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Euro sharpens decline to two-week low amid grim outlook

Euro fell in European trade against dollar for third straight session, hitting two-week lows amid grim outlook for European services and manufacturing, which could hinder the ECB's policy tightening plans. The dollar extended its gains following recent remarks by Fed officials, which confirms the ECB will carry on its battle against inflation in the US. EURUSD fell 0.7% fell 1.0252, the lowest since November 11, after losing 0.4% on Friday, the second loss in a row as two-year German treasury yields slowed down.

Euro fell 0.3% last week against dollar on profit-taking away from four-month highs at 1.0481.

Grim Outlook

• Europe's manufacturing PMI data are expected later today to show a slowdown in activities in November. 
• The data is expected to bring down bets on the European Central Bank's expected rate hikes at upcoming meetings.

 
The Dollar

• The dollar index rose 0.6% on Monday on track for the third profit in a row, hitting two-week highs at 107.59 against a basket of major rivals.
• Recent US data showed retail sales rose past estimates in October, while Fed officials such as San Francisco Fed President Mary Dale said it's reasonable the Fed will raise rates to 5.25% by early next year. 

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Morning Market Review

EURUSD
The European currency shows an attempt at corrective growth, testing the level of 1.0260 for a breakout. The EUR/USD pair is recovering after a noticeable decline the day before, as a result of which the single currency updated local lows from November 11. At the same time, market activity remains reduced, as trading participants are in no hurry to open new positions ahead of the publication of the minutes of the US Federal Reserve meeting, as well as a block of macroeconomic statistics on the dynamics of Durable Goods Orders in October and business activity in November. Analysts expect new signals from the US regulator regarding future monetary policy. It is assumed that already in December, the Fed may go for some softening of its rhetoric and raise the interest rate by only 50 basis points. However, the value could be adjusted to higher levels than originally estimated as domestic inflation remains well above the 2.0% target. Uncertain macroeconomic statistics from Germany put pressure on the single currency yesterday. The Producer Price Index in October fell by 4.2% after rising by 2.3% in the previous month, while analysts expected an increase of 0.9%, and in annual terms, the dynamics slowed down from 45.8% to 34.5%, which also turned out to be worse than forecasts at the level of 41.5%.

GBPUSD
The British pound is trading with a weak upward trend, testing the level of 1.1850 for a breakout. The GBP/USD pair is recovering after a moderate decline at the beginning of this week; however, the activity of the "bulls" remains very low, as investors expect new drivers to appear on the market. The focus of traders is a block of macroeconomic statistics from the US on the dynamics of Durable Goods Orders, as well as the publication of the minutes of the US Federal Reserve, which will be released tomorrow. Traders will assess the likelihood of a slowdown in the tightening of monetary policy, as previously repeatedly stated by representatives of the regulator. In turn, the global vector for a gradual increase in the cost of borrowing is likely to continue, and therefore the American currency is in high demand. In the middle of the week, speeches by representatives of the Bank of England are also expected, including David Ramsden, Huw Pill and Catherine Mann. Moderate tightening of monetary policy is also expected from the British regulator in the future; however, the UK, in addition to raising interest rates, is trying to stabilize the economic situation by reducing government spending and increasing the fiscal burden.

XAUUSD
Gold prices show corrective growth, recovering from a four-day decline, as a result of which the instrument retreated from local highs to lows from November 10. The XAU/USD pair is testing 1745.00 for a breakout, waiting for new drivers to appear on the market. Demand for gold is gradually recovering as the publication of the minutes of the US Federal Reserve meeting approaches, which may contain hints regarding future monetary policy. The market expects the regulator to allow some weakening of its position in December and raise the interest rate by only 50 basis points. In addition, the minutes will contain updated forecasts regarding economic growth rates and inflation dynamics for the near future. The pressure on the trading instrument is also exerted by the upcoming meeting of the Reserve Bank of New Zealand (RBNZ), which will be held on Wednesday, November 23. Forecasts suggest that the interest rate will be raised again by 75 basis points to 4.25%.
 

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Gold hovers near two-week lows ahead of Fed's minutes

Gold prices settled in European trade in a tight range of trading near two-week lows as investors shun new positions ahead of the Fed's last meeting minutes. The minutes will provide clues on the future of US monetary policy and the pace of interest rates. 

 
Prices Today
Gold prices traded around $1,738 an ounce as of 08:55 GMT, with a session-high at $1,745. Gold prices closed Tuesday over 0.1% higher, the first profit in five sessions away from two-week lows at $1,732.50.

The Fed

As of 19:00 GMT, the Federal Reserve will release the minutes of the November 1-2 meeting, at which policy makers voted to increase interest rates by 75 basis points for the fourth time in a row to 4%, the highest since December 2007. The Fed asserted back then the fight against inflation requires continuous increases in borrowing rates until consumer prices are brought under control.

 
Interest Rate Prospects 
Markets now are pricing a 75%  chance of a 0.5% rate hike in December, and a 25% chance of a 0.75% rate hike.

 

Estimates
Markets remain a bit jittery ahead of Fed's minutes, with some analysts expecting some modest gains for gold prices until year's end as the dollar weakens gradually.

 

The SPDR
Gold holdings at the SPDR Gold Trust rose 0.87 tones yesterday, the second increase in a row to a total of 906.93 tones, the highest since November 14. 
 

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Euro hovers near four-month high on US interest rate prospects

Euro rose in European trade against a basket of major rivals for the third straight session against dollar, almost hitting four-month highs amid fading concerns about the widening policy gap between the US and Europe. The dollar fell to near three-month lows under pressure from Fed's minutes, which bolstered the case for a 0.5% rate hike in December. 

EURUSD rose 0.5% to 1.0448, after closing  up 0.9% yesterday, the second profit in a row, as risk appetite improved. 

Four-Month Peak

Euro hit four-month highs at 1.0481 on November 15 before entering a descending wave on profit-taking. 
Current gains amid fading concerns about the policy gaps between the US and Europe, with the ECB expected to increase interest rates by 75 basis points in December. 

It's now also widely expected the Fed will increase rates by only 0.5% next month instead of 0.75%. 

The Dollar

The dollar index fell 0.4% on Thursday, sharpening losses for the third day in a row, and hitting three-month lows at 105.34 against a basket of major rivals. 

Fed's minutes yesterday showed US policymakers are content about the slowdown in inflation, and are moving toward smaller rate hikes. 

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ADAUSD - Murrey analysis

The ADAUSD pair continues to trade within the medium-term downward channel, where it returned at the beginning of this month: at the weekend, the price reached the year’s lows around 0.2945 but is currently trying to restore positions. However, the upside potential is limited by strong resistance 0.3418 (Murrey level [2/8], the middle line of Bollinger bands, the upper border of the downwards channel).

In general, the downward trend in the market continues, which is signaled by a downward reversal of Stochastic and stabilization of the MACD histogram in the negative zone. Under these conditions, the key “bearish” level is 0.2929 (Murrey level [0/8]). The consolidation below it allows a decline to 0.2685 (Murrey level [−1/8]) and 0.2441 (Murrey level [−2/8]). In general, the resumption of the cryptocurrency decline soon seems more likely.

Resistance levels: 0.3173, 0.3418 | Support levels: 0.2929, 0.2685, 0.2441
 

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Dollar on track for weekly losses on Fed rates

Dollar fell in European trade on Friday against a basket of major rivals, extending the gains for the fourth day in a row, and almost hitting three-month lows, and on track for the second weekly loss in three weeks following weak US data and the release of Fed's minutes. Such Fed minutes clearly bolstered the case for a 0.5% rate hike in December and a slower pace of policy tightening.

The Index

The dollar index fell 0.25% to 105.68, with a session-high at 106.16, after closing down 0.2% yesterday, the third loss in a row, edging near three-month lows at 105.34. Dollar is now down 1.2% so far this week on track for the second weekly loss in three weeks. 

Weak Data

Recent US data showed manufacturing and services activities tumbled heavily in November, hinting at potential economic recession in the fourth quarter of the year.

The Fed

Fed's minutes released for the November 1-2 meeting showed most policymakers agreed it's important to slow down the pace of policy tightening.

Fed Minutes

Chances for a 0.5% rate hike in December by the Fed rose from 75% to 85% after Fed's minutes, while chances for a 0.75% rate hike fell from 25% to 15%.
 

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EURUSD -  Downside surprise in German inflation data Coming?

German CPI inflation data for November is a key European macro reading of the day. Data for the whole of Germany will be released at 1:00 pm GMT and median consensus point to headline price growth remaining unchanged at 10.4% YoY. However, those expectations may be outdated following the release of state-level CPI data from Europe's largest economy. All 6 state-level readings that were already released showed a deceleration in consumer price growth in November. This is a strong hint that German reading at 1:00 pm GMT will not show inflation remaining unchanged and will instead surprise to the downside.

German state-level CPI readings for November

• North Rhine Westphalia: 10.4% YoY vs 11.0% YoY previously
• Hesse: 9.7% YoY vs 9.9% YoY previously
• Baden Wuerttemberg: 9.6% YoY vs 9.8% YoY previously
• Bavaria: 10.9% YoY vs 11.0% YoY previously
• Brandenburg: 10.5% YoY vs 10.8% YoY previously
• Saxony: 9.9% YoY vs 10.1% YoY previously

It should be also noted that Spain CPI reading for November, released today at 8:00 am GMT, also surprised to the downside and decelerated from 7.3% to 6.6% YoY (exp. 7.5% YoY). If inflation in Germany slows as well, ECB could have more reasons to slow the pace of tightening to 50 bp rate hike in December, down from 75 bp rate hikes delivered at two previous meetings.

EURUSD is rather unimpressed by deceleration in German state-level inflation data. The pair continues to trade in between 50- and 200-hour moving averages, awaiting a catalyst for a break.

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Economic Calendar: ADP Employment report, speech from Fed Chair Powell

• European indices set for higher opening
• Powell to speak on the economy and inflation in the evening
• ADP report expected to show 200k jobs gain in November

Economic calendar for the day ahead is packed with interesting releases. While GDP data from Europe and US that is scheduled for release will be revisions, other reports may trigger some market moves. European CPI reading will be released at 10:00 am GMT and is expected to show deceleration. Note that major European economies saw price growth decelerate in November so there is a scope for a downside surprise. Apart from that, traders will closely watch ADP jobs report for November (1:15 pm GMT) as it will be a final hint ahead of Friday's NFP release. Last but not least, Fed Chair Powell is scheduled to speak at 6:30 pm GMT today with the topic of a speech being "Economic Outlook, Inflation and the Labor Market".
 

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XRPUSD - The pressure on the coin remains

Currently, the instrument is under the influence of opposite factors. Thus, the weakening of the US currency contributes to the price increase on the eve of a likely slowdown in December in the pace of interest rate hikes by the US Fed. Earlier, this possibility was confirmed by the head of the American regulator Jerome Powell. Nevertheless, a significant strengthening of the positions of digital assets continues to be hindered by the negative associated with the bankruptcy of the FTX exchange. Additional pressure on XRP is exerted by the decision of Coinbase, the largest cryptocurrency platform in the United States, to discontinue support for XRP, BCH, ETC and XLM tokens by the Coinbase Wallet, which is explained by the low volumes of their use. The management of the platform assured that investors will not lose their funds, but to access them it is necessary to use another electronic wallet and go through the recovery procedure. Some experts have suggested that this decision is due to the possibility of a negative outcome for Ripple in the lawsuit filed by the US Securities and Exchange Commission (SEC) to determine the status of XRP as a security.

Technically, the XRPUSD pair continues to trade within the long-term descending channel. The price has reached its upper limit and is currently trying to resume the decline, but for this it will need to consolidate below the middle line of the Bollinger Bands in the area of 0.3770. In this case, the quotes will be able to fall to the area of 0.3418 (Murray level [-1/8]) and 0.2930 (Murray level [-2/8]). In case of a breakout of the level of 0.4350 (Murray level [1/8], Fibo retracement 23.6%), the price will leave the descending channel and will be able to rise to the levels of 0.4883 (Murray level [2/8]), 0.5219 (Fibo retracement 38.2%).

Technical indicators do not give a single signal: the Bollinger Bands are horizontal, the Stochastic reverses upwards, the MACD histogram is stable in the negative zone.

Resistance levels: 0.4350, 0.4883, 0.5219 | Support levels: 0.3770, 0.3418, 0.2930
 

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Euro widens gains to six-month highs ahead of US jobs data

Euro rose in European trade against dollar for third straight session, hitting six-month highs and on track for the second weekly profit in a row as concerns about the widening policy gap between Europe and the US fades away. Dollar is extending its heavy losses against a basket of major rivals following recent remarks by Fed Chair Jerome Powell, at which he hinted strongly at only a 0.5% rate hike in December. 

Investors await important official US payrolls data later today for November, which will provide fresh clues on growth. EURUSD rose over 0.2% to 1.0542, the highest since June, with a session-low at 1.0504, and the largest profit since November 11. 
 

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Major differences 

• MT4 has 9-time frames, whereas MT5 offers 21-time frames. More time frames assist technical analyzers to have a better conception of the market movement. 
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• MT5 has 38 technical indicators, 44 analytical objects and unlimited charts 
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Morning Market Review

EURUSD
The European currency shows moderate growth, developing a strong "bullish" momentum, formed on November 30. The EUR/USD pair is testing the level of 1.0580 for a breakout, updating local highs from June 28. On Friday, December 2, investors reacted to the publication of the report on the US labor market for November, as a result of which the dollar attempted corrective growth, which ultimately did not result in the formation of any trend phenomena. November data showed an increase in the number of Nonfarm Payrolls by 263.0 thousand, which turned out to be significantly better than market expectations at the level of 200.0 thousand. The October indicator was revised from 261.0 thousand to 264.0 thousand. The Unemployment Rate remained at the same level of 3.7%, while the Average Hourly Earnings accelerated from 0.5% to 0.6% in monthly terms, contrary to forecasts of a slowdown to 0.3%, and in annual terms it corrected from 4.9% to 5.1%, beating expectations at 4.6%. The positions of the single currency were also supported by statistics from Europe on the dynamics of producer inflation. Producer Price Index in October fell by 2.9% after rising by 1.6% in the previous month, while analysts had projected a decline of 2.0%, and in annual terms, the indicator slowed down from 41.9% to 30.8% with the forecast of 31.5%.

GBPUSD
The British pound is trading with upward dynamics, updating local highs from June 17. The GBP/USD pair is testing 1.2340 for a breakout, and investors are waiting for new drivers in the market. In particular, data on business activity from S&P Global in the services sector for November is scheduled for release today. Forecasts suggest that the PMI in the UK will remain at the same level of 48.8 points, as well as the main European indicators should not change. Business activity statistics will also be released in the US, and analysts expect moderate growth here. The Institute for Supply Management (ISM) PMI is forecast to strengthen from 54.4 points to 55.6 points in November. So far, the report on the US labor market, which was released last Friday, remains in the focus of attention of traders, which again lowered investor confidence that the US Federal Reserve will ease the pace of monetary tightening. In December, the regulator is expected to increase the interest rate by only 50 basis points, partly due to the fact that the consumer inflation rate shows an unsustainable decline.

XAUUSD
Gold prices show moderate growth, again testing the level of 1810.00. The XAU/USD pair is updating local highs from July 5, receiving support from the growth of optimism regarding the Chinese economy. In particular, investors are reacting positively to the easing of quarantine restrictions in certain cities and regions of China, suggesting that this could become an impetus for the restoration of economic activity. In turn, gold positions remain under pressure after the publication of a rather strong report on the US labor market last Friday. The real dynamics turned out to be noticeably better than analysts' forecasts and reflected an increase in the number of Nonfarm Payrolls by 263.0 thousand in November, while the forecast was at the level of 200.0 thousand. Strong results support "hawkish" sentiment regarding the future monetary policy of the US Federal Reserve. However, markets still expect only a 50 basis point increase in interest rates in December.

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Euro hits fresh six-month highs against dollar

Euro rose in European trade for the fourth straight session against dollar, hitting fresh six-month highs as concerns about a widening policy gap between the US and Europe fade. Dollar extended its decline after Fed Chair Jerome Powell's recent statements about slowing down the pace of rate hikes starting from December. EURUSD rose over 0.4% to 1.0584, the highest since June , after closing up 0.15% on Friday, the third profit in a row as risk appetite dominated markets. 

European Rates

The financial markets are now expecting the European Central Bank to increase rates by 75 basis points in December instead of 50. There are strong recent incentives for the ECB to do such move according to many analysts, while the Federal Reserve is only expected to hike rates by 50 basis points this month.
 

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ETHUSD - Murrey analysis

The key "bearish" range is the support zone of 1250 – 1210 (Murrey [2/8], the middle line of Bollinger bands), the breakdown of which will give the prospect of a decline to 1125 (Murrey [1/8]) and 1000 (Murrey [0/8]). Otherwise, growth will resume towards the central level of Murrey's trading range and the upper limit of the long-term downward channel around 1500 ([4/8]).

Technical indicators do not give a single signal, illustrating the current uncertainty in the market. Given the persistence of the long-term downward trend, the resumption of negative dynamics soon seems more likely.

Resistance levels: 1375, 1500, 1625 | Support levels: 1210, 1125, 1000