Markets React to Treasury Nomination and Geopolitical Developments (11.26.2024)

Market Eyes ECB Rate Cuts as Eurozone Risks Persist

The Euro edged closer to $1.05, supported by a weakening dollar after Donald Trump announced Scott Bessent as his Treasury Secretary pick. Bessent’s expected focus on stability eased concerns over sweeping tariffs. However, the Euro remains near two-year lows amid worries over Eurozone economic risks, including a second Trump term, the Ukraine war, and political instability in Germany and France. Markets have fully priced in a 25bps ECB rate cut next month, with a 58% chance of a 50bps cut. Upcoming Euro Area inflation data this week may provide further clarity on the ECB’s next move.

Resistance levels for the euro are at 1.0530, followed by 1.0600 and 1.0660. Support levels are at 1.0450, 1.0400, and 1.0330.

BOJ Signals Possible Rate Hike as Inflation Data Looms

The Japanese yen held steady around 154 per dollar on Tuesday, gaining 0.5% this week as Trump’s tariff threats on China, Mexico, and Canada dampened risk sentiment. Support also came from Trump’s nomination of Scott Bessent as Treasury Secretary, calming markets and reducing "Trump trades." Domestically, investors await Tokyo inflation data, a key indicator of nationwide trends. BOJ Governor Kazuo Ueda hinted at a possible December rate hike, citing concerns over yen weakness.

Resistance levels for the yen are at 156.10, 157.50, and 158.00. Support levels are at 153.60, 152.50, and 151.80.

Focus Shifts to Fed Minutes as Gold Recovers from Sharp Drop

Gold steadied around $2,620 on Tuesday after a 3.4% drop, driven by reports of an Israel-Hezbollah ceasefire reducing safe-haven demand. The metal faced further pressure from a stronger dollar following Trump’s announcement of tariffs on Mexico, Canada, and China. Gold was also impacted by the nomination of Scott Bessent as Treasury Secretary, who advocated phased trade restrictions and negotiation on tariff levels. Investors now await the Fed’s November meeting minutes for insights into future monetary policy.

Resistance levels for gold are at $2,635, $2,660, and $2,690. Support levels are at $2,600, $2,575, and $2,550.

From a technical perspective, the initial resistance to watch is 1.2620, and if broken, the next levels to monitor are 1.2680 and 1.2720. On the downside, the first support is at 1.2530, with subsequent support levels at 1.2500 and 1.2475 if it falls below.

Inflation Concerns and Ceasefire Hopes Weigh on Silver

Resistance levels for silver are at $31.10, $31.55, and $32.10. Support levels are at $30.20, $29.85, and $29.30.