An alleged Russian missile blast that killed two in Poland has stoked geopolitical tensions, although Russia has denied involvement.

What You Need To Know

The U.S. producer price index (PPI) came in lower than estimated, leading investors to believe that inflation may have peaked. The dollar fell and the equities market rose as investors strengthened their belief that the Fed will slow its pace in rate hikes. Commodities prices, including oil prices, closed higher last night after the news that an explosion happened near the border between Russia and Poland. This has intensified the tension between Russia and the NATO nations. Oil supply in the Euro region is even tighter as the Druzhba oil pipeline, which supplies oil to Hungary from Russia, has been temporarily suspended.

Look Out For

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

75 bps (19.4%) VS 50 bps (80.6%)

Market Movement

DXY

The Dollar Index extended its selling pressure yesterday amid an aggressive rate hike expectations faded. The US Treasury yields dipped on Tuesday over the backdrop of downbeat inflation data from the United States region, further confirming to investors that inflation may be stabilising. The 10-year Treasury yield fell 7 basis points to 3.792%, its lowest level since October. According to the US Bureau of Labor Statistics, the latest PPI figures indicated that wholesale prices increased by only 0.2% in October, lower than the market expectations of 0.5%. The data further signalled to investors that inflation risk is likely cooling after the pessimistic consumer inflation figures were released last week. 

The Dollar Index is trading lower while currently testing the support level at 106.45. Nonetheless, MACD has illustrated increasing bullish momentum, while RSI is at 35, suggesting that the index was going into oversold territory. 

Resistance level: 107.80, 109.65

 Support level: 106.45, 105.00

XAU/USD

Gold prices continue to stand on their ground following the escalating tensions with Russia-Ukraine, which stoked a shift in sentiment toward the safe-haven asset. Meanwhile, the United States claimed that they are currently investigating unconfirmed reports regarding the Russian missiles that caused a massive explosion in Poland. As for now, investors will continue to eye on these geopolitical issues and the monetary policy statement from the Federal Reserve for further trading signals.

The gold market is trading higher following the prior breakout above the previous resistance level. Nonetheless, MACD has illustrated diminishing bullish momentum, while RSI is at 71, suggesting the commodity is entering the overbought territory.

Resistance level: 1809.25, 1868.45

Support level: 1770.35, 1727.20

EUR/USD

The Euro slumped significantly following the Poland reports sparked fears about the heightening tensions between Russia-Ukraine. According to Reuters, firefighters claimed that two people were killed during an explosion in Przewodow, a village in eastern Poland near Ukraine’s border. According to the AP news agency, a senior US Intelligence official claimed that the missiles were of Russian origin. Poland’s Prime Minister Mateusz Morawiecki has convened the Committee of the Council of Ministers for National Security and Defense affairs to discuss the issue.

EUR/USD is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 63, suggesting that the bears are in control of the pair as the RSI retreated sharply from the overbought territory. 

Resistance level: 1.0440, 1.0590

Support level: 1.0300, 1.0190

BTC/USD

The release of the latest producer price index (PPI) has made investors more firm in believing that the Fed will slow down its pace in rate hikes. The PPI index was lower than estimated, leading investors to think that the inflation rate had peaked. A weaker dollar will be an advantage for the btc to support at this level before the FTX scandal is clear. Binance’s CEO also announced his intention to start a crypto recovery fund to support firms that are affected by the fall of FTX.

The RSI is still hovering near 50-level with no indication for future direction for the coin. The MACD climbing toward the zero line from the bottom suggests that the btc is being supported at this price range. 

Resistance level: 17405, 18424

Support level: 15945

DJ30

The US equity market edged higher yesterday, with investors bracing for downbeat inflation data and a dovish tone from the Federal Reserve. The Producer Prices Index (PPI) came in at 0.2% in October, below the market expectations of 0.5%. The 10-year Treasury yield dipped by 7 basis points to 3.792%, its lowest level since October. Nevertheless, the gains experienced by the US equity market are still limited by the rising geopolitical tensions between Russia and Ukraine after the new stories about the Russian missile landing in Poland. 

The Dow is trading higher following the prior breakout above the previous resistance. Nonetheless, MACD has illustrated diminishing bullish momentum, while RSI is at 63, suggesting the index will likely to be traded lower in the short-term due to technical correction after the RSI retraced sharply from the overbought territory. 

Resistance level: 34320, 35720

Support level: 33065, 31045

GBP/USD

The pound rose by 2.3% to $1.12, the psychological level since mid-August, as the UK released its positive economic data on Tuesday. Investors could keep an eye on the upcoming UK inflation figures, pushing the pound further if it has good readings. In addition, markets are awaiting the announcement from the UK government’s Autumn Statement about the tax rises and spending cut.

The pound broke through its strong resistance line at 1.12 at one time, which suppressed the pair for 3 months. However, the momentum seems to ease after the resistance is broken, and there is another psychological resistance level of 1.23. The MACD shows a positive sign to the pound where the MACD line flows above the zero line, and the gap between the signal lines widens. RSI continues to stay in the region above 50, which indicates that there is still buyer power for the pound. 

Resistance：1.2000, 1.2300

Support： 1.1727, 1.1477

USD/JPY

The pair traded within a sideway range from 137.7 to 140.6 due to mixed economic data from Japan and the US. Japan’s GDP fell an annualised 1.2% in July-September, and a weak yen led to higher import costs on household consumptions and businesses. This cost of living strains by further increasing the price of everything from fuel to food items are affected. 

MACD is trading below the zero line, suggesting that the pair hovers at a bearish momentum. While RSI is trading near 40, which suggests a bearish momentum is continued in the short term. 

Resistance level: 140.6，145.04

Support level: 137.7， 135.4

CL OIL

Oil prices edged higher after the Druzhba oil pipeline was suspended, jeopardising the world’s oil supply. Meanwhile, the rising tensions between Russia-Ukraine after the stray Russian missiles caused an explosion in a Polish village has continued to insinuate the expectation of a more aggressive sanction from the EU to Russia. According to the International Energy Agency, a European Union sanction on seaboard Russian crude oil due on 5th December 2022 will likely disrupt the oil supply by more than 1.1 million barrels per day (bpd).

Crude oil prices are trading higher following prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 50, suggesting that the bulls are in control of the commodity as the RSI rebounded significantly from the oversold territory.  

Resistance level: 89.75, 92.60

Support level: 85.50, 83.05