Drop in Eurozone consumer sentiment impacts Euro

Euro is trading low against the greenback in the Monday Asian session. The softer-than-expected US Nonfarm Payrolls (NFP) and the worsening of the Eurozone’s investor sentiment underpinned this move.

The Unemployment rate dropped lower than the expectation of 4.7% to 4.2% this data helped the greenback. However US NFP disappointed labor market optimists with 210K figures, versus 550K expected, Further, Average Hourly Earnings matched the 4.8% YoY forecast. Before the release of the data, St Louis Fed President James Bullard who is also a voting member in 2022 said, “Could look at raising interest rates before completing the taper.”

On the other hand, Eurozone’s investor sentiment keeps worsening in the final month of the year, the latest data published by the Sentix research group showed on Monday. The gauge fell further to 13.5 in December from 18.3 in November vs. a reading of 15.9 expected. The index reached the lowest levels since April.

A current conditions index fell for the third month in a row to 13.3 from 23.5 in November, dropping to its lowest since May. However, an expectations index rose to 13.8 from 13.3 in the previous month.

Sentix Managing Director Manfred Huebner said: “A slowdown and even a recession no longer seem to be ruled out now. These lockdowns hit the economy harder than before.”

Whereas, the European Central Bank (ECB) policymakers believe that the inflation fears are temporary and highlight the pandemic to defend the easy money policies.

Talking about the Omicron variant, At the start of the week, it was reported that ”initial data from a major hospital complex in South Africa’s omicron epicentre show that while Covid case numbers have surged, patients need less medical intervention.” 

Meanwhile, Omicron has now been detected in at least 24 countries around the world, according to the World Health Organization (WHO). While Omicron has spread to about one-third of US states as of Sunday, Dr. Anthony Fauci, the top US infectious disease official, told CNN that “thus far it does not look like there’s a great degree of severity to it,” though he cautioned that it’s too early to be certain.

There is no major market-moving economic data due for release from the US on Monday, leaving the USD to be dependent on the bond yield to find the trade direction.

EUR/USD 4 Hour Chart:

Support: 1.1275 (S1), 1.1237 (S2), 1.1208 (S3).

Resistance: 1.342 (R1), 1.1371 (R2), 1.1409 (R3).

In the prevailing trading sentiment which favors the greenback over the Euro, we expect a bearish trend for the EUR/USD.

BTC/USD Weekly Forecast (06th December 2021 – 10th December 2021)

Fundamental view:

Bitcoin traded low against the greenback during the trading course of the week. This crash to lowest since late September comes in the wake of uncertainties caused by the Omicron variant of COVID-19 and Federal Reserve’s (Fed) growing discomfort with high inflation. In this week, US Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen, testified on the CARES act before the Senate. Powell noted that inflation had spread more broadly and that the risk of persistent inflation has risen. He added that it’s time to remove the term “transitory” to describe price pressures, and the Fed would discuss speeding up tapering in their December meeting, to counter inflation. This further weighed on the Bitcoin.

Elsewhere, some are using this fall as an opportunity to “buy the dip.” El Salvador President Nayib Bukele, whose country holds bitcoin on its balance sheet and has purchased coins during previous dips, announced another purchase of 150 BTC for around $48,700 each. Meanwhile, Vijay Ayyar, head of Asia Pacific with crypto exchange Luno said “It’s hard to say what that means for economies and markets and hence the uncertainty.”

The major economic events deciding the movement of the pair in the next week are Nonfarm Productivity quarterly report at Dec 7, EIA Crude Oil Stocks Change at Dec 08, Initial Jobless Claims, WASDE Report at Dec 09, Michigan Consumer Sentiment and Federal Budget Balance at Dec 10 for US.

BTC/USD Weekly outlook:

Technical View:

Last week’s high was 0.53% lower than the previous week. Maintaining high at 59206.9 and low at 51910.2 showed a movement of 7296 pips.

In the upcoming week we expect BTC/USD to show a bearish trend. The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. Should 50231.7 proves to be unreliable support then the pair may fall further to 47422.6 and 42935.0 respectively whereas a solid breakout above 57528.4 will open a clear path upward to 62016.0 and then will further raise up to 64825.1. In H4 chart descending triangle breakout favors prospects of a bearish trend. Shooting star pattern constructs a bearish outlook for the pair in the upcoming week.

Preference
Sell: 53065.6 target at 46170.8 and stop loss at 57532.4

 

Alternate Scenario
Buy: 57532.4 target at 64824.7 and stop loss at 53065.6

XAU/USD Weekly Forecast (06th December 2021 – 10th December 2021)

Fundamental view:

Gold traded high at the starting of the week but however, with confirmed Omicron cases in Europe and the UK showing mild symptoms, the yellow metal could not standout  and fell against the greenback. The Hawkish comment of the Fed Powell further favored the greenback. While testifying before the US Senate Banking Committee, Powell said it would be appropriate to consider wrapping up the asset taper a few months sooner than initially planned. He also noted that it was time to retire the term transitory when defining inflation in the US. Speaking about the Omicron variant, Powell said that they need to see more data to assess its potential impact on economic activity.

Favorable data also underpinned the dollar bullish trend. The employment in the private sector increased by 534,000. The ISM Manufacturing PMI arrived at 61.1 in November, showing that the business activity in the manufacturing sector continued to expand at a robust pace. Further The US Bureau of Labor Statistics reported on Friday that Nonfarm Payrolls (NFP) increased by 210,000 in November, missing analysts’ estimate of 550,000 by a wide margin. 

The major economic events deciding the movement of the pair in the next week are Nonfarm Productivity quarterly report at Dec 7, EIA Crude Oil Stocks Change at Dec 08, Initial Jobless Claims, WASDE Report at Dec 09, Michigan Consumer Sentiment and Federal Budget Balance at Dec 10 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 2.22% lower than the previous week. Maintaining high at 1808.7 and low at 1761.7 showed a movement of 470 pips.

In the upcoming week we expect XAU/USD to show a bearish trend.  The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. Should 1760.0 proves to be unreliable support then the pair may fall further to 1737.4 and 1713.0 respectively whereas a solid breakout above 1807.0 will open a clear path upward to 1831.4 and then will further raise up to 1854.0. In H4 chart bearish flag pattern favors prospects of a bearish trend. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.

Preference
Sell: 1782.4 target at 1738.8 and stop loss at 1812.6

 

Alternate Scenario
Buy: 1812.6 target at 1853.5 and stop loss at 1782.4

AUD/USD Weekly Forecast (06th December 2021 – 10th December 2021)

Fundamental view:

Australian dollar traded low against the American dollar during the trading course of the week. The sour market sentiment and chances of further tightening in the US favored the American dollar. The discovery of Omicron variant created sour market sentiment. As per analysts, Omicron is more contagious, it is also less deadly. It is also unclear whether existing vaccines are effective against it, however at this time. several countries suspect that the variant has been locally circulating before it was actually reported. Overall, authorities have ended the week saying that travel restrictions are not the best way to fight the virus. Elsewhere, US Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen, testified on the CARES act before the Senate. Powell noted that inflation had spread more broadly and that the risk of persistent inflation has risen. He added that it’s time to remove the term “transitory” to describe price pressures, and the Fed would discuss speeding up tapering in their December meeting, to counter inflation. On the other hand, The RBA will meet on Tuesday.

RBA Deputy Governor Debelle Speech on 30th November and Commonwealth Bank Services PMI on 3rd December favored uptrend whereas Fed Chair Powell Testimony on 30th November and US ISM Manufacturing PMI on 1st December favored bearish trend for the pair in this week.

The major economic events deciding the movement of the pair in the next week are RBA Interest Rate Decision, US Nonfarm Productivity quarterly report at Dec 7, RBA Governor Lowe Speech, EIA Crude Oil Stocks Change at Dec 08, Initial Jobless Claims at Dec 09, Michigan Consumer Sentiment and US Federal Budget Balance at Dec 10.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 1.39% lower than the previous week. Maintaining high at 0.7172 and low at 0.6992 showed a movement of 180 pips.

In the upcoming week we expect AUD/USD to show a bearish trend. The currency pair is trading below the Simple Moving Average and the MACD trades to the downside. Should 0.6935 proves to be unreliable support then the pair may fall further to 0.6874 and 0.6755 respectively whereas a solid breakout above 0.7115 will open a clear path upward to 0.7234 and then will further raise up to 0.7295. In H4 chart descending scallop pattern favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.

Preference
Sell: 0.6996 target at 0.6849 and stop loss at 0.7120

 

Alternate Scenario
Buy: 0.7120 target at 0.7294 and stop loss at 0.6996