Financial Market Research and Analysis

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USD rallies on Fed rate hike bets
The EURUSD sold-off to 1.0582 as FOMC Chair Janet Yellen hinted at a Federal Reserve (Fed) rate hike in December. The widening policy outlook between the Fed and the European Central Bank (ECB) is favourable for an extension of the downtrend toward 1.0524 (Dec 2rd, 2116 low), and below. The intra-day resistances are eyed at 1.0750 (minor 23.6% retracement in Nov 9th to Nov 18th decline), 1.0835 (200-hour moving average), max 1.0855 (major 38.2% retrace).

The USDJPY broke above the 110.00 barrier and extended gains to 110.80 in Tokyo. Large option expiries at 110.25, 111.00 and 111.25 are expected to sustain the positive trend for a further extension toward 112.00. Downside corrections should see support at 110.25 (optionality), 109.50 (50-day moving average), 108.52 (minor 23.6% retracement on Nov 9th to Nov 18th).

The pound held ground above 1.2385, the ascending channel base since Oct 7th flash crash, hence the GBPUSD outperformed the majority of its G10 counterparts against the rising US dollar in Asia. The momentum on hourly basis turned slightly negative, suggesting a bearish consolidation to 1.2355/1.2350 (weekly support). Option barriers are seen at 1.2400 before the weekly closing bell, while more offers are touted pre-50-day moving average, 1.2495.

The AUDUSD extended losses to 0.7379 on the combination of rising US dollar and recovery in global yields. The negative trend is expected to extend toward 0.7300/0.7280 (Jun 23rd / Jun 15th dips). Option barriers stand at 0.7485 for today’s expiry, while light bids are eyed above 0.7490/0.7500.

Broad based USD rally weighs on gold. The lack of demand is expected to send the price of an ounce down to $1200, before $1180. Offers are eyed at $1223 (50 and 100-hour moving averages), before $1236 (minor 23.6% retracement on Nov 9th to Nov 18th decline).

The WTI trades a touch above $45.00/45.15 (200-hour moving average). Trend and momentum indicators suggest a deeper correction to $44.90/44.80 (Fib 50% on Nov 14th to Nov 17th recovery / 200-day moving average), max 44.40 (major 61.8% retrace). Intra-day resistances are eyed at $46.00 (minor 23.6% retrace & 50-hour moving average), $47.00 (weekly resistance).

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