Daily Technical Insights 7 December 2022

　　

EURUSD (4-Hour Chart)

The EURUSD traded 0.45% lower throughout Monday’s trading. The Dollar Index, which tracks the U.S. Dollar against a basket of foreign currencies, rose 0.75% throughout yesterday’s trading. Without major economic data releases, EURUSD retraced higher throughout the 6^th. Observing the pair since September, EURUSD has been on a steady rise, and the pair was further stimulated after the ECB hiked rates by 75 basis points in late October. The increasingly hawkish ECB and the gradually dovish Fed could soon create a sentiment differential between the two central banks; however, compared to the EU, the economic outlook for the U.S. remains more upbeat—evident from the upward surprise of the nonfarm payrolls figure released last week.

On the technical front, the EURUSD hit our previously estimated short-term resistance in the 1.06 price range during yesterday’s trading. Short-term support for the pair remains around the 1.035 price region. The 76.4% Fibonacci retracement of 1.0391 presents itself as a short-term entry opportunity for the recovering euro. RSI for the pair sits at 53.9, as of writing. On the four-hour chart, EURUSD currently trades above its 50, 100, and 200-day SMAs.

Resistance: 1.06

Support: 1.0391, 1.035

GBPUSD (4-Hour Chart)

GBPUSD traded 0.82% lower throughout Monday’s trading. On Monday, the British pound fell against the dollar as market participants saw a dip in buying opportunities for the US currency. On Tuesday, the U.K. released its November construction PMI figure, which came in at 50.4, a downward surprise from the market consensus of 52. The lower PMI figure from the U.K. is a confident signal for the BoE as the central bank hikes interest rates by 75 basis points in November. Slowing price pressure from the manufacturing sector is a long-awaited sign for the BoE as the central bank suffers from running out of measures to tame inflation in a quickly contracting British economy. On the economic docket, the U.S. will release jobless claims figures on the 8^th and November PPI on the 9^th.

On the technical side, GBPUSD has continued to challenge our previously estimated resistance level at around the 1.23 price region. Cable has yet to break out of this resistance level, but the weakening U.S. dollar will present pound bulls with ample opportunity. RSI for the pair sits at 55.3, as of writing. On the four-hour chart, GBPUSD currently trades above its 50, 100, and 200-day SMAs.

Resistance: 1.2400, 1.2600

Support: 1.2154, 1.1927, and 1.1765

XAUUSD (4-Hour Chart)

XAUUSD retreated 1.67% throughout Monday’s trading. The precious metal met heavy selling pressure as the U.S. dollar rebounded. The momentum behind the recovering dollar was further boosted by the rise in short-term U.S. treasury yields. The benchmark U.S. 10-year Treasury yield has recovered above 3.5% and was last seen trading at 3.551%. The upward surprise of the U.S. ISM PMI index released on Monday rattled market participants, who had falsely bought into the narrative of a Fed pivot and potential slowing of interest rate hikes. Gold, however, remains attractive as global geopolitical tensions continue to rise. The Russian-Ukrainian war continues to rage on in Eastern Europe, while China’s “zero CO2” policy has sparked protests across the country.

On the technical side, XAUUSD continues to retrace from our previously estimated resistance level of $1800 per ounce. Our short-term support level estimate remains at $1735 per ounce. The 50% Fibonacci retracement level of $1769 per ounce also acts as short-term support for the yellow metal. On the four-hour chart, XAUUSD currently trades above its 50, 100, and 200-day SMAs.

Resistance: $1800

Support: $1769, $1735