DBG Markets: Market Report for Nov 21, 2024

Market Overview

Qatar has recently expelled Hezbollah leaders from their cabinet, a move that has significantly disrupted the group's financial support network. This development puts Hezbollah in a difficult position, forcing them to choose between accepting a proposed peace deal or facing further operational and resource challenges. Reports also confirm that Hezbollah has responded positively to a U.S.-drafted ceasefire proposal aimed at resolving the conflict with Israel. The proposed agreement includes the withdrawal of Israeli ground forces and Hezbollah fighters from a UN-monitored buffer zone in southern Lebanon, bolstered by additional peacekeepers and Lebanese troops. However, disagreements remain over enforcement mechanisms and the permissible extent of military activity within the buffer zone.

GOLD - GOLD continues its bullish momentum amidst escalating geopolitical tensions. Moscow's threat to use nuclear weapons against the U.S. following its approval of Ukraine's long-range missile strikes on Russian territories has driven safe-haven demand. Despite this, the chart reflects a muted response due to market expectations of higher inflation under Trump's administration.

SILVER - SILVER has maintained its position below 31.472, even as geopolitical risks heighten. Momentum has already shifted, as previously analyzed, with price consolidating below the key resistance level. The MACD shows an upward cross with minimal histogram volume, supported by robust RSI strength. However, the RSI's overbought status suggests that selloffs might emerge, potentially limiting further upward movement in the near term.

DXY - The dollar remains consolidated below 106.848, with investors awaiting clarity on Trump's cabinet appointments, which could influence his administrative strategies. Rising geopolitical risks have bolstered the dollar, reflecting increased confidence since Trump's election.

GBPUSD - The Pound continues to weaken following the dollar's recent reversal. Price action faces rejection at 1.27006, increasing the probability of continued selling. However, further movement is required to confirm the market's direction. The MACD shows a downward cross with diminishing histogram volume, reflecting declining momentum.

AUDUSD - The Aussie dollar reflects bearish sentiment, respecting previous swing highs as anticipated in prior analyses. The Reserve Bank of Australia's (RBA) November minutes emphasized restrictive monetary policy until inflation aligns with target levels, with adjustments contingent on upcoming data. While the RSI and MACD both suggest potential buying, supported by rising RSI momentum and light histogram prints, a divergence in the RSI hints at a sudden selloff from the current peak. Price action remains bearish until a definitive break above the current S&D level.

NZDUSD - The Kiwi aligns with expectations, showing increased bearish momentum. Fundamentals and price action both favor continued selling. The MACD reflects this sentiment, though histogram volume lightens, indicating a slight slowdown. The RSI, in overbought territory, supports further downside potential, reinforcing the bearish outlook.

EURUSD - The Euro is expected to weaken, especially if tensions between Ukraine and Russia escalate. Although the MACD hints at a potential upward cross with light histogram prints, the RSIs overbought levels suggest selling pressure will dominate. Eurozone inflation, which fell to 2% year-on-year in October, makes a 25-basis point rate cut by the ECB in December increasingly likely, with further reductions expected by 2025. This dovish policy stance aligns with continued bearish sentiment for the Euro.

USDJPY - The Yen broke its previous swing high, encountering resistance at 155.704. Price action suggests continued buying, though the market faces limited resistance from fundamentals. The Bank of Japan (BOJ) appears on track for a 25-basis point rate hike during its December 18–19 Policy Board meeting. With growth prospects improving and inflation staying above the 2% target, the Yen may see mixed influences in the coming weeks.

USDCHF - The Franc appears poised for further gains, as price remains above the previous swing low. The MACD, however, indicates increasing bearish strength, while the RSI signals oversold conditions, suggesting a potential recovery. Geopolitical uncertainties lend strength to the Franc, yet the dollar's prevailing strength makes it challenging to see a decisive bullish breakout for the Swiss currency.

USDCAD - The CAD gained traction following better-than-expected CPI data released on Tuesday, reducing the likelihood of another rate cut for the Loonie in the coming months. Price action favors bearish momentum, with the MACD corroborating this through light histogram prints. The RSI also supports the downtrend, remaining below the zero line and avoiding oversold levels, suggesting room for continued selling.