Yesterday’s much-anticipated release of the ADP Non-Farm Unemployment Change failed to give the dollar any momentum as the number came in below expectations. There was continued downward pressure on the dollar’s strength as long-term U.S. Treasury yields continued to fall. In the commodities arena, gold maintained its position above the $2020 level, awaiting a catalyst. Meanwhile, oil prices plunged on the back of Moody’s downgrade of China’s credit rating, which pointed to continued challenges in the economic recovery of the largest oil-importing nation. This development coincided with a significant decline in Chinese stock market indices, with the Hang Seng Index plunging and the China A50 Index approaching its lowest level since 2019.
Dollar Index, H4
The U.S. dollar maintains its upward momentum, but faces uncertainty amid lackluster economic data. Disappointing private payrolls growth of 103,000 in November, down from the previous month and below market expectations, is adding to concerns. Investors are closely watching the upcoming economic data, especially the crucial employment report, to decipher the signals and gain clarity on the Dollar’s direction.
The Dollar Index is trading higher and is currently testing resistance. However, the MACD is showing diminishing bullish momentum, while the RSI is at 68, indicating that the index may experience a technical correction, as the RSI has entered the overbought territory.
Resistance level: 104.25, 104.80.
Support: 103.60, 103.10.
GBP/USD, H4
The British Pound saw a reversal in its recent bullish trend, even as the U.S. Dollar showed relative stability in the latest session. The U.S. ADP Non-Farm Employment Change, which came in below expectations, failed to provide the necessary impetus for the Dollar to gain traction. Attention now turns to Friday’s Non-Farm Payrolls report, which is expected to provide insight into the Fed‘s potential monetary policy decisions and their subsequent impact on the Dollar’s strength.
The Cable has continued to plummet since the beginning of the week and has formed a reversal price pattern, indicating a bearish bias for the Cable. The RSI is about to enter the oversold territory, while the MACD has dropped below the zero line, indicating that the Cable is trading in a bearish momentum.
Resistance level: 1.2631 1.2729.
Support: 1.2528, 1.2437.
GBP/USD, H4
The British Pound saw a reversal in its recent bullish trend, even as the U.S. Dollar showed relative stability in the latest session. The U.S. ADP Non-Farm Employment Change, which came in below expectations, failed to provide the necessary impetus for the Dollar to gain traction. Attention now turns to Friday’s Non-Farm Payrolls report, which is expected to provide insight into the Fed’s potential monetary policy decisions and their subsequent impact on the Dollar’s strength.
The Cable has continued to plummet since the beginning of the week and has formed a reversal price pattern, indicating a bearish bias for the Cable. The RSI is about to enter the oversold territory, while the MACD has dropped below the zero line, indicating that the Cable is trading in a bearish momentum.
Resistance level: 1.2631 1.2729.
Support: 1.2528, 1.2437.
EUR/USD, H4
The EUR/USD pair is in a sustained bearish trend, and has dropped more than 2% since last Wednesday. The euro has been under sustained downward pressure, exacerbated by the recent underwhelming German factory orders data, which points to challenges within the euro-zone economy. Market sentiment is now rife with speculation that the European Central Bank (ECB) may take a dovish stance on monetary policy next year in order to support the economy, which currently faces a bleak outlook.
The EUR/USD continues to trade in a downtrend as it heads towards the key psychological support level of 1.0700. The MACD is still pointing down while the RSI is floating in the oversold territory, indicating that the bearish momentum is strong.
