EURUSD XAUUSD Market Insight

EUR/USD

The European Central Bank raised interest rates for the tenth consecutive time to combat stubborn inflation on Thursday but signaled that it may have ended its tightening policy. Central banks in the 20 countries that use the euro raised deposit rates from 3.75% to 4%. Economists expect this to be the ECB last tightening action and then a rate cut would be followed in the second half of next year after prolonged pause.

We can see EUR/USD tumbled after ECB raised interest rates yesterday, since investors considered it would be last time to add rate. On the other hand, the price seems to form bottom divergence on H4 chart, it has rebound demand owing to oversold state. Accordingly.  buy limit could be employed around 1.0600, stop loss is compulsory. 

XAU/USD

The economic data released by the US are encouraging, not only retail sales are much higher than expected, but PPI is also trending upward. In addition, the lower number of initial jobless claims, it indicates that the US economy is still overheating and is ready to withstand further interest rate increase by the FED. Gold investors are waiting for clear signs that inflation is being subdued so that discussions around when to reduce interest rates can really begin, but the problem is that we're not at that stage yet.

We can see gold jumped when price divergence formed on H4 chart. The gold has crossed resistance of 1910 and approached 48 hours moving average. In addition, MACD negative histogram bar and double line is constituting golden cross which will cause further rebound. Hence the buy limit could be used between 1900 and 1905, stop loss is necessary.