The Week Ahead 11th – 15th December: Awaiting Federal Reserve and ECB Rate Decisions

Welcome to Key To Markets preview of the Week Ahead.
<h2>Currency Pair Performance</h2>
5-day performance as of December 7, 2023. 12:00 GMT.
<img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-27541" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/curr.png" alt="" width="622" height="290" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/curr.png 622w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/curr-300×140.png 300w" sizes="(max-width: 622px) 100vw, 622px" />
Source: finviz.com
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<h2>10 Big Stories Last Week</h2>
In case you missed it…
US jobs data was weaker than expected. ADP payrolls, JOLTS job openings, and Challenger job cuts point to a slowing US labor market.
Moody’s downwardly revised China’s credit outlook. The rating agency cut China’s outlook to negative as the economy slows.
DAX rose to an all-time high. The German index outperformed its peers, rising to a new all-time closing high of 16533 on expectations that the ECB could cut rates early next year.
Oil fell to a 5-month low. The commodity dropped below $70.00 to its lowest level since June after OPEC+ agreed on voluntary cuts and as the demand outlook weakened.
Apple closed above $3 trillion. The tech giant closed with its market cap over $3 trillion for the first time since August as the share price rallied to a 4-month high.
Gold hit a record high. The precious metal jumped to $2135 on Monday, boosted by bets that the Federal Reserve will start to cut interest rates early next year.
Exxon Mobil announced plans to expand its share buyback. The energy giant plans to increase its share repurchase programme to $20 billion from 2024 to 2025 as it sees a big earnings boost from cost cuts.
Bitcoin hit $44k. The cryptocurrency rose to a 19-month high on spot Bitcoin ETF optimism and dovish Fed bets.
Google launched Gemini. This is Google’s largest and most capable AI model, which reportedly outperformed ChatGPT 3.5.
USD/JPY sinks to A 3-month low. The yen surged as the BoJ hinted at a policy shift away from its ultra-loose policy stance.
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<h2>Chart of the Week</h2>
<img decoding="async" class="alignnone wp-image-27544 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/graph.png" alt="" width="644" height="342" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/graph.png 644w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/graph-300×159.png 300w" sizes="(max-width: 644px) 100vw, 644px" />
Bets are rising rapidly the BoJ will end its negative interest rate regime as soon as this month. The move into the yen came after comments from BoJ Governor Kazuo Ueda and a subsequent visit to PM Fumio Kishida’s offices to discuss his monetary policy stance.
The big question is when? The BoJ meets on December 18-19 and again in January. The overnight indexed swaps showed an almost 45% chance that the BoJ would end negative rates in December, up from 3.5% just two days ago. The USD/JPY plunged 1.8%.
There is, of course, the risk that the market is over-interpreting the BoJ’s positioning for a move this month rather than next year. The BoJ will unveil updated price forecasts in January, so a big announcement could happen then. Still, December’s meeting will have the markets on edge.
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<h2>5 Things to Watch This Week</h2>
1. Federal Reserve rate decision 
The Federal Reserve will announce the rate decision on Wednesday, December 13th, and is expected to leave interest rates on hold. The focus will be much more on guidance, with the market now pricing in a 60% probability that the Fed will cut rights as soon as March next year. However, the Fed is likely to be cautious and has previously warned that it is too early to discuss rate cuts. As a result, the market is trying to second-guess the Fed. Any dovish comments could support the view that the Federal cut early next year.
2. ECB rate decision 
The ECB is expected to leave interest rates at the record 4% level when it meets on Thursday, December 14th. ECB policymakers have said they believe that the ECB is done hiking interest rates as inflation has cooled to 2.4% and is almost at the central bank’s 2% target. The market will focus on when the ECB may start cutting rates. The market believes that the ECB could start cutting interest rates as soon as March next year and is looking to cut by almost 150 basis points throughout 2024. Any dovish guidance on the future path of rates could pull the USD lower.
3. BoE rate decision 
The Bank of England will announce its interest rate decision on Thursday and is expected to leave interest rates on hold at 5.25%. The meeting comes as inflation remains 2.5 times above the central bank’s target and as the service sector activity unexpectedly returned to growth. The pound has been resilient as the market believes that the first cut from the BoE may not happen until June, which is later than the ECB and the Fed. Bank of England governor Andrew Bailey has said that he will do whatever’s necessary to get inflation back to the 2% target.
4. China retail sales/ industrial output 
The health of the Chinese economy has been in focus over the past week after Moody’s rating agency downwardly revised the credit outlook for China amid concerns over its growth outlook. Attention this week will be on retail sales and industrial activity, which pointed to a mixed picture for the recovery in October. Chinese consumer and industrial activity expanded faster than expected in October; however, weak trade on a slowdown in the property sector acted as a headwind. Investors will be watching the data closely. However, the comparisons could be flattering as the comparison was with the final stages of China’s restrictive COVID policy last year.
5. Eurozone PMIs 
Eurozone PMI data will be in focus now after the composite PMI rose to a 4-month high in November but remained in contraction territory. Another month of contraction would suggest that the eurozone economy tipped into recession in the final quarter of the year. However, an improving PMI could also suggest that any recession may be shallower than initially feared. Weak PMI figures could support the view that the ECB may need to cut interest rates sooner than expected, which could pull the. Euro lower and underpin stocks.
<h2>Economic Calendar Highlights</h2>
<img decoding="async" class="alignnone wp-image-27547 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/cal1.png" alt="" width="713" height="519" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/cal1.png 713w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/cal1-300×218.png 300w" sizes="(max-width: 713px) 100vw, 713px" />
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-27550" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/cal2.png" alt="" width="694" height="449" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/cal2.png 694w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/cal2-300×194.png 300w" sizes="(max-width: 694px) 100vw, 694px" />
Source: FXStreet.com
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<h2>Technical Analysis:</h2>
TA of the major asset classes (Forex – Commodities – Indices…).
EUR/USD (D1)
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-27553" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Eur-usd-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" />
The EUR/USD pair has experienced a sizable retreat. It’s still above the 50-day SMA, which supports the overall uptrend. The RSI has decreased to around 47, indicating a neutral position. The pair has broken support at 1.0802 but if it retakes it, it could spit a bigger rebound to 1.093. The trend remains bullish, but caution is warranted as an ABC correction involving another leg lower seems likely.
GBP/USD (D1)
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-27556" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GBP-usd-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" />
GBP/USD remains in an uptrend, comfortably above the 50-day SMA. The RSI has edged down slightly to 57.14, suggesting that the bullish momentum is intact but not as strong as previously. The pair is caught between resistance at 1.2715 and support at 1.2570, where if support holds, new highs are likely but a break lower could mean a drop to 1.243.
USD/JPY (D1)
<img loading="lazy" decoding="async" class="alignnone wp-image-27559 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/usdjpy-Canva-1-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" />
USD/JPY has seen a significant downward move, breaking below the previous support level at 147.15. The RSI is deeply oversold at 28, which could helped setup a big spike off the lows. The next key level of support may be found near 141.44, while any recovery would face resistance around 145.
XAU/USD (Gold vs. US Dollar) (D1)
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-27562" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gold-Canva-1-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" />
Gold has been rejected from a huge spike to all-time highs and from the resistance level of 2078 and is currently trading just above the 2k round number. The RSI is at 59, suggesting that there’s still bullish momentum, but the failure to break resistance could result in consolidation or a retest of lower support levels.
Brent Crude Oil Futures (D1)
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-27565" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" />
Brent Crude has continued its bearish trend, moving further below the 50-day SMA. The RSI is at 34, indicating that the market is approaching oversold territory but not there yet. Support is likely near 73.34 – the start of the 2023 rally, and resistance is now further away at 76 then 80, where a move over 83 is needed to reverse the downtrend.
S&P 500 Index (D1)
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-27568" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP550-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" />
The S&P 500 index is testing the 2023 high, well above the 50-day SMA designating an uptrend. The RSI, at 67, suggests that the market is approaching overbought conditions, but there’s still room for upside before reaching that threshold. Resistance may be found near 4648 then 4719, and support is established around 4514 then 4446.
Thank you very much for reading – and have a great week trading!
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The post <a href="https://www.keytomarkets.com/blog/analysis/the-week-ahead-11th-15th-december-awaiting-federal-reserve-and-ecb-rate-decisions-27540/">The Week Ahead 11th – 15th December: Awaiting Federal Reserve and ECB Rate Decisions</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.

The Week Ahead 11th – 15th December: Awaiting Federal Reserve and ECB Rate Decisions

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