November 03th Daily Analysis
November 3th Daily Analysis
U.S. DOLLAR INDEX (USDX)
The U.S. dollar eased slightly on Thursday as investors digested the possibility that the Federal Reserve may raise interest rates further than expected, while sterling edged higher ahead of the Bank of England policy meeting. Matching the expectations, the Fed raised its benchmark funds rate by 75 basis points (bps) to 3.75-4%.
The dollar initially fell on hints in the Fed’s statement of smaller hikes ahead but regained strength after Chair Jerome Powell said that the battle against inflation will require borrowing costs to rise further. Meanwhile, the U.S. dollar index fell 0.214% at 111.880, coming off a session high of 112.19, its highest in seven sessions.
The index remains positive on the daily chart while despite the strong corrective downtrend. While RSI and Moving Averages show support for the positive trend, MACD on the other hand shows high divergence and possibility to further correction.
On the hourly chart, technical indicators show a possibility to reach the major resistance at 112.10 which will cause fluctuations. Additionally, price action analysis expects fluctuations between 111.60 and 112.10 with high probability to break above 112.10.
Pivot Point: 112.00
STERLING POUND (GBPUSD)
The Cable rose 0.1% to 1.1499, ahead of Thursday’s Bank of England policy meeting. However, Market participants expect an interest rate increase of 75 bps while consumer inflation hits double figures in September.
The cable remains under heavy selling pressure below the resistance at 1.1440 and it remains within the negative direction. Meanwhile, the daily chart shoed high resistance at 1.1650 limiting chances for any gains in the foreseen future. However, the hourly chart shows the trendline targeting 1.1320.
Pivot Point: 1.1385
SPOT GOLD (XAUUSD)
Gold prices fell on Thursday, reversing recent gains as hawkish comments from Federal Reserve Chairman Jerome Powell dashed hopes that interest rate hikes will end soon. The Fed hiked interest rates by an as-expected 75 basis points (bps) and said that it was “very premature” to consider pausing further rate hikes.
While Powell hinted that future rate hikes may be of a smaller size, the Fed appears to be further away from the end of its tightening cycle than previously thought. However, Powell said that U.S. rates will likely end the cycle higher than previously expected. Meanwhile, spot gold fell 0.2% to $1,632.45 an ounce, while gold futures slumped nearly 1% to $1,634.60 an ounce.
Technically, spot gold remains negative on the daily chart and targets $1,620 per ounce with little to no support before that level. Technical indicators show a probability of a horizontal movement or neutral momentum. Meanwhile, the hourly chart shows a continuation slowly to the downtrend.
Pivot Point: 1,635
WEST TEXAS CRUDE (USOUSD)
Oil futures fell early on Thursday as the dollar firmed on the Federal Reserve’s hawkish stance, but concerns over looming supply risks kept a floor under prices. Brent crude shed 0.5% to $95.72 a barrel, while U.S. WTI crude futures retreated 0.7% to $89.41.
The benchmarks settled up more than $1 on Wednesday, aided by another drop in U.S. oil inventories, even as the Fed boosted interest rates by 75 basis points and Chair Jerome Powell said it was premature to think about pausing rate increases.
Brent crude for January delivery rose 0.8% to $93.54 a barrel. WTI crude rose 0.7% to $87.11 a barrel. Both benchmarks ended October higher, their first monthly gains since May after the OPEC+ said they would cut output by 2 million barrels per day (bpd).
Pivot Point: 88.40