EURUSD
- The EUR/USD achieved its highest daily close in three months, sustaining a clear bullish bias amid a broader weakening of the US Dollar against various currencies.
- The currency pair remains in proximity to the 1.0950 resistance area, showcasing resilience. The daily chart's Relative Strength Index (RSI) is in overbought territory, yet there are no apparent signals of an imminent correction or exhaustion.
- ECB President Christine Lagarde cautioned that headline inflation might experience a slight rise in the upcoming months. During her address to the European Parliament, Lagarde also acknowledged the likelihood of continued weak economic growth. These remarks were in line with expectations, with the ECB anticipated to maintain unchanged interest rates.
- Data from the US revealed a notable drop in New Home Sales to 679K in October, falling short of the expected figure of 725K. This points to challenges in the US housing market.
- Tuesday brings additional housing data, including house prices. Furthermore, several Federal Reserve officials are scheduled to speak, adding to the potential market impact.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD maintains its bullish momentum, navigating resistance at 1.0950, while Lagarde's cautious stance aligns with expectations of a steady ECB policy. Disappointing US New Home Sales contribute to the narrative, and the market looks ahead to more housing data and insights from Federal Reserve officials.
GBPUSD
- GBP/USD is maintaining a steady position above 1.2600, having recently retested a two-month high at 1.2644 on Monday.
- Pound Sterling (GBP) displays strength against the US Dollar (USD) for the fourth consecutive day, indicating the UK economy's resilience amid tightening measures implemented by the Bank of England (BoE).
- BoE Governor Andrew Bailey recognized the challenge of returning inflation to the 2% target. He emphasized that the recent decline from 6.7% to 4.6% is linked to the decrease in energy prices, highlighting the complexities of managing inflation dynamics.
- A recent report from the US Census Bureau revealed a significant drop in New Home Sales for October. This decline is attributed to elevated mortgage rates, signaling potential challenges in the US housing market.
- Money market futures suggest an expected 25 basis points rate cut by the BoE in September of the following year. In contrast, market expectations for the Federal Reserve (Fed) indicate fully factored cuts of almost 85 basis points in 2024.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: GBP/USD holds its ground above 1.2600, reflecting the Pound's resilience against the USD. BoE Governor Bailey's acknowledgment of inflation challenges and concerning US New Home Sales contribute to the narrative. Divergent monetary policy expectations highlight the contrasting paths of the BoE and the Fed.
GOLD
- Gold price maintains a positive bias, marking the fourth consecutive day of gains and approaching a multi-month peak.
- Continued support for gold is derived from expectations that the Federal Reserve (Fed) has concluded its rate-raising cycle and may initiate policy easing in 2024. These expectations contribute to undermining the US Dollar (USD), reinforcing the positive outlook for the non-yielding precious metal.
- Anticipation of a Fed rate cut in 2024 has been brought forward, propelled by indications of easing inflationary pressures. This dynamic not only weakens the USD but also validates the positive sentiment surrounding gold.
- Gold finds additional support amid concerns about a potential global economic downturn. As a traditional safe-haven asset, gold tends to attract demand in times of economic uncertainty.
- Bullish traders appear cautious, refraining from aggressive bets and opting to await the release of the Personal Consumption Expenditure (PCE) Price Index from the United States (US) for potentially meaningful market impetus.
Closing statement: Gold sustains its positive momentum, fueled by expectations of a dovish Fed, concerns over a global economic downturn, and cautious trading ahead of key US economic data. The outlook remains influenced by Fed policy dynamics and broader economic uncertainties.
CRUDE OIL
- Western Texas Intermediate (WTI), the US crude oil benchmark, is currently trading around $74.90, reflecting recent price dynamics in the oil market.
- Analysts are anticipating OPEC+ to take measures to address the recent decline in oil prices. There is an expectation that OPEC+ may opt to prolong or deepen production cuts into the upcoming year.
- Saudi Arabia, a key player in the oil market, is expected to extend oil supply cuts by 1 million barrels a day until the next year. Additionally, Russia is contemplating further supply cuts, potentially reducing production by 300,000 barrels per day.
- The release of China's NBS Purchasing Managers Index (PMI) data on Thursday is awaited. Positive data from China, the world's largest gold producer and consumer, could contribute to lifting WTI prices.
- The International Energy Agency (IEA) anticipates a minor surplus in crude oil production in 2024, even if OPEC+ nations extend their production cuts into the next year.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Neutral |
Closing statement: WTI crude oil is navigating around $74.90, with market focus on potential actions by OPEC+ to stabilize prices. Anticipation of extended or deeper production cuts, Saudi Arabia's commitment, and the impact of Chinese economic data remain key factors influencing oil market dynamics. The balance between supply decisions and global economic factors will likely guide future oil price movements.
DAX
- On Monday, ECB President Christine Lagarde maintained a cautious stance, signaling a commitment to a higher-for-longer rate path. Lagarde emphasized the ongoing battle against inflation, highlighting robust wage growth amid an uncertain economic outlook.
- There were no significant euro area economic indicators on Monday, contributing to an environment where market risk sentiment was not strongly influenced.
- The GfK Consumer Climate Indicator for Germany showed a marginal improvement, edging up to -27.8 for December from a revised -28.3 in November. The result was in line with market forecasts of -27.9.
- Investors are advised to consider upcoming ECB commentary. Both ECB President Christine Lagarde and Executive Board member Elizabeth McCaul are scheduled to speak. Their remarks regarding inflation, the overall economic landscape, and interest rates will be closely monitored.
- Later in the Tuesday session, market attention will shift to US consumer confidence data and speeches from Federal Reserve (Fed) representatives. These events are likely to contribute to market movements.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The DAX faces a nuanced landscape with ECB President Lagarde emphasizing a persistent inflation battle. The German consumer climate shows slight improvement, and investors await insights from ECB officials. US consumer confidence and Fed communications will further shape market dynamics during the session.