GBP/USD Price Analysis – Dec 23, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair started the week on a quiet note, moving in a narrow range just above the mid-1.2500s.
However, the US Dollar had pulled back from a two-year high last Friday, following the release of the Personal Consumption Expenditure (PCE) Price Index for November. The report showed signs of inflation easing, but also highlighted ongoing economic struggles.
However, there are still factors working in favor of the USD. The Federal Reserve's recent hawkish stance continues to support the greenback, as markets anticipate further tightening. This keeps the safe-haven USD in demand, limiting any significant gains for the GBP.
On the other hand, the British Pound faces its own challenges. The Bank of England's (BoE) recent decision to leave interest rates unchanged, along with a more dovish outlook, has created a sense of caution in the markets.
The BoE’s split vote shows a lack of consensus among policymakers, which leaves traders hesitant to make aggressive bullish bets on the GBP.
As a result, the pair's movement remains restrained, with neither the USD nor GBP dominating the direction in the early hours of the week.
USD Remains Supported by Hawkish Fed and Global Tensions, Capping GBP/USD Gains
On the US front, the broad-based US Dollar (USD) eased from its two-year high on Friday after the November Personal Consumption Expenditure (PCE) Price Index hinted at slowing inflation and ongoing economic challenges.
This has kept USD buyers cautious, giving some support to the GBP/USD pair. However, the Federal Reserve’s (Fed) hawkish outlook still favors the USD.
While the Fed recently lowered interest rates by 25 basis points (bps), it signaled a slower pace of rate cuts in 2025.
This, along with strong US Treasury yields and global tensions from the Russia-Ukraine conflict and Middle East unrest, could attract USD buyers and limit the GBP/USD pair's gains.
Traders now await key events for further direction, including the Bank of England’s (BoE) Quarterly Bulletin and the US Consumer Confidence Index later today.
The market mood remains cautious, as the BoE’s less aggressive stance on interest rates and global uncertainties weigh on the British Pound.
Given the mixed signals from both currencies, it’s wise to wait for clear and sustained buying interest before confirming whether the GBP/USD pair has hit a bottom in the short term.
GBP/USD Under Pressure Amid BoE's Dovish Tone and Economic Downgrade
On the GBP front, the British Pound faces pressure after the Bank of England (BoE) decided to keep interest rates unchanged last week.
The decision revealed a split vote among policymakers, with three members of the Monetary Policy Committee (MPC) voting to cut rates. This lack of agreement has added to the uncertainty surrounding the BoE's future policy direction.
Moreover, the central bank downgraded its economic forecast for the final quarter of 2024, signaling potential challenges ahead for the UK economy.
These developments make traders cautious about betting on strong gains for the GBP. The BoE's dovish tone, combined with concerns about slower growth, is likely to limit the upside for the GBP/USD pair.
This cautious outlook keeps the GBP/USD pair under pressure, with further movements likely dependent on broader market factors and key economic data.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.25689, up 0.04%, as the pair consolidates below the $1.26021 pivot point, reflecting a cautious tone.
The pair faces immediate resistance at $1.26620, with higher barriers at $1.27292 and $1.27819, signaling a challenging path for bulls amid a neutral market sentiment.
The 50 EMA at $1.26110 hovers above the current price, adding to downward pressure, while the RSI at 50 highlights indecision in momentum.
On the downside, immediate support lies at $1.25375, with additional levels at $1.24764 and $1.24237, reinforcing a bearish bias if these levels are breached.
The broader trend remains under pressure as the pair struggles to maintain gains above the pivot. The technical setup favors sellers, with the current price action suggesting a potential downside toward the $1.25029 take-profit target, especially if the pair fails to overcome the $1.26021 pivot point.
However, a decisive break above $1.26620 could shift momentum, opening the door to further gains.
Sell-limit orders below $1.25819 are preferred, with a target of $1.25029 and a stop-loss at $1.26415. Key resistance above $1.26620 needs monitoring for a potential reversal.
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EUR/USD Price Analysis – Dec 20, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair managed to halt its downward trend and gained some bullish momentum, reaching as high as 1.0398.
This recovery can be mainly attributed to two factors. First, the US Dollar (USD) had given up some of its earlier gains, though it remains strong due to factors like the Federal Reserve's hawkish outlook and the ongoing strength of the US economy.
On the other hand, the Euro (EUR) found support from a key development in Germany, where lawmakers approved tax reforms that will cut annual tax revenue by 14 billion euros.
This decision is expected to leave more money in the hands of German households, encouraging higher consumer spending.
As a result, this boost in demand is likely to help stimulate economic growth in the Eurozone. Moreover, increased spending could help keep inflation in check, reducing the risk of it falling below the European Central Bank’s (ECB) target of 2%.
Despite the temporary bounce, the EUR/USD pair remains cautious, still trading near its yearly lows around 1.0350, reflecting ongoing concerns about the strength of the US Dollar and the broader economic outlook. The pair’s direction remains uncertain as investors watch closely for further developments.
EUR/USD Temporary Support from German Tax Reforms and ECB's Cautious Rate Cut Stance
On the EUR front, EUR/USD gained some temporary support near its yearly low as the Euro strengthened after German lawmakers approved tax reforms. These reforms will reduce tax revenue by 14 billion euros, giving households more disposable income.
This extra money is expected to boost consumer demand and help stimulate economic growth in the Eurozone. Higher spending could also reduce the risk of inflation falling below the European Central Bank’s (ECB) 2% target, especially since Germany is the largest economy in the region.
Meanwhile, ECB policymaker Christodoulos Patsalides, who is also the Governor of the Central Bank of Cyprus, has reduced expectations for larger rate cuts to boost growth. He prefers smaller, gradual rate adjustments instead of big cuts.
Patsalides believes that bigger cuts would only be necessary if inflation remains well below the ECB’s target for a long period.
Right now, traders expect four interest rate cuts from the ECB by June 2025. So far, the ECB has already lowered its Deposit Facility rate four times by 100 basis points to 3% this year, which has helped support the Euro in the short term.
Therefore, the approval of tax reforms in Germany and the ECB's cautious stance on rate cuts provide temporary support for the Euro, helping EUR/USD recover slightly from yearly lows. However, ongoing USD strength and market expectations for ECB cuts limit significant gains.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.03698, marking a modest gain of 0.12% on the day, as it consolidates near the $1.03435 pivot point on the 4-hour chart. Immediate resistance is situated at $1.04220, with the next barriers at $1.04550 and $1.04800.
A break above these levels could solidify bullish momentum, setting the stage for further gains. Conversely, support lies at $1.03151, with deeper levels at $1.02840 and $1.02557 providing a safety net against extended losses.
Technical indicators are mixed, with the RSI at 42 indicating slight bearish bias, yet not fully oversold. Meanwhile, the 50 EMA at $1.04073 suggests downward pressure in the short term, as the price remains below this key moving average.
A decisive close above the pivot point at $1.03920 and the 50 EMA would shift sentiment to bullish, targeting the immediate resistance levels.
A cautious trading strategy is advised in this consolidation phase. Traders might consider buying near $1.03435, targeting $1.04038, with a stop loss at $1.03157.
A successful break above $1.04220 could pave the way for additional upside toward $1.04550, while failure to hold $1.03151 could signal bearish continuation.
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GOLD Price Analysis – Dec 20, 2024
Daily Price Outlook
Despite the Federal Reserve's hawkish stance, gold (XAU/USD) has managed to maintain its upward momentum, holding steady around the 2,605 level and even reaching an intra-day high of 2,607.
This bullish trend can largely be attributed to a slight dip in the US dollar, which lost some ground due to a modest pullback in US Treasury bond yields.
Meanwhile, the Fed's signals that it plans to slow the pace of interest rate cuts in 2025 are likely to provide support for US bond yields and the dollar. Additionally, the prevailing risk-off sentiment has kept gold in demand as a safe-haven asset, further boosting its price.
Looking ahead, traders seem cautious to place strong positions ahead of the US Personal Consumption Expenditure (PCE) Price Index release.
This key inflation report will impact USD price and could create short-term opportunities in the gold.
Impact of Fed's Hawkish Stance and Economic Uncertainties on Gold
On the US front, the broad-based US dollar has been holding onto its weekly gains, reaching a two-year high.
This is largely due to the Federal Reserve's hawkish signal that it plans to slow the pace of interest rate cuts in 2025, which is supporting the USD. However, this is acting as a headwind for gold.
At the same time, investors are feeling uncertain due to ongoing geopolitical risks, fears of a trade war, and the threat of a US government shutdown.
This is putting pressure on the stock market and driving more demand for safe-haven assets like gold. Traders are also cautious ahead of the release of the US Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of inflation.
In addition, the US Treasury bond yields have pulled back from a multi-month high, limiting the USD’s rally.
Positive economic data, like the 3.1% annual GDP growth for the third quarter and a drop in jobless claims, are backing the Fed's stance.
These developments suggest that the Fed will continue with its hawkish approach, which supports the US dollar and bond yields.
However, this outlook also keeps pressure on gold, as the precious metal offers no yield. Gold traders are waiting for further clues from the PCE data before making significant moves.
Therefore, the US dollar's strength, driven by the Fed's hawkish stance and rising bond yields, is limiting gold's upward movement.
In the meantime, the ongoing geopolitical risks and economic uncertainties are supporting gold's safe-haven demand, but traders remain cautious ahead of key inflation data.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,604.19, up 0.37% on the day, as the metal consolidates above the $2,596.10 pivot point. Despite the modest gains, gold faces immediate resistance at $2,626.76, with further hurdles at $2,640.36.
A sustained break above these levels could open the door for bullish momentum, targeting new highs in the near term. On the downside, immediate support is seen at $2,583.95, followed by stronger levels at $2,568.47 and $2,555.24.
Technical indicators present a mixed picture. The RSI is neutral at 50, suggesting that gold is neither overbought nor oversold.
However, the 50 EMA at $2,615.16 indicates near-term bearish pressure, as the price remains below this key moving average. To regain bullish momentum, gold must clear the $2,613 pivot point and stay above the 50 EMA.
The current setup suggests a cautious trading strategy. Traders may look to buy near $2,596 with a stop-loss at $2,584 and a take-profit target of $2,613. A break above $2,626 could justify higher targets, while failure to hold $2,583 may lead to sharper declines.
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S&P500 (SPX) Price Analysis – Dec 20, 2024
Daily Price Outlook
The S&P 500 Index is currently trading in the red, holding at 5,867.08 and reaching an intra-day low of 5,866.
This decline shows the broader market's reaction to the Federal Reserve’s hawkish stance, rising bond yields, and ongoing geopolitical and economic uncertainties.
While the index has shown resilience in the past, the current conditions suggest a challenging environment for US equities.
Fed's Hawkish Stance Weighs on Market Sentiment
On the US front, the Federal Reserve's recent signals indicating a slower pace of interest rate cuts in 2025 are supporting the US dollar and Treasury bond yields.
However, these moves are creating headwinds for the equity market, particularly for growth stocks that are sensitive to higher interest rates.
As bond yields rise, investors may find fixed-income assets more attractive than equities, leading to a shift in market dynamics.
This is especially concerning for the S&P 500, which has a significant portion of its constituents in sectors such as technology and growth companies, which are more vulnerable to higher rates.
Despite the Fed's stance, the broader market remains uncertain due to fears of slower economic growth and other challenges. As a result, the S&P 500 index is experiencing selling pressure, reflected in the current pullback.
Geopolitical Risks and Economic Uncertainty Drive Caution
Apart from this, the ongoing geopolitical tensions and economic uncertainty are adding additional stress to the S&P 500.
The risk of a US government shutdown, coupled with concerns over trade wars and global instability, has led to a more cautious sentiment among investors.
The equity market is particularly sensitive to such risks, as any escalation could derail global economic growth and disrupt corporate earnings.
Furthermore, investors are wary of the US Personal Consumption Expenditure (PCE) Price Index release, the Fed's preferred inflation measure.
Traders are closely watching this key inflation report, which could influence the Fed's future policy moves. If inflation remains high, it may prompt the Fed to keep interest rates elevated for longer, further pressuring the equity market.
S&P 500 – Technical Analysis
The S&P 500 Index (SPX) is trading at $5867.07, reflecting a slight dip of 0.09% in today’s session. The index is consolidating near the $5919.77 pivot point on the 4-hour chart, signaling cautious sentiment among traders.
Immediate resistance lies at $6005.28, with further barriers at $6070.88. A sustained breakout above these levels could reverse the recent downward trajectory, with bullish momentum targeting higher highs.
On the downside, immediate support is found at $5852.81, with critical levels at $5804.87 and $5754.58.
Technical indicators lean bearish, with the RSI at 26 indicating oversold conditions. While this could suggest a short-term bounce, the price remains below the 50 EMA at $6032.28, reinforcing the overall bearish bias.
A decisive break below $5852.81 could accelerate selling pressure, testing deeper support levels. Conversely, recovery above the pivot at $5919.77 is necessary to regain upward traction.
Traders should consider a cautious strategy amid this oversold scenario. A sell limit around $5908, targeting $5837 with a stop loss at $5940, aligns with the bearish outlook.
A move below $5804.87 would confirm further downside potential, while a recovery above $6005.28 could negate the bearish trend.
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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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USD/JPY Price Analysis – Dec 19, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has seen notable bullish trend and edged higher around 156.91 level. However, the pair was influenced by the Bank of Japan's (BoJ) recent policy decision.
The BoJ decided to keep its short-term interest rate target unchanged in the range of 0.15%-0.25%. This decision, coupled with BoJ Governor Kazuo Ueda's remarks indicating no immediate rate hikes in the first quarter of 2025, has weakened the Japanese Yen. This has pushed USD/JPY currency higher.
On the other hand, the US Dollar remains strong due to the Federal Reserve's outlook. Even though the Fed lowered rates by 25 basis points last Wednesday, bringing the benchmark rate to 4.25%-4.50%, they indicated that future rate cuts will be slower than expected.
The Fed now expects only two small rate cuts in 2025, down from four previously. This change has kept US Treasury bond yields high, which supports the USD.
As a result, the USD/JPY pair has been rising, with the US economy showing strength compared to the Bank of Japan's cautious approach.
US Economic Data and Geopolitical Tensions Impacting USD/JPY Pair Outlook
Moreover, the Japanese Yen still holds appeal as a safe-haven currency as risk-off sentiment stemming from global geopolitical tensions and potential trade disruptions could provide some support to the Yen.
However, the safe-haven demand for JPY has been muted against the backdrop of the Fed’s tightening policy.
Moving ahead, market participants are keeping an eye on upcoming US economic data, including the final Q3 GDP print and Weekly Initial Jobless Claims.
These data points will offer insights into the health of the US economy and could influence USD/JPY movements.
Meanwhile, the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday will be a key event for inflation expectations.
A stronger-than-expected PCE report could further fuel USD strength and push the USD/JPY pair to new highs, while weaker data may offer some relief for the Yen.
USD/JPY – Technical Analysis
The USD/JPY pair is trading at 155.34, posting a 0.34% gain for the day. On the 4-hour chart, the pair continues its upward trajectory, supported by robust bullish momentum. The pivot point is at 154.54, with immediate resistance at 155.86.
If this level is breached, the next upside targets are 156.72 and 157.59. On the downside, immediate support lies at 153.49, followed by deeper levels at 152.24 and 151.02.
Technical indicators underscore strong bullish sentiment. The RSI at 74 suggests overbought conditions, indicating that the pair could face some short-term consolidation or a minor pullback. However, the price remains above the 50 EMA at 153.83, signaling that buyers are firmly in control in the medium term.
If USD/JPY holds above the pivot point at 154.54, the bulls could aim for a test of 155.86. A sustained break above this level may open the path toward 157.59. On the other hand, a move below 153.49 would likely see the pair testing support at 152.24, although the broader trend remains bullish.
Traders may consider a buy limit at 154.54, targeting 156.01, with a stop-loss at 153.93 to manage downside risks.
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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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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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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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