Daily Markets

• The dollar index fell on Tuesday and the euro hit a more than four-month high as investors waited on fresh clues to when the Federal Reserve is likely to begin cutting interest rates as inflation falls closer to the U.S. central bank’s 2% annual target. Volumes were muted the day after Christmas, however, as markets in the UK, Australia, New Zealand and Hong Kong, among others, were still out for a public holiday. Many traders globally are also out for holidays until the New Year. The greenback is on track to post its worst performance since 2020 against a basket of currencies as anticipation of Fed rate cuts dents the appeal of the U.S. currency relative to peers. Many analysts expect the U.S. economy to markedly slow in 2024, but the Fed is also expected to act to ensure that the gap between the fed funds rate and realized inflation doesn’t widen too far. If inflation falls much faster than the Fed’s benchmark rate it can tighten monetary conditions more than Fed policymakers intend and increase the risk of a hard economic landing. However they pushed back against a cut coming as soon as March and disagreed with market pricing of 154 bps in easing by December, noting that this is "unlikely to be necessary unless the economy were to fall into a recession in coming months." Data on Friday showed U.S. prices fell in November for the first in more than 3-1/2 years, pushing the annual increase in inflation further below 3%. Annual home prices in October rose again, pointing toward continued recovery of the housing market, data on Tuesday showed. Separately a Mastercard eport showed U.S. retail sales rose 3.1% between Nov. 1 and Dec. 24 as shoppers looked for last-minute Christmas deals amid big promotions. The euro was up 0.20% at $1.1045, the highest since Aug. 10. The single currency has risen from a 20-year low of $0.9528 on Sept. 26, 2022 and is on track for a 3.08% gain this year. The dollar gained 0.06% against the yen to 142.47. The dollar reached a 32-year high of 151.94 yen on Oct. 24, 2022, and came close to reaching this level again last month, before the Japanese currency recovered. The dollar is on pace for a 8.68% gain this year. The yen has steadied near a recent five-month peak on the view that the Bank of Japan (BOJ) could soon mark an end to its ultra-easy policy. For most of 2022 and 2023, the policy has kept the Japanese currency under pressure as other major central banks embarked on aggressive rate-hike cycles. BOJ Governor Kazuo Ueda said on Monday the likelihood of achieving the central bank's inflation target was "gradually rising" and it would consider changing policy if prospects of sustainably achieving the 2% target increase "sufficiently".

Gold – XAU

Gold on Wednesday made its intraday high of US$2084.37/oz and low of $2061.43/oz. Gold is up by 4.09% at US$2077.49/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (1953). If it drops below this level, it could lead to 1,927. The MACD is currently below the zero line but the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 45.31, which is in the neutral region, suggesting there may be more selling pressure before it rebounds. The Stochastic Oscillator is also in the oversold territory but has given a positive crossover, indicating a bullish stance for intraday trades.

Trading Strategy: Sell on Strength

Sell in between 2080-2107 keeping stop loss closing above 2107, targeting 2064-2054-2040 and 2032-2020-2005. Buy in between 2070-2005 with risk below 2005 targeting 2080-2094-2100-2107.

Silver - XAG

Silver on Tuesday made its intraday high of US$24.41/oz and low of US$24.04/oz settled down by 0.661% at US$24.25/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (22.91), breakage above will lead to 23.51. MACD is below the zero line and histograms are decreasing trend, bringing a bearish stance in the upcoming sessions. RSI is approaching the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the oversold region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 23.40-19.30, targeting 23.50-24.60 and 25.00-25.90 with stop loss should be placed on the breakage below 19.00. Sell in between 24.00-27.50 with a stop loss above 27.50 targeting 23.40-22.40-21.90 and 21.50-20.90-20.50.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$75.69/bbl, an intraday low of US$73.84/bbl, and settled down by 1.94% to close at US73.90/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 74.00-76.70 with stop loss at 77.00; targeting 73.85-72.50-72.00 and 71.00-70.10-69.40. Buy above 73.00-67.35 with risk daily closing below 67.00; targeting 75.10-75.90-76.50 and 77.00-77.60.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.1027/EUR, a high of US$1.1122/EUR, and settled the day up by 0.568% to close at US$1.1103/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.1120-1.1100, targeting 1.0940-1.0890-1.0820 and 1.0775-1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.1020-1.0490 with risk below 1.0490 targeting 1.1105-1.1145-1.1200 and 1.1245-1.1275.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.2697/GBP, a high of US$1.2801/GBP, and settled the day up by 0.572% to close at US$1.2796/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2297) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2790-1.2050 with a target of 1.2850-1.2890-1.2950 and 1.2990-1.3040-1.3090 with a stop loss closing below 1.2100. Sell in between 1.2790-1.2950 with targets at 1.2690-1.2630-1.2540 and 1.2490-1.2440-1.2390 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY142.17/USD, an intraday high of JPY142.62/USD, and settled the day up by 0.135% at JPY142.38/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 143.00-145.90 with risk above 146.00 targeting 143.00-141.60-140.90 and 140.00-138.70-137.90. Long positions above 142.00-137.90 with targets of 142.90-143.20-144.00 and 145.00-146.00-146.80 with stops below 137.90.