EURUSD appears to have lost momentum as investors are trading cautiously ahead of the ECB interest rate decision. The market participants and investors anticipate that the European Central Bank will leave key rates on hold later in the day. Interest rate decision to be announced at 12:15 GMT. However, Investors are waiting for the comments from ECB President Christine Lagarde's press conference on inflation and future interest rate expectations because the inflation in the Eurozone is still significantly above the central bank's 2% target. Lagarde speech is scheduled 30 minutes after the rate announcement.
If the ECB leaves rates unchanged and Lagarde announces any indication of slowing down the rate hikes, we could see a resumption of the downside move in the euro. The expected trading range for EURUSD today is between 1.0600 support and 1.0840 resistance.
Global stock markets are volatile again after the release of robust US inflation data. This can stay for a while as the market estimations suggest over a 50% probability of a 25-basis point increase either in November or December after the bigger-than-expected increase in headline US CPI. US stock futures made slim gains on Thursday morning as investors remain concerned about the prospect of further monetary tightening. Looking further ahead to the US session, the US Producer Price Index (PPI), Retail sales and jobless claims could influence the market mood.
Crude oil prices ended a volatile session slightly lower on Wednesday following the release of EIA crude inventory data. The EIA data showed the US crude inventories increased by 4 million barrels last week, defying expectations for a 1.9-million-barrel drop. The US economic data and dollar movement will set the tone for the price action in crude oil prices in the next two days.
In the currency market, the U.S. Dollar currency Index is trading on a bullish note as chances of a November rate hike increase. Moving ahead, the US traders should watch closely the release of the latest US PPI data, that's the next piece of major economic news that could alter the FED's thinking on interest rates. The US Producer Price Index is expected to show that prices rose +1.2% Year-on-Year, up from +0.8% in July. Technically, the medium-term trend is very supportive, and the index has room to climb If the upside momentum continues.
Gold price bears are hunting down, and volatility is expected to increase during the NY session today due to the release of major US economic data and the ECB meeting decision. The metal struggled to regain upside momentum as traders started to anticipate that the FED would continue to take action until Inflation is brought down. The long-term technical scenario is absolutely bearish and attempts to exit the current bearish channel will not succeed without moving above the $1940 resistance.
On the data front, the headline US CPI increased to 3.7% in August 2023 compared to a year ago, the U.S. Department of Labor reported on Wednesday. The latest reading was slightly higher than expected 3.6%. While the core US CPI rose 4.3% in August 2023, which was exactly as estimated by the market.
Moving ahead today, the important events to watch:
Eurozone – ECB interest rate decision and statement: GMT – 12:15
US – PPI: GMT – 12:30
US – Retail sales: GMT – 12.30
Technical Outlook and Review
EURUSD: Technically the current price action signals suggest that a medium-term bearish trend remains intact. On the downside, the decline is more extensive, and it will be hard to rule out a run toward 1.0660/30 if the bearish momentum continues. On the flip side, the pair needs to recover back to above 1.0800 to have a chance to develop upside momentum in the near term.
The important levels to watch for today: Support- 1.0660 and 1.0630 Resistance- 1.0770 and 1.0810.
GOLD: Gold price daily chart is still biased to the downside and still possible we will get further downside as the chart has downward pressure. For today, US PPI and Retail Sales figures will likely have a significant effect on gold. Technically, If the bearish momentum continues bears will probably try to achieve the $1900 and $1894 zones. On the flip side, immediate resistance at $1910 then $1916.
The important levels to watch for today: Support- 1900 and 1892 Resistance- 1911 and 1916.
Quote of the day – An investment operation is one which, upon thorough analysis, promises safety of the principal and an adequate return. Operations not meeting these requirements are speculative - Benjamin Graham.