The Week Ahead – Return of the bull? – Orbex Forex Trading Blog

EURUSD consolidates ahead of ECB meeting

The euro steadies as the market hopes for a hawkish turn in monetary policy. Inflation across the Euro zone saw a sharp retreat with the latest print at 2.4%, from over 10% just a year ago. More hawkish policymakers are joining the rank of the doves and advocate that further rate hikes could be off the table. The meeting might be uneventful in terms of rates but traders will certainly look for a change in the official rhetoric. The focus is now on betting on rate cuts next year, but with the US likely to lead the way, the dollar could trail behind the single currency. After hitting resistance at 1.1000, the price may look for support around 1.0660.

GBPUSD steadies as BoE may not blink

Cable holds onto gains as rates might remain high longer than elsewhere. Central banks have adopted the standard language of ‘seeing the full impact of higher borrowing costs passing through the economy’, and the BoE is no exception. Even with interest rates at their 15-year peak,  Britain is still coping with the highest inflation rate among developed countries. Officials may acknowledge a slowdown in the economy but would push back rumours of cutting rates, especially with stronger-than-expected wage and income growth, they would refrain from loosening the grip too soon. 1.2400 is a fresh support and 1.2800 a key resistance.

UKOIL slides on China downgrade

Brent crude tumbles as Moody’s turns negative on China’s credit outlook. Concerns about the state of the country’s economy have put pressure on the price. Chinese customs data showed that crude imports fell sharply in November, reinforcing worries about demand from the largest global importer. The straw that broke the camel’s back would be ratings agency Moody’s downgrade warnings on China, Hong Kong and Macau questioning the sustainability of the growth engine in the region. The cloudy outlook would certainly make buyers think twice. 72.00 is a critical floor to prevent a steep sell-off and 84.00 the closest resistance.

SPX 500 recovers as rate cut bets rise

The S&P 500 keeps the high ground as investors bet on increasing dovishness from the Federal Reserve. Growing expectations that the US central bank was done with its campaign of interest rate hikes and that it could start to cut rates in March have fueled the V-shaped recovery from the October bottom. While value names have benefited from the market’s eagerness to resume the bull run, upbeat sentiment compounds fresh catalysts in the AI area, boosting demand for tech-related stocks. The next set of CPI prints will be key in sustaining the climb above 4680 and towards a fresh all-time high. 4400 would be the first support

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