2023-12-17 05:05

US DOLLAR FORECAST The U.S. dollar sold off last week, pressured by the U.S. central bank’s pivot The Fed’s dovish stance sent interest rate expectations sharply lower, dragging U.S. yields in the process This article looks at the technical outlook for EUR/USD, USD/JPY and GBP/USD following recent market events Most Read: Gold Price Forecast: Fed Pivot Reversal or Damage Control? Key Levels for XAU/USD The U.S. dollar, as measured by the DXY index, suffered heavy losses last week, pressured by the collapse in U.S. Treasury yields across most tenors following the Federal Reserve’s pivot. Although the U.S. central bank held its policy settings unchanged on Wednesday, it embraced a dovish posture - a turnaround that appeared unlikely based on recent rhetoric. To offer some context, the Fed adopted a more optimistic view of the inflation outlook, acknowledged the start of discussions about rate cuts and signaled 75 basis points of easing in 2024 at the end of its last meeting of the year. The unexpected shift in the strategy caught investors by surprise and on the wrong side of the trade, sending interest rate expectations sharply lower (see chart below). 2024 FED FUNDS FUTURES (IMPLIED YIELDS) Source: TradingView New York Fed President John Williams contested the idea of policymakers openly talking about slashing borrowing costs in an interview before the weekend, but Wall Street downplayed this contradiction. Many theories have emerged to explain the change in tune, but most traders believe it is not a complete policy reversal, but a damage control tactic to tamp down animal spirits and prevent financial conditions from easing further. The first days of the week won’t feature any major risk events, but Friday will hold significance with the release of Personal Income and Outlays, a key report containing information on consumer spending and, more importantly, core PCE, the Fed's favorite inflation gauge. For the FOMC’s path, as discounted by market participants, to remain dovish, personal spending and core PCE must exhibit restraint. A failure to show moderation would signal that the economy is still running hot and that it would be premature to ease the policy stance - a scenario that could spark a hawkish repricing of interest rate expectations, boosting the greenback in the process. For a complete analysis of the euro’s medium-term prospects, request a copy of our quarterly trading outlook. It is free! EUR/USD TECHNICAL ANALYSIS EUR/USD rallied last week, but it failed to clear cluster resistance in the 1.1015 area, with prices pivoting lower upon testing this region. If bullish momentum continues to diminish and sellers re-enter the scene, the first line of defense against a bearish assault lies at 1.0830, near the 200-day simple moving average. Subsequent losses could bring attention to 1.0770, followed by long-term trendline support at 1.0640. On the other hand, if the pair manages to consolidate higher and takes out overhead resistance stretching from 1.0995 to 1.1020, a potential move towards the 1.1100 handle could be in the cards. Breaching this ceiling may prove challenging for the bulls, but in the event of a breakout, the prospect of revisiting the 2023 highs in the vicinity of 1.1275 cannot be dismissed. EUR/USD TECHNICAL CHART EUR/USD Chart Prepared Using TradingView USD/JPY TECHNICAL ANALYSIS USD/JPY plummeted last week, breaching and closing below the 200-day simple moving average, marking a bearish development in technical analysis. If losses continue in the coming days, the pair may establish a base around the psychological 141.00 level. It is imperative for this floor to hold; failure to do so could spark a retracement towards trendline support at 139.40. On the other hand, if USD/JPY resumes its rebound unexpectedly, the first obstacle on the path to recovery is the 200-day simple moving average. Given the worsening sentiment around the U.S. dollar, surmounting this barrier may prove difficult, but a successful move above it could open the door for a rally toward 144.60. On further strength, attention then shifts to the 146.00 handle. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView Interested in learning how retail positioning can offer clues about GBP/USD’s directional bias? Our sentiment guide has valuable insights about this topic. Get the complimentary guide now! GBP/USD TECHNICAL ANALYSIS GBP/USD jump last week, briefly touching its best levels since late August. However, the positive momentum began to diminish on Friday as the pair encountered resistance around the 1.2795 area, paving the way for a modest pullback off those highs. If prices extend lower over the coming trading sessions, support is seen near 1.2590, followed by 1.2500, just around the 200-day simple moving average. Conversely, if buyers regain dominance and drive cable higher, initial resistance looms at 1.2720, the 61.8% Fibonacci retracement of the July/October selloff, and 1.2795 thereafter. Moving beyond those levels, the focus turns to 1.2830. Overcoming this hurdle will be a mighty task for the bulls, but should a breakout occur, a retest of the 1.3000 mark could be on the horizon. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/us-dollar-in-peril-with-core-pce-on-deck-setups-eur-usd-gbp-usd-usd-jpy-20231217.html

2023-12-15 16:40

GOLD PRICE OUTLOOK Gold prices stall their advance as New York Fed President John Williams contradicts Powell’s pivot Williams’ pushback may be more about damage control than a complete reversal of the existing strategy This article analyzes XAU/USD’s technical prospects, analyzing pivotal price thresholds that could act as support or resistance in the coming days Most Read: Gold Price Forecast - Fed Pivot May Open Pathway for New Record, XAU/USD Levels Gold's bullish momentum faded on Friday after New York Fed President John Williams pushed back against Chairman Powell's dovish posture earlier in the week at the last FOMC meeting. Against this backdrop, XAU/USD was largely unchanged heading into the weekend, moving between small gains and losses around the $2,035 level. For context, Williams said rate cuts are premature and not a topic of discussion at this moment, contradicting the Fed chief who indicated that the central bank has begun talking about slashing borrowing costs. While odd, this contradiction does not necessarily imply that policymakers are backtracking; instead, it may be more about damage control – a strategy to prevent financial conditions from loosening further. In the absence of a complete reversal of the "pivot," bond yields and the U.S. dollar are likely to continue their downward trajectory as traders try to front-run the easing cycle, which is expected to begin at some point in the first quarter of 2024. This could mean more upside for precious metals and possibly a new record high for gold prices. Eager to gain insights into gold's future path? Discover the answers in our complimentary quarterly trading guide. Request a copy now! Directing attention to technical analysis, XAU/USD maintains a constructive profile, but its upward journey may encounter short-lived obstacles. This means there could be temporary retracements within the broader uptrend, particularly if markets get overextended. The RSI indicator may give clues when overbought conditions are reached. In terms of major price thresholds worth watching, initial resistance appears at $2,050, followed by May’s peak around $2,075. Previous attempts to breach this ceiling on a sustained basis have been unsuccessful, so history could repeat itself on a retest. Nevertheless, in the event of a clear breakout, a rally toward the 2023 swing high becomes a plausible scenario. On the flip side, if sellers return in droves and trigger a meaningful reversal, the first line of defense against a bearish assault is located near $2,010. Safeguarding this floor is imperative; a failure to do so could reinforce selling pressure, exposing trendline support near $1,990. Below this level, scrutiny will shift to the 50-day simple moving average. Wondering how retail positioning can shape gold prices? Our sentiment guide provides the answers you are looking for—don't miss out, get the guide now! GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/gold-price-forecast-fed-pivot-reversal-or-damage-control-key-levels-for-xau-usd-20231215.html

2023-12-15 13:00

EUR/USD Forecast - Prices, Charts, and Analysis Euro Area business activity remains weak. EUR/USD fails its first re-test of 1.1000 Most Read: ECB Keep Rates Steady with Tentative Inflation Downgrades, EUR/USD Rises The Euro Area economy continues to struggle and is set to enter a technical recession in the coming weeks. According to data provider HCOB, business activity in the Euro Area fell at a steeper rate in December, closing off a fourth quarter which has seen output fall at its fastest rate for 11 years barring only the early-2020 pandemic months. Commenting on the data, Dr. Cyrus de la Rubia, HCOB chief economist said, ‘Once again, the figures paint a disheartening picture as the Eurozone economy fails to display any distinct signs of recovery. On the contrary, it has contracted for six straight months. The likelihood of the Eurozone being in a recession since the third quarter remains notably high.’ Thursday’s ECB meeting saw the central bank push back against aggressive market pricing of nearly 150 basis points of rate cuts in 2024. President Lagarde said that rates would be set at sufficiently restrictive levels for as long as possible to bring inflation back to target (2%), and that the governing council had not discussed any rate cut timetable. If the Euro Area falls into recession, as looks likely, and inflation continues to fall, the ECB may have to change tack on interest rates and start priming the market for a series of cuts next year. The financial markets are already pricing in the best part of five 25 basis point rate cuts in 2024. The ongoing weakness in the US dollar accelerated late Wednesday after Fed Chair Jerome Powell held rates steady for the third month in a row and gave a strong signal that interest rates would be cut in 2024. The Fed indicated that they could cut rates by 75 basis points next year, but this was seen by the market as lowly. After the FOMC press conference had ended, market expectations of US rate cuts for 2024 rose to 150 basis points, with the first 25bp cut seen in March. These expectations, and the selloff in US bond yields, caused the US dollar to fall further. EUR/USD touched 1.1009, just a few pips away from making a new four-month high, before ending the session just below 1.1000. Today’s PMI data will it harder for EUR/USD to make a confirmed break above 1.1000, especially if current ECB rate cut expectations become baked in. EUR/USD Daily Chart Chart Using TradingView IG retail trader data shows 37.02% of traders are net-long with the ratio of traders short to long at 1.70 to 1.The number of traders net-long is 19.69% lower than yesterday and 43.14% lower than last week, while the number of traders net-short is 17.74% higher than yesterday and 47.89% higher than last week. What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/euro-eur-latest-eur-usd-drifts-after-weak-pmi-data-release-20231215.html

2023-12-15 11:30

Article by IG Senior Market Analyst Axel Rudolph FTSE 100, DAX 40, S&P 500 - Analysis and Charts FTSE 100 short-term tops out The FTSE 100 briefly made a near three-month high at 7,725 on Thursday as risk-on sentiment prevailed amid brought forward rate cut expectations in the US from May to March of next year with a total of 150 basis points of cuts priced in by the markets. Later in the day, the UK blue chip index gave back more than half of its intraday gains, though, after it became known that three of the nine voting Bank of England (BoE) Monetary Policy Members (MPC) wanted to see another rate hike while six voted to keep UK rates where they are. Though the European Central Bank (ECB) also held its rates steady, its president Christine Lagarde said interest rate cuts had not been discussed during the meeting, leading to profit-taking in European equity indices. Resistance for the FTSE 100 can now be spotted around the 7,687 to 7,702 October highs ahead of Thursday’s 7,725 and the September 7,747 highs.Minor support below the 10 August high at 7,624 comes in along the breached September-to-December downtrend line, now because of inverse polarity a support line, at 7,602. FTSE 100 Daily Chart DAX 40 comes off new record high around the 17,000 mark The DAX 40’s strong advance from its October low over six consecutive bullish weeks stalled around the minor psychological 17,000 mark as the ECB said that rate cuts were not discussed at its monetary meeting, prompting some profit taking and a slip to 16,661 for the index. The German stock index remains above its October-to-December uptrend line at 16,664, though, which should act as support. As long as it does, Tuesday’s high at 16,853 may well be revisited. Further minor resistance sits at Wednesday’s 16,928 high. DAX 40 Daily Chart See how daily and weekly sentiment changes can affect price action S&P 500 surges ahead The S&P’s steep advance on rate cut expectations is beginning to lose upside momentum around the 4,739 mark but remains intact while Thursday’s low at 4,694 holds. On Friday volatility is expected to flare up again as 'triple witching' of $5 trillion in expiring options collides with index-rebalancing of the S&P 500 and the Nasdaq 100. Below 4,694 the March 2022 peak at 4,637 could act as support. While the last couple of weeks’ lows at 4,544 to 4,537 underpin, the medium-term uptrend stays intact.The index now targets the November and mid-December 2021 highs at 4,743 to 4,752 ahead of its record high made in January 2022 at 4,817. S&P 500 Daily Chart https://www.dailyfx.com/news/ftse-100-dax-40-and-s-p-500-lose-upside-momentum-20231215.html

2023-12-15 08:11

GBP/USD Analysis Bank of England (BoE) unconvinced about recent inflation progress GBP/USD on track for impressive weekly comeback US and UK final GDP figures for Q3 and PCE data up next The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Bank of England Unconvinced about Recent Inflation Progress The Bank of England’s statement on Thursday dismissed recent progress in the fight against inflation in a broad warning against complacency. The Monetary Policy Committee (MPC) could not conclusively express that both wage growth and services inflation were definitely on the path to lower levels. October’s inflation data which was released last month revealed a massive step in the right direction as both core and headline measures of inflation made notable declines. However, the BoE has focused intently on services inflation, a pocket of underlying price pressures which are yet to show conclusive signs of easing. The committee warned that interest rates will need to be sufficiently restrictive for a sufficiently long period to achieve the 2% price target. In addition, one third of the nine voting members are still voting for rate hikes. GBP/USD On Track for Impressive Weekly Comeback Ahead of the Fed and BoE meetings this week, GBP/USD (cable) eased into the 200-day simple moving average (SMA), testing the dynamic level of support before the sharp rise. The 200 SMA acted as a springboard for cable as prices look to close the week above the November seeing high of 1.2736. While it was Wednesday’s dovish Fed statement and press conference that resulted in a weaker dollar, and by extension a move higher in GBP/USD, the biggest catalyst this week came in the form of the Bank of England standing firm despite somewhat misleading improvements in inflation. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow Are you new to FX trading? The team at DailyFX has curated a collection of guides to help you understand the key fundamentals of the FX market to accelerate your learning: Major Event Risk Ahead (GBP/USD) Next week the Office for National Statistics (ONS) releases the latest UK inflation data. Market participants will be eager to find out if October’s notable drop-off continued into November, which may unravel some of sterling’s gains that have been acquired after a relatively hawkish BoE statement on Thursday. We then get the final US GDP data for Q3 which already witnessed an upward revision, followed by the final UK GDP print for the same quarter – which is likely to make for some grim reading. Rounding off next week’s tier 1 economic data is US PCE data and the final print of the University of Michigan consumer sentiment print. US sentiment is said to have improved in December after 4 consecutive months of declines. https://www.dailyfx.com/news/cable-on-track-for-remarkable-recovery-after-hawkish-boe-messaging-20231215.html

2023-12-15 01:00

GOLD PRICE OUTLOOK Gold prices push higher and challenge critical resistance, supported by falling yields and a weakening U.S. dollar The Fed’s dovish pivot can be seen as a bullish catalyst for precious metals, but caution is warranted as markets are getting overextended This article analyzes XAU/USD’s technical outlook, examining major price thresholds worth watching in the coming days Most Read: US Dollar Demolished by Fed’s Dovish Pivot, Tech Setups on EUR/USD and USD/JPY Gold prices (XAU/USD) gained ground on Thursday, rising for the second consecutive trading session after the Federal Reserve embraced a dovish posture at the conclusion of its December monetary policy meeting on Wednesday afternoon, an unexpected outcome that triggered a substantial drop in U.S. Treasury yields and the U.S. dollar. With bond yields and the greenback in free fall, precious metals may have more upside in the near term. In this context, it wouldn't be surprising to witness bullion climb to new heights and possibly hit another record before the end of the year. Acquire the knowledge needed for maintaining trading consistency. Grab your "How to Trade Gold" guide for invaluable insights and tips! Focusing on technical analysis, XAU/USD retains a bullish outlook, although its upward journey may encounter temporary setbacks. This means there could be transient pullbacks in the uptrend, especially if overbought conditions are reached. We are not there yet, but the 14-day RSI indicator is heading in that direction, In terms of major levels to watch, resistance looms at $2,050. On further strength, the focus shifts to May’s peak near $2,075. Previous attempts to breach this barrier on a sustained basis have been unsuccessful, so history could repeat itself on a retest. However, if a decisive breakout materializes, a rally toward the 2023 swing high becomes a realistic prospect. On the other hand, if upside momentum wanes and sellers spark a reversal, the first line of defense against a bearish attack appears at $2,010. Maintaining this floor is crucial; a failure to do so could reinforce downward pressure, exposing trendline support near $1,990. Below this threshold, all eyes will be on the 50-day simple moving average. Eager to gain insights into gold's future trajectory and the upcoming market drivers for volatility? Discover the answers in our complimentary quarterly trading guide. Get it now! GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/gold-price-forecast-fed-pivot-opens-pathway-for-new-fresh-record-xau-usd-levels-20231215.html