Bullish Flag Formation Emerging, Euro May Continue to Rise

Summary:

The Eurozone's November HICP will make it difficult for the market to link a fall in inflation to a slowdown in rate hikes. But this may also be good for the euro. Meanwhile, the two US labor market-related data and Powell's speech will bring about another collision of market expectations with that of the Fed.

BUY EURUSD

Close Time

CLOSED

1.03070

Entry Price

1.04390

1.02459

1.09528 +0.00043 +0.03%

65.7

Pips

Profit

1.02459

1.03727

Exit Price

1.03070

Entry Price

1.04390

Fundamentals

The euro dropped slightly by 0.11% on Wednesday, with an overall oscillating pattern. The market is in a high wait-and-see mood due to the lack of important economic data along with the arrival of Powell's speech, which is of high interest to the market. The euro opened a little higher during the day and is now at 1.0354, up slightly by 0.23%.

The HICP for the eurozone for November will be released during the day. Although the market generally expects inflation to fall slightly, the bearish impact on the euro may be more limited, as ECB President Lagarde said in her speech on Monday that she would not consider inflation to have peaked. This is because there are too many uncertainties, especially the transmission of excessive energy costs from the wholesale level to the retail level. It is surprising to see that inflation has peaked. The ECB is expected to raise interest rates further to ensure that inflation returns to the target level as soon as possible.

Even if the HICP does fall slightly as the market expects, Lagarde's speech may weaken the market's expectations that inflation has peaked. This, coupled with the divisions within the ECB on slowing rate hikes (the number of supporters and opponents is currently roughly equal, and even the opposing group has a slight advantage), will also make it difficult for markets to link the fall in inflation to a slowdown in rate hikes. But this could be a good thing for the euro.

Besides, the US ADP and job vacancy data will be released during the day, and Powell will also give a speech. These are the main events, which will determine the final trend of the euro. From the speech made by Lael Brainard and John C. Williams, this speech given by Powell is also likely to be hawkish. Meanwhile, the market's expectations for both ADP and job vacancy are smaller than the previous value, which is certainly a good hype point for the market that is eager to see a slowdown in the U.S. labor market. And Powell represents the expectations of the Fed. In other words, this will be another collision between market expectations and the expectation of the Fed.

Technical Analysis

In the 4H chart, the euro is currently within the ascending channel and oscillating range. The euro fell from highs yesterday after touching the top of the channel, temporarily supported by the 100 SMA (1.0307); the price is expected to go down to 1.0025 if it falls below this line. And the euro can only open a new round of upside if it breaks 1.0494. As for the indicators, Stoch, DMI, and Ichimoku all show that the euro will rise after a small decline.

EURUSD: Bullish Flag Formation Emerging, Euro May Continue to Rise_1

Trading Recommendations

Trading direction: Long

Entry price: 1.0307

Target price: 1.0439

Stop loss: 1.02459

Support: 1.03343/1.0307/1.0262/1.0225

Resistance: 1.0360/1.03839/1.04182/1.0439

Risk Warnings and Investment Disclaimers

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November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking

Winkelmann

Forex Central Bank

Summary:

As the US dollar continues to weaken, USDJPY highs have fallen significantly, which is likely to close lower with a rare giant bear candle in November. It indicates that the trend in the medium- and the long-term may have reversed. Therefore, shorting at highs is the best option at the moment.

SELL USDJPY

Close Time

CLOSED

138.950

Entry Price

132.000

146.000

148.418 -0.212 -0.14%

383.2

Pips

Profit

132.000

135.118

Exit Price

138.950

Entry Price

146.000

Fundamentals

The trend of USDJPY is highly correlated with US interest rate policy. Markets have lowered expectations for further aggressive rate hikes by the Fed since November. More traders believe the Fed will moderate its rate hikes to 50bps in December. As a result, US Treasury yields and the dollar index keep falling, and the yen reaped the benefit explicitly.

Although hawkish voices remain strong within the Fed, repeatedly emphasizing that the terminal interest rate will continue to rise. It is undoubtedly an effort to avoid the premature formation of consistent expectations of easing financial conditions, due to the recent shift in market expectations and the cooling of enthusiasm. which is detrimental to the Fed's anti-inflation mission as well.

In addition, previous data implied that Tokyo's core consumer prices rose year-on-year in November at a 40-year high, and exceeded the central bank target of 2% for the sixth consecutive month. It reveals a sign of widening inflationary pressures, which easing deflationary pressures in the Japanese economy and benefiting the yen.

At present, the dollar may have peaked, and it probably will be weaker in the future. At the same time, USDJPY has also lost its motivation for a strong push, for the scrupling of the power of Japanese government intervention. However, as the Fed's hawkish stance remains unchanged, more evidence should be given to confirm the slowdown in inflation and employment. Besides, another non-farm payroll report and inflation data will be released before the December Fed meeting, which may still disrupt the market in the short term to some extent. Therefore, even if USDJPY has passed the big top, the possibility of a decline is very slim, and it will need to fluctuate at highs for a while to build the top.

Technical Analysis

USDJPY: November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking_1

Trading at the monthly chart, USDJPY has significantly retreated from its highs. It is speculated that the monthly line will close lower with a rare giant black candle at the end, which indicates that the trend in the medium- and the long-term may have reversed. Therefore, shorting at highs is the best option at the moment.

USDJPY: November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking_2

Looking at the daily chart, USDJPY seems to have lost momentum to continue to rise after several government interventions. With the weakening of the dollar, USDJPY has not only broken through the key support around 145.0 but also the 140.0 mark, laying the foundation for a trend reversal. Although there was a rebound last week, the space was limited and the strength was not strong, which just headed to 142.0 before turning downward, and has now fallen below the support around 139.0, opening up a new downside trend.

It is recommended to mainly go short when the price rally to around 139.0. The initial target is set below support around 136.0, the second target is around 132.0, and the stop loss is set above 145.0.

Trading Recommendations

Trading Direction: Short

Entry Price: 138.95

Target Price: 132.0

Stop Loss: 146.0

Support: 132.0/136.0

Resistance: 145.0/142.0

Risk Warnings and Investment Disclaimers

USD Is Under Multiple Pressures

Jason

Summary:

Two labor market-related data may boost the market's expectations of slowing down interest rate hikes. Thus, the market could first take advantage of these two data to "enjoy" a bit in anticipation of Powell's hawkish speech. The USD may first fall and then rise under Powell's speech. As for the rise, it depends on the degree of Powell's hawkishness. If it is less hawkish than the market expectations, the USD may even decline.

SELL USDX

EXP

EXPIRED

107.291

Entry Price

106.034

108.000

103.193 -0.059 -0.05%

Pips

EXPIRED

106.034

106.321

Exit Price

107.291

Entry Price

108.000

Fundamentals

The USD continued its oscillation on Tuesday, closing slightly up 0.16%. On the eve of Powell's speech, the market was in a cautious wait-and-see attitude. Although the recent market has gradually digested the Fed's monetary policy tightening path, Powell's speech at this time must be meaningful considering that this is the last speech of the Fed officials before the start of the blackout period, coupled with the current market trading bias that the Fed is nearing the end of the tightening cycle.

Fortunately, the Fed's No. 2 and No. 3 officials have already delivered their speeches and exposed some clues. First, Brainard. There are many people who interpret her words as dovish, which is obviously a misjudgment because the whole speech was a warning that monetary policy may be tighter than before the pandemic, not looser. Also, even when talking about the change of "supply chain pressure relief", she was emphasizing that "although there is a relief, the pressure is still greater than before the pandemic". It is too hard to interpret any dovish meaning.

Secondly, Williams' outlook on the economy is more pessimistic than the Fed's previous forecast. At the same time, he also clearly expressed the impossibility to reach the 2% inflation target next year, and inflation is expected to be higher than 3% instead. Moreover, it will take longer to suppress potential inflation, implying that it is hopeless to cut interest rates next year. This is clearly at odds with current market expectations.

The speech of these two persons may lay the foundation for Powell's hawkish stand.

In addition, ADP data will be released during the day. The market is currently eager to see further evidence of a slowdown in the U.S. labor market. As the "lead" data of Nonfarm Payrolls, ADP undoubtedly has the "ability" to mobilize market expectations. Generally, the market expects that this ADP will be smaller than the previous value, and the market may interpret it as a slowdown in the labor market.

Furthermore, the job vacancy data matters as well, which is also expected by the market to be less than the previous value. If this data and ADP data are in line with market expectations, the expectation of a slowdown in interest rate hikes will heat up. Besides. Since these two data are released before Powell's speech, the market may 'enjoy' them. The USD may first fall and then rise under Powell's speech. As for the rise, it depends on the degree of Powell's hawkishness. If it is less than the market expectations, the USD may even decline.

Technical Analysis

Regarding the 4H chart, USD is running in the oscillation range between 107.291 and 106.0344 and is also in a descending channel. It is blocked by 108.824. There is strong and massive resistance in the range of 107.29-107.35, in which there is the top of oscillation and the 100-day moving average as well as the descending trendline and the top of descending channel. The key resistance is 108.453, and the USD will only stop dropping after it breaks below this resistance. Besides, the lower strong support is 105.465, which is close to the new low of 3 months and the bottom of descending channel. Furthermore, the key support is 104.651, which is the 61.8% Fibonacci retracement. If the USD breaks below this line, it could reach 103.1, which is the starting point for the gains since June. Referring to indicators, Stoch and DMI allude to a short-term plunge in the USD.

USDX: USD Is Under Multiple Pressures _1

Trading Recommendations

Trading direction: Short

Entry price: 107.291

Target price: 106.034

Stop loss: 108.00

Support: 106.034/105.465/104.651

Resistance: 106.824/107.291/107.735

Risk Warnings and Investment Disclaimers

Pessimistic Expectations Improved, EUR Could Be Boosted in the Medium Term

King Ten

Forex

Summary:

Although the industrial sentiment index is not improved, the eurozone economic sentiment, and consumer and service sector sentiment index were promoted in November. Marginally, the market's pessimistic expectations for the eurozone gradually improved, which may boost the EUR in the medium term.

BUY EURUSD

EXP

EXPIRED

1.02400

Entry Price

1.05000

1.00000

1.09528 +0.00043 +0.03%

Pips

EXPIRED

1.00000

1.06355

Exit Price

1.02400

Entry Price

1.05000

Fundamentals

Last night, Eurostat announced that the eurozone economic sentiment index ended the decline for months in November, and rebounded to 93.7, better than the market expectations of 93.2, while the previous value was 92.5. In addition, the industrial sentiment index fell to negative 2, worse than the market expectations of negative 0.5, and the previous value of negative 1.2. Moreover, the eurozone services sentiment index rose to 2.3 in November, better than the market expectations of 2, and the previous value was 1.8.

There are signs of stabilization in the eurozone economy. Regarding the November economic data, although the industrial index is still very weak, the economic sentiment and service sector sentiment index has rebounded and oscillated between 1.02 and 1.05 recently. Besides, the marginal shorting sentiment and the market's pessimistic expectations for the eurozone have been improved, indicating bullish opportunities for the EUR in the medium term. Also, the US will release numerous essential data today, and the Fed's hawkishness may drag down the EUR, which could be an opportunity to build long positions for further gains.

Technical Analysis

Referring to the daily chart, the 5-day moving average and the 10-day moving average are moving closely, suggesting a weaker bullish momentum. Additionally, MACD forms a death cross, which could result in short-term depreciation. However, the support is still valid near the 20-day moving average below, which was the low point in the previous sessions. Therefore, it is recommended to go long near the previous low or the 20-day moving average.

EURUSD: Pessimistic Expectations Improved, EUR Could Be Boosted in the Medium Term_1

Trading Recommendations

Trading direction: Long

Entry price: 1.02400

Target price: 1.05000

Stop loss: 1.00000

Support: 1.02800/1.00800

Resistance: 1.04800/1.06200

Risk Warnings and Investment Disclaimers

Powell's Speech Could Extend Hawkish Tone, Gold Bulls Having Concerns

Winkelmann

Summary:

The gold price is hovering in oscillation in the short term. It is suggested to wait for Powell's speech to point out a new direction, and the hawkish tone of the speech expected by the market may make the gold bulls have concerns.

SELL XAUUSD

Close Time

CLOSED

1760.00

Entry Price

1735.00

1788.00

2015.44 +1.41 +0.07%

280.0

Pips

Loss

1735.00

1788.33

Exit Price

1760.00

Entry Price

1788.00

Fundamentals

The release of the weaker-than-expected U.S. inflation data in early November led the market to lower expectations for future Fed rate hikes, which was seen as a sign of hawkishness peaking. With U.S. Treasury yields and the dollar falling back, the gold price appears to be on the turnaround. Last week's Fed minutes confirmed expectations of a slower pace of future rate hikes. Besides, the repeated spread of the global pandemic, geopolitical situation, global recession fears and buying on the dips have provided good support for gold.

The minutes of the Fed meeting, however, also implied that interest rates would peak higher than previously expected. And Fed officials continued their hawkish remarks, repeatedly emphasizing their determination to fight inflation and reiterating that the Fed's efforts to raise interest rates are not over. The market expects Fed Chairman Jerome Powell to continue the hawkish tone of the interest rate resolution and recent Fed officials during the day's New York session, downplaying the importance of slowing the pace of interest rate hikes, paving the way for further rate hikes in December. He may even mention that the Fed will maintain a higher interest rate level for a longer period.

The CME FedWatch Tool shows that the probability that the market expects the Fed to raise rates by 50 basis points in December has dropped to 66%, while earlier this month the probability was once expected to reach more than 80%. The expectation of slowing down the pace of interest rate hikes has cooled, which may provide some support to the dollar in the short term, with gold prices facing the risk of further retracements.

Also, the Fed is still in the process of raising interest rates. Even though the dollar index's high has passed, the relative strength of the U.S. economy and the Fed's more assertive hawkishness may continue to support the dollar in the face of downgraded global growth; at least in the short term, there is little probability of a downward trend in the dollar, which could also weaken gold's rally space.

Technical Analysis

XAUUSD: Powell's Speech Could Extend Hawkish Tone, Gold Bulls Having Concerns_1

In the daily chart, XAUUSD is hovering in oscillation in the short term. The trading range is still maintained between 1730 and 1760, and the breakout of the range needs to be watched to determine the next direction.

XAUUSD: Powell's Speech Could Extend Hawkish Tone, Gold Bulls Having Concerns_2

In the 4H chart, XAUUSD maintains the range oscillation. The short-term rally in the dollar is still weighing on gold prices, but the trading is relatively calm. The market is still waiting for Powell's speech. As gold price is close to the top of the oscillation range in the short term, it is recommended to go short after the price surges higher.

It is recommended to go short at highs and go long at lows. Try to go short with small positions after the price rallies to near 1760, with the target located near the support level of 1730 and the stop loss located above 1786.

Trading Recommendations

Trading direction: Short

Entry price: 1760.0

Target price: 1735.0

Stop loss: 1788.0

Support: 1747/1730

Resistance: 1785/1860

Risk Warnings and Investment Disclaimers

Market Oscillation Is Expanded Due to the Upcoming Significant Meeting

King Ten

Summary:

The market may be difficult to see a one-sided trend before the significant meeting and it will be in a wide range of oscillation. To buy lows and sell highs is recommended.

BUY WTI

EXP

EXPIRED

78.000

Entry Price

83.000

73.000

75.645 +0.549 +0.73%

Pips

EXPIRED

73.000

81.272

Exit Price

78.000

Entry Price

83.000

Fundamentals

U.S. API crude oil inventories fell by 7.85 million barrels, compared with the expected decline of 2.487 million barrels and the previous drop of 4.819 million barrels.

International crude oil futures prices fluctuated on November 29th, mainly due to expectations that China will ease its strict COVID-19 pandemic controls, while concerns about OPEC+ keeping production unchanged at its upcoming meeting limited gains as well. Besides, five OPEC+ sources told Reuters that the group is likely to continue its current policy at Sunday's meeting, and two other sources said further production cuts could also be discussed, but not very likely.

Joint Prevention and Control Mechanism of the State Council of PRC issued a "plan to boost vaccination of elderly people against COVID-19", calling for accelerating the vaccination rate for people aged over 80 and continuing to increase the rate for people aged 60-79. It will remove a key obstacle to easing the "Zero Covid-19" policy, which could contribute significantly to the future demand growth in China.

Currently, there is no clear direction for the oil price movement, and both rising and falling are cautious, waiting for the conference at the weekend. If production cuts enlarge, it will be the main logic of short-term oil price trading. Also, the inflation in the eurozone declines, while the U.S. inflationary pressure could be eased in November, and the U.S. oil reserve is low now. Furthermore, the U.S. announced that it will buy back strategic reserve stocks at $68-72/barrel previously. All the above will also be short-term support for the oil market.

Technical Analysis

Regarding the daily chart, oil prices are building a short-term double bottom, with stronger support near 76. Now, this position has been confirmed stably in the near term and a rebound is coming.

WTI: Market Oscillation Is Expanded Due to the Upcoming Significant Meeting_1

Trading Recommendations

Trading direction: Long

Entry price: 78.000

Target price: 83.000

Stop loss: 73.000

Support: 76.200/72.800

Resistance: 82.200/83.300

Risk Warnings and Investment Disclaimers

Uptrend Remains Intact Despite Seeming Weakness of Bulls

Eva Chen

Summary:

Before this week's key data are released, the USD had entered a huge support zone. The market could face a big challenge this week as we emerge from the downturn in U.S. yields and begin to study how markets can begin to price the upcoming recession. In a pessimistic scenario, this could turn a bullish market of the USD into a bearish one.

BUY EURUSD

EXP

EXPIRED

1.02800

Entry Price

1.05500

1.01790

1.09528 +0.00043 +0.03%

Pips

EXPIRED

1.01790

1.06341

Exit Price

1.02800

Entry Price

1.05500

Fundamentals

The USD received a huge boost ahead of this week's key data. Is it time to shift the view on the USD's turnaround? To answer such a question, we must first review the minutes of the FOMC meeting released last week.

The minutes of the Federal Open Market Committee meeting last Wednesday confirmed the market's established expectation that the Federal Reserve would reduce the rate hike to 50 basis points in December, and then tighten the policy and keep it unchanged for most of next year. These signals suggest that the market is pricing for an impending recession unless inflationary pressures can somehow normalize in the event of a typical soft landing.

At present, the market is celebrating the decline in the yields of U.S. Treasury Securities, but at some point, the market will have to consider the impact of the economic recession on corporate profits, credit cycles, and asset prices. Fears of a recession intensified as yields fell, the most interesting challenge of the USD and its cross-asset correlation. Will the USD continue to fall as yields fall as the Fed eventually relaxes, or will weaker risk appetite and poorer liquidity, and fears that the Fed will prove too slow to switch to easing, lead to a more significant deleveraging across the market to keep the USD well supported? We believe that if we do see a new round of general risk aversion, the safe haven status of the USD will still exist.

Meanwhile, any indication that inflation has failed to maintain a steady downward path is unwelcome. This could be exacerbated by China's easing of its restrictions and its stimulus & push-up of commodity prices as Europe and the US fall into recession. In this case, the USD is more likely to be sensitive to risk sentiment, as it is hard to see a further drop in yields under such conditions.

In yesterday's trading, the EURUSD once again interacted with its 200-day SMA and broke the recent pivot high of around 1.0480, and an RSI above 50 could give buyers hope for further gains. If the FOMC meeting on December 14 can provide a test of the current market background, the EURUSD could hit new highs.

EURUSD: Uptrend Remains Intact Despite Seeming Weakness of Bulls_1

Technical Analysis

Following yesterday's rejection to break the psychological barrier of 1.0480, the EURUSD fell on Tuesday. Nevertheless, the uptrend remained intact before it fell below 1.0220.

The bulls are now making another attempt to break above the psychological barrier of 1.0480 and maintain a bullish bias above the 200-day SMA. However, the momentum indicators reflect some divergence in the buying interest. Specifically, the RSI peaked near its overbought level of 70 before hitting a new high, and the stochastics turned to the downside, while the MACD was slightly flat below its 0-axis, increasing the risk of a downside reversal.

Nevertheless, the potential downside correction will not deter bulls from buying in the short term, on the contrary, it will attract more bargain hunters (those who go long at the lows). Unless the price returns to its previous low of 1.0220 and is below the 20-day SMA, the 1.0194 level of 23.6% Fibonacci retracement of the 1.2348-0.9535 downtrend will become of immediate concern.

On the bright side, however, if bulls successfully break the threshold of 1.0400 again, the recovery is expected to accelerate above the long-term downtrend. As a result, another bulls' victory could boost buying interest until the threshold of 1.0400 is tested. Moving higher from here could increase bulls' confidence in the EURUSD's further bullish outlook.

Overall, in the short term, investors will continue to support the EURUSD as long as the bottom near 1.0220 remains valid, although bulls appear to be somewhat weak. It is recommended to go long at the lows with the reference to the former supports that are not broken.

Trading Recommendations

Trading direction: Long

Entry price: 1.0280

Target price: 1.0550

Stop loss: 1.0179

Deadline: 2022-12-13 23:55:00

Support: 1.0220, 1.0185

Resistance: 1.0400, 1.0480

Risk Warnings and Investment Disclaimers

Jason

Analyst

I have an in-depth study of fundamentals, especiaslly for the US dollar market. I'm good at short and medium term trading by virtue of my profound financial theoretical knowledge and extensive practical experience.

Ranking

Articles

332

Win Rate

0.00%

P/L Ratio

1.23

Focus on

USDX, EURUSD, GBPUSD

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Bullish Flag Formation Emerging, Euro May Continue to Rise

Fundamentals

Trading Recommendations

November Will Be Closed By a Long Bear Candle, Confirming a Reversal after Peaking

Fundamentals

Technical Analysis

Trading Recommendations

USD Is Under Multiple Pressures

Fundamentals

Technical Analysis

Trading Recommendations

Pessimistic Expectations Improved, EUR Could Be Boosted in the Medium Term

Fundamentals

Technical Analysis

Trading Recommendations

Powell's Speech Could Extend Hawkish Tone, Gold Bulls Having Concerns

Fundamentals

Technical Analysis

Trading Recommendations

Market Oscillation Is Expanded Due to the Upcoming Significant Meeting

Fundamentals

Technical Analysis

Trading Recommendations

Uptrend Remains Intact Despite Seeming Weakness of Bulls

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure