As we step into the 45th week of financial trading, investors and traders alike are gearing up to analyze the EURUSD pairing and XAUUSD (Gold) with a keen eye on critical economic data releases. These assets, deeply intertwined with macroeconomic developments, are poised to experience volatility and potential trend shifts. Here, we present an extensive preview of the forthcoming data and its probable impact on these two prominent markets.
Upcoming Economic Events and Their Potential Impacts:
- Tuesday: RBA Interest Rate Decision (03:30 AM GMT): The Reserve Bank of Australia's stance on interest rates, with a market consensus pointing towards a hike to 4.35%, is likely to invigorate the Australian dollar. A confirmed rate increase could see the AUD strengthen against major currencies, including the Euro and USD, potentially impacting the EURUSD dynamics.
- Wednesday: Fed Chair Powell's Speech (02:15 PM GMT): The spotlight falls on Jerome Powell during the centennial celebration of the Federal Reserve's Research and Statistics division. His speech is pivotal, with investors dissecting every word for hints on future monetary policy, which could sway the dollar and, subsequently, the EURUSD and gold prices.
- Thursday: Chinese Inflation Rate (01:30 AM GMT): Anticipated deflation in the Chinese economy could signify an excess of supply over demand. Such an economic cooldown may have ripple effects on global markets, influencing investor risk appetite and commodity prices like gold.
- Friday: Preliminary British GDP Growth (07:00 AM GMT): Predicted contractions in the UK's GDP growth could foreshadow a weakening pound, which might alter the currency dynamics against the Euro and indirectly influence the EURUSD pair.
EURUSD Analysis:
On the cusp of the new week, major currencies have shown stability, but there's a lingering anticipation of the dollar's retreat after a less hawkish tilt from the Federal Reserve. A six-week nadir in the dollar index reflects this sentiment, fueled by subdued U.S. job growth, manufacturing activity, and dipping Treasury yields. While the dollar's weakness could persist, a resurgence in USD-supportive factors remains a possibility. To maintain a downtrend, the dollar requires consistent improvements in other major economies, particularly the Eurozone. The recent downturn in Treasury yields and market bets against further Fed rate hikes in 2023 underscore this dynamic.
EURUSD Technical Perspective: The pair hovers at a critical resistance near $1.075, marked by the convergence of the 38.2% Fibonacci retracement, the 100-day average, and psychological resistance. The Stochastic oscillator's overbought signals suggest a possible correction, with the $1.06 mark emerging as a significant support, marrying the psychological influence of round numbers with the 20 and 50-day moving averages and the 23.6% Fibonacci retracement.
Gold-Dollar Correlation Analysis:
Gold's slight retreat aligns with a minor uptick in U.S. bond yields and the anticipation of Powell's speech. The connection between gold prices and the U.S. 10-year Treasury yields remains strong, with the latest jobs report tempering expectations for a rate hike in December and hinting at easing come May.
Gold Price Technical Analysis: Gold has successfully defended the $1,970 level, bolstered by the 23.6% Fibonacci retracement and the 20-day moving average. Should gold slip below this threshold, the $1,900 to $1,920 zone stands as a potential support area, encapsulated by round number psychology, the 38.2% Fibonacci level, the lower Bollinger band, and the dynamic interplay of the 50 and 100-day averages.
Conclusion:
As we navigate through week 45, the economic calendar is thick with events that could significantly sway the EURUSD and XAUUSD markets. Investors must brace for volatility and stay prepared to adjust strategies in response to the unfolding economic narratives and technical indicators.
