IC Markets Europe Fundamental Forecast | 01 December 2022

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What happened across the Asia session?

Most major currencies continued to gain against the DXY, as the US dollar weakened following the overnight comments from the Federal Reserve. 

What does it mean for Europe and US Sessions?

Look out for further weakness of the DXY and for the major currencies to continue with the overall trend against the US dollar. 

The Dollar Index (DXY) 

Key news events today

USD Fed Chair Powell Speaks 

USD Core PCE Price Index m/m 

USD ISM Manufacturing PMI 

What can we expect from DXY today?

The DXY rose sharply early during the US session to reach a high of 107 as the GDP data was released better than expected at 2.9% (Forecast: 2.8%). However, the move higher was unsustained as the DXY reversed due to comments from Federal Reserve Chair Powell. Indicating that the Federal Reserve could slow down interest rate hikes in December and that they did not want to overtighten, the dovish sentiment brought downward pressure on the DXY. The DXY ended the trading session below 106 with the current price at 105.60. While the DXY could retrace briefly, look for further downside, with the next key support level at 105.25. 

Central Bank Notes:

  • Federal Reserve hiked rates by 75bps taking interest rates to 4.00%
  • Next meeting is on 15 December 2022
  • Further rate increases can be anticipated, with rate cuts expected only if Fed Reserve is confident inflation is moving back down to 2%

Next 24 Hours Bias

Medium Bearish


Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Gold surged strongly higher as the DXY weakened. The price broke out of the consolidation, above the 1760 price level to reach a high of 1780. As further downside is anticipated for the DXY, Gold is likely to continue trading higher with the immediate key resistance level at 1785. If Gold breaks above 1785, the next key resistance levels are at 1800 and 1875. 

Next 24 Hours Bias

Medium Bullish 


The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

The EURUSD broke strongly out of its previous consolidation, as price surged through the 1.0380 price level to reach the high of 1.0450. Further upside is expected, if the DXY continues to weaken, with the next key resistance levels at 1.05 and 1.06. However, prior to the continuation of the uptrend, it is likely that the EURUSD could retrace briefly, testing the 1.04 round number interim support level before trading higher again.   

Central Bank Notes:

  • Main Refinancing Rate is currently at 2.00%
  • Reference to rate hikes continuing at the next “several” meetings removed
  • Next meeting on 15 December 2022

Next 24 Hours Bias

Medium Bullish


The Swiss Franc (CHF)

Key news events today

CHF CPI m/m  

What can we expect from CHF today?

The USDCHF fell significantly from the 0.9550 price area, as it ended the overnight trading session at the 0.9455 interim support level. During the Asian session, as the DXY continued to weaken, the USDCHF continued to slide lower and is currently trading at 0.9420. Look for the price to break below the 0.94 support level to signal a continuation of the downtrend, with the next key support level at 0.9350. 

Central Bank Notes:

  • Current policy rate is at 0.50%
  • Next meeting on 15 December 2022

Next 24 Hours Bias

Weak Bullish


The Pound (GBP)

Key news events today

No major news events. 

What can we expect from GBP today?

Although the GBPUSD traded lower briefly yesterday, the price tested and bounced strongly from the 1.19 support level to climb strongly. Currently trading at the 1.21 round number resistance level, look for a brief retrace on the GBPUSD before a continuation of the uptrend. Look for the price action on the GBPUSD to reject the 1.2050 price level to trade higher toward the next key resistance level of 1.2250. 

Central Bank Notes:

  • Interest rate is currently at 3.00%
  • Peak inflation revised to more than 15% in 2023. 
  • Next meeting on 15 December 2022

Next 24 Hours Bias

Weak Bullish


The Canadian Dollar (CAD)

Key news events today

No major news events. 

What can we expect from CAD today?

The USDCAD reversed strongly from the 1.3585 price level as the weakening of the DXY dragged prices lower toward the near term support of 1.34. The USDCAD could consolidate at this price level for the interim, however, if the DXY continues to weaken, the USDCAD could see further downside. Look for the price to break strongly below the 1.34 support level to signal a continuation of the downtrend, with the next key support level at 1.32. 

Central Bank Notes:

  • Increased interest rates to 3.75%  
  • Surprised markets with only 50bps hike in October
  • Future hikes determined by future inflation data and expectations
  • Next meeting on 7 December 2022

Next 24 Hours Bias

Weak Bullish


Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

Despite the volatility of the DXY overnight, energy prices have continued to trade within a tight consolidation, with Brent at 87.00 and WTI at the 80.00 price level. As the prices consolidate, look for a potential move to the downside to test the near term support of 84.00 and 77.00 for Brent and WTI respectively. With the OPEC meeting on Sunday, with anticipation that OPEC+ might announce a cut in production levels, any downside on energy prices could be for the short term. 

Next 24 Hours Bias
Weak Bearish