The EURUSD has sold off considerably in the view of a sustained USD bullish momentum. With talks of third wave brewing in Europe, markets will be seeking direction in the week ahead as traders anticipate the possible cost of what lockdown could cause to the market. Currently trading close to the low of the year at 1.1450 and with persistent inflation in the US suggesting a fast US Fed hiking cycle, it could possibly see the USD continue it bullish momentum. As the trend is trading considerably below the 100 day moving average, a possible retracement could be on the cards. With one last FOMC meeting in the month on December and the meeting associated with the economic projections summary, focus will be on the possible pace of the hiking cycle.
The US Fed hiking cycle will have implication to the precious metal Gold, XAUUSD. Generally a reduction is stimulus and hiking of interest rates tend to put upward pressure on bond yields, currently the US10-yr Treasury is trading at 1.5550. This in-turn increases the opportunity cost of gold which yield no interest. Gold currently trading at $1863 per ounce has sustained is bullish momentum. However with the markets currently trading sideways, direction will be sought as the week unfolds.
With key economic data expected out of Europe and the US this week, the data will possibly have market moving impact and possible directional momentum. Key economic data expected out this week includes, Euro Area GDP, Employment Data (Tues 16 Nov), Euro Are Inflation data (Wed 17 Nov), US Retail Sales data (Tues 16 Nov), US Fed FOMC Member Speeches (Bostic, Barking, Harker and Daily: Tues 16 Nov) and US Jobless claims data Thurs 18 Nov. This data will likely be building up to a possible feel of the year ahead, 2022.
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