S&P500 (SPX) Price Analysis – July 26, 2024
Daily Price Outlook
The global market sentiment has lost momentum, with the S&P 500 index trading around 5,399.22 and hitting an intra-day low of 5,390.95. This decline stems from disappointing earnings reports from major tech companies like Alphabet and Tesla, which triggered widespread market sell-offs.
Meanwhile, the weak U.S. manufacturing data and lower-than-expected new home sales have heightened investor concerns, heightening the market's negative reaction.
Besides this, the economic slowdown in China, highlighted by disappointing GDP growth and an unexpected rate cut by the People's Bank of China (PBoC), has further pressured U.S. stocks as reduced business investment and consumer spending in China have added to market uncertainties.
Investor caution has also been influenced by upcoming U.S. core PCE data, contributing to increased volatility.
China's Economic Slowdown and Its Impact on the S&P 500 Index
On the China front, the Third Plenum's lackluster outcome, weaker-than-expected Q2 GDP growth, and an unexpected rate cut by the People’s Bank of China (PBoC) have signaled a slowdown in the world's second-largest economy, raising concerns about business investment and consumer spending.
Meanwhile, the PBoC cut its one-year policy loan rate by 20 basis points to 2.3%, the largest reduction since April 2020, after also lowering a key short-term rate. This move aims to support the slowing economy, with silver, a metal used in industries like renewable energy and electric vehicles, potentially being impacted by these economic shifts.
These developments in China have weighed heavily on the S&P 500 index, amplifying investor concerns about global economic stability.
The slowdown in China's economy and reduced business investment and consumer spending have increased market uncertainty, contributing to the index's recent declines and overall market volatility.
Impact of Core PCE Data and Fed Rate Cut Expectations on the S&P 500 Index
On the US front, Investor uncertainty has impacted the S&P 500 index as they await the core Personal Consumption Expenditure (PCE) price index data for May. The PCE, a crucial inflation gauge for the Federal Reserve, is projected to show a year-on-year decrease to 2.5% from 2.8%, with a monthly growth rate of 0.1%.
This data will influence expectations for potential Fed rate cuts, which are anticipated to begin in September.
Despite the US dollar facing challenges due to these rate-cut expectations, strong economic indicators, such as 2.8% GDP growth and lower unemployment claims, have mitigated market losses. However, lower inflation continues to pose a challenge to the dollar's strength.
Therefore, investor uncertainty ahead of the core PCE price index data for May has impacted the S&P 500 index. Meanwhile, the expectations of a Fed rate cut in September, combined with strong economic data, have limited market losses despite ongoing inflation concerns.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is currently trading at $5399.23, marking a decline of 0.51%. The 4-hour chart highlights critical levels and indicators that shape the current market sentiment and potential future movements. The pivot point is set at $5429.65, serving as a key reference for traders.
On the upside, immediate resistance is noted at $5502.69, followed by $5577.16 and $5665.95. These resistance levels will be crucial for any bullish attempts to recover recent losses.
Conversely, immediate support is found at $5327.98, with further support levels at $5259.24 and $5190.50, which could be pivotal for any further downward pressure.
The Relative Strength Index (RSI) is currently at 33, indicating that the S&P 500 is approaching oversold territory. This suggests the possibility of a short-term rebound or consolidation before any significant directional move.
The 50-day Exponential Moving Average (EMA) is positioned at $5529.94, indicating that the current price is below this average, reinforcing a bearish sentiment. The 50 EMA often serves as a benchmark for medium-term trends and could act as a resistance level if the price attempts to rise.
In conclusion, the technical outlook for the S&P 500 remains bearish below the $5429.65 pivot point. Traders are advised to consider entry points for selling below $5430, with a take profit target of $5325 and a stop loss at $5500.
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EUR/USD Price Analysis – July 26, 2024
EUR/USD Price Analysis – July 26, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained positive traction, turning bullish around the 1.0857 level and reaching an intra-day high of 1.0861.
This upward movement is primarily due to the weakening US dollar, which has been under pressure amid expectations for Federal Reserve (Fed) rate cuts later this year. Softer-than-expected US inflation figures have intensified these expectations, potentially leading to lower interest rates and further weakening the dollar.
However, the EUR/USD pair's gains may be limited by ongoing economic challenges in the Eurozone. Germany's PMI data recently showed contraction, and the European Central Bank (ECB) is anticipated to cut rates further, which could also put downward pressure on the Euro.
Additionally, the Euro faces headwinds from a significant tax relief package, impacting its overall value.
Weak German Economy and ECB Rate Cut Expectations Pressure EUR/USD Pair
On the EUR front, the Eurozone is facing a tough time as Germany, its largest economy, struggles with economic contraction. In July, the German Hamburg Commercial Bank (HCOB) Composite Purchasing Managers Index (PMI) fell to 48.7 from 50.4, signaling a decline in private sector activity.
Dr. Cyrus de la Rubia, HCOB’s Chief Economist, warned that Germany’s economy is shrinking, particularly due to a sharp drop in manufacturing output. This weak performance is affecting the Euro, compounded by expectations of two more rate cuts by the European Central Bank (ECB).
ECB officials are considering these cuts to boost the economy, especially as inflation is projected to hit 2% by 2025.
Meanwhile, Germany’s 30 billion euros tax relief plan shows the government’s concern over low demand. The upcoming Eurozone Harmonized Index of Consumer Prices (HICP) data will be crucial in determining the timing of future ECB rate cuts.
Therefore, the weak German economy and anticipated ECB rate cuts are likely to weaken the Euro. As Germany struggles with contraction and inflation expectations shift, the EUR/USD pair could see downward pressure, with the Euro losing ground against the US dollar.
Impact of US Inflation Data and Fed Rate Cut Speculation on EUR/USD Pair
On the US front, the broad-based US dollar has been losing its momentum as investors await the core Personal Consumption Expenditures (PCE) price index data for June, set for release at 12:30 GMT.
Economists forecast that inflation will ease slightly to 2.5% year-over-year in June from 2.6% previously, with a steady 0.1% monthly increase. This data will play a crucial role in shaping market expectations for Federal Reserve (Fed) rate cuts this year.
Currently, there is strong speculation that the Fed will cut rates in September. If inflation figures are softer than expected, it would likely support the case for these cuts, while stubbornly high inflation could weaken this expectation.
The US dollar has shown subdued performance as traders remain cautious, knowing that the Fed is expected to keep its key rates steady at 5.25%-5.50% during its July 31 meeting.
Therefore, the subdued US dollar and anticipated Fed rate cuts could benefit the EUR/USD pair. Softer inflation data might reinforce expectations for September rate cuts, potentially strengthening the Euro against the Dollar.
EUR/USD - Technical Analysis
The EUR/USD currency pair is currently trading at $1.08577, reflecting a modest increase of 0.12%. Analyzing the 4-hour chart, several key levels and technical indicators emerge, providing insight into potential price movements.
The pivot point is identified at $1.0836, serving as a crucial level that could determine the pair's next direction. Immediate resistance is observed at $1.0877, with subsequent resistance levels at $1.0912 and $1.0949. These levels represent potential barriers for any upward movement in the short term.
On the downside, immediate support is found at $1.0806, followed by $1.0777 and $1.0753. These support levels are critical in preventing further declines and could act as bounce points if the pair faces selling pressure.
The Relative Strength Index (RSI) stands at 48, suggesting a neutral market sentiment. An RSI near 50 indicates neither overbought nor oversold conditions, implying potential for movement in either direction based on market catalysts.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0883, slightly above the current price. The proximity of the price to the 50 EMA suggests potential resistance if the pair attempts to climb higher. The 50 EMA is a commonly watched indicator that traders use to gauge medium-term trend direction.
In conclusion, the technical outlook for EUR/USD remains cautiously bullish above the pivot point of $1.0836. Traders are advised to consider buying above $1.08354, with a take profit target of $1.08869 and a stop loss at $1.08120.
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S&P500 (SPX) Price Analysis – July 26, 2024
GOLD Price Analysis – July 26, 2024
Daily Price Outlook
Gold (XAU/USD) reversed its previous downward trend and gained momentum, climbing from 2,370.15 to an intraday high of 2,379.35. This uptick was largely driven by a weaker US dollar, fueled by expectations that the Federal Reserve might begin a rate-cut cycle in September.
The US Dollar (USD) fell short of a two-week high reached earlier in the week, which bolstered gold's attractiveness to investors. However, stronger-than-expected US GDP growth and slower inflation in Q2 2024 suggest a resilient economy, potentially diminishing gold's appeal as a safe-haven asset and limiting the extent of its gains.
Looking ahead, traders are closely monitoring the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index this Friday for clues on the Federal Reserve's policy stance.
The PCE report is expected to impact USD demand and could potentially create new momentum for gold, which, as a non-yielding asset, often reacts to shifts in interest rate expectations and economic indicators.
US Economic Data and Federal Reserve Expectations Impact Gold
On the US front, the US dollar struggled to gain momentum and turned bearish amid expectations of an impending rate-cut cycle by the Federal Reserve. Markets have fully priced in a rate cut for September and anticipate two more reductions by the end of the year, which has kept the US Dollar on the back foot and supported gold prices.
Meanwhile, the strong US economic data, including 2.8% GDP growth and a decline in unemployment claims, help limit the US dollar's losses, though lower inflation still challenge its strength.
On the data front, the US economy expanded at a 2.8% annualized rate from April to June, up from 1.4% in the previous quarter and surpassing the anticipated 2% growth. The core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation, moderated to 2.9% from 3.7% in the previous quarter.
Additionally, the US Department of Labor reported a larger-than-expected decline in unemployment insurance claims, which fell to 235,000 for the week ending July 20.
This data could weigh on gold prices, as stronger economic growth and lower inflation decrease gold's appeal as a safe-haven asset. Additionally, the drop in unemployment claims suggests a strong job market, which could heighten expectations for higher interest rates and further reduce gold's attractiveness.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2369.020, up by 0.30%. The 4-hour chart reveals key technical levels and indicators suggesting the metal's future trajectory. The pivot point is positioned at $2379.70, acting as a critical marker for potential market movements.
On the upside, immediate resistance is noted at $2401.34, with further resistance levels at $2421.78 and $2451.44. These levels will be crucial for any bullish momentum. Conversely, immediate support is seen at $2357.25, followed by $2339.62 and $2319.18, which are pivotal for any downside movements.
The Relative Strength Index (RSI) stands at 33, indicating that gold is nearing oversold territory. This could imply a potential rebound or a consolidation phase before any significant move.
The 50-day Exponential Moving Average (EMA) is positioned at $2418.25, suggesting that the current price is below this average, reinforcing the bearish sentiment. This indicator often serves as a benchmark for medium-term trends and could act as resistance if the price attempts to rise.
In conclusion, the technical outlook for gold remains bearish below the $2379.70 pivot point. Traders are advised to consider entry points for selling below $2380, with a take profit target of $2350 and a stop loss at $2395.
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S&P500 (SPX) Price Analysis – July 26, 2024
GOLD Price Analysis – July 25, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to stop their previous session's downward rally and remained well offered around $2,375, hitting an intraday low of $2,365. This downward trend can be attributed to technical selling, as it experiences a predicted downward movement within its trading range.
Meanwhile, the slightly positive US S&P Global PMI data for July reduced fears of "stagflation" (a weak economy with high inflation), leading to a decline in gold prices as the improved economic outlook made gold less attractive as a safe-haven asset.
In contrast, increasing expectations that the Federal Reserve (Fed) will cut interest rates multiple times before the year's end helped gold prices limit their deeper losses. Looking ahead, traders are waiting for more US economic data to gauge future interest rates.
Key reports include the Q2 GDP growth data on Thursday and the PCE Price Index for June on Friday. These reports will provide insights into the economy and inflation.
Gold Prices Decline Amid Positive Economic Outlook and Rising Production Costs
On the US front, the recent S&P Global PMI data for July was slightly positive, easing worries about a weak economy with high inflation (stagflation). Chris Williamson from S&P Global described the situation as a "Goldilocks" scenario, where the economy is growing well and inflation is under control.
However, higher costs for materials, shipping, and labor could lead to increased prices or lower profit margins.
Despite expectations that the Federal Reserve will cut interest rates, gold prices are falling because the improved economic outlook and rising production costs are overshadowing these expectations.
On the data front, the preliminary S&P Global Composite PMI improved to 55 in July from 54.8 in June, showing overall economic growth.
However, the S&P Global Manufacturing PMI dropped to 49.5 from 51.6, indicating a slowdown in manufacturing, while the Services PMI rose to 56.0 from 55.3, reflecting stronger growth in services.
Despite a positive economic outlook and expectations of lower interest rates, Gold prices are falling. This is due to rising production costs and a slowdown in manufacturing overshadowing the benefits of rate cuts.
Gold Prices Set to Gain from Lower US Bond Yields, Reduced Import Tax in India, and Geopolitical Shifts
On the other hand, the unwinding of the "Trump trade" has lowered US bond yields, which benefits gold prices. Polls show Democrat Kamala Harris leading over former President Trump, potentially signaling a less inflationary economy if she wins.
Moreover, India's reduction of its gold import tax from 15% to 6% is expected to boost physical gold demand.
Furthermore, gold might benefit from geopolitical factors, especially if BRICS+ nations succeed in creating a gold-backed alternative to the US dollar as the world's reserve currency, reducing US influence through dollar-based sanctions.
Gold prices are likely to benefit from lower US bond yields, reduced Gold import tax in India, and potential geopolitical shifts if BRICS+ nations establish a Gold-backed reserve currency.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) experienced a modest decline of 0.92%, settling at $2,373.915 on the four-hour chart. This recent move sees the precious metal navigating key technical levels that traders are closely monitoring.
As the price action unfolds, it becomes essential to understand the pivotal areas of support and resistance that could influence the next directional shift.
The pivot point, currently at $2,379.70, serves as a crucial marker. Gold's immediate resistance stands at $2,401.34, a break above which could propel prices toward the next resistance levels of $2,421.78 and $2,451.44.
Conversely, the downside is guarded by immediate support at $2,357.25. Further declines may find stabilization at subsequent support levels of $2,339.62 and $2,319.18, which are critical for maintaining the bullish sentiment in the medium term.
Technical indicators present a mixed scenario. The Relative Strength Index (RSI) is positioned at 30, indicating that Gold might be entering oversold territory. This could suggest a potential reversal or a period of consolidation in the near term.
Additionally, the 50-day Exponential Moving Average (EMA) is at $2,424.48, highlighting a bearish trend as the current price remains below this average. Traders should remain cautious, as a sustained move below the 50 EMA often signals continued downward momentum.
In conclusion, traders are advised to consider short positions below $2,380, targeting $2,350 for profit-taking, with a stop loss set at $2,395.
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AUD/USD Price Analysis – July 25, 2024
AUD/USD Price Analysis – July 25, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to stop its downward trend and remained well offered around the 0.6527 level, hitting an intra-day low of 0.6519.
The downward rally can be attributed to the weak economic outlooks for China and Australia, which have dampened the Australian dollar and contributed to the AUD/USD pair's losses.
In contrast, the bearish US dollar, driven by increasing expectations that the Federal Reserve (Fed) will cut interest rates multiple times before the year's end, has helped the AUD/USD pair to limit its losses.
Australian Dollar Under Pressure from China’s Economic Slowdown and Weak Market Sentiment
On the AUD front, The Australian Dollar (AUD) is under pressure due to concerns about China's economic slowdown. China's recent decision to cut its Loan Prime Rate (LPR) by 10 basis points, coupled with a lack of strong growth measures, has raised fears about the country's economic health.
This is significant for Australia, as the AUD often mirrors China's economic conditions and Australia heavily depends on iron ore exports to China.
With global iron ore prices falling to a three-week low and anticipated declines in foreign investment in Australia, the AUD faces further challenges. Additionally, weak market sentiment before the US Q2 GDP report and nominal losses in S&P 500 futures compound the AUD's difficulties.
Impact of US Economic Data and Outlook on AUD/USD
On the US front, the US Dollar is falling but remains above the key support level of 104.00. However, the US economy is growing at a solid 2.0% annual rate, up from the previous 1.4%, although the GDP Price Index has slowed to 3.6% from 3.1%. This could lead to early rate cuts by the Federal Reserve.
It should be noted that the recent S&P Global PMI data for July is somewhat positive, suggesting that the economy is doing well with controlled inflation, though rising costs for materials and labor might impact prices and profit margins.
Despite the expectation of Fed rate cuts, gold prices are declining due to a stronger economic outlook and higher production costs.
The S&P Global Composite PMI improved to 55, showing overall growth, while the Manufacturing PMI fell to 49.5, indicating slower manufacturing, and the Services PMI rose to 56.0, reflecting stronger growth in services.
Therefore, the Australian Dollar (AUD) may weaken against the US Dollar (USD) as improved US economic data and a stronger outlook overshadow expectations of Fed rate cuts, impacting AUD/USD negatively.
AUD/USD - Technical Analysis
The Australian dollar (AUD/USD) declined by 0.48%, settling at $0.65453 in recent trading sessions. This downward movement places the currency pair in a delicate position as it hovers near significant technical levels. Traders and analysts are keenly observing these levels to gauge potential future movements.
The pivot point at $0.6517 is a critical marker for traders. Immediate resistance is seen at $0.6592. A break above this could push the AUD/USD towards the next resistance levels at $0.6636 and $0.6682.
On the downside, the immediate support lies at $0.6517. Further declines could find additional support at $0.6491 and $0.6465, which are vital for preventing a deeper sell-off.
Technical indicators offer a mixed outlook. The Relative Strength Index (RSI) is notably low at 19, suggesting that the AUD/USD is in oversold territory. This could imply a potential reversal or a consolidation phase in the near term as the market corrects the oversold conditions.
The 50-day Exponential Moving Average (EMA) stands at $0.6683, indicating a bearish trend as the current price remains well below this level. A sustained move below the 50 EMA often signals continued downward momentum, adding pressure on the AUD/USD.
In conclusion, the recommendation is to consider short positions below $0.65580, targeting $0.65166 for profit-taking with a stop loss set at $0.65828.
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USD/JPY Price Analysis – July 25, 2024
USD/JPY Price Analysis – July 25, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair continued its bearish trend, trading under pressure at the 152.58 level as the Japanese Yen (JPY) rose to its highest level in 12 weeks against the US Dollar (USD).
This drop is mainly due to traders closing their carry trades before the Bank of Japan’s (BoJ) upcoming policy meeting.
However, the carry trades involve borrowing in low-interest currencies like the Yen and investing in higher-interest assets. With the BoJ likely to change its policy soon, traders are exiting these trades, which strengthens the Yen and weakens the USD/JPY pair.
In simple words, traders are adjusting their strategies ahead of expected changes from the BoJ, impacting the Yen and Dollar.
Japanese Yen Hits 12-Week High as Traders Anticipate BoJ Policy Shift
On Thursday, the Japanese Yen rose to a 12-week high of 151.93 against the US Dollar. This increase happened because traders are closing their carry trades before the Bank of Japan’s (BoJ) policy meeting next week. The BoJ is expected to raise interest rates and cut back on buying bonds, which would reduce economic support.
As a result, traders are selling off positions that benefit from low rates, boosting the Yen. This caused the USD/JPY pair to fall, showing that the Yen is gaining strength due to expectations of changes in Japan's monetary policy.
US Economic Data Increases Pressure on USD/JPY Amid Fed Policy Uncertainty
On the US front, the recent economic data is putting more pressure on the USD/JPY pair. The July Purchasing Managers' Index (PMI) shows strong growth in private-sector activity, which might allow the Federal Reserve (Fed) to keep its tight monetary policy. Despite this, the US Dollar is still struggling.
Investors are waiting for upcoming reports on US GDP and inflation to see if the Fed will change its policies. If these reports show slower inflation or economic growth, the Dollar could weaken even more, which would add to the downward trend in the USD/JPY pair.
USD/JPY - Technical Analysis
The USD/JPY pair declined by 0.97%, currently trading at $152.802, reflecting a bearish sentiment in the market. This drop brings the currency pair closer to significant technical levels, prompting traders to reassess their positions and strategies.
The pivot point at $154.011 is crucial for determining the next move. Immediate resistance is observed at $153.436, and breaking above this could drive the pair towards the next resistance levels of $154.551 and $155.596.
Conversely, immediate support is found at $151.695, with further support levels at $151.052 and $150.314, which are essential for maintaining the upward trend.
Technical indicators show mixed signals. The Relative Strength Index (RSI) is at 24, indicating that the USD/JPY is entering oversold territory. This suggests a potential for a reversal or a consolidation phase as the market adjusts to the oversold conditions.
The 50-day Exponential Moving Average (EMA) is at $156.607, highlighting a bearish trend as the current price is significantly below this level. A sustained move below the 50 EMA typically signals continued downward momentum, putting pressure on the USD/JPY.
In conclusion, traders should consider long positions above $152.250, targeting $154.000 for profit-taking, with a stop loss set at $151.000.
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AUD/USD Price Analysis – July 25, 2024
GBP/USD Price Analysis – July 24, 2024
Daily Price Outlook
Despite the upbeat PMI data, the GBP/USD currency pair failed to gain positive traction and remained under pressure around the 1.2904 level, hitting an intra-day low of 1.2876.
The downward rally can be attributed to high service sector inflation and concerns over the potential impact of the Bank of England's restrictive monetary policy.
Moreover, the renewed strength of the US dollar, supported by recent developments in the US presidential elections, was another key factor putting pressure on the GBP/USD pair.
In contrast, growing expectations that the Federal Reserve may begin a rate-cutting cycle in September could cap gains in the US dollar and help the GBP/USD pair limit its losses.
US Dollar Strengthens Amid Election Speculation and Economic Data
On the US front, the broad-based US dollar regained its bullish traction and edged higher near a weekly high at around 104.50.
This strength is partly due to investor interest ahead of the US presidential elections in November, with market experts predicting a win for Donald Trump despite the Democratic nomination of Vice President Kamala Harris.
Additionally, the US dollar's performance is influenced by the anticipation of significant upcoming economic data releases.
On the data front, investors are closely watching the preliminary US S&P Global PMI data for July, expected to show modest expansion in both manufacturing and services.
The main triggers for the US dollar this week will be the preliminary Q2 GDP and the Personal Consumption Expenditures Price Index (PCE) data, scheduled for Thursday and Friday. The US economy is projected to have grown by 1.9%, up from the previous 1.4%.
Investors are particularly interested in the core PCE inflation, the Federal Reserve’s preferred inflation measure, to gauge the timeline for potential interest rate cuts, which markets currently expect to begin in September.
Therefore the stronger US Dollar, buoyed by positive economic data and election developments, puts pressure on the GBP/USD pair. Despite the UK's upbeat PMI data, the pair may face downward pressure due to the contrasting economic outlooks and potential Fed rate cuts.
GBP/USD Pair Faces Pressure Amid BoE Rate Cut Speculation and High Service Sector Inflation
However, the decline in the GBP/USD pair is linked to growing speculation that the Bank of England (BoE) will begin cutting interest rates in August. Market experts believe the UK economy is struggling under the BoE's high interest rates, significantly impacting household spending.
This concern is highlighted by the faster-than-expected contraction in UK Retail Sales, a key measure of consumer spending, in June. Despite this, BoE officials are hesitant to endorse rate cuts due to persistently high service sector inflation, which grew steadily by 5.7% in June.
On the data front, the Composite PMI for July came in higher at 52.7, surpassing estimates of 52.6 and the previous release of 52.3, thanks to increased activities in both manufacturing and service sectors.
The Manufacturing PMI rose to 51.8 and the Services PMI to 52.4, both outperforming their previous readings.
Despite the upbeat PMI data, the GBP/USD pair faces pressure. The stronger US Dollar and speculation about Bank of England rate cuts amid high UK service inflation contribute to a potential downward trend for the GBP/USD pair.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.2884, reflecting the latest market movements. On the 4-hour chart, the key technical levels are crucial for understanding potential price action. The pivot point is set at $1.2901, serving as a central level around which the price may fluctuate.
Immediate resistance levels are identified at $1.2942, $1.2988, and $1.3033. These levels represent potential selling points where the market may face resistance if it attempts to rise.
On the downside, immediate support levels are marked at $1.2838, $1.2782, and $1.2735. These support levels are vital as they indicate potential areas where buying interest could emerge, preventing further declines.
The Relative Strength Index (RSI) is currently at 32, indicating that the market is nearing oversold conditions. This suggests that the GBP/USD pair may experience a bounce if buyers step in at lower levels.
The 50-day Exponential Moving Average (EMA) is at $1.2951, acting as a dynamic resistance level that traders should watch closely.
Given the current technical setup, the recommendation is to sell below $1.29072. The take profit level is set at $1.28381, providing a reasonable target for downside movements. A stop loss at $1.29510 is advised to manage risk, protecting against potential upward reversals.
In conclusion, the technical outlook for GBP/USD suggests a bearish sentiment below the pivot point of $1.2901.
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EUR/USD Price Analysis – July 24, 2024
EUR/USD Price Analysis – July 24, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to gain positive traction, remaining under pressure around the 1.0845 level and hitting an intra-day low of 1.0825.
The downward trend can be attributed to the preliminary Eurozone Hamburg Commercial Bank (HCOB) PMI report for July, which showed an unexpected easing in composite numbers. This was driven by a slowdown in both manufacturing and services, putting pressure on the EUR/USD pair.
The weak economic activity in the Eurozone is expected to boost expectations of more rate cuts by the European Central Bank (ECB).
Furthermore, the renewed strength of the US dollar, supported by recent developments in the US presidential elections, was another key factor affecting the EUR/USD pair.
However, growing expectations that the Federal Reserve may begin a rate-cutting cycle in September could limit gains in the US dollar and help the EUR/USD pair mitigate its losses.
Eurozone Economic Weakness and ECB Rate Cut Expectations Pressure EUR/USD Pair
On the EUR front, the ECB is expected to cut interest rates two more times by the end of the year due to weak economic activity in the Eurozone. The preliminary Eurozone Hamburg Commercial Bank (HCOB) Purchasing Managers’ Index (PMI) report for July showed a slowdown in both manufacturing and services.
The HCOB Composite PMI decreased to 50.1, just above the 50 threshold that separates expansion from contraction, falling short of investor expectations of 51.1. Manufacturing contracted to 45.6, while services expanded at a slower pace of 51.9.
This in turn, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that weak demand in Germany's manufacturing sector is dragging down overall private sector output.
In contrast, French service providers increased activity due to preparations for the Olympic Games.
Despite this, input prices in the services sector rose at a faster rate, and selling prices remained steady, offering no relief to ECB policymakers. Traders currently expect the ECB to deliver two more rate cuts this year, aligning with some ECB officials' views.
Therefore, the weak Eurozone economic data and expectations for additional ECB rate cuts pressure the EUR/USD pair. Despite increased activity in French services, the overall slowdown and rising input prices contribute to the euro's struggles against the stronger US dollar.
Strong US Dollar and Anticipated Fed Rate Cuts Impact EUR/USD Pair
On the US front, the broad-based US dollar managed to stop its bearish bias and regained its positive traction, edging higher near a weekly high of around 104.50.
This strength is due to investor interest ahead of the US presidential elections in November, with market experts predicting a win for Donald Trump despite the Democratic nomination of Vice President Kamala Harris. Additionally, the US dollar's performance is influenced by anticipation of significant upcoming economic data releases.
On the data front, investors are closely watching the preliminary US S&P Global PMI data for July, which is expected to show modest expansion in both manufacturing and services.
The main triggers for the US dollar this week will be the preliminary Q2 GDP and the Personal Consumption Expenditures (PCE) Price Index data, scheduled for release on Thursday and Friday, respectively. The US economy is projected to have grown by 1.9% in Q2, up from the previous 1.4%.
Investors are particularly focused on the core PCE inflation data, the Federal Reserve’s preferred measure of inflation, to assess the timeline for potential interest rate cuts. Markets currently anticipate these rate cuts to begin in September.
Therefore, the strong US dollar, driven by investor interest ahead of the presidential elections and anticipation of significant economic data releases, pressures the EUR/USD pair. However, potential Federal Reserve rate cuts in September may limit the pair's losses.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.0828, reflecting the latest market movements. The 4-hour chart highlights crucial technical levels that traders should monitor closely. The pivot point is positioned at $1.0847, serving as a central level around which price action is likely to oscillate.
Immediate resistance levels are identified at $1.0878, $1.0912, and $1.0949. These levels represent potential selling points where the market may encounter resistance if it attempts to rise.
On the downside, immediate support levels are found at $1.0806, $1.0777, and $1.0753. These levels are critical as they indicate potential areas where buying interest may emerge, preventing further declines.
The Relative Strength Index (RSI) is currently at 25, suggesting that the market is in oversold territory. This indicates a potential for a rebound if buyers step in at lower levels.
The 50-day Exponential Moving Average (EMA) stands at $1.0894, acting as a dynamic resistance level that traders should watch for potential price reactions.
Given the current technical setup, the recommendation is to sell below $1.08474. The take profit level is set at $1.08068, providing a reasonable downside target. A stop loss is advised at $1.08724 to manage risk, protecting against potential upward reversals.
In conclusion, the technical outlook for EUR/USD suggests a bearish sentiment below the pivot point of $1.0847.
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GOLD Price Analysis – July 24, 2024
GOLD Price Analysis – July 24, 2024
Daily Price Outlook
Gold prices (XAU/USD) continued their upward momentum, trading around $2,411.12 and reaching an intraday peak of $2,419.15. This rally is largely attributed to dovish expectations from the Federal Reserve, which have weakened the US dollar and boosted gold's appeal.
Meanwhile, the risk-off market sentiment has increased demand for gold as a safe-haven asset.
The US dollar has weakened amid growing anticipation of potential Fed rate cuts in September and recent political developments in the US, leading to dollar selling and further supporting gold prices.
Looking ahead, traders are expected to remain cautious, refraining from making aggressive bets until clearer signals emerge about the Federal Reserve's policy direction.
Consequently, market focus will shift to the upcoming Advance US Q2 GDP data and the US Personal Consumption Expenditures (PCE) Price Index, set for release on Thursday and Friday, respectively. Moreover, traders will keep an eye on the flash global PMIs for short-term market insights.
US Dollar Weakness and Economic Data Boost Gold Prices Amid Fed Rate-Cut Expectations
On the US front, the broad-based US dollar struggled to maintain its recent upward trend and lost its bullish traction, providing support for gold prices.
This decline was driven by growing expectations that the Federal Reserve may begin a rate-cutting cycle in September, along with recent US political developments. These factors have led to increased selling pressure on the US dollar, allowing gold to remain bullish.
On the data front, the Federal Reserve Bank of Richmond reported a deterioration in manufacturing activity for July, with the composite manufacturing index falling to -17 from -10 in June.
Additionally, the National Association of Realtors indicated a 5.4% decline in US existing home sales in June, reaching a seasonally adjusted annual rate of 3.89 million units, the lowest since December and below expectations.
These signs of economic weakness, including declining manufacturing activity and falling home sales, enhance the likelihood of a rate cut, as they could prompt the Federal Reserve to ease monetary policy.
Therefore, the US dollar's retreat from a two-week high, driven by rising expectations of a Federal Reserve rate-cutting cycle in September and recent US political developments, has bolstered gold prices by increasing demand for this safe-haven asset.
Gold Prices Boosted by China's Economic Slowdown and PBoC Rate Cut
On the other hand, gold prices could gain further traction due to sluggish economic activity in China and an unexpected rate cut by the People's Bank of China (PBoC), which have introduced broader market uncertainties.
These factors have increased the safe-haven appeal of gold, as investors seek refuge in stable assets amidst economic volatility. The PBoC's move to lower rates and China's economic slowdown could lead to heightened global market concerns, further driving demand for gold as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2414.07, marking a 0.30% increase on the day. On the 4-hour chart, key technical levels indicate crucial points of potential resistance and support that traders should monitor closely. The pivot point is positioned at $2418.92, suggesting a central level around which the price may oscillate.
Immediate resistance levels are identified at $2435.02, $2453.93, and $2482.70. These levels represent potential selling points if the price attempts to move higher, where the market may encounter selling pressure.
Conversely, immediate support levels are found at $2391.97, $2370.70, and $2350.44. These levels are critical as they represent potential buying points where the price may find support, preventing further declines.
The Relative Strength Index (RSI) is currently at 49, indicating a neutral momentum in the market. This suggests that gold is neither overbought nor oversold, providing a balanced view for both buyers and sellers.
The 50-day Exponential Moving Average (EMA) stands at $2425.78, acting as a dynamic resistance level that traders should watch for potential price reactions.
Given the current market conditions, the recommendation is to sell below $2420. The take profit level is set at $2390, providing a reasonable downside target. A stop loss is advised at $2435 to manage risk, protecting against potential adverse price movements.
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USD/CAD Price Analysis – July 23, 2024
Daily Price Outlook
Despite a bearish US dollar and dovish Federal Reserve (Fed) expectations, the USD/CAD currency pair has continued its upward trend, trading around the 1.3763 level and reaching an intra-day high of 1.3773.
This upward movement is largely attributed to the recent slump in crude oil prices, which weakens the commodity-linked Canadian dollar and supports the USD/CAD pair. Conversely, selling pressure on the US dollar, driven by expectations of a possible Fed interest rate cut in September, has capped further gains in the USD/CAD pair.
Effects of Anticipated Fed Rate Cuts and Lower Treasury Yields on the USD/CAD Pair
On the US front, the broad-based US dollar has weakened recently due to expectations that the Federal Reserve will soon cut interest rates. Investors believe the Fed may start reducing rates in September, with possible additional cuts later in the year.
This has led to lower US Treasury bond yields, making bonds less attractive and putting pressure on the dollar.
The weaker US dollar, driven by anticipated Fed rate cuts and lower Treasury yields, has supported the USD/CAD pair, pushing it higher as the Canadian dollar weakens from falling oil prices.
Impact of Falling Crude Oil Prices on the USD/CAD Pair
On the other side, the recent drop in crude oil prices to a one-month low has weakened the Canadian dollar, benefiting the USD/CAD pair.
Oil prices were flat on Tuesday after a European Central Bank official suggested a possible rate cut in September, which offset some pressure from renewed hopes for a ceasefire in the Gaza conflict.
Therefore, the decline in oil prices over the previous sessions has further supported the USD/CAD pair by reducing the strength of the commodity-linked Loonie.
USD/CAD - Technical Analysis
The USD/CAD pair is trading at $1.37696, up 0.06% for the day. The 4-hour chart suggests a bullish trend, with the pivot point set at $1.3791. This level is crucial for determining the market's direction. If the price surpasses this pivot point, the bullish trend is likely to continue.
Immediate resistance is observed at $1.3791, followed by $1.3822 and $1.3851. These levels act as potential barriers to any upward movement. On the downside, immediate support is seen at $1.3713, with further support at $1.3674 and $1.3631, which could provide potential entry points for long positions if the price rebounds.
The Relative Strength Index (RSI) is at 74, indicating that USD/CAD is in overbought territory. This suggests that a correction could be imminent, although the overall trend remains bullish. The 50-day Exponential Moving Average (EMA) is at $1.3699, which supports the bullish outlook as long as the price remains above this level.
Given the technical indicators, the suggested trading strategy is to buy above $1.37556, with a take profit target at $1.37910 and a stop loss at $1.37275. This strategy aligns with the current bullish sentiment and key resistance and support levels.
In conclusion, USD/CAD's outlook remains bullish above the pivot point of $1.3791.
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