Japanese Yen Strong on Heighten Likelihood of BoJ Rate Hike

• Japanese Yen strengthened after Tokyo CPI came better than market expectation.

• Gold prices were buoyed by the recent lacklustre U.S. dollar.

• Eyes on today‘s eurozone CPI reading to gauge the euro’s strength.

Market Summary

The Japanese yen strengthened further following an upbeat Tokyo CPI reading above 2%, reinforcing expectations of a potential BoJ rate hike. USD/JPY fell below the 150 level as market sentiment shifted. Meanwhile, the dollar remained subdued after Wednesdays PCE report, with the Dollar Index retreating from the 106 mark, reflecting expectations of steady Fed policy.

In commodities, gold edged higher, nearing $2,650, supported by dollar weakness, while oil traders await the rescheduled OPEC+ meeting on December 5 for direction.

Key economic releases today include the Eurozone CPI and Canadian GDP, which are likely to influence the euro and Canadian dollar, respectively.

Current rate hike bets on 18th December Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (40.4%) VS -25 bps (59.6%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index hovered near a key support level, reflecting flat trading amid subdued liquidity due to the Thanksgiving and Black Friday holidays, which have closed major trading floors in the United States. With an empty economic calendar for the remainder of the week, market participants are adopting a wait-and-see approach. Investors should stay vigilant for future catalysts, including potential updates on Donald Trumps policies, forthcoming economic data, and signals from the Federal Reserve, which could provide direction for the greenback.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 38, suggesting the index might extend its losses after it successfully breakout since the RSI stays below the midline.

Resistance level: 106.85, 108.10

Support level: 105.80, 104.45

XAU/USD, H4

Gold prices consolidated within a tight range but rebounded slightly during the thinly traded Thanksgiving holiday. Previously, gold faced downward pressure following the Israel-Lebanon ceasefire announcement, which boosted risk sentiment and reduced the appeal of safe-haven assets. However, lingering geopolitical risks such as the escalation of the Russia-Ukraine conflict and the potential for trade wars stemming from Trumps tariff threats on  Canada, and Mexico could provide underlying support for gold prices.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 51, suggesting the commodity might extend its gains since the RSI stays above the midline.

Resistance level: 2650.00, 2710.00

Support level: 2610.00, 2550.00

GBP/USD，H4

The GBP/USD pair broke above resistance at 1.2625, gaining bullish momentum and indicating a bullish bias. Sustaining levels above the key psychological mark of 1.2700 could confirm a bullish trajectory. The pair's rebound, up over 1.5% from recent lows, is driven by continued weakness in the U.S. dollar.

The GBP/USD has jumped by more than 1.5% from its recent low level and has broken its psychological resistance level at the 1.2700 mark. The RSI has surged to near the overbought zone while the MACD has broken above the zero line, suggesting that the bullish momentum is gaining.

Resistance level:1.2790, 1.2850

Support level: 1.2620, 1.2505

CL OIL, H4

Oil prices traded flat but remained on a downward trajectory as markets continued to digest the ceasefire agreement between Israel and Lebanon, which alleviated fears of supply disruptions. Attention is now turning to the upcoming OPEC+ meeting on December 5, expected to be held virtually. Reports suggest that OPEC+ may extend its current production curbs, having already postponed its plan to restore 2.2 million barrels per day twice. Oil prices have declined approximately 15% since July.

Oil prices are trading flat while currently near the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 48, suggesting the commodity might edge higher since the RSI rebounded from the oversold territory.

Resistance level: 71.30, 74.00

Support level: 68.25, 66.85