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Gold prices are hovering around 2,650 USD per troy ounce as investors remain cautious, conserving their energy for a potential move depending on the US Federal Reserve’s rate decision later tonight. The predominant market expectation is a 25-basis-point cut in interest rates, but there's significant uncertainty about the Fed’s monetary policy trajectory for 2025, which will be a key focus in today’s announcements.

Recent robust retail sales data from November, showing a 0.7% increase, have stirred discussions among investors that the Fed might decelerate its pace of rate cuts. This surge in retail sales is seen as a pro-inflationary factor, potentially influencing the Fed’s approach towards monetary easing.

A slowdown in rate reductions would likely be unfavourable for Gold, as lower interest rates generally decrease the opportunity cost of holding non-yielding assets like Gold, making it more attractive. Nonetheless, investors should wait for the Federal Reserve’s statement, which could diverge from current market speculations.

Since the start of the year, Gold has appreciated over 28%, potentially ending 2024 with the highest annual gain since 2010.

Technical analysis of XAU/USD

H4 Chart: Gold has established a consolidation range around the 2,675.55 level on the H4 chart. A growth structure has been formed up to 2726.27, and a corrective movement towards 2,635.00 is unfolding. Looking forward, a continuation of the growth wave towards 2743.85 is anticipated. The MACD indicator supports the bullish outlook, with its signal line below zero but pointed sharply upwards.

H1 Chart: On the H1 chart, Gold has completed a correction to 2,633.00 and is now expected to rise towards 2,680.00. After this increase, a potential decline to 2,658.00 may occur. Once this level is reached, a new growth phase towards 2705.70 will likely extend to 2,743.85. This scenario is corroborated by the Stochastic oscillator, whose signal line is currently above 50 and aiming towards 80, indicating upward momentum.

ECB Chief Economist Philip Lane highlighted the importance of maintaining "agility" in monetary policy decisions during a speech today. Lane emphasized that in the current environment of elevated uncertainty, ECB’s "prudent" approach will be guided by a meeting-by-meeting strategy without pre-committing to any specific rate path.

Lane outlined that the pace of monetary easing will depend on the balance of risks. If the inflation outlook or economic momentum experiences upside shocks, "monetary easing can proceed more slowly " compared to the December projections.

Conversely, in the case of downside shocks, the easing process could accelerate. He further noted that the rate path would also depend on ECB’s "ongoing assessment of underlying inflation dynamics and the strength of monetary policy transmission."

Full speech of ECB's Lane here.

Eurozone headline inflation for November was finalized at 2.2% yoy, up from October’s 2.0%. Meanwhile, Core CPI, which excludes food, alcohol, and tobacco, eased to 2.7% yoy, down from October’s 2.9%.

Services contributed the most to the Eurozone annual inflation rate, adding +1.74 percentage points, followed by food, alcohol, and tobacco (+0.53 pp) and non-energy industrial goods (+0.17 pp). Energy, on the other hand, detracted -0.19 percentage points, reflecting subdued demand and easing energy prices.

At the broader EU level, headline inflation was finalized at 2.5% yoy. Among member states, Ireland registered the lowest annual inflation at 0.5%, followed by Lithuania and Luxembourg (both at 1.1%). On the high end, Romania recorded the highest inflation at 5.4%, with Belgium (4.8%) and Croatia (4.0%) close behind. Compared to October, inflation fell in four EU member states, remained unchanged in three, and rose in twenty.

Full Eurozone CPI final release here.

• AUDUSD extends downtrend to a more-than-a-year low
• A pause is likely, but negative trend could stay in play
• FOMC policy announcement due at 19:00 GMT

AUDUSD is caught in a relentless downtrend, plunging to a 14-month low of 0.6308 on Wednesday following the close below the long-term support trendline from October 2022.

As global markets brace for the Federal Reserve’s final policy meeting of the year, speculation mounts over whether buying the dip could play out in the coming sessions as the price is flirting with the 2023 bottom region of 0.6269-0.6300.

The RSI and the stochastic oscillator are signaling that the sell-off is overstretched, though the indicators have yet to bottom out in the oversold region. Hence, the bears may keep the upper hand for now. If the 0.6200 area allows more declines, the door could open for the 0.6100 round mark and then for the 0.5980 zone taken from April 2020.

On the upside, a break above the falling channel and the 20-day simple moving average (SMA) near 0.6440 could be a major challenge for the bulls who first need to overcome the 0.6388 resistance. If they succeed, the pair could advance toward the 0.6500-0.6530 zone, where the 50-day SMA is located. Slightly higher, a former constraining line at 0.6565 could clear the way toward the 200-day SMA at 0.6615.

It's important to note that both the 50-day and 200-day SMAs have recently formed a death cross; a bearish signal that casts doubt on any immediate trend reversal.

In short, the bearish trend in AUDUSD is firmly in place, with the pair continuing to drift lower in the short term. While a recovery attempt could be possible near the 2023 low, selling interest could remain strong below the 0.6565 level. Hence, the outlook remains predominantly negative for now. 

• USDJPY is trading sideways as the yen shows some signs of life
• Market participants are preparing for central bank meetings
• Momentum indicators are mostly bullish at this stage

USDJPY is trading sideways today, following Tuesday’s red candle, which was the first negative session for this pair after six consecutive green candles that pushed it towards the 154.52 level again. While the Fed is expected to cut rates by 25bps at today’s meeting, Trump’s imminent return to the White House and the gradually reduced probability of a BoJ rate hike have contributed to the continued underperformance of the yen.  

Meanwhile, the momentum indicators are mostly bullish. Specifically, the RSI is hovering slightly above its midpoint, pointing to a weak bullish trend in USDJPY. Similarly, the Average Directional Movement Index (ADX) is edging higher, above its 25 threshold, and thus signaling a muted bullish trend in USDJPY. Interestingly, the stochastic oscillator is trading higher, above its moving average, and moving towards its overbought territory (OB). Should it return inside its OB area, it could be seen as a signal of strong bullish pressure in USDJPY.

Should the bulls remain hungry, they could try to push USDJPY above the June 4, 2024 low of 154.52, and then target a higher high above the November 15, 2024 high of 156.74. If successful, the door would then be open for a test of the 127.2% Fibonacci extension of the October 21, 2022 - January 16, 2023 downtrend at 158.66. Such a move would most likely attract the interest of Japanese government officials, causing another round of verbal interventions.

On the flip side, the bears are keen to recapture the market reins and push USDJPY lower, towards the busy 151.94-152.34 area. This region is populated by the October 21, 2022 high, and the 50- and 200-day simple moving averages (SMAs). A break below this zone would signal that the bearish move is gaining traction. The next key support areas are likely to be the October 3, 2023 high and the 100-day SMA, at the 150.15 and 148.68 levels respectively.

To sum up, USDJPY’s rally appears to have paused, with the two central banks meetings today and tomorrow potentially proving critical for the next USDJPY leg.

AUD/USD declined below the 0.6400 and 0.6375 support levels. NZD/USD is also moving lower and might extend losses below 0.57350.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar started a fresh decline from well above the 0.6400 level against the US Dollar.
• There is a connecting bearish trend line forming with resistance at 0.6340 on the hourly chart of AUD/USD at FXOpen.
• NZD/USD declined steadily from the 0.5790 resistance zone.
• There is a short-term bearish trend line forming with resistance at 0.5750 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair struggled to clear the 0.6430 zone. The Aussie Dollar started a fresh decline below the 0.6400 support against the US Dollar, as discussed in the previous analysis.

The pair even settled below 0.6375 and the 50-hour simple moving average. There was a clear move below 0.6340. A low was formed at 0.6317 and the pair is now consolidating losses. On the upside, an immediate resistance is near the 0.6340 level.

There is also a connecting bearish trend line forming with resistance at 0.6340. It is close to the 23.6% Fib retracement level of the downward move from the 0.6429 swing high to the 0.6317 low.

The next major resistance is near the 0.6375 zone or the 50% Fib retracement level of the downward move from the 0.6429 swing high to the 0.6317 low, above which the price could rise toward 0.6385. Any more gains might send the pair toward the 0.6430 resistance.

A close above the 0.6430 level could start another steady increase in the near term. The next major resistance on the AUD/USD chart could be 0.6500.

On the downside, initial support is near the 0.6320 zone. The next support sits at 0.6350. If there is a downside break below 0.6350, the pair could extend its decline. The next support could be 0.6320. Any more losses might send the pair toward the 0.6300 support.

NZD/USD Technical Analysis

On the hourly chart of NZD/USD on FXOpen, the pair also followed a similar pattern and declined from the 0.5790 zone. The New Zealand Dollar gained bearish momentum and traded below 0.5765 against the US Dollar.

The pair settled below the 0.5755 level and the 50-hour simple moving average. Finally, it tested the 0.5735 zone and is currently consolidating losses.

Immediate resistance on the upside is near the 23.6% Fib retracement level of the downward move from the 0.5792 swing high to the 0.5736 low at 0.5750. There is also a short-term bearish trend line forming with resistance at 0.5750.

The next resistance is the 0.5765 level or the 50% Fib retracement level of the downward move from the 0.5792 swing high to the 0.5736 low. If there is a move above 0.5765, the pair could rise toward 0.5790.

Any more gains might open the doors for a move toward the 0.5810 resistance zone in the coming days. On the downside, immediate support on the NZD/USD chart is near the 0.5735 level.

The next major support is near the 0.5710 zone. If there is a downside break below 0.5710, the pair could extend its decline toward the 0.5665 level. The next key support is near 0.5640.

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It’s finally Wednesday, likely the most important day of the week as we await the Fed’s decision. Expectations are for a 25-basis-point cut, but the real focus will be on the press conference and whether they deliver hawkish remarks. As you know, the US economic projections for next year are quite strong, so there may not be a need to cut rates in upcoming meetings, especially considering inflation remains well above their 2% target.

If the Fed sounds hawkish, we can expect the dollar to recover, and from an Elliott wave perspective, this seems likely after a strong rebound from 105.40, with move out of the corrective channel in five waves, so after some slowdown now ahead of the Fed, there’s a chance we’ll see continuation higher into a fifth wave. On the flip side, major currencies like the euro, Aussie, and Swiss franc could then drop.

What we should also watch closely are US yields and stocks. I think stocks could move lower, testing the downside of their recent ranges, especially the S&P 500, if Powell delivers a hawkish tone.

Daily Pivots: (S1) 194.57; (P) 195.23; (R1) 195.81; More...

Intraday bias in GBP/JPY remains on the upside for the moment. Rise from 188.07 is seen as another rising leg in the corrective pattern from 180.00. Further rally would be seen to 199.79 resistance. On the downside, break of 192.84 support will turn intraday bias back to the downside for 188.07 support instead.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 160.39; (P) 161.43; (R1) 162.09; More...

Intraday bias in EUR/JPY stays neutral for consolidations below 162.46 temporary top. Another rise is in favor as long as 159.09 support holds. Sideway pattern from 154.40 might still be in progress with another rising leg. Break of 162.46 will target 166.67 resistance. Nevertheless, break of 159.09 will bring retest of 156.16 instead.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8237; (P) 0.8266; (R1) 0.8283; More...

Intraday bias in EUR/GBP stays on the downside for retesting 0.8224 support. Firm break there will resume larger down trend to 0.8201 key support. On the upside, break of 0.8326 resistance will resume the rebound to 38.2% retracement of 0.8624 to 0.8224 at 0.8377.

In the bigger picture, focus is now on whether 0.8201 key support (2022 low) is strong enough to complete the whole down trend from 0.9267 (2022 high). In any case, medium term outlook will be neutral at best until decisive break of 0.8624 key resistance. Otherwise, risk will stay on the downside even in case of strong rebound.