Bearish Outlook Maintained

Central Bank

Forex

Summary:

Yesterday, the European Central Bank (ECB) met market expectations with a 25-basis-point rate cut, with inflation forecast to reach 2%. Yet, the overall economic outlook remains bleak for the Eurozone, facing multiple challenges. Further easing measures from the ECB seem likely.

SELL EURJPY

Close Time

CLOSED

161.000

Entry Price

151.500

162.500

162.857 -0.111 -0.07%

150.0

Pips

Loss

151.500

162.500

Exit Price

161.000

Entry Price

162.500

Fundamentals

The ECB announced its latest interest rate decision yesterday, cutting the deposit facility rate by 25 basis points to 3%, which is in line with market predictions. ECB President Lagarde stated that the rate cut proposal was unanimously agreed upon, with inflation anticipated to hit the 2% mark in the medium term.

The economic outlook in the Eurozone seems atrocious although inflation is likely to reach the target. Manufacturing and service sectors face obstacles, and Germany, one of the major economies, is already experiencing consecutive years of economic contraction.

Moreover, political uncertainties in Germany and France, two of the largest economies within the Eurozone, continue to weigh on the region's economic health.

As Trump's return date approaches, his tariff policies might lead to further downturns in the Eurozone economy. Additional easing measures from the ECB are probable to support economic growth.

Technical Analysis

In the daily chart, the EURJPY is trending in a high-level consolidation phase, with gradually declining peaks. It signals underlying bearish sentiment, hinting at possible further downside moves.

Currently, the pair has weakened after rallying towards the 160.70 resistance level, with the daily chart showing two doji stars with long upper shadow and a bearish close yesterday, increasing the probability of a decline in the short term. Should the currency pair commence its descent, the first target lies at the 155.00 support level, followed by the psychological level at 150.00.

Selling at highs is preferred.

Trading Recommendations

Trading direction: Sell

Entry price: 161.00

Target price: 151.50

Stop loss: 162.50

Valid Until: December 27th, 2024, 20:00:00

Support: 159.10/156.17/155.15

Resistance: 159.10/156.17/155.15

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Australian Dollar (AUD) faces sustained pressure as former US President Donald Trump's tariff threats and Beijing's retaliatory actions weigh on risk-sensitive currencies.

SELL AUDUSD

Close Time

CLOSED

0.63700

Entry Price

0.61900

0.64200

0.62483 +0.00129 +0.21%

47.8

Pips

Profit

0.61900

0.63222

Exit Price

0.63700

Entry Price

0.64200

The Australian Dollar (AUD) is experiencing significant losses against the US Dollar (USD) as geopolitical and economic factors converge to create a challenging environment for the risk-sensitive currency. On Friday, the AUD/USD pair continued its downward trajectory, reflecting the broader market’s preference for the safe-haven USD amid heightened trade tensions and robust US economic data.

Tariff threats from former President Trump’s administration have reignited trade tensions, with potential repercussions for global markets. Trump has proposed a 10% tariff on Chinese goods, a move that could disrupt Australia’s economic ties with its largest trading partner, China. In retaliation, Beijing has launched a probe into US-based Nvidia, threatened to blacklist an American apparel company, and imposed restrictions on critical mineral exports to the United States. These developments underscore the fragility of US-China relations and their ripple effects on the AUD.

Adding to the pressure, China’s policymakers are considering allowing the Chinese Yuan to weaken as a countermeasure against anticipated tariff hikes. This could indirectly weigh on the Australian Dollar, given Australia’s heavy reliance on exports to China. President Xi Jinping’s assertion that “there are no winners in trade wars, tariff wars, or tech wars” highlights the global stakes involved.

Domestically, the Australian economy presents a mixed picture. Employment data provided a brief respite, with seasonally adjusted Employment Change figures rising by 35,600 in November. This brought total employment to 14.54 million, while the Unemployment Rate dropped to a historic low of 3.9%, beating market expectations of 4.2%. However, weaker-than-expected GDP growth in the third quarter painted a less optimistic picture. Australia’s GDP rose just 0.3%, missing forecasts of 0.4% and marking the slowest annual growth rate since the pandemic.

The Reserve Bank of Australia (RBA) kept the Official Cash Rate (OCR) steady at 4.35% during its December policy meeting. While RBA Governor Michele Bullock acknowledged that inflation risks have eased, she emphasized the need for vigilance. The central bank’s cautious stance reflects broader concerns about slowing economic growth and its impact on future policy decisions.

In contrast, the US Dollar has been buoyed by strong economic data. The US Producer Price Index (PPI) for November exceeded expectations, rising 0.4% month-over-month, the largest gain since June. This robust performance, coupled with a 2.7% year-over-year increase in the US Consumer Price Index (CPI), has reinforced market expectations for further policy tightening by the Federal Reserve.

Traders are now fully pricing in a 25-basis-point rate cut during the Federal Reserve’s meeting on December 18, signaling confidence in the resilience of the US economy. This monetary policy divergence between the Fed and the RBA has further widened the yield differential, supporting the USD and pressuring the AUD/USD pair.

Technical Analysis

The AUD/USD pair is trading near 0.6360, with technical indicators pointing to a bearish outlook. The pair remains within a descending channel pattern, and the 14-day Relative Strength Index (RSI) hovers just above the oversold territory at 30, suggesting sustained downward momentum. Immediate support lies at the yearly low of 0.6348, last tested in early August. A decisive break below this level could accelerate the decline, targeting the channel’s lower boundary near 0.6190.

Conversely, any upside recovery will face resistance at 0.6450. A breach of this level would be necessary to negate the current bearish trend. The expected trading range for the day is between support at 0.6310 and resistance at 0.6400.

TRADE RECOMMENDATION

SELL AUDUSD

ENTRY PRICE: 0.6370

STOP LOSS: 0.6420

TAKE PROFIT: 0.6190

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The British Pound fell significantly after data revealed a surprising contraction in the UK’s GDP and factory output for October, while expectations mount for volatile trading ahead of key economic releases next week.

SELL GBPUSD

Close Time

CLOSED

1.26300

Entry Price

1.23000

1.28000

1.25573 +0.00575 +0.46%

115.0

Pips

Profit

1.23000

1.25150

Exit Price

1.26300

Entry Price

1.28000

The British Pound Sterling (GBP) experienced a sharp selloff on Friday after dismal economic data highlighted persistent weakness in the United Kingdom’s economy. The Office for National Statistics (ONS) reported that the UK’s monthly Gross Domestic Product (GDP) declined by 0.1% in October, extending the contraction from September and falling short of economists’ forecasts for modest growth of 0.1%.

Adding to the bleak picture, both Industrial and Manufacturing Production contracted by 0.6% month-on-month, marking a second consecutive month of declines. Analysts had hoped for a rebound in factory output, but those expectations were dashed. On an annual basis, Industrial Production slipped by 0.7%, while Manufacturing Production stagnated.

The disappointing data underscores ongoing struggles in the UK’s industrial sector. Persistent weakness suggests that producers are scaling back operations in anticipation of reduced consumer demand, exacerbated by rising employer costs. The Labour Party’s recent policy to increase employers’ National Insurance (NI) contributions from 13.8% to 15% has further strained businesses, eliciting widespread dissatisfaction.

The Pound is likely to face heightened volatility in the coming week as investors brace for key economic releases, including UK employment figures for the three months ending October and November’s Consumer Price Index (CPI). Additionally, the Bank of England (BoE) will convene on Thursday to determine interest rates. While markets widely anticipate the BoE will maintain rates at 4.75%, any surprises could significantly impact the GBP’s trajectory.

The Pound’s decline coincides with contrasting developments in the United States, where the Dollar continues to strengthen. The US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, climbed above 107.00 on Friday, extending its six-day winning streak. The surge followed a hotter-than-expected US Producer Price Index (PPI) report for November, which revealed that both headline and core producer inflation accelerated to 3% and 3.4% year-on-year, respectively.

On a monthly basis, headline PPI rose by 0.4%, exceeding the previous 0.3%, while core PPI met expectations at 0.2%. The data suggests rising input costs that businesses may pass on to consumers, potentially fueling higher consumer inflation. This complicates the Federal Reserve’s efforts to balance economic growth with inflation control. While traders are pricing in a 25-basis-point rate cut at the Fed’s meeting next Wednesday, the higher-than-expected PPI could prompt the central bank to reconsider its policy-easing trajectory for January.

Technical Analysis

From a technical standpoint, the GBP/USD pair extended its downside momentum to trade near 1.2625 after failing to sustain levels above the 20-day Exponential Moving Average (EMA) at 1.2715. The pair fell close to the upward-sloping trendline around 1.2610, originating from the October 2023 low of 1.2035.

The recent price action invalidated the inverted head-and-shoulders pattern highlighted in prior analyses, leaving the pair under sustained bearish pressure. Immediate support lies at 1.2565, which could serve as the next downside target. Conversely, a breach above the 1.2735 resistance level would halt the bearish trend and signal potential recovery attempts in the short term.

Expected Trading Range: 1.2575 (support) – 1.2730 (resistance). Trend Forecast: Bearish.

TRADE RECOMMEDNATION

SELL GBPUSD

ENTRY PRICE: 1.2630

STOP LOSS: 1.2800

TAKE PROFIT: 1.2300

Risk Warnings and Disclaimers

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Manuel

Cryptocurrency

Summary:

Consolidation phases often maintain consistent highs and lows, suggesting long opportunities targeting 0.0026.

BUY SOL-BTC

Close Time

CLOSED

0.0022150

Entry Price

0.0026000

0.0020800

0.0018808 -0.0000328 -1.71%

135.0

Pips

Loss

0.0020800

Exit Price

0.0022150

Entry Price

0.0026000

Blockchain data analytics company Chainalysis has announced new support for tracking activity within the Solana network. This enhancement allows for comprehensive monitoring of cryptocurrencies and tokens operating on Solana, broadening the scope of its blockchain analysis services.

Matthew Wilson, Chainalysis's Director of Product, shared the news via LinkedIn, stating: "Chainalysis has expanded its Solana coverage to include all Solana tokens within KYT and Reactor. From the moment an SPL contract is deployed, Chainalysis provides notifications, exposure metrics, and full tracing capabilities."

This development equips exchanges and businesses utilizing Chainalysis tools with detailed insights into tokens on Solana, ensuring robust compliance. Additionally, Wilson emphasized its utility for governments and security organizations in investigating fraud and scams associated with these assets.

Notably, this move includes support for tracking activity on platforms like Pump.fun, which facilitates the issuance of tokens and memecoins on Solana. While many well-known cryptocurrencies have emerged from this platform, it has also been linked to numerous scam projects.

The announcement comes on the heels of Arkham Intelligence's expansion into the Solana ecosystem, where they now provide detailed data on tokens, projects, and wallets. Both developments highlight the increasing importance of Solana in the blockchain space.

Moreover, this news aligns with a broader market trend, as the memecoin sector sees record-high trading volumes and capital inflows. Solana has emerged as a hub for such tokens due to the ease of creation offered by platforms like Pump.fun.

In a parallel development, asset management giant BlackRock has recommended certain investors allocate 2% of their portfolios to Bitcoin. This marks a significant shift, as it’s the first time the firm has issued specific guidance on Bitcoin allocation, signaling growing institutional confidence.

The recommendation appeared in a report shared by Bloomberg analyst Eric Balchunas, describing it as a positive step for Bitcoin adoption. As of now, BlackRock’s iShares Bitcoin Trust (IBIT) manages 530,831 BTC, valued at over $53.8 billion, making it the top-performing Bitcoin ETF.

Bitcoin itself has reached significant milestones, recently surpassing $100,000 per unit. However, the market remains highly volatile, driven by liquidation events and substantial trading volumes.

Adding to the momentum, newly elected U.S. President Donald Trump has reaffirmed plans to establish a strategic Bitcoin reserve for the country. In an interview with CNBC’s Jim Cramer, Trump reiterated his campaign promise to position the U.S. as a global leader in cryptocurrency innovation.

SOLBTC Triple Test Bullish Opportunities Ahead_1

Technical Analysis

For the SOLBTC pair, the price has once again reached the local low of 0.002144, marking the third test of this level. On each previous occasion, the price initiated a bullish move from this zone. Should the pattern repeat, a rally toward the upper boundary of the channel is possible. The RSI at 33.80 aligns with levels observed during prior rebounds, further supporting this potential scenario.

The 100- and 200-period moving averages are positioned in the middle of the channel, indicating a consolidating price range. Consolidation phases often maintain consistent highs and lows, suggesting long opportunities targeting 0.0026. Conversely, a break below 0.002144 could push the price down to 0.001976.

Trading Recommendations

Trading direction: Buy

Entry price: 0.002215

Target price: 0.002600

Stop loss: 0.002080

Validity: Dec 20, 2024 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

On Thursday, against the backdrop of a declining US dollar, the EURUSD rebounded above 1.0500. However, the upside potential for EURUSD seems limited due to expectations of further rate cuts by the European Central Bank (ECB) in 2025. Attention is now turned to the ECB's policy statement and Lagarde's press conference.

BUY EURUSD

Close Time

CLOSED

1.04727

Entry Price

1.07090

1.03830

1.04249 +0.00643 +0.62%

89.7

Pips

Loss

1.03830

1.03826

Exit Price

1.04727

Entry Price

1.07090

Fundamentals

The focus of financial markets on Thursday was the ECB policy meeting. The market currently anticipates a 25bps cut in the benchmark interest rate at this meeting. Ahead of the ECB's policy statement, the EURUSD held onto gains above 1.0500.

For the ECB, debate also revolves around the scale of its next move. Recent speculation about a 50bps rate cut has been largely dispelled by comments from ECB officials. A more likely outcome is a 25bps reduction in the deposit rate to 3.00%.

However, market participants are closely watching the tone of the ECB's statement and press conference. Amid weak economic activity, inflation is expected to stabilize at the target level in the middle of 2025. The ECB will make it clear that continued easing will be needed next year.

Currently, investors are expecting rate cuts at every meeting, with the deposit rate potentially reaching 1.75% by the end of 2025. However, such an aggressive pace of rate cuts could push rates below neutral levels.

EURUSD: Navigating Choppy Waters with Strategic Buy-Low, Sell-High Tactics _1

Technical Analysis

In terms of market impact, the EURUSD has fallen sharply after failing to break through the 1.0600 psychological level and is now challenging the 1.0500 level. Over the past month, the asset has been trading within a narrow range between 1.0450 and 1.0600. Oscillators indicate further declines ahead. The Relative Strength Index has fallen below the neutral level of 50, and the MACD lines are moving below the 0 axis.

On the downside, a break below the 1.0471 support level for EURUSD would indicate that the corrective rebound from the 1.0330 level has completed at 1.0629, and the decline from 1.1213 is set to resume. The intraday bias will first return to the downtrend at 1.0330, followed by 1.0254. Additionally, in this scenario, persistent trading below the key Fibonacci level of 1.0404 would bring a stronger bearish implication.

On the other hand, if the price breaks through the MA20 of 1.0530, the market may return to the key level of 1.0600. If the market shows sufficient strength this time and breaks through this area, the next resistance could come from 1.0665.

Overall, since its peak at 1.1215, EURUSD has been strongly bearish. Only a breakthrough of the MA200 at 1.0830 could potentially turn the outlook bullish.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.0465

Target Price: 1.0709

Stop Loss: 1.0383

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

Support: 1.0479/1.0461/1.0426

Resistance: 1.0530/1.0568/1.0600

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Silver prices surged to a five-week high, driven by expectations of a Fed rate cut and moderate inflation data. The market awaits China’s economic policy update, which could boost demand for silver.

BUY XAGUSD

EXP

PENDING

31.800

Entry Price

34.000

30.200

29.524 +0.505 +1.74%

Pips

PENDING

30.200

Exit Price

31.800

Entry Price

34.000

Silver prices surged to a fresh five-week high, reaching approximately $32.30 during Thursday’s European trading session, as traders have fully priced in expectations of a Federal Reserve (Fed) interest rate cut in the upcoming policy meeting on Wednesday. The optimistic sentiment surrounding the white metal comes as investors anticipate that the Fed will implement a 25 basis point (bps) reduction in rates, bringing the target range to 4.25%-4.50%. This shift is particularly beneficial for non-yielding assets like silver, which stand to gain as lower interest rates reduce the opportunity costs of holding such metals.

The uptick in silver prices is also fueled by broader market expectations that the Fed will adopt a more dovish stance in response to recent economic data. The release of the U.S. Consumer Price Index (CPI) for November revealed moderate growth in rental prices, a key component of inflation, which has further intensified the outlook for a dovish Fed. The headline CPI, which tracks the overall inflation rate, rose by 2.7% year-over-year, while the core CPI, excluding the more volatile food and energy components, increased by 3.3%, both in line with market expectations.

This data has reinforced expectations that inflationary pressures are easing, giving the central bank more room to lower borrowing costs. In response, the U.S. Dollar Index (DXY), which measures the strength of the dollar against a basket of six major currencies, dropped to around 106.50, while 10-year U.S. Treasury yields edged higher, approaching 4.30%. The drop in the dollar’s value typically benefits precious metals, as they become more affordable for investors holding other currencies.

Looking ahead, market participants are eagerly awaiting the outcome of China’s high-level economic work conference, a two-day closed-door meeting where Chinese leadership will unveil the country’s economic agenda for 2025. Analysts anticipate that China’s government may roll out a significant stimulus package aimed at bolstering domestic consumption and stabilizing the country’s real estate sector. Given silver’s extensive use in industrial applications, including solar energy, electric vehicles, and mining, any substantial economic stimulus from China would likely spur demand for the metal, further supporting its price trajectory.

Technical Analysis

From a technical perspective, silver’s recent price movement reinforces the expectation of continued bullish momentum in the near term. The market has now resumed its upward trajectory, which positions silver to potentially hit the next resistance level at $32.86. A break above this level could pave the way for further gains, with $34.00 emerging as the next target. As long as the price stays above key support levels, the bullish trend remains intact.

However, traders should be mindful of the downside risks. If silver fails to maintain its upward trajectory and falls below the $31.45 mark, this could signal a reversal in sentiment, with prices turning lower. In such a scenario, the bullish wave would lose momentum, and silver prices could see a decline.

For the day ahead, the expected trading range for silver is between the support level of $31.60 and resistance at $32.50. Given the overall bullish outlook, the trend remains positive, with the potential for further gains if silver can continue to maintain its upward momentum.

TRADE RECOMMENDATION

BUY XAGUSD

ENTRY PRICE: 31.800

STOP LOSS: 30.200

TAKE PROFIT: 34.00

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The NZD/USD pair gives up earlier gains as the US Dollar recovers despite traders anticipating a 25 basis point cut in US interest rates.

SELL NZDUSD

Close Time

CLOSED

0.57950

Entry Price

0.57000

0.58600

0.56488 +0.00194 +0.34%

26.7

Pips

Profit

0.57000

0.57683

Exit Price

0.57950

Entry Price

0.58600

The NZD/USD currency pair, which had shown signs of recovery earlier on Thursday, quickly surrendered its intraday gains as the US Dollar regained strength across the board. This turn of events, despite market expectations of a dovish Federal Reserve (Fed) stance, underlines the ongoing pressure on the New Zealand Dollar. As of the early North American session, the Kiwi pair slid back below the critical 0.5800 level, continuing its struggle in a broader bearish trend.

This reversal comes after a brief period of optimism, during which market participants had priced in a potential 25 basis point rate cut from the Federal Reserve following its two-day monetary policy meeting. Despite the Fed's dovish outlook, which suggests that US interest rates could be reduced to 4.25%-4.50%, the US Dollar managed to recover much of its recent losses, prompting a renewed sell-off in the NZD/USD pair.

The Kiwi has faced significant headwinds for more than two months, languishing near a two-year low. The ongoing deterioration of the New Zealand Dollar's outlook is attributed to several factors, most notably the aggressive interest rate cuts implemented by the Reserve Bank of New Zealand (RBNZ). In a bid to address economic slowdowns, the RBNZ has slashed its Official Cash Rate (OCR) by a cumulative 125 basis points in three consecutive policy meetings this year, bringing it to its current level of 4.25%.

The central bank's actions reflect the increasingly challenging economic landscape in New Zealand, driven by slowing inflationary pressures, a weakening labor market, and disappointing business activity. The RBNZ's response to these developments has been a necessary one; however, it has come at a cost to the value of the New Zealand Dollar, which has struggled to find any lasting support.

At the same time, the US Dollar has been gaining ground on global markets, buoyed by expectations that US fiscal policy under President-elect Donald Trump will inject inflationary pressures into the economy. The anticipated implementation of higher import tariffs and tax cuts is seen as potentially boosting inflation, which in turn strengthens the appeal of the US Dollar relative to other currencies. This has exacerbated the downward pressure on the Kiwi, which has been further weakened by the Fed's dovish stance.

Technical Analysis

Technically, the NZD/USD pair is currently showing some bullish divergence, but this pattern seems unlikely to trigger a substantial reversal in the near term. The short-term outlook for the pair remains decidedly bearish, with the likelihood of a continued decline towards the 0.5700 level. Despite the brief uptick above the 0.5800 mark, the broader trend remains negative, and the pair will likely struggle to maintain gains in the face of persistent pressure from the US Dollar.

The pair's resistance is seen at the 0.5860 level, which continues to cap any significant upward movement. The EMA50 (50-period Exponential Moving Average) remains a key technical indicator, reinforcing the bearish bias as it provides resistance to any rally attempts. In the near term, the expected trading range for NZD/USD is between the support at 0.5750 and resistance at 0.5850. Traders will be closely watching for any developments that might shift the technical landscape, but for now, the bearish outlook prevails.

TRADE RECOMMENDATION

SELL NZDUSD

ENTRY PRICE: 0.5795

STOP LOSS: 0.5860

TAKE PROFIT: 0.5700

Risk Warnings and Disclaimers

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Risk Disclosure