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In mid-November, analysing the XNG/USD chart, we noted a rise in natural gas prices, outlined a system of trend channels, and suggested a possible pullback scenario.

Indeed, since then (as indicated by the arrow), U.S. gas prices retreated to the lower boundary of the orange ascending channel, forming a low at point B. From late November, renewed buying activity has been observed, driven by:

→ Seasonal factor: U.S. forecasts for December indicate below-average temperatures, sharply increasing demand for heating and electricity.

→ Export and geopolitics: The U.S. is exporting record volumes of liquefied natural gas (LNG). Europe continues to purchase U.S. gas to replace Russian supplies, while demand in Asia is also rising.

→ Anticipation of shortages: Due to high exports and early cold weather, traders are factoring in the risk that storage levels may deplete faster than usual.

Technical Analysis of XNG/USD

Price is currently near a resistance zone formed by:

→ The upper boundary of a broad descending channel, extended following a bullish breakout in late October.

→ The $4.800/MMBtu level, near which a peak formed in March.

→ The psychological $5.000/MMBtu mark.

At the same time, price action indicates bulls remain in control:

→ The lower boundary of the orange channel acts as support.

→ Low B resembles a false bearish breakout of low A, trapping short sellers who expected a breakdown.

→ Long lower wicks at low B indicate strong buying pressure.

Given this, it is reasonable to suggest that if U.S. gas prices failed to hold above $4.800/MMBtu in mid-November, December could prove more favourable for bulls, potentially establishing a three-year high.

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The GBP/USD pair advanced decisively to 1.3338, marking its highest level since late October. Sterling found support from an upward revision of the UK's November Services PMI, while the US dollar remained under broad pressure ahead of an anticipated Federal Reserve rate cut next week.

The UK Services PMI rose to 51.3 from a preliminary 50.5, remaining firmly in expansionary territory above the 50.0 threshold. The Composite PMI followed suit, climbing to 51.2.

Despite this improvement, S&P Global noted underlying softness, with business activity growth slowing and employment declining at the fastest pace since February. Furthermore, output price inflation fell to its lowest level since January 2021.

Markets continue to price in a 25-basis-point rate cut from the Bank of England in December. However, expectations are that the central bank will then enter a prolonged pause, wary of the persistent risk of renewed inflation.

Conversely, the US dollar remains on the back foot. Markets have fully priced in a third consecutive Fed rate cut for December, with at least two additional cuts anticipated in 2026. This widening interest rate differential is enhancing the pound's relative appeal.

Technical Analysis: GBP/USD

H4 Chart:

On the H4 chart, GBP/USD continues its confident upward trajectory, approaching a key technical resistance level at 1.3354. The price is holding well above the middle Bollinger Band, confirming the dominance of the bullish trend. The expansion of the upper band signals rising volatility and sustained buying interest.

A decisive breakout and close above 1.3354 would open the path for an extension of the rally towards the next resistance zone around 1.3363–1.3380. Should a pullback occur, the nearest significant support is situated at 1.3280. A breach of this level would suggest a deeper correction, potentially targeting the lower Bollinger Band.

H1 Chart:

On the H1 chart, GBPUSD maintains an upward bias following a powerful impulse that pushed the price to the 1.3350–1.3360 resistance zone. The pair is now correcting, remaining above the local support of 1.3179, from which the growth began earlier. The upper Bollinger Band has turned down after a sharp expansion, indicating short-term market overheating and increasing the likelihood of a pullback. Nevertheless, the structure remains bullish: holding the price above the middle Bollinger Band supports a retest of 1.3350.

A breakout of the 1.3350–1.3360 resistance will open the way to the next target in the 1.3400 area. A consolidation below 1.3179 will be the first signal for a deeper correction, with targets in the 1.3120-1.3140 demand area.

Conclusion

GBP/USD strength is driven by a clear divergence in central bank policy expectations, favouring sterling in the near term. Technically, the pair is in a firm uptrend but is testing a critical resistance level at 1.3354. A successful breakout here could accelerate gains, while a rejection may trigger a consolidation or correction towards 1.3280. The upcoming Fed and BoE meetings will be pivotal in determining whether this momentum can be sustained.

Daily Pivots: (S1) 206.16; (P) 206.75; (R1) 207.86; More...

Intraday bias in GBP/JPY is back on the upside with breach of 207.18. Rise from 184.35 is resuming for retesting 208.09 high. Firm break there will confirm long term up trend resumption. However, break of 205.17 support will turn bias to the downside for deeper pullback, possibly to 55 D EMA (now at 203.12).

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, decisive break of 199.04 support will dampen this view and extend the corrective pattern with another fall.

Daily Pivots: (S1) 180.82; (P) 181.14; (R1) 181.48; More...

Intraday bias in EUR/JPY remains neutral as consolidations continues below 181.98. While deeper retreat cannot be ruled out, downside should be contained by 178.80 resistance turned support to bring another rally. On the upside, break of 181.98 will target 100% projection of 161.06 to 173.87 from 171.09 at 183.90 next. However, firm break of 178.80 will argue that deeper correction is already underway towards 55 D EMA (now at 177.74).

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Outlook will continue to stay bullish as long as 55 W EMA (now at 169.87) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8717; (P) 0.8760; (R1) 0.8784; More…

EUR/GBP's fall from 0.8863 resumed by breaking through 0.8745 and intraday bias is back on the downside. Considering bearish divergence condition in D MACD, sustained trading below 55 D EMA (now at 0.745) will solidify the case of bearish reversal. Deeper fall should then be seen to 0.8631 cluster (38.2% retracement of 0.8221 to 0.8663 at 0.8618). For now, risk will stay on the downside as long as 0.8800 resistance holds, in case of recovery.

In the bigger picture, rise from 0.8221 medium term bottom is still seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8600) should confirm that this corrective bounce has completed. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

Daily Pivots: (S1) 1.7647; (P) 1.7699; (R1) 1.7731; More...

EUR/AUD's fall from 1.7976 is in progress today and intraday bias stays on the downside for 1.7561 support. Firm break there should confirm that larger corrective pattern from 1.8554 is already in the third leg. Deeper decline should then be seen to 1.7245 support next. For now, risk will stay on the downside as long as 1.7794 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Sustained break of 55 W EMA (now at 1.7426) will suggest that it's correcting the whole rally from 1.4281 (2022 low). In this case, deeper decline would be seen to 38.2% retracement of 1.4281 to 1.8554 at 1.6922. Nevertheless, strong rebound from 55 W EMA will likely bring resumption of the up trend sooner.

Daily Pivots: (S1) 0.9325; (P) 0.9335; (R1) 0.9341; More....

EUR/CHF is still bounded in consolidations below 0.9349 and intraday bias stays neutral. As noted before, fall from 0.9660 could have completed at 0.9178, on bullish convergence condition in D MACD. Above 0.9349 will resume the rise from 0.9178, and target 0.9452 resistance next. However, break of 0.9275 will turn bias back to the downside for 0.9178 low instead.

In the bigger picture, outlook remains bearish with EUR/CHF staying well inside long term falling channel after multiple rejection by 55 W EMA (now at 0.9371). Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Break of 0.9452 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Markets

US economic data yesterday all but cemented next week’s Fed rate cut expectations. The ADP job report unexpectedly showed a 32k job loss – the second worst reading since June 2020 – and wage growth cooling. But while a further rate reduction to 3.5-3.75% may be a done deal, the bigger question remains what the next move(s) will be. Yesterday’s services ISM in any case argues against going full force. The prices paid gauge fell to a seven-month low but remains historically elevated. Activity rose to a three-month high of 54.5, helping lift the headline index to 52.6. New orders growth fell compared to last month but continued to expand nevertheless (52.9). The employment series remained sub 50 but showed signs of stabilizing. The ISM chair concluded that the November edition had “positive signs of an emerging recovery for the services sector”. It lifted US yields, particularly at the front end, off their intraday lows. Net daily changes varied between -1.5 and -2.6 bps in a bull steepener. European rates hovered sideways in directionless trading. Interest rate differentials along with a modest constructive risk environment gave the euro an edge over the dollar. EUR/USD rose to 1.1671, the highest in over a month. DXY dropped below the 99 barrier. Sterling had a nice bull run, supported amongst others by upwardly revised final PMIs to 51.2. EUR/GBP slid to 0.874. GBP/USD jumped to well north of 1.33.

Japan’s 30-year bond auction stood at the center of attention in Asian dealings this morning. It drew the strongest demand since 2019, profiting from the recent yield uptick to new (record) highs. While the ultralong end of the Japanese curve enjoys some bids as a result, maturities up to 20 year still eke out several basis points. The 10-yr tenor rose to the highest level since 2007. It’s keeping the rest of global peers (Treasuries, Bund futures) under pressure as well. The steepening could be tied to increased rate cut bets by the Fed. That helps explain the solid (Japanese) stock performance. European stock futures also suggest a higher open of around 0.5-0.6%. It’s a small step, though, for markets to redirect the focus to public finances in a context of rising bond yields again. The economic calendar is pretty empty with only jobless claims in the US as worth mentioning. FX markets will be the playground of technically-savvy investors. EUR/USD currently snaps an 8-day winning streak.

News & Views

The National Bank of Poland cut its policy rate by another 25 bps yesterday to 4%, bringing this year’s total effort at 175 bps of policy easing. In a brief statement, the NBP pointed out that inflation annual inflation decline to 2.4% in November, below the 2.5% inflation target. The central bank removed a reference to elevated services inflation and pointed at a slowdown in wage growth. Recent strong growth is on the other side of the balance with domestic demand pushing the annual growth rate to 3.8% in Q3. NBP governor Glapinski holds a press conference this afternoon. Key talking point will be the remaining policy room towards a neutral interest rate level. Polish money markets put the floor currently at 3.5%. Yesterday’s NBP statement indicates that further decisions will depend on incoming data. Fiscal policy, recovery of demand in the economy as well as developments in wage growth, energy prices and inflation abroad remain risk factors for the Polish inflation outlook. EUR/PLN remains stuck in the extremely narrow 4.22-4.30 trading range in place since mid-April.

Hungarian PM Orban announced this morning that the country will lift the minimum wage by 11% after an agreement between the government, employers and trade unions. It’s less than the previously agreed 13% with disappointing economic growth triggering the revision. Guaranteed minimum wages for positions requiring secondary education or vocational training will be raised by 7%.

Daily Pivots: (S1) 1.1635; (P) 1.1657; (R1) 1.1692; More….

Intraday bias in EUR/USD remains on the upside for the moment. Fall from 1.1917 should have completed at 1.1467. Further rise should be seen to 1.1727 resistance first. Firm break there will bring retest of 1.1917 high. Nevertheless, below 1.1590 minor support will mix up the outlook and turn bias neutral again.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1345) holds, the up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 154.85; (P) 155.39; (R1) 155.77; More...

Intraday bias in USD/JPY remains neutral and outlook is unchanged. With near term rising channel floor intact, further rally is expected. Above 156.57 minor resistance will bring retest of 157.88. Further break there will resume the whole rally from 139.87. Next target is 158.86 structural resistance, and then 161.94 high. However, sustained break of the channel support will bring deeper correction to 55 D EMA (now at 153.13), and raise the chance of near term trend reversal.

In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.