a slower pace of rate cuts in 2025.
This, along with strong US Treasury yields and global tensions from the Russia-Ukraine conflict and Middle East unrest, could attract USD buyers and limit the GBP/USD pair's gains.
Traders now await key events for further direction, including the Bank of England’s (BoE) Quarterly Bulletin and the US Consumer Confidence Index later today.
The market mood remains cautious, as the BoE’s less aggressive stance on interest rates and global uncertainties weigh on the British Pound.
Given the mixed signals from both currencies, it’s wise to wait for clear and sustained buying interest before confirming whether the GBP/USD pair has hit a bottom in the short term.
GBP/USD Under Pressure Amid BoE's Dovish Tone and Economic Downgrade
On the GBP front, the British Pound faces pressure after the Bank of England (BoE) decided to keep interest rates unchanged last week.
The decision revealed a split vote among policymakers, with three members of the Monetary Policy Committee (MPC) voting to cut rates. This lack of agreement has added to the uncertainty surrounding the BoE's future policy direction.
Moreover, the central bank downgraded its economic forecast for the final quarter of 2024, signaling potential challenges ahead for the UK economy.
These developments make traders cautious about betting on strong gains for the GBP. The BoE's dovish tone, combined with concerns about slower growth, is likely to limit the upside for the GBP/USD pair.
This cautious outlook keeps the GBP/USD pair under pressure, with further movements likely dependent on broader market factors and key economic data.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.25689, up 0.04%, as the pair consolidates below the $1.26021 pivot point, reflecting a cautious tone.
The pair faces immediate resistance at $1.26620, with higher barriers at $1.27292 and $1.27819, signaling a challenging path for bulls amid a neutral market sentiment.
The 50 EMA at $1.26110 hovers above the current price, adding to downward pressure, while the RSI at 50 highlights indecision in momentum.
On the downside, immediate support lies at $1.25375, with additional levels at $1.24764 and $1.24237, reinforcing a bearish bias if these levels are breached.
The broader trend remains under pressure as the pair struggles to maintain gains above the pivot. The technical setup favors sellers, with the current price action suggesting a potential downside toward the $1.25029 take-profit target, especially if the pair fails to overcome the $1.26021 pivot point.
However, a decisive break above $1.26620 could shift momentum, opening the door to further gains.
Sell-limit orders below $1.25819 are preferred, with a target of $1.25029 and a stop-loss at $1.26415. Key resistance above $1.26620 needs monitoring for a potential reversal.
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- GOLD Price Analysis – Dec 23, 2024
GOLD Price Analysis – Dec 23, 2024
Daily Price Outlook
Gold prices (XAU/USD) have had a quiet start to the week, moving slowly around $2,627, with a trading range between $2,617.59 and $2,629.30. This sluggishness comes as the US Dollar (USD) remains strong, just below its two-year peak, putting pressure on gold.
At the same time, global geopolitical uncertainties, like the ongoing Russia-Ukraine conflict and tensions in the Middle East, continue to drive demand for gold as a safe-haven asset.
The Federal Reserve's recent stance, signaling slower rate cuts in 2025, has kept US Treasury yields high, which dampens gold’s potential for major gains. On top of that, a positive mood in global stock markets is capping any significant rise in gold prices.
As the week progresses, traders are closely watching the release of the Conference Board's Consumer Confidence Index, hoping it will offer more clarity on the gold market’s short-term direction.
US Dollar Weakens on Softer Inflation Data, Supporting Gold Prices Amid Stable Economic Growth
On the US front, the broad-based US Dollar (USD) remain subdued after the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday.
The softer inflation numbers for November have raised expectations that the Federal Reserve (Fed) will continue easing its policies in 2025.
According to the CME FedWatch tool, there is now a more than 90% chance that the Fed will keep interest rates unchanged at 4.25%-4.50% in January.
The core PCE inflation, which is the Fed’s preferred inflation measure, rose by 2.8% year-over-year, slightly below the expected 2.9%.
Monthly core inflation also grew by just 0.1%, less than the anticipated 0.2%, signaling a slowdown in inflationary pressures.
In addition to the PCE data, other economic indicators also had an impact. The US GDP grew by 3.1% in the third quarter, beating expectations and showing stronger-than-expected economic growth.
Initial Jobless Claims fell to 220,000, better than the forecast of 230,000, indicating a stable labor market.
Despite these positive figures, inflation remains a key concern, with the yearly change in the PCE Price Index rising to 2.4%.
The Fed's recent signal to slow down rate cuts in 2025 caused US Treasury yields to reach their highest level in over six months, adding pressure to the USD.
Therefore, the softer inflation data and the Fed’s likely decision to keep rates unchanged support gold prices by reducing the likelihood of aggressive rate hikes.
However, higher Treasury yields and stable economic growth may limit gold’s potential for significant gains.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,630.70, up 0.27% as it consolidates gains following a steady recovery. The price action remains supported by the $2,620.64 pivot point, while the 50 EMA at $2,622.84 provides dynamic support, reinforcing the bullish sentiment.
The immediate resistance lies at $2,642.56, aligning with the first target for short-term buyers. A breakout above this level could propel gold toward the next resistance at $2,658.33, with a further push targeting $2,674.87.
On the downside, immediate support rests at $2,607.53, with additional layers at $2,593.83 and $2,583.93 providing a safety net for bulls.
The RSI at 60 indicates moderate bullish momentum, but the market requires a decisive move above $2,642.56 to maintain the uptrend.
The broader outlook is cautiously optimistic as geopolitical risks and USD fluctuations continue to shape market sentiment.
Traders are eyeing the upcoming resistance zones, as breaking through these levels could spark accelerated gains.
On the flip side, a breach below $2,620.64 may trigger a pullback, with downside risks increasing if prices dip below the $2,607.53 support.
Gold's technical setup favors buying opportunities above $2,626, with a take-profit target of $2,642 and a stop-loss at $2,614.
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GOLD Price Analysis – Dec 20, 2024
Daily Price Outlook
Despite the Federal Reserve's hawkish stance, gold (XAU/USD) has managed to maintain its upward momentum, holding steady around the 2,605 level and even reaching an intra-day high of 2,607.
This bullish trend can largely be attributed to a slight dip in the US dollar, which lost some ground due to a modest pullback in US Treasury bond yields.
Meanwhile, the Fed's signals that it plans to slow the pace of interest rate cuts in 2025 are likely to provide support for US bond yields and the dollar. Additionally, the prevailing risk-off sentiment has kept gold in demand as a safe-haven asset, further boosting its price.
Looking ahead, traders seem cautious to place strong positions ahead of the US Personal Consumption Expenditure (PCE) Price Index release.
This key inflation report will impact USD price and could create short-term opportunities in the gold.
Impact of Fed's Hawkish Stance and Economic Uncertainties on Gold
On the US front, the broad-based US dollar has been holding onto its weekly gains, reaching a two-year high.
This is largely due to the Federal Reserve's hawkish signal that it plans to slow the pace of interest rate cuts in 2025, which is supporting the USD. However, this is acting as a headwind for gold.
At the same time, investors are feeling uncertain due to ongoing geopolitical risks, fears of a trade war, and the threat of a US government shutdown.
This is putting pressure on the stock market and driving more demand for safe-haven assets like gold. Traders are also cautious ahead of the release of the US Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of inflation.
In addition, the US Treasury bond yields have pulled back from a multi-month high, limiting the USD’s rally.
Positive economic data, like the 3.1% annual GDP growth for the third quarter and a drop in jobless claims, are backing the Fed's stance.
These developments suggest that the Fed will continue with its hawkish approach, which supports the US dollar and bond yields.
However, this outlook also keeps pressure on gold, as the precious metal offers no yield. Gold traders are waiting for further clues from the PCE data before making significant moves.
Therefore, the US dollar's strength, driven by the Fed's hawkish stance and rising bond yields, is limiting gold's upward movement.
In the meantime, the ongoing geopolitical risks and economic uncertainties are supporting gold's safe-haven demand, but traders remain cautious ahead of key inflation data.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,604.19, up 0.37% on the day, as the metal consolidates above the $2,596.10 pivot point. Despite the modest gains, gold faces immediate resistance at $2,626.76, with further hurdles at $2,640.36.
A sustained break above these levels could open the door for bullish momentum, targeting new highs in the near term. On the downside, immediate support is seen at $2,583.95, followed by stronger levels at $2,568.47 and $2,555.24.
Technical indicators present a mixed picture. The RSI is neutral at 50, suggesting that gold is neither overbought nor oversold.
However, the 50 EMA at $2,615.16 indicates near-term bearish pressure, as the price remains below this key moving average. To regain bullish momentum, gold must clear the $2,613 pivot point and stay above the 50 EMA.
The current setup suggests a cautious trading strategy. Traders may look to buy near $2,596 with a stop-loss at $2,584 and a take-profit target of $2,613. A break above $2,626 could justify higher targets, while failure to hold $2,583 may lead to sharper declines.
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S&P500 (SPX) Price Analysis – Dec 20, 2024
Daily Price Outlook
The S&P 500 Index is currently trading in the red, holding at 5,867.08 and reaching an intra-day low of 5,866.
This decline shows the broader market's reaction to the Federal Reserve’s hawkish stance, rising bond yields, and ongoing geopolitical and economic uncertainties.
While the index has shown resilience in the past, the current conditions suggest a challenging environment for US equities.
Fed's Hawkish Stance Weighs on Market Sentiment
On the US front, the Federal Reserve's recent signals indicating a slower pace of interest rate cuts in 2025 are supporting the US dollar and Treasury bond yields.
However, these moves are creating headwinds for the equity market, particularly for growth stocks that are sensitive to higher interest rates.
As bond yields rise, investors may find fixed-income assets more attractive than equities, leading to a shift in market dynamics.
This is especially concerning for the S&P 500, which has a significant portion of its constituents in sectors such as technology and growth companies, which are more vulnerable to higher rates.
Despite the Fed's stance, the broader market remains uncertain due to fears of slower economic growth and other challenges. As a result, the S&P 500 index is experiencing selling pressure, reflected in the current pullback.
Geopolitical Risks and Economic Uncertainty Drive Caution
Apart from this, the ongoing geopolitical tensions and economic uncertainty are adding additional stress to the S&P 500.
The risk of a US government shutdown, coupled with concerns over trade wars and global instability, has led to a more cautious sentiment among investors.
The equity market is particularly sensitive to such risks, as any escalation could derail global economic growth and disrupt corporate earnings.
Furthermore, investors are wary of the US Personal Consumption Expenditure (PCE) Price Index release, the Fed's preferred inflation measure.
Traders are closely watching this key inflation report, which could influence the Fed's future policy moves. If inflation remains high, it may prompt the Fed to keep interest rates elevated for longer, further pressuring the equity market.
S&P 500 – Technical Analysis
The S&P 500 Index (SPX) is trading at $5867.07, reflecting a slight dip of 0.09% in today’s session. The index is consolidating near the $5919.77 pivot point on the 4-hour chart, signaling cautious sentiment among traders.
Immediate resistance lies at $6005.28, with further barriers at $6070.88. A sustained breakout above these levels could reverse the recent downward trajectory, with bullish momentum targeting higher highs.
On the downside, immediate support is found at $5852.81, with critical levels at $5804.87 and $5754.58.
Technical indicators lean bearish, with the RSI at 26 indicating oversold conditions. While this could suggest a short-term bounce, the price remains below the 50 EMA at $6032.28, reinforcing the overall bearish bias.
A decisive break below $5852.81 could accelerate selling pressure, testing deeper support levels. Conversely, recovery above the pivot at $5919.77 is necessary to regain upward traction.
Traders should consider a cautious strategy amid this oversold scenario. A sell limit around $5908, targeting $5837 with a stop loss at $5940, aligns with the bearish outlook.
A move below $5804.87 would confirm further downside potential, while a recovery above $6005.28 could negate the bearish trend.
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EUR/USD Price Analysis – Dec 20, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair managed to halt its downward trend and gained some bullish momentum, reaching as high as 1.0398.
This recovery can be mainly attributed to two factors. First, the US Dollar (USD) had given up some of its earlier gains, though it remains strong due to factors like the Federal Reserve's hawkish outlook and the ongoing strength of the US economy.
On the other hand, the Euro (EUR) found support from a key development in Germany, where lawmakers approved tax reforms that will cut annual tax revenue by 14 billion euros.
This decision is expected to leave more money in the hands of German households, encouraging higher consumer spending.
As a result, this boost in demand is likely to help stimulate economic growth in the Eurozone. Moreover, increased spending could help keep inflation in check, reducing the risk of it falling below the European Central Bank’s (ECB) target of 2%.
Despite the temporary bounce, the EUR/USD pair remains cautious, still trading near its yearly lows around 1.0350, reflecting ongoing concerns about the strength of the US Dollar and the broader economic outlook. The pair’s direction remains uncertain as investors watch closely for further developments.
EUR/USD Temporary Support from German Tax Reforms and ECB's Cautious Rate Cut Stance
On the EUR front, EUR/USD gained some temporary support near its yearly low as the Euro strengthened after German lawmakers approved tax reforms. These reforms will reduce tax revenue by 14 billion euros, giving households more disposable income.
This extra money is expected to boost consumer demand and help stimulate economic growth in the Eurozone. Higher spending could also reduce the risk of inflation falling below the European Central Bank’s (ECB) 2% target, especially since Germany is the largest economy in the region.
Meanwhile, ECB policymaker Christodoulos Patsalides, who is also the Governor of the Central Bank of Cyprus, has reduced expectations for larger rate cuts to boost growth. He prefers smaller, gradual rate adjustments instead of big cuts.
Patsalides believes that bigger cuts would only be necessary if inflation remains well below the ECB’s target for a long period.
Right now, traders expect four interest rate cuts from the ECB by June 2025. So far, the ECB has already lowered its Deposit Facility rate four times by 100 basis points to 3% this year, which has helped support the Euro in the short term.
Therefore, the approval of tax reforms in Germany and the ECB's cautious stance on rate cuts provide temporary support for the Euro, helping EUR/USD recover slightly from yearly lows. However, ongoing USD strength and market expectations for ECB cuts limit significant gains.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.03698, marking a modest gain of 0.12% on the day, as it consolidates near the $1.03435 pivot point on the 4-hour chart. Immediate resistance is situated at $1.04220, with the next barriers at $1.04550 and $1.04800.
A break above these levels could solidify bullish momentum, setting the stage for further gains. Conversely, support lies at $1.03151, with deeper levels at $1.02840 and $1.02557 providing a safety net against extended losses.
Technical indicators are mixed, with the RSI at 42 indicating slight bearish bias, yet not fully oversold. Meanwhile, the 50 EMA at $1.04073 suggests downward pressure in the short term, as the price remains below this key moving average.
A decisive close above the pivot point at $1.03920 and the 50 EMA would shift sentiment to bullish, targeting the immediate resistance levels.
A cautious trading strategy is advised in this consolidation phase. Traders might consider buying near $1.03435, targeting $1.04038, with a stop loss at $1.03157.
A successful break above $1.04220 could pave the way for additional upside toward $1.04550, while failure to hold $1.03151 could signal bearish continuation.
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AUD/USD Price Analysis – Dec 19, 2024
Daily Price Outlook
Despite the strong US dollar, the AUD/USD pair managed to maintain its bullish momentum, trading confidently around the 2,617 level and briefly reaching a high of 2,626.
This upward trend was largely supported by Australia's positive Consumer Inflation Expectations report released on Thursday.
However, the Australian dollar faced some challenges due to growing expectations that the Reserve Bank of Australia (RBA) might cut interest rates sooner and more aggressively than previously anticipated.
Meanwhile, the US dollar's strength, fueled by the Federal Reserve's hawkish 25 basis-point rate cut during its December meeting, played a significant role in limiting the AUD/USD pair's gains.
Impact of Rising Inflation Expectations and Global Uncertainties on the AUD/USD Pair
Australia's Consumer Inflation Expectations surged to 4.2% in December, up from 3.8% the previous month, marking the highest level since September. This indicates rising price pressures within the economy.
Despite this, the Australian dollar faces significant challenges due to growing expectations that the Reserve Bank of Australia (RBA) may cut interest rates sooner and more aggressively than initially anticipated.
National Australia Bank (NAB) predicts the first rate cut could occur as early as May 2025, with February also being a possibility.
They forecast the unemployment rate to peak at 4.3% before gradually improving to 4.2% by 2026, while inflation is expected to ease slowly to 2.7% by late 2025.
In addition, Australia’s consumer confidence has taken a hit, with Westpac's Consumer Confidence Index falling by 2% to 92.8 points in December, reversing two months of positive momentum.
This signals growing concerns among households about the economic outlook. Globally, external factors are also exerting pressure on the Australian dollar.
China, Australia’s largest trading partner, has set a growth target of around 5% for 2025. However, uncertainties surrounding the US potentially imposing 10% tariffs on Chinese exports and a record $45.7 billion net outflow from China's capital markets in November have raised concerns about economic stability.
Chinese authorities, under President Xi Jinping, are working to boost the economy by increasing the fiscal deficit and focusing on consumption-driven growth. However, the lack of clear details on fiscal support has added to the uncertainty surrounding the Australian dollar.
Given China's importance to Australia’s trade, these economic uncertainties, combined with cautious signals from the RBA, are weighing on the outlook for the Australian dollar, limiting its gains against the US dollar.
Therefore, the rising inflation expectations in Australia and concerns about potential interest rate cuts by the RBA, combined with global uncertainties like China’s economic challenges, are putting downward pressure on the AUD, limiting its gains against the US dollar in the AUD/USD pair.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.62204, marking a modest gain of 0.07% in the current session. Despite the uptick, the pair remains under bearish pressure, trading below its pivot point at $0.62746.
Immediate resistance is seen at $0.63375, with additional hurdles at $0.63899 and $0.64509. On the downside, immediate support lies at $0.61720, followed by $0.61232 and $0.60746.
Technical indicators suggest further downside risks. The RSI at 25 highlights oversold conditions, implying limited room for additional bearish moves in the short term.
However, the 50 EMA at $0.65234 underscores a broader bearish trend, with the AUD/USD pair struggling to sustain any recovery above key levels.
A failure to reclaim the pivot point at $0.62746 could encourage further selling pressure, targeting the immediate support at $0.61720.
A decisive break below this level might expose the pair to deeper losses toward $0.61232 and $0.60746. On the upside, clearing the pivot and sustaining momentum above $0.63375 would be crucial for a bullish reversal.
Traders may consider a sell limit at $0.62763, targeting $0.61845, with a stop-loss placed at $0.63382.
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