Intraday Technical Analysis 20 December

The FOMC held its meeting yesterday, and as widely expected, the Central Bank raised interest rates by another quarter point. This brought the Fed funds rate to 2.25% – 2.50%. As expected, the Central Bank forecast fewer rate hikes for the year ahead. Still, the U.S. Dollar managed to maintain the gains.

UK’s consumer prices rose at a slower pace of 2.3% on the year ending November. This was in line with estimates and is down from the 2.4% registered the month before.

The core inflation rate rose 1.8% matching estimates and down from 1.9% previously. The decline in inflation came due to lower fuel prices.

Canada’s inflation data was also out later in the day. Consumer prices fell 0.4% on the month matching estimates and reversed the 0.3% increase from the month before. The trimmed mean CPI is lower, rising only by 1.9% on an annualized basis compared to 2.1% previously registered.

Economic data from the U.S. saw existing home sales rebounding, rising 5.32 million on the month in November. This was slightly better than the forecasts of 5.20 million.

In the overnight session, New Zealand’s quarterly GDP showed that the economy expanded by 0.3% in the third quarter of the year. This is well below estimates of a 0.6% increase that was the forecast.

It is another busy day for the markets. In the overnight session, Australia’s monthly employment report came out. Earlier today, Australia’s labor market data showed that the economy added 37k jobs during November. This beat forecasts of a 20k increase. October’s data shows 28.7k jobs added. The Australian unemployment rate rose to 5.1% in November from 5.0% previously.

The Bank of Japan held its monetary policy meeting earlier today. The Central Bank left interest rates unchanged. The BoJ Governor Kuroda will speak shortly.

The European session will see the release of the UK’s retail sales report. Retail sales can see an increase of 0.3%. This follow’s October’s decline of 0.5%.

The Bank of England will be holding its monetary policy meeting a few hours later. No changes are expected as the Central Bank is expected to maintain its interest rates steady at 0.75%. The NY trading session is somewhat quiet. The Philly Fed manufacturing index is due, followed by the weekly unemployment claims report.

EURUSD intraday analysis

EURUSD (1.1382): The EURUSD currency pair tested the highs of 1.1430 before giving up the gains. The declines in the common currency came as price action touched the previously established resistance level. Overall, the EURUSD remains caught trading in the range. The current declines could be seen retesting the falling trendline in the near term. If price posts a rebound off the falling trend line, we could anticipate a potential breakout from the resistance level if it is followed up by a rally. To the downside, the support at 1.1315 remains in place.

GBPUSD intraday analysis

GBPUSD (1.2628): The GBPUSD currency pair has been trading somewhat flat after price action tested the resistance level of 1.2683. The sideways range formed between 1.2683 a 1.2491 is expected to remain in place. With the BoE meeting due today, we could, however, expect to see some volatility. A breakout from this range could potentially set up the direction in the next leg of the trend. A close above 1.2683 could likely confirm a short-term shift in the major downtrend while a break down below 1.2491 could signal a continuation to the downside.

XAUUSD intraday analysis

XAUUSD (144.94): Gold prices briefly tested the highs of 1250 before giving up the gains. Price action, however, retesting the support at the 1240 handle. As long as this support holds, the bias in gold remains to the upside. Yet, if the support at 1240 fails, gold prices could be extending the declines. The lower support at 1227.10 remains a key support area that is pending retest.