IC Markets Europe Fundamental Forecast | 23 November 2022

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What happened across the Asia session?

Most major currencies traded in a consolidation, with significant volatility coming from the release of the RBNZ interest rate decision. 

What does it mean for Europe and US Sessions?

Look out for potential further weakness in the DXY with the major currencies gaining against the greenback.

The Dollar Index (DXY)

Key news events today

USD Flash Services PMI  

What can we expect from DXY today?

Overnight, the DXY continued its slide as the price broke below the 107.50 price level to reach 106.90. Despite a lack of major news events, the DXY trading lower was likely due to the strength of the EURUSD. If the DXY breaks below the 106.70 price level, further downside can be anticipated with the next key support level at 106.25 and 105.60. Alternatively, if the services PMI is released stronger than anticipated today, the DXY could rebound above 107 to trade higher toward the near-term high of 107.80.  

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?

The slide in Gold paused at the 1735 level as the price bounced toward the 1750 interim resistance level. Gold is likely to fluctuate between the 1735 and 1750 price level, with the directional bias dependent on the volatility of the DXY. If the DXY recovers in strength, Gold could break below 1735 to trade lower toward the next key support level of 1700. 

Next 24 Hours Bias

Weak Bearish


The Euro (EUR)

Key news events today

EUR Flash Manufacturing PMI

EUR Flash Services PMI  

What can we expect from EUR today?

The EURUSD climbed strongly from 1.0240 overnight to the current price level of 1.0325. This move higher was due to comments from various ECB members indicating that the upcoming interest rate hikes could be higher than expected at 75bps. The hawkish sentiment from the ECB could drive the EURUSD higher toward the key resistance level of 1.0450. A confirmation for the continuation of the uptrend could be signaled ir price breaks above the 1.0340 price level. However, with a series of manufacturing and services PMI data to be released for the Eurozone today, the move to the upside could be choppy. 

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

No major news events. 

What can we expect from CHF today?

The USDCHF traded lower overnight, reversing down from the 0.9585 price level to reach the near term support level of 0.95. With the price consolidating at the support level, if the DXY continues to weaken, the USDCHF could break below the support level to continue with the current downtrend. The interim support level is at 0.9450, with the key support level and previous swing low at 0.94. 

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

GBP Flash Manufacturing PMI

GBP Flash Services PMI 

What can we expect from GBP today?

Overnight, the GBPUSD climbed higher toward the 1.19 round number resistance level. However, as the price failed to break higher and consolidates below the resistance level, look for a breakout potential to the upside. However, manufacturing and services PMI data to be released today could bring further volatility to the GBPUSD. If the price breaks above the 1.19 resistance level, the GBPUSD is likely to trade higher toward the next resistance level of 1.1950. 

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?

As the DXY weakened overnight, the USDCAD slid from the 1.3445 price level to reach the interim support level of 1.3360. The USDCAD is currently retracing to retest the 1.34 round number price level as oil prices trade slightly lower. If the DXY continues to weaken, the USDCAD could continue to trade lower. Look for the price to break below the 1.3360 price level to signal a continuation of the downside, with the next key support level at 1.33. 

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?

Energy prices climbed slightly following the significant fluctuations due to the mixed news release from OPEC members yesterday. However, Brent tested the resistance level of 90.00 and is currently retracing. Similarly, WTI failed to break above 82.00 with the price action signaling strong potential for a reversal. Look for the prices to consolidate at their current levels before trading lower again, with the next support level for Brent at 86.00 and WTI at 78.00. 

Next 24 Hours Bias
Weak Bearish