EUR/USD Faces Resistance as Key Economic Data Looms

XAUUSD

Prediction: Decline

Fundamental Analysis:
Spot gold rebounded strongly after touching a one-week low near $2,605 per ounce, closing above $2,630. Analysts highlight that while Israel's ceasefire agreement with Lebanon dampened safe-haven demand, lingering concerns over the Russia-Ukraine conflict and the potential implications of Trump’s tariff plans supported gold's recovery. On Tuesday, spot gold gained around 0.3%, ending at $2,632.67 per ounce after briefly dipping to $2,605.15—its lowest level since November 18. Although optimism surrounding a truce between Israel and Hezbollah reduced gold's appeal as a haven, fears of a global trade war stemming from tariff threats provided upward pressure. Additionally, escalating tensions in the Russia-Ukraine situation limited further downside movement for gold.

Technical Analysis:
Gold prices remain tilted toward a neutral-to-bearish outlook as sellers have driven the price below the key $2,700 level. The current price action exhibits a pattern of lower highs and lower lows, signaling bearish momentum. A break below $2,600 could lead to a test of the 100-day moving average at $2,565, with further downside targeting the November 14 low of $2,536. Conversely, if buyers regain control and push prices above the 50-day moving average at $2,665, this could pave the way for a retest of the $2,700 resistance. A sustained move above $2,700 may expose the $2,750 level and the all-time high of $2,790. Momentum indicators, such as the Relative Strength Index (RSI), continue to trend lower, indicating that sellers maintain a technical advantage.

USDJPY

Prediction: Decline Expected

Fundamental Analysis:
Market participants are closely monitoring the release of the US Personal Consumption Expenditure (PCE) Price Index for October on Wednesday. This data is anticipated to provide significant insights into the Federal Reserve’s stance on interest rates for December. Analysts forecast a rise in annual inflation compared to September, with stable month-on-month growth in both headline and core PCE figures. On the other hand, the Japanese Yen (JPY) maintains its strength despite diminishing prospects of a Bank of Japan (BoJ) rate hike in December. However, political uncertainties in Japan may cap the potential for further rate increases. Attention will also turn to Tokyo’s Consumer Price Index (CPI) data for October, scheduled for release on Thursday.

Technical Analysis:
On the technical front, a break below the 100-period Simple Moving Average (SMA) indicates potential further downside for USD/JPY. The first support level is observed around 153.30-153.25, with the critical 153.00 level below. A breach of these levels could accelerate selling pressure, driving the pair towards the mid-152.00 range and eventually to the 200-day SMA near 152.00. Conversely, immediate resistance is seen at 154.00, followed by the session high at 154.40. A decisive move beyond these levels could push the pair towards 155.00 and the 155.40-155.50 region. Sustained bullish momentum may target 156.00 and the November 15 peak at 156.75.

EURUSD

Prediction: Bullish Sentiment with Key Hurdles

Fundamental Analysis:
This week brings limited EU economic data, with the spotlight on Friday’s release of the European Harmonized Index of Consumer Prices (HICP) inflation. November's preliminary HICP is projected to show annual growth, an indicator under close observation by the European Central Bank (ECB). However, ECB officials have downplayed concerns over a short-term inflation spike. In the US, attention will turn to the Personal Consumption Expenditure Price Index (PCEPI) and third-quarter Gross Domestic Product (GDP) on Wednesday. Core PCEPI inflation is anticipated to edge up to 2.8%, while GDP growth is expected to hold steady at 2.8%.

Technical Analysis:
EUR/USD found some support amid a softer US Dollar, briefly retesting the 1.0500 mark earlier this week. However, this key resistance level has held firm, and buyers have struggled to sustain upward momentum. Following a 24-month low last week, the pair has managed a modest rebound, though a significant bullish breakout remains uncertain. A failure to hold current levels could see EUR/USD retreat toward weekly lows at 1.0290 (November 30, 2022) and 1.0222 (November 21, 2022). Conversely, resistance levels include the weekly high of 1.0606 (November 18) and the critical 200-day Simple Moving Average (SMA) at 1.0857.

BTCUSD

Prediction: Decrease

Fundamental Analysis:
Bitcoin experienced a sharp decline, falling below $92,000, with the so-called "Trump Trade" erasing $200 billion in market value. Despite this, the market avoided panic, and key indicators have yet to enter bearish territory. The current long/short ratio reflects a bearish sentiment, as traders are heavily shorting Bitcoin. This excessive leverage in the derivatives market poses a risk of sudden shifts, potentially triggering a short squeeze. Such an event could act as an unexpected catalyst for a price rebound. Although Bitcoin has seen substantial gains in this bull cycle, dominant long positions have tempered speculative activity. A break in the bullish trend could present short sellers with opportunities, though a short squeeze might compel traders to close positions, causing abrupt price drops.

Technical Analysis:
After hitting an all-time high of $99,609 on November 22, Bitcoin retreated by 8.2% over four days. This pullback resulted in $250 million in leveraged bullish positions being liquidated, yet it did not incite panic or push indicators into bearish zones. Selling pressure from long-term holders also contributed to the decline. Historical patterns reveal similar dynamics in late March when Bitcoin failed multiple times to break the $73,500 resistance level. Profit-taking by major holders during that period led to a two-month correction, with Bitcoin eventually bottoming out at $60,830 on May 1.

 

 

 

 

 

 

 

 

 

 

 

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