Week 45 data: EURUSD and gold
By Antreas Themistokleous
06 November 2023
This preview of weekly data examines EURUSD and XAUUSD, with upcoming economic data driving market trends for the short-term outlook.
The critical economic data for this week include:
The RBA interest rate decision is at 03:30 AM GMT. There is a market consensus that the central bank will opt for a single hike, raising interest rates to 4.35%. Should this occur, the Australian dollar might gain support against its major counterparts.
Fed Chair Powell's speech is scheduled for 02:15 PM GMT. On 8 November, 2023, the Federal Reserve will host a conference to mark the centennial of the Division of Research and Statistics. The event will explore the division's history, current role, and future. Market participants will scrutinize Powell's speech for any indications of the Fed's monetary policy plans.
The Chinese inflation rate, due at 01:30 AM GMT, is expected to fall to -0.1%. This suggests deflation in the Chinese economy for October, indicating supply outstripping demand.
The preliminary British GDP growth figure, releasing at 07:00 AM GMT, is anticipated to fall to 0.5% year-over-year, with the quarterly figure dropping to -0.1%, down from the previous 0.2%. Accurate predictions could lead to the pound incurring short-term losses against other currencies.
Major global currencies, such as the dollar, euro, sterling, and yen, remained stable on Monday. Investors are looking for signs of the dollar's decline following the Federal Reserve's less aggressive stance.
The dollar index fell to a six-week low after dropping over 1% last week. Factors like weaker U.S. job data, softer manufacturing figures, and falling Treasury yields contributed to the dollar's decline. While some analysts foresee a continued weak trend for the dollar, others warn that USD-supportive factors might reappear.
For a lasting dollar sell-off, improvements in the eurozone, China, and elsewhere are necessary. Last week saw Treasury yields decrease, and futures markets suggest the Fed may not raise rates further in 2023.
Technically, the price is hovering near a significant resistance zone at $1.075. This level is defined by the 38.2% Fibonacci retracement on the weekly chart, the 100-day moving average, and the psychological resistance of the round number.
Concurrently, the Stochastic oscillator is in the overbought territory, which could signal an impending correction. Should these factors drive the price down, the first major technical support might be at the $1.06 level. This support combines the round number's psychological impact, the intersection of the 20 and 50-day moving averages, and the 23.6% weekly Fibonacci retracement.
On Monday, gold prices dipped slightly due to a modest rise in US bond yields and expectations of a speech by Jerome Powell. Short-term movements in gold prices will likely correlate with U.S. 10-year Treasury yields. The recent US jobs report, indicating slower job growth and minimal wage increases, has set the stage for no rate hikes in December and potential easing in May. The Fedwatch tool shows a 45.5% probability of a 0.25% rate cut at the May meeting, with a 36.6% chance of rates remaining at 5.5%. Powell's upcoming speech on 9 November is expected to provide further insight into interest rate projections.
From a technical perspective, gold prices have maintained levels above $1,970 over the past two weeks. The 23.6% weekly Fibonacci retracement has been a robust support. Currently, this level holds, with the 20-day moving average reinforcing the psychological support of the $1,970 round number.
A decisive break below $1,970 could lead to potential support in the $1,900 to $1,920 range. This range includes the psychological round number support, the 38.2% weekly Fibonacci retracement, the lower Bollinger band, and the dynamic support between the 50 and 100-day moving averages.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.
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