Euro Steadies as Political Calm and CB Outlook Shape Market Sentiment (12.09.2024)

The euro remained steady near $1.06 following renewed confidence in French political stability and clearer indications of policy easing from the European Central Bank. President Macron’s initiative to appoint a new prime minister and secure the 2025 budget calmed investor nerves, while markets anticipate a 25 bps ECB rate cut next week, bringing the total expected easing through mid-2025 to 125 bps. Meanwhile, strong US jobs data increased bets on a December Fed cut, underscoring resilient economic conditions and global monetary policy shifts that keep the currency markets on edge.

Euro Steady Near $1.06 Amid France's Political Stabilization and ECB Outlook

The euro hovered near $1.0530, ending the week flat amid France's political turmoil and upcoming ECB decisions. President Macron’s plan to appoint a new prime minister to secure the 2025 budget calmed market fears, sparking a brief rally on Thursday. The ECB is set to cut rates by 25 basis points next week, its fourth reduction this year, aiming for a neutral policy rate near 2%. President Lagarde emphasized a cautious approach to support recovery while addressing risks. Markets anticipate 125 basis points of ECB easing through mid-2025, contrasting with the Fed’s expected smaller cuts. In the US, bets on a December Fed cut rose as strong jobs data highlighted economic resilience.

Technically, the firs resistance level will be 1.0600 level. In case of this level’s breach, next levels to watch would be 1.0660 and 1.0720 consequently. On the downside 1.0525 will be the first support level. 1.0500 and 1.0450 are next levels to monitor if first support level is breached.

Yen Strengthens with Rate Hike Promises

The Japanese yen held near 150 per dollar on Monday, staying in a tight range as investors assessed Japan's revised economic growth figures. Final data showed 0.3% quarterly growth in Q3, surpassing the 0.2% preliminary estimate and forecasts. Along with stronger wage growth, this bolsters the case for a hawkish Bank of Japan (BOJ). However, uncertainty remains about the timing of a rate hike, with predictions split between December and January. BOJ Governor Kazuo Ueda signaled a hike is imminent, citing steady economic performance, while board member Toyoaki Nakamura raised doubts about wage growth sustainability and signs of economic weakness.

From a technical perspective, 151.00 appears to be the key initial resistance level, with a break above it potentially targeting 152.00 and 153.00. On the downside, 149.40 is the first major support, followed by 148.70 and 148.20 if the price moves lower.

Gold Surges Above $2,640 Amid Geopolitical Unrest and Renewed Demand

Gold climbed above $2,640 per ounce on Monday, bolstered by safe-haven demand amid Middle East tensions and China's resumed gold purchases. Syrian rebel forces ousted President Assad on Sunday, ending his 50-year rule and raising concerns about regional instability. China's central bank added gold to its reserves in November after a six-month pause, further supporting prices. Meanwhile, the U.S. jobs report showed a gradual labor market slowdown, increasing the likelihood of a Fed rate cut. Markets now see an 83% chance of a 25bps cut at the Fed's December meeting, enhancing gold's appeal as a non-yielding asset.

Technically, the firs resistance level will be 2660 level. In case of this level’s breach, next levels to watch would be 2690 and 2710 consequently. On the downside 2600 will be the first support level. 2575 and 2545 are next levels to monitor if first support level is breached.

British Pound Sees Modest Decline, Remains Far From Historical Highs

The British pound was trading near 1.2710, while the dollar index remained steady around 106 on Monday as investors awaited key inflation data later this week, which could impact the Federal Reserve's upcoming interest rate decision. On Friday, US economic figures showed stronger job growth for November, though the unemployment rate ticked up to 4.2%. Consumer confidence in the US also rose in December, supporting a positive outlook for the dollar. Despite this, market expectations for a 25 basis point rate cut from the Fed this month are still strong, with the probability currently at 83%.

Technically, the firs resistance level will be 1.2760 level. In case of this level’s breach, next levels to watch would be 1.2830 and 1.2900 consequently. On the downside 1.2610 will be the first support level. 1.2540 and 1.2470 are next levels to monitor if first support level is breached.

Silver Nears One-Month High Amid Fed and China Stimulus Hopes

Silver prices held steady above $30.90 per ounce on Monday, nearing monthly highs as traders piled on bets that the US Federal Reserve will cut interest rates again this month. The probability of a 25 basis point rate cut in December surged to around 85%, up from 72% last week. These expectations grew even after Fed Chair Jerome Powell signaled that the central bank is in no rush to lower rates, citing strong growth, a robust labor market, and persistent inflationary pressures. Additionally, speculation is rising that China could announce more stimulus measures during key political meetings this month, which could further boost demand in the world’s largest consumer of metals.

Technically, the firs resistance level will be 31.50 level. In case of this level’s breach, next levels to watch would be 32.00 and 32.50 consequently. On the downside 30.70 will be the first support level. 30.20 and 29.80 are next levels to monitor if first support level is breached.