Sample Category Title

The euro is lower for a fourth straight trading day and has deUS clined 0.10% on the day, trading at 1.0612 at the time of writing. Earlier today, the euro dropped below the 1.06 line for the first time since November 2023.

US CPI expected to rise to 2.6%

The US releases the October inflation report later today. Headline CPI is expected to rise to 2.6% y/y, up from 2.4% in September. The monthly rate is projected to remain at 0.2%. The core rate is also expected to stay unchanged from September, at 3.3% y/y and 0.3% m/m.

If headline inflation moves higher as expected, the markets could respond by trimming the probability of a rate cut at the Dec. 18 meeting. The current market pricing for a 25-basis point cut is 58%, down from 68% a day ago. This means that investors are not sold on a rate cut at the final meeting of the year. The US economy is in good shape but underlying inflation remains above the 2% target and the labor market has been cooling. Today’s inflation report could be a key factor in the rate decision at the December meeting.
Will ECB lower rates in December?

The European Central Bank meets on Dec. 12 and there are differing opinions among Governing Council members as to the timing of another rate cut. Inflation has been falling, but it the pace fast enough to warrant a rate cut at the December meeting? Some voices have been calling for a jumbo 50-basis point cut in December, while more dovish members want to wait until early next year.

The most recent development which the ECB must contend with is the Trump election win, which could mean US tariffs on European goods. Governing Council member Robert Holzmann said on Tuesday that if Trump enacted tariffs, the US dollar would rise against the euro and that would put upward inflation on eurozone inflation and make it more difficult for the ECB to achieve its 2% target.

EUR/USD Technical

• EUR/USD is testing resistance at 1.0627. Above, there is resistance at 1.0659
• 1.0591 is the next line of support, which has held since November 2023. Below, there is support at 1.0559

BoE MPC member Catherine Mann reiterated her hawkish stance on inflation during a panel discussion today, emphasizing the need for an "activist" approach to monetary policy. Mann expressed that she prefers to wait for more concrete evidence of underlying inflationary pressures easing before considering any policy loosening.

She highlighted the significance of monetary policy's immediate effects on the economy, stating, "Part of my activist strategy is when I move, I will move big."

Mann underscored that while the traditional view of long policy lags—the "olden day story," as she referred to it—still holds some relevance, recent research indicates that rate adjustments can have prompt impacts on firms' pricing decisions and inflation expectations.

As BoE's most hawkish member, Mann maintained her cautious perspective on the inflation outlook. She pointed out the persistence of "pretty sticky" services inflation and cautioned about the potential for increased volatility in prices. "For those two reasons I say that inflation has not yet been vanquished," she concluded.

In an interview with Die Zeit, German ECB Governing Council member Joachim Nagel reinforced ECB’s current rate path as necessary, citing persistent inflationary pressures, particularly within the services sector due to rising wages.

Nagel emphasized, "We are not exaggerating. There is still noticeable price pressure" .

Nagel also voiced concern over economic fallout from US President-elect Donald Trump’s proposed tariffs, estimating they could trim as much as 1% from Germany’s economic output if enacted.

“If the new tariffs actually materialize, we could even slip into negative territory,” he warned, a worrisome prospect as Germany already faces weak growth projections.

The German economy is anticipated to stagnate through 2024, with growth in 2025 expected to remain below 1%.

• Trump’s election invites gold bears into the game
• Bets of slower rate cuts by the Fed may be the main driver
• PBoC pauses purchases, but strategy likely not changed
• Speculation around geopolitics may also be weighing

Trump wins but gold loses

After hitting a record high of around $2,790 on October 30, gold entered a corrective phase due to US data suggesting that the Fed may need to slow down the pace of its future interest rate reductions.

The correction of the precious metal accelerated on the first signs that Donald Trump will be the 47th president of the US, with the bears staying in charge as the financial world continued to pile into the so-called ‘Trump Trade.’

But is the pullback in gold actually part of the ‘Trump trade’? Because ahead of the election, the precious metal was benefiting whenever the chances of Trump returning to the White House were increasing, perhaps due to the uncertainty surrounding a Trump presidency.

Yet, currently, gold seems to be surrendering to the stronger dollar, which is likely benefiting from speculation that Trump’s tax cut and tariff policies will fuel inflation and thereby prompt the Fed to proceed with even slower rate reductions.

Just after the election, the probability for policymakers stepping to the sidelines in December rose to slightly above 30%. Now, it rests at around 15%, with the probability of taking a pause in January rising to around 63%.

Besides Fed, China and geopolitics are also eyed

Before the US election even started being a theme for financial markets, gold’s main drivers were elevated purchases by major central banks, especially the People’s Bank of China, safe-haven inflows due to geopolitical tensions in the Middle East, as well as speculation of aggressive rate cuts by the Fed.

It is worth mentioning that just after September’s 50bps reduction, investors were assigning a strong chance for a back-to-back double cut in November, although this changed later due to the better-than-expected US data and the increasing chances of Trump winning the election.

China refrains from buying for the sixth straight month

According to the World Gold Council, central bank purchases of the precious metal may be set to slow further due to a six-month abstain by the Chinese central bank. Its holdings held steady at 72.8mn troy ounces, although the Bank’s value of gold reserves rose to $199bn from $191bn.

But Trump’s return to the White House is likely adding to the chances of China resuming its purchases. After all, the central bank of the world’s second-largest economy has been piling up gold so that it loosens its dependence on the US dollar in case tensions between the US and China escalate. And with Trump pledging to impose massive tariffs on Chinese goods, a Trade War 2.0 seems increasingly likely.

So, China is unlikely to have changed its strategy. They may prefer to wait and buy more gold at more favorable prices.

Can Trump restore peace in Europe and the Middle East?

In terms of geopolitics, some investors may have started unwinding their safe-haven holdings in hopes that as the new US president, Donald Trump will try to resolve the conflicts in the Middle East and Ukraine. However, anything suggesting that a truce may not be so easily achievable, could very well refuel the yellow metal’s prevailing uptrend.

Broader uptrend remains intact

From a technical standpoint, gold corrected sharply lower this month, but it is still holding above the uptrend line drawn from the low of October 6, 2023. This corroborates the view that the current retreat may be destined to stay limited and short lived.

The bulls may decide to jump back into the action from near the crossroads of the uptrend line and the $2,545 zone and perhaps aim for the high of September 26 at $2,685. Should they not stop there, they could aim once again, and even exceed, the record high of $2,790.

For the outlook to shift to bearish, the metal may need to slide below the crossroads of the $2,545 barrier and the aforementioned uptrend line. Such a technical dip may pave the way for the key pivot zone of $2,390, the break of which could carry extensions towards the $2,285 territory, which acted as a floor between April and June.

The Dollar index keeps firm tone and holding above former top 105.79 but near term action turned to the quiet mode in early Wednesday, ahead of key economic event today – US inflation data.

Recent strong bullish acceleration after the dollar was lifted by US election results (so-called Trump trades) has slowed, as markets look for fresh signals from CPI numbers which will subsequently affect Fed’s stance on interest rates.

However, the new reality after Trump’s election victory and anticipated impact of policies he plans to implement, implies that Fed is unlikely to go for initially planned strong policy easing, but will likely look to adjust its action to expected stronger economic growth and elevated inflation.

This sets stage for further Dollar’s advance with initial target at 106.36 (May 1 peak) and more significant barriers at 107.00 zone (Oct 2023 lower platform /ceiling of a larger range / 50% retracement of 114.72/99.20 downtrend)., violation of which to signal an end of broader range and open way for stronger gains.

Technical picture is firmly bullish on daily chart positive momentum is strong and MA’s in bullish setup and formed a number of bull-crosses, with price action holding near the upper borderline of a bull-channel (106.41).

However overbought conditions may keep bulls on hold for consolidation, with likely shallow dips to offer better levels to re-enter bullish market.

Former top (105.79) marks immediate support, followed by 5DMA (105.22) and broken Fibo 76.4% level (104.82).

Res: 106.41; 106.96; 107.03; 107.88.
Sup: 105.79; 105.22; 104.82; 104.62.

The Australian dollar is steady on Wednesday. In the European session, AUD/USD is trading at 0.6525, down 0.12% on the day.

Australia’s wage inflation within expectations

Wage inflation in Australia eased to 3.5% y/y in the third quarter, down from 4.1% in Q2 and just shy of the market estimate of 3.6%. This was the weakest wage price growth since Q4 2022. Quarterly, wage growth remained at 0.8% in the third quarter, below the market estimate of 0.9%.

The data is in line with the Reserve Bank of Australia’s projection that wage growth has peaked. The central bank expects wages to continue to easing in the fourth quarter and next year, which supports the case for a rate cut. The RBA has insisted that a rate hike remains on the table as underlying inflation is too high. The decline in wage growth is an encouraging sign as high wages have driven services inflation, which remains much higher than the 2% inflation target.

The RBA’s hawkish stance has put it out of sync with other major central banks are lowering rates in response to falling inflation. The markets have priced in another hold in rates at the December meeting, with an initial rate cut likely in the first half of 2025.

Australia releases the October employment report on Thursday. The economy is expected to have added 25 thousand jobs, after a sparkling 64.1 thousand gain in September, most of which was full-time employment. The unemployment rate is expected to remain unchanged at 4.1%.

In the US, Minneapolis Fed President Neel Kashkari said on Wednesday that the US economy is in a “good place” and that monetary policy is currently “modestly restrictive”. Kashkari added that economic data would be the guide as to the Fed’s rate path.

AUD/USD Technical

• There is support at 0.6505 and 0.6475
• 0.6543 and 0.6573 and the next resistance lines

On November 4, when gold was trading around $2,750, we observed bearish signals on the XAU/USD chart.

Since then, the price has declined to the $2,600 level, briefly dipping below it — the lowest price since mid-September.

According to Trading Economics, investors may be losing interest in gold for several reasons:

→ Strong U.S. Dollar: A robust dollar reduces gold's appeal as a safe-haven asset.

→ Optimism Following Trump’s Election: Market participants are reacting to Trump’s fiscal and monetary policy pledges, shifting toward riskier assets.

→ Upcoming Key U.S. Inflation Data: The CPI data, expected today at 16:30 GMT+3, may reveal no unexpected negative trends.

Today’s XAU/USD technical analysis shows that:

→ Gold’s price is at the lower boundary of the blue channel, which has been extended to reflect recent trading data.

→ The channel’s median line has shifted from support to resistance (shown with arrows).

It is possible that today’s inflation news may catalyse one of two scenarios on the XAU/USD chart:

→ Bullish Rebound: Buyers may attempt to resume an uptrend from the lower boundary of the blue channel, facing resistance around $2,655.

→ Bearish Control: Sellers may continue to dominate, potentially making the blue channel less relevant as price stabilises below $2,600.

Start trading commodity CFDs with tight spreads. Open your trading account now or learn more about trading commodity CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Market Picture

The crypto market cap fell to $2.88 trillion, down 5% over the day. It appears that the market has started to take profits after a week of rallying. The first target for such a pullback appears to be the March-June resistance area around $2.70 trillion. However, we are optimistic that the market may well pick up cryptocurrencies at higher levels and trigger FOMO.

Bitcoin kept things interesting on Tuesday, starting the day by testing the $90K level, then dropping to $85K before testing $90K again. On Wednesday morning, the price pulled back to $87K, the first significant daily decline in eight days. Technically, a pullback to $84K or even $81K would fit within the correction pattern of the last impulse. In that case, a broader correction could begin. For now, however, we believe the market has stumbled and could quickly return to growth.

News Background

Amid the rapid rise of cryptocurrencies, tech analyst Ali Martinez noted an ‘explosion of institutional FOMO’, citing Bernstein’s recent positive report. ‘We are literally starting the dot-com cycle for cryptocurrencies,’ said Michael van de Poppe, founder of MN Trading.

On 11 November, MicroStrategy shares hit a new all-time high of $351.7, taking its YTD growth rate to 438%. Coinbase shares have been at their highest since November 2021. The exchange’s shares have jumped 75% in the last five days.

Arkham Intelligence notes that 2,500 BTC ($222m) were sent to two unknown addresses from the wallets of the former Mt.Gox. This is the fifth Bitcoin transaction in the last two weeks, totalling more than $2 billion.

Polymarket users are betting that bitcoin will reach $100K by the end of November. The proportion of such bets has reached 57%.

Tesla’s Bitcoin value has exceeded $1 billion. The company holds 11,509 BTC. According to Arkham data, El Salvador’s Bitcoin assets exceeded $500 million. The country holds 5,932 BTC.

French ECB Governing Council member Francois Villeroy de Galhau shared his outlook on inflation and global growth risks today with France Inter, suggesting a period of moderate inflation within France alongside more rate cuts from ECB. He also projected that France’s unemployment rate could temporarily increase to around 8% before stabilizing back to 7%.

Villeroy raised concerns over the inflationary impact of US President-elect Donald Trump’s proposed economic policies, specifically warning that Trump’s program “risks bringing back inflation to the United States.” He suggested this could slow global growth, although the full extent of this impact remains uncertain and could vary between the US, China, and Europe.

A particular focus of Villeroy's remarks was on Trump’s proposed tariffs, which aim to eliminate the US trade deficit by imposing a 10% or higher tax on all imported goods.

Villeroy argued that such protectionist policies could ultimately hurt US consumers, noting, “Protectionism almost always means reduced purchasing power for consumers.”

• USDJPY resumes uptrend, unlocks 3½-month high
• Short-term bias is positive; July’s barrier could pose a test

USDJPY broke into the 155.00 territory for the first time since July, reigniting optimism that the upleg which started in mid-September has more room to run.

That said, the pair seems to be facing an obstacle near the 155.20 level – the same zone that sparked a sharp downfall at the end of July. With the RSI and stochastic oscillator edging toward overbought territory, a potential slowdown or consolidation could be on the cards.

Hence, for the bulls to maintain momentum, they'll need to decisively pierce through the 155.20 wall. Such a move could pave the way for the next target range around 158.50-159.00, where the upper boundary of the upward-sloping channel lies. From there, the 160.20 mark could be the next major hurdle.

Otherwise, a pullback could initially take a halt somewhere between the 61.8% Fibonacci retracement of the previous downleg at 153.40 and the 20-day exponential moving average (EMA) at 152.40. If the bears breach that floor, confirming a negative shift in market sentiment, the spotlight may immediately fall on the 50% Fibonacci mark of 150.75 and the 50- and 200-day EMAs. Further downside could see the pair test the 38.2% Fibonacci level at 148.11.

In summary, USDJPY is back in an uptrend, though for a continuous rally, the bulls must successfully close above the 155.20 barrier.