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Daily Technical Insights 11 November 2022


EURUSD (4-Hour Chart)

The EURUSD has gathered bullish momentum and climbed to its highest level in nearly two months above 1.018 level as of writing on Thursday, as the data from the US inflation data showed better-than-expected figures. Tuesday’s US economic docket highlights the release of the critical US consumer inflation for October. On a monthly basis, the headline CPI rose by 0.4% during the reported month as compared to the market’s expected 0.6%. The yearly rate, however, rose by 7.7% and is expected to ease to 8.0% in October. EURUSD regains upside traction on the back of the collapse in the dollar after US inflation figures advanced less than estimated in October, which the speculations that the Fed will slow down the pace of hiking rates mounted. In the meantime, the greenback fell sharply below the 109.00 support level and traded in levels last seen back in mid-September in the 108.50 bands.

From the technical perspective, the four-hour scale RSI indicator surged to 67 as of writing, suggesting that the pair was surrounded by strong positive traction. As for the Bollinger Bands, the euro was priced above the upper band and the size became larger, which is a signal that the bullish momentum would persist and had the chance to challenge the highest level since mid-September, 1.0198,  in the near term.

Resistance: 1.0198

Support: 0.9996, 0.9961, 0.9741

GBPUSD (4-Hour Chart)

GBPUSD surged in the second half of the day on Thursday and reached its highest level since mid-September above 1.16650 following the release of the softer-than-expected, the pair was pricing at 1.16670 level as of writing.  The US Bureau of Labor Statistics reported that the headline CPI rose 0.4% in October and the yearly rate eased to 7.7% from 8.2% in September, both missing expectations. Additional details revealed the core inflation, which excluded food and energy prices, decelerated more than anticipated to a 6.3% YoY rate from 6.6% previous. The data adds to the bets that the Federal Reserve will slow the pace of its policy tightening and drags the US Dollar to a fresh multi-week low. This, in turn, is seen as a key factor behind the GBPUSD pair’s sharp rally during the early US trading session. However, a bleak outlook for the UK economy might continue to undermine the British Pound. As a result, the focus now shifts to the Preliminary UK Q3 GDP report, due on Friday. The key UK macro data should provide a fresh directional impetus to the GBPUSD pair.

From the technical perspective, the four-hour scale RSI indicator dramatically rallied to 65 figures as if writing, suggesting that the pair amid strong bullish momentum. As for the Bollinger Bands, the pair was pricing around the upper band and the size between upper and lower bands get larger, indicating that the pair was more favoured to the upside movement in the near future to challenge the highest level since mid-September 1.1738.

Resistance: 1.1438, 1.1623

Support: 1.1146, 1.0953, 1.0797

XAUUSD (4-Hour Chart)

Gold has shrugged off the soft tone seen earlier today to rally $40 higher and reach the mid-range of the $1700s and had been boosted by the broad-based US Dollar weakness following the release of US inflation data. Consumer inflation rose at a slower-than-expected pace in the US, which has set the scene for the US Federal Reserve to ease its aggressive monetary policy path. Tish has spurred risk appetite, hammering the US Dollar and pushing yellow metal higher. US CPI increased by 0.4% in October, unchanged from the previous month, against the market expectations of a 0.6% reading, according to data from the US Bureau of Labor Statistics. Year on year, the CPI cooled down to a 7.7% rate, beyond the consensus of 8%, and after an 8.2% increase in September. As for the core part, the Federal Reserve’s preferred gauge for inflationary trends has eased to 0.3% in October, from 0.6% in September, against expectations of a 0.5% increase. Year on year, the core CPI has retreated to 6.3% from 6.6% in September.

From the technical perspective, the four-hour scale RSI indicator hugely advanced to 78 figures as of writing, suggesting that the XAUUSD has entered into the overbought zone, and a downward correction could be expected.  As for the Bollinger Bands, the gold was priced around the upper band and the size between upper and lower got larger, which is a signal that the pair remain strong upside tilt. Therefore, we think the gold would move up to challenge the $1765 mark, then correctively rebound to the $1700 to $1710 area in the near term.

Resistance: 1765, 1802

Support: 1703, 1667, 1642