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The Japanese yen has posted strong gains on Thursday. In the European session, USD/JPY is trading at 154.34, down 0.70% on the day.

Ueda says rate decision will depend on data

Bank of Japan Governor Ueda’s remarks are always closely monitored and often move the financial markets. That was the case today as the yen has posted sharp gains after Ueda’s comments at an event in Tokyo today. Ueda said that the BoJ would make its rate decisions “meeting by meeting” on the basis of the information available. Those comments certainly weren’t eye-opening, but Ueda also said that the BoJ would “seriously” review the impact of exchange rates on inflation and the economy and noted the yen’s sharp swings.

The markets viewed Ueda’s remarks as a hint of a possible rate hike at the Dec. 19 meeting. The BoJ raised rates in July, partly in response to the weak yen. The central bank has often voiced concern about sharp movement from the yen and could hike again as early as December in order to boost the wobbly Japanese currency.

The rise in inflation has hurt Japanese households and the coalition government is set to approve a massive $140 billion stimulus package to provide some relief. Prime Minister Ishiba is trying to stay in power with a fragile minority government and will need the opposition’s agreement to pass the bill. The spending bill will raise the already huge government debt and an interest rate hike would raise the cost of servicing the debt.

USD/JPY Technical

• USD/JPY has pushed below support at 155.28 and is testing support at 154.68
• 1.5604 and 1.5664 are the next resistance lines

US initial jobless claims fell -6k to 213k in the week ending November 16, below expectation of 220k. Four-week moving average of initial claims fell -4k to 218k.

Continuing claims rose 36k to 1908k in the week ending November 9, highest since November 13, 2021. Four-week moving average of continuing claims rose 5k to 1879k, highest since November 27, 2021.

Full US jobless claims release here.

Richmond Fed President Tom Barkin told the Financial Times he would not “prejudge" the rate decision at the December meeting. He acknowledged the dual challenges of elevated inflation and labor market strains.

“If you’ve got inflation staying above our target, that makes the case to be careful about reducing rates,” he said. "If you’ve got unemployment accelerating, that makes the case to be more forward-leaning.”

Barkin emphasized growing vulnerability to cost shocks which he said was higher than it might have been five years ago. He also pointed to business concerns over potential inflationary pressures stemming from President-elect Donald Trump’s proposed tariffs and deportation policies

However, he added that Trump’s plans to boost domestic energy production could have a counteracting "disinflationary" effect.

While businesses are apprehensive about economic policy changes under the new administration, Barkin underscored that the Fed would not preemptively adjust its policy.

“We shouldn’t try to solve it before it happens,” he remarked.

Greek ECB Governing Council member Yannis Stournaras expressed strong support for further monetary easing, suggesting a rate cut at every meeting moving forward until the policy rate reaches the "neutral rate," estimated at around 2%.

Speaking with Bloomberg TV, Stournaras described the proposed quarter-point reduction in December, which would bring the deposit rate to 3%, as the “right response” to current economic and inflation conditions.

He refrained from ruling out a larger 50 basis-point cut, and emphasized that external factors, including market reactions and the Fed's actions, remain uncertain.

Stournaras also downplayed concerns over the sharp third-quarter rise in negotiated wages, the highest since the euro's inception in 1999, stating, “We expect that to fall in the months to come. We thought it’s one blip but not a permanent increase.”

EUR/USD remains biased lower as near term action stays within extended consolidation range above 13-month low (1.0495), with the upside being capped by solid barriers at 1.0600 zone (former low of Apr 16 / Fibo 23.6% of 1.0936/1.0495 / falling 10 DMA).

Negative 14-d momentum and daily MA’s in full bearish setup support scenario, with selling opportunities expected as long as upticks remain capped at 1.0600 zone.

Firm break of 1.0495 pivots to expose targets at 1.0448 (3 Oct 2023 low) and 1.0405 (50% retracement of 0.9535/1.1275).

Alternatively, violation of 1.0600 pivots would ease downside pressure, but sustained break above double-Fibo barrier at 1.0665 (23.6% of 1.1214/1.0495 / 38.2% of 1.0936/1.0495) will be needed to validate initial bullish signal.

Fundamentals remain overall negative for Euro, as Trump trades continue to inflate dollar and geopolitical uncertainty weigh strongly on risk mode.

Market focus shifts on Friday’s release of Eurozone PMI data (Manufacturing Nov 46.0 f/c and Services Nov 51.6 f/c, both indicators expected to remain unchanged from previous month), with divergence of Nov numbers from consensus to generate fresh direction signal.

Res: 1.0557; 1.0600; 1.0665; 1.0700.
Sup: 1.0495; 1.0448; 1.0405; 1.0290.

As shown in the XAU/USD chart, last Thursday, the price of gold dropped below $2,540. Today, however, the precious metal has surged above $2,660 per ounce.

The more than 5% weekly increase was driven by a new wave of international tensions, particularly the escalation surrounding the approval for Ukraine to use Western long-range weapons for strikes deep into Russian territory.

Technical analysis of the XAU/USD chart highlights that last week’s upward reversal once again demonstrates how effectively parallel channel lines can work. During the summer, the median line of the ascending channel (marked in blue) acted as support. However, following its bearish breakout on 11 November, the lower boundary of the channel, reinforced by the $2,535 level (which served as resistance in August and September), provided support for the price.

Will Gold Prices Continue to Rise?

Much will depend on the fundamental backdrop:

→ Geopolitical news;

→ The release of economic indicators. For instance, at 16:30 GMT+3 today, the US jobless claims report will be published, while tomorrow will bring PMI data for various countries.

Further growth in gold prices cannot be ruled out, especially given the long-term upward trend. However, it is worth noting that bulls have approached a significant resistance level near $2,677. This area saw bearish dominance on 11 November, leading to a breakout of the median line. Bears may attempt to defend control of this level.

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• USDJPY trims gains, falls below steep bullish channel
• New sellers could show up below 153.00-153.55

USDJPY came under pressure early on Thursday, trimming Wednesday’s moderate gains and putting its two-month-old bullish channel at risk once again.

The technical signals are not providing clear direction, with the falling RSI maintaining a sideways trajectory above its 50 neutral mark and the stochastic oscillator pointing down despite posting a positive cross.

Perhaps a downside correction may not scare traders and could still be an opportunity to buy the dip unless the price slumps below the 153.00-153.55 area, breaking below the 20-day exponential moving average (EMA) and beneath a shorter-term bullish channel. If that proves to be the case, selling forces could intensify toward the 50-day EMA and the 50% Fibonacci mark of 150.75. Note that the 200-day EMA is also nearby at 150.25. Hence, if it gives way too, there is potential for a sharp decline to 148.11.

In the bullish scenario where the price advances above 155.40, it could head straight up to the resistance area of 157.00-157.70. Should the former barrier of 158.35 prove fragile as well, the rally could speed up to 159.35 taken from April-May 1990 and then push toward the channel’s upper band seen near 160.50.

Overall, the uptrend in USDJPY seems to have geared down, shifting to a lower bullish channel. While downside risks have not evaporated, only a decline below 153.00-153.55 could activate fresh selling orders.

The NZD/USD pair is trading near 0.5879, experiencing volatility as the market awaits the upcoming Reserve Bank of New Zealand (RBNZ) meeting. Expectations are leaning towards a significant rate cut, with a 50-basis-point reduction considered the baseline scenario and a 25% probability of a more aggressive 75-basis-point cut.

Adding to the uncertainty are pessimistic projections from the New Zealand Treasury, suggesting potential delays in economic recovery, further weighing on sentiment around the NZD.

Internally, the US dollar’s strength, fuelled by mixed expectations regarding the Federal Reserve’s policy decisions in December, continues to exert substantial pressure on the NZD. Since the US election, the dollar has emerged as a dominant force, benefiting from robust domestic factors, and overshadowing other currencies that lack similar support, leading to their devaluation. As a result, the NZD, particularly vulnerable, reflects this broader depreciation trend against the USD.

Technical analysis of NZD/USD

On the H4 chart of NZD/USD, the market corrected to the 0.5921 level. Today, a decline wave structure is forming at the 0.5858 level, marking the boundaries of the consolidation range. A downward exit from this range could indicate the potential for the wave to extend towards 0.5777. Alternatively, an upward exit may result in another corrective move towards 0.5944 before the price resumes its decline to 0.5777.  From a technical standpoint, this bearish outlook for NZD/USD is supported by the MACD indicator, with its signal line below zero and sloping downward.

On the H1 chart of NZD/USD, the market has formed a consolidation range around 0.5875. Today, another decline wave towards 0.5777 is likely to develop. At this level, the wave is expected to exhaust its downside potential. This scenario is technically confirmed by the Stochastic oscillator, with its signal line below 50 and trending downward.

Short Term Elliott Wave View in Gold (XAUUSD) suggests that rally to 2790.07 ended wave ((3)). Pullback in wave ((4)) unfolded as a double three Elliott Wave structure. Down from wave ((3)), wave A ended at 2724.6 and rally in wave B ended at 2749.9. Wave C lower ended at 2643.1 which completed wave (W) in higher degree. Rally in wave (X) ended at 2710.61. The metal then turned lower in wave (Y) with subdivision as another zigzag. Down from wave (X), wave A ended at 2589.5 and wave B rally ended at 2618.8. Wave C lower ended at 2537.7 which completed wave (Y) of ((4)) in higher degree.

The metal has turned higher in wave ((5)). Up from wave ((4)), wave ((i)) ended at 2577.47 and wave ((ii)) pullback ended at 2554.34. The metal extended higher in wave ((iii)) towards 2641.92 and pullback in wave ((iv)) ended at 2618.7. Expect wave ((v)) of 1 to end soon and the metal to turn lower in wave 2 to correct cycle from 11.14.2024 low in 3, 7, or 11 swing before it resumes higher. Near term, as far as pivot at 2537.7 low stays intact, expect dips to find buyers in 3, 7, or 11 swing for further upside.

XAUUSD 60 Minutes Elliott Wave Chart

XAUUSD Elliott Wave Video

https://www.youtube.com/watch?v=_QAsmmy9M60

French ECB Governing Council member François Villeroy de Galhau, speaking at a conference today, emphasized a cautious and pragmatic stance on monetary policy, downplaying the significance of recent stronger-than-expected wage data.

He described the Q3 surge in negotiated wages as a “backward-looking” indicator, primarily reflecting the “lagged effects” of earlier negotiations in Germany, which were already factored into the ECB’s September projections.

Villeroy highlighted a shift in risks, stating that the balance for both growth and inflation now tilts to the downside. He also noted that potential US tariffs are "not expected to alter significantly the inflation outlook in Europe".

Against this backdrop, Villeroy reaffirmed the ECB's commitment to "continue to reduce the degree of monetary policy restriction," while underscoring that the pace must be guided by "agile pragmatism" and "full optionality" in future decisions.