Market Update by Solidecn.com

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USDRON Analysis


Source – The USDRON currency pair recently reached the top limit of its downward trend pattern. Now, the pair's value is holding steady, staying above the 38.2% support level seen in the daily chart. Indicators suggest this uptrend, which started on November 29 at a rate of 4.15, might keep going. For those betting on a further increase, the 50% Fibonacci level is the next big challenge. If the USDRON rate breaks through this barrier, we could see it rise even more, potentially reaching 61.8% and then maybe even 78.6%. However, if the pair doesn't break through this 50% level, we might see it drop down to the 23.6% support level. This lower level aligns with the middle of the downward trend pattern.

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USDJPY Tests Crucial Support: Bearish Trends in Focus

Solid ECN – The USDJPY currency pair recently climbed, approaching the 23.6% support level. This particular level coincides with the previously breached bullish flag pattern. Given that the pair is currently trading below the Ichimoku cloud, it suggests a bearish outlook. Consequently, it's anticipated that the price may decline, targeting the 38.2% support level in the near future.

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US Futures Gain Post-Inflation Data; Eyes on Fed's Next Move

Solid ECN – After the release of US inflation data, stock futures in the US saw a modest rise on Tuesday. The major averages each grew by approximately 0.2%. This increase came as the inflation figures aligned closely with predictions. Notably, headline inflation eased to 3.1%, while the core rate remained steady at 4%, as anticipated. Additionally, the monthly core rate climbed to 0.3%, and the headline rate saw a 0.1% increase, slightly above the expected flat rate.

The Consumer Price Index (CPI) report has bolstered expectations that the Federal Reserve will hold interest rates steady in its upcoming decision. However, the focus is now shifting to the Fed's plans for next year, particularly regarding when borrowing costs might start to decrease.
In corporate news, Oracle's stock fell about 9% in premarket trading due to disappointing revenue figures. Moreover, Alphabet's shares dipped roughly 0.9% after losing an antitrust lawsuit to Epic Games.

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AUDUSD Rises, But Faces Ichimoku Cloud Challenge

Solid ECN – The AUDUSD currency pair has recently broken above its bearish channel. Accompanying this shift, the Awesome Oscillator is moving above the signal line, while the RSI (Relative Strength Index) remains above the median line. These indicators collectively suggest a bullish trend. However, it's important to note that the pair is still trading below the Ichimoku cloud.



For the uptrend to gain momentum, it's crucial for the bulls to secure and maintain the price above the Ichimoku cloud. Conversely, if the AUDUSD price falls below the 23.6% support level, it could signal a continuation of the downtrend.

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GBPUSD

The GBPUSD pair is currently trading below the Ichimoku cloud, indicating a potential continuation of the downtrend. If the bears manage to close and stabilize the price below the red bullish trendline, currently at 1.2539, this would further confirm the bearish momentum. In such a scenario, we could expect the downtrend to extend towards the 38.2% Fibonacci support level.

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USDPLN Forecast: Poland Interest Rates Unchanged

FxNews USDPLN forecast – The currency pair has struggled to surpass the 23.6% support level in the daily chart. Notably, there is an absence of bearish candlestick patterns, suggesting that the bulls might have an opportunity to overcome the 23.6% obstacle. Read More.

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The EURUSD Dilemma: Between Bullish Breakouts and Bearish Channels

The EURUSD pair experienced a surge in today's trading session. It is now trading above the 50% level of the Fibonacci retracement tool. Simultaneously, the RSI indicator has flipped above the middle line, signaling a bullish trend. Despite this, the EURUSD pair remains within a bearish channel. For a bullish shift to be confirmed, bulls need to close and stabilize the price above the upper band of the flag. If they fail to do so, the bearish trend is likely to persist, particularly if the EURUSD price dips below the 50% Fibonacci level.



In summary, the current trend of EURUSD is bearish. This trend could come to an end if the price crosses above the flag. However, if the price falls below the 50% level, the bearish trend is expected to continue. Under such circumstances, the next bearish target would be the 61.8% support level, potentially extending to the 78.6% level.

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Tuesday's Triumph: FTSE 100 Soars, Marking a New High

Solid ECN​​​​​​​ – On Tuesday, UK's stock market witnessed a significant rebound. The FTSE 100 index, a key indicator, increased by 0.4%, reaching 7,570 points. This jump more than made up for the small loss experienced the day before, marking a near two-month high. The rise was largely driven by a recovery in stocks related to commodities. This shift in the market occurred as investors digested the latest UK labor report.

Interestingly, the unemployment rate has remained steady at 4.2% for five consecutive months. However, there's a twist in the tale of wage growth. While still strong, it has seen its most considerable slowdown in almost two years. This development has led money markets to anticipate the Bank of England's (BoE) first rate cut in June. However, there's a general agreement that the BoE will likely follow the Federal Reserve's lead in terms of timing.

On the corporate front, companies like Rio Tinto, Anglo American, and Antofagasta played a significant role. They each saw gains of over 1.5%, bouncing back from the previous day’s downturn. This recovery was supported by a resurgence in the prices of base and ferrous metals, following China's recent sharp decline in inflation.

However, not all news was positive. Hargreaves Landsdown, a notable firm, experienced a sharp 8% decline in stock value. This drop came after the Financial Conduct Authority (FCA) raised concerns about the firm’s practice of paying interest on cash balances to customers.

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Analyzing the Recent Depreciation of the Mexican Peso

Solid ECN - The Mexican peso has recently experienced a decline in value, now trading beyond the 17.4 mark against the US dollar. This level is close to the lowest it has been since the early days of November. This trend appears to be a reaction to the latest signs of disinflation in Mexico, which is influencing market expectations about the monetary policy stance of the Banco de México (Banxico), Mexico's central bank.




A closer look at the economic data reveals some shifts. Mexico's Producer Price Index (PPI), which measures the average changes in prices received by domestic producers for their output, increased by 1.20% year-on-year in November. This rate is a tad lower than the 1.30% seen in the previous month. Moreover, there was a month-over-month change, moving from a 0.5% increase in October to a 0.4% decrease in November.

In terms of core inflation, which is often used as a gauge for underlying long-term inflation trends in an economy, the numbers came in at 5.3% for November. This figure is lower than expected and represents a slowdown from the 5.5% recorded in the previous month.


Banxico's Response

These developments are in line with recent comments from Banxico's Governor Victoria Rodriguez Ceja and Deputy Governor Jonathan Heath. They have indicated that the central bank might ease its policies if the trend of disinflation continues, which could lessen the support for the Mexican peso.


Market Anticipation and Outlook

Traders and investors are now keenly awaiting the upcoming policy decisions from both the Federal Reserve and Banxico. The general expectation is that both will keep borrowing costs restrictive. However, there is some uncertainty regarding the tone and approach the officials will take moving forward.

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Economic Forces Behind the Fluctuating Canadian Dollar

The Canadian dollar has seen a decline in value, reaching around 1.36 against the US dollar. This trend emerges as the strengthening of the US dollar counterbalances the positive effects of recovering oil prices.




Impact of US Economic Data

The US dollar's strength was bolstered by a jobs report that surpassed expectations. This robust jobs data gives the Federal Reserve room to possibly delay any cuts in interest rates, which in turn supports the value of the US dollar. When the US dollar strengthens, it often leads to a relative depreciation of other currencies, like the Canadian dollar in this case.


Recovery in Oil Prices

Concurrently, there's been a slight uptick in oil prices towards the end of the week. As a major oil exporter, Canada's economy and the value of its currency, often referred to as the "loonie," are influenced by changes in oil prices. The recent recovery in oil prices can potentially boost foreign exchange inflows into Canada, offering some support to the Canadian dollar.


Bank of Canada's Stance

On the domestic front, the Bank of Canada has indicated a leaning towards increasing interest rates in the future. Governor Tiff Macklem has pointed out that the current economic climate, especially with inflation running significantly above the desired level, does not warrant loosening monetary policies.


Economic Implications

The interplay between the Canadian dollar's value, oil prices, and monetary policy decisions is a complex one. A weaker Canadian dollar can make Canadian exports more competitive, potentially boosting sectors like manufacturing. However, it also means higher costs for imports, which could contribute to inflationary pressures. The Bank of Canada's potential interest rate hike can be seen as a response to control inflation. Higher interest rates can cool down an overheated economy, but they also run the risk of slowing down economic growth.