FX majors keep the markets afloat – Market Overview – November 12

FX majors keep the markets afloat – Market Overview – November 12

After three days of euphoria in the market, investors seem to be calm again.

The session in both Asia and the European morning passes relatively calmly without significant movements.

Some of the stock market positions are undone, causing slight rallies in the Nasdaq index and declines in the cyclical stock indices that are nothing more than profit-taking.

FX Majors

The US Dollar, predictably, has stopped strengthening and is falling in line with its latest trend, especially against the Euro and the Japanese Yen.

EUR/USD has bounced twice from the 200-day SMA line around 1.1760, but without managing to break above the 100-day SMA line at 1.1824, the pair is awaiting events from the ECB to define the trend in the next market.

USD/JPY has also not been able to go above the 105.64 resistance level and retrace slightly. Immediate support is now at the 104.80 area.

In the daily chart, the main resistance passes through the 100-day SMA line at 105.80.

The GOLD

Constructive behavior is what the GOLD is having. After the crash that followed the announcement of the Pfizer’s vaccine success, the precious metal has managed to sustain itself above the $1850 support zone.

The fall was caused by the strengthening of the USD, which was caused by the rebound in the yields of American bonds; gold maintains an inverse correlation with the North American currency price.

But although the US Dollar has remained strong in recent days and that the yields of US bonds have only declined slightly, gold has disengaged from these correlations showing intrinsic strength and is forming a base around the support of $1850-70.

This indicates that the demand for the precious metal remains intact. Fund managers continue to consider it a hedge against a more than the potential weakening of the Dollar and, above all, the rise in real interest rates in the economy. Inflation plays an essential role in this regard, and in recent months there has been a rebound from lows. Suppose a significant fiscal stimulus package is approved soon. In that case, inflationary pressure will intensify, and with real interest rates at historic lows, interest in buying gold will become visible in the market.

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