What You Need to Know

Chaos has erupted  in the cryptocurrency market with the fear that crypto exchange FTX might go bankrupt, spreading contagion throughout the industry. BTC traded below $16,000, dropping by more than 14% last night, while ETH dropped more than 18%. Asian markets fell along with the U.S. markets, probably due to the concerns over the cryptocurrency market and worry over crucial inflation data which will be released later today. Republicans are headed towards taking control of the House of Representatives with a small margin, and the market expects this would block some of the bolder fiscal policy moves coming from the Democrats. 

Look Out For

Current rate hike bets on 14th December Fed interest rate decision: 

75 bps (45.6%) VS 50 bps (54.4%)

Market Movements

DXY

The Dollar Index, which measures its value against a basket of six major currencies, rebounded following the risk-off sentiment in the global financial market, which prompted investors to shift their portfolio into the safe-haven US Dollar despite the political uncertainty remaining. As for now, investors will continue to focus on upcoming inflation data for further trading signals.

On the technical front, the Dollar Index is trading higher following the prior rebound from the support level at 109.65. MACD has illustrated increasing bullish momentum, while RSI is at 48, suggesting the pair’s outlook is bullish in the near term as the RSI rebounded sharply from oversold levels.  

Resistance level: 111.95, 113.45

Support level: 109.65, 107.75

XAU/USD

Gold prices continue to hover around a one-month high, benefiting from resurgent safe-haven demand as investors awaited the results of the US midterm elections. Besides that, the speculation over a minor rate hike decision by the Federal Reserve in December continues to insinuate further demand for gold. According to FedWatch Tool, markets are now pricing in nearly a 61.5% chance for a 50-basis point hike during the next FOMC meeting, with another 38.5% probability of a 75-basis point hike.

The gold market is trading higher following the prior breakout above the previous resistance level at 1681.85. However, MACD has illustrated diminishing bullish momentum, while RSI is at 73, indicating that the commodity is going into an overbought area.

Resistance level: 1727.20, 1762.45

Support level: 1681.85, 1619.05

EUR/USD

The euro dropped about 0.6% yesterday and is now trading at 1.0013 as weak sentiment in the equity market and a massive sell-off in cryptocurrency. The market would be more conservative as investors lack clarity on the US election result. Besides that, investors are also waiting for the inflation data which will be released later on Thursday. 

The pair is trading lower while currently testing the support level at 1.0000. Nonetheless, MACD has illustrated diminishing bullish momentum, while RSI is near 50, suggesting that the pair might be traded lower in the short-term as RSI retreated sharply from overbought levels. 

Resistance level: 1.0095, 1.0190

Support level: 1.0000, 0.9869

BTC/USD

Bitcoin extended its significant selloff following Binance pulling out of a potential deal to acquire rival cryptocurrency exchange FTX.com, spurring further uncertainty toward the crypto market. Yesterday, Binance said that it would not pursue the potential acquisitions of FTX.com, mentioning worries about corporate due diligence and the latest turmoil regarding mishandled customer funds and alleged US agency investigations. With the expectations of a rescue from Binance now faded, FTX.com, which is facing a liquidity crunch issue, could be on the brink of collapse. 

BTC is trading lower while currently testing the support level. Nevertheless, BTC has illustrated diminishing bearish momentum, while RSI is at 22, indicating the product was going into oversold territory. 

Resistance level: 18265, 21255

Support level: 15065, 12010

DJ30

The US equity market dived due to the risk-off sentiment in the global financial market following the major technology companies announcing a string of pessimistic news. Yesterday, Facebook claimed that it would cut 13% of its workforce, or more than 11,000 employees, one of the largest tech layoffs of the year. Meanwhile, Tesla Inc dropped by 7.2%, hitting its two-year low following Chief Executive Elon Musk’s disclosure that he was selling $3.95 billion worth of shares to close the $44 billion deal for Twitter Inc. On the other hand, investors remain cautious ahead of upcoming inflation data and result for the midterm elections, which will provide clues about the economic prospect of the United States

Dow Jones is trading lower following a prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 56, suggesting that the index’s outlook is bearish in the near-term as the RSI retreated sharply from overbought levels. 

Resistance level: 33065, 34320

Support level: 31045, 29805

GBP/USD

The US dollar rebounded slightly last night with the fall in the equities market and is awaiting its CPI data that will be released later today.  A stronger dollar has put pressure on Sterling and the market is expecting a tighter fiscal policy from Rishi Sunak, which will perhaps support the strength of Sterling. 

A strong resistance at 1.1625 holds up the Sterling to surge higher. Cable pulled back from the resistance; however it still remains in the uptrend support line. On the other hand, the signal line has crossed with the MACD line and the RSI has dropped below 50 which depicts a pessimistic outlook for Cable. 

Resistance：1.163 ， 1.202

Support： 1.1097, 1.0674 

USD/JPY

The yen has held on to most of its gains following BoJ’s intervention last month. Besides, the BoJ is the only central bank out of the major ones loosening its monetary policy. The downward corrections of the pair continued towards the 145 support level, which is the lowest in two weeks. Markets are waiting for the results of the US election and inflation data, which will impact the future decision of rate hikes. 

The pair has been consolidating between 145 to 146 as of writing. MACD hovers below the zero line, indicating that the pair is in bearish momentum. The same goes for RSI, trading below 50, suggesting that the pair remain in a bearish momentum. 

Resistance level: 148.82, 152.05

Support level: 145.54,  142.12

CL OIL

Crude oil prices dipped significantly following industry data showing that the US crude stockpiles raised more than expected, sparking concerns that a rebound in Covid-19 cases in top importer China would continue to weigh on the market demand for this black commodity. According to Energy Information Administration (EIA), US Crude Oil Inventories increased significantly from the previous reading of -3.115M to 3.925M, much higher than the market expectations of 1.360M. Nonetheless, the supply concerns on the oil market remain as the European Union might ban Russian crude imports by 5th December in retaliation for Russia’s invasion of Ukraine.

Crude oil prices have formed a double-top signal following a breakout below the support level of 86.80. MACD has illustrated increasing bearish momentum, while RSI is at 28, suggesting the downside is more favoured as the RSI stays below the midline.

Resistance level: 86.80, 89.65

Support level: 83.05, 79.50