EUR/USD: data confirms decrease in annual inflation in the USA
The EUR/USD currency pair shows fluctuating movements, being near the 1.0785 mark, with restrained activity in the market, as traders refrain from opening new deals in anticipation of the upcoming meeting of the US Federal Reserve.
The euro is experiencing a correction, although macroeconomic indicators in the region have improved. In Germany, the wholesale price index in October decreased by 0.2% compared to the month, which is better than the previous 0.7% drop, and amounted to 3.6% year-on-year. The ZEW index of current economic conditions in Germany improved from -79.8 to -77.1 points in December, and the indicator of economic sentiment rose from 9.8 to 12.8 points. For the EU, the indicator was 23.0 points, which is significantly better than the 13.8 points of the previous period. However, these positive data are still not enough to significantly support the euro.
- Resistance levels: 1.0830, 1.0938.
- Support levels: 1.0757, 1.0658.
USD/CAD: strengthening of the instrument before the US Federal Reserve meeting
The USD/CAD currency pair continues its growth for the second week in a row, stabilizing near the level of 1.3593 and restoring the positions lost in the previous month. Investors express confidence that the authorities will be able to reduce inflation, minimizing the impact on the labor market, consumer demand and business activity. The expected correction of the monetary policy of the US Federal Reserve in the near future promises additional economic stimulus.
Today's meeting of the US Federal Reserve is of particular importance: analysts assume that the key rate will remain at 5.50% for the third time in a row, which in itself will signal the end of the cycle of higher borrowing costs, even if it is not officially announced. The market also expects hints from the US Federal Reserve about a possible transition to a softer policy and is closely monitoring the regulator's "dot schedule". Questions about this remain controversial: although federal funds futures traders predict monetary policy easing by May, most Wall Street experts believe that interest rate cuts will not begin until the third quarter of 2024. The certainty of the timing of the rate cut may further strengthen the position of the US dollar.
- Resistance levels: 1.3625, 1.3793, 1.3916.
- Support levels: 1.3480, 1.3305.
Silver prices
A technical correction is taking place in the precious metals market, which this week caused the XAG/USD pair to fall below the level of 23.00. The decrease in silver quotations is significantly ahead of changes in other metals, which may be due to attempts by major market players to acquire positions for sale at more favorable prices.
It is worth paying attention to external factors: since the beginning of December, the USD Index, with which silver has a strong inverse correlation, has increased from 102.400 to 104.000. Nevertheless, the price of silver has fallen more significantly, from 25.80 to 22.60, despite the absence of significant changes in market conditions. Usually in such situations, investors tend to transfer capital to other assets, but this time the scenario is different: according to the Commodity Futures Trading Commission (CFTC), in the first week of December, the volume of transactions increased from 34.3 thousand to 36.3 thousand. The trading structure shows a slight increase in contracts by metal producers by 1,247 thousand, and swap dealers have a continuing set of positions by sellers by 3,701 thousand. At this time, institutional investors are slowly increasing the volume of purchases, anticipating that after the expiration of the annual expiration of futures and options, when short-term traders leave the market, a new uptrend will begin.
- Resistance levels: 23.20, 24.30.
- Support levels: 22.30, 21.30.
Crude Oil Market Overview
WTI Crude Oil is aimed at breaking the 68.60 level down. On the previous day, it showed a significant drop, destroying the results of the corrective rise of the previous week and reaching new lows recorded at the end of June.
The decline was caused by data on American inflation, which reinforced the likelihood that the US Federal Reserve may delay the easing of monetary policy at the beginning of next year. The November consumer price index increased from 0.0% to 0.1%, but the annual rate decreased from 3.2% to 3.1%. The index, excluding food and energy products, remained at 4.0% per annum. Today, the US will present November statistics on industrial inflation, the annual rate is expected to decrease from 1.3% to 1.0% and, excluding food and energy, from 2.4% to 2.2%. There will also be a meeting of the American regulator, at which officials are expected to refrain from changes in monetary policy and probably confirm the strategy of expectations for the near future.
- Resistance levels: 69.12, 70.00, 71.00, 71.77.
- Support levels: 68.15, 67.00, 65.74, 64.00.