IC Markets Europe Fundamental Forecast | 24 November 2022

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What happened across the Asia session?

Most major currencies continued to trade higher against the US Dollar as the DXY weakened. 

What does it mean for Europe and US Sessions?

Look out for potential choppy price action as the US market is closed for Thanksgiving and the major currencies trades at near term highs.

The Dollar Index (DXY)

Key news events today

USD Bank Holiday 

What can we expect from DXY today?

Overnight, the DXY broke below the 106.70 price level to trade significantly lower toward the key support area of 105.60. This move lower followed the current downtrend, but was intensified following the release of the FOMC meeting minutes. The meeting minutes indicated that the current monetary policy is ‘approaching a sufficiently restrictive level”. This signaled the possibility that the Federal Reserve could slow down on the scale of further rate increases. However, uncertainty was also cast on the “ultimate level of Fed funds rate required to contain inflation”. Therefore, ook for the DXY to continue falling lower, toward the key support area of 104.65.  Watch out for choppy price action as the US market is closed for thanksgiving today.

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 fluctuated strongly overnight as the price spiked down to the 1726 price level before surging strongly to the upside. Breaking above the 1745 interim resistance level, Gold is currently trading at the 1755 price level. This move higher is primarily due to the current weakness of the DXY. Look for Gold to continue trading higher toward the 1780 price level, with the next key resistance level at 1800. 

Next 24 Hours Bias

Weak Bullish 


The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

Similar to the GBPUSD, the EURUSD saw significant upside as the price climbed steadily overnight to reach a high of 1.04. Today, the EURUSD has continued to climb to trade at the 1.0445 price level, with further upside expected. Look for the EURUSD to possibly retrace to retest the 1.04 price level before trading higher again, with the next key resistance level at 1.0750. 

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 directional bias of the USDCHF was heavily influenced by the DXY as the USDCHF broke down from the support level of 0.95 to trade toward the previous swing low and key support level of 0.94. The USDCHF could bounce briefly, however, look for the price to break below 0.9375 to signal a strong downward move with the next key support level of 0.91.  

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?

Manufacturing and services PMI data for the UK was released stronger than expected at 46.2 and 48.8 respectively. Combined with the weakness of the DXY, the GBPUSD broke above the 1.19 round number resistance level to climb strongly to the upside, ending the trading session at the 1.2050 price area. Currently trading at the 1.21 price level, further upside is anticipated following a consolidation and possible slight retracement. If the GBPUSD continues to trade higher, the next key resistance is at 1.23. 

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 Bullish 


The Canadian Dollar (CAD)

Key news events today

No Major News Events

What can we expect from CAD today?

The USDCAD fluctuated between the 1.3360 and 1.3440 price level overnight before break the support level to trade lower toward the 1.3330 price level. This move lower was due to the weakness of the DXY and the price volatility of oil. As the USDCAD consolidates, look for a potential brief retracement before a continuation to 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 traded sharply lower as news was released that the proposed cap on Russian oil export prices will not be binding on output. Overnight, Brent reversed strongly, breaking below the 88.00 price level to test the key support level of 83.93. Brent could retrace briefly before trading lower toward the next key support level of 80.00. Similarly, WTI reversed from the 82.00 price area to reach the key support area of 77.00. Although the price has rebounded to the 77.88 price level, further downside can be expected, with the next key support level at 75.33. 

Next 24 Hours Bias
Weak Bearish