CFD Markets News and Forecasts — 27-11-2024

• GBP/USD snapped back above the 1.2600 decisively on Wednesday.
• Cable is now bound for a fresh test of 1.2700, but data remains lean.
• A raft of widely-expected US data clears the way for US market holiday.

GBP/USD finally broke back above 1.2600 on Wednesday, propelled higher by a broad-market softening in the Greenback’s recent bullish stance. Economic data remains slim on the UK side of the calendar, and following Wednesday’s broad print of US figures that came in broadly as expected, markets are set for a quiet showing for the rest of the week.

Investors will see a notable constraint on market flows on Thursday and Friday: US markets will be entirely shuttered on Thursday for the US Thanksgiving holiday, and Friday will be light as well with most US exchanges cutting their operating hours short. The UK’s data docket remains equally-thin next week, where investors will be pivoting to face another round of US Nonfarm Payrolls figures next Friday, with plenty of preview employment data to muck up the view.

Annualized US Gross Domestic Product (GDP) grew by the expected 2.8% through the third quarter, to no one's surprise and barely moving the needle on investor pulses. Core Personal Consumption Expenditure Price Index (PCEPI) accelerated to 2.8% for the year ended in October, also meeting expectations. While upticks in inflation metrics generally bode poorly for market expectations of future rate cuts, the move upward was widely expected, and a hold in monthly figures at 0.3% MoM helped to frame the bump in the data as being in the rear-view mirror.

GBP/USD price forecast

Wednesday’s Cable rebound has the pair taking a fresh run at the 1.2700 handle, adding nearly a full percent through the day’s trading and priming GBP/USD bulls for a new leg back into the high side following a 7% top-to-bottom decline from September’s peaks at 1.3434. However, long positioning is set to run into new challenges at the 200-day Exponential Moving Average (EMA) near 1.2835.

GBP/USD daily chart

Reserve Bank of New Zealand (RBNZ) Assistant Governor Karen Silk said on Thursday that residential investment, manufacturing, retail trade and construction in New Zealand will start to see more recovery in early 2025. 

Key quotes

Market reaction 

At the time of writing, the NZD/USD pair is trading 0.01% lower on the day to trade at 0.5896. 

• USD/CAD softens to around 1.4025 in Thursday’s early Asian session. 
• US core PCE inflation climbed to 2.8% YoY in October, as expected. 
• Trump’s tariff plans on Canadian imports could weigh on the Canadian Dollar. 

The USD/CAD pair edges lower to near 1.4025 during the early Asian session on Thursday. The US Dollar Index (DXY) weakens to a multi-day low due to monthly flows and the Thanksgiving Day holiday. 

The US Dollar (USD) declines further as traders prefer not to hold positions before a long Thanksgiving weekend. However, the downside for the Greenback might be limited as the US Federal Reserve (Fed) may be cautious about interest rate cuts after stubbornly strong US inflation data.

Data released by the US Bureau of Economic Analysis (BEA) on Wednesday showed that the US Personal Consumption Expenditures (PCE) Price Index rose 2.3% on a yearly basis in October, compared to a 2.1% increase in September. 

Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, climbed 2.8% in the same period, up from 2.7% in September. Both figures came in line with the market consensus. On a monthly basis, the core PCE Price Index increased 0.3% in October, as expected. This report indicated that consumer spending increased solidly in October, but progress on lowering inflation appeared to have stalled.

According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% chance that the Fed will cut rates by a quarter point, up from 55.7% before the PCE data. Nonetheless, they anticipate the Fed leaving rates unchanged at its January and March meetings.

On the Loonie front, the expectation that US President-elect Donald Trump would impose tariffs on Canadian goods during his first stint as US president could exert some selling pressure on the Canadian Dollar (CAD) and act as a tailwind for the pair. On Monday, Trump vowed to introduce 25% tariffs on goods coming from Mexico and Canada and an additional 10% on goods coming from China.

• The Canadian Dollar caught a slight bid after getting pushed into multi-year lows.
• Canada remains absent from the economic calendar until Friday.
• Incoming US Thanksgiving holiday to compress market volumes this week.

The Canadian Dollar (CAD) caught a much-needed bid on Wednesday, clawing back a sliver of recently-lost ground after the Loonie was pushed into multi-year lows by a correlated decline in Crude Oil prices earlier in the week. Investors eased up from broad-market Greenback bidding, taking USD/CAD back down toward the 1.4000 handle.

Canada has been functionally absent from the economic calendar this week, with no meaningful data releases on the radar until Friday’s Canadian quarterly Gross Domestic Product (GDP) update. US data broadly hit expectations on Wednesday, keeping market sentiment roughly on-balance and giving the Canadian Dollar some breathing room as Greenback bidding eases.

Daily digest market movers: Canadian Dollar claws back ground after multi-year plunge

• The Canadian Dollar gained one quarter of one percent on Wednesday, waking back the early week’s fast plunge into 55-month lows.
• Key market drivers on Wednesday were a wide US data dump as markets rush to wrap things up for Thursday’s Thanksgiving holiday.
• Markets will also see limited trading hours on Friday, further crimping market volumes during the latter half of the trading week.
• US core Personal Consumption Expenditures Price Index (PCEPI) inflation rose on an annualized basis, but no more than investors expected, keeping market reactions limited.
• Canada’s Q3 GDP update, slated for Friday, is expected to shrink to 1.0% on an annualized basis compared to the previous 2.1%, while the monthly GDP estimator is forecast to counter-intuitively swing higher to 0.3% from the previous flat print of 0.0%.

Canadian Dollar price forecast

The Canadian Dollar’s (CAD) 55-month low reach this week is seeing a tepid rebound. The CAD has gained an intraday foothold against the US Dollar, dragging the USD/CAD pair back into touch range of the 1.4000 handle. The pair is still caught on the high end following a broad-market bull run in the Greenback, but technical traders will have an increasingly difficult time ignoring the growing potential for a cyclical turnaround in the long-term charts.

USD/CAD daily chart

• NZD/USD soared 1.02% to trade near 0.5895.
• The pair approached the 20-day SMA at around 0.5910, seemingly continuing its recovery.

The NZD/USD rose by 1.02% to trade near 0.5895 in Wednesday's session, continuing its recovery and approaching the 20-day Simple Moving Average (SMA) at around 0.5910. The Relative Strength Index (RSI) indicates that buying pressure is recovering, while the Moving Average Convergence Divergence (MACD) shows that selling pressure is flat, which prints signs of a recovering buying momentum.

Should the pair breach the 20-day SMA, the outlook may improve further potentially targeting the 0.6000 area. On the downside, bears might invalidate the recovery if they regain the 0.5800 area and push the pair back below yearly lows. In addition, traders shouldn’t take their eyes of the looming bearish crossover between the 100 and 200-day SMA at around 0.6070 area which could give arguments to the bearish rhetoric.

NZD/USD daily chart

• XAU/USD gains over 0.13% on Wednesday, rebounding from a weekly low of $2,605 due to a weaker US Dollar and declining US Treasury yields.
• US economic data show strength with the second GDP estimate for Q3 and strong labor market data.
• The core Personal Consumption Expenditures (PCE) Price Index aligns with expectations yet continues to rise.

Gold prices recover on Wednesday after dropping to a weekly low of $2,605, bolstered by a soft US Dollar responding to the release of US economic data. This alongside falling US Treasury bond yields, spurred Gold’s recovery to current prices. The XAU/USD trades at $2,636 up by 0.13%.

The market mood turned slightly sour as US equity markets prepared for Thanksgiving. In the meantime, the Federal Reserve’s (Fed) preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, justifies the Fed's gradual approach, which is expected to lower borrowing costs at the December meeting.

Other data showed that the economy remains robust after the release of the second estimate of the third quarter's Gross Domestic Product (GDP). At the same time, jobs data revealed that the labor market remains strong as the number of Americans applying for unemployment benefits dipped below estimates.

Following the data, US Treasury bond yields fell, dragging the Greenback lower. The US Dollar Index (DXY), which tracks the performance of six currencies against the buck, tumbled 0.78% to 106.04.

Bullion prices recovered despite Lebanon and Israel agreeing on a ceasefire. Nevertheless, the escalation of the Russia-Ukraine conflict could keep buyers leaning into the non-yielding metal, which posted weekly losses of over 2.90% despite advancing on Wednesday.

According to CME FedWatch Tool data, markets now see a 70% chance of a quarter-point rate cut in December. The non-yielding metal shines in lower interest rate environments.

Daily digest market movers: Gold prices fluctuate near $2,630

• Gold prices recovered as US real yields dropped six basis points to 1.966%.
• US Durable Goods Orders rose by 0.2% MoM in October, missing the 0.5% forecast but improving from September's -0.4% decline.
• The second estimate of US GDP growth for Q3 came in at 2.8% QoQ, meeting expectations but below the 3% growth recorded in Q2 2024.
• Initial Jobless Claims for the week ending November 23 remained steady at 213K, below the projected 217K.
• Core PCE increased by 2.8% YoY in October, in line with expectations and slightly above September's 2.7%.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.

Technical outlook: Gold price advances modestly, clings to $2,630

Gold's price is neutral to downwardly biased after sellers pushed Bullion below the $2,700 mark. Although the golden metal pushes higher on Wednesday, the XAU/USD is carving out a series of successively lower highs and lower lows. However, if bulls reclaim the 50-day SMA at $2,667, this could pave the way to challenge $2,700, the psychological $2,750, and the all-time high at $2,790.

Conversely, If bears push prices below $2,600, it will open the door to testing the 100-day SMA of $2,568, immediately followed by the November 14 swing low of $2,536.

Oscillators like the Relative Strength Index (RSI) have shifted bearishly, indicating sellers are in charge.

• AUD/USD pair rises to 0.6480 on Wednesday.
• Aussie benefits from US Dollar weakness despite soft Australian CPI.
• PCE data from the US meets expectations for inflation.

In Wednesday's session, the AUD/USD rose to 0.6480 as the US Dollar remained weak following the release of high-tier economic data. This comes despite Wednesday's publication of subdued Australian Consumer Price Index (CPI) inflation figures, which had previously limited the Aussie's rise. Nonetheless, the broader weakness in the Greenback continues to support the Australian Dollar.

The AUD/USD pair has struggled in recent trading sessions, weighed down by mixed Australian economic data, a hawkish Reserve Bank of Australia (RBA), and persistent US Dollar strength. The Aussie will still be sensitive to both local and American data as the monetary policy divergences between the RBA and the Federal Reserve (Fed) might shake the pair.

Daily digest market movers: Australian Dollar gains capped by Australian data, but USD weakness helps

• The Aussie’s rise occurred despite subdued Australian CPI inflation data.
• October's Australian CPI remained unchanged at 2.1%, below expectations, while the trimmed Mean CPI rose to 3.5% in October from 3.2% in September.
• Energy prices significantly contributed to the low headline inflation, falling by 35.6%. Petrol prices declined by 11.5%, impacting headline inflation.
• The RBA is unlikely to alter interest rates since these factors are deemed transitory.
• On the US front, the Gross Domestic Product from Q3 was reported at 2.8% as expected.
• Other data showed that Initial Jobless Claims declined to 213K, surpassing expectations, while Durable Goods Orders rose by a modest 0.2% in October, below forecasts.
• The highlight was the the Personal Consumption Expenditures (PCE) Price Index, which rose 0.2% MoM and 2.3% YoY, in line with expectations.
• Core PCE Price Index increased by 2.8% YoY, meeting market estimates.
• Following the data, the odds of a cut by the Fed in December remain high at around 60% but declined significantly in November, which favoured the Greenback’s rise.

AUD/USD technical outlook: Pair remains capped by 20-day SMA, with indicators recovering but still negative

The AUD/USD pair's indicators have shown a slight uptick but remain in negative territory, indicating ongoing bearish momentum. The RSI is hovering around the 40 region, while the MACD histogram remains red, reinforcing the downtrend.

The pair remains capped by the 20-day Simple Moving Average (SMA) acting as a significant resistance level. This technical outlook suggests that the AUD/USD may continue to face selling pressure in the near term, with further declines likely if the mentioned SMA isn’t conquered.

The Greenback faced strong and sudden downward pressure, retreating to multi-day lows due to lower US yields and investors’ adjustments to month-end flows.

Here is what you need to know on Thursday, November 28:

The US Dollar Index (DXY) sold off to multi-day lows, breaking below the 106.00 support in tandem with extra weakness in US yields. The US markets will be closed due to the Thanksgiving Day holiday.

EUR/USD regained upside impulse and came closer to the key barrier at 1.0600 the figure following the strong pullback in the US Dollar. Germany’s preliminary Inflation Rate will take centre stage, seconded by EMU’s Economic Sentiment, the final Consumer Confidence gauge, the ECB’s Consumer Inflation Expectations, and speeches by the ECB’s Elderson and Lane.

GBP/USD rose markedly and flirted with weekly tops just pips away from the key 1.2700 hurdle. The UK’s Car Production figures will be published.

USD/JPY lost further ground and clinched five-week lows well south of the 151.00 support. The usual weekly Foreign Bond Investment readings will be released.

AUD/USD regained some composure and trimmed most of Tuesday’s pullback, revisiting at the same time the key 0.6500 barrier. Next on the Australian docket will be the quarterly Private Capital Expenditure, and the speech by the RBA’s Bullock.

WTI prices weakened to the vicinity of the $68.00 mark per barrel following alleviated geopolitical concerns and an unexpected strong build in US gasoline inventories, as reported by the EIA.

Gold prices added to Tuesday’s modest advance and briefly tested the $2,660 region per troy ounce on the back of the Greenback’s sell off, lower yields and further repricing of the Fed’s rate path following sticky US PCE readings. Silver prices tumbled to two-week lows, breaking below the key $30.00 mark per ounce.

• EUR/USD rises 0.81% to 1.0574, recovering from recent losses, after ECB’s Isabel Schnabel urges caution on accommodative monetary policy.
• US Durable Goods Orders for October beat expectations but missed forecasts for a larger gain, up 0.2% MoM.
• US GDP growth for Q3 rose to 2.8%, in line with expectations, but down from Q2’s 3% growth.

The Euro recovered against the Greenback in the mid-North American session due to hawkish comments by European Central Bank (ECB) member Isabel Schnabel, who said the ECB should not be accommodative on rates. Therefore, the EUR/USD climbed by 0.81% and trades at 1.0574.

EUR/USD gains 0.81% to 1.0574, bolstered by ECB comments

US data failed to underpin the Greenback, which appreciated some 5.50% against the Euro, since the elections. US Durable Goods Orders for the month of October came at 0.2% MoM, exceeding September’s figures, yet missed estimates for a 0.5% expansion. Other data showed that the US Gross Domestic Product (GDP) in its second estimate was 2.8%, as expected, below the second quarter's 3% growth.

At the same time, the US Department of Labor announced that Initial Jobless Claims for the week ending November 23, rose by 213K, unchanged from the previous reading and missed estimates of 217K.

In the meantime, the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, was unchanged at 2.8% YoY, up from the previous reading of 2.7%.

Earlier, Germany’s Gfk Consumer Climate index plummeted by -23.3 in November, below estimates. The institute mentioned that consumers have a sharp decline in income expectations and some decline in the willingness to buy, in contrast to an increase in the desire to save

EUR/USD Price Forecast: Technical outlook

The EUR/USD downtrend remains intact, yet price action during the last three days edged higher, an indication that it is not finding acceptance at around the 1.03-1.04 figure. If the pair extends its gains past the November 20 high of 1.0609, buyers could test the 1.0700 figure. Otherwise, a drop beneath 1.0500 could lead to bears challenging the 1.0400 mark.

• The US Dollar Index plunged toward 106.00 on Wednesday.
• The US Dollar ticked lower, but its losses may be limited as markets are pricing in a more hawkish Fed.
• PCE data from October met expectations for inflation.

In Wednesday’s session, the US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, ticked 1% lower as markets assess the release of high-tier economic data including a Personal Consumption Expenditures (PCE) reading, the Federal Reserve’s (Fed) preferred gauge of inflation.

Daily digest market movers: US Dollar retreats despite sticky inflation data

• Despite US data indicating rising inflation, the DXY remains on the back foot.
• The market is pricing in a more hawkish stance from the Fed, which could lead to less cuts in the near term.
• This hawkish stance is likely contributing to the recent strength of the US Dollar against other currencies.
• Data is showing that the economy keeps doing well with no recession in view.
• The Q3 Gross Domestic Product (GDP) was reported at  2.8% as expected.
• Initial Jobless Claims improved to 213K, better than the expected 217K.
• Durable Goods Orders rose by 0.2% in October, lower than the expected 0.5% but higher than September's -0.4%.
• The PCE Price Index rose by 0.2% MoM and 2.3% YoY as expected. The core PCE annual figure increased by 2.8% YoY, meeting forecasts as well.

DXY technical outlook: Indicators suggest potential consolidation, but uptrend intact

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators had been struggling to gain ground lately, and they seemed to have given up on Wednesday as the index retreats to 106.00. 

This suggests that the index may be due for a period of consolidation. However, the index remains about its 20,100 and 200-day Simple Moving Averages (SMA),  which indicates that the overall momentum remains positive. The DXY is expected to find support at 106.00-106.50 and faces resistance at 108.00. 

• The Dow Jones tapped the 45,000 level for the first time ever.
• Despite an early upshot into a new record bid, the major index is trading softer.
• US inflation and growth data met expectations, causing little stir.

The Dow Jones Industrial Average (DJIA) rose to another all-time high on Wednesday, tapping the 45,000 major price handle before settling back below the day’s opening bids near 44,800. Equities are turning tepid quickly as the US market space pivots into the upcoming Thanksgiving holiday on Thursday. Shorter hours on Friday further squeeze out the potential for momentum in the back half of the trading week.

Annualized US Gross Domestic Product (GDP) grew by the expected 2.8% through the third quarter, to no one's surprise and barely moving the needle on investor pulses. Core Personal Consumption Expenditure Price Index (PCEPI) accelerated to 2.8% for the year ended in October, also meeting expectations. While upticks in inflation metrics generally bode poorly for market expectations of future rate cuts, the move upward was widely expected, and a hold in monthly figures at 0.3% MoM helped to frame the bump in the data as being in the rear-view mirror.

Dow Jones news

After an early bump to test record highs, the Dow Jones is softening slightly, down around 75 points as of writing. Most of the major equity board’s listed securities are finding higher ground on the day, but concentrated losses in familiar tech stocks are dragging the averages lower.

Salesforce (CRM) fell over 3.5% to $330 per share as investors ease back on data management company that has been at the forefront of the AI integration space. CRM is slated to deliver its latest quarterly financials on December 3. Despite still being light on details about how a larger AI segment within the company will generate excess revenue, the generative data wave has propelled Salesforce to a $315 billion market cap, doubling its share price over the past five years.

Dow Jones price forecast

Despite pivoting into the red through the Wednesday trading session, the Dow Jones still set another record high, briefly piercing the 45,000 level for the first time ever. Despite all technical signals suggesting DJIA is overbought, bearish momentum has proven to be a trap rather than a successful entry point through most of 2024.

The Dow Jones is up around 20% YTD, and has outrun its own 200-day Exponential Moving Average (EMA), currently rising into 40,460, for over a year straight. A near-term floor is priced in at the 50-day EMA near 42,900, with the last swing low all the way down at the 42,000 handle.

Dow Jones daily chart

• Mexican Peso climbs some 0.12% following 2% drop since late Monday on Trump’s rhetoric.
• Mexican President Sheinbaum warns of retaliation with higher tariffs on US imports.
• Economy Minister Ebrard highlights potential job losses in the US and economic slowdown due to US tariffs.

The Mexican Peso recovered some ground after depreciating more than 2% since Monday, following Trump’s remarks that he would impose tariffs on Mexico. The Peso shrugs off Trump’s comments and appreciates amid broad US Dollar weakness. The USD/MXN trades at 20.62, down 0.12%.

On Tuesday, Mexican President Claudia Sheinbaum said that Mexico would raise tariffs on imports from the US in retaliation for Mexican exports. In the meantime, Economy Minister Marcelo Ebrard commented that a 25% tariff on Mexican products exported to the US would cause the loss of over 400,000 jobs in the United States, slow growth, and hurt US companies and consumers.

Barclays analysts said that imposing a 25% tariff against Canadian and Mexican imports “could wipe out effectively all profits” from the three Detroit automakers.

The Mexican Balance of Trade for October printed a surplus of $0.37 billion, improving compared to September’s -$0.579 billion deficit.

In the US, the schedule was busy. October’s Durable Good Orders improved, and Initial Jobless Claims came in below estimates. Further data revealed the second estimate of the Gross Domestic Product (GDP) for the third quarter and the Federal Reserve’s (Fed) preferred inflation gauge, the Core Personal Consumption Price Expenditures (PCE) Price Index.

Ahead this week, the Mexican economic docket will feature the release of the latest meeting of the Bank of Mexico (Banxico).

Daily digest market movers: Mexican Peso ignores Trump’s tariffs rhetoric to appreciate

• Mexico’s Chamber of Deputies, after approving the dissolution of autonomous bodies, proposed adjustments to the details of a contentious reform that abolished several regulatory bodies to ensure compliance with the USMCA trade agreement.
• “The fact that MORENA is taking a more cautious approach with two of the most important regulators, antitrust and telecoms, is a positive sign,” said Rodolfo Ramos of the Brazilian bank Bradesco BBI.
• Last week, Banxico Governor Victoria Rodriguez was dovish and hinted that the central bank might look to decrease rates by more than 25 bps due to disinflation progress. Headline inflation during the first two weeks of November dipped from 4.68% to 4.56% YoY.
• US Durable Goods Orders in October came in at 0.2% MoM, below estimates of 0.5%, but higher than September’s -0.4% contraction.
• US GDP for Q3 in its second estimate was 2.8% QoQ, as expected, below Q2 2024’s 3%.
• Initial Jobless Claims for the week ending November 23 reached 213K, below estimates of 217K and unchanged compared to the previous figure.
• US core PCE expanded by 2.8% YoY as expected, up from 2.7%.
• The CME FedWatch Tool suggests that investors see a 66% chance of a 25-basis-point rate cut at the US central bank’s December meeting, up from 59% a day ago.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.

USD/MXN technical outlook: Mexican Peso recovers as USD/MXN dives beneath 20.60

The USD/MXN uptrend remains intact, even though the pair edges lower at the time of writing. If the exotic pair drops below the psychological 20.50 figure, this could pave the way to test the previous year-to-date (YTD) peak at 20.22, before dropping to 20.00.

A bullish resumption would happen once buyers lift the USD/MXN above the YTD high of 20.83, ahead of the 21.00 mark. A breach of the latter will expose the March 8, 2022, peak at 21.46, followed by the November 26, 2021 high at 22.15.

• Wednesday's session saw the EUR/CAD pair rise by 0.51% to 1.4815.
• The pair is on its way to test the 200-day SMA following a jump in the early part of the session.
• A looming bearish crossover between the 20 and 200-day SMA at 1.4850 could reject the buyers.

The EUR/CAD rose by 0.51% to 1.4815 in Wednesday's session and is on its way to test the 200-day Simple Moving Average (SMA) following a jump in the early part of the day. The cross has made a new stride to conquer the key 200-day SMA at 1.4850 which in case of conquering it would improve the outlook. The Relative Strength Index (RSI) is recovering, while the Moving Average Convergence Divergence (MACD) is rising, suggesting that the overall momentum is mixed.

The EUR/CAD pair maintains a positive trend, supported by recovering buying pressure. The RSI indicates bullish momentum, but the MACD suggests increasing selling pressure, resulting in a mixed outlook. However, the pair's attempts to break above the 200-day SMA could boost bullish sentiment. Traders need to be cautious of a potential bearish reversal if the 20 and 200-day SMAs cross over at 1.4850, threatening the buyers' progress.

EUR/CAD daily chart

• GBP/USD rallies to a four-day high of 1.2667, trading at 1.2646 at the time of writing, up 0.64% daily.
• Bulls need to reclaim 1.2700 to target the 200-day SMA at 1.2818, while a break above could shift the bias upward.
• On the downside, a move below 1.2600 could see the pair test the November 22 low of 1.2486, with further support at the year-to-date low of 1.2299.

The Pound Sterling rallied to a four-day peak against the US Dollar at 1.2667 as market participants shrugged off Trump’s tariffs threats, which sparked a flight to safety on Tuesday. At the time of writing, the GBP/USD trades at 1.2646, above its opening price by 0.64%.

GBP/USD Price Forecast: Technical outlook

The GBP/USD remains biased downward despite recovering the psychological figure of 1.2600. Bulls must reclaim 1.2700 to test the 200-day Simple Moving Average (SMA) at 1.2818. If those levels are cleared, the bias could shift upwards.

For a bearish continuation, if GBP/USD drops below 1.2600, bears could drive the exchange rate toward the November 22 swing low of 1.2486. A breach of the latter will expose the year-to-date (YTD) low of 1.2299.

Oscillators such as the Relative Strength Index (RSI) signals buyers’ recovery. However, bears remain in charge as the RSI remains below the neutral line.

GBP/USD Price Chart – Daily

• EUR/CHF might continue to decline towards the initial target generated by the Triangle pattern formed between August – October. 
• A textbook bullish Hammer reversal candle was not confirmed and downside risks remains.

EUR/CHF recovers after declining following a breakout from a Triangle pattern that started forming in August and completed in November (see chart). 

The pair reached lows of 0.9204 on November 22 but promptly recovered to form a bullish reversal candlestick pattern called a bullish Hammer (green rectangle on chart below). 

EUR/CHF Daily Chart

Despite being a classic example of a Hammer, the candle on EUR/CHF failed to gain bullish confirmation as it was not succeeded by a green up candle on the following day. 

Since then the market has been going sideways. 

There is still a risk EUR/CHF could resume falling again. It has not yet reached the conservative downside target for the Triangle at around 0.9146 (red dashed line), the 61.8% Fibonacci extrapolation of the height of the Triangle lower, and it is possible it may still fall down to that target in time.

A break below the Hammer’s lows at 0.9204 would increase the likelihood of the target being achieved.  

Macro funds skillfully managed to liquidate nearly 60% of their extreme position size in the weeks that followed the US elections, mitigating subsequent downside risks, barring a change in the prevailing macro narrative, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Gold prices need another catalyst for the next round of liquidations

“CTA positioning has contributed to some whipsaws, but is now unlikely to add to downside flows until prices break south of $2550/oz. Shanghai traders' positions have been on a significant downtrend, but have stabilized over the last sessions.”

“In turn, while buying exhaustion appears apparent, Gold prices will require another catalyst for the next round of liquidations to hit the tapes, which point to a range-bound outlook for the near-term.”

“Positioning in silver markets has remained cleaner, and the current set-up for CTA flows rather points to notable upside asymmetry such that algos will buy in an uptape, but will no longer sell in a downtape over the coming week. This points to favorable tailwinds in silver on an XAUXAG basis.”

• USD/JPY is testing the bottom of a probable bearish reversal pattern, attempting to break out. 
• A decisive break below the baseline of the Broadening Formation would signal a reversal and probably more downside. 

USD/JPY has fallen to test the lower border line of a bearish Broadening Formation price pattern (see chart below). The pair looks poised to break out lower. If so, it would signal a reversal of the trend and likely more downside on the horizon.

USD/JPY Daily Chart 

The (blue) Moving Average Convergence Divergence (MACD) momentum indicator has crossed below the red signal line and is diverging – a bearish indication. 

A decisive break below the lower borderline of the Broadening Formation (BF) at about 151.50 would probably indicate a follow through to the target for the pattern at around 148.54. 

A decisive break would be one accompanied by a long red candle that pierced clearly below the level and closed near its lows, or three red candles in a row that broke below the boundary. 

Another possibility is that the pattern has not yet finished forming, in which case it could begin a new up leg within the boundary lines of the BF. This could either rally about half way up before pettering out or all the way up to the top of the pattern in the 156.00s. However, it is still too early to say whether either of these outcomes is likely to be the case. 

• AUD/NZD is probably forming a bearish reversal pattern after peaking in late November. 
• The MACD could be about to offer a sell signal reinforcing the pattern.
   

AUD/NZD has fallen for the third consecutive day after peaking at the November 25 multi-month high.

If Wednesday ends with a bearish close it will signal the completion of a bearish Three Black Crows candlestick reversal pattern (red rectangle on chart). Such a pattern would indicate the odds favor AUD/NZD falling to lower lows. 

AUD/NZD Daily Chart 

The (blue) Moving Average Convergence Divergence (MACD) is crossing below its red signal line, giving a sell signal and reinforcing the bearish candlestick pattern. The crossover is only on an intraday basis, however, and MACD would need to end the day below the signal line to confirm the bearish bias. 

Support lies at around 1.0900 – 1.0920 at the trendline for the broader uptrend. Assuming the pattern and MACD signal are confirmed, price will probably fall to that zone and consolidate. 

• USD/CAD edges lower as the US Dollar tumbles after a slew of mid-tier US economic data.
• Investors will pay close attention to the US PCE inflation data for October.
• The Canadian Dollar remains weak as US Trump threatens to impose 25% tariffs on Canada.

The USD/CAD pair ticks down as the US Dollar (USD) extends its downside but remains broadly sideways around 1.4050 after the release of a slew of mid-tier United States (US) economic data.

The first estimate of Q3 Gross Domestic Product (GDP) growth remained at 2.8%, in line with expectations of the preliminary estimate. Initial Jobless Claims for the week ending November 22 surprisingly came in lower than the former release. The number of individuals claiming jobless benefits for the first time was 213K, lower than the prior reading of 215K, upwardly revised from 213K. 

Meanwhile, growth in Durable Goods Orders in October remained weaker than projected. Fresh orders for durable goods rose by 0.2%, slower than estimates of 0.5%. In September, the Durable Goods Orders contracted by 0.4%, upwardly revised from 0.4% decline.

The initial reaction on the US Dollar was bearish, with the US Dollar Index (DXY) refreshing a weekly low around 106.20.

Going forward, the major trigger for the US Dollar will be the US Personal Consumption Expenditure Price Index (PCE) data for October, which will be published at 15:00 GMT. The inflation data will significantly influence market expectations for the Federal Reserve’s (Fed) likely interest rate action in the December meeting.

Though the US Dollar is underperforming, its performance against the Canadian Dollar (CAD) has remained firm, bolstered by US President-elect Donald Trump’s threat of imposing 25% tariffs on Canada and Mexico. Trump said in a post on Truth.Social that China has poured illicit drugs into the US, mainly through Mexico. Trump added that he will impose an additional 10% on China, which will be over 60% that he mentioned in his election campaign.

The announcement of higher tariffs on Canada has weakened the CAD across the board. Canada is one of the leading trading partners of the US, and higher-level tariffs on the nation will dampen its export sector.

ICE Brent has been trading flat after a sharp fall on Monday as the market assesses the Middle East's new dynamics. Israel and Hezbollah have announced a 60-day ceasefire agreement, effective immediately. This time window could be used to discuss a longer-lasting peace agreement. The focus now shifts to the implementation of the current agreement and how it affects ongoing fighting in the Gaza Strip or the Israel-Iran conflict, ING’s commodity analysts Ewa Manthey and Warren Patterson note.         

Crude oil prices continue to face stiff resistance around $75

“Weekly data from the American Petroleum Institute (API) shows that crude oil inventory in the US dropped by 5.9m barrels over the last week compared to market expectations of a marginal draw. For refined products, distillate and gasoline stocks increased by 2.5m barrels and 1.8m barrels respectively. The more widely followed EIA report will be released today.”

“OPEC+ is scheduled to meet this weekend and expectations are that the group could further delay its plans to increase production by 180k bbls/d in January. In the last meeting, the group had postponed its supply increment plans from December to January.”

“Crude oil prices continue to face stiff resistance around US$75/bbl due to demand concerns. Any premature production hike from the group could push the market into deeper oversupply.”

• Initial Jobless Claims climbed less than estimated to 213K.
• Continuing Jobless Claims rose to 1.907M in the week ending November 15.

US citizens filing new applications for unemployment insurance rose to 213K for the week ending November 22, as reported by the US Department of Labor (DoL) on Thursday. This print came in below initial estimates (217K) and was lower than the previous week's tally of 215K (revised from 213K).

Moreover, Continuing Jobless Claims went up by 9K to reach 1.907M for the week ending November 15.

Market reaction

The Greenback maintains its bearish note for the day so far, motivating the US Dollar Index (DXY) to retreat to the 106.30 region, or five-day lows.

• Durable Goods Orders in the US rose slightly in October.
• US Dollar Index stays on the back foot below 106.50.

Durable Goods Orders in the US increased $0.7 billion, or 0.2%, to $286.6 billion in October, the US Census Bureau reported on Wednesday. This reading followed the 0.4% decrease (revised from -0.8%) recorded in September and came in worse than the market expectation for an increase of 0.5%.

"Excluding transportation, new orders increased 0.1%," the publication read. "Excluding defense, new orders increased 0.4%. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $0.4 billion or 0.5% to $97.1 billion."

Market reaction

The US Dollar (USD) remains under pressure following this data. At the time of press, the USD Index was down 0.6% on the day at 106.25.

The Pound Sterling (GBP) is modestly higher on the session, tracking its G10 peers for the most part. BoE DG Lombardelli reiterated her caution on the policy outlook in an interview with the FT, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP gains modestly

“The latest comments go a little further in defining the ‘cautious’ approach to policy adjustment that her colleagues have referenced in recent comments. Lombardelli wants to see more evidence of the ‘disinflation process continuing’ before easing again. Markets continue to price in around 80% risk of a 25bps cut in February, with the Bank widely expected to take a pass at the December decision.”

“Cable has been pressuring minor trend resistance off the early November high in spot over the past couple of sessions and has managed to make a clean break above that point (now intraday support) at 1.2591 so far today.”

“Gains are not pushing on decisively above recent peaks around 1.2615 at this point, however, and the broader pattern of recent trade still looks more like a consolidation ahead of renewed losses rather than a reversal in the November track lower in the pound. Short-term gains could extend to the mid/upper 1.26s but a move through 1.2715 resistance is needed to inject a little more technical strength in the near-term outlook.”

The Euro (EUR) is moderately higher on the session, with gains retesting recent peaks around 1.0540 before easing, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR firmer on hawkish Schnabel comments

“Hawkish comments from ECB Governor Schnabel that the central bank needed to be cautious about cutting rates too far as policy is nearing neutral helped give the EUR a lift.”

“The EUR may gain a little more in the near term as positioning is lightened up around the US Thanksgiving break but scope for significant gains remains limited. My fair value estimate for EURUSD is little changed today at 1.0427.”

“EUR gains from last week’s low continue to pressure the mid-1.05 area after breaking above minor trend resistance off the early November high around 1.09. Moderate gains may extend a little further towards the 1.0600/50 zone if a clear push above 1.0550 develops.”

Spot is little changed on the day as the Canadian Dollar (CAD) consolidates. CAD sentiment has taken a hit in the wake of Trump’s tariff threats but sentiment was already pretty weak anyway and, after the initial CAD slide on the headlines Tuesday evening, USDCAD has tended to drift modestly lower. More CAD losses seem inevitable unless the Canadian government can muster a response that satisfies the incoming administration quickly, however. That may not be easy, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD trades little changed on the session

“Trump’s recently named ‘border czar’ Tom Homan recently called the northern border 'an extreme national security issue' which suggests an quick fix to the president-elect’s concerns may be elusive. The risk of 25% tariffs remains just that at the moment but the longer the threat lingers and the closer we get to the inauguration, the weaker the CAD may trade.”

“Consolidation remains the name of the game for the CAD. Spot movement since the late Monday peak suggests a firm rejection of 1.41+ levels on the short-term chart for now but there broader pattern of trade also suggests the USD is consolidating ahead of another push higher at this point.”

“USD losses are likely to remain well-supported on minor dips to the 1.4000/25 area for now and the CAD really needs to push back through the 1.3945/50 area to show any sort of rebound potential.”

The US Dollar (USD) retains something of a softer undertone as the postelection rally ebbs a little (and continues to closely track the post-election pattern of trade from 2016), Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD consolidates near term

ȚToday brings the usual deluge of US data reports ahead of the Thanksgiving break. The second reading of Q3 GDP is expected to show the US economy remains in very decent shape, growing at a 2.8% clip (unchanged from the preliminary reading). October Personal Spending is forecast to rise at a 0.4% clip on the month while headline and core PCE price readings are forecast to edge higher from September to 2.3% and 2.8% respectively.”

“These data may add to some policymakers’ concerns that progress on inflation has stalled since the summer. Decent growth and a pick-up in PCE price data combined may dampen expectations for a Fed ease next month at a time when policymakers already appear to be turning a bit more cautious on the rate outlook—reflected in yesterday’s minutes for the November FOMC.

“Firm data, Fed caution and Trump’s tariff threats combined will bolster prospects for the USD’s late year strength to persist into December.”

• The US Dollar trades on the back foot at the start of the last normal trading day of the week.
• With Thanksgiving and Black Friday ahead, Wednesday will release three days’s worth of economic data. 
• The US Dollar Index extends this week’s correction and falls below 106.50 on Wednesday. 

The US Dollar (USD) trades softer against most major peers in the currency markets, with the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, extending this week’s correction and falling below the 106.50 level. The release of the Federal Open Market Committee (FOMC) Minutes on Tuesday did not really move the needle for markets, with confirmation that several Federal Reserve (Fed) members were advocating for either another rate cut in December or a pause in the cutting cycle. The fact that a rate hike was not discussed at all should put markets at ease on the Fed’s rate decision in December. 

The US economic calendar is full on Wednesday, with three days of data compressed into a single trading day ahead of the Thanksgiving holidays. The main pivotal data is the Personal Consumption Expenditures (PCE) Price Index for October, the preferred inflation gauge for the Federal Reserve (Fed), which could shape expectations about the interest rate outlook for the Fed meeting in December. Alongside the PCE release, Durable Goods Orders data for October, revised Q3 Gross Domestic Product (GDP) estimates, and Initial Jobless Claims data for the week ending November 22 will be released. 

Daily digest market movers: Set your alarm for 13:30 GMT

• At 13:30 GMT, traders will be glued to their screens for some major economic data releases on the US economy. Here are the ones to look out for:
  • A revised reading of the US Gross Domestic Product for the third quarter:
    • Headline GDP is expected to stabilise at 2.8%.
    • The Price Index component is expected to stay flat at 1.8%.
    • The PCE segment should remain unchanged at 1.5%.
  • Weekly Initial Jobless Claims are expected to rise to 217,000 in the week ending on November 22, coming from 213,000 the prior week. 
  • Durable Goods Orders for October are expected to tick up 0.5%, compared to a  0.7% contraction in the previous month. Goods excluding transportation are expected to increase by 0.2% from the previous 0.5%. 
• At 15:00 GMT, the Fed’s preferred inflation gauge will be released, the Personal Consumption Expenditures (PCE) for October:
• The monthly headline PCE is expected to have grown steadily by 0.2%.
• The monthly core PCE should portray a similar picture and show a steady growth of  0.3% compared to the previous month. 
• On a yearly basis, the headline inflation is expected to accelerate to 2.3% in October from 2.1% a month earlier. The core PCE is estimated to have risen by 2.8%, stronger than the former release of 2.7%.
• Equities are very mixed, with China outperforming against the rest of the world. The Chinese Hang Seng closed above 2% gains on the day, while  European equities and US futures are in the red. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 66.5%. A 33.5% chance is for rates to remain unchanged. The Fed Minutes have helped the rate cut odds for December to move higher. 
• The US 10-year benchmark rate trades at 4.27%, substantially lower from the high printed two weeks ago of 4.50% on November 15.

US Dollar Index Technical Analysis: Mixed bag

The US Dollar Index (DXY) is softening a touch ahead of the last important data release for this broken week with the Thanksgiving public holiday ahead. Experienced traders will know that it will be nearly impossible to trade on the back of the economic data release with too many moving parts influencing the direction of the Greenback and other asset classes. Besides that, a very valid argument can be made here that the Greenback has had a very profitable rally, with US traders ready to cash in before diving into their turkey. 

The fresh two-year high at 108.07 seen on Friday is the first level to beat. Further up, the 109.00 big figure level is the next one in line. The support from October 2023 at 109.36 is certainly a level to watch out for on the topside.  

Support comes in around 106.52, the double top from May. A touch lower, the pivotal 105.53 (April 11 high) should avoid any downturns towards 104.00. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 103.98 should catch any falling knife formation. 

US Dollar Index: Daily Chart

• AUD/USD sees a brief up lift following higher trimmed mean CPI out of Australia in October. 
• Figures showed headline CPI at multi-year lows but this was put down to lower energy and fuel prices. 
• Further gains result from a slight increase in bets the Federal Reserve will cut rates in December. 

AUD/USD bounces within a prolonged downtrend to trade in the 0.6870s on Wednesday after the release of Australian inflation data fails to change the widespread view that the Reserve Bank of Australia (RBA) will keep its “arms folded” at the next meeting, leaving its cash rate unchanged at a comparatively high 4.35%.  

AUD/USD Daily Chart 

The differential between central bank interest rates is a key driver of FX valuations, with central banks that have – or are expected to keep – interest rates relatively high compared to their peers seeing an appreciation in their country’s currencies. 

AUD/USD is trading higher on Wednesday because unlike the RBA, the US Federal Reserve (Fed) is increasingly seen as likely to cut its key interest rate by 25 basis points (bps), or 0.25%, to a range of 4.50% – 4.75% at the Bank’s December policy meeting. Further, the US central bank has already cut by 75 bps this year whilst the RBA has not lowered rates at all. 

The CME FedWatch tool calculates the probability of the Fed cutting by a quarter of a percentage point in December as 66.5% on Wednesday, up from the circa 56% at the beginning of the week. 

Although still higher than the RBA rate, the greater likelihood of the Fed cutting is mildly supportive of the Australian Dollar (AUD) and AUD/USD. 

AUD/USD’s downtrend since the beginning of October has been due to a radical change in market expectations about the trajectory of interest rates in the US. Prior to October these had been for the Fed to lower interest rates aggressively but robust US economic data led to a revision of these expectations. The outcome of the US Presidential election was a further factor supporting the pair. 

Australian CPI data fails to encourage AUD

Data out overnight showed the Australian monthly Consumer Price Index (CPI) remained at 2.1% in October – the same as September – and lingering at three-year lows. This was below the 2.3% forecast by economists. 

The Trimmed Mean CPI, however, rose by 3.5% in October from 3.2% in the previous month. 

In addition, most of the weakness in price growth of the headline 2.1% figure was put down to falling energy prices due to the ongoing impact of the Energy Bill Relief Fund rebate. The data showed that energy prices as a subcomponent fell 35.6% in October. Lower global Oil prices also impacted headline inflation as petrol prices fell by 11.5%. 

Since these factors are seen as transitory and not as representative of underlying inflation, the RBA is seen as unlikely to respond to them by lowering interest rates. 

Although the headline CPI data failed to meet expectations the rise in trimmed mean CPI meant there was no change to the outlook for the RBA’s cash rate or the AUD. 

Indeed, the RBA focuses more on the quarterly inflation figures, according to analysts at Brown Brothers Harriman (BBH) when it decides policy. 

“It’s worth noting that the RBA focuses on the quarterly CPI prints because it’s less volatile and captures more items than the monthly CPI indicator. RBA cash rate futures continue to imply a first full 25bps rate cut to 4.10% in May (2025),” said Elias Haddad, Senior Markets Strategist at BBH. 

The view was echoed by analysts at Societe Generale, who see no change in the cash rate at the RBA’s December meeting. 

“The wait for lower rates in Australia continues and the RBA will sit on the fence until 2Q25 after another disappointing inflation print. Core CPI picked up to 3.5% YoY in October,” said Kenneth Broux, a senior FX strategist with the French lender. 

• Israel and Iran-backed militant group Hezbollah in Lebanon have agreed to a ceasefire deal. 
• OPEC+ has started discussions on its production restart plans. 
• The US Dollar Index edges slightly lower ahead of a chunky economic data calendar ahead. 

Crude Oil ticks up on Wednesday, flirting with a 1% gain on the day. The move comes with several Organization of the Petroleum Exporting Countries and its allies (OPEC+) delegates confirming talks are underway for another delay of plans for its production normalization. The postponement could take months, with even talks of a pushback to the second quarter of 2025, Bloomberg reports. 

The US Dollar Index (DXY), which measures the Greenback’s performance against a basket of currencies, is struggling again ahead of Thursday and Friday's Thanksgiving festivities. The release of the Federal Reserve (Fed) Minutes on Wednesday was the cue for traders to start taking profit in the Greenback rally, with only a rate cut pause or an actual rate cut under consideration for the upcoming Fed meeting in December. 

With the shortened trading week, all main economic data releases, such as a revised reading for the third quarter of the US Gross Domestic Product (GDP), the Personal Consumption Expenditures Price Index (PCE), and the Durable Goods Orders reading for October, will be unleashed this Wednesday. 

At the time of writing, Crude Oil (WTI) trades at $68.81 and Brent Crude at $72.45.

Oil news and market movers: OPEC+ rumours buzzing

• A ceasefire deal has been signed between Israel and Hezbollah in Lebanon and should see tensions in the Middle East fade from now, with a risk premium to be further priced out of Crude Oil.
• Key OPEC+ nations began discussions on Tuesday to delay the Oil production restart planned for January, potentially for several months, delegates said, reported by Bloomberg. 
• Goldman Sachs joins RBC in its latest investor note, pointing to signs of increasing compliance with OPEC+ production quotas making it likely the alliance will decide to extend output cuts set to end in January when it meets this weekend, Reuters reports.
• The weekly Crude Stockpile release from the American Petroleum Institute (API) on Tuesday came in at a drawdown of 5.935 million barrels compared to the previous build of 4.753 million.
• At 15:30 GMT, the Energy Information Administration (EIA) will release its weekly Crude Stockpile Change findings. Expectations are for a draw of 1.3 million barrels in the week ending on November 22 compared to the previous build of 0.545 million. 

Oil Technical Analysis: Whenever, wherever will OPEC+ normalize

Crude Oil price is attempting to recover again this week after a failed attempt on Tuesday. The question at hand is when OPEC+ could be able to control the Crude price action again, with markets already pricing in another delay towards the March statement and later dates in 2025. Without additional measures to limit supply, a return for Crude to higher prices is out of the question. 

On the upside, the pivotal level at $71.46 and the 100-day Simple Moving Average (SMA) at $72.40 are the two main resistances. The 200-day SMA at $76.32 is still far off, although it could be tested if tensions intensify further. In its rally towards that 200-day SMA, the pivotal level at $75.27 could still slow down any upticks. 

On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

• Silver price oscillates around $30.50 as the focus shifts to US PCE inflation data for October.
• The US Dollar refreshes weekly low ahead of the US PCE inflation data release.
• The safe-haven appeal of the Silver price weakens as the ceasefire between Israel and Iran comes into effect.

Silver price (XAG/USD) exhibits indecisiveness near $30.50 in Wednesday’s European session, with investors focusing on the United States (US) Personal Consumption Expenditure Price Index (PCE) data for October, which will be published at 15:00 GMT.

Investors await the US PCE inflation data to get more insights about the Federal Reserve’s (Fed) interest rate action in the December meeting. The possibility for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% next month has increased to 66% from 56% a week ago, according to the CME FedWatch tool.

Investors will pay close attention to the core PCE inflation data – which excludes volatile food and energy prices – as it is the Fed’s preferred inflation gauge. Economists expect the annual core PCE inflation to have accelerated to 2.8% from 2.7% in September, with monthly figures growing steadily by 0.3%.

The Silver price remains well-supported above $30.00 from the past two trading sessions amid a correction in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against ix major currencies, posts a fresh weekly low near 106.50.

However, the bias towards the Silver price remains downbeat as its safe-haven demand has diminished on initiation of a ceasefire between Israel and Iran.

It began at 02:00 GMT on Wednesday, putting an at least temporary end to nearly 14 months of conflict between Israel and the Iran-backed militant group, according to BBC News.

Silver technical analysis

Silver price resumes its declining trend after a mean-reversion move to near the 20-day Exponential Moving Average (EMA) around $31.40. The white metal is expected to retreat to the November 14 low of around $29.70. The white metal weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.

The upward-sloping trendline from the February 29 low of $22.30 will act as key support for the Silver price around $29.50.

The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.

Silver daily chart

Instead of continuing to rise, the US Dollar (USD) is likely to trade in a sideways range between 7.2450 and 7.2660. In the longer run, momentum is building again; USD could break above 7.2800, but it is too early to determine if 7.3115 is within reach, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.

USD likely to trade between 7.2450 and 7.2660

24-HOUR VIEW: “After USD soared in early Asian trade yesterday, we indicated that ‘the sharp and swift rally appears to be overextended.’ However, we were of the view that ‘there is room for USD to test the major resistance at 7.2800 before levelling off.’ While USD rose as expected, it only reached a high of 7.2730 before pulling back. Upward pressure appears to have eased with the pullback. Today, instead of continuing to advance, USD is more likely to trade in a sideways range of 7.2450 and 7.2660.”

1-3 WEEKS VIEW: “Yesterday (26 Nov, spot at 7.2630), we noted that “momentum is building again.” We added, “USD could break above 7.2800, but it is too early to determine if 7.3115 is within reach.” We continue to hold the same view. On the downside, a breach of 7.2200 (no change in ‘strong support’ level), would mean that the USD strength from early this month has ended.”

USD could weaken; given the oversold conditions. Downward momentum has increased, albeit not significantly, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.

Downward momentum has increased

24-HOUR VIEW: “Yesterday, we indicated that ‘The current price action is likely part of a range trading phase, probably between 153.60 and 154.70.’ Our view was incorrect, as USD tumbled to a low of 152.97 before closing at 153.10 (--0.72%). Strong downward momentum suggests further USD weakness. However, given the oversold conditions, any decline may not be able to break clearly below 152.50. To sustain the momentum, USD must stay below 153.80 (minor resistance is at 153.40).”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (21 Nov, spot at 155.25), wherein USD “is expected to trade in a range, likely between 153.30 and 156.50.” Yesterday, USD broke below 153.30, closing at 153.10. Downward momentum has increased, albeit not significantly. From here, USD could edge lower, but it remains to be seen if any decline can reach the major support at 151.60. Our view will remain the same provided that 154.35 is not breached.”

With one-week deposit rates at 4.75% and the highest in the G10 space, sterling may be deriving some inflows as the market makes up its mind about the speed and magnitude of Trump's policy agenda, ING's FX analyst Chris Turner notes.

Huw Pill cites the ongoing focus on service inflation

“Additionally, the Bank of England (BoE) rate profile continues to get traded closer to the Fed than the ECB and suggests sterling should outperform against the euro. We have a year-end EUR/GBP at 0.83 – not too far from current levels.”

“However, the risk to that forecast probably lies more to 0.82 than 0.84 since the UK is less exposed on the trade side and the BoE has yet to abandon its concern over late-cycle inflation. The BoE's Chief Economist, Huw Pill, was the latest MPC member yesterday to cite the ongoing focus on service inflation.”

S$NEER continued to ease; last at 0.9% above model-implied mid. Looking back, SGD has been easing since Oct-2024 on trade-weighted terms even as MAS maintained policy status quo. Pair was last seen at 1.3431.

Signs of some degree of bearish pullback in the near term

“That said, SGD remains stronger vs. peers in the basket but it is just less strong today (vs. than for most of the year). Historically the positive correlation between the change in S$NEER and MAS core inflation shows that SGD strength can ease when core inflation eases materially. Monday’s release of CPI report saw both headline and core CPI surprised to the downside. The sharp pullback has also led to chatters if MAS would ease soon at the next MPC in Jan-2015.”

“We think there is no hurry to ease amidst many moving parts – tariff threats, geopolitics – which may see price pressures return. MAS is better off monitoring further to avoid any risk of flip-flopping on policy. MAS maintaining policy status quo suggests that SGD can still remain somewhat resilient on trade-weighted terms. At some point in 2Q or 3Q in 2025, MAS may ease policy if core CPI does ease further.”

“USD/SGD eased, alongside the pullback seen in broad USD. Mild bullish momentum on daily chart continues to fade while RSI is flat. Bearish divergence on MACD appears to be playing out. Technical patterns suggest signs of some degree of bearish pullback in the near term. Support at 1.3410, 1.3340 (200 DMA) and 1.3290 (61.8% fibo retracement of Jun high to Oct low). Resistance at 1.3520 levels.”

Downward momentum is beginning to build; NZD is expected to weaken to 0.5770, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.

NZD is expected to weaken to 0.5770

24-HOUR VIEW: When NZD was at 0.5820 yesterday, we indicated that NZD ‘could drop further, but it does not appear to have enough momentum to reach 0.5770 for now.’ The subsequent did not quite turn out as we expected, as after dropping to 0.5797, NZD soared to 0.5865. It then pulled back to close at 0.5835. The outlook for NZD is mixed after the choppy price action. Overall, it could trade in a range of 0.5805/0.5860.”

1-3 WEEKS VIEW: “We revised our NZD view to negative yesterday (26 Nov, spot at 0.5820), indicating that ‘downward momentum is beginning to build, and NZD is expected to weaken to 0.5770.’ We will maintain the same view provided that 0.5875 (no change in ‘strong resistance’ level) is not breached.”

USD/JPY continued to fall, in line with our bias for downside bias. Pair was last at 151.35 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to the downside

“Daily momentum is bearish while RSI fell. Risks remain skewed to the downside. Support at 150.70 (50% fibo). Resistance at 153.30 (61.8% fibo retracement of 2024 high to low), 153.85 (61.8% fibo), 155 levels.”

“PM Ishiba said that he swapped views with business and union leaders on pay talks and ask businesses to continue with pay hikes. He is also calling for bigger wage deal than this year’s. To add, PPI services came in higher at 2.9% y/y (vs. 2.5% expected). Price-related data, wage growth expectations continue to reinforce our view that BoJ should proceed with another hike next month.”

“Divergence in Fed-BoJ policies should bring about further narrowing of UST-JGB yield differentials and this should underpin the broader direction of travel for USD/JPY to the downside. To add, tariff threats, geopolitical uncertainties are additional drivers that should be supportive of JPY strength.”

• USD/JPY dives to near 151.50 as the US Dollar’s correction extends further.
• The US Dollar refreshes weekly low ahead of the US PCE inflation data for October.
• The BofA sees the pair heading into a longer-term bearish trajectory.

The USD/JPY pair is down around 1%, plummets to near 151.50 in European trading hours on Wednesday. The asset plunges as the US Dollar (USD) extends its correction triggered as market participants anticipated Scott Bessent, United States (US) President-elect Donald Trump’s nomination for Treasury Secretary, will maintain fiscal discipline and political steadiness despite focusing on fulfilling Trump’s economic agenda.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh weekly low near 106.30. Scott Bessent said that he would focus on lowering the budget deficit through spending cuts and enacting tariffs with a “layered in gradually” approach. A move that won’t result in a significant increase in inflation than feared.

Meanwhile, the Bank of America (BofA) advises caution against picking short-term Japanese Yen (JPY) strength as it sees the currency drifting into a longer-term bearish trajectory. The BofA said that policies such as increased tariffs and tighter immigration controls from the incoming US administration could trigger a risk-off environment, initially supporting the yen. However, it anticipates a correction in early 2025 and projects the USD/JPY pair to rise to 160.00 by the end of 2025 on expectations that long-term capital flows from Japan to the US will accelerate in the second half of 2025 due to their deregulatory measures.

Going forward, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for October, which will be published at 15:00 GMT. The PCE report is expected to show that headline and core price pressures accelerated on year, while monthly figures grew steadily.

DXY: Core PCE in focus – OCBC

The US Dollar (USD) drifted a touch lower even as Trump threatened tariffs yesterday. Price action continues to show that USD bull momentum is feeling lethargic, and the highs seen last week lacked follow through. DXY fell; last at 106.46, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Downside play likely

“Stretched USD valuation, technical signals and potential December seasonality effect (DXY fell in 8 out of the last 10 Decembers) are some considerations for profit-taking on USD longs in the near term. We may need to see a flush out of USD longs before USD can resume its rise (at some point later). In the interim, we would look to US data for directional cues for USD.”

“Today brings 3Q GDP, core PCE, durable goods orders, Chicago PMI, initial jobless claims, personal income/spending. Firmer print will add to US exceptionalism narrative, keeping USD rates and USD elevated for longer, while softer print should add to USD unwinding momentum (i.e. USD may ease more). No US data for released on Thu and Fri due to Thanksgiving Day holidays.”

“Bear in mind that razor thin market liquidity may exacerbate choppy moves in FX market on any catalyst. Mild bullish momentum on daily chart is fading while RSI fell. Bearish divergence on daily MACD, RSI observed. Downside play likely. Support at 106.20, 105.40/50 levels (21 DMA, 38.2% fibo). Resistance at 107.40, 108.10 (recent high).”

Downward momentum has eased; the Australian Dollar (AUD) is likely to trade in a range between 0.6440 and 0.6500. In the longer run, AUD must break and hold below 0.6440 before a move to 0.6400 can be expected, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.

Downward momentum has eased

24-HOUR VIEW: “After AUD dropped sharply early yesterday, we pointed out that ‘downward momentum is beginning to build.’ We indicated, AUD ‘could break below 0.6440, but it might not be able to maintain a foothold below this level.’ We also indicated that ‘To sustain the momentum buildup, AUD must remain below 0.6510 (minor resistance is at 0.6490).’ AUD subsequently dropped to 0.6434, rebounding strongly to 0.6508. AUD closed at 0.6474 (-0.47%). Downward momentum appears to have eased with the strong rebound. In other words, AUD is likely to trade in a range today, probably between 0.6440 and 0.6500.”

1-3 WEEKS VIEW: “Yesterday (26 Nov), when AUD was at 0.6470, we highlighted that it ‘must break and hold below 0.6440 before a move to 0.6400 can be expected.’ We added, ‘The likelihood of AUD breaking clearly below 0.6440 will increase in the next few days, provided that 0.6525 is not breached.’ While AUD subsequently broke below 0.6440, it rebounded from 0.6434 to close at 0.6474. We continue to hold the same view for now.”

The New Zealand (NZD) traded choppy post-RBNZ and press conference. NZD was last at 0.5893 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Bearish momentum on daily chart shows signs of fading

“Gains in NZD post-decision was partially erased when Governor Orr’s press conference gets underway. In particular, Orr said that track implies steeper cash rate decline than Aug and that forward projection is consistent with 50bp cut in Feb-2025. Orr’s remarks suggest that RBNZ is not about to change pace of cut.”

“Bearish momentum on daily chart shows signs of fading while RSI rose from near oversold conditions. Technical bunce not ruled out. Resistance at 0.5915 (21 DMA), 0.60 (61.8% fibo retracement of 2023 low to 2024 high). Support at 0.5810, 0.5770 levels (2023 low).

• Gold rises as traders “buy the fact” of the ceasefire deal brokered between Israel and Hezbollah on Tuesday. 
• Technical support from a major trendline is also adding upside pressure as it represents a key chart level for Gold. 
• Wednesday sees an economic data dump from the US; changes in interest rate expectations could impact Gold price.  

Gold (XAU/USD) recovers into the $2,650s on Wednesday as traders “buy the fact” of the ceasefire deal brokered between Israel and Hezbollah after “the rumor” led to heavy selling on Monday. The two warring parties agreed on a 60-day ceasefire deal which has, so far, held, although sceptics say it will remain unsustainable without an end to hostilities in Gaza, according to Bloomberg News. 

Gold may also be rising from safe-haven flows due to other geopolitical hotspots. Reports from Ukraine suggest the frontline is becoming “as unstable as at the start of the war,” according to the UK’s Secretary of State for Defence, John Healy.   

A weaker US Dollar (USD) on Wednesday, meanwhile, may be providing Gold with a backwind, given the two assets’ negative correlation to each other.

In a busy day for markets, the precious metal could face volatility with the release of key US metrics covering growth, inflation, and the labor market, particularly if they revise the outlook for US interest rates, a key driver for Gold price. 

Gold rises as market bets increase of Fed cutting  

Gold might be further supported by the steady rise in the probability of the Federal Reserve (Fed) cutting interest rates at its December policy meeting, according to the CME FedWatch tool, which calculates probabilities based on the fluctuating price of 30-day Fed Fund interest rate futures. 

From determining about a 56% probability of the Fed cutting interest rates by 25 basis points (bps) (0.25%) at its meeting in December, at the start of the week, the CME tool now calculates the chances as 66.5%. The probability of the Fed not cutting interest rates at all has fallen from 44% to 33.5% over the same period. 

The increased chances of the Fed cutting interest rates is positive for Gold price as it lowers the opportunity cost of holding the non-interest-bearing asset, making it more attractive to investors. 

Technical Analysis: XAU/USD bounces off major trendline

Gold has bounced off a major trendline that reflects the precious metal’s long-term uptrend on Wednesday. 

XAU/USD Daily Chart

The precious metal trend is in a medium and long-term uptrend, and given the maxim that “the trend is your friend,” the odds still favor a continuation higher. In the short term, the trend is unclear.

A break above $2,721 (Monday’s high) would be a bullish sign and give the green light to a continuation higher. The next target would be at $2,790, matching the previous record high.

Alternatively, a decisive break below the major trendline would likely lead to further losses and confirm the short-term trend as bearish. 

A decisive break would be one accompanied by a long red candlestick that broke cleanly through the trendline and closed near its low – or three red candlesticks in a row that broke below the line. 

• EUR/USD rises as the US Dollar posts a fresh weekly low ahead of a slew of US economic data.
• The optimism over Bessent maintaining fiscal discipline keeps the US Dollar under pressure.
• ECB’s Centeno warned about the risk of price pressures remaining below the bank’s target.

EUR/USD jumps higher to near 1.0530 in Wednesday’s European session. The major currency pair strengthens as the US Dollar (USD) tumbles ahead of a string of United States (US) economic data such as the Personal Consumption Expenditure Price Index (PCE), Durable Goods Orders, and Personal Spending data for October, revised Q3 Gross Domestic Product (GDP) growth estimates, and Initial Jobless Claims data for the week ending November 22, which will be published in the North American session. 

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh weekly low near 106.35. The Greenback has corrected lately after posting a fresh two-year high at around 108.00 on Friday. The correction was triggered after Scott Bessent, a veteran hedge fund manager, said that the objective of enacting tariffs will be “layered in gradually and the budget deficit will be reduced to 3% of Gross Domestic Product (GDP) by slashing spending,” a move that won’t result in high inflation than feared. The comments from Bessent came after US President-elect Donald Trump nominated him for Treasury Secretary. 

Within the array of US data, investors will pay close attention to the PCE inflation, the Federal Reserve’s (Fed) preferred inflation measure for decision-making on policy rates. The PCE report is expected to show that the headline inflation accelerated to 2.3% year-over-year in October from 2.1% a month earlier. 

In the same period, the core PCE – which excludes volatile food and energy prices – is estimated to have risen by 2.8%, stronger than the former release of 2.7%. The month-on-month headline and core PCE are expected to have grown steadily by 0.2% and 0.3%, respectively.

The US PCE inflation data will influence Fed interest rate cut prospects for the December meeting. On Monday, Minneapolis Fed Bank President Neel Kashkari said it is reasonable to consider another interest rate reduction in the December meeting. His viewpoint of an interest rate cut next month was backed by expectations that inflation is gently trending down and the labor market remains strong right now.

Daily digest market movers: EUR/USD gains despite ECB officials worry about Eurozone economic growth

• EUR/USD gains at the US Dollar’s expense on Wednesday. However, the outlook of the Euro (EUR) is downbeat as European Central Bank (ECB) policymakers have grown nervous over the Eurozone’s current and forward economic growth. 
• On Tuesday, ECB policymaker and Portuguese central bank chief Mario Centeno warned that the economy was stagnating and "risks are accumulating downwards," with tariffs threatened by Trump a further downside risk. When asked about his outlook on the monetary policy, Centeno warned about the risk of inflation undershooting the bank's target and advised not to leave rate cuts too late.
• An interest rate reduction from the ECB is almost certain in the December meeting, however, market participants are mixed about the likely rate cut size. “The view here remains there is no fiscal calvary coming in the eurozone and that the only way to address the current malaise is for the European Central Bank to cut rates more quickly than usual. The market now prices 37bp of a 50bp ECB cut in December and short-dated US; eurozone spreads remain very wide at 190bp,” analysts at ING said in a note.
• For fresh guidance on the interest rate path, investors will focus on the flash November Harmonized Index of Consumer Prices (HICP) data for the Eurozone and its major economies, which will be published on Thursday and Friday. 

Technical Analysis: EUR/USD rises above 1.0500

EUR/USD jumps above the psychological figure of 1.0500 in European trading hours on Wednesday. The major currency pair continues to hold the near-term low of 1.0330. However, the outlook remains bearish as all short-to-long-term day Exponential Moving Averages (EMAs) in the daily chart are declining, pointing to a downside trend.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold. However, the oscillator has cooled down, which could allow bears to take charge again.

Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the November 20 high round 1.0600 will be the key barrier.

Most recent article: Silver rises, according to FXStreet data

Silver prices (XAG/USD) broadly unchanged on Wednesday, according to FXStreet data. Silver trades at $30.54 per troy ounce, broadly unchanged 0.12% from the $30.50 it cost on Tuesday.

Silver prices have increased by 28.33% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 86.79 on Wednesday, up from 86.30 on Tuesday.

(An automation tool was used in creating this post.)

The Pound Sterling (GBP) is expected to trade between 1.2510 and 1.2610. In the longer run, sharp drop appears to be overextended; any further decline may find it difficult to break below 1.2475, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP may find it difficult to break below 1.2475

24-HOUR VIEW: “When GBP was at 1.2550 early yesterday, we indicated the following: ‘As long as GBP remains below 1.2600 (minor resistance is at 1.2575), it could test the 1.2505 support. Last Friday’s low of 1.2475 is unlikely to come under threat.’ The subsequent price action did not turn out as we expected. GBP did not quite test 1.2505, as it dropped to 1.2512 before staging a surprisingly sharp bounce to a high of 1.2616. GBP pulled back from the high to close largely unchanged at 1.2568 (-0.02%). The current price movements are likely part of a range trading phase. Today, we expect GBP to trade between 1.2510 and 1.2610.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since the middle of this month. After GBP plummeted to 1.2475 and rebounded strongly, we indicated on Monday (25 Nov, spot at 1.2590) that ‘the sharp drop appears to be overextended.’ We pointed out, ‘any further decline may find it difficult to break last Friday’s low of 1.2475, which is serving as a significant support level.’ We will continue to hold the same view as long as 1.2650 (no change in ‘strong resistance’ level) is not breached.”

EUR consolidated in absence of fresh catalyst. Pair was last at 1.0480 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Focus this week is on Euro-area CPI

“Bearish momentum on daily chart intact but shows signs of fading while RSI shows signs of turning higher. Bullish divergence is also observed on daily MACD.”

“Not ruling out EUR short squeeze in the near term. Resistance at 1.0510, 1.0650 (21 DMA). Key support at 1.0450 levels before 1.03 levels. Focus this week on Euro-area CPI. Upside surprise may aid the squeeze in EUR shorts.”

• AUD/JPY continues its losing streak due to a strengthening bearish bias.
• A corrective rebound could be indicated if the 14-day RSI breaks below the 30 level.
• The currency cross may navigate the region around its four-month low of 93.59.

The AUD/JPY cross extends its losing streak for the fifth consecutive day, trading around 98.40 during the European hours on Wednesday. The 14-day Relative Strength Index (RSI) is currently above 30, indicating a bearish market trend. If the RSI drops below 30, it would signal an oversold condition, potentially leading to a corrective rebound.

Additionally, an analysis of the daily chart suggests that the nine-day Exponential Moving Average (EMA) crosses below the 50-day EMA, suggesting a bearish signal. This crossover indicates that the short-term momentum is weakening relative to the longer-term trend, which could signify the continued price weakness.

On the downside, the primary support for the AUD/JPY cross is located around the psychological level of 97.00, followed by the next support at 96.00 level. A decisive break below the latter could open the gates for the currency cross to navigate the region around its four-month low of 93.59, which was recorded on September 11.

To the upside, the AUD/JPY cross may test the primary resistance around the nine-day EMA at 99.92 level, followed by the 50-day EMA at 100.09 level. A break above these levels could weaken the bearish bias, potentially pushing the currency cross toward the four-month high of 102.41, reached on November 7.

AUD/JPY: Daily Chart

EUR/USD struggled to rally yesterday despite some US macro data which was not as strong as it could be, ING’s FX analyst Chris Turner notes.

EUR/USD still looks quite oversold

“Holding the euro back was probably the fallout on the European auto sector yesterday as it reacted to the prospect of Trump following through on his pre-election threats. German car maker equity prices were off 3-6% yesterday.”

“There is not a lot on the eurozone calendar today and the best chance of a EUR/USD move will be on the back of the US inflation data. EUR/USD still looks quite oversold based on its 6-7% two-month drop, which suggests any dip towards the 1.0400/0425 area today could be enough of a decline before any potential month-end rebalancing dollar sales emerge.”

The US Dollar (USD  ) remained reasonably bid on Tuesday as markets digested the US tariff news, while news of a peace deal between Israel and Hezbollah has not affected the market much. Apart from the understandable pressure on the Mexican peso and US car producers with facilities south of the border, there was little impact on the US rates markets. In other words, the inflationary side of potential tariffs has yet to play out in US asset markets, ING’s FX analyst Chris Turner notes.

The environment looks dollar-bullish

“On the subject of inflation, today sees the release of the core PCE deflator for October. The 0.3% month-on-month reading may still be a little too high for the Fed's liking, although such a number is fully discounted today. That means the market probably retains its pricing of 15bp worth of Fed cuts in December and also keeps US rate differentials versus the Rest of the World at reasonably wide levels.”

“We are bullish on the dollar and note that today's US data set, including confirmation of US third-quarter GDP at 2.8% quarter-on-quarter annualized, will be the last in this holiday-shortened week. In its entirety, the environment looks dollar-bullish to us. The main downside risk to the dollar this week probably comes from month-end rebalancing flows.” 

“Here the huge divergence for dollar-based equity investors of S&P 500 +5.3% month-to-date versus -1.36% for the Eurostoxx 50 or -1.6% for the Nikkei 225 warns of rebalancing dollar sales to raise European and Japanese equity weightings back to benchmarks. These flows could be going through poor liquidity conditions later this week, but any DXY dip to the 106.25/50 area this week should meet good demand.”           

• NZD/USD catches aggressive bids after the RBNZ’s expected 50 bps rate cut on Wednesday.
• The USD struggles near the weekly low amid sliding US bond yields and supports the pair.
• Trade war concerns might cap the risk-sensitive Kiwi ahead of the crucial US inflation data. 

The NZD/USD pair builds on the overnight bounce from sub-0.5800 levels, or a fresh year-to-date low and gains strong positive traction on Wednesday after the Reserve Bank of New Zealand (RBNZ) announced its policy decision. The intraday move up remains uninterrupted through the first half of the European session and lifts spot prices to the 0.5900 mark, or a one-week high in the last hour. 

As was widely anticipated, the RBNZ lowered the Official Cash Rate (OCR) by 50 basis points (bps), from 4.75% to 4.25% at the conclusion of the November policy meeting. In the post-meeting press conference, RBNZ Governor Adrian Orr said there had been little discussion on cutting rates by anything other than 50 bps. This might have disappointed some investors anticipating a more aggressive easing, which, in turn, boosts the New Zealand Dollar (NZD) and prompts aggressive intraday short-covering around the NZD/USD pair. 

Meanwhile, expectations that Scott Bessent – US President-elect Donald Trump's US Treasury secretary nominee – will restrain budget deficits drag the benchmark 10-year US Treasury yields to a fresh multi-week low. This, along with the optimism over a ceasefire deal between Israel and Hezbollah, keeps the safe-haven US Dollar (USD) depressed near the weekly low, which offers additional support to the NZD/USD pair. That said, concerns that Trump's tariff plans will trigger trade wars might cap gains for the risk-sensitive Kiwi. 

Traders might also opt to wait on the sidelines and look to the crucial US inflation data for cues about the Fed's rate-cut path, which, in turn, will drive the USD demand and provide a fresh impetus to the NZD/USD pair. Hence, the focus will remain glued to the US Personal Consumption Expenditure (PCE) Price Index data. In the meantime, the prelim (revised) US Q3 GDP print, along with US Durable Goods Orders, could influence the USD and produce short-term trading opportunities during the North American session.

European Central Bank (ECB) policymaker Isabel Schnabel said on Wednesday, “I see only limited room for further rate cuts.”

Additional quotes

Market reaction

EUR/USD holds its upbeat momentum above 1.0500 following these less dovish remarks, adding  0.23% on the day to trade near 1.0510 as of writing.

• The Mexican Peso trades flat on Wednesday but an escalation in rhetoric between US and Mexican leaders poses risks. 
• Mexico’s President Sheinbaum reads out a letter on television warning Trump she’ll retaliate with tit-for-tat tariffs if he starts. 
• Technically, USD/MXN remains at the top of a mini range as it consolidates within a broader uptrend.

The Mexican Peso (MXN) trades flat as one of the country’s trademark tortillas on Wednesday after closing on average over 1.5% lower on Tuesday, however, markets remain tense as the rhetoric ramps up between the two countries’ leaders.

The previous day’s decline was caused by President-elect Donald Trump’s threat to tear up the US, Mexico and Canada free trade agreement (USMCA), and whack a 25% tariff on imports from both countries, unless they tightened their borders with the US and put an end to illegal immigration and narcotics trafficking. 

This led to a broad depreciation of the MXN and the CAD on fears tariffs would result in lower exports and reduced demand for the FX to purchase them.

Mexican Peso weakens on escalating trade rhetoric

The Mexican Peso continued to see weakness after the President of Mexico Claudia Sheinbaum responded to Trump’s tariff threat during one of her regular televised press conferences, on Tuesday. Sheinbaum read from an overhead projector passages from a letter she had written in response to Trump’s tariff threat. 

“One tariff would lead to another in response,” said Sheinbaum, inferring that if the US raised levies on Mexican goods entering America, Mexico would do the same on US goods entering Mexico. Adding that a trade war would achieve nothing more than “place at risk common businesses” in both country’s economies. 

Sheinbaum highlighted Mexico’s existing willingness to cooperate with the US on border issues. She said illegal immigration into the US from Mexico had fallen by 75% from December 2023 to November 2024, according to US border patrol figures. 

Mexico had always been willing to work with the US on reducing the traffic of Fentanyl across the border, but she added that the problem of drug abuse was a US “public health and consumption” problem not a Mexican problem. 

The Mexican President’s pugnacious response raised the spectre of a tariff war between the two countries that would significantly raise prices for US citizens, especially in the automotive spare-part’s sector of the economy. 

Such a war would almost certainly increase inflation in the US, especially if it included Canada too, according to economists. This would lead the Federal Reserve (Fed) to maintain interest rates at elevated levels, which, in turn, would likely strengthen the US Dollar, since higher interest rates tend to attract more foreign capital inflows. 

Technical Analysis: USD/MXN tests the ceiling of mini range

USD/MXN continues to remain at elevated levels above 20.50 on Wednesday, trading close to the top of the mini range (green dashed line on chart below) formed during November. 

The final C wave of a Measured Move pattern that has unfolded within the confines of the mini range now looks complete. Resembling zig-zags, such patterns normally exhibit a symmetry between waves A and C, which are usually of a similar length. This is currently the case with the example on USD/MXN.

USD/MXN Daily Chart 

USD/MXN is probably range-bound in the short term as it oscillates within this mini range. In the medium and long term, however, it is still in an uptrend within a rising channel. 

It would require a decisive break above the top of the range at 20.80 to signal the start of a more bullish short-term trend in line with longer-term up cycles. 

In the absence of such a breakout, the pair is likely to continue to oscillate within the parameters of its range, with the next move probably back down towards the range floor in the 19.70s (red dashed line). 

A decisive breakout higher would be one accompanied by a long green candle that pierced and rose well above the range highs before then closing near its highs, or three green candles in a row that broke above the level. 

The Reserve Bank of New Zealand (RBNZ) decided to reduce the official cash rate (OCR) by 50 bps to 4.25%. In the accompanying media release, the RBNZ flagged that “annual consumer price inflation has declined and is now close to the midpoint of the Monetary Policy Committee’s 1 to 3 percent target band. Inflation expectations are also close to target and core inflation is converging to the midpoint, UOB Group’s Economist Lee Sue Ann notes.

Committee expects to be able to lower the OCR further early next year

“The Reserve Bank of New Zealand (RBNZ) decided to reduce the official cash rate (OCR) by 50 bps to 4.25% again, as expected. This marks the third straight reduction after the RBNZ began its easing cycle in Aug, lowering rates by 125 bps in little more than three months.”

“In today’s release of the November Monetary Policy Statement, the RBNZ’s new forecasts show the average OCR falling to 3.83% by the middle of next year, suggesting it may move to more gradual rate cuts.”

“Our baseline expectation is that the RBNZ will reduce the pace of easing to standard 25bp cuts for the first half of next year, to reach 3.50% by 1H25, and for the OCR to reach 3.00% by 2H25. But as we previously cautioned, the monetary policy path is unlikely to be smooth, and incoming economic data will ultimately be the driving factor.”

The Euro (EUR) is likely to trade in a relatively broad range, probably between 1.0435 and 1.0535. In the longer run, downward momentum appears to be slowing; the likelihood of EUR breaking below 1.0333 is decreasing, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of EUR breaking below 1.0333 is decreasing

24-HOUR VIEW: “EUR dropped sharply in early Asian trade yesterday. When it was at 1.0465, we indicated that ‘downward momentum appears to be building, albeit tentatively.’ We held the view that it ‘is likely to trade with a downward bias towards 1.0420.’ However, after dropping to 1.0424, EUR soared to 1.0544 before pulling back to close at 1.0486 (-0.08%). The choppy swings provide no clarity. Overall, EUR is likely to trade in a relatively broad range today, probably between 1.0435 and 1.0535.”

1-3 WEEKS VIEW: “In our latest narrative from two days ago (25 Nov, spot at 1.0475), we highlighted that ‘while the weakness in EUR remains intact, it must break and remain below last Friday’s low of 1.0333 before further decline can be expected.’ We added, ‘The likelihood of EUR breaking below 1.0333 is not high, but it will remain intact as long as 1.0560 (‘strong resistance’) is not breached in the next few days.’ Yesterday, EUR rose to 1.0544 then pulled back. While we continue to hold the same view, downward momentum appears to be slowing. Put it another way, the likelihood of EUR breaking below is decreasing.”

• GBP/JPY faces challenges as US President-elect Donald Trump's renewed tariff threats have dampened market sentiment.
• The Pound Sterling may gain ground due to the hawkish mood surrounding the BoE policy decision next month.
• BoE Deputy Governor Lombardelli requires more evidence of easing inflation before supporting another rate cut.

GBP/JPY continues its losing streak for the fifth successive session, trading around 191.10 during the European hours on Wednesday. Investors will focus on the Tokyo Consumer Price Index (CPI) data for October, which will be published on Friday.

The downside risk for the GBP/JPY cross appears due to the increased risk aversion following US President-elect Donald Trump's renewed tariff threats, which have dampened market sentiment, contributing support for the safe-haven Japanese Yen (JPY).

However, the upside of the JPY could be retrained as traders dial back expectations for the Bank of Japan (BoJ) to hike interest rates in December. Market participants expect that political uncertainty in Japan limits BoJ’s potential for raising its key borrowing rates further.

Last week, BoJ Governor Kazuo Ueda hinted last week at the possibility of another interest rate hike as early as December. Japanese Prime Minister Shigeru Ishiba said on Tuesday that he would ask companies to implement significant wage hikes at the annual "Shuntō" negotiations next spring.

The downside of the GBP/JPY cross could be limited as the Pound Sterling (GBP) receives support from reduced expectations that the Bank of England (BoE) will cut interest rates in December. Most BoE policymakers favor a gradual approach to easing monetary policy. Bank of England’s Financial Stability Report will be eyed on Friday.

BoE Deputy Governor Clare Lombardelli stated on Tuesday that she needs to see further evidence of cooling price pressures before endorsing another interest rate cut. Lombardelli also noted that US trade tariffs pose a potential risk to economic growth, though it is too early to fully gauge their impact.

• The Pound Sterling consolidates below 1.2600 against the US Dollar as investors await a string of US economic data, including PCE inflation.
• The FOMC minutes failed to offer meaningful cues about the interest rate path.
• BoE Lombardelli wants to see evidence of a slowdown in inflation before backing an interest rate cut.

The Pound Sterling (GBP) trades in a very tight range below 1.2600 against the US Dollar (USD) in Wednesday’s London session. The GBP/USD pair consolidates as the US Dollar is sidelined ahead of the United States (US) Personal Consumption Expenditure Price Index (PCE) data for October, which will be published at 13:30 GMT.

Economists expect the core PCE inflation data – which excludes volatile food and energy prices – to have accelerated to 2.8% from 2.7% in September on year, with monthly figures growing steadily by 0.3%.

Investors will pay close attention to the core PCE inflation data as it is the Federal Reserve’s (Fed) preferred inflation measure for decision-making on interest rates. The inflation data will influence market expectations for the Fed's likely interest rate action in the December meeting. According to the CME FedWatch tool, the probability for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the December meeting has increased to 65% from 56% a week ago.

Dovish Fed bets have escalated after the release of the Federal Open Market Committee (FOMC) minutes for the policy meeting held on November 7 even though it didn’t offer any meaningful guidance about the interest rate path. Some officials reportedly suggested that the Fed could consider pausing its rate-cutting cycle if inflation remains “elevated”, while others argued that the policy-easing cycle would be needed to accelerate if economic conditions or the labor market deteriorate.

In Wednesday’s session, investors will also focus on the revised Q3 Gross Domestic Product (GDP) growth estimates, Durable Goods Orders and Personal Spending data for October, and Initial Jobless Claims data for the week ending November 22.

By far, the US Dollar Index (DXY) has remained under pressure this week after US President-elect Donald Trump nominated Scott Bessent, a seasoned hedge fund manager, to fill the position of Treasury Secretary. Market participants expect Bessent to execute Trump-stated trade policies strategically and gradually with an intention to avoid a lethal trade war.

Daily digest market movers: Pound Sterling trades with caution amid worries over US tariffs

• The Pound Sterling exhibits an imprecise price action against its major peers on Wednesday. The British currency performs cautiously amid growing worries over the impact of Trump’s tariffs policies on the United Kingdom (UK) export sector.
• In an interview with Financial Times (FT) on Tuesday, Bank of England (BoE) Deputy Governor Clare Lombardelli said, “US trade tariffs would pose a risk to economic growth.” Lombardelli added, “Trade barriers certainly are negative for growth in the short, medium and long term.” However, she refrained from forecasting the likely impact of US tariffs on the economy. “Too early to quantify effects of proposed tariffs,” Lombardelli said.
• When asked about the BoE interest rate cut path, Lombardelli said she wants to see more evidence of colling price pressures for backing another interest rate cut. In her speech at King’s Business School on Monday, Lombardelli warned about risks of inflation remaining higher than the bank’s forecast where wage growth normalizes at 3.5-4% and the Consumer Price Index (CPI) around 3% rather than 2%.
• This week, the UK economic calendar has nothing to offer. Therefore, the Pound Sterling will be guided by market expectations for BoE interest rate action in the December meeting. Traders see the BoE to leave interest rates unchanged at 4.75% next month.

Technical Analysis: Pound Sterling wobbles below 1.2550

The Pound Sterling hovers below the upward-sloping trendline near 1.2550 against the US Dollar, which is plotted from October 2023 low around 1.2040. The outlook of the GBP/USD pair remains bearish as the 20- and 50-day Exponential Moving Averages (EMAs) at 1.2735 and 1.2883, respectively, are sloping downwards.

The 14-day Relative Strength Index (RSI) oscillates inside the 20.00-40.00 range, suggesting that the downside momentum is intact.

Looking down, the pair is expected to find a cushion near May’s low of 1.2446. On the upside, the November 20 high at around 1.2720 will act as key resistance.

• EUR/GBP remains subdued as Pound Sterling receives support from the hawkish mood surrounding the BoE policy decision in December.
• BoE Deputy Governor Lombardelli requires more evidence of easing price pressures before supporting another rate cut.
• The Euro struggles as the ECB could deliver a rate cut in December amid growing concerns about Eurozone's economic outlook.

EUR/GBP extends its losses for the second successive session, trading around 0.8330 during the early European hours on Wednesday. This downside of the EUR/GBP cross could be attributed to improved Pound Sterling (GBP) amid reduced expectations of the Bank of England (BoE) cutting interest rates in December.

Most BoE policymakers favor a gradual approach to easing monetary policy. BoE Deputy Governor Clare Lombardelli stated on Tuesday that she would require additional evidence of easing price pressures before supporting another interest rate cut. US trade tariffs could threaten economic growth, though it remains too early to assess the full impact of the proposed measures, Lombardelli added.

In contrast, Eurozone markets have fully priced in a 25-basis-point rate cut by the European Central Bank (ECB) in December, with the probability of a larger 50 bps cut rising to 58%. This reflects growing market concerns about the region's economic prospects. 

Meanwhile, US President-elect Donald Trump's renewed tariff threats against China, Mexico, and Canada have further dampened market sentiment, adding downward pressure on European economies and weighing on the risk-sensitive Euro.

Traders are now focused on the upcoming release of the Eurozone Harmonized Index of Consumer Prices (HICP) inflation data on Friday. Preliminary inflation and core inflation figures for November are expected to show annualized increases, potentially raising concerns for investors. Moreover, Bank of England’s Financial Stability Report will also be eyed.

Here is what you need to know on Wednesday, November 27:

The US Dollar (USD) stabilizes following two days of choppy action, with the USD Index moving sideways slightly below 107.00 in the European morning on Wednesday. Ahead of the Thanksgiving Day holiday, the US economic calendar will feature several high-tier data releases, including Personal Consumption Expenditures (PCE) Price Index and Durable Goods Orders for October.

The modest improvement seen in risk mood made it difficult for the USD to gather strength during the American trading hours on Tuesday. Early Wednesday, US stock index futures trade mixed, while the benchmark 10-year US Treasury bond yield struggles to build on Tuesday's modest gains and remains below 4.3%. In addition to above-mentioned data releases, the US Department of Labor will publish the weekly Initial Jobless Claims and the US Bureau of Economic Analysis will announce its second estimate of the annualized Gross Domestic Product (GDP) growth for the third quarter.

During the Asian trading hours, the Reserve Bank of New Zealand (RBNZ) announced that it lowered the policy rate by 50 basis points (bps) to 4.25% from 4.75%. This decision came in line with the market expectation. "If economic conditions continue to evolve as projected, the committee expects to be able to lower the OCR further early next year," the RBNZ noted in its policy statement. Speaking on the policy outlook, RBNZ Governor Adrian Orr noted that the door remains open for another 50 bps rate cut in February. After fluctuating wildly with the immediate reaction to the RBNZ announcements, NZD/USD gained traction and was last seen trading in positive territory above 0.5850.

EUR/USD failed to make a decisive move in either direction on Tuesday and closed the day virtually unchanged. The pair stays relatively calm in the European morning on Wednesday and fluctuates in a narrow band below 1.0500.

GBP/USD lost its traction after testing 1.2600 for the second consecutive day on Tuesday. The pair moves sideways above 1.2550 to begin the European session.

USD/JPY came under bearish pressure on Tuesday and dropped 0.7%. The pair continues to push lower and was last seen losing more than 0.5% on the day at around 152.00.

Gold staged a modest recovery after falling toward $2,600 on Tuesday and ended the day with small gains. XAU/USD extends its rebound early Wednesday and trades near $2,650.

• The core Personal Consumption Expenditures Price Index is expected to rise 0.3% MoM and 2.8% YoY in October.
• Markets are undecided on whether the Fed will lower the policy rate by 25 basis points at the next policy meeting.
• Annual PCE inflation is forecast to edge higher to 2.3% from 2.1% in October.

The United States Bureau of Economic Analysis (BEA) is set to release the Personal Consumption Expenditures (PCE) Price Index data for October on Wednesday at 13:30 GMT. This index is the Federal Reserve’s preferred measure of inflation.

Although PCE inflation data is usually seen as a big market-mover, this time it might be difficult to assess its impact on the US Dollar’s (USD) valuation. With the US entering the Thanksgiving holiday on Thursday, other macroeconomic data –such as the weekly Initial Jobless Claims, October Durable Goods Orders and the second estimate of the third-quarter Gross Domestic Product (GDP)– will be released alongside the PCE inflation figures.

Anticipating the PCE: Insights into the Federal Reserve's key inflation metric

The core PCE Price Index, which excludes volatile food and energy prices, is projected to rise 0.3% on a monthly basis in October, matching September’s increase. Over the last twelve months, the core PCE inflation is expected to edge higher to 2.8% from 2.7%. Meanwhile, the headline annual PCE inflation is seen rising to 2.3% from 2.1% in the same period. 

At the November policy meeting, the Federal Reserve (Fed) decided to lower the policy rate by 25 basis points (bps) to the range of 4.5%-4.75%. In the policy statement, the US central bank made a small adjustment to say inflation "made progress" towards the Fed’s target, compared to “made further progress” in the previous statement. Additionally, the Fed noted that the core PCE inflation has shown little change over the past three months. 

Previewing the PCE inflation report, TD Securities said: “Headline PCE prices likely rose at a firm 0.27% m/m pace, with core rising 0.31% m/m and supercore inflation accelerating to 0.39% m/m.”. “Separately, we look for consumer spending to start Q4 with a soft tone, rising 0.3% m/m in nominal terms in October and close to flat in real terms,” added TD Securities in a recently published report.

The CME Group FedWatch Tool shows that markets are currently pricing in a nearly 41% probability of the Fed holding the policy rate unchanged at the last policy meeting of the year, suggesting that the US Dollar is facing a two-way risk heading into the event. 

How will the Personal Consumption Expenditures Price Index affect EUR/USD?

Market participants could scale back bets on a December rate cut in case the monthly core PCE Price Index rises at a stronger pace than expected. In this scenario, the USD could gather strength and make it difficult for EUR/USD to hold its ground. Conversely, a monthly core PCE Price Index increase of 0.2% or lower could revive optimism about further progress in disinflation and weigh on the USD with the immediate reaction, opening the door for a rebound in the pair in the near term. 

Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief technical outlook for EUR/USD:

“The Relative Strength Index (RSI) indicator on the daily chart remains well below 50, while holding above 30, suggesting that EUR/USD has more room on the downside before turning technically oversold.”

“On the downside, 1.0400 (static level) aligns as first support. In case EUR/USD makes a daily close below this level and starts using it as resistance, 1.0330 (November 22 low) could act as interim support before 1.0230 (static level from November 2022). Looking north, the first resistance could be spotted at 1.0600 (static level) ahead of 1.0660 (20-day Simple Moving Average). If EUR/USD clears that latter hurdle, it could target 1.0800 (static level) next.”

• USD/CHF weaken to around 0.8855 in Wednesday’s early European session. 
• Fed officials see interest rate cuts ahead, but only gradually, FOMC Minutes showed. 
• The rising Middle East geopolitical tensions could boost the safe-haven currency like the Swiss Franc.

The USD/CHF pair softens to near 0.8855 during the early European session on Wednesday. The weakening of the US Dollar (USD) ahead of the US October inflation data weighs on the pair. Meanwhile, the US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, edges lower to near the weekly low as profit-taking set in.

Traders prefer to wait on the sidelines ahead of US PCE data, which is due later on Wednesday. The US markets will be closed for the Thanksgiving holiday on Thursday. However, the strong US economic data and the cautious stance of the US Federal Reserve (Fed) are likely to cap the upside for the USD in the near term. The Federal Open Market Committee (FOMC) Minutes from the November meeting released Tuesday showed that Fed officials see interest rate cuts ahead but at a gradual pace. 

Traders pared back their expectations for an interest rate cut in December. Futures traders are now pricing in a 57.7% possibility that the Fed will cut rates by a quarter point, down from around 69.5% a month ago, according to the CME FedWatch Tool. 

On Tuesday, Israel approved a ceasefire agreement with Lebanon’s Hezbollah militants that would end nearly 14 months of fighting linked to the war in the Gaza Strip, per the AP News. US President Joe Biden said the deal between Israel and Hezbollah involves Israeli forces withdrawing from Lebanon over 60 days, with Lebanon’s military taking control of areas in the country's south to ensure Hezbollah does not rebuild forces. 

Investors will closely monitor the development surrounding the geopolitical risks. Any signs of the escalating tension could boost the safe-haven flows, benefiting the Swiss Franc (CHF). 

• The EUR/JPY cross may depreciate further as the daily chart analysis suggests a prevailing bearish bias.
• A corrective move could be indicated once the 14-day RSI falls below the 30 mark.
• The primary support appears at the descending channel around the psychological level of 159.00.

EUR/JPY extends its losses for the second consecutive day, trading around 159.60 during the Asian hours on Wednesday. Technical analysis of the daily chart shows the pair is moving downwards within the descending channel pattern, suggesting an ongoing bearish bias.

Additionally, the 14-day Relative Strength Index (RSI) is positioned slightly below the 30 level, confirming the bearish sentiment for the EUR/JPY cross. A dip below the 30 mark would indicate an oversold situation and direct a corrective rebound.

In terms of support, the EUR/JPY cross may find primary support at the lower boundary of the descending channel around the psychological level of 159.00, followed by a two-month low of 158.10, recorded on September 30. A break below this level could strengthen the bearish sentiment and put downward pressure on the currency cross to navigate the area around its 11-month low of 154.41, which was recorded in December 2023.

On the upside, the EUR/JPY cross may approach to test the upper boundary of the descending channel near the nine-day Exponential Moving Average (EMA) at the 161.80 level, followed by the 14-day EMA at 162.43. A decisive breach above these levels would cause the emergence of the momentum shift from bearish to bullish and support the pair to re-test a four-month high of 166.69, a level last seen on October 31.

EUR/JPY: Daily Chart

• GBP/USD gains traction to around 1.2570 in Wednesday’s early European session. 
• FOMC Minutes indicated a cautious approach to further rate cuts.  
• BoE’s Lombardelli said she needs to see more evidence before the next rate cut.

The GBP/USD pair trades on a stronger note near 1.2570 on Wednesday during the early European session. The Pound Sterling (GBP) consolidates despite US President-elect Donald Trump announcing more tariff measures. Traders brace for the release of US October Core Personal Consumption Expenditures (Core PCE) - Price Index for fresh impetus. 

Early Tuesday, Donald Trump pledged to impose tariffs on all products coming into the US from Canada, Mexico and China, which lifted the Greenback against the GBP in the previous session. The USD rally stalls on Wednesday as traders await the US Core PCE inflation data for more cues about the interest rate outlook. Meanwhile, the US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, currently trades near the lower end of its weekly range of around 106.85.  

However, the potential downside for the Greenback seems limited amid the less dovish remarks from Federal Reserve (Fed) officials. The minutes from the November FOMC meeting released Tuesday showed that Fed officials expressed confidence that inflation is easing and the labor market remains strong, allowing for further interest rate cuts albeit at a gradual pace. Fed policymakers emphasized that further rate cuts likely will happen, though they did not specify the timing and pace of reductions.

Most Bank of England (BoE) policymakers support a gradual policy-easing approach. The BoE Deputy Governor Clare Lombardelli said on Tuesday that she needs to see more evidence of cooling price pressures before she backs another interest rate cut. The lower bets that the UK central bank will cut interest rates next month provide some support to the GBP for the time being. 

FX option expiries for Nov 27 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0410 3.2b
• 1.0450 1.3b
• 1.0475 1.5b
• 1.0490 872m
• 1.0500 4.9b
• 1.0550 806m
• 1.0570 1.4b
• 1.0600 3.1b

GBP/USD: GBP amounts     

• 1.2600 860m

USD/JPY: USD amounts                     

• 151.00 843m
• 152.50 1.1b
• 153.00 3b
• 155.70 886m
• 156.00 914m

USD/CHF: USD amounts     

• 0.8900 420m

AUD/USD: AUD amounts

• 0.6490 440m
• 0.6650 1.7b

USD/CAD: USD amounts       

• 1.3825 443m
• 1.3950 409m

NZD/USD: NZD amounts

• 0.5750 1b
• 0.5780 544m
• 0.5865 650m

EUR/GBP: EUR amounts        

• 0.8405 469m

• USD/CAD regains some positive traction and draws support from a combination of factors.
• Crude Oil prices remain depressed and undermine the Loonie amid Trump’s tariff threats.
• The technical setup favors bulls and supports prospects for additional near-term gains.

The USD/CAD pair attracts some dip-buyers following the previous day's pullback from the highest level since April 2020 and trades around the 1.4070 region during the Asian session on Wednesday. Meanwhile, the fundamental backdrop favors bullish traders and suggests that the path of least resistance for spot prices is to the upside. 

The long-running Middle East conflict de-escalated after US President Joe Biden announced that Lebanon and Israel agreed to a ceasefire deal. This, in turn, fails to assist Crude Oil prices to capitalize on Tuesday's modest bounce from over a one-week low. This, along with US President-elect Donald Trump's tariff threats, continues to undermine the commodity-linked Loonie. Adding to this, expectations for a less dovish Federal Reserve (Fed) might continue to act as a tailwind for the US Dollar (USD) and validate the positive outlook for the USD/CAD pair. 

From a technical perspective, this week's bounce from the 1.3930-1.3925 horizontal support and positive oscillators on the daily support prospects for a further near-term appreciating move for the USD/CAD pair. That said, it will still be prudent to wait for a sustained strength back above the 1.4100 mark before placing fresh bullish bets. Spot prices might then aim to challenge the multi-year peak and reclaim the 1.4200 round figure. The momentum could eventually lift spot prices to the 1.4265 intermediate hurdle en route to the April 2020 high, around the 1.4300 mark. 

On the flip side, the Asian session low, around the 1.4045 region, now seems to protect the immediate downside. Any further slide could be seen as a buying opportunity and remain limited near the 1.4000 psychological mark. The latter should act as a key pivotal point, which if broken decisively might negate the constructive setup. The USD/CAD pair might then weaken further below the 1.3930-1.3925 horizontal support and the 1.3200 round figure, towards testing the next support near the 1.3855 area en route to the monthly swing low, around the 1.3825-1.3820 region.

USD/CAD daily chart

• EUR/USD holds its ground ahead of US economic data releases including US PCE Price Index and quarterly GDP Annualized.
• The Euro faced challenges as US President-elect Donald Trump's renewed tariff threats have dampened market sentiment.
• The ECB is widely anticipated to implement a 25 basis point rate cut in December.

EUR/USD maintains its position after the recent losses registered in the previous session, trading around 1.0480 during the Asian hours on Wednesday. Traders await the US Personal Consumption Expenditure (PCE) Price Index and quarterly Gross Domestic Product Annualized scheduled to be released later in the North American session.

However, the US Dollar (USD) faces pressure amid bond market optimism following President-elect Donald Trump's decision to nominate fund manager Scott Bessent, a seasoned Wall Street veteran and fiscal conservative, as US Treasury Secretary.

The latest Federal Open Market Committee (FOMC) Meeting Minutes from the November 7 policy session showed that policymakers are taking a cautious approach to cutting interest rates. While the Federal Reserve's (Fed) key officials generally agreed that downside risks related to employment and inflation have diminished, they indicated that rate cuts are unlikely to speed up unless significant weaknesses emerge in the job market and inflationary pressures decline.

US President-elect Donald Trump is expected to appoint Jamieson Greer as the US Trade Representative, Bloomberg reported on Tuesday. Greer’s nomination highlights the central role of tariffs in Trump’s economic strategy.

US President-elect Donald Trump's renewed tariff threats on China, Mexico, and Canada. These developments have dampened market sentiment, adding downward pressure on European economies and weighing on the risk-sensitive Euro. As a result, the EUR/USD pair struggles to gain traction amid a challenging external environment.

In the Eurozone, markets have fully priced in a 25-basis-point (bps) rate cut by the European Central Bank (ECB) in December, with the likelihood of a larger 50 bps cut climbing to 58%. This reflects increasing market concerns about the region's economic outlook.

• Gold price gains follow-through traction for the second day amid trade war concerns.
• Subdued USD price action and geopolitical risks also benefit the safe-haven XAU/USD.
• Traders look to the US Q3 GDP print and the US PCE Price Index for  fresh impetuses.

Gold price (XAU/USD) attracts some follow-through buying during the Asian session on Wednesday and looks to build on the overnight bonce from the $2,600 neighborhood, or a one-week low. Persistent geopolitical risks stemming from the protracted Russia-Ukraine war, along with concerns over US President-elect Donald Trump's tariff plans, drive some haven flows towards the precious metal for the second straight day. 

Meanwhile, the US Dollar (USD) consolidates near the lower end of its weekly range despite Tuesday's upbeat US macro data and turns out to be another factor underpinning the Gold price. That said, the prospects for a less dovish Federal Reserve (Fed) might cap the non-yielding yellow metal. Traders also await the US inflation data for cues about the future rate cuts and before placing fresh directional bets around the XAU/USD.

Gold price continues to attract haven flows after Trump’s tariff threats

• US President-elect Donald Trump pledged to impose tariffs on all products coming into the US from Canada, Mexico and China, driving some follow-through haven flows towards the Gold price. 
• Ukraine reported the biggest Russian drone attack on its territory on Tuesday. Russia used a hypersonic missile on Ukraine last week and is advancing at the fastest rate since the 2022 invasion.
• Russia is reported to be using North Korean troops in Ukraine. Ukraine is striking targets deep inside Russia with Western-supplied missiles, raising the risk of a further escalation of the conflict.
• The long-running Middle East conflict de-escalated after US President Joe Biden announced that Lebanon and Israel agreed to a ceasefire deal effective from 02:00 GMT this Wednesday.
• The Conference Board reported on Tuesday that the US Consumer Confidence  Index climbed to 111.7 in November – the highest since July 2023 – from 109.6 in the previous month.
• Minutes of the November 6-7 FOMC meeting showed that officials were divided over how much farther they may need to cut rates and were uncertain about the direction of the economy.
• The CME Group's FedWatch Tool indicates that investors are still pricing in a 63% chance that the US central bank will lower borrowing costs by 25-basis-point at the December meeting. 
• President-elect Donald Trump's nominee for US Treasury secretary, Scott Bessent is expected to take a more phased approach on tariffs in an attempt to rein in the budget deficit.
• The yield on the benchmark 10-year US government bond holds steady above a two-week low touched on Monday and the US Dollar is seen consolidating near the weekly low. 
• Wednesday's US economic docket features the release of the prelim Q3 GDP print and the Personal Consumption Expenditure (PCE) Price Index later during the North American session. 

Gold price is likely to confront some resistance near 100-period SMA on the 4-hour chart

From a technical perspective, Tuesday's goodish rebound from the 61.8% Fibonacci retracement level of the recent recovery and the subsequent strength favor bullish traders. That said, oscillators on the daily chart are yet to confirm a positive bias and suggest that the move up is more likely to confront stiff resistance near the 100-period Simple Moving Average (SMA) on the 4-hour chart. The said barrier is pegged near the $2,645 region, above which the Gold price could climb further towards the $2,665 area en route to the $2,677-2,678 hurdle before aiming to reclaim the $2,700 round figure.

On the flip side, the $2,624-2,622 region could offer some support ahead of the $2,600 mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and expose the 100-day SMA, around the $2,569-2,568 zone. This is followed by the monthly swing low, around the $2,537-2,536 area. Failure to defend the said support levels will be seen as a fresh trigger for bearish traders and set the stage for the resumption of the corrective decline from the $2,800 neighborhood, or the all-time peak touched in October.

Gold prices rose in India on Wednesday, according to data compiled by FXStreet.

The price for Gold stood at 7,167.62 Indian Rupees (INR) per gram, up compared with the INR 7,145.39 it cost on Tuesday.

The price for Gold increased to INR 83,598.89 per tola from INR 83,342.38 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• Silver price appreciates as daily chart analysis suggests a possible momentum shift from bearish to bullish.
• The primary resistance would be found at a nine-day EMA at $30.76.
• The pair may navigate the area around the throwback support at the psychological level of $30.00.

Silver price (XAG/USD) remains steady near $30.50 per troy ounce during the Asian hours on Wednesday. The daily chart analysis suggests a possible shift in momentum from bearish to bullish as the pair has been tracking down along the upper boundary of the descending channel pattern.

However, the 14-day Relative Strength Index (RSI) is currently positioned below the 50 level, indicating a prevailing bearish sentiment. Additionally, the XAG/USD pair remains below the 14- and nine-day Exponential Moving Averages (EMA), signaling a bearish outlook and indicating weakening short-term price momentum. This suggests weak buying interest and the potential for further price losses.

In terms of the upside, if the Silver price successfully breaches the key resistance zone near the upper boundary of the descending channel, the asset price would further test the nine-day Exponential Moving Average (EMA) at $30.76, followed by the 14-day EMA at $30.96.

On the downside, the Silver price may find support around its “throwback support” at the psychological level of $30.00. A break below this level could deepen bearish sentiment, potentially driving the price lower toward its three-month low of $27.69, followed by the descending channel's lower boundary at $28.50.

XAG/USD: Daily Chart

• The Australian Dollar gains ground as the US Dollar remains subdued amid bond market optimism.
• Australia’s Monthly Consumer Price Index remained consistent at a 2.1% rise YoY in October, against an expected 2.3% increase.
• November’s FOMC Meeting Minutes indicated that policymakers are adopting a cautious stance on rate cuts.

The Australian Dollar (AUD) halts its three-day losing streak on Wednesday as the US Dollar (USD) remains subdued amid bond market optimism. Additionally, the Reserve Bank of Australia's (RBA) hawkish outlook on future interest rate decisions provides support for the AUD.

Australia's monthly Consumer Price Index (CPI) rose by 2.1% year-over-year in October, unchanged from the previous month but below market expectations of 2.3%. This marked the lowest inflation rate since July 2021 and remained within the central bank's target range of 2-3% for the third consecutive month.

The upside of the AUD/USD pair could be restrained due to dampened market sentiment following President-elect Donald Trump's announcement of a 10% increase in tariffs on all Chinese goods entering the United States (US). Given that both countries are close trade partners, any change in China's economy would impact Australian markets.

China’s Ambassador to Australia remarked on Tuesday that "US policy on trade with China and other countries will have an impact." The Ambassador highlighted China's expectation for dialogue with the US to address trade policies and explore ways to manage their bilateral relationship effectively.

Australian Dollar receives support from hawkish sentiment surrounding the RBA

• The latest Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.
• US President-elect Donald Trump is expected to appoint Jamieson Greer as the US Trade Representative, Bloomberg reported on Tuesday. Greer’s nomination highlights the central role of tariffs in Trump’s economic strategy.
• Chicago Fed President Austan Goolsbee indicated on Tuesday that the Fed is likely to continue lowering interest rates toward a neutral stance that neither stimulates nor restricts economic activity. Meanwhile, Minneapolis Fed President Neel Kashkari highlighted that it remains appropriate to consider another rate cut at the Fed’s December meeting, according to Bloomberg.
• US bond market gains ground as US President-elect Donald Trump selected the fund manager Scott Bessent as the US Treasury secretary, a seasoned Wall Street figure and fiscal conservative.
• The recent preliminary S&P Global US Purchasing Managers’ Index (PMI) data have reinforced expectations that the Federal Reserve (Fed) may slow the pace of rate cuts. Futures traders are now assigning a 57.7% probability to the Federal Reserve cutting rates by a quarter point in December, according to the CME FedWatch Tool.
• Australia's four largest banks are predicting the Reserve Bank of Australia's first rate cut. Westpac has revised its forecast for the first cut to May, up from February. National Australia Bank (NAB) also expects the cut in May. Meanwhile, the Commonwealth Bank of Australia (CBA) and ANZ are cautiously forecasting a rate cut in February.

Technical Analysis: Australian Dollar rises toward nine-day EMA near 0.6500

The AUD/USD pair hovers near 0.6470 on Wednesday, with technical analysis of the daily chart suggesting strengthening short-term bearish momentum. The pair remains confined within a descending channel, while the 14-day Relative Strength Index (RSI) stays below 50, signaling persistent negative sentiment.

Regarding its support, the AUD/USD pair could test its four-month low of 0.6434 recorded on November 26. A break below this level could lead the pair to approach the yearly low of 0.6348, last reached on August 5, with additional support found near the descending channel's lower boundary at 0.6320.

On the upside, the resistance lies at the nine-day Exponential Moving Average (EMA) of 0.6495 and the 14-day EMA of 0.6512. Further resistance appears at the upper boundary of the descending channel at the 0.6550 level. A decisive break above these levels could support the pair to explore the region around its four-week high of 0.6687.

AUD/USD: Daily Chart

• The Japanese Yen benefits from Trump’s tariff threats and the recent fall in the US bond yields.
• The USD struggles to lure buyers and drags the USD/JPY pair to a three-week low on Wednesday.
• Traders now look to the prelim US Q3 GDP print and the US PCE Price Index for a fresh impetus.

The Japanese Yen (JPY) continues to attract some haven flows in the wake of US President-elect Donald Trump's tariff threats. Moreover, the recent pullback in the US Treasury bond yields, which followed Scott Bessent's nomination as the US Treasury Secretary and expectations that he would restrain budget deficits, offers additional support to the lower-yielding JPY. This, along with subdued US Dollar (USD) price action, drags the USD/JPY pair to a nearly three-week low, around the 152.70-152.65 area, during the Asian session on Wednesday. 

That said, the uncertainty tied to another interest rate hike by the Bank of Japan (BoJ) in December might hold back traders from placing aggressive JPY bullish bets. Meanwhile, easing geopolitical tensions, amid a ceasefire deal between Israel and Hezbollah, might contribute to capping gains for the safe-haven JPY. The USD, on the other hand, is likely to draw support from bets for slower interest rate cuts by the Federal Reserve (Fed), which could further offer some support to the USD/JPY pair ahead of the key US macro data due later today. 

Japanese Yen strengthens as Trump’s tariff threats continue to drive some haven flows

• Concerns that US President-elect Donald Trump's tariffs would trigger trade wars, and impact the global economy, continue to drive some haven flows towards the Japanese Yen. 
• Scott Bessent's nomination as the US Treasury secretary provided some respite to US bond investors and dragged the benchmark 10-year US Treasury yield to a two-week low on Monday.
• Data released on Tuesday showed broadening service-sector inflation in Japan, keeping the door open for another rate hike by the Bank of Japan at its next policy meeting in December. 
• Japanese Prime Minister Shigeru Ishiba said on Tuesday that he would ask companies to implement significant wage hikes at the annual "Shuntō" negotiations next spring.
• The November FOMC meeting minutes revealed that the Committee could pause its easing of the policy rate and hold it at a restrictive level if inflation remained elevated.
• Officials expressed confidence that inflation is easing and the labor market is strong, which should allow the Federal Reserve to cut rates further, albeit at a gradual pace.
• According to the CME Group's FedWatch Tool, traders are currently pricing in a 63% chance that the Fed will lower borrowing costs by 25 basis points in December. 
• The US Dollar struggles to gain any meaningful traction and languishes near the weekly low touched on Tuesday, exerting additional pressure on the USD/JPY pair. 
• Lebanon-based Hezbollah militant group said that it launched drones towards Israel on Tuesday night, while Israel launched air strikes on Beirut's southern suburbs.
• Moments later, US President Joe Biden announced that Lebanon and Israel have agreed to the ceasefire deal, which comes into effect from 02:00 GMT this Wednesday.
• Traders now look forward to the first revision of the US Q3 GDP print and the US Personal Consumption Expenditure (PCE) Price Index for some meaningful impetus.
• The market attention will then shift to a slew of Japanese macro data, including Tokyo's Core CPI report, due for release during the Asian session on Friday. 

USD/JPY might now aim to test a key pivotal support near the 152.00 mark

From a technical perspective, the overnight close below the 100-period Simple Moving Average (SMA) on the 4-hour chart and the subsequent downfall favors bearish traders. Moreover, oscillators on the daily chart have just started gaining negative traction and support prospects for a further USD/JPY depreciating move. Hence, some follow-through weakness towards the very important 200-day SMA, currently pegged around the 152.00 mark, looks like a distinct possibility. A convincing break below the latter could expose the monthly swing low, around the 151.30-151.25 region. 

On the flip side, the 153.00 round figure might now act as an immediate hurdle ahead of the 153.25-153.30 region. A sustained strength beyond the latter might trigger a short-covering rally and allow the USD/JPY pair to reclaim the 154.00 mark. The upward trajectory could extend further towards the 154.60 intermediate hurdle en route to the 155.00 psychological mark and the next relevant hurdle near the 155.35-155.40 area.

• The Indian Rupee weakens in Wednesday’s Asian session.
• Trump's tariff threats undermine the INR, but significant inflows and RBI intervention might cap its downside. 
• The US Core PCE inflation data will be closely watched.

The Indian Rupee (INR) extends its decline on Wednesday. The expectation that Donald Trump might impose high tariffs on imports into the US provides some support to the US Dollar (USD) and weighs on the local currency. Additionally, the cautious stance from the Federal Reserve (Fed) could underpin the USD in the near term. 

Nonetheless, the foreign inflows related to the rejig of MSCI's global equity indexes might help limit the INR’s losses. The downside of the Indian Rupee might be capped as the Reserve Bank of India (RBI) might intervene in the foreign exchange market to prevent the INR from depreciating. The US Core Personal Consumption Expenditures (Core PCE) - Price Index for October will be the highlight on Wednesday. Also, the weekly Initial Jobless Claims, Pending Home Sales, the Chicago PMI and Durable Goods Orders will be published.  

Indian Rupee remains weak despite MSCI Index rebalancing

• The MSCI index rebalancing significantly boosted the Indian stock market, drawing in foreign investors who fueled over $1 billion in net purchases.
• A major portion of the Indian economy is witnessing an upward trend despite fluctuations, according to HSBC Global Research.
• Donald Trump said early Tuesday that he would announce a 25% tariff on all products from Mexico and Canada from his first day in office and impose an extra 10% tariff on goods from China.
• Minutes from the Federal Open Market Committee's (FOMC) latest meeting indicated that the policymakers are taking a cautious approach to cutting interest rates as inflation is easing and the labor market remains strong.  
• Financial markets are now pricing in nearly 57.7% possibility that the Fed will cut rates by a quarter point, down from around 69.5% a month ago, according to the CME FedWatch Tool. 

USD/INR holds a bullish undertone

The Indian Rupee trades weaker on the day. The USD/INR pair keeps the bullish vibe within an ascending trend channel on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). The upward momentum is supported by the 14-day Relative Strength Index, which is located above the midline near 55.30, suggesting further upside looks favorable. 

The crucial resistance level emerges in the 84.50-84.55 zone, representing the all-time high and the upper boundary of the trend channel. Sustained bullish momentum above this level could see a rally to the 85.00 psychological mark. 

On the other hand, the lower limit of the trend channel of 84.24 acts as an initial support level for USD/INR. The next contention level is seen at 83.94, the 100-day EMA. The additional downside filter to watch is 83.65, the low of August 1. 

Reserve Bank of New Zealand’s (RBNZ) Governor Adrian Orr explains the interest rate decision at a press conference following the monetary policy meeting on Wednesday.

Orr is responding to questions from the media.

Key quotes

developing story ....

Market reaction to RBNZ Orr’s presser

NZD/USD trims gains to trade near 0.5850 on Orr’s comments, still adding 0.35% on the day.

• The New Zealand Dollar advanced as the RBNZ reduced its Official Cash Rate by 50 basis points in November.
• The risk-sensitive NZD faced challenges as Donald Trump announced a plan to increase import tariffs on Chinese goods.
• The USD struggles due to bond market optimism following President-elect Donald Trump's decision to nominate fund manager Scott Bessent.

The New Zealand Dollar (NZD) breaks its five-day losing streak against the US Dollar (USD) following the Reserve Bank of New Zealand's (RBNZ) interest rate decision on Wednesday. The central bank announced a further cut to its Official Cash Rate (OCR), lowering it by 50 basis points (bps) from 4.75% to 4.25% in November.

The RBNZ justified this rate cut by citing a bleak economic outlook and a decline in inflation, which has now returned to the central bank's target range of 1% to 3%. Earlier this year, the central bank reduced the OCR by 25 bps in August and followed with a 50 bps reduction in October.

The NZD faced challenges due to weaker market sentiment, largely driven by President-elect Donald Trump's announcement of a 10% tariff increase on all Chinese goods entering the United States (US), as well as a 25% tariff on imports from Mexico and Canada. Since China is a significant trade partner for New Zealand, any economic disruption in China has a direct impact on New Zealand's economy.

New Zealand Dollar appreciates as US Dollar faces challenges due to bond market optimism

• The USD faced pressure amid bond market optimism following President-elect Donald Trump's decision to nominate fund manager Scott Bessent, a seasoned Wall Street veteran and fiscal conservative, as US Treasury Secretary.
• However, downside risks for the USD remain limited. Preliminary S&P Global US Purchasing Managers’ Index (PMI) data have bolstered expectations that the Federal Reserve might slow the pace of rate cuts. According to the CME FedWatch Tool, the probability of a quarter-point rate cut has dropped to 57.7%.
• The latest Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.
• US President-elect Donald Trump is expected to appoint Jamieson Greer as the US Trade Representative, Bloomberg reported on Tuesday. Greer’s nomination highlights the central role of tariffs in Trump’s economic strategy.
• On Tuesday, Chicago Fed President Austan Goolsbee indicated that the Fed is likely to continue lowering interest rates toward a neutral stance that neither stimulates nor restricts economic activity. Meanwhile, Minneapolis Fed President Neel Kashkari highlighted that it remains appropriate to consider another rate cut at the Fed’s December meeting, according to Bloomberg.
• In November, S&P Global US Composite PMI climbed to 55.3, indicating the strongest growth in private sector activity since April 2022. Meanwhile, the US Services PMI rose to 57.0, up from 55.0, significantly surpassing market expectations of 55.2, marking the sharpest expansion in the services sector since March 2022.
• New Zealand’s Gross Domestic Product (GDP) shrank by 0.2% in the second quarter (Q2), following a revised 0.1% growth in the previous quarter. Economists had anticipated a 0.4% contraction for the period, while the RBNZ forecasted a 0.5% decline.
• NZ Stats showed on October 16 that New Zealand’s annual Consumer Price Index (CPI) rose 2.2% in Q3, aligning with market forecasts and marking a sharp slowdown from the 3.3% growth in Q2.

New Zealand Dollar tests the descending channel’s upper boundary near 0.5900

The NZD/USD pair trades near 0.5880 on Wednesday. A daily chart review highlights a deepening bearish trend as the pair moves within a descending channel pattern. Meanwhile, the 14-day Relative Strength Index (RSI) stays below 50, signaling persistent negative sentiment.

Regarding its support, the NZD/USD pair may navigate the region around the psychological level of 0.5800, which coincides with the lower boundary of the descending channel. A decisive break below this level would drive the pair toward its two-year low of 0.5772, last seen in November 2023.

On the upside, immediate resistance lies at the 14-day Exponential Moving Average (EMA) of 0.5886, which aligns with the upper boundary of the descending channel. A further barrier appears at the psychological level of 0.5900.

NZD/USD: Daily Chart

On Wednesday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1982, as compared to the previous day's fix of 7.1910 and 7.2535 Reuters estimates.

• AUD/NZD met with heavy supply after the RBNZ announced its policy decision. 
• The NZD rallies across the board in the absence of more dovish RBNZ signals.
• Softer Australian CPI and US-China trade war fears continue to weigh on the AUD.

The AUD/NZD cross attracts heavy selling after the Reserve Bank of New Zealand (RBNZ) announced its policy decision and dives to a one-week low, around the 1.1030 region during the Asian session on Wednesday. 

As was widely expected, the RBNZ lowered the Official Cash Rate (OCR) by another 50 basis points (bps) from 4.75% to 4.25% at the conclusion of the November policy meeting. This seems to have disappointed some investors anticipating an even bigger rate cut and provides a strong boost to the New Zealand Dollar (NZD), which, in turn, drags the AUD/NZD cross lower for the third straight day. 

Meanwhile, the central bank, in the accompanying Monetary Policy Statement (MPS), said that the economic growth could recover gradually from late 2024 due to lower interest rates, but the timing and speed of recovery remain uncertain. The RBNZ further noted that core inflation is converging toward the 1–3% target range and that subdued domestic demand has eased inflationary pressures.

The Australian Dollar (AUD), on the other hand, continues with its relative underperformance on the back of the softer domestic Consumer Price Index (CPI), which fell short of expectations and held steady at the 2.1% YoY rate in October. Apart from this, renewed US-China trade war fears turn out to be another factor undermining the China-proxy Aussie and exerting pressure on the AUD/NZD cross.

Australia’s monthly Consumer Price Index (CPI) rose by 2.1% in the year to October, compared to a 2.1% increase seen in September, according to the data published by the Australian Bureau of Statistics (ABS) on Wednesday.

The market forecast was for 2.3% growth in the reported period. 

Market reaction to Australia’s monthly CPI inflation

At the time of writing, the AUD/USD pair is trading 0.16% higher on the day to trade at 0.6472. 

US President-elect Donald Trump is expected to name Jamieson Greer as the US Trade Representative, according to Bloomberg on Tuesday, citing sources.

Greer's nomination emphasises the importance of tariffs in Trump's economic plan, with the incoming president promising to use trade policy to raise federal income and compel firms to re-shore manufacturing jobs to the US.  

Market reaction 

At the time of writing, the US Dollar Index (DXY) is trading 0.06% lower on the day to trade at 106.81. 

Bank of England (BoE) Deputy Governor Clare Lombardelli said on Tuesday that she needs to see more evidence of cooling price pressures before she backs another interest rate reduction, per Bloomberg.  

Key quotes

Market reaction 

At the time of writing, GBP/USD is trading 0.12% higher on the day to trade at 1.2573. 

• WTI price rebounds to near $68.75 in Wednesday’s early Asian session. 
• US crude oil stocks fell by 5.935 million barrels last week, according to the API on Tuesday.
• The possible Middle East peace deal caps the WTI’s upside. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.75 on Wednesday. The WTI price edges higher amid the uncertainty for the US oil industry and the large surprise crude draw. 

US President-elect Donald Trump said he would impose a 25% tariff on all products coming into the US from Mexico and Canada. The US oil industry might face an unpredictable outlook if Trump follows through on newly promised blanket tariffs on imports from these countries. 

"These would obviously be very economically disturbing tariffs if they were put into place," Josh Zive, senior principal at Bracewell LLP, told S&P Global Commodity Insights. "This is what, probably initially, ends up persuading them not to impose them—the energy sector is one that's going to be hit most dramatically by these sorts of tariffs,” added Zive.

A decline in US crude inventories last week might boost the black gold price. The American Petroleum Institute (API) weekly report showed Crude oil stockpiles in the United States for the week ending November 22 fell by 5.935 million barrels, compared to a rise of 4.753 million barrels in the previous week. The market consensus estimated that stocks would increase by just 250,000 barrels.

Investors will closely monitor the developments surrounding the ongoing geopolitical tensions in the Middle East. On Tuesday, Israel approved a ceasefire agreement with Lebanon’s Hezbollah militants that would end nearly 14 months of fighting linked to the war in the Gaza Strip, per the AP News. The easing geopolitical risks could drag the WTI price lower.