2023-12-30 00:00

AUD/USD price action on the longer-term weekly chart now sees AUD bulls retesting the downward trendline resistance level (black) for the fourth time since February 2021. A major area of confluence like this could be central to traders and their directional biases in 2024. A confirmation close above could see a runup towards the 0.7000 psychological handle, while a failure may bring back into consideration the 0.6500 support level and beyond. This article is specifically dedicated to analyzing the technical outlook for the Australian dollar. If you are interested in the currency’s fundamental prospects, request the full Q1 forecast now! AUD/USD Weekly Chart Source: TradingView, Prepared by Warren Venketas Focusing on the daily chart below, it is clear that the pair is in overbought territory as measured by the Relative Strength Index (RSI). I expect a pullback lower in January but with bullish momentum (prices trading above both 50-day and 200-day moving averages) in favour, downside may be short-lived. In conclusion, I do not expect any meaningful appreciation relative to current levels but my longer-term view as we head further into 2024 should facilitate upside sustenance for the AUD ceteris paribus. AUD/USD Daily Chart Source: TradingView, Prepared by Warren Venketas Key resistance levels: 0.7000 0.6822 Trendline resistance Key support levels: 0.6700 0.6595 200-day MA (blue) 0.6500 https://www.dailyfx.com/news/forex-australian-dollar-technical-forecast-aud-usd-enters-q1-at-key-resistance-20231230.html

2023-12-29 21:00

Looking for new strategies for 2024? Explore the top trading ideas developed by DailyFX's team of experts The Federal Reserve's unexpected pivot at its December monetary policy meeting has significantly reduced the probability of a downturn in the coming year, making the soft-landing scenario the most likely outcome for the economy. For context, policymakers have signaled that they will prioritize growth over inflation and indicated that they will deliver numerous rate cuts over the next 12 months, sending yields reeling in late 2023 – a situation that has eased financial conditions significantly. The relaxation of financial conditions, in turn, has boosted stocks, steering major U.S. equity indices toward fresh records. Elevated asset values are expected to contribute to an enhanced wealth effect in the near term, helping support household spending- the main driver of U.S. GDP. With the economic outlook stabilizing and already showing signs of improvement, small-cap stocks, which have historically thrived in times of lower market uncertainty, should fare well in Q1 2024 after lagging for much of 2023, possibly outperforming larger companies. This leaves Russell well-positioned to command strength early in the new year. Focusing on technical analysis, the Russell 2000 experienced a surge towards the end of the fourth quarter in 2023, but encountered stiff resistance at 2,050, a key ceiling defined by the 50% Fibonacci retracement of the November 2021/October 2023 selloff. To have more confidence in the bullish thesis, the small-cap benchmark must decisively climb and close above the 2,050 level, with a successful breakout opening the door for a rally toward 2,150. Subsequent gains could signal a possible continuation towards 2,300, followed by 2,355. In the of event of unexpected and sustained weakness, the bullish bias would be null and void if prices dip and close below support near the psychological 1,900 level on a weekly candle. If you're looking for an in-depth analysis of U.S. equity indices, our first-quarter stock market trading forecast is packed with great fundamental and technical insights. Get it now! Russell 200 Weekly Chart Source: TradingView, Prepared by Diego Colman https://www.dailyfx.com/news/bullish-russell-2000-as-soft-landing-scenario-gets-traction-20231229.html

2023-12-29 14:30

British Pound Fundamental Outlook In the Q4 British Pound forecast we questioned whether the Bank of England (BoE) was finished hiking interest rates and if they would ease into a period of consolidation to let the raft of rate hikes work their way through the economy. This question has now been answered. It is now highly unlikely that the BoE will move rates higher again in the foreseeable future and a series of quarter-point rate cuts are now fully priced into the market. The new question is, how long will the UK central bank push back against these market expectations before they start to ease monetary policy? UK Inflation Takes a Sharp Turn Lower The recently released Inflation Report saw price pressures ease sharply in November, hitting the lowest level seen in more than two years. A combination of falling fuel, food and household good prices pushed annual inflation down to 3.9% from 4.6% in October, well below market forecasts of 4.4%. This fall below 4% is in contrast to the BoE’s predications at the November MPC meeting where CPI inflation was seen falling to 4.5% in Q1 2024 and 3.75% in Q2 2024. The report suggested that inflation would fall to target (2%) in two years’ time. It looks likely that the BoE will have to revise their inflation expectations a lot lower in the next quarterly MPC Report in February. BoE November Monetary Policy Report - Forecast Summary The above BoE Summary also shows that UK growth is expected to flatline in 2024 before a very modest pick-up in 2025. If these projections are correct, and they may be upgraded in February, it will become increasingly hard for the BoE to ignore market calls for a series of interest rate cuts next year, and starting sooner rather than later. Looking at current expectations for UK interest rates next year, financial markets are already pricing in five 25 basis point rate cuts next year, with the first move lower fully priced in at the May MPC meeting. Interested in learning how retail positioning can shape GBP/USD’s path? Our sentiment guide explains the role of crowd mentality in FX market dynamics. Get the free guide now! The difference between the Bank of England’s and the market's expectations on the path of interest rates is set to steer the British Pound over the coming quarter. The BoE is not alone in trying to temper rate cut expectations with the US Federal Reserve and the European Central Bank also trying to talk back market expectations. The messaging from all three central banks will add volatility to GBP/USD and EUR/GBP in the coming months and will give traders a range of opportunities to trade central bank talk. https://www.dailyfx.com/news/british-pound-q1-forecast-can-the-boe-temper-uk-rate-cut-expectations-20231229.html

2023-12-29 09:55

FTSE 100 consolidates below September and December highs The FTSE 100 is expected to remain below its September and December highs at 7,747 to 7,769 on the last trading day of the year with markets closing early. UK house prices falling more than expected in December have not had much of an impact on the index which looks bid as trading begins. While Thursday’s low at 7,705 underpins, immediate upside pressure should be maintained with the 7,747 to 7,769 region representing upside targets ahead of the 7,800 mark. A slip through 7,705 would likely retest the 7,702 October peak below which the November-to-December uptrend line can be spotted at 7,664. DAILY FTSE 100 CHART Chart Prepared by Axel Rudolph DAX 40 tries to end year on a high The DAX 40 index, which has risen by around 19% year-to-date, is trying to finish the year on a high with it targeting last and this week’s highs at 16,809 to 16,812. If bettered, the December record high at 17,003 could be back in the pipeline. Support below Thursday’s 16,686 lies at last week’s 15,595 low. Only if this low were to give way, would the July peak at 16,532 be back on the map but should offer support. DAILY DAX CHART Chart Prepared by Axel Rudolph https://www.dailyfx.com/news/ftse-100-dax-40-on-track-for-another-day-of-gains-on-last-trading-day-of-year-20231229.html

2023-12-29 08:16

POUND STERLING ANALYSIS & TALKING POINTS UK housing prices strengthen slightly since November. Muted day expected final trading day of 2023 may provide some volatility. GBP/USD eyes rising wedge break. GBPUSD FUNDAMENTAL BACKDROP TECHNICAL ANALYSIS GBP/USD DAILY CHART Chart prepared by Warren Venketas, IG GBP/USD price action is more interesting than and contains several technical indications. Short-term there is a forming rising wedge (dashed black line) although the wedge is not typical in its positioning (downtrend), a break below wedge support could see the pattern unfold as per normal. The Relative Strength Index (RSI) is declining off overbought levels with corresponding prices ticking higher, reflecting bearish/negative divergence that could suggest subsequent downside to come. Bulls are also approaching long-term symmetrical triangle resistance (black) around the 1.2848 swing high which does not rule out further upside. Key resistance levels: 1.2900 Triangle resistance 1.2848 Wedge resistance Key support levels: 1.2764 Wedge support 1.2613 MIXED IG CLIENT SENTIMENT (GBP/USD) IG Client Sentiment Data (IGCS) shows retail traders are currently net SHORT on GBP/USD with 51% of traders holding SHORT positions (as of this writing). https://www.dailyfx.com/news/forex-gbp-usd-price-forecast-fading-bullish-momentum-for-pound-wv-20231229.html

2023-12-28 21:30

2023 was a year that lessened the stature of central bank forward guidance. Forward guidance is a tool used by central banks to communicate monetary policy projections. Historically, markets viewed this messaging in high regard as it often tied into relatively accurate outcomes. This year, forward guidance regularly misaligned with incoming economic data that includes the ECB and Federal Reserve alike. The resultant impact is one of increased volatility while creating doubt around the central bank's credibility. Many of the global central banks now place emphasis on ‘data dependency’ to assist in outlining an accurate rate path. The implication for traders and investors is less reliance on forward guidance but greater understanding of economic data to make rational trading decisions. The DailyFX educational section contains many of these fundamental concepts and how it can influence financial markets. Inflation and labour markets will continue to be closely monitored in 2024 as central banks look to unwind its tight monetary policy stances without reigniting inflationary pressures. From a technical analysis standpoint, price action in and around data releases has generated greater volatility and, therefore, risk management has become even more important. My trading goal for 2024 will be to consistently analyse economic data while maintaining strict risk management techniques. https://www.dailyfx.com/news/the-collapse-of-central-bank-forward-guidance-20231228.html