Forex-novosti i prognoze od 10-12-2024

• EUR/USD softened further on Tuesday, testing 1.0500 once again.
• The Fiber pair has closed slightly lower for a third straight day.
• Euro traders are bracing for back-to-back key data prints.

EUR/USD shed close to 0.2% on Tuesday, chalking in a third straight declining trading day and testing down into the 1.0500 handle as the Euro’s near-term bullish recovery fizzles out. Fiber is backsliding into a cautious stance ahead of a key US Consumer Price Index (CPI) inflation print due on Wednesday, with another rate call from the European Central Bank (ECB) just around the corner on Thursday.

Wednesday’s CPI inflation print, which serves as one of the last key data releases before the Federal Reserve’s (Fed) last policy meeting in 2024. Signs that progress on inflation has stalled could kill hopes for a third consecutive rate cut on December 18. At the current cut, Wednesday’s US CPI inflation for November is expected to rise slightly to 2.7% YoY from the previous 2.6%, while core annualized CPI is forecast to hold steady at 3.3%.

According to the CME’s FedWatch Tool, rate traders are pricing on 85% odds of one last quarter-point rate cut for the year.

The ECB’s latest rate call is set for Thursday, and the rate meeting is widely expected to deliver another quarter-point cut to investors. The ECB’s Main Refinancing Operations Rate is forecast to get trimmed to 3.15% from 3.4%, while the ECB Rate on Deposit Facility is anticipated to decline to a flat 3.0% from 3.25%.

EUR/USD price forecast

The EUR/USD daily chart highlights the continuation of a bearish medium-term trend, as the pair remains comfortably below the 50-day EMA at 1.0696 and the 200-day EMA at 1.0826. After the sharp sell-off in November, which saw the pair plunge to a multi-month low near 1.0450, EUR/USD has been consolidating in a tight range. Recent attempts to reclaim the 1.0600 handle have faltered, underscoring the strength of the prevailing bearish sentiment. The broader downtrend remains intact, with lower highs and lower lows defining price action since late October.

The most recent candle closed with a bearish tone at 1.0531, marking a decline of 0.18% on the day. Despite a brief attempt to push higher during the session, the pair failed to sustain momentum above 1.0560, resulting in a long upper wick and signaling selling pressure. Key support at 1.0500 is now back in focus, with a break below this level likely to expose the November low of 1.0450. Conversely, immediate resistance resides at 1.0600, with the descending 50-day EMA adding to the challenge for bulls.

The MACD histogram remains slightly positive but is flattening, indicating fading bullish momentum from the recent rebound. Furthermore, the MACD line is below the signal line, suggesting bearish control persists. To shift sentiment, bulls need a clear break above 1.0600, which could spark a recovery toward 1.0700. However, failure to hold above 1.0500 would likely confirm the bearish trend, paving the way for an extension toward 1.0400 in the coming sessions.

EUR/USD daily chart

• GBP/USD gained nearly one-fifth of a percent on Tuesday.
• Cable bulls are testing the high end of recent consolidation.
• Greenback traders will be hunkering down ahead of Wednesday’s US CPI.

GBP/USD found some room on the high side on Tuesday, gaining almost 0.2% and inching back toward the 1.2800 handle, grasping for the key price level that has flummoxed bullish momentum in recent days. Cable traders are buckling up for the wait to Wednesday’s US Consumer Price Index (CPI) inflation update.

GBP-centric data is limited this week, with the UK showing strictly mid-tier economic releases on the calendar, leaving Cable to singularly face this Wednesday’s CPI inflation print, which serves as one of the last key data releases before the Federal Reserve’s (Fed) last policy meeting in 2024. Signs that progress on inflation has stalled could kill hopes for a third consecutive rate cut on December 18. At the current cut, Wednesday’s US CPI inflation for November is expected to rise slightly to 2.7% YoY from the previous 2.6%, while core annualized CPI is forecast to hold steady at 3.3%.

According to the CME’s FedWatch Tool, rate traders are pricing on 85% odds of one last quarter-point rate cut for the year.

GBP/USD price forecast

GBP/USD is battling near-term chart churn near the 1.2800 handle, with the pair suspending in a dead zone just south of the 200-day Exponential Moving Average (EMA) near 1.2830. Price action has made a slow, trudging recovery after bottoming out near 1.2500 in late November, but bullish momentum is running into trouble and another leg lower could be chalked into the chart if the 200-day EMA stops being a target and becomes a hard technical barrier.

GBP/USD daily chart

• USD/CAD edges higher to around 1.4180 in Wednesday’s early Asian session. 
• The US CPI data will be closely monitored on Wednesday. 
• The BoC is anticipated to deliver a 50 bps reduction on Wednesday, bringing the benchmark rate to 3.25%.

The USD/CAD pair extends the rally to near 1.4180 during the early Asian session on Wednesday, bolstered by the firmer US dollar (USD) broadly. The release of crucial US November Consumer Price Index (CPI) data and the Bank of Canada (BoC) interest rate decision will be in the spotlight later on Wednesday. 

The headline US CPI inflation is expected to rise to 2.7% YoY in November from 2.6% in October. The core CPI is estimated to show an increase of 3.3% YoY during the same period. The reading will be the last major inflation data point before the Federal Reserve's (Fed) final policy meeting of the year.

Any signs that progress has stalled could well undercut the chances of a rate cut, lifting the Greenback. The markets are now pricing in nearly an 80% chance of a quarter-point Fed reduction in the December meeting, according to the CME FedWatch tool. 

On the Loonie front, the BoC is widely expected to lower its benchmark interest rate by 50 basis points (bps), currently sitting at 3.75%, in a fifth consecutive decision on Wednesday. Money markets raised bets of an oversized step to 80% after Friday’s November employment report showed a larger-than-expected jump in the unemployment rate to 6.8% in November. Nathan Janzen, assistant chief economist at RBC, emphasized a divergence in the policy rates between the BoC and Fed as the prevailing headwind for the Canadian Dollar (CAD). 

• Silver gains 0.19%, stabilizing at $31.89 as traders anticipate key U.S. inflation figures and Fed's next steps.
• Technical analysis highlights consolidation near the $32 mark, with $31.75 acting as crucial support.
• Potential downside risks include a fall towards the $31.00 area and the 100-day SMA at $30.47 if bearish pressure mounts.

Silver price climbed some 0.19% on Tuesday yet failed to clear the $32.00 hurdle after hitting a three-week high of $32.27 at the beginning of the week. At the time of writing, XAG/USD trades at $31.89 as Wednesday’s Asian Pacific session commences.

Mounting speculation about a potential Federal Reserve interest rate cut next week is driving market sentiment. The release of US inflation data on Wednesday is expected to provide clearer insights into the Fed’s monetary policy trajectory.

XAG/USD Price Forecast: Technical outlook

After briefly climbing above $32.00, XAG/USD retreated and is now consolidating within the $31.75–$32.00 range, with the 50-day Simple Moving Average (SMA) at $31.75 serving as key support.

The price action suggests the formation of a "double bottom" chart pattern, which remains just short of its minimum target of $33.50. A decisive break above the $32.00 resistance level could strengthen bullish momentum, paving the way toward $33.00 and ultimately the "double bottom" target.

On the other hand, if XAG/USD falls below the 50-day SMA, sellers may gain control, potentially driving prices toward the low $31.00 range. A further decline past this level could bring the 100-day SMA at $30.47 into focus.

XAG/USD Price Chart – Daily

• NZD/USD declines on Tuesday, retreating to 0.5800 after failing to reclaim the 20-day SMA.
• Pair faces strong rejection at the 20-day SMA, falling to fresh lows not seen since November 2023.
• RSI declines sharply in negative territory, while MACD histogram shows weakening bullish momentum with decreasing green bars.

The NZD/USD pair faced renewed selling pressure on Tuesday, dropping by 1.14% to 0.5800 after a failed attempt to reclaim the 20-day Simple Moving Average (SMA). The rejection at this key resistance level highlights the pair's inability to reverse its bearish trend, pushing it to fresh lows not seen since November 2023.

Technical indicators reinforce the bearish sentiment. The Relative Strength Index (RSI) has declined sharply to 39, remaining in negative territory and signaling intensifying selling pressure. Similarly, the Moving Average Convergence Divergence (MACD) histogram prints decreasing green bars, suggesting weakening bullish momentum and a lack of recovery signals.

With the pair now trading near the critical 0.5800 psychological support level, the downside risks remain elevated. A break below this level could pave the way for further declines, potentially targeting the 0.5770-0.5750 range. On the upside, the 20-day SMA at 0.5890 remains the key barrier, with a decisive break above it needed to shift the outlook back to neutral or bullish.

NZD/USD daily chart

• NZD/JPY declined by 0.69% on Tuesday, settling at 88.10 as selling pressure persists.
• Indicators consolidate losses, with RSI sharply declining to 39 and MACD printing flat red bars.
• Bearish momentum remains dominant, following a breakout from a sideways range between 90.00 and 92.00.

The NZD/JPY pair continued its downward trajectory on Tuesday, retreating to 88.10 amid ongoing bearish pressure. This decline builds on the pair's recent breakout from a clear sideways trading range between 90.00 and 92.00, signaling a shift in sentiment toward sustained selling.

Technical indicators confirm the bearish outlook. The Relative Strength Index (RSI) has declined sharply to 39, remaining in negative territory and reflecting intensifying downward momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator shows flat red bars, suggesting a pause in momentum as the pair consolidates recent losses.

For any recovery, NZD/JPY would need to reclaim the 88.50 level as a first step, followed by a test of the psychological 89.00 barrier. On the downside, the pair remains vulnerable to further declines, with immediate targets at 87.50 and potentially extending to the 85.00-86.00 support zone if bearish momentum persists.

NZD/JPY daily chart

• EUR/AUD gains 0.67% after RBA holds rates steady, signaling a dovish outlook with easing inflation pressures.
• Despite gains, potential ECB rate cuts loom, influencing near-term trading dynamics for the cross-pair.
• Technical levels to watch: Support at 1.6450 and 1.6400, with resistance near the recent peak at 1.6540.

The EUR/AUD soared to a new two-day peak on Tuesday after the Reserve Bank of Australia (RBA) kept rates unchanged yet adopted a dovish stance, as they noted inflation is beginning to ease towards its 3% goal. At the time of writing, the cross-pair trades at 1.6497, gains over 0.67%.

EUR/AUD Price Forecast: Technical outlook

The pair began the week lower, but the RBA’s decision pushed the EUR/AUD pair toward a two-day high of 1.6540. Nevertheless, traders pared some of those gains, as the European Central Bank (ECB) is expected to lower rates at the December 12 meeting.

Momentum remains slightly bullish, yet the Relative Strength Index (RSI) suggests that sellers have the upper hand in the short term.

The EUR/AUD first support would be the 1.6450 area, followed by the 1.6400 psychological mark. On further weakness, the next support would be the 100-day Simple Moving Average (SMA) at 1.6382, followed by the 200-day SMA at 1.6364. A breach of the latter will expose 1.6300.

Conversely, if buyers clear 1.6500, immediate resistance would be 1.6540, followed by 1.6561, the December 6 peak.

EUR/AUD Price Chart – Daily

• AUD/USD declines by 0.82% to 0.6395 on Tuesday.
• The RBA's less hawkish interest rate guidance weighs heavily on the Aussie.
• Michele Bullock, RBA Governor, remains slightly confident that inflation will return to the bank’s 2% target.

The AUD/USD pair fell sharply below 0.6400 on Tuesday, declining by 0.82% to 0.6395 after the Reserve Bank of Australia (RBA) delivered less hawkish interest rate guidance. RBA Governor Michele Bullock expressed confidence that inflation risks had eased but not disappeared. She noted that the decision to cut interest rates in the upcoming February meeting would be data-dependent, but she was confident that wages and demand were slowing. 

Investors are now waiting for US inflation data and Australian employment data, both of which could influence the Aussie’s direction in the coming days. Meanwhile, the market remains under selling pressure as expectations grow for a less dovish RBA. Analysts at ANZ and Westpac predict that the RBA could start reducing interest rates by May 2025.

Daily digest market movers: Aussie down as markets assess less hawkish RBA tone

• The Aussie remains under severe selling pressure as markets bet on a less dovish RBA stance.
• Michele Bullock, RBA Governor, expressed slight confidence in inflation returning to the bank’s target of 2%. 
• When asked about whether the RBA will cut interest rates in February, Bullock said the decision would be data-dependent with a focus on slowing wages and demand.
• Before the RBA’s policy decision, analysts at ANZ and Westpac predicted that the RBA may begin reducing interest rates beginning in May 2025.
• This week, investors should brace for more volatility in the Australian Dollar, as the domestic employment data for November is scheduled to be released on Thursday.
• Meanwhile, the US Dollar rises ahead of the November US Consumer Price Index data, which will be released on Wednesday. 
• This data will likely influence market speculation regarding the Federal Reserve’s interest rate decisions for the December 18 policy meeting.
• As for now according to the CME FedWatch tool, the likelihood of the Fed reducing interest rates by 25 basis points to 4.25%-4.50% is currently around  80%.

AUD/USD technical outlook: Bulls take a punch, bears take the lead

The Relative Strength Index (RSI) sits at 36 for the Aussie pair, still in the negative area and declining sharply, signaling ongoing selling pressure. The Moving Average Convergence Divergence (MACD) histogram also prints decreasing green bars, suggesting that the bearish momentum is likely to persist. 
Immediate support is found at the recent low of 0.6350, while resistance lies near 0.6440. The market will remain volatile, and upcoming data releases, such as the RBA's policy decision and US CPI, could provide significant direction for the pair in the coming days.

• Gold prices surge toward $2,700, supported by strong market anticipation of a Fed rate cut this December.
• US small business optimism rises, yet traders await crucial US CPI and PPI data later this week.
• Speculation about China's central bank Gold purchases and political changes in Syria also influence market dynamics.

Gold climbed during the North American session on Tuesday with buyers eyeing the $2,700 mark for the first time since November 25. One of the drivers of the rise in the price of the yellow metal is the expectation that the Federal Reserve (Fed) will cut rates at the December meeting. At the time of writing, the XAU/USD trades at $2,694, up by 1.32%.

US economic data revealed during the day hinted that small businesses had grown optimistic about the economy, according to a survey by the National Federation of Independent Business. Nevertheless, traders are focused on the release of US inflation figures on the consumer and the producer sides on Wednesday and Thursday, respectively.

Investors seem convinced that the Fed will cut interest rates at the December 17-18 meeting. CME FedWatch Tool data hints that the futures market priced in an 86% chance that Fed Chair Jerome Powell and company will lower the fed funds rate by 25 basis points (bps).

In addition, XAU/USD prices surged on speculation that China’s central bank resumed purchases of the non-yielding metal. Meanwhile, geopolitics played a significant role after Bashar Al-Assad was ousted in Syria.

This week, the US economic docket will feature the Consumer Price Index (CPI), the Producer Price Index (PPI) and Initial Jobless Claims data.

Daily digest market movers: Gold price shrugs off high US yields

• Gold prices advanced as US real yields rose two basis points to 1.956%.
• The US 10-year Treasury yield rose three basis points to 4.24%, a tailwind for the Greenback.
• The US Dollar Index (DXY) soars 0.40% to 106.59 on Tuesday.
• Small US businesses grew optimistic about the economy. The NFIB index came in at 101.7, exceeding forecasts of 95.3 and 93.7 in October.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 19 bps of Fed easing by the end of 2024.

Technical outlook: Gold price resumes its bullish trend, eyes $2,700

Gold’s uptrend resumed on Tuesday, extending its gains past the 50-day Simple Moving Average (SMA) at $2,685, as well as opening the door to challenge the $2,700 figure. The Relative Strength Index (RSI) remains bullish, hinting that buyers are gaining control.

Therefore, XAU/USD’s first resistance would be $2,700, followed by the record high of $2,790.

Conversely, if Bullion drops below the 50-day SMA, the next support would be the $2,650 figure. On further weakness, the next stop would be $2,600, followed by the confluence of an upsloping support trendline and the 100-day Simple Moving Average (SMA) in the $2,580 to $2,590 area. This then comes ahead of the November 14 daily low and intermediate support at $2,536.

• The Canadian Dollar took another hit on Tuesday, testing the 1.4200 handle.
• The Bank of Canada is poised to accelerate its pace of rate cuts.
• A widening differential and soggy data outlook keeps the Loonie pinned on the low end.

The Canadian Dollar (CAD) swooned on Tuesday, dipping closer toward the 1.4200 handle against the Greenback before meagerly recovering its stance on the day. Investors are broadly cashing out of the Loonie as the Bank of Canada (BoC) is poised to widen the CAD’s interest rate differential against the US Dollar even further.

The Canadian economy is in a sore spot right now, and the BoC is set to tip back into the pool and find another 50 bps rate cut this week. The Canadian Unemployment Rate hit multi-year highs recently, giving the Canadian central bank and BoC Governor Tiff Macklem all of the ammunition they need to case further rate cuts in order to bolster the Canadian housing market. As Canada’s largest industry, the selling and buying of residential property holds a death grip on Canadian policymaking as an outsized contributor to national growth figures.

Daily digest market movers: CAD suffers at the hands of widening rate differentials

• Canadian Dollar inches toward a tenth of a percent gain against the Greenback on Tuesday as Loonie flows battle back from a midday low near the 1.4200 handle.
• The Bank of Canada is broadly set to trim interest rates by another 50 bps on Wednesday.
• BoC main reference rate expected to decline to 3.25% from 3.75%.
• US Consumer Price Index (CPI) inflation also set to release on Wednesday, markets are hoping that inflation pressure continue to ease enough to keep the Federal Reserve (Fed) on-balance for a third straight rate cut on December 18.
• US headline CPI inflation set to tick upwards to 2.7% from 2.6% YoY.

Canadian Dollar price forecast

The Canadian Dollar (CAD) came within touch range of 1.4200 against the US Dollar, slumping to a 56-month low and bolstering the USD/CAD chart to its highest bids in nearly five years. Structural CAD weakness has pushed USD/CAD into the top end of a long-term sideways grind that has trapped the pair for nearly a decade. The pair is on pace to close in the green for a fourth consecutive month.

USD/CAD daily chart

The Greenback added to recent gains amid rising yields and intense caution ahead of the release of the US inflation figures gauged by the CPI on Wednesday.

Here is what you need to know on Wednesday, December 11:

The US Dollar Index (DXY) advanced for the third consecutive day, extending the move past the 106.00 barrier prior to the release of crucial US CPI data on Wednesday. The US Inflation Rate would be the salient event in the FX galaxy, seconded by the weekly MBA Mortgage Applications as well as the EIA’s weekly report on US crude oil inventories.

EUR/USD added to weekly losses and briefly breached the 1.0500 support to reach new four-day lows. Next on tap in the euro docket will be the ECB gathering on December 12.

GBP/USD maintained its bullish bias, adding to Monday’s advance and revisiting the 1.2780 zone. The RICS House Price Balance comes next across the Channel on December 12.

USD/JPY’s upside impulse picked up extra pace and reclaimed the area beyond the 152.00 barrier, challenging at the same time the key 200-day SMA. Japan’s Producer Prices, the Reuters Tankan Index and the BSI Large Manufacturing index will be published.

AUD/USD remained well on the defensive below the 0.6400 support as investors assessed the dovish tilt at the RBA’s meeting. All the attention will be on the release of the Australian labour market report on December 12.

Prices of WTI extended the auspicious start to the week and advanced above the $69.00 mark per barrel as traders continued to digest fresh stimulus in China and potential supply concerns in Europe.

Prices of Gold rose further and printed new two-week highs just below the key $2,700 mark per troy ounce ahead of US CPI data. Silver prices added to Monday’s strong advance, remaining close to the $32.00 mark per ounce.

• DXY trades near 106.00 with muted price action as markets prepare for November CPI.
• Inflation data is forecast to edge higher, keeping the Federal Reserve's cautious tone in focus.
• Profit-taking moderates gains, but strong economic data continues to support the Greenback.

The US Dollar Index (DXY) holds steady around the 106.00 mark as markets recalibrate following robust Nonfarm Payrolls (NFP) data last week. While a December rate cut by the Federal Reserve (Fed) remains widely anticipated, attention now shifts to November Consumer Price Index (CPI) data due Wednesday. Analysts expect annual headline inflation to rise to 2.7% from October's 2.6%, while the core CPI is likely to remain unchanged at 3.3%.

Despite some profit-taking after recent rallies, the Greenback remains buoyed by strong US economic fundamentals, with solid growth and sentiment indicators offering continued support.

Daily digest market movers: US Dollar trades sideways with key data ahead, backed by strong economic outlook

• November CPI headline inflation is forecast to rise to 2.7%, while core inflation is seen steady at 3.3%.
• NFIB small business optimism surged to 101.7, its highest level since June 2021, reflecting improved business conditions.
• The Atlanta Fed GDPNow model predicts Q4 growth at 3.3%, while the New York Fed Nowcast model projects 1.9% for Q4 and 2.4% for Q1 2025.
• Markets are pricing nearly 90% odds of a December rate cut, expected to be a "hawkish cut" amid sticky inflation concerns.

DXY technical outlook: Bulls eye higher levels amid cautious optimism

The DXY hovers near 106.00, with technical indicators offering mixed signals. The Relative Strength Index (RSI) points slightly upward but remains in negative territory, suggesting limited bullish momentum. The Moving Average Convergence Divergence (MACD) indicator shows smaller red histogram bars, signaling reduced bearish pressure.

The index is approaching the 20-day Simple Moving Average (SMA), a pivotal level for short-term direction. Resistance levels are noted at 106.50 and 107.00, while support remains strong between 105.50 and 106.00. Traders await Wednesday’s CPI release, which could trigger heightened volatility depending on the inflation outcome.

• The Dow Jones traded into the middle on Tuesday.
• Equities tested lower but stuck to the day’s opening bids.
• Markets are coiling ahead of key US CPI inflation update.

The Dow Jones Industrial Average (DJIA) flat-lined on Tuesday, testing briefly into the low end below 44,200 before rebounding into the day’s opening prices near 44,400. Equities are stuck in the mud as investors await the latest print of US Consumer Price Index (CPI) inflation, slated for Wednesday.

Investors will be keeping a close eye on Wednesday’s CPI inflation print which serves as one of the last key data releases before the Federal Reserve’s (Fed) last policy meeting in 2024. Signs that progress on inflation has stalled could kill hopes for a third consecutive rate cut on December 18.

China’s recently-announced policy pivot represents the Asian giant’s first step toward a looser monetary policy stance since the early 2010s. Investors broadly reacted positively to the news that China would be injecting much-needed cash directly into the global markets. However, bullish momentum on the news has faded as traders now grapple with the reality that China’s commitments to monetary policy adjustment remain shadowy. To top it off, the conditions that would require a pivot from a decade-plus-long policy stance are less than ideal for investment conditions.

Dow Jones news

A tepid Tuesday market session sees action on the Dow Jones split roughly even between gainers and losers for the day. Merck & Co (MRK) shed 2.5% to fall below $102 per share, while Boeing (BA) rebounded an additional 4.5% and climbed above $164 per share as investors continue to re-bid the battered aerospace manufacturer. Boeing has been besieged by issues of late, including strikes, lawsuits, manufacturing errors, and the worst of all, missed earnings calls. But investors are taking heart after the plane maker announced it would revive its investor appeal by axing ten percent of its global workforce despite a multi-year backlog of customer orders continuing to pile up.

Dow Jones price forecast

The Dow Jones has quietly closed lower for three straight trading days when nobody was looking, dragging intraday price action down below 44,400 after testing record highs above 45,000 just last week. Despite the near-term pulldown, prices remain firmly entrenched on the high end, with bids floating well north of the 50-day Exponential Moving Average (EMA) near 43,437.

Dow Jones daily chart

• Mexican Consumer Confidence plunges to its lowest since August 2024, impacting Peso performance.
• Banxico remains dovish with potential rate cuts on the horizon following recent dips in inflation.
• US Dollar finds support from a rise in Treasury yields with the 10-year yield climbing to 4.24%.

The Mexican Peso erased its earlier gains and dropped to a four-day low before recovering some ground against the Greenback on Tuesday after Consumer Confidence figures in Mexico deteriorated, while US Treasury bond yields rose. The USD/MXN trades at 20.23, virtually unchanged.

Mexico’s National Statistics Agency revealed that Consumer Confidence hit its lowest level since August 2024, with nine of the ten subcomponents diminishing, according to the national survey.

The latest inflation report on Monday keeps traders optimistic that the Bank of Mexico (Banxico) will lower interest rates at the December 19 meeting. The November Consumer Price Index dipped in headline and core figures, opening the door for expansionary policies by the central bank.

Banxico’s Governor, Victoria Rodriguez Ceja, remained dovish. In her last interview with Reuters, she said that given the progress of disinflation, the central bank could continue lowering borrowing costs.

In November, the US National Federation of Independent Business reported a surge in small business optimism.

Earlier, the USD/MXN climbed, underpinned by the jump in US Treasury bond yields. The US 10-year Treasury yield rose three basis points to 4.24%, a tailwind for the Greenback.

The US Dollar Index (DXY), which tracks the performance of the buck’s value against a basket of six currencies, soars 0.40% to 106.59.

This week, Mexico’s economic docket will feature Industrial Production data. In the US, the Consumer Price Index (CPI), the Producer Price Index, and Initial Jobless Claims data will also entice traders.

Daily digest market movers: Mexican Peso consolidates at around 20.20

• Mexico’s Consumer Confidence in November edged down from 49.5 to 47.7, below forecasts of 48.0.
• The swaps market suggests Banxico will cut interest rates by 25 basis points at the December 19 meeting.
• Mexico’s economic docket revealed that headline and core inflation in November missed estimates, edging lower after the Consumer Price Index hit its highest level of 5.57% in July.
• US small businesses grew optimistic about the economy. The index came in at 101.7, exceeding forecasts of 95.3 and 93.7 in October.
• Money market futures price in 88% odds that the Fed will lower borrowing costs by 25 basis points this month, according to the CME FedWatch Tool.
• Banxico’s November survey shows that analysts estimate Mexican inflation at 4.42% in 2024 and 3.84% in 2025. Underlying inflation figures will remain at 3.69% in 2024 and 2025. GDP is forecast at 1.55% and 1.23% for 2024 and 2025, respectively, and the USD/MXN exchange rate at 20.22 for the rest of the year and 20.71 in 2025.

Mexican Peso technical outlook: USD/MXN remains firm below 20.30 on Peso strength

The USD/MXN consolidates at around the 20.10-20.30 area for the fourth consecutive day, slightly above immediate support seen at the 50-day Simple Moving Average (SMA) at 20.00. The Relative Strength Index (RSI) depicts momentum shifted to the downside in the near term, which could pave the way for further downside.

In that outcome, if USD/MXN drops below 20.00, the next support would be the 100-day SMA at 19.61 before testing the psychological 19.50 mark, ahead of the 19.00 figure.

Conversely, if USD/MXN soars above the December 6 high of 20.28, that could pave the way to challenge 20.50, ahead of the year-to-date peak at 20.82, followed by the 21.00 mark.

• EUR/USD declines by 0.33% on Tuesday, settling at 1.0525 after falling below the 20-day SMA.
• RSI drops sharply to 40, remaining in the negative area, signaling weakening momentum.
• MACD histogram prints decreasing green bars, highlighting fading bullish traction.

The EUR/USD pair extended its losses on Tuesday, retreating to 1.0525 and slipping slightly below the 20-day Simple Moving Average (SMA). This development undermines the pair's short-term constructive outlook, raising concerns about further downside risks if the 20-day SMA is definitively breached.

Technical indicators point to a deteriorating momentum. The Relative Strength Index (RSI) has declined sharply to 40, signaling increased selling pressure and remaining firmly in the negative territory. Similarly, the Moving Average Convergence Divergence (MACD) histogram shows decreasing green bars, indicating fading bullish traction and reinforcing a bearish bias.

On the downside, the loss of the 20-day SMA around 1.0550 exposes the pair to further declines, with the next support levels at 1.0500 and 1.0480. For any recovery, EUR/USD must first regain the 20-day SMA and then break above the 1.0600 resistance level to revive the bullish case and shift momentum back in favor of the bulls.

EUR/USD daily chart

• Cable slides 0.17%, unable to sustain gains against a strengthening US Dollar Index, now at 106.36.
• GBP/USD's failure to surpass the 200-day SMA at 1.2820 signals potential for further pullback.
• Downward pressure increases, with possible support targets at 1.2600 and the November 22 low of 1.2486.

The Pound Sterling tumbled after failing to clear the 1.2800 figure for the third consecutive day, trading at 1.2720, down over 0.17% daily. Cable erased its earlier minuscule gains amid a session characterized by US Dollar strength, with the US Dollar Index (DXY) up over 0.19%, at 106.36.

GBP/USD Price Forecast: Technical outlook

The GBP/USD consolidates as it recovers from falling to multi-month lows at around 1.2480s. On its way north, the pair cleared the 1.2600 figure and November 29 peak of 1.2749 before aiming toward the December 6 high at 1.2811. The failure to extend its gains past the 200-day Simple Moving Average (SMA) of 1.2820 opened the door for a pullback to current spot prices.

On the other hand, sellers are moving in, as shown by the Relative Strength Index (RSI) punching below its neutral line, indicating that they’re gathering steam. If GBP/USD drops below 1.2700, the pair could slide towards 1.2600 before challenging the November 22 swing low of 1.2486.

GBP/USD Price Chart – Daily

• NZD/USD faces an intense sell-off amid uncertainty ahead of China’s two-day annual economic conference.
• The RBNZ is expected to cut interest rates by 50 bps in the policy meeting in February 2025.
• The next move in the US Dollar will be influenced by the US inflation data for November.

The NZD/USD pair plunges to near 0.5820 in Tuesday’s North American session. The Kiwi pair faces intense selling pressure as antipodean currencies weaken amid uncertainty ahead of China’s closed-door annual economic conference to be held on Dec 11-12.

China’s Politburo is expected to announce big-bank economic stimulus to boost domestic consumption and stabilize their beaten-down real estate sector, a scenario that will boost trading activities with the New Zealand (NZD) and strengthen the New Zealand Dollar’s (NZD) appeal, being one of the leading trading partners of China.

Domestically, the Kiwi dollar remains under pressure as market expectations for the Reserve Bank of New Zealand (RBNZ) to cut interest rates again by 50 basis points (bps) at the first meeting of 2025 in February. RBNZ dovish bets fuelled further after comments from NZ Prime Minister Christopher Luxon emphasized on lowering inflation and interest rates to stimulate the economy.

Meanwhile, a further recovery in the US Dollar (USD) has also weighed on the Kiwi pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 106.40. The Greenback gains even though market expectations that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 4.25%-4.50% remain firm.

Going forward, investors will focus on the United States (US) Consumer Price Index (CPI) data for November that could influence Fed dovish bets, which will be published on Wednesday.

• Euro loses ground, although Germany reports steady inflation; traders await the ECB’s decision.
• NFIB Business Optimism Index in the US climbs to 101.7, marking the highest since June 2021.
• Traders await upcoming US CPI data, searching for clues about the Fed’s December decision.

The Euro fell from 1.0600 on Monday and tumbled over 80 pips against the Greenback on Tuesday after Germany revealed that inflation remains steady. Meanwhile, the NFIB Business Optimism Index in the US surged to its highest level since June 2021. The EUR/USD trades at 1.0519.

EUR/USD drops amidst high US business confidence, anticipation of ECB rate cuts

The National Federation of Independent Business (NFIB) revealed that small businesses grew optimistic about the economy, with the index coming at 101.7, exceeding forecasts of 95.3 and 93.7 in October. Market participants mainly ignored the data, as the EUR/USD slipped below 1.0550 as traders await the European Central Bank (ECB) monetary policy on December 12.

In the meantime, EUR/USD traders are eyeing the release of the Consumer Price Index (CPI) in the US ahead of the ECB’s decision. Lagarde and Co. are widely expected to lower borrowing costs; the odds stand at a 100% chance, with the swaps market expecting 28 basis points (bps) of easing.

Data-wise, Germany revealed the Harmonized Index of Consumer Prices (HICP), which came steadily at 2.4% YoY in headline figures as expected. The month-over-month figures remained at -0.7%, unchanged and as foreseen by analysts, an indication that inflation continues to edge lower.

EUR/USD Price Forecast: Technical outlook

The EUR/USD has a neutral downward bias after registering lower lows for the last two days, indicating that bears remain reluctant to give bulls any chance of recovery. Momentum, as measured by the Relative Strength Index (RSI), confirms that thesis, as the RSI edges lower yet is shy of clearing the latest trough.

If EUR/USD clears 1.0500, the next support would be the December 2 low of 1.0460, followed by the yearly low of 1.0331. On the other hand, if buyers drive spot prices above 1.0600, this will clear the path for a recovery, but bulls must clear 1.0700 before challenging the 50-day Simple Moving Average (SMA) at 1.0727.

• The Euro dives to fresh two-year lows below 0.8260 weighed by weak German data and a risk-averse sentiment
• German HICP contracted at a 0.7% pace in November, its worst reading Since December 2022.
• The diverging ECB and BoE monetary policy expectations are likely to keep the Euro under pressure.

The Euro resumed its broader bearish trend on Tuesday, breaking below November’s low at 0.8260 to reach its lowest prices in more than two years. A dismal risk mood and hopes of further ECB monetary easing this week are hammering the Euro across the board.

Earlier today, German CPI revealed that price inflation contracted 0.7% in November, highlighting the weak momentum of the Eurozone’s main economy and increasing pressure on the ECB to lower borrowing costs.

The bank is widely expected to cut rates by 25 basis points on Thursday. Investors, however, will be eager to know whether the weak economic outlook and the political uncertainty in Germany and France have altered the bank’s usual neutral forward guidance.. 

The UK, on the contrary, is showing a more resilient outlook, with the heavy-spending Labour budget expected to stir inflationary pressures. This will likely limit the BoE’s leeway to cut rates in 2025, which is giving a competitive advantage to the GBP.

The Pound Sterling (GBP) is a moderate outperformer on the session, holding fairly comfortably in the mid-1.27s versus the USD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR/GBP weakens on the day

“The BoE’s slow-moving policy adjustment process is driving spreads wider in the GBP’s favour against the EUR, with the cross trading at its lowest since 2022 after breaking out of a 1-month consolidation range which formed around 0.83. The GBP retains a somewhat positive technical undertone against the USD on the intraday chart, with Cable holding a sideways consolidation range around the 1.2750 area.”

“But the 200-day MA (1.2822) remains a block on gains and the USD retains a fair degree of residual bull momentum on the daily and weekly charts which will limit the pound’s ability to strengthen for now at least. EUR/GBP is bearish.”

“The cross has broken out on the downside of its recent consolidation range, trend strength oscillators are aligned bearishly across short-, medium– and long-term studies and there is nothing in the way of a test of major support at 0.82. The cross has not traded below this point since Brexit. A push below here would be very significant from a technical point of view I believe.”

China imported significantly more crude oil in November for the first time in a while. As reported by the Chinese customs authority, imports amounted to 48.5 million tons or 11.8 million barrels per day, Commerzbank’s commodity analyst Carsten Fritsch notes.

China is no longer the main driver of global oil demand

“This was a good 14% up on the previous year and the highest volume in a month since August 2023. For the first time since April, imports were higher than in the same month of the previous year. As tanker data had already indicated this, the surprise was limited. However, it is doubtful that this is a sign of stronger domestic demand.”

“Rather, refineries are likely to have used the low price level in November to build up stocks. In addition, new crude oil processing capacities were put into operation. However, crude oil imports are likely to be lower again in the coming months due to weak domestic demand.”

“Despite the increase in November, crude oil imports after eleven months are still 1.9% below the level in the same period last year, meaning that an annual decline is likely to be recorded for the third time in the last four years. This is further confirmation that China is no longer the main driver of global oil demand.”

The Euro (EUR) is softer, slipping back to the low 1.05s after failing to hold gains through the low 1.06s late last week, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR drifts lower

“A 1/4-point cut is fully priced in for Thursday’s ECB policy decision and while the EUR may drift a little further ahead of the meeting, spot is trading close to fair value (1.0549) this morning, suggesting that there may be little scope for significant losses in the short run unless the ECB springs a dovish surprise and eases policy more aggressively than markets are positioned for.”

“The EUR’s failed attempt to push through technical resistance around 1.06 suggests a period of softer trading ahead. Spot losses through 1.0540 imply some scope for additional weakness in the short run at least. EUR support is 1.0470/75. Resistance is 1.0540/50.”

Saudi Arabia reduced its official selling prices (OSP) for customers in Asia to a four-year low in January, Commerzbank’s commodity analyst Barbara Lambrecht notes.

Saudi Arabia reduces official sail prices for oil shipments

“Next month, they will only have to pay a premium of 90 US cents per barrel for Arab Light compared to the Oman/Dubai benchmark. This is a significant drop compared to $1.70 in December and the lowest since January 2021. At the beginning of this year, the price premium was $3.5, at the middle of the year $2.9 and in November $2.2.”

“In our opinion, the significant price reduction is an indication of subdued demand in Asia, which purchases around 80% of Saudi Arabian oil. The OSPs for customers in Europe were also reduced significantly, which can be explained by the weak economy. In contrast, they remained unchanged for customers in the US as demand there is comparatively robust.”

“The weakness in demand in Asia is likely to have been a key reason why OPEC+ last week postponed the increase in oil production planned for January by a further three months until April. Saudi Arabia's price cut therefore comes as no great surprise. If there is no revival in demand, the most recent postponement of the production increase by OPEC+ is unlikely to be the last.”

The Canadian Dollar (CAD) is little changed overnight after slipping in late trade yesterday after PM Trudeau said Canada would retaliate in the event of new tariffs being imposed on Canadian exports under President-elect Trump’s administration, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Broader trend dynamics remain USD-bullish

“Ottawa was still looking at how to respond, he said. An aggravated trade relationship with the US is not what Canada needs or wants but it has little choice but to respond to new tariffs. During the first Trump term, Canada stuck tariffs on products from Republican-controlled districts to put optimal pressure on the White House. Similar tactics may be deployed in the future. Swaps are pricing in around 47bps of easing for the BoC tomorrow.”

“The USD edged slightly higher to trade briefly around 1.4195 in overnight trade before easing back modestly. The CAD’s broader undertone remains weak but short term price action does indicate a minor bear reversal (outside range) formed around the USD’s minor new cycle high earlier.”

“Scope for CAD gains is likely limited, however, as broader trend dynamics remain USD-bullish. USD/CAD support should be firm in the 1.4125/35 range.”

Oil prices rose significantly at the start of the week, making up for Friday's losses, Commerzbank’s commodity analyst Barbara Lambrecht notes.

A higher risk premium on the oil price seems justified

“Prices were driven up by news from China, which led to a brightening of demand prospects. In addition, there is new uncertainty in the Middle East after the Assad regime in Syria, which has been ruling for decades, was toppled at the weekend and it is still unclear who will fill the resulting power vacuum.”

“This obviously also brings back memories of the fall of the long-term rulers in Iraq in 2003 and Libya in 2011, whereupon both countries plunged into chaos. In contrast to these two countries, Syria is not a significant oil producer, but due to its geographical location in the Middle East it is of great importance for the stability of the region.”

“A higher risk premium on the oil price is therefore justified. On a positive note, Iran could lose influence in the region due to the loss of its ally Assad.”

• Silver price trades sideways near $32.00 with a focus on a slew of global events.
• Investors expect the Fed to cut interest rates by 25 bps to 4.25%-4.50% on December 18.
• Tensions escalating in the Middle East would keep the Silver price well-supported.

Silver price (XAG/USD) trades in a tight range near $32.00 in Tuesday’s North American session. The white metal consolidates as investors await the outcome of China’s closed-door annual central economic conference to be held on Dec 11-12, according to Bloomberg, and the release of the United States (US) Consumer Price Index (CPI), which will be published on Wednesday.

Ahead of China’s conference, Politburo has already shown intentions of providing a strong stimulus to boost consumption and stabilize reality and stock markets. “Will implement more proactive fiscal policy and moderately loose monetary policy,” members of China’s Politburo said on Monday.

Meanwhile, the uncertainty ahead of the release of the US inflation data will also keep the Silver price on the sidelines. Economists expect the annual core CPI -which excludes volatile food and energy prices – to rise steadily by 3.3%. The annual headline CPI is estimated to have grown by 2.7%, faster than the former reading of 2.6%.

The inflation data will influence market expectations for the Federal Reserve (Fed) interest rate action in the policy meeting on December 18. There is an 86% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

On the geopolitical front, Israel’s attack on Syria to destroy its military infrastructure in an attempt to prevent Syrian rebels from attacking Israel in the future has escalated tension in the Middle East. Historically, heightened geopolitical tensions improve the safe-haven demand of the Silver price.

Silver technical analysis

Silver price trades inside Monday’s trading range around $32.00. The white metal rallied on Monday to near $32.30 after breaking above the three-day resistance of $31.30. The asset climbs above the 20- and 50-day Exponential Moving Averages (EMAs) near $31.15 and $31.20, respectively, suggesting a strong uptrend.

The 14-day Relative Strength Index (RSI) approaches 60.00. A bullish momentum would trigger a decisive break above the same.

Looking down, the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe, would act as key support for the Silver price. On the upside, the horizontal resistance plotted from the May 21 high of $32.50 would be the barrier.

Silver daily chart

The US Dollar (USD) is narrowly mixed to a little firmer against the majors in quiet trade. It’s another very light session for data, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD mixed to firmer in quiet trade as markets await CPI

“Markets have little incentive to move significantly ahead of tomorrow’s major event risk in North America—US CPI data and the BoC policy decision. The GBP and MXN are grinding out small gains on the USD so far on the session while the AUD has given up yesterday’s China stimulus-driven bump to slide more than 0.6%, pulling the NZD lower with it.”

“The RBA policy meeting overnight concluded with no change in the policy rate, as expected, but policymakers indicated that they are gaining confidence in the inflation outlook which prompted markets to boost expectations that a rate cut could, finally, emerge in February. Global stock trends look a little soft again after yesterday’s US market losses when the Santa rally appeared to stumble a bit. The S&P 500 is up more than 30% this year so a correction ought not surprise.”

“The charts suggest that the stock rally may be starting to look a bit stretched and might be losing momentum. Soft stocks may have given the USD a bit of a lift in European trade but the roots of the dollar gains seen in the past few days really lie in the strong rebound seen around Friday’s jobs data. In contrast to the ‘seasonal’ soft trend in the USD that we often see in December, near-term risks appear geared towards a bit more strength in the DXY towards 106.75. Support is 106.00/05.”

The Gold price rose to as high as $2,675 per troy ounce yesterday, Commerzbank’s commodity analyst Carsten Fritsch notes.

News from China provide a tailwind for Gold

“Furthermore, it was announced over the weekend that the Chinese central bank (PBoC) bought Gold again in November for the first time after a break of six months. According to a PBoC publication, its Gold holdings rose to 72.96 million ounces by the end of November, compared with 72.80 million ounces at the end of October. The increase in Gold reserves in November corresponds to purchases of 5 tons of Gold.”

“Compared with previous monthly purchase volumes of up to 30 tons, this is a small amount. More important, however, is the signal that the PBoC has started buying Gold again after having paused for six months. The purchases may have been in response to Donald Trump's election victory, which threatens China with the introduction of punitive tariffs of 60%.”

“In addition, the Gold price had fallen significantly in November after rising to a record level, which may also have stimulated buying interest. The lower Gold price also meant that the PBoC's Gold reserves were worth less in USD terms at the end of November than at the end of October, despite the purchases. It will now be important that Gold purchases continue in the coming months, i.e. that the purchases in November do not remain a flash in the pan.”

• The Dollar appreciates on higher demand for safe assets and investors' cautiousness ahead of the US CPI release.
• US inflation is expected to bolster the case for very gradual Fed easing in 2025.
• The wider gap between US and Japanese Treasury yields is weighing on the JPY.

The US Dollar is trading higher for the second consecutive day on Tuesday. The sourer market sentiment and the rebound in US Treasury yields are supporting the safe-haven USD and weighing on the Yen.

Beyond that, investors are growing increasingly wary of placing large US Dollar bets, awaiting Wednesday’s US Consumer Prices Index reading.

US inflation is expected to confirm that the last mile is the toughest one to run. Consumer prices are expected to have ticked up to a 2.7% yearly rate in November from 2.6% in October, with the core inflation steady at 3.3%, well above the 2% Fed target for price stability.

These figures do not change expectations of a Fed cut next week but they will send a signal towards a more cautious approach to monetary easing in 2025. More so if we take into account the inflationary policies that Trump’s cabinet is expected to implement.

The adverse risk sentiment has triggered some recovery on US Treasury yields, with the benchmark 10-year yield crawling to 4.23% from 4.13% on Monday, and increasing the gap with the JGB. This has added bearish pressure on the Yen.

• The US Dollar picks up supported by a sourer market sentiment ahead of the US CPI release.
• Soft Mecican CPI data has increased hopes of a 25 bps rate cut next week and is weighing on the MXN.
• Technically, USD/MXN’s double top at 20.80 suggests the possibility of a deeper correction.
   

The Mexican Peso (MXN) is drifting lower from the key 20.00 area weighed by a stronger US Dollar (USD). A somewhat sourer market sentiment on Tuesday is supporting the safe-haven Greenback, while the MXN is still weighed by the weak Mexican inflation data seen on Monday.

The US Dollar is picking up across the board as investors' focus shifts to the US Consumer Prices Index (CPI) release, due on Wednesday. The market consensus hints toward a sticky inflation reading, which endorses the view of a shallow Federal Reserve’s (Fed) easing cycle in 2025.

In Mexico, the soft consumer inflation data has countered the hawkish comments from Banxico Deputy Governor Espinosa, boosting hopes that the bank will cut rates by 25 basis points again next week. 

Daily digest market movers: Mexican Peso rally loses momentum

• Consumer Inflation eased to 4.55% in the last twelve months in Mexico, down from 4.76% in the previous month. The market was expecting a 4.59% reading.
   
• Likewise, the core CPI dropped to 3.58% year-on-year from 3.8%, below the market consensus of a 3.6% reading.
   
• These figures boost hopes that the Bank of Mexico will cut rates by 25 bps for the fourth consecutive time after their December 19 meeting.
   
• In the US, The main focus is Wednesday’s CPI data. Yearly inflation is expected to have ticked up to 2.7% in November, from 2.6% in October. The core CPI, more relevant from the monetary policy perspective, is seen steady at 3.3%.
   
• On Friday, US Nonfarm payrolls showed a 227,000 increase in November, beating expectations of a 200,000 rise. October’s data was revised to a 36,000 increment from the previously estimated 12,000 payrolls.
   
• The US Unemployment Rate, however, increased to 4.2% from 4.1% in October,  which cemented hopes of a Federal Reserve (Fed) cut in December, and kept the US Dollar from rallying further.
   
• Futures markets are now pricing an 85% chance that the Fed will cut rates by 25 basis points in December, up from below 70% last week, according to data from the CME Group’s Fed Watch tool.

Mexican Peso technical outlook: USD/MXN recovery remains capped below 20.27

The USD/MXN has found support at the 20.00 support area to pare previous losses, although it remains capped below the December 6 high at 20.27 so far.

Technical indicators are mixed, with the 4-hour Relative Strength Index (RSI) still in bearish territory below the 50 level. From a broader perspective, the bearish trend remains intact, with the double top at 20.80 suggesting the possibility of a deeper correction.

Immediate resistance is at the mentioned December 6 high at 20.27, ahead of the December 2 high at 20.60 and November’s peak at 20.80. On the downside, the 20.00 psychological level is the neckline of the mentioned double top ahead of November’s low, at 19.75.

(This story was corrected on December 10 at 11:55 GMT to say, in the technical analysis section, that the December 6 high was at 20.27, not 2.27.)
 

USD/MXN 4-Hour Chart

This morning, the Reserve Bank of Australia (RBA) left the key interest rate unchanged at 4.35 per cent in its last monetary policy meeting of the year. However, the tone surrounding this decision was noticeably more dovish, causing the AUD to weaken significantly in the initial reaction, Commerzbank’s FX analyst Volkmar Baur notes.

Economic development weaker than expected

“Two points stood out for FX traders. Firstly, the RBA had to admit that economic growth in Q3 was weaker than expected. The economic development is therefore weaker than expected, which argues in favour of a looser monetary policy. Furthermore, and this point is even more important, the wording around inflation was changed.”

“It now states that the RBA is more confident that inflation will move sustainably towards the middle of the RBA's target range (2-3%). In November, the RBA still stated that this is exactly what had to happen in order to start loosening monetary policy. There is still a long time to go before their next meeting in mid-February. Two labour market reports and the inflation figures for the fourth quarter will be published in the meantime.”

“The market will therefore be watching these data very closely in the coming weeks to gauge what to expect in February. We expect the RBA to cut interest rates in February. The market's assessment of the probability of such a move is currently a little higher than it was yesterday, at around 64% this morning. A full pricing-in over the next few weeks would weigh further on the AUD.”

Upcoming CEWC likely to set a pro-growth tone and lay out stimulus plan, echoing the Politburo. Shift to an ‘appropriately loose’ monetary policy stance increases the chance of positive surprises. That said, diminishing policy room and financial stability concerns may constrain size of stimulus. We expect fiscal policy to do the heavy lifting, with increasing emphasis on boosting consumption, Standard Chartered’s economists Carol Liao and Shuang Ding note.

Stronger easing signals

“The Politburo meeting on 9 December sent strong policy easing signals, raising market hopes of a ‘big-bang’ stimulus package. The shift in the monetary policy stance from ‘prudent’ to ‘appropriately loose’ and the introduction of ‘extraordinary counter-cyclical adjustment’ beat expectations, suggesting that the government may set an ambitious 2025 growth target (likely around 5%). In addition, the meeting pledged to implement more proactive fiscal policy, stabilise the housing and stock markets, and boost domestic demand 'from every aspect.' Markets have reacted positively.”

“We think the strong tone of the Politburo is part of the authorities’ efforts to use forward guidance to revive market sentiment. While upside surprises are possible from monetary easing and broader-based stimulus, we keep our 2025 growth forecast at 4.5% given diminishing macro policy room, the ongoing property-market correction and rising external headwinds.”

“We expect the Central Economic Work Conference (CEWC), likely to be held later this week, to provide more details on what the Politburo called ‘extraordinary counter-cyclical adjustment’. We think this may include a large increase in government bond issuance, supported by regular PBoC purchases of central government bonds from the market. The new stimulus package is likely to be more focused on boosting consumption, a departure from the old stimulus model that relied heavily on investment. Monetary easing could provide positive surprises, but we do not think it will be comparable to the 2009 stimulus given diminishing policy room and concerns about financial stability.”

• AUD/USD falls sharply below 0.6400 as the RBA delivers a less-hawkish interest rate guidance.
• RBA Bullock was confident about easing upside risks to price pressures.
• Investors await the US inflation and the Australian employment data for November.

The AUD/USD pair plunges below the key support of 0.6400 in Tuesday’s European session. The Aussie pair weakens as Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a less-hawkish interest rate guidance after leaving its key Official Cash Rate (OCR) unchanged at 4.35% for the ninth meeting in a row.

Michele Bullock remained slightly confident about inflation returning to the bank’s target of 2%. “Upside inflation risks had eased but not gone away,” Bullock said. When asked about whether the RBA will cut interest rates in the February meeting, Bullock said that the decision would be data-dependent but was confident that wages and demand are slowing.

Before the RBA’s policy decision, analysts at ANZ and Westpac predicted the RBA to start reducing interest rates from May 2025.

This week, investors should brace for more volatility in the Australian Dollar (AUD) as the domestic employment data is scheduled to be released on Thursday.

Meanwhile, the US Dollar (USD) rises ahead of the United States (US) Consumer Price Index (CPI) data for November, which will be released on Wednesday. The inflation data will influence market speculation for the Federal Reserve’s (Fed) interest rate action in the policy meeting on December 18.

There is an almost 86% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

• Gold rally maintains its positive momentum intact fuelled by buying from China and safe-haven flows.
• The US Dollar’s moderate recovery is weighing on Gold.
• XAU/USD’s technical picture remains positive with price action standing above the last two week’s trading range.

Gold (XAU/USD) maintains a mild bullish tone on Tuesday. The tone shift by China’s Politburo, vowing further economic stimulus to support growth, and the resumption of Gold purchases by the People’s Bank of China (PBoC) are acting as a tailwind for the precious metal.

Other sources of support for Gold are the safe-haven flows triggered by the uncertainty in the Middle East, after the fall of Bacher El Asad’s regime in Syria, and the political deadlocks in France and Germany

Finally, growing bets that the Federal Reserve (Fed) will cut rates next week keep US yields close to multi-week lows, and provide additional support to the yieldless metal.

Daily digest market movers: A somewhat stronger Dollar is weighing on Gold’s recovery

• China’s PBoC reported buying 160,000 ounces in November after a six-month pause. This has boosted expectations of further Gold appreciation and will likely underpin speculative demand for Bullion.
   
• In Syria, the diverse rebel factions are starting negotiations to form a government while foreign powers like Israel and Turkey take positions. The increasing uncertainty in an already volatile region will underpin demand for the safe-haven Gold.
   
• The US Dollar is trading moderately higher awaiting Wednesday’s Consumer Prices Index (CPI) figures to clarify the Feds’s monetary easing calendar for 2025.
   
• The CME Group’s Fed Watch Tool reveals an 86% chance of a 25 bps Fed cut after the December 17-18 meeting and between two and three more cuts in 2025.
   
• US consumer inflation is expected to confirm that inflation remains sticky above the Fed’s 2% target rate. The headline CPI is expected to have ticked up to a 2.7% yearly rate, from 2.6% in October with the core CPI steady at 3.3% year-on-year.

  US Dollar PRICE Today

  The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

  	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
  USD		0.16%	-0.11%	0.23%	0.00%	0.58%	0.62%	0.09%
  EUR	-0.16%		-0.26%	0.03%	-0.16%	0.42%	0.46%	-0.07%
  GBP	0.11%	0.26%		0.29%	0.10%	0.69%	0.72%	0.18%
  JPY	-0.23%	-0.03%	-0.29%		-0.20%	0.38%	0.41%	-0.11%
  CAD	-0.01%	0.16%	-0.10%	0.20%		0.57%	0.61%	0.09%
  AUD	-0.58%	-0.42%	-0.69%	-0.38%	-0.57%		0.03%	-0.49%
  NZD	-0.62%	-0.46%	-0.72%	-0.41%	-0.61%	-0.03%		-0.52%
  CHF	-0.09%	0.07%	-0.18%	0.11%	-0.09%	0.49%	0.52%

  The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote)

Technical analysis: XAU/USD is hovering right above the previous range top, at $2,660

Gold rally is losing steam, with the US Dollar coming up on Tuesday but it remains steady above the top of the last two week’s trading range, at $2,660.

Above here, the next target would be the $2,690 intra-day level, and the November 24 high, at $2,720. A bearish reaction below the mentioned $2,660 would bring the December 9 low, at $2630 back into focus, ahead of the channel bottom (November 26 and December 5 lows), at $2,605.

XAU/USD 4-Hour Chart

• USD/CAD rises to a fresh four-year high near 1.4200 ahead of BoC monetary policy announcement and the US inflation.
• US core CPI is estimated to have grown steadily by 3.3% in November.
• Investors expect the BoC to cut interest rates by 50 bps on Wednesday.

The USD/CAD pair posts a fresh four-year high near the round-level resistance of 1.4200 in Tuesday’s European session. The Loonie pair strengthens as the US Dollar (USD) rises ahead of the United States (US) Consumer Price Index (CPI) data for November, which will be published on Wednesday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes a two-day high at 106.35.

The inflation data is expected to influence market expectations for the Federal Reserve’s (Fed) likely interest rate action in the policy meeting on December 18. The Fed is highly anticipated to cut its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% next week, according to the CME FedWatch tool.

Economists expect the annual headline inflation to have accelerated to 2.7% from the October reading of 2.6%. In the same period, the core CPI – which excludes volatile food and energy prices – is expected to have risen steadily by 3.3%. Month-on-month headline and core CPI are estimated to have grown steadily by 0.2% and 0.3%, respectively.

Signs of cooling price pressures would accelerate Fed dovish bets for policy meeting next week. On the contrary, hot inflationary pressures would weaken them.

Meanwhile, the outlook of the Canadian Dollar (CAD) remains weak as investors expect the Bank of Canada (BoC) to cut interest rates again by 50 basis points (bps) to 3.25% in the monetary policy meeting on Wednesday.

Significantly lower Unemployment Rate and price pressures remaining contained within bank’s target of 2% have led to dovish BoC bets.

Trump’s policies will likely incur costs, including for the US; this raises questions about their longevity. Trade wars, anti-immigration policies and a rejection of multilateralism will be high on the agenda. Other countries and regions are bracing for the new reality, with varying levels of adaptability, Standard Chartered’s Senior Economist Philippe Dauba-Pantanacce notes.

Ideology or pragmatism?

“Who will win the argument between ideology and pragmatism? Trump’s chosen appointees and advisers are firm believers in protectionism, anti-immigration policies, and maximum pressure against Iran; it appears that the team is being assembled with a view to fully implementing Trump’s agenda. But his political instincts could ultimately be obstructed by the economic costs of his maximalist campaign promises – particularly higher inflation.”

“That could become a political liability ahead of the 2026 midterm elections; the party that controls the White House tends to lose midterms. Ideologues are likely to be willing to accept the initial costs of their policy choices for the sake of longer-term outcomes. But political cycles are shorter-term in nature, and pragmatists could be willing to make a course correction if economic costs become impossible to ignore. Those costs could potentially include higher inflation, pressure on economic sectors struggling with the reduction of immigrant workers, or a stock-market correction.”

“While execution is uncertain, some core tenets of Trump’s worldview are unlikely to change. On the foreign policy front, he has decisively rejected multilateralism and is likely to take an adversarial approach to – or refuse to participate in – multilateral agreements, compromises and institutions. This has implications for global climate policy, the UN, Bretton Woods institutions, and US relations with the EU. US foreign policy will likely return to a focus on bilateral discussions, where the US enjoys the most leverage given its size and influence. This does not mean that no deals will be agreed, however. We look at the various regions to see what Trump 2.0 could mean for the rest of the world.”

US Dollar (USD) is under mild downward pressure; it could edge lower to 7.2540. The major support at 7.2400 is unlikely to be tested. In the longer run, current price movements are likely part of range trading, probably between 7.2400 and 7.2900, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The major support at 7.2400 is unlikely to be tested

24-HOUR VIEW: “While we noted ‘a slight increase in momentum’ yesterday, we were of the view that ‘this is likely to lead to a higher trading range of 7.2650/7.2900 instead of a sustained rise.’ USD then rose to 7.2927 before dropping sharply 7.2575. This time around, there has been a slight increase in downward momentum. Today, USD is likely to edge lower to 7.2540. The major support at 7.2400 is unlikely to be tested. Resistance is at 7.2760; a breach of 7.2830 would indicate that the current mild downward pressure has eased.”

1-3 WEEKS VIEW: “There is not much to add to our update from last Friday (06 Dec, spot at 7.2660). As previously indicated, ‘the current price movements are likely part of range trading, probably between 7.2400 and 7.2900.’ Note that while USD rose to 7.2927 yesterday, it pulled back quickly to close lower at 7.2685.”

Euro (EUR) traded little changed, was last seen at 1.0532 levels. This week, EUR may continue to see more volatility because of the political risks in Germany and the upcoming ECB meeting on Thursday, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Classic inverted head & shoulders pattern on charts

“Daily momentum is mild bullish but rise in RSI slowed. Price pattern shows a classic formation of an inverted head & shoulders pattern, which is typically associated with a bullish reversal. Neckline comes in at 1.0610/20 levels. Break-out puts 1.0670 (38.2% fibo) within reach before next resistance comes in at 1.0750/75 levels (50 DMA, 50% fibo). Support at 1.0460 levels.”

“On Wednesday, German Chancellor Scholz is expected to call for a vote of confidence and the Bundestag will vote next Monday on 16 Dec. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes. But in the event, he fails, then Germany is likely to make way for elections on 23 Feb 2025. Far right AfD is calling for Germany to leave the European Union, the EUR and Paris climate deal as the party prepares for early elections in Feb-2025. The concern here is the explicit language to quit EU unlike its manifesto ahead of the European parliament elections previously in Jun-2024.”

“On Thursday, ECB meeting takes centre stage. Markets have already reduced bets for 50bp cut and is now pricing just a 25bp cut. OIS-implied has also priced in back-to-back cuts for 1H next year, taking rates to below 2% in Jun 2025, or even 1.75% in July. This may have been overdone. While political risks in Europe may still weigh on EUR, but we had also flagged that many EUR negatives, such as slowing growth momentum, political fallout, aggressive ECB cut expectations, etc. are already in the price. We still do not rule out the risk of EUR short squeeze in the short term.”

Further US Dollar (USD) strength appears likely; any advance is unlikely to breach the major resistance at 152.00. In the longer run, USD weakness appears to have stabilised; it is likely to trade in a range of 148.65/152.00 for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD weakness appears to have stabilised

24-HOUR VIEW: “Our view for USD to consolidate in a range of 149.15/150.55 yesterday was incorrect. Instead of consolidating in a range, USD soared to a high of 151.34, closing on a strong note at 151.19 (+0.77%). While further USD strength appears likely, any advance is unlikely to breach the major resistance at 152.00. On the downside, support levels are at 150.90 and 150.50.”

1-3 WEEKS VIEW: “Last Thursday (05 Dec, spot at 150.35), we highlighted that the recent USD weakness ‘appears to have stabilised.’ We also highlighted that ‘the current price movements are likely the early stages of a range trading phase, probably between 148.65 and 152.00.’ There is no change in our view.”

Silver prices (XAG/USD) rose on Tuesday, according to FXStreet data. Silver trades at $31.83 per troy ounce, up 0.12% from the $31.79 it cost on Monday.

Silver prices have increased by 33.76% 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 83.70 on Tuesday, up from 83.61 on Monday.

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USD/JPY traded higher this week after PM Ishiba told parliament that the government is not considering revising a long-standing agreement between BoJ and the government as Japan has not escaped deflation yet. He also added that BoJ’s monetary policy doesn’t aim to move FX. USD/JPY rose to a high of 151.55, and the pair was last seen at 151.61 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

USD/JPY moves may face intermittent upward pressure

“Bearish momentum on daily chart intact but shows signs of fading but rise in RSI slowed. Bias remains to sell rallies. Resistance at 152 levels (200 DMA) and 152.70/80 levels (21 DMA, 23.6% fibo). Support at 150.20 (38.2% fibo), 148.70 levels (100 DMA) and 148.20 (38.2% fibo retracement of September low to November high).”

“In terms of data releases, there is a few to keep a look out for this week, including PPI on Wed and Tankan survey on Fri before BoJ MPC (19 December). But largely, we are looking for BoJ to carry on with policy normalization with a hike next week and into 2025. Recent uptick in base pay supports the view about positive development in labor market, alongside still elevated services inflation, better 3Q GDP and expectations for 5-6% wage increases for 2025.”

“The risk is a slowdown in pace of respective policy normalization, especially if Fed slows pace on return of US exceptionalism. Then USD/JPY moves may even face intermittent upward pressure.”

Instead of continuing to rise, New Zealand Dollar (NZD) is more likely to trade between 0.5825 and 0.5890. In the longer run, the likelihood of NZD declining to 0.5770 has diminished, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of NZD declining to 0.5770 has diminished

24-HOUR VIEW: “After NZD dropped sharply to 0.5824 last Friday, we stated yesterday that ‘there is scope for NZD to continue to weaken.’ However, we pointed out that ‘given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795 (there is another support at 0.5810).’ NZD subsequently dropped to 0.5805 before staging a surprisingly sharp advance to 0.5888. The rapid rise appears to be overdone, and instead of continuing to rise, NZD is more likely to trade between 0.5825 and 0.5890 today.”

1-3 WEEKS VIEW: “Yesterday (09 Dec), when NZD was at 0.5835, we indicated that it ‘is likely to trade with a downward bias toward 0.5795.’ We pointed out, ‘the likelihood of it reach 0.5770 is not high for now.’ NZD subsequently dropped to 0.5805 before rebounding strongly to 0.5888. Although our ‘strong resistance’ at 0.5890 has not been breached yet, the slowing momentum suggests the likelihood of NZD declining to 0.5770 has diminished.”

US Dollar (USD) traded a subdued range overnight in absence of key catalyst. Fedspeaks go into blackout so that puts the focus on data before FOMC next Thursday (19 December). DXY was last at 106.35, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

A bearish setup arises on the charts

“This week, we have CPI on Wednesday and PPI on Thursday. A 25bp cut is more or less a done deal for December meeting unless US CPI unexpectedly surprises a lot to the upside. We would be keen to see the dot plot guidance for 2025. Fed fund futures are implying about 3 cuts for 2025, slightly less than the previous dot plot of 4 cuts that was penciled in for 2025.”

“Daily momentum is mild bearish while RSI is flat. Head and shoulders pattern appears to have formed with DXY testing the neckline (which was respected last Friday). This is typically a bearish setup. A decisive break below neckline should see bears gather momentum.”

“Support at 105 levels (38.2% fibo retracement of Sep low to November high), 104.60 (50 DMA) and 104.10 (200 DMA, 50% fibo). Resistance at 106.70 (second shoulder).”

• NZD/USD drifts lower on Tuesday and is pressured by a combination of factors.
• Bets for aggressive RBNZ easing and China’s economic woes weigh on the Kiwi.
• Expectations for a less dovish Fed underpin the USD and contribute to the slide.

The NZD/USD pair struggles to capitalize on the previous day's bounce from the vicinity of the 0.5800 mark or a near two-week low and attracts fresh sellers on Tuesday. Spot prices retain intraday bearish bias through the first half of the European session and currently trade around the 0.5825-0.5820 region, within striking distance of a one-year trough touched in November.

The New Zealand Dollar (NZD) continues to be undermined by expectations for a more aggressive policy easing by the Reserve Bank of New Zealand (RBNZ). Adding to this, disappointing readings on China's exports and imports added to worries about a fragile recovery in the world's second-largest economy, which further undermined demand for antipodean currencies, including the Kiwi. This, along with a modest US Dollar (USD) uptick, exerts additional pressure on the NZD/USD pair. 

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, looks to build on the post-NFP bounce from a nearly one-month low amid bets that the Federal Reserve (Fed) will adopt a cautious stance on cutting interest rates. Moreover, the worsening Russia-Ukraine war and persistent geopolitical tensions in the Middle East drive some haven flows towards the buck. This, along with concerns about US President-elect Donald Trump's tariffs, weighs on the NZD/USD pair.

The aforementioned fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though traders might await the release of the US consumer inflation figures on Wednesday. The crucial US Consumer Price Index (CPI) report will be looked for cues about the interest rate outlook in the US and guide Fed policymakers on their decision later this month. This, in turn, will influence the USD price dynamics and provide a fresh impetus to the NZD/USD pair.

• EUR/USD drops to near 1.0530 as investors await key events including US inflation and the ECB policy meeting.
• The ECB is widely anticipated to cut its Deposit Facility Rate by 25 bps to 3% on Thursday.
• Economists expect US annual core CPI to have grown steadily by 3.3% in November.

EUR/USD slides to near 1.0530 in Tuesday’s European session as investors turn cautious ahead of the European Central Bank (ECB) monetary policy meeting, which will be announced on Thursday. Traders have priced in a 25-basis points (bps) reduction in the Deposit Facility Rate to 3%. This would be the third interest rate cut decision by the ECB in a row.

Market experts assume that a slew of factors, including Donald Trump’s victory in the United States (US) Presidential elections, political turmoil in France and Germany, and a sharp slowdown in the Eurozone business activity compelled financial market participants to factor in an interest rate reduction in the policy meeting on Thursday.

The fallout of the government in France and instability in Germany and France could have a direct impact on the Eurozone economic growth, which will weigh on price pressures, as these two are the largest economies of the trading bloc. The impact of Trump’s tariffs on Eurozone inflation when he reaches the White House is still uncertain.

ECB policymakers are divided over whether the impact of Trump tariffs will be inflationary or deflationary on the Eurozone economy. A handful of ECB policymakers assume that Trump’s tariffs will weaken the Euro (EUR) against the USD significantly, a scenario that will make imports costlier for individuals and boost price pressures. On the contrary, a few officials forecast risks of inflation undershooting the bank’s target as higher tariffs will dampen the Eurozone’s export sector.

Daily digest market movers: EUR/USD drops with US inflation in focus

• EUR/USD drops as the US Dollar (USD) rises, with investors awaiting the US Consumer Price Index (CPI) data release for November, which is scheduled for Wednesday. The inflation report is expected to show that the annual headline CPI rose at a faster pace of 2.7% from the prior release of 2.6%. The core CPI – which excludes volatile food and energy prices – is expected to rise steadily by 3.3%.
• The inflation data is less likely to influence Federal Reserve (Fed) interest rate expectations for the policy meeting on December 18 unless the data deviates from expectations significantly.
• According to the CME FedWatch tool, the probability for the Fed to reduce interest rates by 25 bps to 4.25%-4.50% is almost 90%. Analysts at Macquire agree with Fed rate cut market expectations for next week but expect the central bank to deliver a slightly hawkish interest rate guidance. 
• “The recent slowdown in the pace of US disinflation, a lower Unemployment Rate than what the Fed projected in September, and exuberance in US financial markets are contributing to this more hawkish stance,” analysts at Macquarie said.

Technical Analysis: EUR/USD holds key support of 1.0500

EUR/USD wobbles above the psychological figure of 1.0500. The outlook of the major currency pair remains bearish as the 20-day EMA near 1.0573 acts as key resistance for the Euro (EUR) bulls.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the broader bearish trend for the pair doesn’t seem to be over yet.

Looking down, the November 22 low of 1.0330 will be a key support. On the flip side, the 50-day EMA near 1.0700 will be the key barrier for the Euro bulls.

Australian Dollar (AUD) is likely to trade in a range between 0.6400 and 0.6480. In the longer run, current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD/USD expected to be in a range of 0.6375/0.6500

24-HOUR VIEW: “Following AUD sharp decline to 0.6373 last Friday, we pointed out yesterday that ‘the sharp drop appears to be excessive.’ However, we were of the view that ‘there is scope for AUD to retest last Friday’s low near 0.6375 before a stabilisation can be expected.’ AUD then dipped to 0.6380 before rebounding strongly to a high of 0.6471. It then eased off to close at 0.6441 (+0.80%). This time around, the sharp rebound appears to be excessive, and AUD is unlikely to rise much further. Today, AUD is more likely to trade in a range, probably between 0.6400 and 0.6480.”

1-3 WEEKS VIEW: “We turned negative in AUD late last week. After AUD plummeted to 0.6373, we indicated yesterday (09 Dec, spot at 0.6400) that “the risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350.” We did anticipate the sharp bounce that broke above our ‘strong resistance’ level at 0.6450 (high has been 0.6471). In other words, the decline fell short than expected. The current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500.”

Inflation numbers from Hungary this morning should show an increase from 3.2% to 3.8% YoY, slightly above market expectations, and in line with the National Bank of Hungary (NBH) forecast, ING’s FX analyst Frantisek Taborsky notes.

Market is pricing in little NBH easing in the coming years

“Although at first glance inflation developments in Hungary look favourable for the central bank, we think they will be of little relevance for next week's meeting. Nevertheless, Hungarian inflation remains the only downside surprise within the CEE region. Still, EUR/HUF has the main attention.”

“Friday's rating outlook upgrade from negative to stable from Fitch brought visible relief to the HUF yesterday and we believe the currency has put the worst behind it. Positioning seems already strongly on the short side at the moment, while Hungarian government bonds have seen new inflows in recent days. Moreover, December is seasonally positive for EUR/USD and CEE currencies, which could provide some relief after two months of stress in the HUF market.”

“Although in the medium term we believe EUR/HUF will grind further higher towards 420, tactically by year-end short positions could see some profit-taking. At the same time, the market is pricing in little NBH easing in the coming years following the sell-off in November with two to three 25bp rate cuts, which is significantly less than we forecast. Thus, yesterday's signs of calm in the HUF market could indicate a broader rally in HUF assets into year-end with attractive valuations.

Pound Sterling (GBP) is expected to trade in a 1.2710/1.2790 range. In the longer run, there has been a strong surge in momentum; GBP may rise to 1.2850, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP may rise to 1.2850

24-HOUR VIEW: “We indicated yesterday that GBP ‘appears to have entered a consolidation and is likely to trade between 1.2705 and 1.2770.’ GBP traded in a wider and higher range than expected (1.2718/1.2799) before closing largely unchanged at 1.2752 (+0.09%). The price action provides no fresh clues, and we expect GBP to trade in a 1.2710/1.2790 range today.”

1-3 WEEKS VIEW: “Last Friday (06 Dec, spot at 1.2760), we indicated ‘there has been a strong surge in momentum,’ and it ‘may rise to 1.2850.’ Aside from a brief rise to 1.2811, GBP has not been able to make much headway on the downside. However, we will continue to hold the same view, provided that 1.2685 (no change in ‘strong support’ from last Friday) is not breached.”

Germany's final inflation numbers brought no change to the headline number published previously with November unchanged at 2.2% year-on-year. EUR/USD bounced down after touching 1.060 yesterday with a close at 1.055, indicating some willingness to go lower after some positioning adjustment in recent days, ING’s FX analyst Chris Turner notes.

Waiting for the ECB to show the next direction

“Industrial production in Italy is also unlikely to make much difference to ECB pricing for Thursday's meeting. Here, a 25bp rate cut seems a done deal for the market, although our economist believes the press conference may open up the discussion for more cuts later, implying a dovish outcome for EUR.”

“In the headlines today we could see the results of the two-day Eurogroup meeting of finance ministers. Otherwise, it should be a quiet day similar to yesterday with the focus on Thursday's ECB meeting. Still, given some rebound in US rates while the EUR side remains muted, we saw some widening of the rate differential yesterday after more than a week of tightening spreads, indicating some reversal in EUR/USD.”

“The pair bounced down after touching 1.060 yesterday with a close at 1.055, indicating some willingness to go lower after some positioning adjustment in recent days. However, for more action here we will have to wait for Thursday's ECB meeting, which should show the next direction.”

• GBP/JPY appreciates due to mixed expectations regarding the BoJ rate hike in December.
• BoJ board member Toyoaki Nakamura emphasized the need for caution in raising rates.
• BoE is widely expected to keep its current interest rates at 4.75% unchanged on December 19.

GBP/JPY extends its gains for the second successive session, trading around 193.10 during the European hours on Tuesday. The recent upward movement in the GBP/JPY cross is likely driven by a weaker Japanese Yen (JPY), stemming from mixed expectations regarding a potential Bank of Japan (BoJ) rate hike in December.

BoJ Governor Kazuo Ueda recently indicated that the timing for the next rate hike is nearing, bolstered by strong underlying inflation data in Japan. This has fueled speculation about a possible rate hike during the BoJ’s December 18–19 policy meeting.

However, conflicting media reports suggest the BoJ might forgo a rate hike this month. Adding to the uncertainty, dovish BoJ board member Toyoaki Nakamura has cautioned against premature rate increases, further weighing on the Japanese Yen.

The Pound Sterling (GBP) gains ground against its major peers as investors become increasingly confident that the Bank of England (BoE) will maintain its current interest rates at 4.75% in the monetary policy meeting on December 19.

Most BoE officials are anticipated to vote for an unchanged interest rate, as UK headline inflation has risen again after briefly falling below the bank's 2% target. The BoE had previously forecasted a rebound in inflation after it temporarily aligned with the desired range.

USD/CNH continued to drift lower, thanks to recent news from politburo about ramping up support and also taking cues from daily fixing guidance. Policymakers continue to manage the daily fix, setting it below 7.20 and at times, even lower, when USD was even trading stronger. USD/CNH was last at 7.2519 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum turns bearish

“Fixing pattern suggests that PBoC is doing whatever it takes to not only restraint the RMB from over-weakening but also to guide its bias and direction. Tariff may hurt RMB when it happens but that may be a story for 2025 after Trump inauguration. In the interim, we would keep a look out for the China’s CEWC meeting on 11-12 December.”

“Expectations are building up for stimulus support after politburo vowed to stabilise property and stock markets. Officials also pledged to ramp up ‘extraordinary counter-cyclical policy adjustment’ to support the economy and it also announced that it will embrace a “moderately loose” strategy for monetary policy in 2025. Follow-up policy action is crucial, and bear in mind markets are impatient. We caution that any delay in concrete policy action may setup a case for disappointment (again).”

“For now, we remain cautiously hopeful. And that would imply some support for Asian FX, including CNH, KRW, TWD, SGD and MYR. Daily momentum turned bearish while RSI fell. Risks are skewed to the downside. Support at 7.2340 (23.6% fibo retracement of Sep low to Dec high), 7.2040 9200 DMA), 7.18 levels (38.2% fibo, 50 DMA). Resistance at 7.27 levels.”

Further sideways trading in Euro (EUR) seems likely, probably between 1.0525 and 1.0585. In the longer run, EUR has to break and remain above 1.0610 before further advance to 1.0650 is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Further sideways trading in EUR seems likely

24-HOUR VIEW: “After EUR rose to 1.0629 last Friday, and then pulled back, we indicated yesterday that ‘upward pressure appears to have eased.’ We were of the view that EUR ‘may trade sideways between 1.0530 and 1.0590.’ Our view was not wrong, even though EUR traded in a slightly wider range of 1.0531/1.0594, closing at 1.0552 (-0.15%). Further sideways trading seems likely today, probably between 1.0525 and 1.0585.”

1-3 WEEKS VIEW: “Our update from last Friday (06 Dec, spot at 1.0585) remains valid. As indicated previously, EUR ‘has to break and remain above 1.0610 before further advance to 1.0650 is likely.’ On the downside, should EUR break below 1.0500 (no change in ‘strong support’ level), it would mean that the likelihood of EUR breaking clearly above 1.0610 has faded. Looking ahead, the next level to watch above 1.0610 is 1.0650.”

As expected, the Reserve Bank of Australia (RBA) decided to leave its cash rate target unchanged at a 13-year high of 4.35%. It has now been more than a year since the RBA’s last rate move, the 13th increase in a series that began in May 2022. It also kept the interest rate paid on Exchange Settlement balances unchanged at 4.25%, UOB Group’s Economist Lee Sue Ann notes.

RBA keeps rates at a 13-year high of 4.35%

“The Reserve Bank of Australia (RBA) kept rates at a 13-year high of 4.35% earlier today (10 December), as expected. The Board acknowledged that it is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, although risks remain.”

“The RBA had opted not to raise rates as high as other central banks during the 2022-23 tightening cycle in an effort to safeguard the labor market, which remains a bright spot. However, that has led to inflation lingering more persistently in Australia.”

“Employment figures due later this week (12 December) are predicted to show the unemployment rate edging higher to 4.2% in November. As for inflation, the release of 4Q24 inflation data is not till 29 January, just ahead of the RBA's first policy meeting next year on 18 February. For now, we do not expect the RBA to cut rates until 1Q25 at the earliest.”

• Silver price retreats from Monday's monthly high of $32.28.
• The price of the grey metal found support following news of potential economic stimulus measures from China.
• The stronger US Dollar weighs on demand for dollar-denominated Silver.

Silver price (XAG/USD) retreats from $32.00 per troy ounce during the European session on Tuesday. However, the price of the grey metal received support from news of potential economic stimulus from China.

Chinese policymakers, through the Politburo, outlined plans for a “moderately loose” monetary policy and a “more proactive” fiscal stimulus for the coming year. This marks a shift from the cautious approach of the past decade and has boosted the demand outlook for metals in the world’s largest consumer of raw materials.

Chinese President Xi Jinping stated on Tuesday, "China has full confidence in achieving this year's economic target." He emphasized that China will continue to serve as the largest engine of global economic growth and asserted that there would be no winners in tariff wars, trade wars, or tech wars.

Silver prices also benefited from growing expectations that the US Federal Reserve (Fed) will cut interest rates again this month. Traders are now pricing in nearly an 89.5% chance of Fed rate reductions by 25 basis points on December 18, according to the CME FedWatch Tool.

However, the strengthening of the US Dollar (USD) is making dollar-denominated Silver less affordable for buyers with foreign currencies, dampening its demand. Trades adopt caution ahead of the US Consumer Price Index (CPI) data scheduled to be released on Wednesday.

The US Dollar (USD) got a little softer against most currencies on Monday after Chinese policymakers said they would boost consumption ‘forcefully’, ING’s FX analyst Chris Turner notes.

DXY to face support at 105.40/60

“USD was a little softer against most currencies on Monday after Chinese policymakers said they would boost consumption ‘forcefully’. This will be music to the ears of President-elect Donald Trump who is seeking to reverse China’s $300bn trade surplus with the US.”

“The news particularly helped China-centric currency pairs such as the Australian dollar and the South African rand. Expectations of some more detailed Chinese policy measures on Wednesday and Thursday this week can probably prove slightly supportive for the Rest of World currencies.”

“For today, the US data calendar is light and the focus should be on some slightly better small business optimism embodied in the NFIB index. We doubt investors will want to chase the DXY too much lower ahead of tomorrow’s US CPI number and would expect support at 105.40/60 to hold on a closing basis.”

• The Pound Sterling trades sideways near 1.2750 against the USD as investors await the US inflation data for November.
• The impact of US inflation should be limited on Fed interest rate prospects unless there is a dramatic deviation from expectations.
• Investors expect the BoE to leave interest rates steady at 4.75% on December 19.

The Pound Sterling (GBP) consolidates in a tight range near 1.2750 against the US Dollar (USD) in Tuesday’s European session. The GBP/USD pair trades sideways as investors focus on the United States (US) Consumer Price Index (CPI) data for November, which will be published on Wednesday.

Economists expect the annual headline inflation to have accelerated to 2.7% from the October reading of 2.6%. In the same period, the core CPI – which excludes volatile food and energy prices – is expected to have risen steadily by 3.3%. The month-on-month headline and core CPI are estimated to have grown steadily by 0.2% and 0.3%, respectively.

Unless there is a dramatic deviation from what’s expected, the impact of the inflation data shouldn’t significantly change market expectations for the Federal Reserve’s (Fed) likely interest rate action in the policy meeting on December 18. Recent commentaries from a string of Fed officials have indicated that they are confident about inflation remaining on a sustainable path towards the bank’s target of 2%.

However, Fed Governor Michelle Bowman, a well-known hawk, said on Friday that the central bank should “proceed cautiously and gradually in lowering the policy rate, as inflation remains elevated.”

There is an almost 90% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

In Tuesday’s session, investors will focus on the Q3 Unit Labor Costs data, which will be published at 13:30 GMT. The economic data will indicate the total cost borne by employers for employing the labor force. The Unit Labor Cost data is estimated to have grown steadily by 1.9% compared to the previous quarter.

Daily digest market movers: Pound Sterling gains as BoE is set to leave interest rates steady next week

• The Pound Sterling performs strongly against its major peers on Tuesday in a light United Kingdom (UK) economic calendar week, with investors becoming increasingly confident that the Bank of England (BoE) will leave interest rates unchanged at 4.75% in the monetary policy meeting on December 19.
• The majority of BoE officials are expected to vote for an unchanged interest rate decision as the UK headline inflation has ticked up again after declining below the bank’s target of 2%. The BoE had already projected that inflation would pick up after coming within the bank’s desired range, suggesting that the central bank needs to do more to bring inflation down sustainably.
• Later this week, investors will focus on the UK monthly Gross Domestic Product (GDP), and Industrial and Manufacturing Production data for October. The GDP and factory data will show the current status of economic health. Economists expect the factory and GDP data to have expanded after declining in September.

Technical Analysis: Pound Sterling aims to reclaim 1.2800

The Pound Sterling strives to reclaim the key resistance of 1.2800 against the US Dollar. The GBP/USD pair holds the 20-day Exponential Moving Average (EMA) around 1.2720.

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

Looking down, the pair is expected to find a cushion near the upward-sloping trendline around 1.2500, which is plotted from the October 2023 low near 1.2035. On the upside, the 200-day EMA around 1.2830 will act as key resistance.

Here is what you need to know on Tuesday, December 10:

The Australian Dollar (AUD) stays under selling pressure early Tuesday following the Reserve Bank of Australia's (RBA) monetary policy announcements. The European economic docket will not offer any high-impact data releases. Later in the day, third-quarter Unit Labor Costs and Nonfarm Productivity data from the US will be watched closely by market participants.

The RBA left the Official Cash Rate (OCR) unchanged at 4.35% after its December policy meeting, as expected. "The board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain," the RBA noted in its policy statement. In the post-meeting press conference, RBA Governor Michele Bullock said that they discussed that upside inflation risks had eased but not gone away. AUD/USD came under bearish pressure and was last seen trading near 0.6400, losing more than 0.5% on the day.

The data from China showed on Tuesday that the trade surplus widened to $97.44 billion in November from $95.27 billion in October. On a yearly basis, Exports rose by 6.7%, while Imports declined by 3.9%. "China has full confidence in achieving this year's economic target," Chinese President Xi Jinping said on Tuesday.

Following a bearish start to the week, the US Dollar (USD) Index edged higher in the American trading hours on Monday and closed in positive territory, supported by the cautious market mood. The USD Index holds steady slightly above 106.00 in the European morning on Tuesday. In the meantime, the benchmark 10-year US Treasury bond yield continues to fluctuate below 4.2%, while US stock index futures trade flat.

EUR/USD registered small daily losses on Monday. The pair holds steady above 1.0550 to begin the European session on Tuesday. The data from Germany confirmed that the Consumer Price Index rose 2.2% on a yearly basis in November. 

After rising toward 1.2800, GBP/USD lost its traction and closed virtually unchanged on Monday. The pair stays in a consolidation phase at around 1.2750 early Tuesday.

USD/JPY gathered bullish momentum and gained nearly 0.8% on Monday. The pair moves sideways above 151.00 in the European morning.

Gold turned north on Chinese stimulus hopes and rose about 1% on Monday. XAU/USD continues to push higher early Tuesday and was last seen trading near $2,670.

• EUR/GBP posts modest gains near 0.8280 in Tuesday’s early Asian session. 
• The BoE keeps a cautious stance on its easing path. 
• ECB is widely expected to cut its key interest rate by 25 bps to 3.00% at its December meeting on Thursday. 

The EUR/GBP cross trades with mild gains around 0.8280 during the early European session on Tuesday. However, the upside for the cross might be limited as the rising bets that the Bank of England (BoE) will stick to a gradual script for rate cuts provide some support to the Pound Sterling (GBP) against the Euro (EUR). 

The BoE policymaker Swati Dhingra warned that high interest rates are bearing down on the economy by curbing consumer spending and business investment. Dhingra added that she is in favor of “gradual” interest rate reductions and that the long-term neutral interest rate is likely to be in the range of 2.5% to 3.5%.

The expectation that the UK central bank cuts interest rates more gradually compared with other major central banks could lift the GBP. Markets expect the BOE to leave rates unchanged at 4.75% at its December meeting but expect rates to be cut by a further 75 basis points (bps) in total next year.

On the Euro front, markets expect the European Central Bank (ECB) to lower its key deposit rate by a quarter percentage point to 3% on Thursday. Investors then expect five more 25 bps rate cuts next year that will bring down the deposit rate to 1.75%, according to the LSEG. The ECB President Lagarde’s press conference and the updated macroeconomic projections will be closely watched. The ECB is expected to lower its inflation and real GDP growth predictions, which might result in a downward adjustment to ECB easing expectations, weighing on the shared currency. 

• USD/CHF drifts lower to 0.8770 in Tuesday's early European session, down 0.19% on the day. 
• The SNB is anticipated to cut its key policy rate by 25 bps on Thursday. 
• Friday’s US employment data prompted the anticipation of a Fed rate cut next week.

The USD/CHF pair softens to around 0.8770 during the early European session on Tuesday. The uptick of the Swiss Franc (CHF) is bolstered by further turmoil in the Middle East, which boosts the safe-haven flows. The release of the US November Consumer Price Index (CPI) data and the Swiss National Bank (SNB) interest rate decision will be the highlights for this week. 

Turbulence in the Middle East increased over the weekend as Syrian President Bashar al-Assad and his family fled to Moscow and were granted political asylum, ending 50 years of a brutal dictatorship. The downfall of Bashar al-Assad's regime could lead to a conflict involving regional countries, lifting the safe-haven currency like the CHF against the Greenback. “The government’s collapse in Syria could see haven demand flowing in,” said ANZ Group Holdings analysts. 

The SNB is expected to cut its key policy rate by 25 basis points (bps) at its December meeting on Thursday. According to a Reuters poll, over 85% of economists estimated the Swiss central bank would cut its main rate by 25 bps to 0.75% on Thursday. Christian Schulz, the deputy chief European economist at Citi, expected the SNB to downgrade its short-term forecasts again, adding, "The SNB's guidance will likely remain dovish”. This, in turn, might undermine the CHF and act as a tailwind for USD/CHF. 

On the other hand, traders raised their bets for another US Federal Reserve (Fed) rate cut in the December meeting after the US employment report on Friday. Data released on Friday showed that US job growth rose in November, but a rise in the unemployment rate to 4.2% pointed to an easing labor market that should allow the Fed to cut interest rates again this month. Traders will keep an eye on the US inflation report on Wednesday for fresh impetus. 

Chinese President Xi Jinping said on Tuesday, “China has full confidence in achieving this year's economic target.”

Additional comments

Market reaction

AUD/USD keeps losses following these comments, losing 0.64% on the day to trade near 0.6395.

• EUR/JPY may gain ground due to uncertain expectations surrounding the BoJ rate hike in December.
• BoJ board member Toyoaki Nakamura emphasized the need for caution in raising rates.
• Markets are fully pricing in a 25 basis point cut to the ECB’s Deposit Facility Rate, bringing it to 3% on Thursday.

EUR/JPY maintains its position around 159.50 during Tuesday's Asian session. This upward movement in the EUR/JPY cross is likely due to a weaker Japanese Yen (JPY), driven by uncertain expectations about a potential Bank of Japan (BoJ) rate hike in December.

BoJ Governor Kazuo Ueda recently signaled that the timing for the next rate hike is approaching. Combined with data showing strong underlying inflation in Japan, this has increased speculation of a rate hike at the BoJ's policy meeting on December 18-19.

However, some media reports suggest the BoJ may opt to skip a rate hike this month. Additionally, dovish BoJ board member Toyoaki Nakamura emphasized the need for caution in raising rates, adding further uncertainty and weighing on the Japanese Yen.

In the Eurozone, markets are nearly fully pricing in a 25 basis point (bps) cut to the European Central Bank's (ECB) Deposit Facility Rate, bringing it to 3% on Thursday. Several ECB officials have expressed concerns about the risk of inflation falling short of the bank’s target, driven by a weak economic outlook. The ECB has already reduced the deposit rate by 75 bps this year, and Thursday’s anticipated cut would mark the third consecutive reduction.

Market participants expect the Eurozone economy to underperform due to political uncertainty in Germany and France, the largest economies in the bloc. Additionally, concerns are growing about the potential impact on the export sector, particularly with the uncertainty surrounding US President Donald Trump’s administration and its policies once he takes office.

• USD/CAD trades with positive bias for the third straight day and climbs to a fresh multi-year top.
• Bets for a larger BoC rate cut and a modest downtick in Crude Oil prices undermine the Loonie. 
• A subdued USD price action caps the pair ahead of the US CPI and BoC decision on Wednesday.

The USD/CAD pair touches a fresh high since April 2020 during the Asian session on Tuesday, though it lacks follow-through buying and remains below the 1.4200 round-figure mark. The near-term fundamental backdrop, meanwhile, seems tilted in favor of bullish traders and suggests that the path of least resistance for spot prices remains to the upside. 

The Canadian Dollar (CAD) continues to be weighed down by bets for a larger interest rate cut by the Bank of Canada (BoC) on Wednesday, bolstered by a jump in the domestic unemployment rate in November. Apart from this, a modest downtick in Crude Oil prices undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair, though the lack of follow-through US Dollar (USD) buying caps the upside. 

The US Nonfarm Payrolls (NFP) report released on Friday reaffirmed bets that the Federal Reserve (Fed) will cut interest rates in December. This, in turn, keeps the US Treasury bond yields depressed near October lows and caps the post-NFP USD recovery from a nearly one-month through. However, expectations for a less dovish Fed should help limit any meaningful USD losses and offer some support to the USD/CAD pair. 

Traders, meanwhile, might refrain from placing aggressive directional bets ahead of the key US macro data and the central bank event risk. The US Consumer Price Index (CPI) report is due for release on Wednesday and should offer cues about the Fed's rate-cut path, which will drive the USD demand. Adding to this, the BoC policy decision, also on Wednesday, will determine the next leg of a directional move for the USD/CAD pair.

• EUR/USD gains ground to near 1.0560 in Tuesday’s early European session. 
• The negative view of the pair prevails below the 100-day EMA with a bearish RSI indicator. 
• The first downside target to watch is 1.0480; the immediate resistance level emerges at 1.0623.

The EUR/USD pair trades in positive territory around 1.0560 during the early European session on Tuesday. However, the upside for the major pair seems limited amid the rising bets for additional reductions by the European Central Bank (ECB) on Thursday. 

The ECB is widely expected to announce a 25-basis point (bps) rate cut at its December meeting on Thursday, though an unusual 50 bps reduction remains possible. Market players will monitor ECB President Christine Lagarde’s press conference after the monetary policy meeting as it might offer some hints about future policy direction and the potential timeline for additional rate cuts.

Technically, EUR/USD keeps the bearish vibe on the daily chart as the major pair remains capped below the key 100-day Exponential Moving Average (EMA). Additionally, the downward momentum is supported by the 14-day Relative Strength Index (RSI), which is located below the midline around 45.20, indicating that the path to the least resistance level is to the upside. 

The initial support level for the major pair emerges at 1.0480, the low of December 3. Any follow-through selling below the mentioned level could expose the lower limit of the Bollinger Band at 1.0445. Extended losses could push prices lower toward 1.0332, the low of November 22. 

On the upside, the first upside barrier is seen near the upper boundary of the Bollinger Band at 1.0623. Sustained bullish momentum could see a rally to 1.0787, the 100-day EMA. Further north, the next hurdle to watch is the 1.0800 psychological level.  

EUR/USD daily chart

Reserve Bank of Australia (RBA) Governor Michele Bullock is speaking at the press conference, following the announcement of the December monetary policy decision on Tuesday.

Bullock is responding to questions from the media as part of a new reporting format for the central bank starting this year.

The RBA maintained the benchmark interest rate at 4.35% for the ninth straight meeting earlier this Tuesday but signalled a dovish pivot.

Key quotes

Developing story, please refresh the page for updates. 

Market reaction

AUD/USD is holding losses near 0.6400 on the above comments, down 0.54% on the day, as of writing.

• GBP/USD may face challenges as traders adopt caution ahead of US Consumer Price Index data due on Wednesday.
• CME FedWatch Tool suggests an 85.8% chance of Fed rate reductions by 25 basis points in December.
• The upcoming Friday’s data is expected to indicate a rebound in the UK economy during October.

GBP/USD remains stable for the second consecutive day, trading around 1.2750 during the Asian session on Tuesday. The risk-sensitive pair could face challenges as the US Dollar (USD) continues to gain ground due to market caution ahead of the US Consumer Price Index (CPI) data scheduled to be released on Wednesday.

The Federal Reserve Bank of New York highlighted in its latest consumer survey summary that US consumers are navigating uncertain economic expectations. The survey indicated a sharp improvement in consumers' outlook on their financial situations and the federal government’s fiscal condition, alongside a significant shift in expectations regarding debt affordability and credit conditions.

US November NFP data from Friday showed a robust 227,000 gain, well above expectations, and stable Average Hourly Earnings growth at 0.4% MoM. Traders are now pricing in nearly an 85.8% chance of Fed rate reductions by 25 basis points on December 18, according to the CME FedWatch Tool.

The Pound Sterling (GBP) hovers near four-week highs as investors await key economic data and upcoming central bank meetings. Data due next Friday is expected to show the UK economy rebounding in October, alongside signs of recovery in the manufacturing sector. The Bank of England (BoE) is widely anticipated to keep interest rates unchanged at its December 19 meeting.

On Monday, BoE Deputy Governor for Markets and Banking, Sir Dave Ramsden, emphasized the need for the central bank to remain “vigilant” amid heightened uncertainty surrounding the UK’s economic outlook.

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

The price for Gold stood at 7,290.05 Indian Rupees (INR) per gram, up compared with the INR 7,251.86 it cost on Monday.

The price for Gold increased to INR 85,030.08 per tola from INR 84,584.24 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.)

• Gold price climbs back closer to a two-week high and draws support from a combination of factors. 
• Geopolitical risks continue to benefit the safe-haven XAU/USD amid December Fed rate cut bets.
• The technical setup now seems tilted in favor of bulls and supports prospects for additional gains.

Gold price (XAU/USD) attracts some dip-buyers during the Asian session on Tuesday and moves back closer to a two-week top touched the previous day. Geopolitical tensions continue to bolster safe-haven demand, which, along with the resumption of buying by China’s central bank for the first time in seven months, acts as a tailwind for the precious metal. Furthermore, concerns about US President-elect Donald Trump's tariff plans and their effects on the global economic outlook turn out to be another factor that benefits the bullion.

Meanwhile, Friday's US Nonfarm Payrolls (NFP) report reaffirmed bets that the Federal Reserve (Fed) will cut interest rates in December, which contributed to the recent downfall in the US Treasury bond yields. This, along with expectations that Trump's policies will boost inflation, offers support to Gold price, which is considered as a hedge against inflation. However, a modest US Dollar (USD) strength, bolstered by bets for a less dovish Fed, might cap the XAU/USD ahead of the US consumer inflation figures on Wednesday. 

Gold price is underpinned by safe-haven demand and bets for a rate cut by the Fed in December

• Geopolitical tensions in the Middle East increased over the weekend after Syrian rebels took control, forcing President Bashar al-Assad to flee to Russia and driving haven flows towards the Gold price. 
• The People’s Bank of China announced on Saturday said it bought 160,000 fine troy ounces of Gold in November, ending a six-month pause in purchases and lending additional support to the bullion. 
• US President-elect Donald Trump has pledged to impose big tariffs against America’s three biggest trading partners – Mexico, Canada and China – and also threatened a 100% tariff on 'BRICS' nations. 
• The CME Group's FedWatch Tool indicates that traders are currently pricing in over an 85% chance that the Federal Reserve will lower borrowing costs by 25 basis points at its December policy meeting. 
• The recent hawkish remarks by several Fed officials, along with expectations that Trump's policies would reignite inflation, suggest that the US central bank could pause its rate-cutting cycle. 
• This led to the overnight bounce in the US Treasury bond yields, from the lowest daily close since October 18 posted on Friday, and offers some support to the US Dollar, which might cap the XAU/USD. 
• This week’s main event will be Wednesday’s release of the US Consumer Price Index for November, which might guide Fed policymakers on their decision and influence the non-yielding yellow metal. 

Gold price might now aim to reclaim the $2,700 mark and test the $2,720-2,722 resistance zone

From a technical perspective, the overnight breakout through and daily close above the $2,650 barrier could be seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart have just started gaining positive traction and support prospects for a further appreciating move for the Gold price. Hence, some follow-through strength towards reclaiming the $2,700 mark, en route to the $2,720-2,722 supply zone, looks like a distinct possibility.

On the flip side, the $2,650 resistance breakpoint, which coincides with the 200-period Exponential Moving Average (EMA) on the 4-hour chart, should now act as an immediate strong support. A convincing break below might expose the next relevant support near the $2,625-2,620 area before the Gold price eventually drops to the $2,600 mark. A subsequent break below the 100-day SMA, currently around the $2,590-2,585 region, will set the stage for deeper losses and drag the XAU/USD to the November swing low, around the $2,537-2,536 zone.

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

EUR/USD: EUR amounts

• 1.0400 1b
• 1.0450 1.3b
• 1.0465 1.5b
• 1.0475 1.1b
• 1.0500 1.4b
• 1.0600 2.3b
• 1.0650 992m

GBP/USD: GBP amounts     

• 1.2780 435m

USD/JPY: USD amounts                     

• 150.00 449m
• 151.90 765m

USD/CHF: USD amounts     

• 0.8600 442m

AUD/USD: AUD amounts

• 0.6500 1.2b

USD/CAD: USD amounts       

• 1.4120 522m
• 1.4150 646m

NZD/USD: NZD amounts

• 0.5745 440m
• 0.5950 403m

• NZD/USD remains tepid following the release of China’s Trade Balance data.
• China's Trade Balance expanded to CNY 692.8 billion in November, up from CNY 679.1 billion in the previous month.
• Traders adopt caution ahead of the US Consumer Price Index (CPI) data release on Wednesday.

NZD/USD retraces its recent gains, trading around 0.5830 during Asian hours on Tuesday. The New Zealand Dollar (NZD) remains subdued following China’s Trade Balance data for November. However, buyers of the Kiwi dollar welcomed the decision from New Zealand's top trading partner, China, to implement a more proactive fiscal policy and moderately loose monetary policy next year.

China's Trade Balance (CNY) expanded to CNY 692.8 billion in November, up from CNY 679.1 billion in the previous month. Exports grew by 1.5% year-over-year in November, compared to the 11.2% rise in October. Meanwhile, imports increased by 1.2% YoY, recovering from the 3.7% decline recorded earlier.

The New Zealand Dollar remains under pressure as Prime Minister Christopher Luxon reaffirms his commitment to lowering inflation and interest rates to bolster the economy. This suggests the possibility of significant rate cuts early next year.

Additionally, the NZD/USD pair depreciates as the US Dollar (USD) extends its winning streak for the third successive day as traders adopt caution ahead of the US Consumer Price Index (CPI) data release on Wednesday. Traders are now pricing in nearly an 85.8% chance of Fed rate reductions by 25 basis points on December 18, according to the CME FedWatch Tool.

On Monday, the Federal Reserve Bank of New York highlighted in its consumer survey summary that US consumers are navigating uncertain economic expectations. The survey indicated a sharp improvement in consumers' outlook on their financial situations and the federal government’s fiscal condition, alongside a significant shift in expectations regarding debt affordability and credit conditions.

• AUD/JPY trades in negative territory around 96.50 in Tuesday’s Asian session, losing 0.77% on the day. 
• The RBA decided to keep the OCR on hold at 4.35% at its December meeting on Tuesday. 
• Geopolitical risks might boost the safe-haven flows, benefiting the JPY. 

The AUD/JPY cross weakens to near 96.55 during the Asian trading hours on Tuesday. The Australian Dollar (AUD) edges lower after the Reserve Bank of Australia (RBA) interest rate decision as the tone in the statement has turned slightly dovish. 

The RBA kept the Official Cash Rate (OCR) on hold at 4.35% following the conclusion of its December policy meeting. The decision came in line with market expectations. The RBA made no changes to its policy settings for the ninth consecutive meeting. The Aussie attracts some sellers following the RBA interest rate decision.

According to the RBA Monetary Policy Statement, the board members are gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain. The policymaker further stated that the outlook remains uncertain and broad and will continue to rely upon the data and the evolving assessment of risks to guide its decisions.

The uncertainty over the timing for the Bank of Japan (BoJ) to raise interest rates again weighs on the Japanese yen (JPY) against the shared currency. BoJ Governor Kazuo Ueda indicated a willingness to hike interest rates again if the BOJ grows more confident that inflation would remain around 2% due to rising wages and robust domestic demand. Traders have priced in nearly a 28% chance of a BOJ rate hike this month, down from around 66% at the end of last month.

Nonetheless, the rising geopolitical tensions in the Middle East, particularly after the downfall of Syrian President Bashar al-Assad, could boost the safe-haven currency like the JPY. On Monday, the rebel group that toppled Syria's President Bashar Al-Assad agreed to hand power to Mohammed Al Bashir to form a transitional administration. Investors will closely watch the development surrounding geopolitical risks in this region as the collapse of the Syrian leader regime could lead to a conflict involving regional countries.

• AUD/NZD faces rejection near 1.1000 after the RBA announced its policy decision.
• The RBA leaves its cash rate unchanged, though turned dovish and weighs on the AUD.
• Bets for aggressive RBNZ easing undermine the NZD and help limit losses for the cross.

The AUD/NZD cross attracts fresh sellers following an Asian session uptick to the 1.1000 psychological mark and drops to a fresh daily low after the Reserve Bank of Australia (RBA) announced its policy decision. Spot prices currently trade around mid-1.0900s, within striking distance of over a two-month low touched on Monday, though manage to hold above the very important 200-day Simple Moving Average (SMA) pivotal support.

The Australian central bank, as was widely expected, decided to maintain the status quo for the ninth straight meeting and left the Official Cash Rate (OCR) unchanged at 4.35% following its December policy meeting. In the accompanying statement, the RBA noted that the board is gaining some confidence that inflationary pressures are declining in line with their forecasts. This reaffirms bets for an early rate cut and turns out to be a key factor exerting pressure on the Australian Dollar (AUD) and the AUD/NZD cross. 

Meanwhile, government data released earlier this Tuesday showed that China’s Trade Balance unexpectedly grew to $97.44 billion in November from $95.27 billion in the prior month. This, however, was offset by the disappointing readings on exports and imports, which pointed to still sluggish overseas and local demand. Apart from this, worries about US President-elect Donald Trump's impending tariffs further dent demand for the China-proxy Aussie and contribute to the AUD/NZD pair's intraday slide.

That said, bets for aggressive policy easing by the Reserve Bank of New Zealand (RBNZ) might hold back traders from placing aggressive bullish bets around the New Zealand Dollar (NZD) and help limit losses for the AUD/NZD cross. This, in turn, makes it prudent to wait for some follow-through selling below a technically significant 200-day SMA before positioning for an extension of the recent decline witnessed over the past two weeks or so. Traders now look to the post-meeting presser for a fresh impetus.

China's Trade Balance for November, in Chinese Yuan (CNY) terms, came in at CNY692.8 billion, widening from the previous figure of CNY679.1 billion.

Exports rose by 1.5% YoY in November vs. 11.2% in October. The country’s imports increased by 1.2% YoY in the same period vs. -3.7% registered previously.

In US Dollar (USD) terms, China’s trade surplus expanded in November.

Trade Balance came in at +97.44B versus +95B expected and +95.27B previous.

Exports (YoY): 6.7% vs. 8.5% expected and 12.7% previous.

Imports (YoY): -3.9% vs. 0.3% expected and -2.3% last.

Additional takeaways

FX implications

AUD/USD remains pressured toward 0.6400 after China’s trade data. The pair is losing 0.35% on the day heading into the RBA policy decision.

• Silver price continues to gain ground due to the prevailing bullish bias.
• The primary barrier appears around the upper boundary of the ascending channel at the $32.60 level.
• The nine- and the 14-day EMA at $31.27 and $31.17, respectively, would act as primary supports.

Silver price (XAG/USD) extends its gains for the second day, trading around $32.00 per troy ounce during the Asian hours on Tuesday. The daily chart analysis indicates a bullish bias, with the pair moving upwards within an ascending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) remains above the 50 mark, further supporting the bullish sentiment.

The XAG/USD pair continues to trade above the nine- and 14-day Exponential Moving Averages (EMA), reinforcing a bullish outlook and signaling to strengthen short-term price momentum. This points to increasing buying interest and raises the likelihood of further price appreciation.

In terms of the upside, the Silver price finds a primary barrier around the upper boundary of the ascending channel at the $32.60 level. A break above this level could reinforce the bullish bias and support the XAG/USD pair to approach its November high at $33.13.

On the downside, the primary support appears at the nine-day EMA at $31.28, followed by the 14-day EMA at $31.17. The lower boundary of the ascending channel at $31.00 level could act as a major support.

A break below the descending channel could weaken the bullish bias and put downward pressure on the price of precious metal to test a “throwback support” at the psychological level of $30.00.

XAG/USD: Daily Chart

• The Japanese Yen slides to over one-week trough against its American counterpart on Tuesday. 
• Doubts over BoJ’s ability to hike rates further turn out to be a key factor undermining the JPY.
• Bets for a less dovish Fed acts as a tailwind for the USD and contributes to the modest uptick.

The Japanese Yen (JPY) loses ground against its American counterpart for the second consecutive day on Tuesday and lifts the USD/JPY pair to over a one-week high, above mid-151.00s during the Asian session on Tuesday. The uncertainty over how soon the Bank of Japan (BoJ) could raise interest rates again keeps the JPY bulls on the defensive. Furthermore, the overnight bounce in the US Treasury bond yields from October lows undermines the lower-yielding JPY. Apart from this, the post-NFP US Dollar (USD) recovery from a nearly one-month trough, bolstered by expectations for a less dovish Federal Reserve (Fed), acts as a tailwind for the currency pair. 

That said, a softer risk tone, concerns that US President-elect Donald Trump's tariff plans could trigger a second wave of global trade wars and geopolitical tensions help limit deeper losses for the safe-haven JPY. Traders might also refrain from placing aggressive bullish bets around the USD/JPY pair and opt to wait for the release of the latest US consumer inflation figures, due on Wednesday. The crucial US Consumer Price Index (CPI) report will be looked upon for fresh cues about the Fed's rate-cut path. This, in turn, will drive the USD demand and provide some meaningful impetus to the currency pair ahead of the key central bank event risks next week. 

Japanese Yen continues losing ground amid mixed BoJ rate hike cues

• Bank of Japan Governor Kazuo Ueda recently said that the timing of the next rate hike was approaching. This, along with data showing that the underlying inflation in Japan remains solid, lifted bets that the BoJ will hike rates at its December 18-19 policy meeting.
• Some media reports, however, suggested the BoJ may skip a rate hike this month. Moreover, BoJ's dovish board member Toyoaki Nakamura said that the central bank must move cautiously in raising rates, adding a layer of uncertainty and undermining the Japanese Yen. 
• The US Nonfarm Payrolls (NFP) report released on Friday reaffirmed bets for a rate cut by the Federal Reserve in December. The Fed, however, could deliver a cautious message amid expectations that US President-elect Donald Trump's policies could reignite inflationary pressures. 
• The yield on the benchmark 10-year US government bond staged a modest bounce on Monday, after closing at its lowest level since October 18 last Friday. This assists the US Dollar (USD) build on the post-NFP recovery and provides a modest lift to the USD/JPY pair. 
• Investors remain concerned about Trump's impending trade tariffs and their effect on the global economic outlook. Moreover, turbulence in the Middle East increased over the weekend after Syrian rebels took control, forcing President Bashar al-Assad to flee to Russia.
• This week’s main event will be Wednesday’s release of the US Consumer Price Index for November, which should offer cues about the interest rate outlook in the US. This, in turn, should influence the currency pair ahead of the FOMC/BoJ policy meetings next week. 

USD/JPY could face stiff resistance near the 151.75-152.00 confluence

From a technical perspective, any subsequent move up is more likely to confront stiff resistance and remain capped near the 151.75-152.00 confluence. The said area comprises the 38.2% Fibonacci retracement level of the recent pullback from a multi-month high touched in November and the very important 200-day Simple Moving Average (SMA). Given that oscillators on the daily chart have recovered from negative territory, a sustained move beyond the 152.00 mark should pave the way for additional gains towards the 152.70-152.75 region, or the 50% retracement level. This is followed by the 153.00 round figure, above which the USD/JPY pair could extend the momentum towards the 61.8% Fibo. level, around the 153.70 area. 

On the flip side, weakness below the 151.00 mark now seems to find decent support near the 150.60 region, or the 23.6% Fibo. level resistance breakpoint. The next relevant support is pegged near the 150.00 psychological mark, below which the USD/JPY pair could weaken to the 149.50-149.45 region en route to the 149.00 mark and the monthly low, around the 148.65 area touched last week. The latter coincides with the 100-day SMA and a convincing break below will be seen as a fresh trigger for bearish traders, and set the stage for a further near-term depreciating move.

• The Australian Dollar depreciates as traders adopt caution ahead of the RBA Interest Rate Decision.
• The RBA is expected to hold the Official Cash Rate steady at 4.35% in its final policy meeting in December.
• The US Dollar continues to gain ground ahead of US Consumer Price Index data due on Wednesday.

The Australian Dollar (AUD) edges lower ahead of the RBA Interest Rate Decision scheduled on Tuesday. The Reserve Bank of Australia (RBA) is expected to hold the Official Cash Rate (OCR) steady at 4.35% following its final policy meeting this year.

RBA Governor Michele Bullock said earlier that inflation is unlikely to "sustainably" return to the central bank's target range before 2026. She also stated that Australia’s core inflation remains “too high” to contemplate interest rate cuts soon.

Traders will likely observe the RBA Governor Michele Bullock’s comments to gauge the central bank’s monetary policy outlook. Elevated core and services inflation and relatively tight labor market conditions in Australia are the primary reasons behind the RBA’s cautious stance.

The US Dollar (USD) extends its winning streak for the third successive day as traders adopt caution ahead of the US Consumer Price Index (CPI) data release on Wednesday. Traders are now pricing in nearly an 85.8% chance of Fed rate reductions by 25 basis points on December 18, according to the CME FedWatch Tool.

Australian Dollar depreciates ahead of the RBA interest rate decision

• The Australian Unemployment Rate remained at 4.1% in October for the third consecutive month. The economy added 9,700 full-time jobs and 6,200 part-time roles, making a net change of 15,900 positions.
• The RBA’s closely watched inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed well above the Bank’s 2%- 3% target.
• Australia's economy grew at its slowest annual pace since the pandemic in the third quarter. The OZ nation’s Gross Domestic Product (GDP) rose 0.3% in the September quarter, missing market forecasts of 0.4%. Weaker-than-expected GDP growth made markets almost fully price in a rate cut next April at 96% (from 73% before), according to Refinitive interest rate probabilities data.
• US November NFP data from Friday showed a robust 227,000 gain, well above expectations, and stable Average Hourly Earnings growth at 0.4% MoM.
• The AUD received support from improved sentiment and stimulus expectations from China. China’s leaders announced plans for proactive fiscal and looser monetary policies to accelerate domestic consumption in 2024.
• Weak Chinese CPI data (-0.6% in November, worse than expected) highlights challenges in the recovery but bolsters stimulus speculation.

Technical Analysis: Australian Dollar breaks below 0.6450, five-month lows

AUD/USD trades near 0.6420 on Tuesday, with bearish momentum gaining strength according to technical analysis. The pair remains confined within a descending channel, and the 14-day Relative Strength Index (RSI) remains below 50, indicating sustained negative sentiment.

On the downside, the AUD/USD pair has dropped below its five-month low of 0.6434, recorded on November 26. If this level is decisively broken, it could open the path toward the yearly low of 0.6348, last seen on August 5. Further support lies near the descending channel’s lower boundary, around 0.6225.

Immediate resistance for the AUD/USD pair is located at the nine-day Exponential Moving Average (EMA) at 0.6449, followed by the 14-day EMA at 0.6465, which aligns closely with the upper boundary of the descending channel. A decisive breakout above these levels could pave the way for a potential rally toward the five-week high of 0.6687.

AUD/USD: Daily Chart

• The Indian Rupee trades flat in Tuesday’s Asian session.
• The weakness in Asian peers, firmer USD, and foreign outflows could drag the INR lower. 
• Investors brace for the US November CP inflation report, which is due on Wednesday.

The Indian Rupee (INR) holds steady on Tuesday after reaching an all-time low in the previous session. The local currency remains vulnerable due to a decline in its Asian peers, the outflow of foreign money, and persistent strength in the US Dollar (USD) from importers and foreign banks. However, the foreign exchange intervention by the Reserve Bank of India (RBI) might prevent the INR from further depreciation. 

Looking ahead, the US Consumer Price Index (CPI) for November will be in the spotlight on Wednesday. This report could serve as the one remaining potential stumbling block to a third successive rate cut from the Federal Reserve (Fed). On the Indian docket, the CPI inflation data will be published on Thursday. 

Indian Rupee remains vulnerable amid multiple headwinds

• "We expect INR to trade at current levels with a depreciating bias. The Reserve Bank of India's recent measures to boost foreign inflows and a range-bound CAD (current account deficit) should lend support over the medium term," noted economists at Bank of Baroda.
• India's forex reserves rose by $1.51 billion to $658.09 billion for the week ended November 29, according to the RBI on Friday. For the previous week, the foreign exchange reserves were $656.58 billion.
• The Indian central bank revised its real Gross Domestic Product (GDP) growth forecast for the current fiscal year, lowering it from 7.2% to 6.6%, signaling a more cautious outlook for the Indian economy.
• San Francisco Fed President Mary Daly noted on Friday that the US jobs market still looked healthy after fresh employment data was released Friday. Daly further stated that the Fed is ready to raise rates if inflation breaks out again.
• Financial markets are now pricing in nearly an 85.8% possibility of a 25 basis points (bps) rate cut by the Fed on December 17-18, according to the CME FedWatch tool. 

USD/INR paints a positive picture in the longer term

The Indian Rupee trades on a flat note on the day. The constructive outlook of the USD/INR pair remains in play, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Nonetheless, the 14-day Relative Strength Index (RSI) stands above the midline near 71.60, indicating the overbought RSI condition. This suggests that further consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation.

The all-time high of 84.86 acts as an immediate resistance level for USD/INR. Consistent trading above this level could pave the way to the 85.00 psychological level, en route to 85.50.

On the other hand, bearish candlesticks below the resistance-turned-support of 84.61 may draw in enough selling pressure to drag the pair to 84.22, the low of November 25. The next contention level to watch is 84.06, the 100-day EMA.

The rebel group that toppled Syria's President Bashar Al-Assad agreed to hand power to Mohammed Al Bashir to form a transitional administration, per Bloomberg. 

Al Bashir will set up a government to handle the transition period and "avoid slipping into chaos," according to the report, which did not provide any other information. The move to task him came after a meeting between HTS commander Ahmed Al-Sharaa, and current Prime Minister Ghazi al-Jalali, according to Arabiya TV, Al Bashir,

Market reaction 

At the time of press, the XAU/USD pair was up 0.28% on the day at $2,665. 

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1896, as compared to the previous day's fix of 7.1870 and 7.2806 Reuters estimates.

South Korea’s finance ministry, Choi Sang-mok, said on Tuesday that the recent volatility in the country's financial and foreign exchange markets is "excessive" given the nation's strong economic fundamentals.

"Although volatility in the financial and foreign exchange markets has increased, it appears somewhat excessive compared to the robust fundamentals and external stability of our economy,” said the finance minister.

South Korea's top economic policymaker further stated that he will respond with market stabilising measures.  

Market reaction

At the time of writing, the USD/KRW pair is trading 0.12% higher on the day to trade at 1427.51. 

• WTI edges higher to near $67.90 in Monday's early Asian session. 
• Middle East turmoil and China’s policy shift could underpin the WTI price in the near term.
• The cautious stance of the Fed might cap the WTI’s downside. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.90 on Tuesday. The WTI price recovers amid the rising geopolitical tensions in the Middle East after the downfall of Syrian President Bashar al-Assad. 

Over the weekend, Syrian President Bashar al-Assad and his family fled to Moscow and were granted political asylum, ending 50 years of a brutal dictatorship. The downfall of the Syrian leader regime could lead to a conflict involving regional countries, lifting the WTI price. 

Tomomichi Akuta of Mitsubishi UFJ Research noted that these geopolitical risks are bolstering crude prices but warned that Saudi Arabia’s recent price cuts and extended OPEC+ output constraints underscore weak demand fundamentals, especially from China.

Additionally, the black gold might be supported by the rising expectations that China will announce further stimulus measures and will unveil its first “moderately loose” monetary policy shift since 2010. "The easing of monetary policy stance in China is likely the driver of the oil price rebounding, supporting risk sentiment," said UBS analyst Giovanni Staunovo. 

On the other hand, the Federal Reserve (Fed) is likely to deliver another interest rate cut on December 18. Still, the US economic data will force the Fed's outlook on interest rates to tilt more hawkish. This, in turn, might support the Greenback and weigh on the USD-denominated Canadian Dollar (CAD). 

• EUR/USD shed barely a tenth of a percent on Monday.
• Despite limited movement, Fiber eased back from 1.0600.
• US CPI inflation, ECB rate call in the barrel for the mid-week.

EUR/USD trimmed its stance slightly on Monday, easing back away from the 1.0600 handle after facing a technical rejection from the key level last week. Euro traders are buckling down for a long wait to Thursday’s rate call from the European Central Bank (ECB), with Greenback bidders awaiting a fresh round of US Consumer Price Index (CPI) inflation updates due on Wednesday.

The front half of the trading week is a sedate showing for the Euro as ECB rate cut clouds gather in the distance. The pan-EU Sentix Investor Confidence survey for December fell to a 13-month low of -17.5, keeping Euro bulls at bay. The ECB is broadly expected to reduce both its Main Refinancing Operations Rate and Rate on Deposit Facility by 25 bps each on Thursday.

The Federal Reserve (Fed) Bank of New York released its latest summary of consumer survey results during Monday’s American market session, noting that US consumers are riding a tricky line with their economic expectations. According to the NY Fed, US consumers expect a suddenly-improved financial situation for themselves and the federal government, with respondents reporting a sea change in their expectations to afford debt and credit conditions following the re-election of former US President Donald Trump. The same pool of respondents also sharply reduced their expectations for future government borrowing levels.

Further complicating the matter for US consumers, the NY Fed’s survey revealed that the same body of surveyed consumers also raised their expectations of future inflation again, with the average respondent expecting inflation to reaccelerate to 3.0% by next November. 

US session traders will be looking ahead to a fresh print of US Consumer Price Index (CPI) inflation slated for Wednesday, with a thin docket on the offering for the early week. US CPI inflation is expected to tick up again on an annualized basis in November. Median market forecasts expect Wednesday’s US CPI inflation to rise to 2.7% YoY compared to October’s 2.6%.

EUR/USD price forecast

The EUR/USD daily chart depicts a bearish medium-term trend as the pair remains firmly below its 50-day EMA at 1.0703 and 200-day EMA at 1.0828. Following the sharp drop in mid-November that led to a multi-month low near 1.0450, the pair has entered a consolidation phase. Resistance at 1.0600–1.0650, which aligns with prior swing lows and the descending 50-day EMA, has capped recent upside attempts. On the downside, 1.0450 stands as a critical support level, guarding against a deeper decline.

The most recent candle reflects indecision, closing near 1.0554 after testing both lower and upper levels within a narrow range. The inability to sustain gains above the 1.0600 psychological level underscores persistent selling pressure. A bearish bias remains intact unless the pair clears the 50-day EMA, which would open the door to retesting the 1.0700 zone. Conversely, a break below the 1.0500 mark could accelerate downside momentum, paving the way for a revisit of the 1.0450 support and potentially lower.

The MACD indicator has started to turn slightly positive, as the histogram trends upward, suggesting that bearish momentum is fading. However, the MACD line remains below the signal line, indicating that the overall trend has yet to shift convincingly. A breakout above 1.0600 with increasing bullish momentum would be a critical development for buyers, while failure to do so keeps the pair vulnerable to further downside, aligning with the broader bearish trend.

EUR/USD daily chart