EUR/USD Gains as Dollar Demand Eases Ahead of Key PMI Data

EURUSD

Prediction: Increase

Fundamental Analysis:

EUR/USD trimmed its losses on Monday, rising by nearly 0.67% as reduced demand for the U.S. Dollar offered the Euro a chance to regain ground. The week ahead features a sparse economic calendar until Friday, when the release of global Purchasing Managers Index (PMI) data will attract attention. Midweek, market participants will also be monitoring European Central Bank (ECB) President Christine Lagarde’s appearance on Wednesday, kicking off the ECB Conference on Financial Stability and Macroprudential Policy.

The ECB is navigating complex challenges, as persistent inflation continues to cloud the economic outlook. Market participants will be particularly watchful on Friday for S&P PMI figures. In Europe, the Manufacturing PMI is forecast to stay unchanged at 46.0, while the Services PMI is projected to climb to 51.8. Across the Atlantic, U.S. Manufacturing PMI is anticipated to increase to 48.8, with Services PMI expected to reach 55.2.

Technical Analysis:

On Monday, EUR/USD adopted a bullish bias, setting its sights on the 1.0600 mark after finding stability around 1.0500 late last week. Nevertheless, the pair maintains its overall bearish positioning, remaining well below the 200-day Exponential Moving Average, currently at 1.0884. The Euro has rebounded slightly from its lowest levels in over a year, having dropped approximately 6.5% from September highs above 1.1200. As it attempts further recovery, technical resistance between the 1.0700 and 1.0800 levels is likely to pose challenges.

XAUUSD

Prediction: Increase

Fundamental Analysis:

Gold prices have surged past $2,600 early Tuesday, fueled by heightened geopolitical tensions between Russia and Ukraine, along with a weakening U.S. Dollar. After dipping to a two-month low of $2,536, gold rebounded with a 1.80% increase at the start of the week, pushing XAU/USD to around $2,610. Meanwhile, Wall Street is showing mixed signals, with gains in some major U.S. indices while others remain unstable. Reports suggest that President Biden has approved Ukraine’s use of long-range missiles against Russia, which has contributed to the Dollar's drop of roughly 0.38% to 106.27. This week, key U.S. economic events include housing data, Jobless Claims, and the release of S&P Global Flash PMIs.

Technical Analysis:

Gold has resumed its upward momentum since November 14, after a 'hammer' candle pattern indicated a possible reversal. Breaking past the October 10 swing low at $2,603, buyers are now eyeing the 50-day Simple Moving Average (SMA) at $2,653, with additional resistance expected around $2,700. A breakout beyond this level could pave the way toward the November 7 peak of $2,710. However, should prices dip below the November 14 swing low of $2,536, initial support lies at the 100-day SMA near $2,547, followed by a critical level at $2,500. The Relative Strength Index (RSI) has shifted from a neutral stance, suggesting emerging bearish momentum that may lead to further declines in XAU/USD.

GBPUSD

Forecast: Potential Decline on Key Economic Data

Fundamental Analysis

GBP/USD saw a 0.5% uptick on Monday, marking a positive start to the trading week and ending a six-day losing streak that pushed the pair toward 1.2700. However, this recovery primarily reflects a softening of the U.S. Dollar rather than notable strength in the British Pound. GBP traders are eyeing UK Consumer Price Index (CPI) inflation data due this week, expected to show an annual increase from 1.7% to 2.2%.

The week began on a quieter note, with limited economic releases. Tuesday brings the Bank of England’s Monetary Policy Report Hearings, but the focal point remains Wednesday’s CPI report. Later in the week, traders will also monitor Friday’s UK Retail Sales and S&P PMI data from both the UK and U.S., providing further insight into economic conditions on both sides of the Atlantic.

Technical Analysis

Despite Monday’s 0.5% gain, GBP/USD remains within bearish territory, trading below the 200-day Exponential Moving Average (EMA) near 1.2850. Last Friday, the pair touched multi-month lows around 1.2600, continuing a decline from September’s multi-year high of 1.3434—a 6.25% decrease. The current short-term recovery may invite additional short positions between 1.2700 and 1.2800, maintaining bearish pressure on the pair.

USDJPY

Prediction: Decrease

Fundamental Analysis:

During Tuesday's Asian session, USD/JPY is hovering above the 154.00 support level after facing rejection at 154.70. While no clear catalysts are directly driving this decline, the possibility of intervention by Japanese authorities continues to present an upside risk for the pair. Additionally, some degree of technical selling is playing a role in the recent price action. However, broader geopolitical tensions and a drop in U.S. Treasury yields may serve to cushion the losses of the lower-yielding JPY. Looking ahead, traders are turning their focus to Japan's upcoming consumer inflation data and global PMI reports, which could influence market sentiment.

Technical Analysis:

On the technical front, USD/JPY's failure to maintain a position above the 155.00 mark on Monday suggests caution for bullish traders. Nonetheless, the pair might find support around the 153.85 level, as indicated by positive signals on the daily chart. Should the selling momentum persist, it could drive the pair down toward 153.25 and subsequently to 153.00, with a key support zone located around 152.70-152.65. A decisive move below this range could expose the critical 200-day Simple Moving Average (SMA), currently providing support near 151.90-151.85.

Conversely, a rally past the 155.00 level, with further gains beyond the recent high around 155.35, would support a bullish outlook, potentially enabling USD/JPY to target 155.70 and test the multi-month high of 156.75 seen last Friday.

 

 

 

 

 

 

 

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