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EUR/USD and Gold Rates Hinge on the Federal Reserve’s Meeting

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 Noiembrie 2022
Stalled progress in the US stimulus package weighs on cyclical stocks upward trend while, EUR/USD and Gold eye the Fed rate decision on Wednesday.

It is Still Possible      

 

The EU and UK are trying to do “whatever it takes” to end 2020 with an agreement and according to the EU Chief Negotiator Michel Barnier a deal is still possible, and that both sides are not planning to abandon talks as long as progress is possible.

 

For both sides, all options are on the table from a modest trade deal to a larger deal and even no trade deal at all. According to Barnier the EU is ready to scrap all possible tariffs as long as the UK respects the European regulations of free and fair competition and reciprocal treatment in the fisheries track.

 

 

Focus on Stimulus

 

The US stocks bullish momentum stalled as the death toll in the US made a record high exceeding 300K and the US legislators still have their disagreements on the proposed stimulus package. The US speaker Nancy Pelosi expressed her concerns on Monday to the Treasury Secretary Mr. Mnuchin about the liability protections that Republicans demand, while, Republicans have vetoed the Democrat's proposal of state and local government aid.  

 

On the other hand, the US electoral college voted for Joe Biden to become the next president of the country, Biden asked for unity and to focus on the stimulus package.    

 

  Stock Market

Change %

S&P 500

-0.4%

Dow Jones

-0.6%

NASDQ

+0.9%

Japan 225

+0.1%

DAX 30

+0.6%

FTSE100

-1.3%

CAC 40

-0.1%

Table source: CAPEX WebTrader

EUR/USD and Main FX Markets 

The EUR/USD stabilized below 1.2150 as the pair traders wait for what will come from the Fed meeting today and tomorrow. The US central bank will release its forecasts for growth, unemployment, and inflation and is expected to retain a dovish bias and emphasize the urgent need for the fiscal stimulus.  

Technically, the Relative Strength Index (RSI) on the daily chart remained flat above 60 highlighting a stalled bullish momentum. The price develops a possible double top pattern and a break below the neckline at 1.2057 could send the price even lower towards 1.1940.

The GBP/USD, steadied in the current trading zone 1.3185 - 1.3460 as the EU-UK negotiations are still on. The pair closed on Monday with a Doji pattern signaling the market indecision, a daily close below the low end of the aforementioned trading zone could send the price even lower towards 1.2916 (September 2016 low).

Gold and Oil 

The oil price fell on Tuesday on demand worries as restrictions measures in Europe and the UK becomes tighter. The Brent Crude remained in the current trading zone 46.47 – 50.50 and pointed lower eyeing a test of the low end of the zone. That said, a daily close above the high end of the zone may cause a rally towards the monthly resistance level (August 31, 2015 high).

The Gold stabilized in the current $1,796 – $1,861 trading zone, the XAU/USD traders await the Fed updates on Wednesday. Technically, the price could edge lower towards the low end of the zone. A daily close below that level could send the yellow metal’s price even lower towards the monthly support level at $1,747 (the April 2020 high) while, a daily close above the high end of the zone may cause a rally towards the weekly resistance level at $1,921 (October 6 high).

Looking Ahead

Not much today on the economic calendar markets will be waiting today for the US industrial production of November at 3:15 PM (GMT) and the Bank of Canada member Macklem’s speech at 8:30 PM.

Sources: Bloomberg, Reuters, Associated Press

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Miguel A. Rodriguez
Miguel A. Rodriguez
Autor financiar

Miguel a lucrat pentru instituții financiare importante, precum Banco Santander și Banco Central-Hispano. De asemenea, a publicat cărți despre Forex.
 

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