IC Markets Europe Fundamental Forecast | 22 November 2022

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What happened across the Asia session?

Most major currencies continued to retrace against the USD, during the Asia session. 

What does it mean for Europe and US Sessions?

Look for further strength on the DXY to drive prices lower across the other major currency pairs.

The Dollar Index (DXY)

Key news events today

No major news events. 

What can we expect from DXY today?

Although the DXY traded with choppy price action on Friday, fluctuating along the 106.50 price level, the DXY has climbed steadily to retest the round number resistance area of 107. Look for the price to break above the 107.20 price level to signal further upside potential, with the next resistance at 108.30. Further upside on the DXY could be driven by significant weakness in the EURUSD and possible comments to come from the Federal Reserve regarding future interest rate decisions. 

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 continues its retracement lower as the price falls towards the 1745 price level. The price of Gold could find brief support at this level. However, if the DXY continues to strengthen, Gold could continue to trade lower again, with the next key support level of 1700 a possible target level. 

Next 24 Hours Bias

Weak Bearish


The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

Similar to the GBPUSD, the EURUSD slid steadily to the downside as the downside pressure continues. German PPI data was released significantly worse than expected at -4.2% (Forecast: 0.9%) which added to the negative sentiment. Currently trading at the 1.0250 price level, look for further downside on the EURUSD, especially if the price breaks below 1.0225, with the next key support level at the parity level. 

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 Bearish


The Swiss Franc (CHF)

Key news events today

No major news events. 

What can we expect from CHF today?

Despite the significant overnight strength of the DXY, the USDCHF traded slightly higher but remains below the 0.96 resistance level. With no major news events on the horizon for the CHF, the price action is anticipated to continue with the current trend. Look for the USDCHF to break above the 0.96 resistance level to signal a confirmation of further upside, with the next key resistance level at 0.97. 

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish 


The Pound (GBP)

Key news events today

No Major News Events

What can we expect from GBP today?

The GBPUSD reversed strongly from the 1.1960 price area, with the price breaking the 1.1880 price level to slide steadily to reach 1.1780. While further downside is anticipated, the GBPUSD rebounded late in the trading session and early today, retesting the 1.1870 price level. Look for the GBPUSD to break below 1.1820 to signal a continuation of the downtrend, with the 1.1755 price level acting as a strong support level. 

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

Medium Bearish


The Canadian Dollar (CAD)

Key news events today

No Major News Events

What can we expect from CAD today?

The USDCAD surged strongly to the upside, reaching the 1.35 round number resistance level following news that OPEC+ was considering increasing production levels by up to 500k bpd. However, the move higher was quickly retraced as the USDCAD ended the trading day at the 1.3450 price level. Look for the USDCAD to break above the 1.3450 price to signal a continuation of the uptrend, with the 1.35 and 1.3550 providing resistance. Alternatively, if the DXY weakens or energy prices recovers, the USDCAD could reverse to trade back toward the 1.3360 support level. 

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 Bearish


Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

The energy sector saw significant volatility following news that OPEC members were discussing a production increase, but such claims were quickly refuted with Saudi Arabia denying the news. Overnight, Brent & WTI reached significant lows of 82.40 and 75.35 respectively before retracing sharply. Look for the prices to consolidate at their current levels before trading lower again, with the next support level for Brent at 83.60 and WTI at 76.40. 

Next 24 Hours Bias
Weak Bearish