By JustMarkets
Many European countries will update their inflation data this week. This data, along with the labor market report, will give more clarity to ECB officials on which rate hike step to choose at the December meeting. Some ECB officials are leaning towards a 50 basis point hike, while others are leaning towards a 75 bps hike. If this week’s data shows that inflationary pressures are at least not increasing, no doubt the ECB will favor the 0.5% step. Economists expect all economies except Spain to show a slowdown in inflation.
The trend on the EUR/USD currency pair on the hourly time frame is bullish. But the price is trading below the moving averages, and the MACD indicator is negative again. The price is adjusting. Buy trades are best considered from the support level of 1.0340 but with additional confirmation. Sell deals can be considered from the resistance level of 1.0408, but better with confirmation in the form of a reverse initiative.
Alternative scenario: if the price breaks down through the support level of 1.0194 and fixes below it, the downtrend will likely resume.
The Bank of England will release several financial reports this week, including consumer credit, secured lending, and mortgage approvals. Several business reports will also be released, including the CBI distribution trade survey. Sales data showed that Britons spent less money on Black Friday than last year, even though the number of transactions was up 3.2%. Energy-saving products led purchases as Britons look to save money on their energy bills.
From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading higher at the level of the moving averages. The MACD indicator has turned negative, and there is slight sellers’ pressure during the day. Under such market conditions, it is better to look for buy deals from the support level of 1.2043, but with confirmation. Sell trades are best sought on intraday time frames from resistance levels of 1.2147 or 1.2167, but they are also better with confirmation.
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Alternative scenario: if the price breaks down of the 1.1800 support level and fixes below it, the downtrend will likely resume.
The situation on the currency pair USD/JPY remains the same. The Bank of Japan intends to keep its monetary policy soft till spring 2023, while the US Federal Reserve is on the path of tightening and plans at least two more interest rate hikes. The difference between the rates will put negative pressure on the Japanese Yen, so fundamentally, it is too early to expect a reversal in the USD/JPY.
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, but the sellers’ strength is insignificant. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 138.50, but only with confirmation. Sell deals can be searched from the resistance level of 140.75 under the condition of a reverse reaction or a false breakdown.
Alternative scenario: If the price fixes above 145.84, the uptrend will likely resume.
The Bank of Canada and the US Federal Reserve have taken an aggressive stance on interest rate increases this year in an attempt to stem rampant inflation. On the one hand, the result of this policy has been a slowdown in inflation indicators. On the other hand, economic indicators have fallen. The Bank of Canada’s upcoming interest rate decision in December will depend on key data such as the latest employment data and wage trends to be released this week. For now, analysts are predicting that the Bank of Canada will raise interest rates by 0.25% in December before taking a pause.
From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price has corrected to the support levels. But the MACD indicator is in the positive zone. On the lower time frames inside the day, purchases are observed. The best way to sell is to consider the resistance level of 1.3458, but with confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3386, but also with additional confirmation.
Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3508, the uptrend will likely resume.
By JustMarkets
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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