An additional rate hike at the Federal Reserve's prospective final meeting of 2023, initially speculated to occur, is now improbable because the probability has decreased to almost zero. A shift in sentiment has occurred in recent weeks, notwithstanding the possibility of additional rate increases.
Although the initial increase in the Fed Funds rate is anticipated in the summer, policymakers expect additional rises to reach the 5% target by the end of next year. However, certain individuals argue that monetary policy is strategically positioned to decelerate the economy.
This week, the European Central Bank (ECB) is anticipated to maintain its current stance as inflation has decelerated more rapidly. Regardless of the difficult economic conditions in the UK, the BoE must persuade the markets that no rate cuts will begin before the following year's summer.
At 7.9%, wage growth in the United Kingdom remains a subject of concern. The October monthly GDP data for the United Kingdom may offer valuable insights into the economy's performance as it transitions into the fourth quarter.
Central banks worldwide are implementing various monetary policy approaches in response to inflation, growth concerns, and geopolitical tensions as they attempt to navigate economic uncertainty.
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Forex Technical Outlook for 11 December 2023 to 15 December 2023
Let’s see the list of events to look at this week:
- RBA Gov Bullock Speaks on Tuesday
- GBP Claimant Count Change on Tuesday
- US Core CPI m/m on Tuesday
- The UK GDP m/m on Wednesday
- US Core PPI on Wednesday
- Federal Funds Rate and FOMC Statement on Wednesday
- SNB Monetary Policy Assessment and Rate Statement on Thursday
- BoE Official Bank Rate and Rate Statement on Thursday
- US Core Retail Sales m/m on Thursday
- China Industrial Production y/y on Friday
- French and German Flash Manufacturing PMI on Friday
Let’s see the market outlook from the weekly forecast:
The EUR/USD started the week with buying pressure but ended up closing below the 1.0900 psychological. The key price driver for this currency pair was the market sentiment, betting the US Dollar against the Euro due to the monetary policy change.
The EUR/USD price traded below the 50% Fibonacci Retracement level from the 1.1275 high to the 1.0447 low, which is at the 1.0861 level. As the current price trades below this crucial resistance level, we may consider the upcoming price direction as bearish.
In the weekly EUR/USD price, technical indicators have lost bullish momentum and moved to the neutral bearish area. Although the current price trades above 20 and 100 Simple Moving Average levels, both lines head marginally lower, suggesting a minor buying interest.
In the daily timeframe, the technical indicators move firmly lower, while the dynamic 20 EMA is acting as a strong resistance.
In the EUR/USD outlook, the 1.0960 level would be the immediate static resistance, where a bullish break above this level could open room for reaching the 1.1016 level. On the bearish side, if the price remains stable below the 1.0790 level, it could lower the price towards the 1.0690 level.
The Pound Sterling stayed aside from the three-week uptrend against the US Dollar and moved below the 1.2600 level with a daily close. The market sentiment depends on the central bank’s decision, where the recent NFP release appeared as a bullish factor for the US Dollar.
The GBP/USD downside pressure became stable as the recent price formed a daily candle below the 1.2500 psychological level. As per the current outlook, a bearish continuation might come after breaking below the 1.2500 level.
The 14-day RSI is above the 50.00 line with a bearish slope, which indicates limited bullish pressure in the market. Moreover, the weekly chart suggests a bullish continuation as the current price remains above the 20-week line.
According to the daily market outlook of GBP/USD, a bearish trend trading opportunity might come after breaking below the 20 EMA level, which could lower the price towards the 1.2372 level.
On the bullish side, the 100 and 200-day SMAs are still holding the buying pressure, where a bullish settlement above the 1.2600 level could increase the price towards the 1.2819 resistance level.
Despite the bullish sentiment from the Non-farm payroll release, AUD/USD holds the buying pressure above the dynamic line. The unchanged rate decision from the RBA with a hawkish tone needs an additional clue from the FED before setting a clear direction for the AUD/USD.
In the Weekly AUD/USD price, selling pressure is potent from the trendline resistance with a bearish two-bar reversal, which could work as a strong bearish trend trading opportunity. Moreover, a bearish weekly candle below the 20-week SMA with the RSI below the 50.00 line could be a confluence bearish factor for this pair.
In the daily chart, the buying pressure holds above the 0.6526 level, which could be the primary barrier for sellers. Moreover, a corrective pressure is present as the RSI level remains at the 50.00 level.
Based on the daily market outlook, a bearish daily candle below the 0.6520 level could be a strong bearish opportunity, targeting the 0.6400 level.
On the bullish side, investors should monitor how the price holds above the 20 DMA level. The primary intention is to look for a consolidation, and a bullish range breakout could be a long opportunity towards the 0.6800 level.
The bearish exhaustion from the 150.00 level has worked as a strong bearish signal for the USD/JPY price. However, the long-term downside pressure might need more clues before heading for the 130.00 level.
The weekly USD/JPY price suggests a selling pressure below the 20 EMA, where the current RSI moved below the 50.00 line. Moreover, higher moving averages are way below the current price, which could work as a bearish factor as a mean reversion.
In the daily chart, multiple bearish candlesticks are visible below the 147.46 key resistance level, which could work as a bearish trend trading opportunity. However, a minor upward momentum might come during the weekly open as the RSI has found a bottom from the 30.00 oversold zone.
Based on the weekly outlook of USDJPY, bullish pressure is potent this week as the recent selling pressure needs a recovery towards the 20 EMA. However, a bearish rejection from 146.00 to 147.70 could resume the selling pressure, targeting the 141.62 level.
Gold commenced the week on a strong, bullish note, ascending to an approximate all-time high of 2150.00 in the early hours of the Asian trading day on Monday. The increase in activity can be attributed to escalated geopolitical tensions, particularly the Houthi rebels of Yemen targeting three commercial ships in the Red Sea.
This occurrence rekindled apprehensions regarding the possible intensification of the Israel-Hamas dispute into a more extensive crisis within the Middle East. Profit-taking ensued after the notable upswing, resulting in a substantial correction in the XAU/USD pair, which concluded in negative territory below the 2000.00 level.
In the weekly XAU/USD price, a strong bearish candle came, eliminating all gains from the all-time high level. It is a strong sign of a bullish liquidity sweep, which could result in a continuation of the bearish trend this week.
The daily XAU/USD price formed a drop base drop formation with a strong bearish D1 candle below the dynamic 20 EMA.
Based on this structure, a downside continuation is potent for the coming days. Investors might expect a bearish continuation towards the 1931.00 level as long as the price remains below the 2040.11 level.
On the other hand, a bearish rejection with a bullish engulf above the 20 EMA could be a long opportunity, targeting the 2080.00 level.
On Friday, Bitcoin witnessed a surge in price, propelled by positive sentiments that emerged in the wake of newly released U.S. employment data. The data revealed that employment in the US added 199,000 jobs in November, exceeding estimates from the previous month. This represents a notable acceleration in employment expansion compared to October. The optimistic economic sign has bolstered optimism that the current monetary policy of the Federal Reserve could effectively orchestrate a "soft landing" for the country's economy.
The Bureau of Labour Statistics report also revealed a reduction in the US unemployment rate from 3.9% to 3.7%, furnishing investors with supplementary favorable indications as they evaluate the Federal Reserve's potential actions in 2024.
Notably, the data did not indicate a substantial increase in mean hourly wages, an essential metric for assessing the likelihood of inflation. In November, wages increased by 4% annually, signifying a deceleration but still exceeding the 3% benchmark set by policymakers.
In the daily chart, the daily candle formed the low at the 40266.57 level, from where the post-NFP sentiment pushed the price higher with a bullish, wicked candle.
Based on this outlook, the upside possibility is potent, where the main aim is to test the 50,000.00 psychological level. On the bearish side, a stable daily candle below the dynamic 20 EMA could be a short-term bearish signal, targeting the 40,000.00 level.