IC Markets Europe Fundamental Forecast | 29 November 2022
What happened across the Asia session?
Most major currencies rose briefly against the DXY but consolidated at the interim levels heading into the European session.
What does it mean for Europe and US Sessions?
Look out for potential reversals across the major currencies if the DXY continues to strengthen.
The Dollar Index (DXY)
Key news events today
USD CB Consumer Confidence
What can we expect from DXY today?
The DXY fluctuated strongly overnight as markets returned after the Thanksgiving weekend. Comments from Federal Reserve members provided mixed sentiments as member Bullard stated that the “Fed will have to pursue rate hikes into 2023” whilst member Barkin indicated that he was supportive of a rate path that was “slower, longer but potentially higher.” The DXY currently trades at 106.20 as it reverses from the recent high of 106.65, with further downside potential toward the key support level of 105.40 likely. Alternatively, if the retracement of the DXY ends at the current price level, the DXY could rebound higher to test the 107 round number resistance level.
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 Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold traded with little volatility despite the overnight fluctuation of the DXY, with the price maintaining around the 1750 price level. Look for a potential breakout on Gold, if the price is able to trade above the 1760 level, with the next key resistance level at 1785. However, for Gold to trade sustainably higher, it is anticipated that the DXY would have to weaken back down to the 105.40 price 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?
Overnight, the EURUSD saw significant volatility as the price fluctuated strongly between the 1.0345 and 1.05 price range. The spike upward was quickly reversed with the EURUSD ending the trading day at the 1.0335 price level. Currently trading at the 1.0380 price level, the EURUSD could continue to trade lower if the DXY strengthens further. However, watch out for price to be supported at the key level of 1.03.
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?
Overnight, the USDCHF traded higher to retest the 0.95 resistance area, however, the move higher was unsustained as the price reversed strongly from the resistance level. Currently trading at the 0.9465 price level, the USDCHF could trade lower to test the near term support area of 0.94 and 0.9390. Alternatively, if the DXY continues to strengthen, look for the USDCHF to break above the 0.95 resistance level to signal a continuation of the uptrend, with the next key resistance level at 0.96.
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?
The GBPUSD reversed strongly after rejecting the 1.21 round number resistance level to trade lower toward the 1.1950 support level overnight. Although the GBPUSD retraced to test the 1.20 price level, the current price action signals the potential for further downside. Look for the GBPUSD to break below the 1.1950 price level to signal a continuation of the downtrend, with the next key support level at 1.1860.
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 Bearish
The Canadian Dollar (CAD)
Key news events today
CAD GDP m/m
What can we expect from CAD today?
The USDCAD currently trades at the 1.3435 price level following significant volatility overnight as the price rose strongly to test and reject the round number resistance level of 1.35. With the Canadian GDP due to be released unchanged (Forecast: 0.1% Previous 0.1%) look for the USDCAD to break below the 1.34 price level to signal a continuation of the downtrend with the next key support level at 1.3330.
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?
As markets continue to anticipate an increase in production levels from the OPEC members, energy prices slid further. WTI reached the 74.00 key support level and Brent traded lower toward the 80.40 price level overnight. However, as the prices retrace, look for the current retracement to complete before a continuation of the downtrend back toward the near-term overnight support levels.
Next 24 Hours Bias
Weak Bearish