The US Dollar remains the
strongest currency but overall, we haven’t got much action in the past couple
of weeks due to the lack of key catalysts and the market’s pricing remaining
largely unchanged around roughly three rate cuts by the end of 2025 despite a
series of strong US data.

This might be a signal that
we are bottoming out here and we could see a correction to the downside in the
US Dollar. This should translate in a higher GBP/USD exchange rate.

On the GBP side, last week
we got the UK CPI report with the data coming in higher than
expected. Moreover, the BoE’s members sounded a bit less dovish recently. This
has strengthened the probabilities for no change at the December meeting but
didn’t change much for the overall easing expectations in 2025.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD failed to sustain the break below the major trendline
and it’s now consolidating around the trendline. The buyers will likely keep on
piling in around these levels to position for a pullback into the downward
trendline. The sellers, on the other hand, will want to see the price falling
back below the major trendline to target new lows.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the pair looks to be bottoming out here and we might see a pullback
into the major downward trendline. The first target for the buyers should be
the resistance
around the 1.27 handle where we can also find the 38.2% Fibonacci
retracement level for confluence.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance zone around the 1.2615 level where the
price got rejected from several times in the past days. The buyers will want to
see a breakout to increase the bullish bets into new highs, while the sellers
will likely step in here to position for a drop into new lows. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we get the US PCE report and the latest US Jobless Claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

On the month itself, gold is still down around 3.5% and poised for its first monthly loss since June. And if this holds, it would be the biggest monthly loss for the precious metal this year. That says a lot about how bullish sentiment has been for gold during the last twelve to fourteen months, that only a 3% drop sounds „bad“.

The rebound last week week helped to limit the post-election stumble in gold. But buyers were dealt a setback earlier this week. I would argue some added profit-taking also had something to do with it. In any case, it dragged gold down to test the 38.2 Fib retracement level of the rebound last week before buyers stepped in. Here’s a look at the near-term chart:

The bounce today builds on the hold yesterday at the technical level above, before buyers moved on to keep price above its 200-hour moving average (blue line). But as price action is still below the 100-hour moving average (red line), the near-term bias stays more neutral for now.

As much as the pullback in gold prices this month might have been timely, the depth of the correction is hardly anything material. It’s not even putting a scratch on the armor to the gold rally this year, let alone a dent of any sorts.

The outlook for gold remains bullish and we’re moving towards a more seasonally favoured period as well for the precious metal. While positive on paper, the one-sidedness of the moves this year is the only gripe I still have with gold heading into December and January. That despite still retaining a more bullish outlook in the big picture.

Going back to today’s action, the latest bounce doesn’t mean much from a technical perspective yet. But it shows that buyers are still staying in the game and are keen to step in to maintain the bullish momentum this year. The test of the 100-day moving average earlier this month also reaffirms that.

So, we’ll see if buyers can keep this up with month-end in focus and the dollar also seeing some softer flows today.

A push back above the 100-hour moving average near $2,660 will be a key near-term test to watch. If so, buyers may look towards another run at the $2,700 mark once more going into December.

This article was written by Justin Low at www.forexlive.com.

The US Dollar remains the
strongest currency but overall, we haven’t got much action in the past couple
of weeks due to the lack of key catalysts and the market’s pricing remaining
largely unchanged around roughly three rate cuts by the end of 2025 despite a
series of strong US data.

This might be a signal that
we are bottoming out here and we could see a correction to the downside in the
US Dollar. This should translate in a higher EUR/USD exchange rate.

On the EUR side, the
probabilities for a 50 bps cut in December rose to 63% from 26% last Friday due
to the weak Eurozone PMIs.

That might have been an
overreaction as the market pared back those expectations this week. This
morning we saw the probabilities strengthening for a 25 bps cut in December
after ECB’s
Schnabel said that she sees limited room for further rate cuts.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD erased all the losses from the Eurozone PMIs and it’s now
trading around the key 1.05 handle again. The buyers will likely pile in around
these levels to position for a pullback into the major upward trendline
around the 1.07 handle. The sellers, on the other hand, will want to see the price
falling back below the 1.05 handle to increase the bearish bets into new lows.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we had a minor downward trendline defining the bearish momentum on
this timeframe. The price broke above the trendline and the 1.05 handle this
week which should give the buyers more conviction for a move to the major
trendline where we can also find the 61.8% Fibonacci
retracement level for confluence.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance
zone around the 1.0540 level where the price got rejected from several times in
the past days. This is where the sellers keep on stepping in to target new lows.
The buyers, on the other hand, will need the price to break higher to start
targeting new highs. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US PCE report and the latest US Jobless Claims figures. Tomorrow,
we have the German inflation data, while on Friday we conclude the week with
the Eurozone Flash CPI.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior -18.3; revised to -18.4

That’s the weakest reading since May and it reaffirms the gloomier outlook surrounding the German economy as we look towards next year.

This article was written by Justin Low at www.forexlive.com.

The ranges of estimates are
important in terms of market reaction because when the actual data deviates from the
expectations, it creates a surprise effect. Another
important input in market’s reaction is the distribution of forecasts.

In fact, although we can have a range of
estimates, most forecasts might be clustered on the upper bound of the
range, so even if the data comes out inside the range of estimates but
on the lower bound of the range, it can still create a surprise effect.

Distribution of forecasts for PCE

PCE Y/Y

• 2.4% (3%)
• 2.3% (86%) – consensus
• 2.2% (11%)

PCE M/M

• 0.4% (3%)
• 0.3% (16%)
• 0.2% (81%) – consensus

Core PCE Y/Y

• 2.8% (88%) – consensus
• 2.7% (12%)

Core PCE M/M

• 0.3% (87%) – consensus
• 0.2% (13%)

Analysis

We
can ignore the headline PCE as the market will focus on the Core
figures. We can see that there’s a pretty strong consensus for 2.8% Y/Y and 0.3% M/M readings. This shouldn’t be surprising given that forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect.

Therefore, unless we see an upside surprise, it shouldn’t affect the current market’s pricing of roughly three rate cuts by the end of 2025, and even then, it’s unlikely that we will see a big change as we will likely need a hot CPI in December to price out another rate cut.

This article was written by Giuseppe Dellamotta at www.forexlive.com.