GBP/JPY reverses the previous day’s drop from a one-week high. A persistent rebound off the 21-SMA and bullish MACD indications favour buyers.
Upward movements are opposed by a downward trend line that is five weeks old and 200-SMA. In the lead-up to Wednesday’s London opening, the pair receives more offers and prints modest gains around 166.65. The cross-currency pair then reverses the previous day’s losses from the one-week high by bouncing off the 21-SMA.
To maintain the optimism of the GBP/JPY purchasers, the recovery movements also draw cues from the positive MACD indications.
Buyers of the pair may find it difficult to overcome a confluence of the 200-SMA and a downward-sloping resistance line from the end of October, located at 167.30.
A run-up towards the late November swing high at 169.00 and eventually to the 170.00 psychological magnets is likely if the GBP/JPY passes the 167.30 thresholds.
The October high of 172.15 and the prior monthly top at 171.00 may have encouraged GBP/JPY buyers to over 170.00.
On the other hand, pullback movements are difficult to execute beyond the 166.00 21-SMA support level.
After that, the final line of defense for the GBP/JPY buyers might be an ascending trend line from November 11 that was, at the time of press, at 164.25.
The cross-currency pair will decline to its October low at 159.70 if it continues to trend down after reaching 164.25 and breaks the 164.00 resistance level.
In this article, we have covered the highlights of global market news about the GBP/USD, AUD/USD, USD/JPY and NZD/USD.
GBP/USD Price Analysis: During a three-day decline, sellers hit the 1.2100 support.
The key support level of 1.2100 is the focus of the GBP/USD bears’ fight as early Wednesday morning in London approaches. As a result, the Cable pair declines for the third day.
However, the MACD indicator’s impending bear cross suggests that the quotation might decline lower. The 200-DMA and an upward-sloping trend line from November 10 prevent the quotation from falling further at this time.
If the GBP/USD bears successfully post a daily close below 1.2100, the June resistance line that has since turned into support, located at 1.1965, may act as a draw for selling. The 1.2000 psychological magnets may serve as a bolster during the fall, but it should be emphasized.
The 61.8% Fibonacci retracement level of the May-September fall, close to 1.1780, will be in focus when watching for more weakening in the GBP/USD market if, at all, the price cannot go higher from 1.1965.
AUD/USD: It seems that the upward push has subsided – UOB
Market Strategist Quek Ser Leang and Senior FX Strategist Peter Chia of UOB Group believe that the short-term direction of AUD/USD is currently sidelined inside the 0.6600-0.6815 area.
24-hour view: “Despite trading between 0.6681 and 0.6744, our forecasts for the “rapid decrease in AUD to extend” did not come to pass. Even if the primary support around 0.6640 is unlikely to be threatened, the risk seems somewhat biased to the downside. The downside risk remains as long as the Australian dollar does not rise over 0.6740 (a little resistance level around 0.6720).
Within three weeks, “We remain committed to yesterday’s position” (December 06, spot at 0.6705). As previously said, the recent rising impetus has subsided, and for the time being, the Australian dollar is expected to stabilize between 0.6600 and 0.6815.
USD/JPY tends to go up toward 138.00, even though options market signals are negative.
In the early hours of Wednesday in Europe, bids for the USD/JPY increase to renew the intraday high around 137.60. In doing so, the Yen pair reflects the risk-on attitude of the market despite a light calendar.
The pair price run-up, however, contrasts with the indications from the options market. However, the one-month risk reversal (RR) for the Yen pair, which measures the ratio between call and put premiums, flashes -0.325 at the earliest, preparing for the largest weekly print in three weeks. As a result, the weekly RR decreases for the third week. Furthermore, the daily RR prints the -0.435 number at the latest, breaking a two-day rise.
The recent risk-on inclination seems to have been sparked by China’s introduction of the new Covid policy.
The opinions of several Bank of Japan officials may also support the USD/JPY (BOJ). Toyoaki Nakamura, a member of the BOJ Board, has said that it is “premature to modify monetary policy at this time while service prices remain low.”
NZD/USD Price Analysis: The price remains protective above the monthly support line at 0.6300.
As bears play about with the short-term crucial support line in the early hours of Wednesday, the NZD/USD oscillates around 0.6320-30. However, the Kiwi pair’s inability to breach the 21-SMA and the bearish MACD indications point to more declines in the quotation.
The chart’s bearish RSI divergence also gives sellers optimism. When the pair makes higher lows but the RSI, which is set at 14, does not, the oscillator-price divergence may be seen. This signals that momentum is weak even if prices are still rising.
As a consequence, a negative move may occur at the first opportunity. However, an upward-sloping support line from November 10 at 0.6315 is of particular interest since a breach to the downside of this level might catalyze the NZD/USD south-run.
In such a situation, bears may be drawn in before marking the previous monthly low of 0.5740, which was recorded at lows on November 28 and 17, respectively, around 0.6155 and 0.6065.
On the other hand, buyers of NZD/USD must be persuaded by a clear breach of the 21-SMA level at 0.6360.
Please click here for the Market News Updates from 6 December, 2022.
In this article, we have covered the highlights of global market news about the USD/JPY, NZD/USD, EUR/USD and USD/CAD.
USD/JPY falls from three-day high; downside seems limited despite some US Dollar gain
The USD/JPY pair cannot take advantage of its slight intraday gains and draws some selling around the mid-137.00s, or the three-day high reached on Tuesday. During the first part of the European session, spot prices fell below the 137.00 level, although the drop was muted due to a bit of US dollar strengthening.
The US Dollar Index, which gauges the dollar’s strength against a basket of currencies, is helping to support the USD/JPY pair by building on the previous day’s strong recovery from a five-month low. According to recent good macroeconomic statistics, the US economy seems to be robust despite increasing borrowing costs, which fuels speculation that the Fed may raise interest rates more than expected. This is seen as a crucial element supporting the dollar in turn.
NZD/USD is flirting with a daily low of about 0.6300, despite a minor US Dollar gain.
On Tuesday, the NZD/USD pair experiences some intraday selling at the 0.6355 regions, and throughout the early European session, it falls to the lower end of its daily range. Currently, the price of the pair is hovering around the 0.6300 level, which, if broken strongly, would pave the way for an extension of the rapid overnight decline from the highest level since mid-August.
This creates a barrier for the NZD/USD pair as the US Dollar picks up some steam and attempts to build on the solid overnight rebound from almost a five-month low. The better US ISM Services PMI reading on Monday revealed that the economy remained robust despite increasing borrowing prices in light of Friday’s positive US monthly employment report. This stoked rumors that the Fed would raise interest rates more than expected, which is a major factor supporting the dollar.
EUR/USD stays on the defensive below 1.0500, moving a little after German Factory Orders.
During the early European session, the EUR/USD pair gave up its little intraday gains and retested the daily low in the region of 1.0520. Following the announcement of better-than-expected German statistics, spot prices are still on the back foot below the psychological level of 1.0500.
According to the most recent statistics by the Federal Statistics Office, German factory orders increased 0.8% in October as opposed to the 0.2% loss predicted and the 4.0% decline seen the prior month. However, despite some continued US Dollar purchasing, the data failed to excite optimistic traders or provide the EUR/USD pair any significant momentum.
The US Dollar Index, which gauges the dollar’s performance against a basket of currencies, is seen strengthening after the overnight recovery from a low in place for more than five months. It operates as a headwind for the EUR/USD pair. The US dollar is supported by the improved US economic statistics, which feeds anticipation that the Fed may hike interest rates more than expected.
The US Service PMI unexpectedly increased to 56.5 in November, according to data published on Monday by the Institute for Supply Management (ISM), which contrasts with the positive US monthly employment report that was issued on Friday. This confirms predictions that the Fed would continue to tighten its monetary policy and shows that the US economy is robust despite increasing borrowing prices.
USD/CAD maintains stability at a one-week high as bulls attempt to take control near the 1.3600 level.
On Tuesday, the USD/CAD pair fluctuated within a small range while consolidating the overnight rise of almost 220 pips from below 1.3400. The pair has remained stable at a one-week high through the early European session. Bulls are now watching for further momentum above the 1.3600 round-figure level.
In anticipation of an increase in fuel demand and the relaxation of COVID-19 restrictions in China, crude oil prices rise and somewhat recoup their roughly 6.5% drop from the previous day. As a result, the commodity-linked Loonie is supported, which weighs down on the USD/CAD pair. The Federal Reserve may hike interest rates more than anticipated, which has sparked some US Dollar purchasing, which has helped to cushion the downside.
Please click here for the Market News Updates from 5 December, 2022.
To forecast market moves and examine patterns, traders often utilize one of three broad forms of forex analysis.
To suit their personalities and trading styles, traders often use one or a mix of FX analysis techniques.
It might be helpful to find trades using the analytical technique in a forex practice account.
There are many different techniques to examine the FX market to prepare for trading. Although there are many different types of analysis, traders should make their research simple enough to spot potential trading chances.
The three most popular forex analysis methods—fundamental, technical, and sentiment analysis—are examined in this article and how they influence trading strategies. After that, it is up to each trader to choose the analysis best matches their trading style.
THE 3 MOST COMMON FOREX MARKET ANALYSIS TYPES:
1) Fundamental
The currency’s interest rate is at the core of most forex fundamentals. This is because interest rates significantly impact the foreign exchange market. These include the gross domestic product, inflation, manufacturing, and economic growth activities, among other vital variables. The impact those other fundamental releases have on the interest rate of that nation is more significant than whether they are positive or negative.
When analyzing fundamental data, traders should consider how interest rates may change. Money follows yield (currency that gives a higher interest rate) when investors are in a risk-seeking mentality, and higher rates can indicate more investment. Risk-averse investors will forgo income in favor of safe-haven currencies.
2) Technical
Forex technical analysis examines trends in price history to identify the most likely time and location to start and exit a transaction. As a consequence, technical analysis is one of the most often employed methods of analysis in the forex market.
FX is one of the biggest and most liquid markets. Therefore, price action fluctuations on a chart often reveal hidden supply and demand levels. Examining the price chart can also reveal other patterns, such as which currencies are trending the strongest. The GBP/USD chart below illustrates this, with the US dollar gaining versus the British pound.
Indicators may be used to undertake further technical research. Since employing indicators makes forex trading easier and the signals are straightforward to comprehend, many traders prefer using them.
The relative merits of technical and fundamental analysis in forex are hotly contested. There is no definitive answer to the issue of whether the style of analysis is superior, although traders often use one or both in their research.
3) Sentiment
Another widespread kind of study is that of currency sentiment. When sentiment is strongly biased in one way, it indicates that most traders have already taken that position.
An illustration clarifies this further. Assume that the majority of traders and investors are optimistic about the Euro. They believe that the Euro will increase. People express their opinions via their trading.
Since we know a sizable group of traders who have previously bought, these purchasers serve as a potential supply of sellers in the future. We know this since they will ultimately want to complete the deal. If these purchasers turn around and sell to finish their transactions, the EUR to USD is now susceptible to a swift decline.
HOW TO USE FOREX TECHNIQUES IN YOUR TRADES?
Traders might use a combination of the three methods of forex market analysis. This may be accomplished by:
Using fundamental analysis to identify long-term trends.
Identifying appropriate entry opportunities with the use of technical analysis and related indicators.
Using customer emotion as the last check box before entering the deal.
Here are detailed examples of how to use the three analytical methodologies to analyze trends in the forex market:
1) Use fundamentals to help you detect a long-term trend:
Analysis of a nation’s GDP, interest rate, and inflation rate provides information about the health of that nation’s economy and, therefore, the value of its currency. For instance, the US dollar will seem appealing if the country starts a cycle of interest rate increases. The USD value will be supported if enough traders and investors purchase US dollars.
2) Use good technical analysis to identify market entries:
Traders may identify the best market entrance using various time frame research and indicators like the MACD or Relative Strength Index.
3) Consider the client’s feelings:
The net number of long or short traders and the difference in net short/long movements are two ways traders might gauge customer mood. However, the key lesson is that retail customers often trade against established trends, making client mood a contrarian indicator.
Gold’s price drops from a five-month high as the US Dollar somewhat recovers intraday. US Treasury bond rates are increasing, putting pressure on the XAU/USD and reviving USD demand.
Risks associated with the price of gold should be limited by bets on the Federal Reserve hiking rates less firmly. Gold’s price falls from the $1,810 area, or the five-month high hit earlier this Monday, failing to benefit from the intraday gain. The XAU/USD slips below $1,800 during the early part of the European session and is now perched on a potentially dangerous 200-day Simple Moving Average (SMA).
The slight US Dollar resurgence is putting pressure on the price of gold. Following an early dip, the US Dollar has only partially recovered from its lowest position since late June, which is anticipated to impact the price of gold denominated in US dollars. The US’s Friday release of solid monthly employment figures and a pleasant surprise in pay growth raised the possibility that inflationary pressures will increase further. This improves the position of the dollar and fuels speculation that the Federal Reserve will continue to tighten monetary policy.
The price of the XAU/USD pair is further hampered by rising US Treasury bond rates. The Federal Reserve’s chairman, Jerome Powell, also predicted that the peak interest rate would be higher than expected this week. Consequently, the price of US Treasury bonds rises throughout the day, which is seen as another factor supporting the US Dollar and pulling money away from the non-yielding Gold price. Further weighing on the XAU/USD is the recent optimism about easing COVID-19 restrictions in several Chinese cities, which has dampened demand for traditional safe-haven assets.
To limit losses, the Federal Reserve wagers on slower rate hikes. At its next meeting on December 13–14, the Federal Reserve is anticipated to increase interest rates by a relatively small 50 basis points, but the downside is anticipated to remain cushioned—at least briefly. In the event of any big corrective slump, this should continue to support the price of gold, requiring careful positioning. The US ISM Services PMI, announced later during the early North American session, is now being anticipated by traders for short-term possibilities.
Technical Gold Price Outlook
Technically, last week’s extended surge past the significant 200-day SMA was seen as a brand-new trigger for bullish traders. Thus, buyers are more likely to be drawn to the $1,783–$1,782 range in the case of a future slump. The price of gold should thus be limited in its upward movement to the support level that served as the horizontal resistance breakpoint between $1,761 and $1,760.
On the other hand, unless some follow-through buying happens beyond the $1,810 zone, bulls may want to delay placing further bets. The price of gold may then continue to increase, perhaps reaching the next significant obstacle on the road to the supply zone between $1,843 and $1,845 near the $1,830 region.
In this article, we have covered the highlights of global market news about the USD/CAD, EUR/USD, AUD/USD and GBP/USD.
The USD/CAD is in for a rocky ride as the BOC-Fed policy divergence widens.
In the Tokyo session, the loonie asset fell significantly below the round-level support of 1.3400 as the US Dollar saw a large increase in risk appetite.
After hitting a new low of 104.14, the US Dollar Index (DXY) has reversed sideways. The risk-on impulse has significantly intensified. Hence it is anticipated that the USD Index will continue to decline. To protect the US economy from financial threats, the Federal Reserve (Fed) is changing its culture to gradual rate increases, putting tremendous pressure on the US dollar. Investors are waiting for the US ISM Services PMI data to be released to get new momentum, which is why S&P500 futures are performing below expectations.
On the strength of encouraging US Nonfarm Payrolls (NFP) statistics, the 10-year US Treasury rates have steadily risen to close to 3.53%. Additionally, the Federal Reserve policymaker’s aggressive remarks on the interest rate peak have hurt US Treasury bonds. Charles Evans, president of the Chicago Fed, said on Friday, according to Reuters, “We are probably going to have a little higher peak to Fed policy rate even as we moderate pace of rate increases.”
EUR/USD retests a multi-month high, aiming for 1.0600 amid persistent USD selling
The EUR/USD pair is expected to build on last week’s breakthrough momentum past the crucial 200-day SMA on Monday and continue to gain ground. The rising trend, supported by the pervasive dollar-bearish attitude, raises spot prices to around 1.0585, the highest level since late June.
In fact, despite expectations for a more gradual tightening of monetary policy by the Fed, the USD Index, which gauges the Dollar’s performance relative to a basket of currencies, drops to a more than five-month low. Market investors think the US central bank will adopt a more accommodating attitude and announce a rate increase of just 50 basis points at its forthcoming meeting on December 13–14. The safe-haven Dollar continues to be undermined by this and the optimism around potential changes to COVID-19 regulations in China.
AUD/USD rises to a seven-week high over 0.6850 as the RBA prepares to tighten policy further.
In the Asian session, the AUD/USD pair’s rebound from 0.6770 to over 0.6850 has been extended. Due to the Reserve Bank of Australia’s (RBA) intention to tighten policy even more to promote price stability, the Aussie asset has seen outstanding purchasing activity from market players.
In addition to the RBA’s monetary policy, the Australian Dollar has gained strength due to a bullish market environment. The US Dollar Index (DXY) has dropped to a five-month low of 104.14 due to a general reduction in safe-haven appeal. As a Federal Reserve (Fed) policymaker suggested a higher interest rate peak despite a reduction in rate speed, S&P500 futures have been muted. The 10-year US Treasury rates have also significantly improved. As a result, they are approaching 3.53%.
Charles Evans, president of the Chicago Fed, stated, according to Reuters, “We are probably going to have a little higher peak to Fed policy rate even as we moderate pace of rate rises.”
GBP/USD trades over 1.2300 as market sentiment increases, and the US ISM Services PMI is being watched.
In the Asian session, the GBP/USD pair’s auction profile moved over the pivotal threshold of 1.2300. Due to the market participants’ strong purchasing interest in the Cable, the risk-on profile has become even more favourable. The major has renewed its five-month high over 1.2340 and is anticipated to continue rising since there is a lot of demand for risky assets.
The prospects of the Federal Reserve’s current interest rate rise pace slowing down are increasing, which has caused the US Dollar Index (DXY) to retest its five-month low at 104.14. (Fed). The Fed will slow down the rate at which it expands interest rates to decrease financial risks and to monitor the results of recent measures to bring about price stability.
Ahead of US ISM Services PMI data, investors act cautiously, as shown by the S&P500 futures’ muted performance. The 10-year US Treasury rates have increased to around 3.53%.
A better-than-expected US ISM Services PMI publication should provide a stronger cushion for the US Dollar despite the positive US Nonfarm Payrolls (NFP) data released on Friday. The consensus estimates the economic statistics to be 55.6 compared to 54.4 in the previous report. In addition, the ISM Services New Orders Index data, which is expected to be higher at 58.5 compared to the previous release of 56.5, will influence Cable.
Please click here for the Market News Updates from 2 December, 2022.
The US dollar‘s overall decline has boosted both gold and silver, but silver stands out among the two metals in terms of its positive climb.
Gold: There is significant resistance at the psychological 1800 level and the 200-day SMA.
Silver is trading above a large zone of support with no indications of slowing down.
Technical Forecast for Gold (XAU/USD): Mixed
Due to falling US rates and a weaker currency, gold has had a great week of gains. To end the week, the precious metal is currently testing the psychological threshold of 1800. A third prolonged lower wick on the weekly time frame was enough to reject a move below and, instead, signal the beginning of a move higher, which led to the bullish advance. This rejection of the 1611.40 (Jan 2020) level was rather significant.
The possible region of resistance to gold’s upward movement may be seen on the daily chart. The purple rectangles show prior instances where price activity neared and eventually respected the 1800 level. The level has been regarded as both opposition and support, emphasizing its significance even more. Additionally, as the 200-day SMA also conveniently lies near the 1800 level, nothing less than a massive follow-through from gold bulls would likely be successful in raising prices from this point.
If prices calm before making another try towards 1800, a drop towards the 38.2% Fibonacci retracement of the 2022 big advance (1786) is still possible. The higher high from mid-November and the Fib level is likewise congruent. The RSI, which just left a short time in oversold territory, also points to a probable deceleration.
Technical Prediction for Silver (XAG/USD): Bullish
Silver keeps moving upward unabatedly, while gold seems to be consolidating. The metal was able to overcome the resistance area between 21.40 and 22.10 comfortably, and silver is still on pace to have its biggest weekly gain since July.
The vast amount of real estate that silver could trade into on the daily chart is shown by breaking all nearby resistance levels, including the 200 SMA and the previously indicated zone of resistance. The price movement was stopped around 24.90, which was the level of resistance reached in early 2022 and September and October 2021.
Silver’s RSI suggests that prices like gold may be ready for a fall soon. However, the signal has yet to dip into overbought territory, indicating that there may still be some additional higher opportunities. Support is found at 22.10 on the upper edge of the support zone (initial resistance).
