Market Analysis and Technical Analysis (4-Hour Chart) – December 20, 2024

Market Analysis and Technical Analysis (4-Hour Chart) – December 20, 2024

EUR/USD – Strong Sell

Current Situation: EUR/USD remains range-bound around 1.0360, with subdued market activity.

Key Points:

• U.S. GDP Revised Upward:
  • Q3 growth rate revised to 3.1% (forecast: 2.8%).
  • This may prompt the Federal Reserve (FRB) to slow its rate-cutting pace.
• Unemployment Claims:
  • Initial claims: 220,000 (previous: 242,000, forecast: 230,000).
  • Continuing claims: 1.874 million (previous: 1.879 million).
• Looking Ahead:
  • Focus on Personal Consumption Expenditures (PCE) Price Index:
    • Core PCE YoY forecast: 2.9% (previous: 2.8%).
    • Monthly forecast: 0.2% (previous: 0.3%).

GBP/USD – Strong Sell

Current Situation: GBP/USD is trending downward near 1.2480, hitting its lowest level since May.

Key Points:

• UK Economy:
  • Inflation accelerating:
    • CPI YoY: 2.6%.
    • Core CPI YoY: 3.5%.
  • Q4 GDP growth forecast revised down to 1.7% (previous: 2.0%).
• BOE Meeting Results:
  • Policy rate held steady at 4.75%.
  • 6 members voted to hold, 3 supported a further 25-basis-point rate cut.
• Impact of U.S. Data:
  • FRB’s rate cut outlook and weak UK economic data put downward pressure on the pound.

NZD/USD – Sell

Current Situation: NZD/USD remains stable around 0.5625, near its lowest level since October 2022.

Key Points:

• New Zealand Economy:
  • ANZ Consumer Confidence Index: 100.2 (previous: 99.8).
  • November exports increased to NZ$6.48 billion (previous: NZ$5.61 billion).
  • November imports decreased to NZ$6.92 billion (previous: NZ$7.27 billion), narrowing the trade deficit to NZ$437 million.
  • Q3 GDP contracted by -1.5% YoY (forecast: -0.4%).
• Impact of FRB:
  • Slower rate cuts by the FRB could weigh on the NZD.

USD/JPY – Buy

Current Situation: USD/JPY trades near 157.25, reaching its highest level since late July.

Key Points:

• Japanese Economy:
  • National CPI:
    • Overall YoY: 2.9% (previous: 2.3%).
    • Core CPI YoY: 2.7% (previous: 2.3%).
  • BOJ held rates at 0.25%, with future rate hikes contingent on additional data.
• Impact of FRB:
  • Market focus remains on U.S. PCE inflation data and its post-announcement trends.

XAU/USD (Gold) – Sell

Current Situation: XAU/USD is attempting to test 2600.00, showing modest gains.

Key Points:

• Impact of FRB:
  • Interest rates reduced to 4.50%.
  • 2025 rate-cut expectations trimmed to two (previous: three).
• Global Trade Impact:
  • Potential tariffs on imports from China, Mexico, and Canada under President Trump’s administration could influence gold demand.
• Today’s Focus:
  • PCE data (15:30 GMT+2) may determine the direction of gold prices.

Summary

Short-Term Focus:

• PCE inflation data.
• Future FRB policy outlook.

Mid-to-Long-Term Impact:

• Global inflation trends and central bank responses will shape market movements.

Market participants are expected to trade cautiously, focusing on U.S. rate-cut projections and key inflation indicators.