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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- GOLD Price Analysis – Dec 19, 2024
GOLD Price Analysis – Dec 19, 2024
Daily Price Outlook
Gold price (XAU/USD) sustains its upward trend, rebounding strongly from a one-month low and reaching around $2,622 on Thursday’s European session.
However, the rally comes as market sentiment turns sour after the Federal Reserve’s hawkish tone on Wednesday.
Apart from this, the growing geopolitical tensions and trade war fears are pushing investors towards the safety of gold, driving its appeal as a haven asset.
At the same time, the US dollar remains steady, consolidating its post-FOMC gains at a two-year high. Notably, the Fed’s signal to slow the pace of interest rate cuts is boosting US Treasury yields, offering support to the USD. Despite these headwinds, gold remains an attractive choice for investors amid rising uncertainty.
Impact of US Economic Data, Fed's Cautious Approach, and Global Uncertainties on Gold
On the US front, the broad-based US Dollar remains strong after the Federal Reserve (Fed) delivered a cautious 25-basis point rate cut, bringing rates to 4.25%-4.50%, a two-year low.
The Fed’s latest projections, known as the ‘dot-plot,’ now show only two rate cuts in 2025, down from four predicted earlier.
During the press conference, Fed Chair Jerome Powell emphasized that the Fed remains cautious about further rate cuts as inflation stays above the 2% target.
Traders are now focusing on upcoming US data, including Initial Jobless Claims, Existing Home Sales, and the final Q3 GDP reading, which could influence the USD’s momentum.
Recent US economic data has been mixed. November Retail Sales rose 0.7%, exceeding the previous 0.5% growth, while the Retail Sales Control Group saw a slight recovery of 0.4%.
The S&P Global US Composite PMI showed improvement, rising to 56.6 in December from 54.9 earlier, driven by stronger services activity.
However, manufacturing data was less optimistic, with the PMI falling to 48.3 from 49.7, signaling continued contraction in the sector.
These indicators paint a picture of resilience in some areas of the economy but challenges in others, particularly in manufacturing.
On the flip side, China’s economy remains under pressure. Authorities plan to target 5% growth in 2025, the same as this year, amid record net outflows of $45.7 billion from its capital markets in November.
While China focuses on boosting domestic consumption, the lack of concrete fiscal support and looming US tariffs are dampening optimism.
The strong US Dollar, mixed economic data, and Fed's cautious approach to rate cuts weigh on gold's appeal as a non-yielding asset.
Meanwhile, global uncertainties like China's economic struggles and geopolitical risks support gold as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,609.76, gaining 0.94% in today’s session. Despite the uptick, the metal remains below its pivot point at $2,616.77, indicating lingering bearish pressure.
The immediate resistance lies at $2,636.57, followed by stronger hurdles at $2,664.90 and $2,690.55. On the downside, immediate support is seen at $2,576.85, with subsequent supports at $2,559.53 and $2,537.25.
Technical indicators highlight mixed sentiment. The RSI at 35 reflects oversold conditions, suggesting limited downside in the near term. However, the 50 EMA at $2,665.76 positions gold below this critical moving average, signaling that bearish momentum is still dominant.
From a technical perspective, a failure to reclaim the pivot point at $2,616.77 could encourage sellers, pushing gold toward its immediate support at $2,576.85.
A break below this level would expose gold to deeper corrections toward $2,559.53 and $2,537.25. Conversely, a successful move above the pivot could trigger buying interest, targeting $2,636.57 and beyond.
Traders may look for opportunities to sell below $2,620, with potential profit-taking near $2,595 and a stop-loss set at $2,635.
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GBP/USD Price Analysis – Dec 18, 2024
Daily Price Outlook
During the European trading session on Wednesday, the GBP/USD currency pair continued its bearish trend, struggling to maintain any upward momentum.
The pair hovered around the 1.2689 level and hit an intra-day low of 1.2679. This decline can largely be attributed to the release of the UK Consumer Price Index (CPI) data for November, which showed that inflation pressures had risen as expected. This data kept the Pound under pressure as traders assessed the UK’s inflation outlook.
Meanwhile, the US Dollar remained stable as market participants awaited the Federal Reserve’s upcoming monetary policy announcement.
Meanwhile, the expectations for a 25-basis point interest rate cut could cap gains in the US dollar and may help GBP/USD pair to limit its losses.
Impact of Federal Reserve's Rate Cut and Inflation Concerns on GBP/USD
On the US front, the US Dollar has been gaining momentum as markets focus on the Federal Reserve's upcoming monetary policy announcement, scheduled for 19:00 GMT.
Traders are anticipating a 25-basis point interest rate cut, which would mark the third consecutive reduction by the Fed.
Investors are closely monitoring the Federal Open Market Committee's (FOMC) Economic Projections and the dot plot, which provides the Fed’s outlook on interest rates for the coming years.
Most economists expect the Fed to slow down its rate cuts in 2025. According to a recent Bloomberg survey, while the Fed may reduce rates three times next year, inflation is likely to remain above the Fed's target.
Additionally, economists are growing more concerned about inflation risks due to the policies of President-elect Donald Trump, including higher import tariffs, tax cuts, and potential mass deportations. These factors could create more uncertainty in the economy and financial markets.
Impact of UK Inflation Data and Bank of England's Rate Outlook on GBP/USD
On the GBP front, the Pound Sterling showed some volatility on Wednesday after the release of the UK Consumer Price Index (CPI) data for November.
The report revealed that inflation rose as expected, with the annual inflation rate increasing to 2.6% from 2.3% in October. Monthly inflation rose by 0.1%, which was lower than the previous month's 0.6%.
The core CPI, which excludes items like food and energy, grew by 3.5%, slightly above the previous month's 3.3%, but below the expected 3.6%. Services inflation, an important indicator for the Bank of England (BoE), rose by 5%.
This rise in inflation has led many to expect the Bank of England (BoE) to keep interest rates at 4.75% in their upcoming meeting, with most members voting to keep rates unchanged.
However, one member, Swati Dhingra, is expected to call for a 25 basis point rate cut. Investors are closely watching BoE Governor Andrew Bailey’s press conference to see if the central bank plans to ease its policies further in 2025.
Additionally, retail sales data for November, set to be released on Friday, will also be important for understanding the UK's economic outlook.
Therefore, the rise in inflation and expectations for the Bank of England to keep rates unchanged may keep the GBP/USD pair under pressure. If the BoE signals further policy easing in 2025, it could weigh on the Pound, limiting upside potential.
The GBP/USD pair is trading at $1.27014, down 0.05%, reflecting a cautious sentiment as the pair remains near a key support level.
The pivot point at $1.27860 acts as a critical resistance, with the pair trading just below the 50 EMA at $1.27176, reinforcing a short-term bearish bias.
Immediate resistance lies at $1.28351, followed by $1.28742, levels that need to be breached to signal a shift in sentiment.
On the downside, the pair finds immediate support at $1.26666, with further levels at $1.26070 and $1.25636 providing key targets for bearish momentum. The RSI at 51 signals neutrality, suggesting limited immediate momentum but leaving room for directional movement.
Traders are positioning for a Sell Limit at $1.27217, targeting $1.26588, with a stop loss at $1.27678 to manage upside risks.
For now, GBP/USD remains rangebound, with a bearish outlook prevailing unless the price reclaims the pivot point and surpasses the 50 EMA.
A failure to hold support at $1.26666 could open the door for further declines toward $1.26070.
The pair’s direction hinges on a break above resistance or below key support, with the overall sentiment skewed slightly bearish.
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EUR/USD Price Analysis – Dec 18, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained modest positive traction despite the bullish US dollar. It is currently trading at the 1.0494 level, hitting an intraday low of 1.0513.
However, the reason for this slight upward trend could be attributed to investor caution ahead of the Federal Reserve's key policy meeting, which is scheduled to conclude later today at 19:00 GMT.
Traders are waiting to see the outcome of the meeting, particularly the revised Summary of Economic Projections (SEP), or the "dot plot," which will reveal the Fed's latest economic outlook and its view on future interest rate hikes.
On the other hand, the Euro’s outlook remains bearish, with market participants expecting the European Central Bank (ECB) to raise rates to around 2% by mid-2025, which continues to weigh on the single currency. This cautious environment is keeping EUR/USD in a tight range.
US Dollar Steady as Investors Await Fed's Policy Decision and Future Guidance
On the US front, the broad-based US dollar is holding steady as investors wait for the outcome of the Federal Reserve’s (Fed) final policy meeting of the year, set to conclude at 19:00 GMT. The Fed is expected to release an updated version of the Summary of Economic Projections (SEP), also known as the dot plot.
Analysts at Bank of America (BofA) anticipate the Fed will reduce interest rates by 25 basis points (bps), bringing them down to the 4.25%-4.5% range. Market participants are fully expecting this 25 bps rate cut, according to the CME FedWatch tool.
Looking ahead, traders are closely watching Fed Chair Jerome Powell’s press conference for more details on future interest rate guidance. Analysts expect Powell to adopt a gradual approach to rate cuts and potentially signal a pause in January if economic data aligns with expectations.
EUR/USD Remains Sideways as ECB Faces Economic Risks and Inflation Concerns
On the EUR front, the shared currency outlook remains bearish, with investors expecting the European Central Bank (ECB) to move toward a neutral interest rate of around 2% by the first half of 2025.
Many traders believe the ECB will continue to lower interest rates at every meeting until June 2025, as officials are concerned about the growing economic risks in the Eurozone.
The ECB is also confident that inflation will return to its target of 2% next year, which could help stabilize the economy.
On Tuesday, ECB policymaker Olli Rehn, who is also the Governor of Finland's central bank, mentioned that inflation is stabilizing near the ECB’s target of 2%.
This sets the stage for further interest rate cuts. This uncertainty keeps traders on edge as they watch for further signals from the ECB in the coming months.
Therefore, the bearish outlook for the Euro, driven by expectations of continued ECB rate cuts, could weigh on the EUR/USD pair, potentially pushing it lower as investors anticipate a weaker Euro.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05019, up 0.11%, as modest bullish momentum develops within a largely neutral setup.
The key pivot point at $1.05480 acts as a critical level for price direction. Immediate resistance lies at $1.05914, with higher levels at $1.06294 offering potential targets if upward pressure strengthens.
On the downside, the pair finds support at $1.04856, with deeper levels at $1.04525 and $1.04204 acting as safety nets for buyers. The RSI at 48 indicates neutral momentum, suggesting the pair is in a consolidation phase with room for directional moves depending on the breakout.
The 50 EMA at $1.05205 is slightly above the current price, reinforcing a cautious upward bias. A break above the pivot point could signal bullish continuation toward $1.05914, while a failure to sustain above the $1.04856 support level may shift sentiment bearish.
Traders are positioning for a Buy Limit at $1.04860, targeting the pivot point at $1.05481, with a stop loss at $1.04522 to manage downside risk.
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- GOLD Price Analysis – Dec 18, 2024
GOLD Price Analysis – Dec 18, 2024
Daily Price Outlook
Gold prices (XAU/USD) are still struggling to break free from their downward trend, lingering around the $2,644 level, with an intraday low of $2,642.
The main reason for this drop seems to be growing expectations that the Federal Reserve will take a more cautious stance on cutting interest rates.
As a result, US Treasury bond yields have strengthened, which boosts the US Dollar (USD) and makes gold less attractive. This is because gold, being a non-yielding asset, tends to lose its appeal when bond yields rise and the dollar strengthens.
Impact of US Economic Data and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar remains strong due to market caution ahead of the Federal Reserve's decision. The CME FedWatch tool shows that markets are almost fully expecting the Fed to cut interest rates by a quarter point in their December meeting.
Traders will also be paying close attention to Fed Chair Jerome Powell’s press conference and the Summary of Economic Projections (dot-plot) after the meeting, which could offer insights into the Fed’s future plans.
On the data front, the US Census Bureau reported a 0.7% increase in retail sales for November, beating the expected 0.5% rise. The Retail Sales Control Group also grew by 0.4%, rebounding from a 0.1% decline previously.
Additionally, the S&P Global Composite PMI for December rose to 56.6 from 54.9, showing stronger economic activity. The Services PMI also improved to 58.5 from 56.1, while the Manufacturing PMI declined slightly to 48.3 from 49.7.
Therefore, the stronger US dollar and mixed economic data, along with expectations of a Fed rate cut, could limit gold's appeal. Higher interest rates and a stronger dollar reduce demand for gold, which doesn't offer yields like bonds or the dollar.
Impact of China’s Economic Outlook and Policy Shifts on Gold Demand
On the other side, China plans to target around 5% economic growth for 2025, the same goal as this year, which is expected to be met. This decision came after a meeting of top Chinese officials at the Central Economic Work Conference.
However, there are concerns about the country's economic performance, as China’s foreign exchange regulator, SAFE, revealed a net outflow of $45.7 billion from China’s capital markets in November.
This was due to a large deficit in cross-border portfolio investments, with $188.9 billion in receipts and $234.6 billion in payments, marking the largest monthly deficit for this category.
In addition, China’s authorities, led by President Xi Jinping, plan to increase the fiscal deficit target for next year, focusing more on boosting consumption to support the economy. This shift in policy comes amid the threat of 10% US tariffs on Chinese exports.
On the data front, China’s retail sales grew by 3.0% year-on-year in November, missing expectations of 4.6%, while industrial production rose by 5.4%, slightly exceeding the 5.3% forecast.
Therefore, China's economic challenges and policy shifts, along with trade tensions, could boost demand for gold as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,647.27, up 0.03%, as the market shows tentative upward movement within a bearish framework.
The key pivot point at $2,654.36 serves as a critical juncture for near-term direction. The 50 EMA at $2,667.06 aligns closely with resistance, reinforcing selling pressure at higher levels.
Immediate resistance is noted at $2,672.93, followed by $2,690.55 and $2,704.46 for further upside tests if momentum shifts.
On the downside, gold is supported initially at $2,634.28, with further levels of $2,617.80 and $2,601.58 offering potential targets for bears.
The RSI at 41 signals bearish momentum but remains neutral enough to allow for a brief recovery before resuming downside pressure.
Traders are watching for a break below the pivot point to confirm bearish dominance, with the suggested entry price for short positions at $2,654, targeting $2,634, while keeping a stop loss at $2,666.
Conversely, sustained movement above $2,672.93 could shift sentiment toward buyers. However, the current setup suggests sellers remain in control below the pivot and 50 EMA.
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GOLD Price Analysis – Dec 17, 2024
Daily Price Outlook
Gold price (XAU/USD) was unable to break its consolidating range and remained stuck between slight gains and minor losses during the European session on Tuesday.
It is currently trading near 2,638 level close to the one-week low reached the previous day, as traders seemed hesitant and opted to wait for clearer signals on the Federal Reserve's (Fed) rate-cut plans before making new bets.
However, the reason can be linked to the ongoing expectations for a less dovish Fed, which continued to support higher US Treasury bond yields. This gave the US Dollar some strength and creating downward pressure on Gold.
On the flip side, ongoing geopolitical risks, particularly from the Russia-Ukraine war and Middle East tensions, still provided support to Gold as a safe-haven asset. Traders are now eyeing the US Retail Sales data later today for further market direction.
US Dollar Strengthens Amid Robust Economic Data and Fed Rate Speculation
On the US front, the broad-based US Dollar has been gaining strength due to recent data showing strong growth in the US economy. The S&P Global flash US Services PMI for December rose to its highest level in 38 months, jumping from 56.1 to 58.5.
Meanwhile, the Composite PMI increased to 56.6, a 33-month high. This solid economic performance, despite a dip in the Manufacturing PMI, has raised expectations that the Federal Reserve may not be as dovish as previously anticipated.
Traders are waiting for more clarity on the Fed's rate-cut plans, leading to a quieter, range-bound market ahead of the important FOMC policy decision on Wednesday.
Meanwhile, the US Dollar's rise has put pressure on non-yielding assets like Gold. Higher US Treasury bond yields are supporting the Dollar, while geopolitical risks, such as tensions with North Korea, Russia, and Yemen, are pushing investors toward safe-haven assets like Gold.
Despite this, markets are focusing on the upcoming US Retail Sales data and the Fed's meeting later this week for potential market-moving updates.
Investors are also keeping a close eye on the impact of US President-elect Donald Trump's policies, which could affect inflation and force the Fed to adjust its rate-cut cycle.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) remains under pressure, trading near $2,648.85, down 0.14% as bearish momentum dominates the session. On the 4-hour chart, Gold has slipped below the key pivot point at $2,654.36, indicating weak sentiment.
Immediate resistance stands at $2,672.93, where the 50-EMA sits slightly higher at $2,678.78, capping upside movement. A sustained push above this level could expose Gold to the next resistance levels at $2,690.55 and $2,707.78.
On the downside, immediate support holds firm at $2,634.28, with sellers eyeing the next critical levels at $2,617.80 and $2,601.58.
The Relative Strength Index (RSI) sits at 36, suggesting Gold is approaching oversold territory but still maintaining a bearish bias.
Technical indicators confirm downward pressure, as the price trades below both the pivot point and the 50-EMA, signaling strong seller control. If bears maintain momentum, a break below $2,634.28 could trigger a sharper decline.
However, any reversal above the $2,654.36 pivot would shift sentiment back in favor of the bulls, though immediate upside remains limited.
Conclusion: A Sell Stop entry at $2,647 is favored, targeting $2,634 as a take-profit level, with a stop-loss at $2,659 to mitigate risk.
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- AUD/USD Price Analysis – Dec 17, 2024
AUD/USD Price Analysis – Dec 17, 2024
Daily Price Outlook
During the European trading session, the AUD/USD pair extended its downward trend, struggling to hold ground and slipping to an intra-day low of 0.6337, remaining under pressure near the 0.6340 level.
The pair's decline is largely driven by a bullish US Dollar (USD), which is benefiting from firm expectations that the Federal Reserve (Fed) will signal a more cautious approach to easing monetary policy during its upcoming meeting on Wednesday.
This comes after the Fed is expected to lower interest rates by 25 basis points (bps) to a range of 4.25%-4.50%.
On the other hand, the Australian Dollar remains weak, weighed down by a subdued market sentiment and rising speculation that the Reserve Bank of Australia (RBA) may start cutting its Official Cash Rate (OCR) as early as February.
These factors, combined with the overall risk-averse mood, are keeping the AUD/USD pair under persistent selling pressure. Traders are now closely watching key economic developments and central bank signals for the next directional move.
Australian Dollar Weakens Amid Economic Concerns and Trade Tensions
On the AUD front, the Australian Dollar (AUD) is struggling across the board due to a weak market sentiment and growing concerns that the Reserve Bank of Australia (RBA) might start cutting its key interest rate (Official Cash Rate, or OCR) as early as February.
This has put pressure on the currency, as traders expect further easing of monetary policy. Additionally, a 2% decline in Australia’s Westpac Consumer Confidence for December, following a 5.3% increase in November, has raised concerns about the country's economic outlook.
Furthermore, the AUD is also being weighed down by external factors, particularly concerns about China's economic growth. With US President-elect Donald Trump expected to impose new tariffs on China, the Australian Dollar is feeling the pressure.
This is especially concerning for Australia, as China is its largest trading partner. The combination of internal economic worries and external trade tensions is keeping the AUD under strain and contributing to its ongoing weakness.
AUD/USD – Technical Analysis
The Australian Dollar (AUD/USD) continues to face bearish pressure, trading at $0.63458, down 0.38% for the session. On the 4-hour chart, the pair has slipped below the pivot point at $0.63619, reinforcing near-term downward momentum.
Immediate resistance lies at $0.63823, closely aligned with the 50 EMA at $0.63719, which adds a dynamic ceiling for further recovery. Any sustained move above this level could target the next resistance at $0.64025 and extend gains toward $0.64287.
On the downside, immediate support is observed at $0.63367. A break below this level opens the door for sellers to test further support at $0.63156 and potentially extend declines toward $0.62957.
The Relative Strength Index (RSI) stands at 36, signaling a bearish trend with oversold conditions approaching.
Technical indicators suggest sellers remain firmly in control, with the price trading below both the pivot point and the 50 EMA, highlighting a sustained bearish outlook.
The pair’s inability to reclaim $0.63619 confirms strong selling pressure, with a potential for further downside if the current sentiment persists.
Conclusion: Traders may consider a Sell Stop entry at $0.63509, targeting a take-profit level of $0.63171, with a stop-loss placed at $0.63800 to manage risk.
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USD/CAD Price Analysis – Dec 17, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair continued its upward trend, staying strong around the 1.4280 level and even reaching an intra-day high of 1.4294.
The reason for this rise can be attributed to the US Dollar bouncing back from its losses in the previous sessions, partly due to higher Treasury yields.
At the time, the US Dollar Index (DXY), which tracks the USD against six major currencies, was holding steady near the 107.00 mark. US Treasury bond yields were also higher, with the 2-year at 4.26% and the 10-year at 4.41%.
On the other hand, the Canadian Dollar (CAD) struggled to maintain its ground due to dovish comments from Bank of Canada (BoC) Governor Tiff Macklem.
Speaking on Monday, Macklem mentioned that the BoC is preparing for an uncertain future with increased vulnerability to economic shocks.
He also noted that the central bank would assess the need for further rate cuts cautiously, taking a more gradual approach to monetary policy, depending on how the economy evolves. This outlook has left the CAD under pressure, contributing to USD/CAD's bullish momentum.
Challenges for the Canadian Dollar Amid Political Uncertainty and Economic Concerns
As we mentioned, the Canadian Dollar (CAD) has been facing challenges recently. In addition to the Bank of Canada’s (BoC) dovish stance, there are political issues weighing on the currency.
Prime Minister Justin Trudeau is facing pressure to resign after Finance Minister Chrystia Freeland announced on Monday that she is stepping down from the Cabinet. This political uncertainty has added to the CAD's struggles, making it harder for the currency to strengthen.
On top of this, the BoC Governor, Tiff Macklem, has made comments that suggest the central bank is preparing for a more uncertain future. Traders will be closely watching Canada’s November Consumer Price Index (CPI) inflation data, which is due later today.
Moreover, the release of November’s US retail sales data in the North American session could also impact the currency market. With these developments, the CAD faces a challenging environment in the near term.
US Dollar Strengthens Amid Higher Treasury Yields and Strong Economic Data, Focus on Fed's Rate Cut Decision
On the US front, the broad-based US dollar is gaining support as it recovers from losses in the previous two sessions.
This strength is linked to higher Treasury yields, with the US Dollar Index (DXY) trading around 107.00. The yields on US Treasury bonds for both 2-year and 10-year bonds are at 4.26% and 4.41%, respectively.
Recent economic data showing strong growth in the US is also supporting the USD. The S&P Global flash US Services PMI for December jumped to 58.5, its highest in 38 months, and the Composite PMI rose to 56.6, the highest in 33 months. These figures signal solid economic performance, even though the Manufacturing PMI showed a slight decline.
Traders are now focused on the upcoming decision from the US Federal Reserve (Fed), particularly the possibility of an interest rate cut. The market is nearly fully pricing in a quarter-point rate cut at the Fed’s December meeting.
Moving ahead, traders focus is on the Fed's projections for 2025, as this will give more clarity on their future plans. Therefore, the strong US economic data, combined with expectations of a potential rate cut, has raised hopes that the Fed might not be as dovish as previously expected, which is adding support to the USD.
USD/CAD - Trade Ideas
USD/CAD is trading at $1.42708, up 0.19%, maintaining its bullish momentum as buyers push prices above key levels.
On the 4-hour chart, the pair trades above the pivot point at $1.42549, signaling continued upside potential. Immediate resistance stands at $1.42923, with a breakout opening the path toward the next key levels at $1.43147 and $1.43365.
The 50 EMA, currently at $1.42065, serves as strong support, reinforcing bullish sentiment. A retest of the pivot point near $1.42549 could attract fresh buyers, as the uptrend remains intact.
On the downside, immediate support rests at $1.42243, with further levels at $1.41986 and $1.41689 offering strong downside protection.
The Relative Strength Index (RSI) stands at 68, hovering near overbought territory but still signaling strong buying pressure. This suggests that USD/CAD could see further upside before any significant pullback.
Technical indicators, including price action above the 50 EMA and the pivot point, confirm the bullish outlook. Traders are closely watching for a decisive move above $1.42923, which could extend the rally to higher resistance levels.
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EUR/USD Price Analysis – Dec 16, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to maintain its gains, slipping back below the key 1.0500 level. The pair fell to an intraday low of 1.0484, reflecting ongoing pressure.
The main factor behind this decline was the dovish stance of the European Central Bank (ECB). ECB President Christine Lagarde, along with several other policymakers, expressed support for further rate cuts and a gradual move towards a neutral rate around 2%.
Meanwhile, the US Dollar staged a rebound, pushing the US Dollar Index (DXY) close to the important 107.00 level.
This renewed strength in the Greenback, combined with uncertainty surrounding the Federal Reserve’s upcoming interest rate decision on Wednesday, kept the USD volatile, contributing to the EUR/USD’s downward pressure.
ECB Signals Further Rate Cuts and Mixed Economic Data Weigh on EUR/USD
On the EUR front, the European Central Bank (ECB) is signaling further policy easing. ECB President Christine Lagarde mentioned that they may cut interest rates more if the data shows that inflation is slowing down.
She also noted that inflation in services has dropped sharply. Additionally, ECB Vice President Luis de Guindos agreed that the bank would continue with its current approach for the time being, suggesting more rate cuts are likely.
Recently, the ECB reduced its Deposit Facility rate by 25 basis points to 3%, part of a total of 100 basis points in rate cuts this year.
With inflation in the Eurozone under control and concerns about economic risks, markets expect the ECB to cut rates by another 100 basis points by June 2025.
On the economic front, the latest data from the Eurozone showed some positive signs. The December Purchasing Managers' Index (PMI) was better than expected, rising to 49.5 from 48.3, suggesting that business activity in the region is slowing down less than before.
The Services PMI improved, expanding to 51.4, which was better than analysts predicted. However, the Manufacturing PMI remained in contraction at 45.2.
Meanwhile, the German and French PMIs also showed improvement, mainly due to better performance in the services sector, although they remained below the 50.0 threshold, signaling ongoing contraction.
In politics, French President Macron appointed Francois Bayrou as the new prime minister, replacing Michel Barnier, who lost a no-confidence vote.
Therefore, the ECB's signals for further rate cuts and the mixed economic data, including a slower pace of contraction in business activity, may put downward pressure on the EUR. This could lead to continued weakness in the EUR/USD pair, especially against a strong USD.
US Dollar Strength and Fed's Rate Cut Expectations Pressure EUR/USD
On the US front, the US Dollar (USD) has regained some strength, pushing the US Dollar Index (DXY) closer to the key resistance level of 107.00. This rebound has caused the EUR/USD pair to give up its earlier gains.
The USD is expected to stay volatile as investors await the Federal Reserve’s (Fed) interest rate decision on Wednesday. The Fed is widely expected to lower its key borrowing rates by 25 basis points, bringing them to 4.25%-4.50%.
Investors will closely examine the Fed’s Summary of Economic Projections, also known as the “dot plot,” which outlines where policymakers expect interest rates to go in the medium and long term.
However, the recent Bloomberg survey revealed that most economists expect the Fed’s outlook for 2025 to be less dovish, meaning they predict fewer interest rate cuts.
Economists anticipate the Fed will reduce rates three times next year, assuming progress in controlling inflation slows. However, there are growing concerns about inflation risks, especially with the potential impact of President-elect Donald Trump's policies, such as new tariffs and tax cuts.
Today, investors will also pay attention to the S&P Global PMI report for December, which will provide further insights into the US economy’s performance.
Therefore, the US Dollar's strength and expectations of a 25 basis point rate cut by the Fed could pressure the EUR/USD pair, especially if the Fed's outlook signals fewer rate cuts in 2025. The pair may face further downward pressure as a result.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.05188, up 0.19%, as the pair extends its recovery above the pivot point of $1.05032. The immediate resistance level lies at $1.05480, a critical threshold for short-term buyers.
A break above this level could see the euro challenging higher resistance at $1.05914 and potentially $1.06294, driven by renewed bullish momentum and improving sentiment.
On the downside, immediate support is at $1.04525, followed by stronger safety nets at $1.04204 and $1.03858. The pair remains supported near the 50 EMA at $1.05031, highlighting stability around the pivot zone.
Traders should watch this level closely, as a sustained position above it suggests further upside potential, while a breach below could shift focus to the support zones.
The Relative Strength Index (RSI) stands at 54, reflecting neutral momentum and signaling room for further gains if buyers take control.
A cautious bullish tone persists as long as the EUR/USD pair holds above the pivot point. The buy limit entry near $1.05037, targeting $1.05491, aligns well with the current technical structure, with a stop loss placed at $1.04699 for risk management.
In conclusion, while market conditions remain delicate, the EUR/USD appears poised for upward movement above $1.05032, with near-term targets pointing to $1.05480 and beyond.
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GBP/USD Price Analysis – Dec 16, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair climbed to around 1.2647, briefly reaching an intraday high of 1.2671.
This upward movement was driven by the release of the UK’s flash S&P Global/CIPS Purchasing Managers’ Index (PMI) data.
The report revealed that overall business activity in the UK expanded modestly, with the PMI rising to 50.5. Meanwhile, the US dollar weakened, turning bearish ahead of key monetary policy meetings this week.
Moving ahead, Federal Reserve is set to meet on Wednesday, followed by the Bank of England on Thursday, adding to market anticipation and influencing the currency pair's performance.
GBP/USD Volatility Set to Increase Ahead of Fed and BoE Meetings Amid Mixed UK PMI Data
On the BoE front, the release of the UK’s flash S&P Global/CIPS PMI data offered mixed signals. Overall business activity expanded at a steady pace, with the PMI rising to 50.5.
However, the manufacturing sector showed a faster-than-expected contraction, with its PMI dropping to 47.3 from 48.0 in November, against forecasts of 48.1.
On the other hand, the services sector grew more robustly, with its PMI climbing to 51.4, beating expectations of 51.0 and the previous month’s 50.8.
Despite this moderate growth, businesses remain cautious due to fragile consumer confidence, tighter budgets, and cutbacks in non-essential spending.
The report also revealed a decline in staffing for the third straight month, partly due to upcoming increases in National Insurance contributions.
Meanwhile, the Pound Sterling gained strength against the US Dollar, which remained subdued with the US Dollar Index (DXY) around 107.00.
Investors are bracing for volatility in the GBP/USD pair this week as both the Federal Reserve (Fed) and the Bank of England (BoE) are set for their final policy meetings of the year.
The Fed is expected to reduce interest rates by 25 basis points to 4.25%-4.50%, while the BoE is likely to keep its rates unchanged at 4.75%.
However, with these rate decisions largely priced in, market attention is shifting toward the outlook for 2025, where traders anticipate three rate cuts from both central banks.
In addition to the central bank meetings, UK economic data will also influence the Pound this week. Employment figures for the three months ending in October and the Consumer Price Index (CPI) data for November will be released on Tuesday and Wednesday.
Any significant deviation from expected numbers could influence market expectations for the BoE’s future actions and its policy stance for 2025.
(GBP/USD) – Technical Analysis
The GBP/USD pair is trading at $1.26392, up 0.24%, as buyers extend gains above the pivot point of $1.26160. The immediate resistance sits at $1.26725, where a break higher could open the door to further upside, targeting resistance levels at $1.27194 and $1.27860.
Market sentiment remains cautiously optimistic, with the pound benefiting from renewed risk appetite and technical buying momentum.
On the downside, immediate support is seen at $1.25679, followed by further levels at $1.25239 and $1.24866, which could attract dip-buyers if the pair retraces.
Despite the current uptick, the 50-day EMA at $1.27096 looms overhead as a key hurdle for bullish continuation, and any failure to breach this resistance could trigger a pullback.
The Relative Strength Index (RSI) stands at 40, signaling mild bearish pressure but also leaving room for a potential recovery.
The technical setup suggests cautious buying above the pivot point at $1.26160, with a target of $1.26742 and a stop loss at $1.25862 to manage downside risks.
In conclusion, the GBP/USD remains in a consolidative phase, but the short-term bias tilts bullish above $1.26160.
A sustained push above $1.26725 would reinforce upward momentum, while failure to hold the pivot could expose the pair to further selling pressure.
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