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FX majors keep the markets afloat – Market Overview – November 12

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
After three days of euphoria in the market, investors seem to be calm again.

The session in both Asia and the European morning passes relatively calmly without significant movements.

Some of the stock market positions are undone, causing slight rallies in the Nasdaq index and declines in the cyclical stock indices that are nothing more than profit-taking.

FX Majors

The US Dollar, predictably, has stopped strengthening and is falling in line with its latest trend, especially against the Euro and the Japanese Yen.

EUR/USD has bounced twice from the 200-day SMA line around 1.1760, but without managing to break above the 100-day SMA line at 1.1824, the pair is awaiting events from the ECB to define the trend in the next market.

USD/JPY has also not been able to go above the 105.64 resistance level and retrace slightly. Immediate support is now at the 104.80 area.

In the daily chart, the main resistance passes through the 100-day SMA line at 105.80.

The GOLD

Constructive behavior is what the GOLD is having. After the crash that followed the announcement of the Pfizer’s vaccine success, the precious metal has managed to sustain itself above the $1850 support zone.

The fall was caused by the strengthening of the USD, which was caused by the rebound in the yields of American bonds; gold maintains an inverse correlation with the North American currency price.

But although the US Dollar has remained strong in recent days and that the yields of US bonds have only declined slightly, gold has disengaged from these correlations showing intrinsic strength and is forming a base around the support of $1850-70.

This indicates that the demand for the precious metal remains intact. Fund managers continue to consider it a hedge against a more than the potential weakening of the Dollar and, above all, the rise in real interest rates in the economy. Inflation plays an essential role in this regard, and in recent months there has been a rebound from lows. Suppose a significant fiscal stimulus package is approved soon. In that case, inflationary pressure will intensify, and with real interest rates at historic lows, interest in buying gold will become visible in the market.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.