GBP/USD Price Analysis – April 29, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has been maintaining a positive trend and remained well bid around 1.2538, hitting the intraday high of 1.2549 level. However, the reason for its upward rally can be attributed to the weaker US Dollar, which lost its traction on the back of risk-on market sentiment. Investors are closely eyeing the upcoming Federal Open Market Committee (FOMC) interest rate decision and press conference scheduled for Wednesday.
Although, the losses in the US dollar could be short-lived as the US Federal Reserve (Fed) is widely expected to maintain the interest rate within its current range of 0.25%–0.5% during this week's meeting. Despite the strength of the US economy and the recent uptick in inflation, speculations suggest that the first rate cut might not occur until September.
US Dollar Weakness and Fed's Hawkish Stance:
Despite the Federal Reserve's hawkish stance on interest rates, the US Dollar is witnessing a decline and remains subdued amid positive market sentiment. Investors anticipate the Fed to maintain rates steady between 5.25% and 5.5%. Although the US economy exhibits strength, concerns over rising inflation have delayed expectations for rate cuts until September. Recent data from the US Bureau of Economic Analysis, showing a higher-than-expected increase in the Core PCE Price Index, further bolstered the Fed's hawkish expectations.
On the data front, the US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in March, exceeding expectations for a reading of 2.6%. The yearly rate also climbed to 2.7% from 2.5% in February. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, remained steady at 2.8%, higher than the anticipated 2.6%. These results reinforced the Federal Reserve's hawkish expectations and helps US dollar to limit its losses.
BoE Expected Rate Cuts and Impact on GBP/USD:
On the UK front, investors are starting to believe that the Bank of England (BoE) might lower interest rates at its June meeting. BoE Governor Andrew Bailey hinted that two or three rate cuts this year could happen, which made people think this way. If the BoE decides to cut rates, it could make the Pound Sterling weaker. However, the dovish shift in BoE's monetary policy stance could weaken the Pound Sterling (GBP) and cap further gains in the GBP/USD pair.
GBP/USD - Technical Analysis
In today’s trading session, the GBP/USD pair has appreciated notably, climbing by 0.43% to reach a current level of 1.25423. This movement places the currency pair just above a pivotal technical juncture observed on the 4-hour chart.
The pivot point for today is established at 1.25151. Holding above this level could serve as a springboard for GBP/USD, targeting the first immediate resistance at 1.25795. Should bullish momentum persist, further resistances are projected at 1.26377 and 1.27034, respectively. On the flip side, should the pair lose ground, it would first encounter support at 1.24498, with more substantial floors awaiting at 1.23929 and 1.23369 if the downtrend accelerates.
The technical indicators suggest a solidifying bullish bias; the Relative Strength Index (RSI) stands at 63, indicating growing momentum but still shy of the overbought territory. Furthermore, the 50-Day Exponential Moving Average (EMA) at 1.2470 now acts as a support level, reinforcing the upward trajectory since it resides below the current price.
Related News
- GOLD Price Analysis – April 29, 2024
EUR/USD Price Analysis – April 29, 2024
Daily Price Outlook
The EUR/USD pair has maintained its upward rally and remained well-bid around the 1.0715 level, hitting the intraday high of 1.0734. However, this positive performance was driven by the weakening US dollar, which failed to gain traction despite the Fed's hawkish stance amid a risk-on market sentiment. Meanwhile, investors await key economic indicators from the Eurozone, which make investors hesitate to place a strong bid.
US Dollar Weighed Down by Economic Uncertainty, Supporting EUR/USD Pair
On the other hand, the broad-based US dollar remains under pressure due to uncertainty surrounding the US economic outlook. However, weak preliminary US economic indicators, such as the S&P Global Purchasing Managers’ Index survey for April and Q1 GDP data, have raised concerns about the economy's ability to withstand higher interest rates by the US Federal Reserve (Fed). The uncertainty surrounding the US economic outlook has kept the US Dollar under pressure.
Hence, the weak economic indicators raise concerns about the economy's resilience against potential interest rate hikes, benefiting the EUR/USD pair.
Eurozone Economic Data and ECB Speculation Impacting EUR/USD Pair
Looking forward, the upcoming release of key economic data from the Eurozone, including the preliminary Eurozone Q1 Gross Domestic Product (GDP) and the Consumer Price Index (CPI) data for April, is expected to influence speculation about interest rate cuts by the European Central Bank (ECB). However, investors increasingly anticipate that the European Central Bank (ECB) will begin reducing interest rates at its June meeting, as policymakers consider this action to be sensible.
Therefore, the anticipation of interest rate cuts by the ECB based on upcoming economic data may weaken the Euro against the US Dollar as investors adjust their positions in response to potential policy changes.
EUR/USD - Technical Analysis
Today, the EUR/USD pair has shown notable strength, registering a gain of 0.35%, and trading at 1.07288. This upward movement comes as the currency pair tests key technical levels on a 4-hour chart. Currently, EUR/USD hovers slightly above the pivot point of 1.07082, suggesting a possible continuation of the bullish trend if it maintains this momentum.
If the pair sustains above the pivot point, the immediate resistance at 1.07534 could be the next target. Breaching this level might open the path towards higher resistance levels at 1.07777 and 1.08088. Conversely, if the pair reverses its gains, it could find support at 1.06783. Further declines might test subsequent support levels at 1.06431 and 1.06090, marking critical zones that could halt a downward trajectory.
The technical indicators reinforce the bullish outlook, with the Relative Strength Index (RSI) at 57 indicating a slight bullish momentum without venturing into overbought territory. The 50-Day Exponential Moving Average (EMA) sits just below the current price at 1.07043, further supporting the potential for upward movement.
Related News
- GOLD Price Analysis – April 29, 2024
GOLD Price Analysis – April 29, 2024
Daily Price Outlook
Despite the Federal Reserve (Fed) delaying interest rate cuts due to persistent inflation, the Gold price (XAU/USD) continued its upward trend, remaining well bid around $2,342 and hitting an intra-day high of $2,344.39. The rise in gold prices can be attributed to the weakening US dollar, which failed to gain traction despite the Fed's hawkish stance amid a risk-on market sentiment. In the meantime, the losses in the US dollar were further bolstered by the strong rally in the Japanese Yen (JPY). Moreover, the ongoing geopolitical tensions regarding the Russia-Ukraine war and the Israel-Hamas conflict were seen as another key factor that kept the safe-haven gold price higher.
US Dollar Weakness and Fed's Hawkish Stance Fuel Gold Price Surge
Despite the Federal Reserve's hawkish stance on interest rates, the broad-based US dollar is losing traction and still flashing red amid positive market sentiment. Hence, the bearish trend in dollar helping the gold prices to stay bid. Investors are paying close attention to the Federal Reserve's upcoming decision on interest rates. They expect the Fed to keep rates steady between 5.25% and 5.5%. The US economy is strong, but rising inflation has led to speculation that rate cuts might not occur until September.
On the data front, the US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in March, exceeding expectations for a reading of 2.6%. The yearly rate also climbed to 2.7% from 2.5% in February. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, remained steady at 2.8%, higher than the anticipated 2.6%. These results reinforced the Federal Reserve's hawkish expectations and put pressure on the non-yielding Gold price.
Therefore, the weakening US dollar, coupled with reinforced expectations of a hawkish Federal Reserve due to rising inflation, has contributed to upward pressure on gold prices despite the absence of yield.
Geopolitical Tensions Drive Safe-Haven Appeal for Gold
On the geopolitical front, the ongoing tensions from the Russia-Ukraine conflict and Israel-Hamas disputes are main factors boosting gold's safe-haven appeal. As per the latest report, Ukraine's attacks on Russian oil refineries and its plea for increased US military aid due to escalating frontline conditions, increased geopolitical risks, supporting the gold price.
Despite talks by Hamas officials in Egypt for a ceasefire, Israel has approved continued military action. However, the casualties on both sides highlight the conflict's toll, with over 34,000 Palestinians and over 1,100 Israelis reported dead since October 7. This situation has created uncertainty, potentially driving up the demand for gold as a safe-haven investment.
GOLD (XAU/USD) - Technical Analysis
Gold prices experienced a slight downturn today, trading at $2,333.435, a decrease of 0.20%. The 4-hour chart reveals a technical landscape where the metal is currently fluctuating around a pivotal point of $2,320.43. The market's direction appears to hinge on the ability of gold to sustain levels above this pivot, which could set the stage for an upward movement toward the immediate resistance at $2,353.05.
If gold successfully breaches this first resistance, subsequent targets lie at $2,373.72 and $2,401.28, suggesting potential for a more significant rally if bullish momentum gathers pace. Conversely, should gold falter and drop below the pivot point, it may seek support at lower levels of $2,290.91, followed by $2,268.21 and $2,244.57, which would indicate a strengthening bearish sentiment.
Current technical indicators provide a mixed outlook; the Relative Strength Index (RSI) is at 51, signaling a relatively neutral market sentiment, neither overbought nor oversold. The 50-Day Exponential Moving Average (EMA) at $2,326.43 sits just above the pivot, underscoring a tentative bullish inclination in the near term.
Related News
- EUR/USD Price Analysis – April 29, 2024
GOLD Price Analysis – April 26, 2024
Daily Price Outlook
Gold price (XAU/USD) succeeded in halting its downward rally and turned bullish around the $2,346 level, reaching an intraday high of $2,350.20. However, the reason for its upward trend can be associated with the mild weakness in the US dollar, which underpinned the gold as it becomes cheaper for holders of other currencies. Furthermore, the US Gross Domestic Product (GDP) report for the first quarter of 2024 indicated a notable slowdown in economic growth and an increase in inflation, which was seen as negative for gold prices, as investors may seek alternative assets to hedge against economic uncertainty.
On the flip side, the expectation that the Federal Reserve will maintain higher interest rates due to persistent inflation is supporting demand for the US dollar, which could limit losses and cap gains in the gold price. Traders prefer to wait for more cues about the Federal Reserve's rate cut path before taking a strong position.
Impact of US Economic Data and Federal Reserve Expectations on Gold Prices
Despite hawkish comments from Fed officials, the broad-based US dollar has experienced a downtick amid disappointing GDP growth and higher-than-expected inflation figures, providing some support to gold prices. On the data front, the US economy grew slower than expected in the first quarter of 2024, expanding by only 1.6%, compared to the previous 3.4%. This was below market expectations of 2.5%.
Despite sluggish growth, prices remained high, with the Personal Consumption Expenditures Price Index climbing by 3.4% annually, surpassing the Fed's 2% target. As a result, the US dollar fell to a two-week low around mid-105.00, following the release of disappointing GDP growth and higher-than-expected inflation figures.
Therefore, the modest downtick in the US dollar, driven by disappointing GDP growth and higher-than-expected inflation, has provided support to gold prices amid upbeat economic data and hawkish Fed comments.
Meanwhile, the financial markets are not expecting the US Federal Reserve to cut interest rates in June, with less than a 10% chance priced in. The probability of a rate cut in September is also low, dropping below 58%. Investors are eagerly awaiting another inflation report due on Friday, which is expected to show a 0.3% monthly increase in both headline and core Personal Consumption Expenditures (PCE). Yearly estimates suggest a 2.6% rise in headline PCE and a 2.7% increase in Core PCE, indicating ongoing inflation concerns.
Consequently, the low expectations for US Federal Reserve rate cuts and ongoing inflation concerns, as indicated by upcoming inflation reports, may support gold prices amid market uncertainty and inflation worries.
Geopolitical Tensions in the Middle East and Gold Prices
On the geopolitical front, tensions in the Middle East have cooled slightly but remain a concern. The eastern part of Rafah is experiencing constant artillery shelling amid Israeli plans for a ground invasion, despite international warnings. The United Nations is seeking legal possession of evidence from Gaza's mass graves for potential investigations, with the Palestinian Civil Defence offering cooperation. In response to President Biden's announcement, the US has initiated pier construction in Gaza for maritime aid delivery. Hamas has expressed willingness to release captives but insists on a ceasefire as a condition.
Therefore, the ongoing tensions in the Middle East, highlighted by the situation in Rafah and Israeli plans for a ground invasion, alongside international concerns and humanitarian efforts, may contribute to market uncertainty and potentially support gold prices as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
On April 26, the price of gold marginally increased to $2,334.76, up 0.17%, reflecting modest market movements amidst varying global economic signals. Currently, the pivot point is set at $2,328.74, which serves as a crucial juncture for determining the metal's short-term trajectory.
Gold's immediate resistance lies at $2,356.18, with subsequent levels at $2,400.53 and $2,444.27. These resistance points are crucial markers that could dictate the pace of price ascensions if surpassed. Conversely, support levels are established at $2,292.92, $2,253.78, and $2,220.76. A breach below these could suggest a bearish turn, pressuring gold prices further.
From a technical perspective, the Relative Strength Index (RSI) at 50 indicates a balanced market condition, neither overbought nor oversold, suggesting that gold is currently in a state of equilibrium between buyers and sellers. Additionally, the 50-Day Exponential Moving Average (EMA) stands at $2,340.20, slightly above the current price, suggesting slight bearish pressure but also potential for upward movement if gold breaks through this average.
Given these indicators, the recommended trading strategy would be to initiate a buy above the pivot point of $2,328, with a target profit at $2,380 and a stop loss at $2,290.
Related News
- EUR/USDPrice Analysis – April 26, 2024
S&P500 (SPX) Price Analysis – April 26, 2024
Daily Price Outlook
Despite the easing fears about further escalation of geopolitical tensions in the Middle East, the S&P 500 index has failed to extend its upward trend and experienced a bearish trend around 5,048, hitting the intraday low of 4,990 level due to several factors including slower GDP growth and higher-than-expected inflation figures. These were seen as negative for the S&P 500, as they may indicate a potential slowdown in economic activity alongside inflationary pressures. Meanwhile, the geopolitical tensions in the Middle East, including artillery shelling and potential investigations into mass graves, contribute to market uncertainty, affecting the S&P 500.
Moreover, the S&P 500's recent downward trend was further bolstered by the Federal Reserve's hawkish stance on monetary policy. The Fed has indicated concern about inflation and has suggested that it may keep interest rates higher for longer. This has made investors wary about the future of the stock market, as interest rate hikes could reduce the attractiveness of equities compared to other investments.
US Economic Indicators and the Impact on the S&P 500
On the US front, the economy grew slower than expected in the first quarter of 2024, expanding by 1.6% compared to a previous reading of 3.4%, falling short of the 2.5% market expectation. Despite this, inflation have remained high, with the Personal Consumption Expenditures Price Index climbing at a 3.4% annual rate, surpassing the Fed's 2% target.
This news led to a drop in the US dollar to two-week lows near mid-105.00. However, the CME FedWatch tool indicates that the financial markets are pricing in less than a 10% chance of a rate cut in June, with the probability of a September rate cut dropping below 58%.
Investors are closely watching for another inflation report on Friday, expecting a 0.3% month-on-month increase in both headline and core PCE figures. Annual headline PCE and Core PCE figures are estimated to show a rise of 2.6% and 2.7% year-on-year, respectively.
Therefore, the slower economic growth alongside higher-than-expected inflation could weigh on investor sentiment, potentially leading to downward pressure on the S&P 500. The uncertainty surrounding future monetary policy decisions by the Federal Reserve adds to market apprehension, contributing to a cautious outlook for equities.
Geopolitical Tensions in the Middle East and the Impact on the S&P 500
On the geopolitical front, the recent tensions in the Middle East, particularly the conflict between Israel and Iran, had strong impact on the S&P 500 index. However, the geopolitical tensions in Gaza, including ongoing shelling and potential for conflict escalation, introduce uncertainty and impact investor sentiment, leading to volatility in the S&P 500.
S&P500 (SPX) - Technical Analysis
On April 26, the S&P 500 registered a slight downturn, with the index falling 0.46% to close at 5,048.41. This movement reflects a broader market sentiment marked by cautious trading amid varied economic signals.
The pivot point for today’s trading stands at 5,137.05, indicating the level above which traders might expect bullish momentum to resume. Immediate resistance is observed at 5,107.34, with further hurdles at 5,173.51 and 5,263.93. These resistance levels are key to determining the short-term directional bias of the index. Should the S&P 500 surpass these marks, it could indicate a stronger bullish momentum returning to the market.
Conversely, immediate support for the index lies at 4,953.05. Further support levels are found at 4,883.16 and 4,802.48. These levels are critical as they represent potential floors where the index could stabilize and rebound in the event of continued downward pressure.
Technical analysis shows the Relative Strength Index (RSI) at 44, suggesting that the market is neither overbought nor oversold, leaning slightly towards oversold territory. This might indicate potential for a recovery if market conditions stabilize. The 50-Day Exponential Moving Average (EMA) is currently at 5,102.24, slightly above today’s closing price, which suggests that the market is testing crucial support levels.
Given the current technical setup, a cautious trading strategy would be advisable. Placing a buy stop at 5,060 with a take profit target at 5,135 and a stop loss at 4,997 could capitalize on potential upward movement while mitigating downside risk.
Related News
- GOLD Price Analysis – April 26, 2024
EUR/USDPrice Analysis – April 26, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend and remained well-bid around 1.0731 level, reaching an intra-day high of 1.0753. However, the main factor behind the EUR/USD's upward trend is the market sentiment regarding the timing of potential Fed interest-rate cuts.
Despite a slightly disappointing US GDP growth rate for Q1, the unexpectedly high Personal Consumption Expenditures Prices component supported the US Dollar. As a result, the probability of a rate cut at the Fed's July meeting decreased, providing temporary strength to the dollar.
However, the Euro has managed to maintain its ground, driven by factors such as improved economic sentiment in the Eurozone and speculation about the ECB's future monetary policy.
Impact of the Core PCE Price Index Release on the EUR/USD
Looking ahead, the forthcoming release of the core Personal Consumption Expenditures (PCE) Price Index for March is set to introduce additional volatility into the EUR/USD currency pair.
Analysts predict the core PCE index may show prices rising more than expected, following a strong GDP report. If the increase exceeds economists' forecast of 2.6%, especially surpassing the previous month's 2.8%, it suggests ongoing inflation. This could lead the Fed to keep interest rates steady for longer, which might weaken the EUR/USD exchange rate. In essence, higher-than-expected inflation could make the US dollar more attractive, potentially causing the euro to lose value against it.
On the flip side, if the core PCE comes in lower than expected, it could speed up the belief that the Fed will cut interest rates soon. This would likely make the US dollar weaker and cause the EUR/USD pair to rise. Currently, the CME FedWatch Tool indicates there's a chance of a rate cut in September.
Therefore, the EUR/USD pair could weaken if the core PCE index shows higher-than-expected inflation, leading the Fed to maintain interest rates. Conversely, a lower-than-expected reading might strengthen the pair due to expectations of a rate cut.
US Economic Indicators and Their Impact on EUR/USD Pair
On the flip side, the performance of the EUR/USD currency pair remains linked to key US economic indicators, particularly amid expectations regarding Fed monetary policy. The recent slowdown in US economic growth, with Q1 GDP expanding by 1.6% compared to market expectations of 2.5%, has highlighted concerns about the pace of recovery. Despite this, inflationary pressures have persisted, as evidenced by the Personal Consumption Expenditures Price Index climbing at a 3.4% annual rate, surpassing the Fed's 2% target.
Looking ahead, investors are eagerly waiting for the upcoming inflation report, expecting a 0.3% increase in both headline and core PCE figures. The relationship between economic growth and inflation is important, affecting market sentiment and the outlook for stocks, which also influences the EUR/USD pair.
EUR/USD - Technical Analysis
On April 26, the EUR/USD pair experienced a slight decline, closing at 1.07223, down by 0.06%. Despite the modest drop, the pair remains in close proximity to the key pivot point at 1.0714, suggesting a potential for pivotal market movements in upcoming sessions.
Technical analysis indicates that the EUR/USD has immediate resistance at 1.0746, with further resistance seen at 1.0778 and 1.0822. These levels will be crucial for traders to monitor as a break above could signify a continuation of bullish momentum. Conversely, the currency pair has established immediate support at 1.0674. Additional support levels are positioned at 1.0636 and 1.0609, which could play a pivotal role should the pair continue its downward trajectory.
The Relative Strength Index (RSI) stands at 59, indicating that the market is neither overbought nor oversold, and there is still room for upward price movement. The 50-Day Exponential Moving Average (EMA) at 1.0693 serves as a near-term support level, slightly below the current price, which adds an additional layer of support for the EUR/USD.
Given the current market conditions and technical setup, traders might consider entering a long position if the EUR/USD rises above 1.07129, aiming for a take profit at 1.07657 and placing a stop loss at 1.06789 to manage risk effectively.
Related News
- GOLD Price Analysis – April 26, 2024
USD/JPY Price Analysis – April 25, 2024
Daily Price Outlook
Despite the bearish US dollar, the USD/JPY currency pair has maintained its upward trend and remained well-bid around the 155.50 level, hitting the intraday high of 155.75. However, the reason behind this upward trend is the divergent monetary policy expectations between the Bank of Japan (BoJ) and the Federal Reserve (Fed).
It should be noted that the Bank of Japan (BoJ) is not planning to raise its interest rates or make its monetary policy less accommodative in the near future. On the other hand, the Federal Reserve (Fed) is expected to delay reducing its interest rates despite inflationary pressures, which suggests that the Fed may keep its monetary policy relatively tighter compared to the BoJ.
Therefore, this difference in monetary policy stances has led to a significant interest rate differential between the US dollar and the Japanese yen. Investors are attracted to the higher interest rates offered by the US dollar, which has contributed to the USD/JPY currency pair's bullish trend, meaning the US dollar is strengthening against the Japanese yen.
US Dollar's Bearish Bias and Its Impact on USD/JPY
On the US front, the broad-based US dollar has shown a bearish bias recently, although it has not significantly dampened the USD/JPY pair's upward momentum. However, the losses in the US dollar can be attributed to the risk-on market sentiment, which tends to weaken the safe-haven appeal of the dollar. However, these losses have been offset by slight gains in US Treasury yields, providing some support to the dollar.
Moving on, the upcoming release of the US GDP figures is expected to offer insights into the strength of the US economy and the future moves of the Fed. If the GDP report shows better-than-expected numbers, it could lead to speculation that the Fed will delay its rate-cut plans, providing further support to the USD/JPY pair.
USD/JPY - Technical Analysis
The USD/JPY pair has shown a notable increase today, rising by 0.23% to a price of 155.689. This movement positions the currency pair slightly above its pivot point of 155.166, signaling potential bullish momentum as it traverses the four-hour chart framework.
At this juncture, USD/JPY faces immediate resistance at 156.330. Should the momentum continue, the pair could encounter further resistance at 157.099 and 157.891. These resistance levels are crucial markers that could define the upper boundaries of the current bullish trend.
Conversely, the support structure for USD/JPY begins at 154.187. Additional support levels are observed at 153.488 and 152.626. A drop below these levels could signify a reversal or a deeper pullback, making them significant for traders monitoring potential downturns.
The technical indicators suggest a robust uptrend. The Relative Strength Index (RSI) stands at 80, indicating a strong buying pressure, though also approaching overbought territory which could suggest a near-term pullback. Meanwhile, the 50-day Exponential Moving Average (EMA) at 151.271 remains well below the current price, underscoring a strong upward trend over the past weeks.
Given the current technical landscape, a strategic approach would involve placing a buy limit order at 155.144. This position leverages the pair's current momentum, aiming for a take profit target at 157.065, while a stop loss at 154.199 would protect against unforeseen declines.
Related News
- GOLD Price Analysis – April 25, 2024
AUD/USD Price Analysis – April 25, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6528 level, hitting the intraday high of $0.6531. However, the upward rally was driven by multiple positive factors including hawkish sentiment regarding the RBA monetary policy stance and the release of robust Australian Consumer Price Index (CPI) figures.
The hawkish sentiment towards the RBA's monetary policy stance, coupled with robust CPI figures, typically boosts the AUD currency due to expectations of potential interest rate hikes. Furthermore, the risk-on market sentiment, backed by easing tensions in the Middle East, has played a major role in underpinning the AUDUSD currency pair.
Impact of Australian Economic Data and RBA Expectations on AUD/USD Pair
On the data front, Australia's Consumer Price Index (CPI) exceeded expectations, rising by 1.0% in the first quarter of 2024 quarter-on-quarter and 3.6% year-on-year. This was higher than the forecasted 0.8% and 3.4%, respectively, indicating a strong inflationary trend. Meanwhile, the Monthly Consumer Price Index for March also surpassed expectations, reaching 3.5% year-on-year.
Conversely, in Australia, the Judo Bank Composite Output Index rose in April, showing the third consecutive month of expansion in the private sector, primarily driven by the service sector, while manufacturing output declined at a slower rate compared to previous months.
Therefore, the stronger-than-expected CPI and positive private sector growth in Australia strengthen the AUD against the USD.
Furthermore, the upticks in the AUD/USD pair were further bolstered by the growing expectations of a more hawkish stance from the Reserve Bank of Australia (RBA) on interest rates. Luci Ellis, chief economist at Westpac and former RBA Assistant Governor (Economic), highlights that inflation slightly exceeded expectations in the March quarter.
Westpac predicts the RBA will maintain interest rates in May and has revised their forecasted date for the first rate cut from September to November this year. Luci Ellis's remarks on higher inflation and delayed rate cuts boost AUD/USD, signaling a hawkish RBA stance and economic strength.
US Economic Indicators and Market Sentiment's Impact on AUD/USD Pair
On the US front, the US Dollar is unable to extend its upward trend and has turned bearish recently, possibly due to risk-on market sentiment. However, the Greenback's losses might be offset by slight gains in US Treasury yields. The upcoming release of the preliminary Q1 Gross Domestic Product (GDP) figures from the United States is anticipated on Thursday, with expectations of a growth rate slowdown.
These figures will offer insights into the US economy's strength and could hint at the Federal Reserve's (Fed) future moves. If the GDP report shows better-than-expected numbers, it could lead to speculation that the Fed will delay its rate-cut plans.
On the data front, the US Census Bureau's latest report showed that in March, orders for durable goods increased by 2.6%, marking a positive sign for manufacturing. Excluding transportation, new orders rose by 0.2%. On the flip side, the Federal Reserve plans to maintain higher interest rates for a longer period due to ongoing inflation.
This decision comes after robust US consumer inflation data and hawkish remarks from Fed officials. This was seen as one of the key factors that cap losses in the US dollar and limit the upside momentum of the AUD/USD pair.
AUD/USD - Technical Analysis
Today, the Australian Dollar (AUD/USD) recorded a slight uptick, trading at 0.65098, a 0.20% increase. This movement situates the currency pair near critical levels on the four-hour chart that could dictate short-term market dynamics.
The AUD/USD is currently navigating just below a key pivot point set at 0.65345. This level could serve as a springboard for further advances if the pair manages to breach it convincingly. Immediate resistance is closely placed at 0.65362, followed by more substantial barriers at 0.65761 and 0.66157. These figures represent crucial thresholds that could define the bullish potential in upcoming trading sessions.
From a technical perspective, the Relative Strength Index (RSI) is at 66, indicating a slightly overbought condition but not enough to deter potential bullish momentum. Additionally, the 50-day Exponential Moving Average (EMA) at 0.64483 supports the currency pair from below, further validating the bullish sentiment in the market.
Given the current market setup, adopting a tactical trading approach could be beneficial. A buy limit order at 0.64832 with a take profit target at the pivot point of 0.65345 and a stop loss at 0.64523 would leverage potential upward movements while effectively managing risk.
Related News
- GOLD Price Analysis – April 25, 2024
GOLD Price Analysis – April 25, 2024
Daily Price Outlook
Gold price (XAU/USD) was able to stop its downward rally and turned bullish around the $2,325 level, hitting an intraday high of $2,328.85. However, the reason for its upward trend can be attributed to the modest weakness in the US Dollar, which tends to benefit gold as it becomes cheaper for holders of other currencies.
Furthermore, a softer tone in equity markets has also contributed to the positive sentiment towards gold. Traders prefer to wait for more cues about the Federal Reserve's rate cut path before placing a strong position. Moving ahead, traders will keep an eye on important US economic data like the Q1 GDP report today and the PCE Price Index on Friday.
Modest USD Downtick and its Impact on Gold Price
Despite the upbeat US economic data and hawkish comments from Fed officials, the broad-based US dollar has experienced a modest downtick, providing some support to gold prices. However, the weaker dollar makes gold more affordable for holders of other currencies, leading to increased demand for the precious metal. However, the upside for gold remains limited as investors await more clarity on the Federal Reserve's rate-cutting cycle. Moving on, the focus is on key US macroeconomic data, including the Advance Q1 GDP report and the PCE Price Index, which will influence the direction of the US Dollar and, consequently, the price of gold.
On the data front, the US Census Bureau's latest report showed that in March, orders for durable goods increased by 2.6%, marking a positive sign for manufacturing. Excluding transportation, new orders rose by 0.2%. Besides, the Advance US GDP report, expected later today, is forecasted to reveal a growth rate of 2.5% for the first quarter, down from the previous 3.4%.
On the flip side, the Federal Reserve plans to maintain higher interest rates for a longer period due to ongoing inflation. This decision comes after robust US consumer inflation data and hawkish remarks from Fed officials. This was seen as one of the key factors that cap losses in the US dollar and limit the upside momentum of gold.
Geopolitical Tensions Ease, Decreasing Demand for Safe-Haven Assets
On the geopolitical front, tensions in the Middle East have cooled down, making investors less anxious about risks. This positive change in sentiment has decreased the appeal of safe-haven assets like gold. As a result, people are now more interested in investing in riskier options such as stocks or real estate.
Iran has also reduced its military presence in southern Syria after Israeli strikes, which has calmed concerns and improved market stability. This reduction in tension between Iran and Israel is good news for markets, as it lowers the risk of further conflict, giving investors more confidence and causing less demand for safe-haven assets like gold, which in turn lowers its price.
GOLD (XAU/USD) - Technical Analysis
As of today, gold is modestly up, trading at $2318.095, a 0.10% increase. The precious metal is currently navigating around a critical juncture on the four-hour chart, which gives us several insights into potential future movements.
Gold's current price is slightly below its pivot point at $2332.535, indicating that the bulls have yet to take full control. If they do, immediate resistance can be found at $2346.215, followed by further barriers at $2359.266 and $2382.859. These levels are essential for traders to monitor, as a break above could signal a continuation of the upward trend.
Conversely, if the price begins to descend, there is immediate support located at $2290.910. Additional support is found lower at $2268.205 and $2244.573. These marks could serve as crucial floors that, if broken, may accelerate declines in the gold price.
The technical indicators add depth to our analysis. The Relative Strength Index (RSI) stands at 40, which points to neither an overbought nor an oversold market, suggesting that there is potential room for movement in either direction. Meanwhile, the 50-day Exponential Moving Average (EMA) at $2357.463, which lies above the current price, acts as a resistance level that gold might strive to surpass in the upcoming sessions.
Considering the current market setup, a cautious trading strategy would be advisable. Placing a sell limit order at $2330 with a take profit target at $2297 and a stop loss at $2345 could capitalize on potential downward movements while managing risk effectively.
Related News
- USD/JPY Price Analysis – April 25, 2024
GOLD Price Analysis – April 24, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its downward rally and remained well-offered around the $2,313.91 level, hitting the intraday low of $2,312.53. However, the reason for its downward trend can be attributed to the renewed strength of the US dollar, which gained traction despite the disappointing release of the US PMIs, suggesting that the economic upturn lost momentum at the start of the second quarter. Another factor weighing on the gold price was the risk-on market sentiment, supported by easing geopolitical tensions. However, the diminishing fears about further escalation of tensions in the Middle East turned out to be a key factor that continues to undermine the safe-haven precious metal.
Stronger US Dollar and Slower Economic Growth Drive Down Gold Prices
On the US front, the broad-based US dollar has been gaining momentum due to expectations that the Federal Reserve will keep interest rates high for a longer period because of persistent inflation, which is weighing down on gold prices. On the data front, the S&P Global Composite PMI fell to 50.9 in April's flash estimate, indicating that US private sector business activity grew at a slower pace. At the same time, the Manufacturing PMI unexpectedly entered contraction territory, and the Services PMI dropped from 51.7 in March to 50.9, signaling reduced economic momentum.
Therefore, the stronger US dollar, combined with a slower pace of US private sector growth and a contracting manufacturing sector, contributes to downward pressure on gold prices, reducing its appeal as a safe-haven asset.
Moving ahead, traders are focusing on the US economic docket, which features Durable Goods Orders, but the primary focus remains on the Advance Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index.
Geopolitical De-Escalation Between Israel and Iran Contributes to Gold Price Decline
On the geopolitical front, ongoing conflicts, particularly between Israel and Iran, are showing signs of slowing down, boosting market sentiment and contributing to gold's decline. While the tensions between Israel and Iran raise fears of a wider conflict, a full-scale war seems unlikely as both nations aim to avoid escalation. Iran supports groups like Hezbollah but denies direct involvement in recent attacks on Israel. Israel's retaliatory strikes are strategic, inflicting more damage on Iran's proxies.
Hence, the reduced geopolitical tensions between Israel and Iran, due to signs of a de-escalation, led to improved market sentiment. This diminishes the safe-haven demand for gold, contributing to its price decline.
GOLD (XAU/USD) - Technical Analysis
Today, gold prices have seen a modest uptick, rising 0.20% to a current level of $2324.955. This movement places the commodity slightly above its pivotal support at $2317.10, which has served as a baseline for today's trading activity.
The immediate resistance for gold stands at $2346.21, with subsequent barriers at $2359.26 and $2382.85. These levels must be breached to confirm a stronger bullish trend. On the downside, support is found at $2290.91, with further cushions at $2268.20 and $2244.57, which could offer buying opportunities if retested.
The Relative Strength Index (RSI) is currently at 40, indicating that gold is neither overbought nor oversold, suggesting a potential for either movement without extreme pressure from buyers or sellers. The 50-day Exponential Moving Average (EMA) is at $2364.13, highlighting a recent downward trend but with potential for reversal as prices approach this average. Additionally, gold has just completed the 23.6% Fibonacci retracement level and is eyeing the 38.2% level at around $2333, suggesting a continuation of the upward momentum if it can sustain current levels.
With the current setup, a strategic approach would involve placing a buy limit order at the pivot point of $2317, targeting a take profit at the immediate resistance of $2346, and setting a stop loss at $2296 to protect against unexpected downturns.
Related News
- EUR/USD Price Analysis – April 24, 2024