Ominous signs as the week gets going

Next 24 hours: Month end rebalancing reveals US Dollar selling

Today’s report: Ominous signs as the week gets going

The market got off to a quiet start on Monday, though the big picture stories were all bearish leaning. Chinese equity markets took an early blow after industrial profits decelerated.

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Wake-up call

Chart talk: Technical & fundamental highlights

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the yearly high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.1000 – Psychological – Strong
  • R1 1.0966 - 21 November high – Medium
  • S1 1.0825 - 17 November low – Medium
  • S2 1.0757 – 6 November high – Strong

EURUSD – fundamental overview

ECB President Christine Lagarde said at the EU hearing on Monday she was seeing “some signs of job growth losing momentum” but reiterated that it was not the time to declare victory over inflation yet. Key standouts on Tuesday’s calendar come from US Case Shiller and consumer confidence data, along with a batch of central bank speak from the BOE, ECB, and Fed.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2747.

  • R2 1.2700 – Figure – Medium
  • R1 1.2644 – 28 November high – Medium
  • S1 1.2520 – 24 November low – Medium
  • S2 1.2449 – 22 November low – Medium

GBPUSD – fundamental overview

The Pound has held onto gains even as BRC shop prices extend a moderation trend. Also propping the Pound are Monday comments from BOE Governor Bailey who pushed back calls for rate cuts in an interview with Newcastle Chronicle newspaper. Key standouts on Tuesday’s calendar come from US Case Shiller and consumer confidence data, along with a batch of central bank speak from the BOE, ECB, and Fed.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 147.00, with only a daily close below to delay the constructive outlook.

  • R2 149.99 – 2o November high – Medium
  • R1 149.75 – 22 November high – Medium
  • S1 147.55 – 21 November low – Medium
  • S2 147.00 – Figure – Strong

USDJPY – fundamental overview

The Yen has continued its early week run, following up on the momentum from the acceleration in Japan services PMIs and rallying some more on Tuesday as US treasury yields slide lower. Key standouts on Tuesday’s calendar come from US Case Shiller and consumer confidence data, along with a batch of central bank speak from the BOE, ECB, and Fed.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6700– Figure – Medium
  • R2 0.6632 – 28 November high – Medium
  • S1 0.6521 – 22 November low – Medium
  • S2 0.6452 – 17 November low – Strong

AUDUSD – fundamental overview

The Australian Dollar has held up well in early Tuesday trade, extending its run of multiday highs, even in the face of a weaker than expected Aussie retail sales print. There is however selling interest noted from medium-term players into this rally. Key standouts on Tuesday’s calendar come from US Case Shiller and consumer confidence data, along with a batch of central bank speak from the BOE, ECB, and Fed.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3777 – 16 November high – Strong
  • R1 1.3712 – 24 November high– Medium
  • S1 1.3593 – 24 November low – Medium
  • S2 1.3569 – 10 October low – Strong

USDCAD – fundamental overview

The Canadian Dollar rally on the back of last Friday's impressive Canada retail sales number has stalled out as the price of oil slides lower. Key standouts on Tuesday’s calendar come from US Case Shiller and consumer confidence data, along with a batch of central bank speak from the BOE, ECB, and Fed.

NZDUSD – technical overview

Overall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6133 would be required to take the immediate pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6133 – 4 August high– Strong
  • R1 0.6114 – 28 November high – Medium
  • S1 0.5940 – 17 November low – Medium
  • S2 0.5863 – 14 November low – Medium

NZDUSD – fundamental overview

The New Zealand Dollar has been tracking with the Australian Dollar on Tuesday, though rallies have been finding fresh offers from medium-term accounts as risk assets stall out. Key standouts on Tuesday’s calendar come from US Case Shiller and consumer confidence data, along with a batch of central bank speak from the BOE, ECB, and Fed.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4600 will be required to take the immediate pressure off the downside. Next key support comes in at 4308.

  • R2 4608 – 27 July/2023 high – Strong
  • R1 4568 – 22 November high – Medium
  • S1 4487– 16 November low – Medium
  • S2 4408 – 14 November low – Strong

US SPX 500 – fundamental overview

Investors continue to struggle with the reality of a higher for longer Fed policy track in the face of ongoing worry around inflation, while also contending with geopolitical risk in 2023. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies despite recent data and market expectations that would argue otherwise.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. Next major resistance comes in at 2100, above which opens the next extension towards 2500.

  • R2 2071 – 8 March 2022/Record high– Strong
  • R1 2019 – 27 November high – Medium
  • S1 1965 – 20 November low – Medium
  • S2 1920 – 13 November low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Peformance chart: 30 Day Performance vs. US dollar (%)

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