IC Markets Europe Fundamental Forecast | 08 December 2022

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What happened across the Asia session?

Most currencies traded in consolidation through the Asia session as volatility was lower across the board.  

What does it mean for Europe and US Sessions?

Look out for further volatility as the DXY looks to continue to reverse from its recent highs, with the major currency pairs likely to trade significantly higher. 

The Dollar Index (DXY) 

Key news events today

No major news events. 

What can we expect from DXY today?

The DXY reversed after reaching the 105.80 price area overnight, sliding lower toward the 104.90 price level. As there were no major new events, the reversal of the DXY was brief, with the price ending the trading session at the 10.10 price level. Volatility was increased as news of Russian President Putin stating that the “threat of nuclear is on the rise”, saw a slight shift towards safety. Look for the DXY to continue with the reversal overnight, especially if the price breaks below the 105-round number support level, with the next key support level at 104.20. 

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

Weak Bearish


Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Gold traded slightly higher overnight, breaking out of the recent consolidation to reach the 1790 price area. Anticipating further weakness in the DXY and increasing concerns over a recession in the US and globally, Gold could retrace briefly before continuing to climb higher, if the price breaks above the 1790 interim resistance level with the next key resistance level at the 1809 price area. 

Next 24 Hours Bias

Weak Bullish


The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

The EURUSD is currently trading at the 1.0520 price level as the price completes its retracement from the overnight move, indicating the potential to continue with the previous correction higher. Look for the EURUSD to break above the 1.0545 interim resistance level to signal a stronger move higher, with the next key resistance level at 1.06. 

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

Weak Bullish


The Swiss Franc (CHF)

Key news events today

No major news events. 

What can we expect from CHF today?

The USDCHF traded with significant volatility overnight as the price broke from the consolidation at 0.9425 to spike lower toward the 0.9365 price level. However this move was quickly reversed at the USDCHF ended the trading session in the 0.94 price area. Look for further weakness in the DXY to pull the USDCHF lower, with the next key support level at 0.9335.  

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?

The GBPUSD climbed higher, although with choppy price action, to reach the interim resistance level of 1.2240. This move higher was due to the weakness of the DXY overnight. Currently trading at the 1.22 price level again, the current price action indicates potential for further upward moves. Look for the price to break above the 1.2240 price level to signal a confirmation of the upside, with the next key resistance level at 1.2340. 

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?

Overnight, the Bank of Canada (BoC) increased interest rates by 50bps, taking rates to 4.25%. This was viewed as a hawkish move, with an aggressive adjustment to the monetary, which saw the USDCAD reverse briefly from the 1.37 resistance area to reach the 1.3590 price level. However, in the accompanying statement, the BoC presented a dovish view as it expects a slowdown in economic activity as a result of the interest rate increases. This resulted in the USDCAD bouncing back to retest the 1.37 resistance area. As the DXY weakens, look for the USDCAD to reverse stronger to the downside, especially if the price breaks below the 1.36 support level, with the next key support level at 1.3520. 

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 25 January 2022

Next 24 Hours Bias

Weak Bullish


Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

Energy prices traded briefly lower as WTI broke the 74.00 support level to reach 72.00. However, the current price action indicates the potential for a brief correction higher, with the price currently at 73.00. Look for WTI to trade higher toward the interim resistance area of 75.00. Similarly, Brent traded lower to reach the 77.00 round number support level as the 80.00 price level provided strong resistance. Look for Brent to retrace higher to retest the 80 resistance level in the short term. 

Next 24 Hours Bias
Weak Bearish