EUR/USD Struggles Near 1.0500 Amid Weak Momentum and Key Data Ahead

EURUSD

Prediction: Potential Upside Ahead

Fundamental Analysis:
Midweek trading saw EUR/USD bulls face challenges, with the pair losing nearly half a percent and hovering just above the 1.0500 threshold. Thursday’s market activity is expected to be subdued for both the Euro and the US Dollar, as traders await Friday’s critical data releases.

European Central Bank (ECB) President Christine Lagarde is scheduled to speak at the European Banking Conference in Frankfurt on Friday. Her address is anticipated to focus on EU monetary policy and its implications for the banking sector, with market participants keenly watching for any indications of potential rate adjustments. Concurrently, the European HCOB PMI figures will be released, with expectations pointing to stable business activity reflected in a Composite PMI of 50.0. Additionally, the S&P PMI data is forecast to show modest improvements in both the Manufacturing and Services sectors.

Technical Analysis:
EUR/USD remains near its lowest point in over a year, following a dip to a 54-week low last Wednesday. A brief recovery attempt failed to sustain momentum, with resistance persisting around the 1.0600 level.

From a technical perspective, the Euro has experienced a sharp decline of approximately 6% from its September highs above 1.1200, signaling a significant shift in its outlook. The pair continues to trade below the 50-day Exponential Moving Average, which is trending downward and approaching the 1.0800 mark, adding further bearish pressure.

XAUUSD

Forecast: Aiming for Gains Amid Mixed Signals

Fundamental Analysis:
Gold prices have extended their rally for the third consecutive day, climbing over 3.40% this week as investors gravitate toward safe-haven assets despite the resilience of the US Dollar. Market participants are eyeing a potential push toward the $2,700 mark.

Previously, gold had dipped to a two-month low of $2,536, driven by profit-taking following Donald Trump’s election victory. Concerns about potential inflationary pressures from his policy plans had spurred a surge in US Treasury yields and strengthened the Dollar.

Geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, have also fueled gold’s rise. Escalations include President Putin authorizing nuclear weapon use in response to Western measures, with the US reaffirming its support for Ukraine.

On the economic front, the US Dollar Index increased by 0.51% to 106.69. Federal Reserve officials have maintained ambiguity regarding the December policy meeting, causing traders to scale back expectations of a rate cut. Key US data releases this week, including Initial Jobless Claims, S&P Global Flash PMIs, and the final University of Michigan Consumer Sentiment Index for November, will likely influence market sentiment.

Technical Analysis:
The outlook for gold prices remains bullish, but critical resistance levels must be overcome. A break above the 50-day Simple Moving Average (SMA) at $2,658 could pave the way for stabilization around $2,700. Beyond this point, the November 7 high of $2,710 and the psychological barrier of $2,750 may come into play.

Conversely, failure to hold above $2,600 may shift momentum in favor of sellers. In this scenario, prices could target the 100-day SMA at $2,550. Further downside risks include a drop to the November 14 low of $2,536 and possibly the $2,500 level. The Relative Strength Index (RSI), while currently bearish, is approaching neutral territory, indicating a potential boost in short-term buying momentum.

Investors should closely monitor key resistance and support levels as market dynamics unfold.

GBPUSD

Outlook: Anticipating a Potential Increase

Fundamental Analysis:

GBP/USD faced challenges on Wednesday, struggling to hold above the 1.2700 level and ending the day 0.2% lower. Despite UK inflation data exceeding expectations, the Pound's performance was weighed down by speculation that the Bank of England may hold off on rate cuts in 2024 due to persistent inflationary pressures.

UK CPI inflation climbed to 2.3% year-over-year, surpassing the 2.2% forecast and significantly up from the prior 1.7%. Core CPI followed suit, rising to 3.3% versus an anticipated 3.1%. However, these stronger-than-expected figures failed to provide lasting support to the Pound. With limited economic events on Thursday, traders are now focusing on Friday’s Purchasing Managers Index (PMI) reports from the UK and US, which are expected to remain relatively stable and could influence market sentiment.

Technical Analysis:

GBP/USD has struggled to sustain a bullish recovery this week, briefly rebounding from a 27-month low near 1.2600. While technical indicators initially hinted at the formation of a support base, buying momentum has since waned. The pair encountered significant resistance around the 1.2700 mark, stalling its upward progress and raising doubts about a sustained recovery.

Market participants will closely monitor whether the pair can overcome this resistance level in the coming sessions or if bearish momentum will push prices lower. A decisive breakout above 1.2700 could signal renewed bullish interest, while failure to hold current levels might prompt further declines.

USDJPY

Prediction: Likely Increase

Fundamental Analysis:
The USD/JPY pair dipped to the 155.00 level during Thursday’s Asian session, though a deeper decline appears improbable given ongoing uncertainty regarding the Bank of Japan's next rate hike. The Japanese Yen's weakness against the US Dollar has enabled USD/JPY to recover from the prior day's one-week low.

Market sentiment has improved despite lingering concerns about the Russia-Ukraine conflict, as reduced fears of nuclear escalation have supported investor confidence. Moreover, speculation surrounding the economic growth and inflationary impact of policies associated with U.S. President-elect Donald Trump could constrain the Federal Reserve's flexibility to cut interest rates. That said, the possibility of intervention by Japanese authorities may temper further JPY depreciation.

Technical Analysis:
The USD/JPY pair’s recent strong rebound suggests the end of its pullback from a multi-month high. This upward momentum, coupled with positive technical signals on the daily chart, indicates the potential for further gains. However, sustained movement above the critical 155.00 level is essential for renewed bullish interest.

Should buying pressure persist and push the pair beyond the weekly high near 155.35, it could solidify the uptrend, targeting the 155.70 level and eventually 156.00. On the downside, initial support is located around 154.40-154.35, followed by 153.30-153.25 and the psychological 153.00 level. A break below the 152.70-152.65 zone may open the path for a decline toward the 200-day Simple Moving Average, positioned near 151.90-151.85.

 

 

 

 

 

 

 

 

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