2023-12-22 11:00

Article by IG Senior Market Analyst Axel Rudolph FTSE 100, DAX 40 Analysis and Charts FTSE 100 slips as festive season approaches After four consecutive days of gains, the FTSE 100 is heading back down again on profit-taking ahead of the Christmas holiday. The fall is happening despite UK retail sales unexpectedly rising 1.3% in November compared to October, probably because the final reading of Q3 is showing that the UK economy is on the brink of recession. A slip through Thursday’s low at 7,654 would engage the 10 August high and November-to-December uptrend line at 7,624 to 7,604. Were Friday’s intraday high to be exceeded, though, Thursday’s high at 7,709 could be reached ahead of last week’s 7,725 peak. FTSE 100 Daily Chart DAX 40 continues to flatline near record highs The DAX 40 continues to trade sideways below its mid-December record high, made marginally above the 17,000 mark while remaining above Wednesday’s 16,595 low. US durable goods, personal income, new home sales, and the Federal Reserve’s (Fed) preferred PCE inflation gauge may provide some volatility later in the day. Were the 16,595 low to give way, the July peak at 16,532 could be revisited but should hold. A rise above Wednesday’s high at 16,811 would be bullish and probably lead to the 11 December high at 16,827 and at last Friday’s 16,889 high being reached. Further up lies the December all-time peak at 17,003. DAX 40 Daily Chart https://www.dailyfx.com/news/ftse-100-slips-as-uk-on-brink-of-recession-while-dax-40-flatlines-20231222.html

2023-12-22 06:50

U.S. DOLLAR TALKING POINTS & ANALYSIS US GDP leaves greenback shaky. Core PCE in focus later today and could dictate terms for the rest of 2023. DXY bulls seek out upside reversal. DOLLAR INDEX FUNDAMENTAL BACKDROP The US dollar attempts to stop yesterday’s bleeding after US GDP missed expectations alongside a decline in core PCE prices. The stubborn jobless claims data was not enough to pushback against these factors and now places the greenback roughly 1.6% lower year-to-date. After the Fed’s dovish shift in tone, some Fed officials have tried to resist the extreme repricing in rate expectations as to the timing of the first cut. As it stands, money markets (refer to table below) forecast the possibility of a rate cut as soon as Q1 2024. This may be a bit too optimistic, leaving room for a risk to the upside for the USD. IMPLED FED FUNDS FUTURES Source: Refinitiv That being said, projections for today’s core PCE index (Fed’s preferred measure of inflation) is lower and could extend the current narrative. Durable goods orders and Michigan consumer sentiment may tick higher but if inflation dips, I expect markets to place more emphasis on the inflation measure. Today marks the last day for 2023 that could set the tone for the final week trading week of the year as no other high impact economic data is due from a dollar point of view. Next week is likely to reflect a continuation of today’s data with minimal volatility across the board. TECHNICAL ANALYSIS U.S. DOLLAR INDEX (DXY) DAILY CHART Chart prepared by Warren Venketas, IG Price action on the daily DXY chart above shows a breakout from the recent symmetrical triangle pattern (dashed black lines) with bears looking to push below the long-term trendline support zone (black)/101.74 swing low. This key inflection point could give us an indication as to short-term directional bias heading into 2024. The Relative Strength Index (RSI) suggest bullish/positive divergence that may keep USD bulls in play. Resistance levels: 104.45/50-day moving average (yellow) 104.00 200-day moving average (blue) Trendline support Support levels: 101.74 101.00 https://www.dailyfx.com/news/forex-usd-price-forecast-dxy-faces-barrage-of-us-data-wv-20231222.html

2023-12-21 23:00

US DOLLAR FORECAST – GOLD PRICES, EUR/USD, GBP/USD The U.S. dollar, as measured by the DXY index, sinks to its lowest level since early August With U.S. yields biased to the downside and risk-on sentiment in full swing, the path of least resistance is lower for the greenback This article focuses on the technical outlook for EUR/USD, GBP/USD and gold, analyzing the main price thresholds to watch in the coming days Most Read: Russell 2000 Rises Toward Key Fibonacci Resistance. Will It Break Out This Time? The U.S. dollar, as measured by the DXY index, sank nearly 0.65% to 101.75 on Thursday, hitting its lowest level since late July, with thinner liquidity ahead of the Christmas holidays possibly amplifying swings and, in this case, losses for the American currency. The Federal Reserve’s pivot this month has been largely responsible for the greenback’s recent pullback. Although the Fed kept borrowing costs unchanged at its last meeting of the year, it signaled that it would slash rates several times in 2024, officially acknowledging that talk of easing its stance has begun. The central bank’s dovish posture, which took many investors by surprise, has triggered a major slump in Treasury rates, sending the 2-year note below 4.40%, a significant retracement from the cycle high of 5.25%. The 10-year bond, for its part, has plunged beneath the 4.0% threshold, after being on the verge of topping 5% in late October. Will the US dollar keep on falling or mount a bullish turnaround? Get all the answers in our quarterly outlook! With U.S. yields biased to the downside and risk-on sentiment on full display in equity markets, the U.S. dollar may extend losses in the near term. This could mean more gains for gold prices, EUR/USD and GBP/USD moving into the last week of 2023. While the greenback’s outlook could change next year if U.S. economic strength and lack of progress on inflation prevent rate cuts, the narrative is unlikely to change for the time being. New narratives take time to build and develop, and often require confirmation from data to gain traction. EUR/USD TECHNICAL ANALYSIS EUR/USD is pressing against cluster resistance near the 1.1000 handle after Thursday’s rally. If buyers manage to propel prices above this technical barrier in the coming trading sessions, a potential move toward 1.1085 might be on the cards. On further strength, the focus shifts higher to 1.1125, which corresponds to the upper boundary of a short-term rising channel. Conversely, if the pair gets rejected at resistance and sellers return in force to exploit the reversal, initial support is located around 1.0830, near the 200-day simple moving average. This region might offer a potential foothold during a retracement ahead of a rebound, but a move below it could be ominous, paving the way for a drop toward channel support at 1.0770. EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView 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! GBP/USD TECHNICAL ANALYSIS After some softness earlier in the week, GBP/USD managed to rebound off confluence support around the 1.2600 mark, consolidating above the 1.2700 threshold on Thursday. If gains accelerate heading into the weekend, the first technical barrier to overcome stretches from 1.2727 to 1.2760. Based on historical patterns, prices might face resistance in this range, but a breakout could propel the pair towards 1.2840. In the event of a bearish reversal, potentially magnified by low holiday trading volume, the first defensive line against a pullback is located around the 1.2600 handle, as previously articulated. Should this floor cave in, attention will gravitate towards the psychological 1.2500 level near the 200-day simple moving average, followed by 1.2455. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView Acquire the knowledge needed for maintaining trading consistency. Grab your "How to Trade Gold" guide for invaluable insights and tips! GOLD PRICE TECHNICAL ANALYSIS Gold fell sharply early this month when a fakeout devolved into a large selloff, but has regained ground in recent days after bouncing off trendline support at $1,975, with bullion currently approaching $2,050 – a key resistance. If history is any guide, prices could be rejected from this area, but a breakout could open the door to a retest of $2,075. Continued strength could bring back focus on the all-time high at $2,150. On the other hand, if the recovery stalls and XAU/USD pivots lower, technical support emerges at $2,010. Maintaining this floor is imperative for the bulls; a failure to do so could reinforce downward momentum, sending the precious metal reeling toward trendline support near $1,990. Below this threshold, the crosshairs will be on $1,975. GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-sinks-holds-on-for-dear-life-setups-on-gold-eur-usd-gbp-usd-20231221.html

2023-12-21 19:51

USD/JPY PRICE, CHARTS AND ANALYSIS: USD/JPY Needs to Clear the 142.00 Hurdle Before 140.00 Comes into Focus. Will US PCE Data Follow a Similar Path as US GDP and Lead to US Dollar Weakness. IG Client Sentiment Shows That 64% of Traders are Net-Short on USD/JPY. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. Most Read: US Q3 GDP Revised Lower Dragging the Dollar Index Along, Gold Rises USD/JPY FUNDAMENTAL BACKDROP USDJPY resumed its selloff today helped in part by a downward revision to US Q3 GDP. As we speak USDJPY is testing the 142.00 support area with a break below opening up the potential for further downside ahead of the year end. The final Q3 GDP number was revised downward today which showed a slowdown in consumer spending. Other data from the US today also missed estimates with the Philadelphia Fed Manufacturing Survey revealed that business conditions worsened with a print of -10.5, well above the forecasted figure of -3. On a positive note, the job market remains resilient with initial jobless claims growing by 205k beating estimates of 215k. Source: US Bureau of Economic Analysis The BoJ really did a number this week reiterating their commitment to the current easy monetary policy stance. As things stand and even with US Dollar weakness, I see limited downside for USDJPY until we get more concrete comments around a policy shift. Japanese inflation this week also showed sign of stickiness which does not help the BoJ as they look to get wage growth to outpace inflation. This will be the key factor in determining when the BoJ may be ready to finally effect the long-awaited shift in monetary policy. RISK EVENTS AHEAD PRICE ACTION AND POTENTIAL SETUPS USDJPY USDJPY from a technical perspective is attempting to break below the 142.00 support area before eyeing the psychological 140.00 handle. Personally, I think downside will be limited, particularly following stickier Japanese inflation and recent comments from the BoJ. However, US PCE data tomorrow could assist in providing a catalyst for a move lower. Alternatively, a push higher here faces its first significant area of resistance around the 144.00 mark before the psychological 145.00 level comes into focus. Key Levels to Keep an Eye On: Support levels: 142.00 141.00 140.00 Resistance levels: 144.00 145.00 146.50 USD/JPY Daily Chart Source: TradingView, prepared by Zain Vawda IG CLIENT SENTIMENT Taking a quick look at the IG Client Sentiment Data whichshows retail traders are 64% net-short on USDJPY. Given the contrarian view adopted here at DailyFX, is USDJPY destined to rise back toward the 145.00 handle? https://www.dailyfx.com/news/usd-jpy-price-forecast-usd-jpy-may-struggle-to-find-aceeptance-below-the-142-00-mark-20231221.html

2023-12-21 16:05

RUSSELL 2000 FORECAST The Russell 2000 rebounds following Wednesday’s selloff While the small-cap equity index appears overbought and prone to a pullback in the near term, the medium-term outlook remains constructive This article looks at the Russell 2000’s key technical levels worth watching in the coming days Most Read: US Q3 GDP Revised Lower Dragging the Dollar Index Along, Gold Rises After Wednesday's selloff, the Russell 2000 rebounded moderately on Thursday, along with the Nasdaq 100 and S&P 500, coming within striking distance from breaching an important technical ceiling at 2,050, as FOMO mentality prevailed, with traders trying to take advantage of positive sentiment in the financial markets. The recent pivot by the Federal Reserve during its December monetary policy meeting has created a more benign environment for small-cap stocks. By prioritizing growth over inflation and hinting at multiple rate cuts in 2024, policymakers have likely steered the country away from a downturn. This unexpected move has tilted the scales in favor of a soft landing, improving prospects for corporate earnings in the coming year. The ripple effects of the U.S. central bank’s dovish posture have been very noticeable. Financial conditions, for instance, have eased dramatically, sending yields tumbling and the main U.S. equity indices toward fresh records. The upswing in asset values, if sustained, should create a virtuous cycle for the economy, magnifying the wealth effect and boosting household spending – the main driver of GDP. Although stocks appear to be overbought, the improving economic outlook will provide continued support heading into 2024. This suggests that the recent bull run is likely to continue, perhaps after a brief period of market consolidation. From a technical analysis standpoint, the Russell 2000 is moving closer toward an important resistance near 2,050, established by the 50% Fibonacci retracement of the November 2021/October 2023 slump. Sellers will defend this barrier tooth and nail based on historical precedent, but in the event of a breakout, a potential rally towards 2,147, representing the 61.8% Fib retracement, could ensue. On the flip side, if the bears regain control of the market and spark a reversal lower, the Russell 2000 may gravitate towards the psychological 1,900 level. While the small-cap index could find stability in this area before resuming its upward trajectory, a breakdown could pave the way for a more significant retreat, with the 50-week simple moving average at 1,850 acting as the next floor. If you are looking for a more comprehensive view of U.S. equity indices, our quarterly stock market trading guide is packed with great insights. Grab your free copy now! RUSSELL 2000 WEEKLY CHART Russell 2000 Chart Created Using TradingView https://www.dailyfx.com/news/russell-2000-rises-toward-key-fibonacci-resistance-will-it-break-out-this-time-20231221.html

2023-12-21 13:57

US GDP Q3 ’23 (FINAL) KEY POINTS: US GDP Growth Q3 Revised Lower to 4.9%. Real DGP in the Second Quarter Q2 Came in at 2.1%. US Dollar Index (DXY) Extends Losses as Gold Trades Back Above the $1940/OZ Handle. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. READ MORE: Bitcoin (BTC) Eyes a Fresh Multi-Month High, Solana (SOL) Continues to Outperform US Q3 GDP has been revised lower to 4.9%, slightly below 5.2% in the second estimate, but matching the 4.9% initially reported in the advance estimate. The estimate released today is based on more complete source data than were available for the "second" estimate issued last month. The downgrade primarily reflected a downward revision to consumer spending. Imports, which are a subtraction in the calculation of GDP, were revised down as well. It is important to note though that the increase in real GDP (2.1% increase) reflected increases in consumer spending, private inventory investment, exports, imports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment. It is important to note though that the increase in real GDP (2.1% increase) reflected increases in consumer spending, private inventory investment, exports, imports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment. Compared to the second quarter, the acceleration in real GDP in the third quarter primarily reflected an upturn in exports and accelerations in consumer spending and private inventory investment that were partly offset by a deceleration in nonresidential fixed investment. Imports turned up. Source: US Bureau of Economic Analysis PERSONAL INCOME Current-dollar personal income increased $196.2 billion in the third quarter, a downward revision of $22.1 billion from the previous estimate. The increase in the third quarter primarily reflected increases in compensation which was led by private wages and salaries as the US labor market continues its resilience. The most telling metric and something i have spoken about at length this year as US consumers continued to spend freely, was a drop off in disposable income in Q4. There are signs of this beginning but the robust labor market for now and salaries and wage growth are keeping consumer spending and disposable income supplemented. US ECONOMY MOVING FORWARD The US economy has showed signs of a slowdown of late and todays data print just adds to the narrative. Fed rate cut expectations are likely to be dovishly repriced and if US Core PCE data underwhelms tomorrow this could leave the US Dollar under pressure heading into 2024. Of course, such repricing is going to continue on a per data release basis, but the signs of a slowdown are definitely growing. This will also rekindle recessionary fears, but initial jobless claims once again beat estimates. At this stage the Fed appear on their way to winning the fight against inflation but there remain external threats which could hamper the last bit of progress needed to get the Fed over the line and inflation below 2%. MARKET REACTION The initial market reaction following the news has seen the DXY continue its slide flirting with the most recent swing lows around the 101.75 handle. A break lower than that brings the support area around 100.84 into focus with US PCE Data out tomorrow this could leave the DXY vulnerable and a possible retest of the 100.00 psychological mark. DXY Daily Chart, October 26, 2023 Source: TradingView, prepared by Zain Vawda GOLD REACTION Gold continues to find support and has held the high ground for the majority of the week. However, as I mentioned earlier in the week in my Gold article upside beyond the $2050 remain elusive at this stage. Market participants may be looking at US PCE data out on Friday to provide a jolt of volatility which may spur on a bigger move. Right now, though the range between $2020-$2050 looks likely to hold. XAU/USD Daily Chart, December 21, 2023 Source: TradingView, prepared by Zain Vawda https://www.dailyfx.com/news/us-q3-gdp-revised-lower-dragging-the-dollar-index-along-gold-rises-20231221.html