IC Markets Europe Fundamental Forecast | 28 November 2022

content provided with permission by IC MArkets

What happened across the Asia session?

Most major currencies continued to consolidate as the market heads into the European session. 

What does it mean for Europe and US Sessions?

Look out for potential breakouts amid the consolidation as the market heads into the Europe and US sessions. 

The Dollar Index (DXY)

Key news events today

No major news events. 

What can we expect from DXY today?

The DXY currently trades at 105.93 despite testing a high of 106.30 on Friday. With no major news events for the DXY today, the DXY is likely to continue trading between the price range of 105.65 and 106.30. However, if the DXY resists further downside moves, a stronger rebound could be anticipated, with the next key resistance level at 107.70. 

Central Bank Notes:

  • Federal Reserve hiked rates by 75bps taking interest rates to 4.00%
  • Next meeting is on 15 December 2022
  • Further rate increases can be anticipated, with rate cuts expected only if Fed Reserve is confident inflation is moving back down to 2%

Next 24 Hours Bias

Weak Bullish 


Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

As Gold continues to trade along the 1755 price level, the next directional bias is still heavily dependent on the DXY. If the DXY breaks below the current support level, Gold could continue to climb toward 1780 and the 1800 key resistance level. Alternatively, if the DXY has a sustained move upward, Gold could trade lower briefly with 1735 forming a strong support level. 

Next 24 Hours Bias

Weak Bullish 


The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

The EURUSD traded with some volatility on Friday but failed to find a clear directional bias as the price fluctuated between the 1.0375 and 1.0424 price levels. With the price action on the EURUSD showing a potential rejection of the 1.0440 price level, the EURUSD is likely to consolidate below the resistance level with some downside potential. However, with the current uptrend still very strong, look for the EURUSD to test the 1.0350 price level before trading significantly higher again, with the next key resistance level at 1.0590. 

Central Bank Notes:

  • Main Refinancing Rate is currently at 2.00%
  • Reference to rate hikes continuing at the next “several” meetings removed
  • Next meeting on 15 December 2022

Next 24 Hours Bias

Weak Bearish


The Swiss Franc (CHF)

Key news events today

No major news events. 

What can we expect from CHF today?

On Friday, the USDCHF bounced from the 0.9430 price level to test the near term high of the 0.95 price area. However, the move higher was quickly retraced as the USDCHF ended the trading week at the 0.9449 price level. If the DXY continues to strengthen, look for the USDCHF to trade higher with the key resistance at 0.9530. 

Central Bank Notes:

  • Current policy rate is at 0.50%
  • Next meeting on 15 December 2022

Next 24 Hours Bias

Weak Bearish


The Pound (GBP)

Key news events today

No major news events. 

What can we expect from GBP today?

Despite the recent climb of the GBPUSD, the pound ended with the trading week with little volatility as price consolidated along the 1.21 price level. The GBPUSD could retrace lower if the price closes below the 1.2065 price level, with the next key support level at 1.2020. However, with the strong uptrend of the GBPUSD, if the price breaks above the 1.2150 price level, this would signal a continuation of the uptrend, with the next key resistance level at 1.23. 

Central Bank Notes:

  • Interest rate is currently at 3.00%
  • Peak inflation revised to more than 15% in 2023. 
  • Next meeting on 15 December 2022

Next 24 Hours Bias

Weak Bullish 


The Canadian Dollar (CAD)

Key news events today

No Major News Events

What can we expect from CAD today?

Similar to the USDCHF, the directional bias of the USDCAD is heavily influenced by the DXY. On Friday, the USDCAD bounced from the 1.3320 price level to trade higher toward the 1.34 price area. The USDCAD is likely to consolidate along the current price level of 1.3375, before retracing slightly lower to the 1.3330 price level. 

Central Bank Notes:

  • Increased interest rates to 3.75%  
  • Surprised markets with only 50bps hike in October
  • Future hikes determined by future inflation data and expectations
  • Next meeting on 7 December 2022

Next 24 Hours Bias

Weak Bullish


Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

On Friday, energy prices continued to trade lower, ending the week at the key support levels. Brent traded down to the 83.80 price level with further downside to the 82.00 price level likely. Similarly, WTI traded lower to reach 76.53 and is likely to test the 75.00 price level. Look out for higher volatility on energy prices this week as the OPEC meeting is due on Thursday. 

Next 24 Hours Bias
Weak Bearish