US Dollar bid returns after solid economic data

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Today’s report: US Dollar bid returns after solid economic data

The US Dollar has made a comeback after the latest round of solid economic data out of the US including a slightly better than expected NFP print and above forecast Michigan sentiment read. Odds for a more aggressive Fed rate cut this month have come off the table as a consequence.

Wake-up call

Chart talk: Technical & fundamental highlights

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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 major bounce in the days ahead and the start to a push back towards the 2023 high at 1.1276. Only a monthly close below 1.0400 negates.

  • R2 1.0683 – 6 November low – Medium
  • R1 1.0630 - 6 December high – Medium
  • S1 1.0400 - Major range low – Strong
  • S2 1.0333 – 22 November/2024 low – Very Strong

EURUSD – fundamental overview

The Euro is still waiting to see who President Macron will choose for the new PM, though it seems most of the worst fears around instability in the government have gone away. This has allowed the Euro to recover in recent sessions, with the single currency also finding some demand on position squaring ahead of this week's ECB decision in which the central bank is expected to cut rates. Key standouts on Monday’s calendar come from BOE speak, US wholesale inventories, and US consumer inflation expectations.

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 door is now open for the next major upside extension towards the 2018 high at 1.4377. Setbacks should be well supported above 1.2500 on a monthly close basis.

  • R2 1.2834 – 6 November low – Strong
  • R1 1.2812 – 6 December high –Medium
  • S1 1.2617 – 2 December low – Medium
  • S2 1.2566 – 27 November low – Medium

GBPUSD – fundamental overview

The Pound came under some selling pressure on the back of the latest dovish comments from BOE Dhingra. The central banker suggested current rates were high relative to the current economic reality in the UK. Key standouts on Monday’s calendar come from BOE speak, US wholesale inventories, and US consumer inflation expectations.

USDJPY – technical overview

The market is looking to resume the longer-term uptrend after an intense correction in 2024. A higher low is ideally sought out above 140.00 in favor of a bullish continuation. The recent weekly close back above 150.00 strengthens the case for longer-term uptrend resumption.

  • R2 155.89 – 20 November high – Strong
  • R1 153.24 – 27 November high – Medium
  • S1 150.00 – Psychological – Medium
  • S2 149.08 – 2 December low – Strong

USDJPY – fundamental overview

Earlier, Japan GDP data came in slightly better than expected on the whole but has failed to have any material impact on price action. Instead, the Yen has been consolidating, more focused on whether or not the BOJ will hike rates again this month. Key standouts on Monday’s calendar come from BOE speak, US wholesale inventories, and US consumer inflation expectations.

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. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6688 – 7 November high – Strong
  • R2 0.6550 – 25 November high – Medium
  • S1 0.6373 –6 December low– Medium
  • S2 0.6349 – 5 August/2024 low – Strong

AUDUSD – fundamental overview

The Australian Dollar remains under pressure on the back of last week's discouraging Aussie GDP read and better than expected US NFP print. This adds more pressure on the RBA to be leaning more to the accommodative side of policy. Key standouts on Monday’s calendar come from BOE speak, US wholesale inventories, and US consumer inflation expectations.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months 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 1.4500-1.5000 area, exposing a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.4200 – Figure – Medium
  • R1 1.4179 – 26 November/2024 high – Medium
  • S1 1.3927 – 25 November low – Medium
  • S2 1.3817 – 6 November low – Strong

USDCAD – fundamental overview

The Canadian Dollar hasn't been able to get away from softer economic data and the odds for more aggressive Bank of Canada cuts. The latest jobs data showed a jump in the unemployment rate and softness in wage data. Key standouts on Monday’s calendar come from BOE speak, US wholesale inventories, and US consumer inflation expectations.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs 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 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6038 – 7 November high – Strong
  • R1 0.5948 – 13 November high – Medium
  • S1 0.5800 – Figure– Medium
  • S2 0.5797 – 26 November/2024 low – Strong

NZDUSD – fundamental overview

There hasn't been a lot of the New Zealand Dollar to be excited about in recent days. RBNZ Orr has signaled another 50-basis point rate cut, US NFP data came in on the stronger side, and China continues to show signs of economic sluggishness, made worst by the added fear around trade tension with the incoming US administration. Key standouts on Monday’s calendar come from BOE speak, US wholesale inventories, and US consumer inflation expectations.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5679, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

  • R2 6200 – Round Number – Strong
  • R1 6104 – 6 December/Record high – Medium
  • S1 5838 – 19 November low – Medium
  • S2 5697 – 4 November low – Strong

US SPX 500 – fundamental overview

The US equities market remains exceptionally well supported in 2024 on the back of an ongoing expectation for more rate cuts than less going forward. Investors are feeling better about a soft landing in the US economy and this has also been accompanied by an accommodative adjustment of Fed policy. Moreover, there has been a fresh wave of market optimism in the aftermath of the Trump election victory. It will however be important to keep an eye on inflation, bigger picture economic data, and geopolitical risk in the weeks and months ahead.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 3000 area. Setbacks should now be well supported above 2500 on a monthly close basis.

  • R2 2791 – 31 October/Record high – Strong
  • R1 2722 – 25 November high – Medium
  • S1 2537 – 14 November low – Medium
  • S2 2500 – Round Number – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.

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

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