GOLD AND BITCOIN PRICES HOLD STEADY AS INFLATION EXPECTATIONS RISE

The euro continued its bullish trend in the evening session as investors priced in higher inflation in Europe. The biggest concern is energy since the price of natural gas has risen substantially in the past few weeks. At the same time, there are signs that these prices will keep rising as Russia has shown no signs that it will boost gas prices in Europe. Meanwhile, in a statement, George Lane, the chief economist at the ECB warned that the bank will likely hold steady for longer than expected. He cited rising cases in some countries and the fact that inflation remains lower than in the US. Later today, the euro will react to a speech by Christine Lagarde.

US stocks rose slightly on Monday as the market continued to reflect on the recent interest rate decision by the Federal Reserve. After flooding the markets with $120 billion per month since the pandemic started, the Fed started to unwind this monetary policy support last week. It aims to keep continue reducing its asset purchases until mid next year. Stocks also rose as the market reflected on the strong quarterly earnings. Data by FactSet showed that most companies were beating analyst forecasts on EPS and revenue. The third-quarter growth was also the best level since 2010.

Tesla shares declined by more than 7% on Monday, which helped to drag benchmark indices like Nasdaq 100 and S&P 500. The decline happened after Elon Musk hinted that he would sell a 10% stake in the company. At the current valuation, that stake is worth more than $20 billion. Still, analysts believe that the stock will sustain momentum even after he sells a small stake. Later today, the key company to watch will be Coinbase, which will publish its quarterly results. Other key market movers will be speeches by Jerome Powell, Christine Lagarde, and Andrew Bailey.

EURUSD

The hourly chart shows that the EURUSD pair rose sharply in the overnight session. A closer look also shows that the pair formed an inverted head and shoulders pattern, which is usually a bullish sign. It moved above the 38.2% Fibonacci retracement level. It also rose slightly above the short and longer-term moving averages. Therefore, the pair will likely keep rising as bulls target the next key resistance at 1.1650.

GBPUSD

The GBPUSD pair rose sharply as investors attempted to buy last week’s dip. The pair rose to a high of 1.3557, which was substantially higher than last week’s low at 1.3422. On the 30-minute chart, the pair moved above the neckline of the inverted head and shoulders pattern. It also rose to the 38.2% Fibonacci retracement level. It has formed a bullish pennant pattern. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.3650.

XAUUSD

The XAUUSD pair jumped to a high of 1826 as demand for gold rose. The bullish trend accelerated when the pair moved above the key resistance level at 1,813, which was the highest level on October 22. It is being supported by the 25-day and 50-day moving averages while the MACD has kept rising. Therefore, the pair will likely keep rising as bulls target the key level at 1,850.