Powell Reaffirms Pause to Rate Cuts
Fed Chair Jerome Powell started his two-day testimony to Congress. In his opening remarks, Powell said that the central bank was comfortable with the current US rates.
He attributed the slowdown in the third quarter due to the auto-strike. The comments reaffirm the Fed’s pledge to leave interest rates unchanged in the foreseeable future.
Eurozone Industrial Production Slows in September
Industrial production in the eurozone grew at a slower pace in September. It rose just 0.1% during the period compared to a 0.4% increase the month before.
This was the slowest pace of increase in four months. But the data was slightly better than forecasts. On a year over year basis, the eurozone’s industrial production is up 1.7%.
EURUSD Holds Steady at Support
The common currency was consolidating near the support area of the 1.1000 region. Price action, according to the Stochastics oscillator is showing a bullish divergence building up.
The currency pair needs to close above 1.1015 in order to confirm the upside. The breached support area at 1.1062 will likely be tested for resistance.
UK Inflation Slips to a 3-year Low
Consumer prices in the United Kingdom fell to a 3-year low in October. Data from ONS showed that inflation rose just 1.5% on an annual basis.
This was slower than the estimates of a 1.6% estimate and down from 1.7% in September. At the current rate, UK inflation is at its lowest level in three years.
GBPUSD Muted to Inflation Report
The currency pair did not budge from the previous levels near 1.2865. The consolidation just below this resistance area could signal a breakout in the near term.
The bias is mixed for the moment, but there is scope for prices to break the resistance level. This will put the GBPUSD back into the range within 1.2960 and 1.2865. To the downside, price needs to decline strongly for any scope of a test of support at 1.2582.
Trade Uncertainty Gives Gold Prices a Boost
The precious metal is recovering from the sell-off earlier in the week. The rebound comes as trade concerns resurface. President Trump’s speech on Tuesday was widely expected to cover the progress of the trade talks.
However, a lack of any reference and the previous comments about not rolling back tariffs have added to investor concerns. Risk sentiment is once again rising, causing gold and other safe havens to appreciate.
XAUUSD Testing Resistance – Can it Break?
The precious metal promptly recovered from the losses. At the time of writing, XAUUSD is testing the resistance level near 1462. But with the Stochastics pointing to a hidden bearish divergence, price might retreat.
In the near term, we expect gold to be confined within the 1462 and 1445 level. Only a breakout from this range will set the near term direction for the precious metal.