The Euro’s Falls
The EUR/USD pair experienced a significant downfall, dipping below 1.0600 on Tuesday. This drop is primarily attributed to the strengthening of the US Dollar, which has been outperforming its rivals, thanks to the rise in the Manufacturing PMI and Services PMI in early October.
EURUSD Daily Chart
Despite flirting with the 1.0700 threshold earlier in the day, the pair witnessed a retreat towards the current 1.0620 price zone. This can be credited to a series of discouraging European data, including the November German Gfk Consumer Confidence Survey and the preliminary estimates of the October Producer Manager Indexes (PMIs) by S&P Global.
ECB Policymakers Weigh In
In the meantime, policymakers from the European Central Bank (ECB) made their voices heard. Gabriel Makhlouf, Governor of the Central Bank of Ireland, expressed concerns about the potential impact of the Middle East crisis on economies. Conversely, President Christine Lagarde conveyed that the fight against inflation is progressing well.
GBP/USD Drops Below 1.2200
The Sterling’s Slide
The GBP/USD pair also saw a downward trajectory, falling below 1.2200 on Tuesday.
GBPUSD Daily Chart
The primary reason for this decline is the renewed strength of the US Dollar, which was bolstered by better-than-expected PMI data.
Despite losing its bullish momentum and turning flat near 1.2250, the technical outlook suggests that the bullish bias remains intact. The ILO Unemployment Rate in the UK showed a slight decrease, and the S&P/CIPS Composite PMI saw marginal improvement in early October.
The Future of GBP/USD
While mixed data releases have caused the Pound Sterling to lose some appeal, an improving risk mood could help GBP/USD maintain its position in the near term.
USD/JPY Finds Interim Support
US Dollar’s Recovery
The USD/JPY pair found interim support near 149.50, thanks to a recovery in the US Dollar.
USD/JPY Daily Chart
The US economy is expected to have grown by 4.2% in the third quarter of 2023, and the Bank of Japan (BoJ) announced an unscheduled bond operation for Wednesday.
The US Dollar bounced back on expectations that upbeat Q3 Gross Domestic Product (GDP) data, due for publication on Thursday, would fuel hopes of further policy tightening by the Federal Reserve (Fed).
Awaiting Fed Chair’s Speech
Investors are eagerly awaiting a speech from Fed Chair Jerome Powell, scheduled for Wednesday. Powell is expected to reiterate the need to keep interest rates unchanged but will keep doors open for further policy tightening.
Gold Recovers $1.970
The Resurgence of Gold
Gold managed to rebound, climbing to the $1,970 area after falling below $1,960 earlier on Tuesday.
XAU/USD Daily Chart
The resurgent demand for the US Dollar weighed on Gold price, sending XAU/USD to an intraday low during London trading hours.
However, global bonds recovered ground, and yields retreated, putting modest pressure on the USD throughout the first half of the day, allowing Gold to hold its ground.
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