2023-12-11 12:30

Article produced by IG Senior Market Analyst Axel Rudolph FTSE 100 slips ahead of Thursday’s BOE meeting The FTSE 100 has reached a two-month high at 7,583 on Friday, close to its 200-day simple moving average (SMA) at 7,565 which acts as resistance with the previous resistance area, now a supportzone, at 7,543 to 7,535 being revisited. Further down lies the 7,500 mark. A rise above 7,583 ahead of Thursday’s Bank of England (BoE) meeting would eye the September-to-December downtrend line at 7,606. DAX Daily Chart Source: IG, ProRealTime, prepared by Axel Rudolph DAX 40 hits new all-time record high The DAX 40’s strong advance from its October low over six consecutive bullish weeks is ongoing with the index hitting a new all-time record high slightly above the 16,800 mark before giving back some of its gains ahead of Tuesday’s German ZEW economic sentiment data. It is to be noted that the Relative Strength Index (RSI) is the most overbought since January of this year, increasing the odds of a minor correction occurring into year-end instead of the traditional Santa Clause rally. Slips may find initial support at Wednesday’s 16,729 high ahead of Friday’s 16,630 low, a slip through which would be the first sign of the swift ascent slowing. DAX Daily Chart source: IG, ProRealTime, prepared by Axel Rudolph S&P 500 grapples with July peak The S&P’s advance briefly took it to 4,609 last week, to marginally above its July peak at 4,607, both of which the index is currently grappling with ahead of Tuesday’s US inflation data and Wednesday’s Federal Reserve (Fed) meeting and interest rate decision. Above last week’s high at 4,609 beckons the March 2022 peak at 4,637. While the last couple of weeks’ lows at 4,544 to 4,537 hold, the medium-term uptrend stays intact. Immediate support can be seen at the 29 November high at 4,587, ahead of the 22 November high at 4,569. Negative divergence on the Relative Strength Index (RSI) increases the odds of at least a short-term correction lower being witnessed at some stage this week. S&P 500 Daily Chart source: IG, ProRealTime, prepared by Axel Rudolph https://www.dailyfx.com/news/ftse-100-dax-40-and-s-p-500-lose-upside-momentum-in-low-volume-trading-20231211.html

2023-12-11 08:30

EUR/USD ANALYSIS Weak euro area economic data has left the euro vulnerable. Will elevated US inflation prompt EUR selloff? EUR/USD approaches key support zone. EURO FUNDAMENTAL BACKDROP The euro opened the week pretty flat as markets prepare for central bank decisions later this week alongside some supplementary data that could sway the messaging provided by the two central banks. Leading up to these announcements, European Central Bank (ECB) interest rate expectations have been ‘dovishly’ repriced after taking into account eurozone data while the Federal Reserve may be less inclined to rush into heavy rate cuts due to its comparatively more resilient economy. This resilience was reinforced by last week’s Non-Farm Payrolls (NFP) report that highlighted the robust labor market in the US. Money markets currently price in the first ECB cut around March/April next year. From a Fed perspective, Goldman Sachs stated this morning that they expect the Fed to deliver its first rate cut in Q3 2024 vs Q4 2024 in their previous forecast. In summary, the euro area is showing signs of significantly weaker economic data relative to the US and could weigh negatively on the EUR moving forward. ECB INTEREST RATE PROBABILITIES Source: Refinitiv TECHNICAL ANALYSIS EUR/USD DAILY CHART Chart prepared by Warren Venketas, IG The daily EUR/USD chart above stays below the 1.0800 psychological handle and looks to be heading towards the longer-term trendline support/50-day moving average (yellow). Short-term directional bias could be heavily swayed by US CPI and PPI as mentioned above. EUR/USD traders remain cautious as reflected by the Relative Strength Index (RSI) hovering around its midpoint. Resistance levels: 1.1000 1.0900 200-day MA 1.0800 Support levels: 1.0700/50-day MA/Trendline support 1.0635 1.0600 IG CLIENT SENTIMENT DATA: MIXED IGCS shows retail traders are currently neither NET LONG on EUR/USD, with 58% of traders currently holding long positions (as of this writing). https://www.dailyfx.com/news/euro-price-forecast-colossal-data-filled-week-for-eur-usd-20231211.html

2023-12-10 17:00

Most Read: US CPI, Fed Decision to Guide US Dollar, Setups on EUR/USD, USD/JPY, GBP/USD Traders should keenly monitor the U.S. inflation report to assess the validity of prevailing interest rate expectations for the upcoming year. Although price pressures are projected to continue to cool, progress towards the Fed's target is likely to be limited, a situation that could reduce the likelihood of the Federal Reserve adopting a more pessimistic stance at its December meeting. Unsure about gold’s underlying trend? Gain clarity with our latest forecast. Get a free copy of the guide now! In terms of the central bank announcements, the Fed, ECB and BoE are seen holding their policy settings steady. For this reason, it is vital to pay close attention to their forward guidance and projections. With growth flagging in both the Eurozone and the UK, there is little appetite for Lagarde or Bailey to be aggressive in their outlook. Powell, however, may have room to be somewhat more hawkish, given the remarkable resilience of the American economy. This may leave the U.S. dollar well positioned to extend its recovery against its major peers, such as the euro, British pound and the Japanese yen, to name a few. In the event of a US dollar rally resulting from a resurgence in Treasury yields, gold (XAU/USD) and silver (XAG/USD) are likely to suffer. Risk assets could also come under pressure, sending the Nasdaq 100 sharply lower. For a thorough analysis of the forces that may shape financial markets and drive volatility in the coming days, consult DailyFX's meticulously prepared week-ahead forecasts. For a complete analysis of the euro’s medium-term outlook, request a copy of our latest forecast! KEY ECONOMIC EVENTS THIS WEEK FUNDAMENTAL AND TECHNICAL FORECASTS British Pound Outlook: GBP/USD Rattled by NFPs, BoE, ECB, Fed Decisions Ahead Cable dropped around half-a-point after a slightly stronger-than-expected NFP report hit the screens, but next week is all about three central bank policy decisions. USD/JPY Weekly Forecast: Markets Peel Back Hopes for BoJ Policy Change JPY upside may be slowing as NFPs showed a robust US labor market. This week sees the FOMC in action and US inflation to drive volatility. Euro Weekly Forecast: ECB Expected to Hold Rates but How Will Projections Differ from Market Expectations? The ECB projections will hold the key in the week ahead as market participants still price in 125bps of rate cuts in 2024. Can the Central Bank arrest the Euro’s slide? Gold, Silver & Oil Forecast: Commodities Prepare for a Busy Week The updated Fed forecast next week can guide the dollar, and by extension, gold prices in the last weeks of 2023 as can the US CPI report. Oil hints at a bullish pullback. US CPI, Fed Decision to Guide US Dollar, Setups on EUR/USD, USD/JPY, GBP/USD This article examines the technical outlook for major US dollar FX pairs such as EUR/USD, USD/JPY and GBP/USD, dissecting the critical price thresholds that could come into play this week ahead of US inflation data and the Fed’s decision. --- Individual Articles Composed by DailyFX Team Members https://www.dailyfx.com/news/forex-markets-week-ahead-gold-eur-usd-gbp-usd-usd-jpy-us-inflation-fed-ecb-boe-20231210.html

2023-12-10 07:00

US DOLLAR FORECAST – EUR/USD, USD/JPY, GBP/USD The U.S. dollar is likely to experience increased volatility this week, with several high-impact events on the economic calendar Market focus will be on U.S. inflation data on Tuesday and the Fed’s monetary policy announcement on Wednesday This article examines the technical outlook for EUR/USD, USD/JPY and GBP/USD, discussing critical price levels to watch in the coming days. Most Read: Crude Oil Forecast - Prices in Freefall as Pivotal Technical Support Caves In Over the past month, the Fed’s interest rate outlook has shifted in a dovish direction, with markets pricing in about 100 basis points of easing over the next 12 months. Although recent data, such as last month's employment numbers, have been strong and inconsistent with an economy in urgent need of central bank support, traders have held firm in their belief that aggressive cuts are just around the corner. Projections, however, could become less dovish in the coming days if the latest inflation figure surprises to the upside or displays limited progress towards the Fed’s 2.0% target. In terms of estimates, November headline CPI is forecast to have slowed slightly to 3.1% y-o-y from 3.2% y-o-y previously, while the core gauge is anticipated to remain steady at 4.0% y-o-y. INCOMING US DATA The December FOMC gathering may be another driver for the reassessment of policy prospects. Although officials are seen holding borrowing costs unchanged when they end their last meeting of the year on Wednesday, they may be inclined to push back against Wall Street’s dovish expectations to prevent financial conditions from easing further. If the FOMC resists pressure to pivot, comes out swinging and pledges to keep interest rates higher for longer in a convincing manner, U.S. Treasury yields are likely to push upwards, reversing part of their recent pullback. This scenario will be quite bullish for the U.S. dollar, paving the way for further recovery heading into 2024. With the significant relaxation of financial conditions posing a threat to ongoing efforts to restore price stability and the U.S. economy holding up remarkably well against all odds, the stage seems set for a potentially hawkish outcome at the December FOMC conclave. Whatever unfolds, increased volatility is anticipated in FX markets in the days ahead. For a complete analysis of the euro’s medium-term prospects, request a copy of our latest forecast! EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD rallied vigorously last month, but has sold off in recent days, with prices slipping and closing below the 200-day moving average last week – a bearish technical event. If the pair deepens its pullback in the coming days, a retest of the 50-day SMA could come any minute. Continued weakness may shift focus towards trendline support near 1.0620. Conversely, if EUR/USD stages a turnaround and charges higher, technical resistance is visible near 1.0820, but further gains could be in store on a push above this threshold, with the next area of interest at 1.0960, the 61.8% Fibonacci retracement of the July/October decline. Continued strength may catalyze a retest of November’s highs. EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView Interested in learning how retail positioning can offer clues about USD/JPY’s short-term direction? Our sentiment guide has all the answers you seek. Get the complimentary guide now! USD/JPY FORECAST - TECHNICAL ANALYSIS The Japanese yen appreciated significantly last week on speculation that the Bank of Japan would end its policy of negative rates soon, with USD/JPY falling sharply before regaining some ground after bouncing off its 200-day simple moving average. If the rebound extends over the next few trading sessions, resistance appears at 146.00, followed by 146.90-147.30. On the other hand, if downward impetus resurfaces and sparks new losses for the pair, the 200-day is likely to be the first line of defense against a bearish assault and 141.75 thereafter. USD/JPY may find stability in this region during a pullback before mounting a comeback; however, in the event of a breakdown, the focus turns to 140.70, then trendline support at 139.50. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView Stay ahead of the curve and improve your trading strategies. Claim the GBP/USD forecast for a thorough overview of the British pound's outlook! GBP/USD FORECAST - TECHNICAL ANALYSIS GBP/USD has trended lower over the past few trading sessions after failing to take out a key ceiling near 1.2720, which corresponds to the 61.8% Fibonacci retracement of the July/October decline. Should losses accelerate in the coming week, support stretches from 1.2480 to 1.2455, where the 200-day SMA converges with a short-term rising trendline. On further weakness, the focus shifts to 1.2340. Conversely, if cable manages to rebound from its current position, overhead resistance is situated around the 1.2590 mark. To rekindle bullish impetus, the pair needs to take out this technical barrier decisively. The materialization of this move may invite new buyers into the market, creating the right conditions for an upward thrust towards 1.2720. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-us-cpi-fed-decision-to-guide-usd-dollar-setups-on-eur-usd-usd-jpy-gbp-usd-20231210.html

2023-12-09 01:00

USD/JPY ANALYSIS & TALKING POINTS Weak Japanese economic data dampens optimism around BoJ policy shift. Fed to keep rates at current levels but will inflation add to NFP and bolster hawkish bets? Key support zone under threat. Supercharge your trading prowess with an in-depth analysis of the JAPANESE YEN outlook, offering insights from both fundamental and technical viewpoints. Claim your free Q4 trading guide now! JAPANESE YEN FUNDAMENTAL BACKDROP The Japanese Yen ended the week on a volatile note after being pushed and prodded from the Asian session all the way through to the much awaited Non-Farm Payroll (NFP) report. Japanese GDP significantly missed estimates and the QoQ print fell into negative territory thus heightening recessionary fears moving forward. This may keep the Bank of Japan’s (BOJ) more cautious to tighten monetary policy despite high levels of inflation. Although we have seen the BoJ Governor Ueda hint at a policy shift, I do not expect anything major from the December meeting without easing the market into it. Data dependency is more crucial than ever for the Japanese central bank as solid additional support for inflation and labor data is required to push the BoJ into changing their current stance. Money markets price in an interest rate hike around September/October 2024 (refer to table below) which supplements my expectation for no drastic changes just yet. BANK OF JAPAN INTEREST RATE PROBABILITIES Source: Refinitiv USD/JPY TECHNICAL ANALYSIS USD/JPY DAILY CHART Chart prepared by Warren Venketas, IG Daily USD/JPY price action above shows bears looking to breach the longer-term channel support zone. Support was found around the 200-day moving average (blue) as the pair moves into oversold territory on the Relative Strength Index (RSI). A weekly close in an around channel support/145.00 psychological handle will not confirm a downside bias and could spark a pullback for the USD. Key resistance levels: 148.52 147.37 Channel support 145.00 Key support levels: 200-day MA 141.62 140.00 IG CLIENT SENTIMENT: MIXED IGCS shows retail traders are currently net SHORT on USD/JPY, with 68% of traders currently holding short positions (as of this writing). https://www.dailyfx.com/news/forex-usd-jpy-weekly-forecast-markets-peel-back-hopes-for-boj-policy-change-wv-20231209.html

2023-12-08 13:54

US NFP AND JOBS REPORT KEY POINTS: The US Added 199,000 Jobs in June, Slightly Above the Forecasted Figure of 180,000. The Unemployment Rate Falls to 3.7%, Remaining within a Range Below the 4% Mark. Average Hourly Earnings Came in at 0.4% MoM with the YoY Print Holding Firm at 4.%. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. The US added 199,000 jobs in November, and the unemployment rate edged down to 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment growth is below the average monthly gain of 240,000 over the prior 12 months but is in line with job growth in recent months. The report is a really mixed ne for the Federal Reserve ahead of next week's meeting with an increase in hourly earnings and drop in unemployment not ideal for the Central Bank. Job gains occurred in health care and government. Employment also increased in manufacturing, reflecting the return of workers from a strike. Employment in retail trade declined. Employment in manufacturing rose by 28,000, slightly less than expected, as automobile workers returned to work following the resolution of the UAW strike. In November, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.4 percent, to $34.10. Over the past 12 months, average hourly earnings have increased by 4.0 percent. In November, average hourly earnings of private-sector production and nonsupervisory employees rose by 12 cents, or 0.4 percent, to $29.30. Source: FinancialJuice FOMC MEETING AND BEYOND There have been a lot of positive of late for the US Federal Reserve with the 10Y yield falling back toward the 4%. The economy has shown signs of a slowdown, but the labor market and service sector remain a concern for the Central Bank as market participants crank up the rate cut bets. Today’s data although slightly better than estimates is not a game changer by any means. The beat on all three major releases today will definitely give the Fed food for thought as average earnings may keep demand elevated moving forward. It will no doubt be interesting to gauge where the rate cut bets will be once the dust settles from today’s jobs report and ahead of the FOMC Meeting. The question that I am left with is whether Fed Chair Powell may need to tailor his address at the upcoming meeting depending on market expectations. MARKET REACTION Dollar Index (DXY) Daily Chart Source: TradingView, prepared by Zain Vawda Initial reaction on the DXY saw the dollar bounce aggressively before a pullback erased nearly all gains. Since then, we are seeing the DXY inch up ever so slightly as traders have eased their rate cut expectations slightly based on Fed swap pricing. Key Levels Worth Watching: Support Areas 103.56 103.00 102.50 Resistance Areas 104.28 104.51 105.00 https://www.dailyfx.com/news/november-jobs-report-unemployment-falls-and-nfp-print-beats-forecast-dxy-advances-20231208.html