AUD/USD Current Price: 0.6662 US Dollar tumbles after Fed meeting as Treasury bonds jump.  Australia's employment report is due on Thursday. The AUD/USD breaks range, looks at monthly highs.  Following the December Federal Reserve (Fed) meeting, the AUD/USD pair jumped, surging above the 0.6600 level as the US Dollar tumbled. This upward movement suggests that the pair has the potential for further gains and could resume its uptrend after a two-week correction. As expected, the Fed decided to keep interest rates unchanged. In the staff projections, policymakers foresee three rate cuts for 2024. The dovish forecast has positively impacted Treasury bonds, while the US Dollar tumbled. With the confirmation that the Fed is done with hike rates, there is a room for further short-term weakness of the US Dollar. On Thursday, the Melbourne Institute will release the Consumer Inflation Expectations report. In November, the one-year expected inflation rate rose slightly to 4.9% from 4.8%. Additionally, the Australian Bureau of Statistics will release the Labour Force report, which is expected to show a positive change in employment of 11,000 in November. This represents a slowdown from the 55,000 jobs added in October.  Another significant release, early in the Asian session, will be the New Zealand Q3 Gross Domestic Product (GDP) report. In the US, important information is due with the weekly Jobless Claims and Retail Sales reports. AUD/USD short-term technical outlook The AUD/USD pair has broken through the key resistance area at 0.6620 and continued its ascent above 0.6650. In the daily chart, the Relative Strength Index (RSI) and Momentum indicators have turned to the upside, while the price remains firmly above important moving averages. The next significant barrier is observed at the December high at 0.6689, above the focus shifts towards the 0.6700 mark. The next resistance is at 0.6720.  On the 4-hour chart, the rally has pushed the technical indicators, such as the RSI, into overbought territory. However, the momentum remains significantly bullish. As long as the pair stays above the 0.6620 level, further gains are possible. A decline below 0.6570 would negate the positive momentum, and if the pair drops under 0.6550, it would likely test an uptrend line near 0.6500. Support levels: 0.6620 0.6570 0.6540  Resistance levels: 0.6680 0.6720 0.6745

XAU/USD Current price: 1,981.7 Gold prices hover within familiar levels ahead of the US Federal Reserve's decision. The United States central bank is widely anticipated to stay pat for a third consecutive meeting. XAU/USD at risk of extending its slump after posting a fresh weekly low. Gold prices see no action on Wednesday, with XAU/USD still stuck around $1,980.00. Financial markets are in wait-and-see mode ahead of the Federal Reserve (Fed) monetary policy announcement, the last one for 2023. Back in September, the Summary of Economic Projections (SEP) or dot plot, indicated that officials were still anticipating a terminal rate higher than the current 5.25%-5.50% interest rate. Still, policymakers refrained from hiking rates in the last two meetings, and the odds for a rate hike today are pretty much null. Speculative interest has long ago started priced in the end of monetary tightening, ignoring officials´ warnings against it. Furthermore, investors are pricing in multiple rate cuts for 2024, starting as soon as Q2. The SEP will then determine the direction of the US dollar, as the document may shed some light on what policymakers think could happen in the next couple of years. Additionally, Chair Jerome Powell will offer a press conference in which he will explain the Federal Open Market Committee (FOMC) decision. Powell's words will also be scrutinized for hints on future actions. The US Dollar will likely react to the market's sentiment, falling if investors turn optimistic and opt for high-yielding assets. XAU/USD short-term technical outlook XAU/USD is little changed for a second consecutive day, although it posted a lower low and a lower high on Wednesday. The daily chart shows that the pair extended its weekly decline to $1,973.00, the immediate support level. The pair develops midway between a mildly bullish 20 Simple Moving Average (SMA) at around $2,010 and directionless 100 and 200 SMAs, over $ 40 below the current level. Finally, technical indicators head nowhere just below their midlines,  reflecting the absence of speculative interest. Technical readings in the 4-hour chart favor a downward extension. XAU/USD develops below all its moving averages, with the 20 SMA heading firmly south after crossing below the longer ones. Meanwhile, technical indicators remain below their midlines with uneven slopes, although also reflecting absent directional interest. Support levels: 1,973.00 1,959.40 1,946.00 Resistance levels: 1,994.40 2,001.70 2,014.20

EUR/USD Current price: 1.0786 Markets in wait-and-see mode ahead of the Federal Reserve monetary policy announcement. Eurozone Industrial Production contracted by more than anticipated in October. EUR/USD poised to extend its slump, strong static support level at 1.0732. The US Dollar trades with a firmer tone on Wednesday, and ahead of the Federal Reserve (Fed) monetary policy decision. The EUR/USD pair met sellers around the 1.0800 mark and trades a handful of pips below the level mid-European session. The Fed is widely anticipated to keep interest rates unchanged for a third consecutive meeting, somehow confirming the end of the monetary tightening cycle without explicitly stating so. At the same time, the central bank will release the Summary of Economic Projections (SEP), which may provide fresh clues on what policymakers expect for the next couple of years. The focus will be on the Fed funds rate, as it would indicate how willing policymakers are to pivot and proceed with rate cuts. Growth and inflation perspectives will also be relevant in terms of price action. Meanwhile, the Eurozone released October Industrial Production, which declined by 0.7% MoM and contracted by 6.6% from a year earlier. EUR/USD short-term technical outlook The EUR/USD pair trades just below the 38.2% Fibonacci retracement of the 1.0447/1.1016 rally at 1.0800. The 50% retracement provides support at 1.0732, a couple of pips above the weekly low. From a technical perspective, the pair is bearish in the daily chart. Sellers rejected Tuesday's advance around a flat 200 Simple Moving Average (SMA) at around 1.0830, while the 20 SMA gained downward traction above the longer one. Technical indicators, in the meantime, turned lower within negative levels, skewing the risk to the downside without confirming it. In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. The pair is trapped in a tight range defined by directionless 20 and 200 SMAs, while the 100 SMA gains downward traction above them. Finally, technical indicators aim marginally lower around their midlines, reflecting the absence of directional conviction. Support levels: 1.0730 1.0680 1.0640 Resistance levels: 1.0830 1.0860 1.0900

EUR/USD continues to fluctuate between key technical levels. The Fed is widely expected to leave the policy rate unchanged at 5.25%-5.5%. The revised Summary of Economic Projections and Powell's comments could impact the USD's valuation. EUR/USD climbed to a fresh weekly high near 1.0830 in the early American session on Tuesday but lost its bullish momentum. Early Wednesday, the pair fluctuates in a narrow channel at around 1.0800 as investors gear up for the Federal Reserve (Fed) policy announcements. The data from the US showed that inflation, as measured by the change in the Consumer Price Index (CPI), edged lower to 3.1% on a yearly basis in November as expected. Meanwhile, the Core CPI, which excludes volatile food and energy prices, rose 0.3% on a monthly basis to match the market consensus. Investors refrained from taking large positions after inflation figures and made it difficult for EUR/USD to find direction. The Fed is expected to leave the policy rate unchanged at 5.25%-5.5% following the last policy meeting of 2023. Since such a decision is already priced in, investors will scrutinize the revised Summary of Projections (SEP), also known as the dot plot, for fresh clues regarding the timing of a possible policy shift in 2024. Markets see a more than 40% probability that the Fed will reduce the policy rate by 25 basis points as early as March, according to the CME Group FedWatch Tool. In case Fed Chairman Jerome Powell pushes back against this market expectation and repeats that it's still too early to even think about a rate reduction, that could be seen as a hawkish hold and help the USD gather strength against its rivals.  On the other hand, EUR/USD could gather bullish momentum if the dot plot points to at least 100 basis points of rate cuts next year and Powell leaves the door open for a rate cut in the first half of the year by adopting an optimistic tone about the inflation outlook. EUR/USD Technical Analysis EUR/USD remains stuck between 1.0750 and 1.0830, where the 100- and 200-day Simple Moving Averages (SMA) are located. The pair needs to move out of that channel to determine its next short-term direction. With a break above 1.0830, EUR/USD could target 1.0860 (100-period SMA on the 4-hour chart) and 1.0900 (psychological level, static level). On the downside, 1.0700 (psychological level, Fibonacci 61.8% retracement) and 1.0660 (static level) could be set as next bearish targets if 1.0750 support fails.

US headline inflation fell to 3.1% as expected, thanks to an almost 9% fall in gasoline prices since last year, although shelter inflation – which is where everyone sees the biggest potential for easing - remained sticky yet another month. Core inflation eased to 4% on a yearly basis, BUT headline inflation was slightly higher-than-expected on a monthly basis. And that small uptick has raised suspicions that the Federal Reserve's (Fed) final stretch in combating inflation may be more challenging than anticipated.  The latter triggered a mini selloff in the 2-year bond right after the data, yet the selloff didn't last long. The US 2-year yield is about where it was yesterday morning. Crude oil fell to $68pb even though the US oil inventories fell 2.3 mio barrels according to the API.  With the latest inflation report behind us with minimal fanfare, the Fed officials will lightheartedly keep interest rates steady this month. Economic forecasts and the dot plot will play a crucial role in providing insight into the perspectives of Federal Reserve officials regarding expectations for rate cuts.   According to activity on Fed funds futures, the Fed should gently start cutting the rates by May; that possibility is given around 75% probability, slightly less than 80% before yesterday's CPI print, while the probability of a March hike fell to around 44% from nearly 50% on that mini spike in monthly headline inflation. In summary, rate cut bets are being placed for a rate cut in March or May 2024. May the best win.  Today, we will probably face a satisfied, calm but cautious Powell, who will say that the Fed has done a great job fighting inflation, but that the rates will remain restrictive as long as needed. One dovish tweak could be deleting 'additional policy firming' from the post-meeting communication.   In the best-case scenario, the doves will make a mountain out of the smallest dovish details that could justify a further fall in yields. The US dollar will likely remain under pressure below the 104.30 level, the major 38.2% Fibonacci resistance that should keep the US dollar index in the bearish consolidation zone. We could see the US 10-year retreat and even – shortly – test the 4% mark to the downside, and the 2-year yield – which captures the Fed expectations – to remain between 4.50/4.70 zone. Lower than that becomes unreasonably overstretched.   In a more down-to-earth scenario, Powell will contain market optimism and rectify the rate cut bets. If so, we should see correction and consolidation in bond and stock valuations during the final weeks of the year.

Gold price is treading water near three-week lows of $1,976 early Wednesday. US CPI data fuelled the recovery in the US Dollar alongside the US Treasury bond yields.    Gold price remains exposed to downside risks amid a bearish technical setup on the 4h chart. The Federal Reserve policy decision holds the key to a fresh Gold price directional impetus. Gold price is challenging bullish commitments early Wednesday, sitting near the lowest level in three weeks of $1,976. Gold price is taking it easy following a good two-way business seen on the United States (US) Consumer Price Index (CPI) data release, as the focus now shifts toward the US Federal Reserve (Fed) policy announcements for a fresh trading impetus.   Federal Reserve decision to rock Gold price Despite a pause in the recent sell-off, Gold price appears vulnerable in Wednesday's trading so far. Investors refrain from placing any fresh bets on the bright metal ahead of key event risk of this week, the Fed interest rate decision and policy outlook, especially after the US CPI inflation report revived bets for the Fed maintaining interest rates higher for longer. The CPI edged up 0.1% last month after being unchanged in October, the Labor Department's Bureau of Labor Statistics (BLS) showed on Tuesday. Annually, the CPI increased 3.1% in November after rising 3.2% in October. Although the US CPI numbers came in line with the market expectations, the details of the report showed an uptick in the shelter index and used car and trucks index, which helped push back against the market's pricing of Fed rate cuts next year. In an initial reaction to the US CPI data release, the US Dollar extended its intraday decline but quickly regained footing alongside the US Treasury bond yields after investors digested the data and its potential implications ahead of Wednesday's Fed decision. Gold price dropped below $1,980, having briefly spiked to $1,997 in a knee-jerk reaction to the US CPI report. Looking ahead, all eyes stay focused on the upcoming Fed decision, with the US central bank widely expected to hold rates at 5.25%-5.50%. However, comments from Fed Chair Jerome Powell and the so-called Dot Plot chart are likely to hold the key, as they could shed more light on the Fed's monetary policy outlook amid expectations of rate cuts in the first half of 2024. Markets are currently pricing about 43% odds of a March Fed rate cut while for May, the probability stands at about 75%. Should Powell and his colleagues dismiss expectations of a Fed rate cut in the first quarter of 2024, acknowledging elevated inflation level and still tight labor market conditions, the non-interest-bearing Gold price is likely to see a renewed sell-off, as the US Dollar demand returns. In contrast, Gold price could stage a solid recovery if the Fed's projections affirm aggressive rate-cut expectations and smash the Greenback across the board. In the meantime, the risk-averse market environment in the lead-up to the Fed event will keep the US Dollar underpinned, checking the upside attempts in Gold price. Gold price technical analysis: Daily chart As observed on the daily chart, Gold price remains on track to test the 50-day Simple Moving Average (SMA) at $1,970 after finding a strong foothold below the multi-week troughs of $1,976. The 14-day Relative Strength Index (RSI) indicator inches lower while below the 50 level, backing the case for further downside. Should the bearish momentum regain traction, the flattish 200-day SMA at $1,953 will be threatened, below which a test of the 100-day SMA at $1,941 cannot be ruled out. On the other hand, a sustained recovery will need acceptance above the 21-day SMA at $2,006 on a daily candlestick closing basis. Gold buyers will then target the November 27 high of $2,018 en route to the $2,040 supply zone.