GOLD Price Analysis – May 15, 2024
Daily Price Outlook
Gold price (XAU/USD) continued its upward momentum and remained well bid around the $2,362 level, reaching an intraday high of $2,363. The reason for its bullish trend can be attributed to strong global demand for the precious metal. According to the World Gold Council's Q1 2024 report, global gold demand rose by 3% to 1,238 tones, making it the strongest first quarter since 2016. This increase in demand further fueled the upward trend of gold. Meanwhile, increasing tension in the Middle East was seen as one of the factors supporting gold's upward trend.
In contrast to this, Federal Reserve (Fed) officials' hawkish remarks and previously released upbeat US Producer Price Index (PPI) boosted the US dollar and capped further gains in the gold price. However, the rise in the Producer Price Index (PPI) and Core PPI suggests increasing inflationary pressures, which lead to expectations of tighter monetary policy by the Federal Reserve.
Impact of Stronger US Dollar & Hawkish Stance on Gold Prices
Despite the risk-on market sentiment, the US dollar has been showing bullish bias, mainly backed by the Federal Reserve's hawkish stance and recent positive economic indicators. On the data front, the Producer Price Index (PPI) surged 2.2% year-over-year in April, indicating mounting inflationary pressures, with the Core PPI rising by 2.4%.
As in result, Fed Chair Jerome Powell is saying that inflation is sticking around for longer than they thought, so they might need to keep interest rates higher for a longer time. On the other hand, Kansas City Fed President Jeffrey Schmid is warning that inflation is still high, suggesting the central bank might need to do more to manage it.
Looking ahead, it is expected that the annual Consumer Price Index (CPI) inflation will ease slightly in April, with the headline CPI anticipated to decrease to 3.4% and the Core CPI to 3.6%. Additionally, US Retail Sales are projected to decline in April. Financial markets are currently factoring in the probability of a Fed rate cut in September 2024.
Despite the stronger US dollar and the Fed's hawkish stance, gold prices are gaining momentum due to heightened demand for the precious metal as a safe-haven asset amidst mounting inflationary pressures and geopolitical tensions.
Escalating Gaza Conflict Sparks Global Market Uncertainty, Surge in Safe-Haven Gold Prices
On the geopolitical front, the ongoing conflict between Israeli forces and Palestinian armed groups in Gaza shows no signs of slowing down, resulting in a high number of casualties, including civilians. It should also be noted that Israeli airstrikes have caused extensive destruction and forced hundreds of thousands of Palestinians to leave their homes. Consequently, the ongoing conflict in Gaza contributes to uncertainty in global markets, prompting investors to seek safe-haven assets like Gold.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,357.26, down 0.03% for the day. On the 4-hour chart, key price levels suggest potential movements. The pivot point, marked by the green line, is at $2,362.57, a critical level for traders to watch.
Immediate resistance is located at $2,378.22, followed by $2,389.35 and $2,403.83. If gold breaks through these resistance levels, it could signal further bullish momentum. Conversely, immediate support is found at $2,352.71, with additional support levels at $2,346.77 and $2,337.10. Should gold fall below these levels, it may indicate a bearish trend.
Technical indicators provide further insights. The Relative Strength Index (RSI) stands at 60, suggesting that gold is in a slightly bullish territory but not yet overbought. The 50-day Exponential Moving Average (EMA) is at $2,347.60, closely aligning with the current price, indicating that recent price movements are in line with the medium-term trend.
The overall technical outlook for gold remains cautiously bullish above the pivot point of $2,362.57. A break above this level could prompt further buying interest, targeting the immediate resistance levels. However, if gold fails to hold above the pivot point, it may test the immediate support levels, potentially leading to increased selling pressure.
Conclusion: The recommended entry price for a buy limit is $2,352, with a take profit target at $2,370 and a stop loss at $2,345.
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- EUR/USD Price Analysis – May 15, 2024
EUR/USD Price Analysis – May 15, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair has maintained its upward trend and remained well bid around the 1.0825 level, hitting an intraday high of 1.0835. Despite the Federal Reserve's hawkish stance, indicating a willingness to tighten monetary policy, the US dollar has been facing challenges, which in turn, has provided support for the EUR/USD currency pair.
Furthermore, the upticks in the EUR/USD pair were further bolstered by the positive results in the Eurozone ZEW Economic Sentiment Survey. The survey for May showed an improvement to 47.0, up from 43.9 in the previous month, beating expectations set at 46.1. This indicates growing optimism among financial experts and investors about the Eurozone's economic future.
Federal Reserve's Stance on Inflation and Its Impact on Currency Markets
On the US front, Federal Reserve Chairman Jerome Powell indicated that inflation is decreasing at a slower rate than anticipated, and recent Producer Price Index (PPI) data supports the decision to maintain higher interest rates for a longer duration. Powell also suggested that while the likelihood of further interest rate hikes is low, the possibility of rate cuts has diminished.
Kansas City Fed President Jeffrey Schmid highlighted that inflation levels remain too high, indicating that the central bank still has work to do in addressing this issue. These comments, considered hawkish because they prioritize controlling inflation, may strengthen the US Dollar and put pressure on major currency pairs like EUR/USD in the short term.
Investors are now awaiting the US Consumer Price Index (CPI) data for further insights. However, the hotter-than-expected CPI reading could diminish hopes for a Fed rate cut this year, potentially boosting the US dollar against the Euro.
Impact of Upbeat Eurozone Economic Sentiment and GDP Growth Expectations on EUR/USD Pair
Another factor that has been boosting the EUR/USD pair is the upbeat ZEW Economic Sentiment Survey results. The Eurozone ZEW Economic Sentiment Survey improved to 47.0 in May from 43.9 in the previous month, surpassing expectations set at 46.1. This positive sentiment reflects growing optimism among financial experts and investors regarding the Eurozone's economic outlook.
The upbeat ZEW survey has provided some support to the major pair for the time being, bolstering confidence in the Euro. However, the focus now shifts to the upcoming European GDP growth numbers. Analysts estimate that Eurozone GDP will grow by 0.3% quarter-on-quarter in the first quarter, with annualized GDP growth forecasted to hold steady at 0.4% year-on-year.
These GDP figures will be closely watched by market participants for further insights into the Eurozone's economic recovery trajectory. Hence, the positive GDP growth numbers could fuel additional strength in the EUR/USD pair, while any disappointments may lead to a temporary reversal for the Euro against the US dollar.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.08233, showing a slight increase of 0.04% for the day. The 4-hour chart reveals crucial levels that could influence the pair's direction. The pivot point, highlighted in green, is at $1.08140, serving as a key reference level for traders.
Immediate resistance is identified at $1.08423, with further resistance at $1.08630 and $1.08835. A break above these levels would indicate a stronger bullish momentum, potentially leading to further gains. Conversely, immediate support is found at $1.07897, followed by $1.07669 and $1.07386. Falling below these support levels could signal a bearish reversal.
Technical indicators provide additional insights into the market conditions. The Relative Strength Index (RSI) is at 66, suggesting that the market is nearing overbought territory but still has room for further upward movement. The 50-day Exponential Moving Average (EMA) is at $1.07843, which aligns closely with the current price, reinforcing the medium-term bullish trend.
The overall technical outlook for EUR/USD remains bullish above the pivot point of $1.08140. A break above this level could encourage more buying interest, targeting the immediate resistance levels. However, if the pair fails to maintain above the pivot point, it may test the immediate support levels, leading to potential downside risks.
In conclusion, the recommended entry price for a buy is at $1.08150, with a take profit target at $1.08415 and a stop loss at $1.08000.
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GBP/USD Price Analysis – May 15, 2024
Daily Price Outlook
Despite the Bank of England's dovish stance on interest rates, the GBP/USD pair has been showing a slight upward trend, hovering around the 1.2601 level and hitting an intraday high of 1.2606. Despite the Federal Reserve's hawkish stance, the US dollar has been struggling, providing support for the Pound Sterling. The recent US Producer Price Index (PPI) data, which rose 2.2% year-over-year in April, slightly higher than March's 1.8% increase, failed to boost the dollar significantly. This suggests that market participants are not rushing to buy into the greenback, even in the face of moderately higher inflation.
Federal Reserve’s Hawkish Stance and Economic Indicators Impact GBP/USD
On the US front, the Federal Reserve has maintained its hawkish stance, emphasizing the need to monitor economic indicators closely before making any decisions regarding interest rates. Despite the uptick in inflation indicated by the PPI data, Fed officials have indicated that this alone may not warrant immediate action on rates.
Cleveland Fed President Loretta Mester's suggestion to start tapering asset purchases this year underscores the Fed's cautious approach to monetary policy adjustments. This means that the Fed is being careful and deliberate in considering any changes to its monetary policy, including potential adjustments to interest rates or asset purchases.
Investors are now keenly awaiting the US Consumer Price Index (CPI) data for further insights. However, the hotter-than-expected CPI reading could diminish hopes for a Fed rate cut this year, potentially boosting the US dollar against the Pound Sterling.
UK Employment Reports and Speculation of BoE Rate Cuts
On the flip side, the UK's employment reports reveal signs of cooling, fueling expectations that the Bank of England (BoE) might opt for rate cuts in the coming months. The UK's Unemployment Rate rose to 4.3% in the three months to March, while private-sector wage growth slowed. Additionally, the UK Employment Change showed a decline of 177,000 jobs in the same period.
These indicators suggest a slowdown in the UK economy, prompting speculation of a rate cut by the Bank of England before the Federal Reserve. It should be noted that the financial markets are anticipating potential rate cuts from the BoE as early as June or August, which could exert downward pressure on the GBP/USD pair in the near term.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.25949, showing a modest increase of 0.02% for the day. The 4-hour chart reveals key levels that could determine the next directional move. The pivot point, marked in green, is at $1.25668, which serves as a critical reference for traders.
Immediate resistance is situated at $1.26348, followed by $1.26981 and $1.27643. Breaking above these resistance levels would signal a stronger bullish trend, potentially leading to further gains. Conversely, immediate support is found at $1.25099, with subsequent support levels at $1.24470 and $1.23890. If the price falls below these support levels, it could indicate a bearish reversal.
Technical indicators provide additional insights into the market conditions. The Relative Strength Index (RSI) is at 66, suggesting that the market is approaching overbought territory but still has room for further upward movement. The 50-day Exponential Moving Average (EMA) is at $1.25403, which aligns closely with the current price, reinforcing the medium-term bullish trend.
The overall technical outlook for GBP/USD remains bullish above the pivot point of $1.25668. A break above this level could encourage more buying interest, targeting the immediate resistance levels. However, if the pair fails to maintain above the pivot point, it may test the immediate support levels, leading to potential downside risks.
In conclusion, the recommended entry price for a buy is above $1.25678, with a take profit target at $1.26346 and a stop loss at $1.25344.
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- GOLD Price Analysis – May 15, 2024
GOLD Price Analysis – May 14, 2024
Daily Price Outlook
Despite the bullish US dollar and hawkish Fed stance regarding interest rates, the safe-haven gold maintained its upward trend and edged higher around the 2,345.73 level, hitting an intra-day high of 2,348.28.
The reason for its upward trend can be attributed to increasing geopolitical tensions, which continue to stoke demand for the safe-haven asset.
Meanwhile, Gita Gopinath from the IMF warned that countries are reconsidering their trade partners, which could lead to a retreat from global trade rules. Western sanctions on nations like Russia and Iran contribute to this trend.
As a result, investors and central banks are increasingly turning to gold as a safe asset, potentially driving up its price.
Furthermore, the decision by BRICS nations to use less of the US dollar in international trade has increased the demand for gold as an alternative. This shift, along with non-Western central banks increasing their gold reserves, is reducing reliance on the US dollar.
US Dollar Strength and Potential Impact on Gold Prices
On the US front, the broad-based US dollar continued its upward trend, staying bullish due to cautious remarks from Federal Reserve officials about keeping interest rates high to tackle persistent inflation.
Fed Vice Chair Philip Jefferson emphasized the need to maintain current rates until signs of inflation easing appear.
Investors are closely monitoring the Producer Price Index (PPI) as it could impact future market trends. Consumer sentiment surveys suggest US consumers anticipate inflation to reach 3.3% in the coming year.
While Minneapolis Fed President Neel Kashkari expressed concerns about monetary policy restrictiveness, rate hikes are still a possibility. San Francisco Fed President Mary Daly emphasized the necessity of maintaining a prolonged restrictive policy to achieve the Federal Reserve's inflation targets.
On the data front, consumer sentiment in the US took a hit in May, dropping to 67.4 from April's 77.2, the lowest in six months, and below market expectations. Meanwhile, consumer inflation expectations rose slightly to 3.1%, hitting a six-month high.
Looking ahead, the US Producer Price Index (PPI) for April is expected to rise by 2.2% compared to last year, with Core PPI likely increasing by 2.4%. Additionally, Consumer Price Index (CPI) inflation is forecasted to ease to 3.4% from the previous 3.5%, while Core CPI inflation is expected to drop to 3.6% from March's 3.8%.
Therefore, the bullish US dollar, driven by cautious Fed remarks on inflation, pressures gold prices as investors eye PPI data for economic cues.
Geopolitical Tension in the Middle East and Potential Impact on Gold Prices
On the geopolitical front, tension in the Middle East intensified as the Israeli military carried out multiple deadly attacks across the Gaza Strip. It should be noted that these attacks resulted in civilian casualties, including children.
The UN chief condemned the killing of a foreign staff member in Israel's actions and called for a full investigation.
Israeli forces also ordered the evacuation of medical staff from Rafah's Kuwaiti Hospital, raising concerns about the collapse of Gaza's healthcare system. However, the death toll from Israeli attacks on Gaza since October 7 has reached 35,173, with thousands wounded.
Therefore, the heightened tension in the Middle East following Israeli military attacks in Gaza may increase uncertainty, potentially driving up gold prices. Investors often turn to gold as a safe-haven asset during geopolitical instability, which could lead to increased demand and upward pressure on its price.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2339.040, up 0.31%, reflecting a slight recovery from recent dips. The 4-hour chart indicates a pivot point at $2333.49. Immediate resistance levels are set at $2356.91, $2378.70, and $2401.14, while support levels are identified at $2307.47, $2286.32, and $2267.78.
Technical indicators provide further insight into the current market conditions. The Relative Strength Index (RSI) is neutral at 50, indicating neither overbought nor oversold conditions.
The 50-day Exponential Moving Average (EMA) stands at $2324.65, suggesting a support level slightly below the current price, which can act as a cushion in the event of downward pressure.
Given the current technical setup, the strategy involves an entry price for selling below $2332, with a take-profit target at $2355 and a stop loss at $2320. This approach considers the potential for gold to face resistance at higher levels while acknowledging the support provided by the 50 EMA.
A break above the immediate resistance at $2356.91 could indicate further bullish momentum, pushing prices toward the next resistance levels of $2378.70 and $2401.14.
Conversely, if gold falls below the pivot point of $2333.49, the immediate support at $2307.47 and subsequent levels at $2286.32 and $2267.78 will be crucial to watch. Overall, gold's outlook remains cautiously bullish above the pivot point of $2333.49.
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- AUD/USD Price Analysis – May 14, 2024
AUD/USD Price Analysis – May 14, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair struggled to gain positive traction and remained around the 0.6610 level, reaching an intraday low of 0.6598. The downward trend could be attributed to several factors, including a strengthening US dollar and risk-off market sentiment.
Additionally, the RBA's less hawkish stance has contributed to undermining the AUD/USD pair. Furthermore, previously released weak business conditions and low confidence indicate a slowing economy, which has dampened investor optimism about Australia's economic outlook and further weakened the AUD/USD pair.
Impact of RBA Decision and Economic Factors on AUD/USD Pair
On the AUD front, the losses in the AUD/USD pair were further bolstered following the Reserve Bank of Australia's decision to maintain interest rates at 0.35% last week, which dampened expectations for a more aggressive monetary policy stance despite stronger inflation data.
On the data front, the National Australia Bank's Business Conditions index declined to 7 in April from the previous 9, while Business Confidence remained unchanged at 1. Australia's Treasury predicts that inflation will return to the RBA's target range by late 2024, consistent with earlier forecasts.
However, the Commonwealth Bank of Australia (CBA) adjusted its AUD forecast for the end of 2024 downwards to 0.69 due to factors such as the interest rate differential and the high yields on US Treasury bonds, which bolster the US Dollar.
Hence, the AUD/USD pair declined due to the RBA's neutral stance, steady rates, weak business conditions, and CBA's lowered AUD forecast, reflecting challenges against a stronger USD.
Impact of US Dollar Strength and Economic Indicators on AUD/USD Pair
On the US front, the US Dollar strengthened as Federal Reserve officials stressed the importance of maintaining higher interest rates due to ongoing worries about inflation. Fed Vice Chair Philip Jefferson's comments on Monday supported this stance, suggesting that rates should remain unchanged until signs of inflation moderating appear.
Investors are anticipating Tuesday's Producer Price Index (PPI) report, which is a significant economic gauge. If it indicates increased inflationary pressures, it could bolster the US Dollar. Additionally, a survey by the Federal Reserve Bank of New York revealed a rise in one-year inflation expectations to 3.3%, further highlighting concerns about inflation.
Neel Kashkari, President of the Minneapolis Federal Reserve, cautioned against tightening monetary policy too quickly, suggesting that despite certain thresholds being met, another rate hike is possible. Meanwhile, San Francisco Fed President Mary Daly emphasized the necessity of maintaining a prolonged restrictive policy to reach the Fed's inflation targets.
On the data front, the University of Michigan Consumer Sentiment Index fell to 67.4 in May, its lowest level in six months, below the expected 76 reading. Additionally, the UoM 5-year Consumer Inflation Expectation increased to 3.1%, reaching a six-month high compared to the previous 3.0%.
Therefore, the US Dollar's strength, supported by Fed officials' stance on interest rates and inflation concerns, coupled with weaker consumer sentiment data, may further pressure the AUD/USD pair amid heightened demand for the USD as a safer currency.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.66072, down 0.10% in the latest session. The 4-hour chart highlights a pivot point at $0.6647, which serves as a critical level for traders. Immediate resistance is found at the pivot point, followed by subsequent resistance levels at $0.6691 and $0.6727. On the downside, immediate support is observed at $0.6559, with further support at $0.6517 and $0.6467.
The technical indicators provide additional context for the current market conditions. The Relative Strength Index (RSI) is at 53, indicating a slightly bullish sentiment but not yet in overbought territory.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6596, acting as a dynamic support level slightly below the current price, which can provide a buffer against further declines.
Based on the technical setup, the strategy suggests an entry price for buying above $0.66014, with a take-profit target at $0.66469 and a stop loss at $0.65713. This approach takes into account the potential for upward movement while managing risk effectively with the stop loss placed just below the recent support level.
A break above the pivot point at $0.6647 could indicate further bullish momentum, propelling prices towards the next resistance levels of $0.6691 and $0.6727.
Conversely, if the price falls below immediate support at $0.6559, the next support levels at $0.6517 and $0.6467 will be crucial to watch for potential stabilization.
Overall, the outlook for AUD/USD remains cautiously optimistic above the entry price of $0.66014.
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- USD/CAD Price Analysis – May 14, 2024
USD/CAD Price Analysis – May 14, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair has maintained its upward rally and remained well bid around 1.3668 level, hitting the intra-day high of 1.3685 level.
However, the bullish performance of the USD/CAD pair was driven by a combination of factors, including a stronger US dollar supported by a hawkish Fed stance and the lower crude oil prices. Thus, the decline in the crude oil price undermined the commodity-linked Canadian dollar and contributed to the USD/CAD pair gains.
Stronger US Dollar and Hawkish Fed Stance
However, the bullish performance of USD/CAD can be attributed to the strength of the US dollar. Federal Reserve officials have been spoken about adopting a hawkish stance towards monetary policy, emphasizing the necessity of maintaining higher interest rates for an extended period to combat inflationary pressures.
This hawkish stance has fueled investor confidence in the US dollar, consequently exerting upward pressure on the USD/CAD pair.
On the data front, the University of Michigan Consumer Sentiment Index fell to 67.4 in May, its lowest level in six months, below the expected 76 reading. Additionally, the UoM 5-year Consumer Inflation Expectation increased to 3.1%, reaching a six-month high compared to the previous 3.0%.
Hence, the decrease in consumer sentiment suggests lower confidence in the economy, which prompted the Fed to consider tightening monetary policy to stabilize the situation.
Lower Crude Oil Price Weighs on the Commodity-Linked Canadian Dollar (CAD)
Another factor impacting the USD/CAD pair's bullish trend is the decline in crude oil prices, which affects the commodity-linked Canadian dollar (CAD) because Canada is a major exporter of oil to the United States.
Therefore, the decline in crude oil prices has exerted downward pressure on the CAD, counteracting some of its underlying strengths. Even though there is positive Canadian employment data for April, which could theoretically bolster the CAD, the dominant influence of oil prices continues to be a major factor shaping the currency's performance.
Looking ahead, market participants will closely monitor key economic indicators, such as the US Producer Price Index (PPI) and the Consumer Price Index (CPI). Additionally, developments in global oil markets will continue to play a crucial role in shaping the trajectory of the USD/CAD currency pair.
USD/CAD - Technical Analysis
USD/CAD is trading at $1.36768, up 0.08% in the latest session. The 4-hour chart shows a pivot point at $1.3733, a key level for traders to watch. Immediate resistance is just above this pivot at $1.3735, followed by additional resistance levels at $1.3788 and $1.3836. On the downside, immediate support is seen at $1.3614, with further support levels at $1.3562 and $1.3516.
The technical indicators offer further insights into the market dynamics. The Relative Strength Index (RSI) is currently at 46, suggesting a neutral sentiment with no immediate signs of being overbought or oversold.
The 50-day Exponential Moving Average (EMA) stands at $1.3690, slightly above the current price, indicating a potential resistance level that could cap upward movements in the short term.
The trading strategy for USD/CAD involves an entry price for buying above $1.36697, targeting a take-profit level at $1.37334 and a stop loss at $1.36275.
This strategy takes into account the likelihood of the pair testing the immediate resistance level at $1.3735, while also managing risk effectively with a stop loss below the recent support level.
A break above the immediate resistance at $1.3735 could signal further bullish momentum, driving prices towards the next resistance levels at $1.3788 and $1.3836. Conversely, if the price falls below the immediate support at $1.3614, the next support levels at $1.3562 and $1.3516 will be critical for assessing potential downside risks.
Overall, the outlook for USD/CAD remains cautiously bullish above the entry price of $1.36697.
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GBP/USD Price Analysis – May 13, 2024
Daily Price Outlook
Despite the hawkish Fed's stance, the GBP/USD maintained its upward trend and remained well bid around the 1.2542 level, hitting the intra-day high of 1.2543. The reason for its upward trend could be attributed to the release of higher-than-expected UK Gross Domestic Product (GDP) figures on Friday. The stronger-than-expected economic growth of 0.6% in Q1 is likely boosting the GBP currency due to improved economic prospects and signals of recovery from the brief recession.
On the other side, the US dollar is losing its traction despite the Federal Reserve's hawkish stance and speculation about delaying easing plans. However, the US dollar lost momentum on the back of a downbeat release of the University of Michigan Consumer Sentiment Index. Hence, the bearish US dollar helped the GBP/USD pair to stay bid.
Impact of US Dollar Strength and Federal Reserve's Stance on GBP/USD Pair
On the UK front, the better-than-expected Gross Domestic Product (GDP) figures released last Friday boosted the GBP currency and contributed to the GBP/USD pair's gains. The UK economy grew by 0.6% in the first quarter of the year, beating predictions and signaling the end of a short recession. This growth was the strongest seen in over two years.
However, the British Pound faced some pressure after Huw Pill, Chief Economist at the Bank of England (BoE), hinted at potential interest rate cuts. Pill's remarks reflected the sentiment of most of the BoE's Monetary Policy Committee, who chose to keep interest rates steady at 5.25% last Thursday but now suggest that rate cuts might be on the horizon.
Looking ahead, investors are eagerly awaiting upcoming employment data from the UK, which is scheduled to be released on Tuesday. It is anticipated that the Claimant Count Change, which reflects the number of individuals claiming jobless benefits, will show an increase in April.
Besides, the ILO Unemployment Rate (3M), which provides a broader measure of unemployment, is expected to indicate a rise in the number of unemployed workers in the UK over the past three months.
Impact of US Dollar Strength and Federal Reserve's Stance on GBP/USD Pair
On the US front, the broad-based US dollar lost some of its strength and dropped after the University of Michigan Consumer Sentiment Index was released. It dropped to 67.4 in May from April's 77.2, which was lower than expected and marked a six-month low. This weaker sentiment led to a decline in the US dollar and contributed to the GBPUSD pair gains.
In contrast to this, the Federal Reserve's hawkish stance and hints of delaying rate cut plans have helped the US dollar limit its losses, possibly capping gains in the GBP/USD pair. While some Fed officials like San Francisco Fed President Daly advocate for continued restrictive policies to achieve inflation targets, others like Atlanta Fed President Bostic suggest potential rate cuts this year despite uncertainties.
Conversely, Dallas Fed President Logan warns of inflation risks and believes it's premature to cut rates, while Minneapolis Fed President Kashkari prefers a "wait-and-see" approach, indicating a high threshold for rate hikes to tackle inflation.
GBP/USD - Technical Analysis
Today, the GBP/USD pair exhibits marginal gains, trading at 1.25262, which is a slight uptick of 0.04%. This minimal increase reflects a cautious optimism in the market as traders assess the currency's next moves amid prevailing economic conditions.
For GBP/USD, the pivot point stands at 1.2598, which serves as the immediate threshold for any bullish advance. Should the pair push above this level, subsequent resistance points are located at 1.2567 and 1.2635.
Conversely, support levels are more distantly set at 1.2467 and 1.2387, with an additional safety net at 1.2301. These levels will play a crucial role should the pair experience a downturn.
The Relative Strength Index (RSI) currently stands at 52, indicating a relatively balanced market with neither overbought nor oversold conditions. The 50-day Exponential Moving Average (EMA) closely mirrors the current price at 1.2525, suggesting that the pair is trading within a stable range without significant bullish or bearish momentum.
Given the proximity of GBP/USD to its 50 EMA and the current RSI levels, the market is poised on a knife-edge, with potential for movement in either direction based on upcoming economic data and market sentiment.
Traders might consider a cautious approach, with a strategy to sell below 1.2598, targeting a take profit level at 1.2467, and setting a stop loss at 1.2698 to mitigate potential losses from unexpected market shifts.
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- GOLD Price Analysis – May 13, 2024
GOLD Price Analysis – May 13, 2024
Daily Price Outlook
Gold price (XAU/USD) is unable to gain positive traction and remains under pressure around the 2,343.70 level, hitting an intraday low of 2,339.15. However, the declining rally in the gold price started after hawkish remarks from the Federal Reserve (Fed) and growing speculation that the Fed might delay its easing plans, boosting the US dollar. The US dollar has been gaining momentum mainly due to the hawkish remarks from the Federal Reserve.
Moving on, traders seem cautious to place any strong bids ahead of the Fed’s Jefferson and Mester speeches on Monday. Meanwhile, the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales will be in the spotlight. In case of stronger-than-expected economic data, this might dampen hopes for a Fed rate cut and exert some selling pressure on XAU/USD.
Impact of Federal Reserve Policy on Gold
On the US front, the Federal Reserve's hawkish stance and talk of delaying plans to aid the economy have given a boost to the US dollar and pushed down gold prices. San Francisco Fed President Daly said, "We might need to keep policies tight for a while to reach our inflation goals." Meanwhile, Atlanta Fed President Bostic hinted at possible interest rate cuts this year despite uncertainties. Dallas Fed President Logan warned about the risks of inflation, saying it's too early to lower rates. Minneapolis Fed President Kashkari is taking a "wait-and-see" approach, saying we'd really need a good reason to raise rates to tackle inflation.
On the data front, the University of Michigan Consumer Sentiment Index fell to 67.4 in May from April's 77.2, hitting a six-month low and missing market forecasts of 76. At the same time, the UoM 5-year Consumer Inflation Expectation climbed to 3.1%, a six-month peak, up from the previous 3.0%.
Therefore, the Federal Reserve's hawkish stance and mixed signals from Fed officials have strengthened the US dollar and dampened silver prices. Meanwhile, the weak consumer sentiment and rising inflation expectations could further pressure gold prices.
Geopolitical Tensions in Middle East Boost Gold Prices
On the geopolitical front, ongoing tensions in the Middle East are likely to help precious metals in the near term. The Israeli recent military's operations in northern Gaza and reports of an impending full-scale invasion, along with fierce clashes and mass evacuations, have heightened regional instability. Further, Egypt's decision to join a lawsuit against Israel at the International Court of Justice further escalates tensions.
Therefore, the escalating tensions in the Middle East, with Israeli military operations and geopolitical uncertainties, could bolster demand for safe-haven assets like gold, lifting its price in the short term.
GOLD (XAU/USD) - Technical Analysis
Today's trading session saw Gold (XAU/USD) experiencing a slight decline, with the price settling at $2354.815, marking a decrease of 0.32%. This movement occurs amidst a broader context where the precious metal struggles to sustain its bullish momentum amid fluctuating market conditions.
The critical pivot point for today stands at $2363.88, serving as the immediate resistance level. Should gold surpass this threshold, it would encounter further resistance at $2379.14 and $2393.38, respectively.
On the flip side, immediate support is observed at $2343.76, followed by stronger support levels at $2327.06 and $2306.33. These markers will be crucial if gold continues its downward trend.
The Relative Strength Index (RSI) is currently at 60, suggesting that while there is some buying momentum, the market is not yet in overbought territory. The 50-day Exponential Moving Average (EMA) is at $2319.05, which gold is trading above, indicating some resilience in its current trading range.
Given the technical setup, the recommendation for traders is to consider a selling strategy if gold falls below $2364, targeting a take profit point at $2343, with a stop loss set at $2378. This approach is based on the anticipation that breaking below the pivot could intensify selling pressure, pushing gold towards lower support levels.
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EUR/USD Price Analysis – May 13, 2024
Daily Price Outlook
During the European trading session, the EUR/USD prolonged its upward rally and gained positive traction around the 1.0796 level, hitting the intra-day high of 1.0798. Traders interpreting that interest rate cuts from the European Central Bank (ECB) are expected to occur sooner and more aggressively than those from the Federal Reserve (Fed) might initially view this as positive news for the EUR.
The reason behind this perspective could be that the ECB's proactive measures to stimulate economic growth or address economic challenges might boost confidence in the Eurozone economy, thereby strengthening the EUR against other currencies.
On the other side, the US dollar is losing its traction despite the Federal Reserve's hawkish stance and speculation about delaying easing plans. However, the US dollar lost momentum on the back of a downbeat release of the University of Michigan Consumer Sentiment Index. Hence, the bearish US dollar helped the EUR/USD pair to stay bid.
US Dollar Strength and Federal Reserve's Stance Impact on EUR/USD Pair
On the US front, the broad-based US dollar continued its decline and remained under pressure following the disappointing release of the University of Michigan Consumer Sentiment Index. It dropped to 67.4 in May from April's 77.2, falling below expectations and hitting a six-month low. This weaker sentiment contributed to a decline in the US dollar.
While the University of Michigan Consumer Sentiment Index's disappointing release dragged down the US dollar, the currency found some support from the Federal Reserve's talk of delaying rate cuts. Some Fed officials, such as San Francisco Fed President Daly, want to keep policies tight to hit inflation targets, while others, like Atlanta Fed President Bostic, hint at possible rate cuts despite uncertainties. On the flip side, Dallas Fed President Logan is concerned about inflation and thinks it's too early to cut rates. Minneapolis Fed President Kashkari prefers a cautious approach, signaling that rate hikes to combat inflation would require a strong case.
ECB Rate Cut Expectations and Eurozone GDP Data
Another factor boosting the EUR/USD pair was the expectation that the European Central Bank (ECB) would cut interest rates more and sooner than the Federal Reserve (Fed). Traders are pricing in a 70 basis points reduction starting from June. Additionally, Eurozone Q1 GDP data, expected to show steady growth of 0.3% quarterly and 0.4% annually, will influence the Euro's performance.
This perspective suggests that because the European Central Bank (ECB) is taking proactive steps to stimulate economic growth or tackle economic issues, it increases confidence in the Eurozone economy. This, in turn, makes the Euro stronger compared to other currencies like the US dollar.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at 1.07701, registering a modest increase of 0.03%. This slight uptick indicates a restrained optimism among traders as they navigate through prevailing economic indicators and market sentiment towards the Eurozone and the United States.
The pivot point for today's session is marked at 1.0806, directing the immediate market trajectory. Above this pivot, resistance levels are identified at 1.0812 and 1.0842, which need to be surpassed for a continued upward movement.
Conversely, the currency pair finds initial support at 1.0723 followed by a stronger foundation at 1.0700. Should the pair breach these supports, it could signal a bearish downturn to as low as 1.0671.
The Relative Strength Index (RSI) is currently at 54, suggesting a slightly bullish momentum but not entering overbought territory. This aligns with the current market price hovering near the 50-day Exponential Moving Average (EMA) of 1.0748, indicating a possible consolidation phase around these levels.
Considering the near alignment of EUR/USD with its 50 EMA and the moderate RSI, the pair shows potential for slight bullish behavior if it can sustain above the pivot point of 1.0806. Traders should consider buying above 1.07600, aiming for a take profit at 1.08060, while setting a stop loss at 1.07350 to manage risk effectively.
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EUR/USD Price Analysis – May 10, 2024
Daily Price Outlook
Despite Fed rate-cut speculation and a bearish U.S. dollar, the EUR/USD pair failed to extend its upward rally, losing some gains and turning bearish around the 1.0781 level. It hit an intra-day low of 1.0772. The reason for this downward trend can be attributed to the dovish stance of the ECB, which is expected to deliver three rate cuts this year due to easing Eurozone inflation. This has put pressure on the shared currency and contributed to the EUR/USD pair's losses.
US Dollar Under Pressure Amid Economic Uncertainty and Potential Fed Rate Cuts
On the other hand, the U.S. dollar remains under pressure due to uncertainty surrounding the U.S. economic outlook. Recent signs of a weakening job market have raised expectations that the Federal Reserve might cut interest rates sooner than expected. This follows higher-than-expected Initial Jobless Claims in early May and a disappointing April Nonfarm Payrolls report, suggesting the economy is struggling due to high interest rates. However, some Fed officials, like Boston Fed President Susan Collins and Minneapolis Fed President Neel Kashkari, believe inflation pressures are still too strong for rate cuts.
The U.S. dollar is under pressure due to economic uncertainty, which could lead to further weakening if the Federal Reserve cuts rates. However, conflicting views on inflation among Fed officials may limit the extent of the dollar's decline. This uncertainty could create upward pressure on the EUR/USD pair.
Impact of ECB Rate Cut Expectations on the Euro and the EUR/USD Pair
On the Euro front, the European Central Bank (ECB) is expected to start cutting interest rates in June, undermining the shared currency. However, ECB policymakers are divided on whether to continue with rate cuts after June. Some, like the Bank of Greece Governor Yannis Stournaras, suggest there could be three rate cuts this year, including one in July, driven by signs of slower economic growth. The Eurozone economy grew by 0.3% in the first quarter, beating expectations. On the other hand, some officials, like Austria's central bank governor Robert Holzmann, are cautious about cutting rates too quickly, fearing it might be premature.
The mixed views among ECB policymakers create uncertainty, with the prospect of rate cuts generally leading to a weaker Euro. This could result in a bearish impact on the EUR/USD pair.
EUR/USD - Technical Analysis
Today, the EUR/USD trades slightly lower at 1.07777, marking a decrease of 0.05%. The pair's movements are subdued amid a mixed sentiment in the forex market, reflecting cautious investor behavior ahead of upcoming economic data releases.
On the downside, initial support lies at $1.06999, followed by more substantial levels at $1.06544 and $1.06125. These figures suggest potential areas where the price might stabilize or rebound during pullbacks.
The Relative Strength Index (RSI) is currently at 59, indicating a slightly bullish momentum but nearing the threshold of overbought conditions. The 50-Day Exponential Moving Average (EMA) at 1.07377 provides underlying support, aligning closely with the pivot point and suggesting a consolidation phase might be at play unless further catalysts drive market volatility.
The trading strategy for EUR/USD under the current conditions involves a cautious approach. Traders might consider a short position if the price moves below the threshold of 1.07844, aiming for a target at the pivot point of 1.07511, with a stop loss set at 1.08136 to mitigate risk.
This setup reflects the current resistance and support levels, offering a structured plan for navigating potential market movements today.
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