Australian Dollar Hits Resistance as US Economic Strength Caps Recovery

Economic

Summary:

The Australian Dollar (AUD) staged a sharp recovery following stronger-than-expected domestic employment data but has encountered resistance at 0.6435.

SELL AUDUSD

Close Time

CLOSED

0.63950

Entry Price

0.62000

0.64800

0.62208 -0.00047 -0.08%

24.2

Pips

Profit

0.62000

0.63708

Exit Price

0.63950

Entry Price

0.64800

The Australian Dollar has clawed back some ground from year-to-date lows, spurred by an impressive Australian labor market report. However, its momentum has faltered near the 0.6435 level, with the Greenback's enduring strength continuing to weigh heavily on the pair.

Earlier today, Australia reported a net gain of 36.6K jobs in November, significantly outpacing the 25K forecast and the downwardly revised 12.1K increase seen in October. The uptick was coupled with a notable drop in the unemployment rate, which declined to 3.9%, marking its lowest level since March and beating market expectations of a rise to 4.2%.

This robust labor market data signals resilience in the Australian economy, despite recent dovish signals from the Reserve Bank of Australia (RBA). On Tuesday, the RBA’s monetary policy statement highlighted concerns about the global economic slowdown, with the central bank emphasizing a cautious stance on rate hikes. However, today’s labor data somewhat counterbalances this narrative, suggesting a tighter labor market than previously thought.

The Australian Dollar’s recovery efforts remain hampered by the persistent strength of the US Dollar. The USD remains buoyed by economic data that reinforces the narrative of US economic exceptionalism. The Dollar Index (DXY), which measures the currency against a basket of six major peers, hovers near two-week highs, bolstered by higher Treasury yields.

Earlier this week, US consumer inflation data for November showed its fastest acceleration in seven months, hinting at sustained price pressures. Later today, attention will turn to US Producer Price Index (PPI) figures and weekly jobless claims, which are expected to further underscore the strength of the US labor market and economy.

Technical Analysis

Technically, AUD/USD has struggled to maintain upward momentum despite positive employment data. The pair approached the 50-day Exponential Moving Average (EMA50), which continues to exert downward pressure. Additionally, the stochastic oscillator shows waning bullish momentum, increasing the likelihood of a bearish reversal in upcoming sessions.

Key support levels for the pair lie at 0.6360, with the next major downside target pegged at 0.6200. On the upside, breaching resistance at 0.6450 would signal the potential for a short-term bullish correction.

Despite the positive employment figures, the Australian Dollar faces an uphill battle. The broader macroeconomic environment remains challenging, with the USD continuing to benefit from stronger economic fundamentals and higher interest rates. Unless the AUD/USD can break above the critical 0.6450 resistance level, the pair is likely to resume its downward trajectory in the near term.

TRADE RECOMMENDATION

SELL AUDUSD

ENTRY PRICE: 0.6395

STOP LOSS: 0.6480

TAKE PROFIT: 0.6200

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Summary:

In the first half of Thursday's European session, gold prices struggled to capitalize on a rebound from the $2,700 level, remaining near the neutral zone. Wednesday's US inflation report indicated that progress towards the Fed's 2% target has nearly stalled, driving market sentiment upwards.

SELL XAUUSD

Close Time

CLOSED

2709.69

Entry Price

2630.00

2725.00

2633.19 +16.48 +0.63%

452.6

Pips

Profit

2630.00

2664.43

Exit Price

2709.69

Entry Price

2725.00

Fundamentals

The precious metals market has experienced a remarkable surge this week, with gold prices climbing nearly $100 over three trading sessions. The recent price spike coincides with the latest US inflation report, which revealed ongoing inflation trends that have caught the attention of financial markets and Fed officials.

Meanwhile, gold prices have once again breached the previous high of $2,721, signaling the market's entry into a high-volatility phase, with both pricing anchors and core variables undergoing varying degrees of change.

The US inflation report for November showed an annual inflation rate of 2.7%, a slight increase from the previous months. Core inflation, which excludes the more volatile energy and food prices, was more pronounced at an annual rate of 3.3%. Although the data met market expectations, it suggests a concerning shift in price pressures.

Fed Chairman Powell acknowledged progress since the inflation peak of over 8.5% in March 2022, but remains cautious about the current economic situation. At a recent meeting, Powell noted that economic growth has been stronger than expected, and inflation continues to pose challenges. The Fed's ultimate goal remains achieving a 2% inflation target, which seems elusive based on current economic indicators.

The Fed is currently adopting a nuanced monetary policy approach, with expectations that the benchmark federal funds rate may stabilize between 3.25% and 3.5% over the next year. At the recent policy meeting, the Fed implemented a total of 75 bps of rate cuts, including a substantial 50 bps cut followed by another 25bps reduction.

Market expectations for further monetary intervention remain high. The CME Group's FedWatch tool shows a 98.6% probability of another 25bps rate cut at the upcoming FOMC meeting, significantly higher than forecasts in recent weeks. However, persistent inflation stickiness may slow the pace of future rate cuts. Investors need to closely monitor how the Fed will balance its dual mandate of controlling inflation and supporting economic growth.

These economic dynamics are particularly favorable for gold prices. Precious metals typically respond well to lower interest rates, as declining yields reduce the appeal of fixed assets like government bonds to investors.

Following the release of the US November inflation data, gold prices surged to $2,726, indicating gold's sensitivity to monetary policy and inflation trends, causing a sharp increase in market volatility.

"Head and Shoulders" Pattern Emerges as Gold Prices React to Inflation Data _1

Technical Analysis

From a technical standpoint, gold prices broke through the previous high of $2,721 during the Asian session, opening an upward channel for subsequent price increases. However, the formation of a "head and shoulders" pattern on the hourly chart adds uncertainty to further price declines.

Thus, if gold prices break below the $2,700 threshold, they may continue to find some support near the overnight volatility lows, around the $2,675-$2,666 area. Some subsequent selling could pave the way for further declines towards the $2,658-$2,635 range. Currently, both the 50 and 200 SMAs on the 4-hour chart support a bearish outlook.

On the other hand, stop-loss orders for bears should be set at the "left shoulder" level of $2,621. A breakthrough of the intraday high of $2,726 could further propel gold prices towards the $2,735 threshold and test the supply zone of $2,748-$2,750. If gold prices continue to break through this supply zone, it would lay the groundwork for challenging the historical high of around $2,790 touched in October.

Trading Recommendations

Trading Direction: Sell

Entry Price: 2710

Target Price: 2630

Stop Loss: 2625

Deadline: December 27, 2024, 23:55:00

Support: 2700/2675/2666

Resistance: 2721/2726/2735

Risk Warnings and Disclaimers

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Winkelmann

Forex

Summary:

Weak economic data coupled with political unrest leaves the euro languishing.

SELL EURUSD

Close Time

CLOSED

1.05300

Entry Price

1.03500

1.06400

1.04161 +0.00251 +0.24%

8.0

Pips

Profit

1.03500

1.05220

Exit Price

1.05300

Entry Price

1.06400

Fundamentals

According to the U.S. Department of Labor, November's U.S. CPI increased 0.3% MoM and rose 2.7% YoY. Inflation figures were mild and entirely matched market expectations, making a Fed rate cut next week all but certain. However, the U.S. dollar strengthened instead of falling, indicating that markets are looking beyond the immediate term. With President Trump's inauguration approaching, his policy plans are becoming clearer, particularly tariff increases and tax cuts, which could exacerbate inflationary pressures. With CPI also edging up compared to prior months, the Federal Reserve cutting rates by 25 basis points next week narrows the space for additional rate cuts next year, providing longer-term support for the U.S. dollar while pressuring the euro.

Markets have now almost fully priced in a 25-basis-point rate cut by the European Central Bank (ECB) on Thursday, with any deeper cut unlikely. Although this offers some near-term support to the euro, the deterioration of Europe's economy is confirmed by November's PMI contraction to 48.3 and Germany's industrial production dropping by 0.4% MoM, suggesting the worsening economic situation. Trump's tariff policies might further harm the European economy. The ECB's current cautious stance on drastic rate cuts is preserving policy room for future bold actions when needed. Moreover, France and Germany face political instability, weakening the euro.

Technical Analysis

Euro Faces "Internal and External Pressures"_1

In the 4H chart, EURUSD maintains an overall downtrend. Despite recent choppy rebounds, it finds resistance at the 1.06 level, leading to renewed declines. It currently forms what resembles a descending flag pattern. If it breaks below 1.048, it may fall further, possibly even breaking parity again.

In the short term, the euro shows weak rebound strength. Traders should focus on selling at highs. Try to sell around 1.053 and target key support at 1.035, with stop-loss above 1.06.

Trading Recommendations

Trading direction: Sell

Entry price: 1.053

Target price: 1.035

Stop loss: 1.064

Support: 1.048/1.035

Resistance: 1.060/1.053

Risk Warnings and Disclaimers

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Manuel

Cryptocurrency

Summary:

The RSI's recent low was at 31, creating a divergence from previous higher RSI lows, which often signals that a pullback has likely concluded, presenting a bullish indicator.

BUY SOL-USDT

Close Time

CLOSED

227.00

Entry Price

263.00

199.00

188.78 +0.08 +0.04%

280.0

Pips

Loss

199.00

198.95

Exit Price

227.00

Entry Price

263.00

Despite Solana's (SOL) recent fluctuations, this week has brought significant announcements that have started to shape the cryptocurrency's market dynamics. Grayscale, a key player in the crypto investment landscape, has revealed plans to launch a Solana-based ETF, positioning it as a potential catalyst for institutional investment. This news has already prompted a 1.86% increase in SOL's price, indicating a bullish market sentiment. Additionally, the Total Value Locked (TVL) in Solana's DeFi ecosystem has climbed to $9.2 billion, highlighting the network's expanding role in decentralized finance.

On the technological front, Solana has pushed forward with advancements in zero-knowledge proofs, introducing ZK Compression. This innovation slashes account rental costs for developers by 1000 times, potentially revolutionizing the cost-efficiency of applications built on Solana. Further developments include integrations with Zero-Knowledge Virtual Machines (ZKVMs), improving the blockchain's efficiency and privacy for smart contracts and transactions.

The Solana ecosystem has also seen expansion through strategic partnerships. The e-Money Network's introduction of a MiCA-compliant wallet enhances Solana's regulatory compliance and usability. Manifest, the first formally verified DEX on Solana, has been released as an open-source public good, potentially raising the bar for security and trust in DeFi. Additionally, a partnership between Fuse Wallet and Bridge now facilitates the conversion of USD into USDC on Solana, promoting its utility for everyday transactions.

These developments underscore a positive shift in market perception towards Solana, suggesting an increase in demand due to its focus on scalability, security, and practical applications. However, traders must remain vigilant regarding regulatory news, as changes in this area could impact Solana's trajectory.

Market data from DefiLlama shows a surge in trading interest and on-chain liquidity for Solana. Daily trading volume has jumped from $2.92 billion on Saturday to $5.99 billion by Wednesday, reaching its highest level since November 20. According to Coinglass, the long-to-short ratio for SOL stands at 1.03, the highest in a month, which signals a bullish market sentiment where more traders expect the price to rise. Bullish Signals as Solana Rebounds from Key Moving Average_1

Bullish Signals as Solana Rebounds from Key Moving Average_1

Technical Analysis

Solana recently tested the 100-period moving average on the daily chart near $201, consolidating around this level before rebounding to $227. If SOL sustains above this moving average, we could witness the initiation of another bullish surge aiming towards $263, revisiting its all-time high.

The 200-period moving average is positioned at around $178, while the RSI sits at 47, not indicating overbought conditions, which suggests there's room for Solana to continue its upward trend. The RSI's recent low was at 31, creating a divergence from previous higher RSI lows, which often signals that a pullback has likely concluded, presenting a bullish indicator.

Trading Recommendations

Trading direction: Buy

Entry price: 227

Target price: 263

Stop loss: 199

Validity: Dec 20, 2024 15:00:00

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

USDX (US Dollar Index) is trading around 106.50, with bullish signals supported by technical indicators. The Stochastic Oscillator shows a strong recovery from oversold territory, while the price has broken above the middle line of the Bollinger Bands, signaling bullish momentum...

BUY USDX

Close Time

CLOSED

106.530

Entry Price

107.000

106.200

107.870 -0.090 -0.08%

1.0

Pips

Loss

106.200

106.520

Exit Price

106.530

Entry Price

107.000

The USDX has rebounded strongly after bottoming at 106.20 earlier in the session, thanks to the release of US CPI data in November that matched forecasts (up 2.3% year-on-year). This reinforced expectations that the US Federal Reserve will maintain high interest rates for a longer period, supporting the strength of the USD.

Meanwhile, global risk factors such as the weak economic outlook in the Eurozone and China continue to drive safe-haven flows into the USD. On the M15 chart, USDX has broken through the middle band of the Bollinger Bands and is heading towards the upper band, indicating clear bullish momentum.

Market psychology

The current market sentiment is leaning towards buying the USD as investors expect the Fed to keep interest rates high to control inflation. At the same time, the weakness of other major currencies such as the euro and the Japanese yen further strengthens the USD's position. The Stochastic Oscillator (5,3,3) on the M15 chart shows that the %K line has crossed above the %D line in the 50–60 zone, reflecting a strong buy signal and the possibility of further price increases.

Technical analysis

On the M15 chart, USDX is hovering near the upper band of the Bollinger Bands at 106.50–106.55, signaling a dominant bullish trend. The Bollinger Bands are slightly expanding, indicating increased volatility and a possible test of higher resistance levels.

The Stochastic Oscillator (5,3,3) has exited the oversold zone and is currently hovering around 77–80, confirming strong bullish momentum. The RSI (14) is also pointing above the neutral level of 50, reinforcing the bullish outlook in the short term.

The key resistance is now at 106.70 and further at 107.00; meanwhile, the nearest support lies at 106.30 and further at 106.10.

Trading Recommendations

Based on current technical analysis:

Enter buy order if price sustains above 106.50.

Entry: 106.55

Take Profit: 107.00

Stop Loss: 106.30

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The consumer price index (CPI) rose 2.3% year-on-year in November, as expected, reinforcing the possibility that the US Federal Reserve will maintain its high interest rate policy for a longer period. At the same time, pressure from the slowing economic outlook in the European region continued to weaken the euro...

SELL EURUSD

Close Time

CLOSED

1.05000

Entry Price

1.04500

1.05850

1.04161 +0.00251 +0.24%

10.1

Pips

Loss

1.04500

1.05101

Exit Price

1.05000

Entry Price

1.05850

EUR/USD is under pressure after US CPI data showed inflation remained high, in line with market expectations. This reinforced the view that the Fed will keep interest rates high for longer to control inflation. The USD is therefore strongly supported, especially as safe-haven assets become more attractive amid global economic uncertainty.

In contrast, the eurozone is facing major challenges as recent economic data point to a decline in manufacturing and services activity. The region’s composite PMI fell to 47.8 in November, below the 50 threshold that reflects economic expansion. This continues to weigh on the euro and puts EUR/USD on track for further declines.

Market psychology

The current market sentiment is biased towards the USD as investors expect the Fed to continue its tightening monetary policy. At the same time, capital flows are flowing out of risky assets in Europe due to concerns about the weak economic outlook in the region. The CCI indicator on the M15 chart shows that EUR/USD has entered the oversold zone (-135), reflecting strong selling pressure but also the possibility of a slight correction before continuing the downtrend.

Technical analysis

On the M15 chart, EUR/USD is hovering below the middle line of the Bollinger Bands at 1.0560, indicating that the downtrend is still dominant. The Bollinger Bands are expanding, signaling increased volatility and the possibility of the price continuing to break important support levels.

CCI (14) is in the oversold zone (-135), but there is no clear reversal signal yet. RSI (14) fluctuates around 30–35, reflecting that the downtrend still has room to continue. The nearest support level is currently at 1.0550 and further at 1.0520; meanwhile, resistance lies at 1.0585 and further at 1.0610.

Trading Recommendations

Based on fundamental and technical analysis:

Enter a sell order if price remains below 1.0560.

Entry: 1.0500

Take Profit: 1.0450

Stop Loss: 1.0585

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

Due to the uncertainty surrounding the Bank of Japan's (BOJ) potential interest rate hikes, the yen has depreciated. Meanwhile, the likelihood of the Bank of England (BOE) maintaining its interest rate at 4.75% in December has increased, providing support for the pound.

BUY GBPJPY

Close Time

CLOSED

194.484

Entry Price

202.570

189.500

197.811 +1.001 +0.51%

326.4

Pips

Profit

189.500

197.748

Exit Price

194.484

Entry Price

202.570

Fundamentals

The GBPJPY has recovered from its intraday losses, marking its third consecutive day of gains, trading around 194.20 during the European session on Wednesday.

The GBPJPY may appreciate further, as the BOJ perceives the cost of waiting for the next interest rate hike to be minimal. Officials reportedly believe that the next rate increase is merely a matter of timing rather than a question of whether to raise rates. Additionally, they assess that the risk of the yen's depreciation exacerbating inflationary pressures is relatively low at this stage.

As a result of the news, the yen is facing significant selling pressure. The GBPJPY dropped to a low of 192.54 before surging back to around 194.50. Current market sentiment indicates that investors anticipate only about a 26% probability of a 25 basis point rate hike by the BOJ next week.

Furthermore, the pound has found support as market confidence strengthens regarding the BOE's decision to maintain interest rates at 4.75% in December. The GBPJPY has regained its footing.

Currently, the market anticipates that BOE policymakers will vote to keep interest rates unchanged, as the overall inflation rate in the UK has risen again after briefly dropping below BOE's 2% target. The BOE had previously forecasted a rebound in inflation following a temporary alignment with the target range.

Investors will also be focusing on the UK's monthly GDP and industrial and manufacturing production data for October this week. Economists expect that following a decline in September, factory output and GDP will show growth (bullish for the pound).

Bulls Have Once Again Solidified Their Positions_1

Technical Analysis

The GBPJPY surged over the critical resistance level of 193.00 on Tuesday and continued to rise on Wednesday, reinforcing the recent upward trend. This indicates that the momentum of the rebound is still in play. The next significant levels to watch are the 200-day and 50-day SMAs near 195.00, which could pose substantial obstacles to further upward movement.

On the downside, a break of the weak support level at 190.59 would initially retest 188.07. A drop below this support level would target the 183.70 support level.

Trading Recommendations

Trading Direction: Buy

Entry Price: 193.50

Target Price: 202.57

Stop Loss: 189.50

Valid until: December 26, 2024 23:55:00

Support: 193.84, 192.94, 192.54

Resistance: 195.00, 197.76, 199.84

Risk Warnings and Disclaimers

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Data

Australian Dollar Hits Resistance as US Economic Strength Caps Recovery

Technical Analysis

"Head and Shoulders" Pattern Emerges as Gold Prices React to Inflation Data

Fundamentals

Technical Analysis

Trading Recommendations

Euro Faces "Internal and External Pressures"

Fundamentals

Technical Analysis

Trading Recommendations

Bullish Signals as Solana Rebounds from Key Moving Average

Technical Analysis

US Dollar Continues to Be Supported by Prospect of Prolonged High Interest Rates from the Fed

Market psychology

Technical analysis

Trading Recommendations

EUR/USD: Pressure From US CPI

Market psychology

Technical analysis

Trading Recommendations

Bulls Have Once Again Solidified Their Positions

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure