Today's Expert Analysis

Reminder

During the holiday season, market liquidity and volume typically decrease, causing spreads to widen and trading activity to slow. As a result, markets are less likely to take any definitive direction until the new year. We recommend exercising caution when trading towards the year-end. Taking a break during this period and resuming trading in the second week of January might be a prudent choice.

Market Overview

This week offers limited data releases:

Monday: Canadian GDP

Wednesday: Bank of Japan (BOJ) stance announcement

Thursday: U.S. weekly claims

With banks approaching the holidays, trading desks will see reduced activity, leading to decreased market momentum and volume for the coming days. Accordingly, expect limited price action.

However, unexpected news releases or developments in geopolitical conflicts could cause delayed reactions in the charts as markets fully reopen. Traders should remain vigilant for potential disruptions during this period.

Bank holidays on Dec. 24, 25, 26 and 31.

Market Analysis

GOLD - Gold prices gained buying volume following an extended pullback. Although the overall trend remains bearish, disappointing Core PCE data (0.1%) from the U.S. triggered buying interest. Despite minimal price movement, the RSI shows significant downward momentum, aligning with the overall bearish sentiment.

SILVER - Silver prices followed golds lead, pulling back higher from recent lows. While the overall bearish trend persists, the RSI and MACD indicate increased potential for a short-term buying continuation. However, the market is likely to consolidate between 29.9000 and 29.0177 in the near term.

DXY - The dollar weakened after last Friday‘s underwhelming Core PCE data. Political uncertainty in the U.S., including concerns over a potential government shutdown (recently averted), further undermined dollar strength. Despite these developments, the overall trend remains intact as markets await Trump’s inauguration. Currently, the January 28-29 FOMC meeting prices in only a 9% probability of a 25-basis-point rate cut.

GBPUSD - The pound gained buying momentum as the MACD and RSI shifted upward. A temporary pullback was noted near 1.26163 after the RSI hit overbought levels. Despite this buying pressure, the overall price action remains bearish, with a selling continuation expected after the bank holidays.

AUDUSD - The Aussie dollar is recovering slightly from recent declines. Consolidation is likely as the RSI shows reduced directional conviction. Although prices have reached overbought levels, the MACD histograms indicate diminishing buying momentum. Once market liquidity and volatility return, continued selling pressure is anticipated.

NZDUSD - The Kiwi remains range-bound, with resistance near 0.56600 and support at previous swing lows. The MACD shows reduced buying momentum, and the RSI reflects a lack of directional conviction after hitting overbought levels at the resistance zone. Consolidation is expected to continue until liquidity returns.

EURUSD - The euro failed to reach 1.03311 during its initial attempt but is now pushing toward 1.04672 after benefiting from last Fridays disappointing U.S. data. While the RSI indicates divergence, suggesting potential buying momentum, the MACD shows weakening strength with waning histograms. A reversal may occur soon.

USDJPY - Asian shares rallied following lower-than-expected data releases, boosting the yen to 157.720. While the MACD and RSI show bearish and overbought conditions, respectively, overall price action still leans toward buying momentum. That said, consolidation is likely until the new year.

USDCHF - The franc is testing support near 0.89431. A successful break lower would shift momentum toward selling. However, current RSI readings show price divergence and overbought levels despite minimal movement, indicating weak buying strength. If prices consolidate at these levels, a sideways trend with small price increments may develop.

USDCAD - The CAD remains near 1.44440, with selling continuation increasingly likely. However, the MACD shows diminished selling momentum, and the RSI lacks strong conviction, suggesting ongoing consolidation. If this area becomes a fair value zone, prices may oscillate between the current swing low and resistance.

COT Report Analysis

AUD - WEAK (5/5)

GBP - STRONG (3/5)

CAD - WEAK (4/5)

EUR - WEAK (4/5)

JPY - WEAK (2/5)

CHF - STRONG (2/5)

USD - STRONG (5/5)

NZD - WEAK (5/5)

GOLD - STRONG (4/5)

SILVER - STRONG (4/5)