EUR/USD: The European currency rose against the US dollar on Monday after traders lowered their expectations for aggressive interest rate hikes from major central banks. The European Central Bank’s Chief Economist said yesterday that supply issues and higher energy prices are the main risks of inflation and the Eurozone’s economic recovery. The Eurozone published Sentix Investor Confidence, which improved in November but missed market expectations. The US calendar doesn’t contain any significant data, but several Fed officials will give speeches, including Fed chief Jerome Powell. The local resistance level can be seen at 1.1600. A breakout to the upside can trigger growth to 1.1655.
BUY 1.1607/TP 1.1655/SL 1.1590
USD/JPY: The US dollar fell against the Japanese Yen on Monday due to general greenback weakness. Japan’s real wages declined in September for the first time in three months due to inflation having risen faster than growth in nominal pay. This is a sign of global cost-push inflation that begins to affect Japanese households. Meanwhile, Japan is considering an economic stimulus package worth more than 30 trillion yen (about $265 billion) that will be aimed at easing the pain from the COVID-19 pandemic. Traders will pay close attention to the Fed speeches and US stimulus headlines for intermediate signals. If the Fed Chair reiterates his carefully hawkish speech, the pair may fall further. The local support level can be seen at 112.90. A breakout below could take the pair towards 112.45.
XAU/USD: Gold rose to a two-month high on Monday due to a retreat in the US dollar and persistent inflation concerns. The weaker greenback combined with rising inflation expectations supported an appetite for the precious metal. While gold is supposed to be a hedge against inflation, it has barely lived up to that billing over the past year because speculation that the Federal Reserve will be forced in a faster-than-expected rate hike had sent Treasury yields and the dollar rallying at bullion’s expense. That trend has weakened over the past week after Fed Chair Jay Powell said that the central bank will be patient with any rate hike that will only come after the middle of 2022 and most likely toward the end of the year.
BUY $1828/TP $1840/SL $1824