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Brent crude oil prices have declined to 71.65 USD per barrel as the commodity market remains tense ahead of this week’s postponed OPEC+ meeting, now rescheduled for Thursday, 6 December. The market is concerned about the direction of future global oil supply amid fears of oversaturation. The prevailing expectation is that OPEC+ might delay its planned increase in oil supply for the third time, reflecting persistent supply uncertainties.

Despite these pressures, there are optimistic signals from the oil sector, particularly China, where a resurgence in production activity is seen as a sign of gradual economic improvement in one of the world’s largest importers of raw materials. This development could bolster the energy sector.

The geopolitical landscape remains mixed, with traders closely monitoring tensions in the Middle East. Any escalation could heighten regional instability and affect the overall oil supply dynamics in these areas.

So far, the recent strengthening of the US dollar has not significantly impacted oil prices. However, future market dynamics could shift as global economic conditions evolve.

Technical analysis of Brent Oil

H4 chart: the market is navigating a broad consolidation range centred around the 73.33 level, with recent extensions downward to 71.55. An upward movement towards 73.33 is anticipated today. Should the price exit this range on the higher side, there may be potential for a growth wave targeting 75.15, potentially extending up to 80.00. The MACD indicator supports the bullish Brent outlook, with its signal line below zero but pointing upwards.

H1 chart: Brent has found support at 71.55, initiating a growth wave towards 73.33. Upon reaching this level, a compact consolidation range might form. A breakout above this range could lead to a rise towards 75.15. This potential growth trajectory is corroborated by the Stochastic oscillator, with its signal line currently above 50 and trending towards 80.

• Gold remains below 50-day SMA
• MACD and RSI mirror the market's waning momentum

Gold prices have been developing with weak momentum over the past few sessions, hovering beneath the 50-day simple moving average (SMA) and the 2,605 support level. The pair remains well above the medium-term ascending trend line, but the technical oscillators are mirroring the sideways move in the market. The RSI is standing marginally beneath the neutral threshold of 50, while the MACD is standing above its trigger line but still below the zero level.

If the price successfully breaks the 2,720 barrier and overcomes the 50-day SMA at 2,605, it could potentially reach the 2,750 area. Should traders continue to buy the commodity above that peak, resistance could then run toward the all-time high of 2,790.

A reversal to the downside, however, could find immediate support at the 2,605 hurdle, while a slightly lower diagonal line at 2,580 could also come into view.  If the diagonal line fails to halt bearish movements, the next target could be the previous trough of 2,531, increasing the likelihood of steeper bearish corrections.

Turning to medium-term trading, the outlook is still positive, despite the recent weakness.  On the other hand, a significant decline below the 200-day SMA, currently at 2,440, may switch the outlook to bearish.

• AUDUSD struggles below 20-SMA; trend signals are discouraging
• AZ Q3 GDP could be a market mover on Wednesday at 00:30 GMT

AUDUSD kicked off the week on a weak note, failing to break above its 20-day simple moving average (SMA) for the second time, with losses capped near its recent low of around 0.6440.

The pair is consolidating at the bottom of a two-month downtrend, and a bearish breakout remains possible as the 50-day and 200-day SMAs form a "death cross."

The technical signals, however, are mixed. Hence, traders may stay on the sidelines until they see a decisive close above 0.6515 or below 0.6440. If the bearish scenario plays out, immediate support could come from the 2022 support trendline at 0.6380, a break of which could squeeze the price toward the 0.6270-0.6300 constraining zone.

In the bullish case that the pair accelerates above 0.6515, resistance could instantly occur near the former support trendline from 2023 at 0.6560. A successful move higher could target the 50- and 200-day SMAs at 0.6630 and then November’s high around 0.6690. Additional gains from there would signal a bullish trend reversal in the short-term picture.

In brief, AUDUSD remains exposed to downside risks as its ongoing consolidation phase is developing within a bearish formation. A clear step below 0.6440 could motivate more selling, particularly if the 0.6380 support cracks too.

Daily Pivots: (S1) 188.07; (P) 189.68; (R1) 190.89; More...

GBP/JPY's fall from 199.79 is in progress and intraday bias stays on the downside for 183.70 support. Break there will bring retest of 180.00 low. On the upside, above 191.27 minor resistance will turn intraday bias neutral first. But risk will now stay on the downside as long as 55 D EMA (now at 194.37) holds, in case of recovery.

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) 156.06; (P) 157.35; (R1) 158.32; More....

EUR/JPY's fall from 166.67 is still in progress and intraday bias remains on the downside for 155.14 support first. Firm break there will raise the chance that whole decline from 175.41 is resuming, and target 154.40 low next. On the upside, above 158.63 minor resistance will turn intraday bias neutral first.

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) 0.8273; (P) 0.8293; (R1) 0.8315; More...

EUR/GBP is staying in range above 0.8259 and intraday bias stays neutral. Further decline is expected with 0.8446 resistance intact. On the downside, decisive break of 0.8259 will resume larger down trend to 0.8201 key support.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 (2022 low), but strong support should be seen there to bring rebound. However, outlook will remain bearish as long as 0.8624 resistance holds even in case of strong rebound. Decisive break of 0.8201 will indicate long term bearish reversal.

Daily Pivots: (S1) 1.6162; (P) 1.6207; (R1) 1.6254; More...

Intraday bias in EUR/AUD stays neutral at this point. On the upside, firm break of 1.6359 resistance will be the first sign of bullish reversal and target 1.6598 resistance for confirmation. On the downside, though, below 1.6125 minor support will bring retest of 1.5963 low.

In the bigger picture, immediate focus is now on 1.5996 key support level. Sustained break there will argue that whole up trend from 1.4281 (2022 low) is already reversing. Deeper decline would be seen to 61.8% retracement of 1.4281 to 1.7180 at 1.5388, even as a correction. Nevertheless, strong rebound from current level, followed by break of 1.6359 resistance, will keep medium term outlook neutral at worst.

Daily Pivots: (S1) 0.9289; (P) 0.9307; (R1) 0.9324; More....

No change in EUR/CHF's outlook and intraday bias stays neutral for the moment. Further decline is in favor with 0.9343 resistance intact. On the downside, below 0.9269 minor support will bring retest of 0.9204/9 support zone. Decisive break there will confirm larger down trend resumption. Nevertheless, firm break of 0.9343 will now be a sign of near term bullish reversal, and target 0.9444 resistance for confirmation.

In the bigger picture, outlook will now stay bearish as long as 0.9444 resistance holds. Decisive break of 0.9209 low will resumed long term down trend to 61.8% projection of 0.9772 to 0.9209 from 0.9444 at 0.9096 next.

• A no-confidence vote to remove French PM Barnier pushed out by the far-right National Rally party may topple the French government this week.
• A current political fiasco in France has triggered an increase in the credit risk premium on longer-term French sovereign bonds.
• A further uptick in French sovereign bonds’ credit risk premium may lead to a major bearish breakdown on the more risk-sensitive EUR/CHF cross pair.

Since our last publication, the higher risk-sensitive EUR/CHF cross pair has wobbled as it grappled with the Eurozone’s economic weakness and a looming unfavorable external trade environment due to further global supply chain disruptions due to incoming US President-elect Trump’s 10% to 20% tariffs threat on other countries’ exports to the US, inclusive of the Eurozone.

The EUR/CHF inched lower in the week of 18 November (ex-post US Presidential election outcome on 6 November) and retested a key intermediate support of 0.9255, a key swing low made almost a year ago on 29 December 2023.

An increase in France’s sovereign bond credit risk premium

Fig 1: 10-year yield spread of French sovereign bond over German Bund as of 3 Dec 2024 (Source: TradingView, click to enlarge chart)

The credit risk premium of longer-term sovereign debt in France can be defined by the 10-year yield spread between France’s and Germany’s sovereign bonds (Bunds)

When the yield spread between 10-year France’s sovereign bonds over Germany’s Bund increases, it suggests a potential increase in the credit risk premium of holding French sovereign bonds.

Since the outcome of the second round of the recent summer French snap-National Assembly election on 7 July, the 10-year yield spread of France’s sovereign bonds over Germany’s Bund has continued to inch higher after its prior major bullish breakout that occurred earlier in the week of 10 June 2024 as the election results have led to a hung-parliament in France.

At the start of this week, the far-right National Rally leader Le Pen intensified her party stance to support a call for a no-confidence vote in the National Assembly to remove the incumbent French Prime Minister Barnier over his refusal to tweet his 2025 budget to suit the viewpoints of the National Rally party.

A no-confidence vote may happen as soon as this Wednesday, 4 December, and the French government may topple this week if things go in favour of Le Pen’s National Rally party.

A further increase in the 10-year yield spread of France’s sovereign bonds over Germany’s Bund towards the 0.98% medium-term resistance level may trigger further downside pressure in the EUR/USD and EUR/CHF (see Fig 1).

EUR/CHF’s last line of defence stands at 0.9255

Fig 2: EUR/CHF medium-term & major trends as of 3 Dec 2024 (Source: TradingView, click to enlarge chart)

The current price level of the EUR/CHF is being traded at 0.9320 at this time of the writing, just a whisker above the 0.9255 key intermediate support in place since its 29 December 2023 swing low.

The weekly MACD trend indicator has continued to inch downwards below its zero centreline which suggests a persistent major downtrend that increases the odds of a major bearish breakdown on the EUR/CHF (see Fig 2).

Watch the modified 0.9565 key medium-term pivotal resistance (also the 200-day moving average) and a break below 0.9255 with a weekly close below it may see fresh multi-year lows on the EUR/CHF to expose the next supports at 0.9085 and 0.8890 in the first step.

On the other hand, a clearance above 0.9565 negates the bearish tone for a squeeze up to revisit the 1.0040/1.1000 long-term pivotal resistance zone (also the upper boundary of the long-term secular descending channel in place since the April 2018 swing high).

• EURJPY finds support near ascending line
• Stochastic and RSI look oversold; bullish move is expected

EURJPY has declined considerably after the pullback from the three-month high of 166.68, losing more than 6% in just one month. The pair recorded a fresh, more than two-month low of 156.36, with the simple moving averages (SMAs) confirming the bearish view in the short term.

However, the technical oscillators indicate the end of the dive. The stochastic oscillator posted a bullish crossover between its %K and %D lines in the oversold territory, while the RSI is pointing slightly up below the 30 level.

If prices continue to head lower, support could come from the 155.15 barrier ahead of the more-than-seven-month low of 154.40. A break below this area would reinforce the short-term bearish view and open the way toward the 153.20 barricade, registered in December 2023.

On the flip side, if the bulls retake control, price advances may stall initially near the 158.10 barrier and the 23.6% Fibonacci retracement level of the down leg from 175.37 to 154.40 at 159.30. A potential upside violation of the latest area would send traders toward the 38.2% Fibonacci of 162.30, which overlaps with the 20-day SMA.

In summary, the EURJPY remains above the medium-term uptrend line, showing indications of a potential bullish wave once more.