GOLD Price Analysis – Sep 20, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward trend and recently soared to a record high of nearly $2,610, driven by rising expectations that central banks around the world will follow the Federal Reserve's lead in easing monetary policy and cutting interest rates. Lower interest rates tend to make gold more attractive, encouraging more investors to jump in.
At the same time, escalating geopolitical tensions are bolstering gold’s reputation as a safe haven. Recent reports of Israel using advanced technology to target Hezbollah agents in Lebanon have raised fears of further conflict in the Middle East.
This uncertainty is prompting many to turn to gold as a reliable store of value, highlighting its enduring appeal in times of crisis.
Global Interest Rate Cuts and Geopolitical Tensions Drive Gold Prices Higher
Following Wednesday’s Federal Reserve decision, several global central banks moved to cut interest rates.
The South African Reserve Bank (SARB) reduced its key rate by 25 basis points on Thursday, its first cut since the COVID-19 pandemic. The Central Bank of the Philippines made a much larger cut of 250 basis points, bringing its rate to 7.0%.
Meanwhile, the Reserve Bank of India (RBI) is expected to follow suit with rate cuts at its next meeting.
In China, the People’s Bank of China (PboC) kept rates unchanged on Friday, but both the one-year and five-year loan prime rates remain at record lows after a surprise cut in July. The Bank of Japan (BoJ) left rates unchanged, despite earlier speculation of a potential hike.
Gold prices have been rising due to a combination of factors, including the Fed's rate cuts, which make holding gold more attractive as it reduces the opportunity cost of investing in non-yielding assets.
Additionally, heightened geopolitical tensions, particularly in the Middle East, have increased demand for gold as a safe haven.
The recent conflict escalations have driven investors toward gold, seeking stability amidst uncertainty.
While the Fed's optimistic outlook for US growth might have initially capped gains, the overall environment of lower rates and geopolitical risk has propelled gold to new highs.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,593.96, up 0.25%, as it hovers near the psychological level of $2,600. With the price approaching key technical levels, the metal remains bullish in the short term. The pivot point at $2,600 serves as a critical juncture.
Immediate resistance is seen just above at $2,600.32, with further upside targets at $2,609.07 and $2,619.51. Should prices break above these levels, gold could see an extended rally, driven by positive momentum.
On the downside, immediate support is positioned at $2,577.27, followed by $2,564.14 and $2,551.52. The 50-day Exponential Moving Average (EMA) at $2,578.06 is acting as a strong support level, ensuring the bullish bias remains intact unless broken.
The Relative Strength Index (RSI) stands at 63, signaling upward momentum but nearing overbought conditions, which could prompt a short-term pullback or consolidation around current levels.
A sustained break above $2,600 would confirm the continuation of the uptrend, while a fall below $2,577 could introduce selling pressure and test lower support levels.
Gold’s technical outlook remains favorable as long as the price holds above $2,578.06. Traders may want to keep an eye on broader economic data, particularly inflation figures, which could further support gold's appeal as a safe-haven asset amid ongoing market uncertainties.
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EUR/USD Price Analysis – Sep 20, 2024
S&P500 (SPX) Price Analysis – Sep 20, 2024
Daily Price Outlook
The S&P 500 index prolonged its upward trend and recently soared to an all-time high, closing at 5,713.64 after a remarkable 1.7% gain. This achievement marks the index's 39th record for 2024 and pushes its impressive year-to-date rise to about 20%.
The rally is largely fueled by the Federal Reserve's decision to implement a significant 50 basis-point rate cut, a move designed to ease economic worries and encourage growth.
Investors are clearly responding positively, reflecting a growing sense of optimism in the market.
This strong bullish move has sparked renewed investor confidence, driving a wave of buying in riskier assets, especially in the tech sector. Major technology companies took the lead, pushing the Nasdaq 100 up by an impressive 2.6%.
This surge highlights the strong link between lower interest rates and rising stock prices, as investors eagerly seek opportunities in a more favorable economic environment. It's a clear sign that optimism is back in the market.
Moreover, encouraging economic indicators, like the drop in jobless claims to their lowest levels since May, have strengthened the belief that the labor market is holding strong despite broader economic challenges.
Market analysts point out that the Fed's proactive stance reflects a commitment to steering clear of recession, which bodes well for the S&P 500's bullish trend. This combination of positive signals is fostering a sense of hope and stability among investors.
Global Interest Rate Cuts and Their Impact on the S&P 500 Index
However, the recent wave of interest rate cuts by central banks around the world has had a significant impact on the S&P 500 index.
Following the Federal Reserve's lead, other institutions, including the South African Reserve Bank and the Central Bank of the Philippines, have also slashed rates to boost their economies.
This collective action has created a supportive environment for U.S. equities, as investors look for better returns amid lower borrowing costs.
Therefore, the expectation of ongoing easing from central banks globally makes stocks even more appealing, particularly in high-growth sectors like technology.
Increased Geopolitical Risks and Their Impact on the S&P 500 Index
In contrast, the gains in the S&P 500 index could be limited as the rising geopolitical tensions create uncertainty for investors.
While the index has benefited from favorable economic conditions and interest rate cuts, concerns over escalating conflicts, particularly in the Middle East, may weigh on market sentiment.
Investors might shift their focus to safer assets like gold, reflecting a growing risk aversion. This uncertainty could weigh on stock prices, dampening the optimism surrounding interest rate cuts.
S&P 500 - Technical Analysis
The S&P 500 index is currently trading at $5,713.65, up by 1.70%, as bullish sentiment continues to drive the market higher. With the price nearing a key pivot point at $5,733.36, traders are eyeing the next levels of resistance.
Immediate resistance is seen at $5,766.23, with further targets at $5,818.03 and $5,868.94. A break above these levels could indicate further upside, particularly if macroeconomic conditions remain supportive.
On the downside, immediate support lies at $5,687.97, followed by $5,650.83 and $5,603.38. A sustained break below these support levels could signal a trend reversal or at least a short-term correction.
The 50-day Exponential Moving Average (EMA) at $5,558.58 continues to provide strong support, maintaining the index's bullish structure as long as prices remain above this key technical level.
The Relative Strength Index (RSI) is currently at 67, nearing overbought conditions, which suggests the possibility of a brief consolidation or pullback in the near term.
However, the market appears to be in a strong uptrend, with any dips likely seen as buying opportunities unless the price breaks below the $5,650 level.
In conclusion, the technical outlook for the S&P 500 remains bullish above $5,733.36. Traders should watch for a break above $5,766.23 to confirm the continuation of the upward trend, while a move below $5,687.97 may signal the beginning of a corrective phase.
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GOLD Price Analysis – Sep 20, 2024
AUD/USD Price Analysis – Sep 19, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the $0.6832 level, hitting an intra-day high of $0.6840. This upward movement can be attributed to the higher-than-expected increase in new jobs created in August.
Meanwhile, the bearish US dollar, driven by the Federal Reserve’s (Fed) 50 basis point (bps) interest rate cut, was another key factor that kept the AUD/USD pair higher.
Moving ahead, the People’s Bank of China’s (PBoC) Monetary Policy Committee (MPC) is scheduled to hold its quarterly meeting on Friday to review its loan prime rate (LPR).
RBA's Stance and Strong Employment Data Support AUD/USD, but Inflation Remains a Concern
On the AUD front, the Reserve Bank of Australia (RBA) Governor Michele Bullock stated that it is too early to consider rate cuts due to ongoing high inflation.
RBA Assistant Governor Sarah Hunter added that, although the labor market remains tight, wage growth seems to have peaked and may slow down.
In August, Australia’s unemployment rate stayed at 4.2%, as expected, while the number of unemployed people fell by 10,000, bringing the total to 627,000.
Employment increased by 47,500 jobs, which exceeded the forecast of 25,000, but was lower than July’s 58,200.
The Australian Bureau of Statistics (ABS) noted that full-time employment dipped by 3,100, while part-time employment rose by 50,600.
The participation rate held steady at a record 67.1%, and the employment-to-population ratio slightly improved to 64.3%, just shy of its November 2023 peak.
Although unemployment figures fell slightly in August, the number of unemployed people has grown by 45,000 since the end of 2023. Overall, Australia's labor market continues to show resilience despite some fluctuations.
This news could provide short-term support for AUD/USD, as stronger-than-expected employment data and stable unemployment may boost confidence in the Australian economy. However, ongoing high inflation and wage growth concerns may limit the currency's long-term gains.
Impact of the Federal Reserve Rate Cut and US Economic Data on the AUD/USD Pair
On the US front, the broad-based US dollar lost its strength after the Federal Reserve unexpectedly cut interest rates by 50 basis points, instead of the expected 25. The Fed lowered its benchmark rate to a range of 4.75%–5% and signaled another half-point cut by year-end.
According to updated forecasts, rates are expected to drop further to 3.4% in 2025 and 2.9% in 2026, down from earlier projections of 4.1% and 3.1%.
The Fed also indicated that inflation won't hit its 2% target before 2026, raising doubts about future rate cuts. Despite this, Fed Chair Jerome Powell reassured that there is no immediate recession risk, pointing to a strong labor market and cooling inflation.
In other economic data, US Retail Sales rose by 0.1% month-over-month in August, following a stronger 1.1% rise in July, which beat expectations of a 0.2% decline.
This suggests consumer spending remains resilient. The Retail Sales Control Group increased by 0.3%, slightly below the previous month’s 0.4%.
Meanwhile, the University of Michigan’s Consumer Sentiment Index rose to 69.0 in September, higher than expected, reflecting an improving outlook on the US economy after months of uncertainty.
Therefore, the unexpected rate cut by the Federal Reserve could actually support the AUD/USD pair, as a weaker US dollar generally boosts other currencies like the Australian dollar.
However, the positive US retail data and improved consumer sentiment might prevent significant gains for AUD/USD.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.6872, up 0.83%, signaling bullish momentum as it moves above key technical levels. Immediate resistance lies at $0.6845, with further resistance targets at $0.6868 and $0.6888.
On the downside, immediate support is found at $0.6784, followed by deeper supports at $0.6750 and $0.6725.
The 50-day Exponential Moving Average (EMA) at $0.6749 is providing solid support, indicating that the current upward trend remains intact.
The Relative Strength Index (RSI) sits at 66, suggesting the market is nearing overbought conditions, but still leaves room for further gains.
A break above $0.6868 would confirm the bullish trend, targeting the next resistance at $0.6888. However, if the pair falls below $0.6784, it could trigger a shift toward a more bearish outlook, testing the $0.6750 support level.
With China being a key trading partner for Australia, any news regarding China's economic performance or trade relations will likely influence the next move for AUD/USD.
Additionally, the U.S. dollar’s performance following the Federal Reserve’s recent interest rate decisions will play a critical role in the pair’s trajectory.
In summary, AUD/USD shows strong bullish signals but faces immediate resistance. Traders should watch for a breakout above $0.6868 to confirm further upward momentum.
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USD/JPY Price Analysis – Sep 19, 2024
GOLD Price Analysis – Sep 19, 2024
Daily Price Outlook
Gold prices (XAU/USD) experienced a significant rally, climbing to around $2,567 and reaching an intraday high of $2,568.19. This upswing followed the US Federal Reserve's decision to cut interest rates by 50 basis points, which led to a weaker dollar and boosted gold’s value.
However, the resurgence in gold prices is also attributed to growing concerns about economic slowdowns in major economies like the US and China, as well as rising tensions in the Middle East, which have driven investors towards gold as a secure investment.
Market participants are now anticipating upcoming US economic data, including Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales, which may further impact gold’s trajectory.
Impact of Federal Reserve Rate Cut on Gold Prices and US Dollar
On the US front, the broad-based US dollar lost its upward momentum after the Federal Reserve’s unexpected decision to cut interest rates by 50 basis points, instead of the anticipated 25 basis points.
The Federal Reserve reduced its benchmark interest rate by 50 basis points to a range of 4.75%–5% and also forecast a further half-point reduction by the end of the year.
According to the Fed’s updated projections, interest rates are expected to drop to 3.4% in 2025 and 2.9% in 2026, down from previous forecasts of 4.1% and 3.1%, respectively.
The Fed’s new economic outlook suggests that inflation will not reach the 2% target before 2026, raising questions about the extent of future rate cuts.
During the post-meeting press conference, Fed Chair Jerome Powell reassured that there is no immediate risk of a recession, citing cooling inflation and a strong labor market.
This reassurance led to a sharp increase in US Treasury bond yields, which continued to rise into Thursday’s Asian session, supporting the US dollar’s recovery.
Gold prices increased as the US dollar weakened due to the Fed’s larger-than-expected rate cut. However, the dollar's recovery could limit further gains in gold prices, as a stronger dollar may reduce gold's appeal.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,575.97, up 0.19%, holding steady above key technical levels, signaling potential bullish momentum.
The immediate resistance is seen at $2,589.57, with further resistance at $2,601.99 and $2,612.69. On the downside, immediate support is at $2,555.78, followed by $2,545.84 and $2,535.16.
The 50-day Exponential Moving Average (EMA) at $2,575.37 is acting as crucial near-term support, reinforcing the upward trend. The Relative Strength Index (RSI) stands at 55, indicating moderate buying interest, yet still leaving room for additional gains.
If gold breaks above $2,589.57, it may open the door for further gains towards the $2,600 mark. However, a failure to hold above $2,555.78 could trigger bearish pressure, bringing prices down towards the lower support levels.
With global economic uncertainty and a weaker US dollar following the Fed’s recent monetary easing, gold continues to benefit from its safe-haven appeal. The near-term outlook remains bullish as long as prices hold above the $2,568 level.
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USD/JPY Price Analysis – Sep 19, 2024
USD/JPY Price Analysis – Sep 19, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has recently seen a strong upward movement, reaching 143.55, which represents about 0.90% increase for the day. This rise is primarily due to a rebound in the US Dollar (USD), bolstered by a major interest rate cut from the Federal Reserve (Fed).
Investors are keenly observing the USD/JPY pair as it capitalizes on the USD's strength and evolving market expectations about future monetary policies.
Impact of the Fed's First Interest Rate Cut in Four Years on the USD/JPY Pair
As we mentioned above, the Federal Reserve implemented its first interest rate cut in over four years, reducing rates by 50 basis points to a range of 4.75%-5.00%. Fed Chairman Jerome Powell described this cut as a necessary measure to address easing price rises and growing concerns in the job market.
Despite this aggressive cut, the USD experienced some volatility, fluctuating between gains and losses as investors adjusted to the news.
However, the recent rate cut by the Fed has created a mixed impact on the USD/JPY pair as the move initially sparked some market fluctuations, but the USD eventually gained ground against the Japanese Yen.
As a result, the USD Index (DXY) recovered from its multi-month lows and climbed back above the 101.00 mark. However, the Fed's dovish stance and the possibility of further rate cuts later this year could limit the USD's potential for further gains and create some challenges for the USD/JPY pair.
Bank of Japan's Expected Interest Rate Decision and Its Potential Impact on USD/JPY
Looking ahead, the Bank of Japan (BoJ) is expected to keep its interest rates unchanged at its policy meeting ending on Friday. Most economists believe the BoJ will maintain the current rates, with the possibility of a hike later in the year.
This cautious approach is seen as a way to maintain economic stability while waiting for clearer global economic signals.
While the BoJ’s decision to hold rates steady might not cause immediate shifts, the anticipated narrowing of the interest rate gap between the US and Japan could eventually benefit the Japanese Yen (JPY) against the USD.
Investors will be closely watching for any hints of future policy changes from the BoJ that could impact the USD/JPY pair.
USD/JPY - Technical Analysis
USD/JPY is trading at 142.32, up 0.05%, indicating a mild upward trend as the pair holds above key support levels. The immediate resistance is noted at 142.44, with further resistance at 143.17 and 143.97.
On the downside, immediate support is at 140.46, followed by 139.70 and 138.95, marking significant levels where the price could potentially reverse.
The 50-day Exponential Moving Average (EMA) at 141.22 acts as critical support, providing stability for near-term bullish sentiment. The Relative Strength Index (RSI) is currently at 54, reflecting neutral-to-bullish momentum, signaling that the market still has room for further upward movement.
A break above 142.44 could confirm a bullish bias, paving the way toward the next resistance level at 143.17. However, if USD/JPY falls below 140.46, the short-term trend could turn bearish, testing the lower support at 139.70.
The broader outlook for USD/JPY remains influenced by the divergent monetary policies between the U.S. Federal Reserve and the Bank of Japan.
While the Fed signals caution after its recent rate adjustments, the Bank of Japan maintains its dovish stance, providing continued support for the dollar against the yen.
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GOLD Price Analysis – Sep 19, 2024
GOLD Price Analysis – Sep 18, 2024
Daily Price Outlook
Gold (XAU/USD) is currently struggling to maintain gains and has slipped to a fresh daily low around $2,567 in the past hour. This decline occurs despite market expectations of a potentially larger interest rate cut by the Federal Reserve (Fed) this Wednesday, which could weigh on the US Dollar (USD).
Moreover, ongoing geopolitical tensions in the Middle East and political uncertainty in the US ahead of the November election might offer further support for gold.
Traders are closely awaiting the Federal Open Market Committee (FOMC) meeting results and updated economic projections before committing to significant positions in gold.
US Economic Data and Fed Rate Cut Expectations Impact Gold and USD
On the US front, the recently released economic data showed a modest increase in Retail Sales for August, rising by 0.1% compared to a decline of 0.2% expected. However, sales excluding autos missed forecasts, also expanding by 0.1%.
This data caused a temporary bounce in the US Dollar as traders covered short positions, pushing the USD away from its lowest level since July 2023.
Despite this, the upward movement was limited, as expectations for a more aggressive interest rate cut by the Federal Reserve (Fed) continue to weigh on the USD.
Markets are currently pricing in a 65% chance that the Fed will cut rates by 50 basis points at the end of its two-day meeting today, which is putting pressure on the USD and supporting gold.
The anticipation of a larger rate cut is expected to attract dip-buyers to gold, helping it recover from a recent pullback near its all-time high.
In the meantime, the yield on the benchmark 10-year US government bond bounced from a 16-month low following the retail sales data, but this move did not have a significant impact, as dovish Fed expectations dominate the market.
Geopolitical Tensions Boost Gold Prices as Safe-Haven Asset
Another factor that could help gold prices stay higher is ongoing geopolitical uncertainty. Recent conflicts in the Middle East and political instability in the US are keeping investors cautious and supportive of gold as a safe-haven asset.
In Lebanon, simultaneous explosions from handheld pagers used by Hezbollah have killed at least nine people and wounded over 2,700, raising fears of a broader regional conflict. Hezbollah has blamed Israel for the blasts, adding to tensions.
In addition, North Korea recently test-fired multiple ballistic missiles towards South Korean and Japanese waters, further heightening global security concerns.
The ongoing war between Israel and Hezbollah, with significant casualties reported, also contributes to the uncertainty. The recent Israeli attacks have reportedly resulted in the deaths of over 11,000 people in Gaza and the West Bank since October 7, according to the Palestinian Education Ministry.
This geopolitical turmoil supports gold prices by reinforcing its role as a safe-haven investment during times of global instability.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,571.08, down slightly by 0.01%, reflecting some consolidation near critical levels. The price hovers just below a key pivot point of $2,590, with immediate resistance at that same level.
A breakout above $2,590 could signal further upside, with the next resistance targets positioned at $2,602 and $2,613. Conversely, on the downside, immediate support lies at $2,556, with further levels at $2,546 and $2,535.
The RSI stands at 56, indicating neutral momentum, but with the potential for more upside if buying pressure increases.
The price is currently hovering above the 50-day EMA of $2,540, which reinforces a potential bullish bias in the near term. However, failure to maintain this level could prompt a bearish reversal.
Traders are likely to remain cautious ahead of key economic events this week, including the FOMC meeting, which could inject volatility into the markets. A break below the $2,561 mark may trigger selling, targeting the $2,590 take-profit level, with a stop-loss at $2,546.
However, should the price maintain its position above $2,556, a bullish continuation could unfold, pushing Gold toward higher resistance levels.
In the short term, Gold is caught between a bearish signal below $2,561 and the opportunity for a bullish reversal if momentum can carry it above $2,590.
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EUR/USD Price Analysis – Sep 18, 2024
GBP/USD Price Analysis – Sep 18, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair continued its upward momentum, climbing near 1.3220 level. This surge followed the release of hotter-than-expected UK inflation data for August.
Meanwhile, the US Dollar is losing ground, weighed down by a dovish stance from the Federal Reserve, which further boosted the GBP/USD.
Looking ahead, investors are focused on the Bank of England’s (BoE) policy decision on Thursday. Before the recent inflation data, markets expected the BoE to keep interest rates unchanged at 5%.
However, with inflation still high, many now believe rates could stay at this level for the rest of the year.
Fed's Expected Rate Cut and Policy Shift May Heighten GBP/USD Volatility
On the US front, the Fed is widely expected to announce its first interest rate cut in over four years. According to the CME FedWatch tool, there's a 65% chance the Fed will lower rates by 50 basis points to 4.75%-5.00%, with the remaining probability favoring a smaller 25-bps cut.
The main focus now is on how fast the Fed will continue reducing rates, as officials have signaled growing concern over weakening labor demand rather than inflation.
In addition to the rate decision, investors will pay close attention to the Fed’s dot plot, which shows the long-term interest rate expectations from policymakers, and the updated economic projections.
Fed Chair Jerome Powell’s press conference following the announcement will also be crucial for understanding the central bank’s future policy path. Recent comments from Fed officials suggest that they are now more focused on weakening labor demand than on inflation.
This hints at a shift toward a more balanced policy approach as they look to normalize rates.
This news is likely to increase volatility in the GBP/USD pair. A Fed rate cut could weaken the US dollar, potentially pushing GBP/USD higher, but uncertainty around the pace of cuts and labor market concerns may keep movements unpredictable.
UK Inflation Surge Fuels Uncertainty Around BoE Rate Cuts, Boosting GBP/USD
Another factor boosting the GBP/USD pair is the hotter-than-expected UK inflation data for August. The Office for National Statistics (ONS) reported that core inflation, which excludes items like food and energy, rose by 3.6%, higher than the expected 3.5%, and up from 3.3% in July.
Additionally, services inflation, closely monitored by the Bank of England (BoE), increased sharply to 5.6% from 5.2% in July. This rise in inflation could make traders rethink their expectations of another interest rate cut from the BoE this year.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.31912, up 0.24%, showing signs of steady momentum. The pair is inching closer to its key pivot point at $1.3226, which marks an important inflection level.
Immediate resistance is just above at $1.3227, followed by additional resistance levels at $1.3265 and $1.3306. On the downside, support levels are found at $1.3113, with further support at $1.3060 and $1.3003.
The RSI stands at 57, indicating mildly bullish sentiment, with room for further gains if the upward momentum continues.
The price is currently hovering above the 50-day EMA, which is positioned at $1.3125, suggesting that the short-term trend is supported by technical factors.
As long as the pair maintains levels above the $1.3125 EMA, a bullish continuation could unfold, potentially breaking above the $1.3227 resistance.
Traders are keeping an eye on macroeconomic events, including the upcoming Bank of England meeting, which could create additional volatility. For now, the pair shows a potential buying opportunity above $1.31706, with a take profit at $1.32259 and a stop-loss at $1.31415.
Should the price break below the $1.3113 support level, it could signal a shift towards a more bearish outlook.
Overall, the pair is poised between critical support and resistance levels, making the $1.3226 pivot a key determinant for the next market move.
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EUR/USD Price Analysis – Sep 18, 2024
EUR/USD Price Analysis – Sep 18, 2024
Daily Price Outlook
During European trading, the EUR/USD pair remains steady above 1.1100, supported by ongoing weakness in the US dollar as traders anticipate the Federal Reserve's policy decision at 18:00 GMT.
Market sentiment is leaning towards a 50-basis-point rate cut by the Fed, which has contributed to the dollar's decline and boosted the EUR/USD pair.
However, the Euro faces some pressure due to uncertainty surrounding the European Central Bank's (ECB) future rate decisions and the overall economic outlook for the Eurozone.
Moving ahead, Eurostat will release the final Harmonized Index of Consumer Prices (HICP) for August at 09:00 GMT. Economists expect the data to align with preliminary estimates, forecasting annual headline inflation at 2.2% and core inflation at 2.8%.
US Retail Sales Data Creates Brief Rebound for Dollar, But Fed Rate Cut Expectations Weigh on EUR/USD
On the US front, recent economic data showed a small increase in Retail Sales for August, rising by 0.1% instead of the expected decline of 0.2%. However, sales excluding autos also grew by just 0.1%, missing forecasts.
This data led to a brief rebound in the US Dollar as traders adjusted their positions, moving it away from its lowest level since July 2023. Despite this, the US Dollar's gains were limited because traders still expect the Federal Reserve to cut interest rates more aggressively.
Markets are currently pricing in a 65% chance that the Fed will lower rates by 50 basis points at the end of its meeting today. This expectation is putting pressure on the US Dollar and supporting the EUR/USD pair.
Even though there was a slight bounce in the yield of the 10-year US government bond after the retail sales data, it did not significantly affect the market, as expectations for a more dovish Fed continue to dominate.
Uncertainty Over ECB Rate Decisions Drives Volatility in EUR/USD Pair
On the other side, the gain in the EUR/USD pair could be limited due to uncertainty about the European Central Bank's (ECB) future interest rate decisions and the Eurozone's economic outlook.
ECB officials are divided on whether to cut rates further. François Villeroy de Galhau, a member of the ECB Governing Council and President of the Bank of France, suggested that more rate cuts might be necessary to prevent inflation from falling too low. He indicated that the ECB is likely to continue cutting rates.
In contrast, Peter Kazimir, another ECB Governing Council member, argued that it might be better to wait until December for a clearer economic picture before making further rate cuts.
He expressed concerns about cutting borrowing costs too quickly if inflation has not been fully addressed.
Financial markets expect the ECB to make one more rate cut later this year, either in October or December, as they await more clarity on the economic situation.
Therefore, the uncertainty over ECB rate decisions is likely to keep the EUR/USD pair volatile. Divergent views among ECB officials create market hesitation, which may lead to fluctuating Euro strength against the US Dollar until a clearer policy direction emerges.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.11258, up 0.11%, showing mild bullish momentum as it approaches key resistance levels. The pair is hovering above its pivot point at $1.1113, indicating that buying interest remains strong for the time being.
Immediate resistance is seen at $1.1135, followed by additional hurdles at $1.1155 and $1.1185. On the downside, the first support sits at $1.1094, with further levels at $1.1072 and $1.1049.
The RSI has reached 60, signaling that momentum is leaning toward the bullish side but is not yet overbought. The 50-day EMA is positioned at $1.1074, providing a solid foundation of support that reinforces a short-term bullish bias.
As long as the pair remains above this moving average, the outlook remains favorable for further gains.
Traders are likely focusing on upcoming economic data and central bank comments, as any shifts in sentiment could introduce volatility.
A break above $1.1135 would confirm the continuation of the uptrend, with a potential move toward the next resistance level at $1.1155. Entry points for buyers are recommended above $1.11134, with a take profit target at $1.11504 and a stop-loss placed at $1.10948.
However, should the pair fall below the $1.1094 support level, bearish sentiment could take hold, pushing the price further toward the next key support at $1.1072.
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AUD/USD Price Analysis – Sep 17, 2024
Daily Price Outlook
The AUD/USD pair extended its gains for the second consecutive day on Tuesday, reaching a one-and-a-half-week high of around 0.6758 during the European session. This marks the fourth straight day of positive movement for the pair. Investors are now focusing on the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday to gauge future direction.
Meanwhile, the US dollar has been consolidating its recent losses, falling to its lowest level since July 2023, partly due to speculation of a substantial 50 basis point rate cut by the Federal Reserve.
Concurrently, the Reserve Bank of Australia's (RBA) hawkish stance and a generally positive sentiment in equity markets are bolstering the Australian dollar. These factors are supporting the AUD/USD pair, showcasing the Aussie’s strength amidst evolving market conditions.
Impact of US Dollar Weakness and Chinese Economic Concerns on AUD/USD Pair
On the US front, the Dollar has been struggling, remaining near its yearly low and contributing to caution among traders. The Federal Reserve’s anticipated significant rate cut has influenced this weakness. According to the CME Group’s FedWatch Tool, there's now over a 60% chance that the Fed will cut rates by 50 basis points on Wednesday.
This expectation has pushed the yield on 2-year US government bonds to its lowest level since September 2022, while the 10-year Treasury yield has weakened to levels not seen since June 2023.
Despite stronger-than-expected data from the New York Empire State Manufacturing Index for September, the Dollar has struggled to gain support. Additionally, weak economic reports from China over the weekend point to ongoing challenges in reaching its 5% GDP growth target for 2024.
This economic uncertainty affects the Australian Dollar, which is sensitive to China’s economic performance. Traders are cautious, waiting for the Fed’s decision on Wednesday and further guidance on future rate cuts, which will be crucial in shaping market expectations.
The uncertainty surrounding the US Dollar and weaker economic reports from China contribute to caution in the AUD/USD pair. Traders are closely watching the Fed's decision on rate cuts, which could influence the pair’s direction based on shifting expectations.
AUD/USD - Technical Analysis
The Australian dollar (AUD/USD) is trading at $0.67478, down 0.13% for the day, as the pair continues to consolidate just above its pivot point of $0.6734.
The 4-hour chart shows a steady upward trend, although the pair has recently encountered minor selling pressure. The immediate resistance at $0.6767 is the key level for bulls to watch.
A break above this could open the door to further upside, with the next resistance levels at $0.6793 and $0.6816, where buyers may face greater opposition.
On the downside, immediate support sits at $0.6698, where the 50-day EMA aligns, providing a solid floor for the pair. If prices break below this level, the next support levels lie at $0.6667 and $0.6635, suggesting potential for a deeper pullback.
The RSI is currently at 64, indicating mild bullish momentum, but edging closer to overbought territory. This suggests that while the trend remains positive, there may be a short-term pause before the next significant move.
A break above $0.67336 offers a potential buying opportunity, with targets around $0.67832. Traders should maintain a stop loss near $0.66962 to manage risk in case of a reversal.
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USD/CAD Price Analysis – Sep 17, 2024
Daily Price Outlook
During the European trading session, the USD/CAD pair struggled to maintain its recovery and slipped back to around 1.3584. The drop can be largely attributed to the weakening US dollar, which has faltered due to strong expectations of a significant Federal Reserve rate cut.
On the Canadian side, the CAD might be facing pressure from rising hopes for further interest rate cuts by the Bank of Canada (BoC).
Meanwhile, the recent remarks by BoC Governor Tiff Macklem have added to this downward pressure. Macklem hinted at the possibility of speeding up rate reductions, even suggesting a potential 50 basis point cut if economic conditions don't improve. This commentary, reported by the Financial Times, has contributed to the CAD's decline.
Impact of Fed Rate Cut Expectations and Treasury Yields on USD/CAD
On the US front, the broad-based US dollar is facing challenges due to increasing expectations of an aggressive Federal Reserve rate cut. The market is now anticipating a 50 basis point cut at the Fed's meeting on Wednesday, which could pressure the USD/CAD pair.
However, stronger US Treasury yields may provide some support for the dollar. According to the CME FedWatch Tool, there's a 38% chance of a 25 basis point rate cut and a 62% chance of a 50 basis point cut, up from 50% just a day earlier.
This reflects growing expectations for more aggressive monetary easing. Traders will also be keeping an eye on Canada’s Consumer Price Index (CPI) data for August, set to be released later in the North American session.
The anticipated aggressive Fed rate cut and strong US Treasury yields may limit the USD/CAD pair's upside. The increased chance of a 50 basis point cut adds pressure on the USD, potentially weakening its position against the CAD.
Canadian Dollar Under Pressure Amid Bank of Canada Rate Cut Expectations and Upcoming CPI Data
On the other hand, the Canadian Dollar (CAD) is facing downward pressure from expectations of more interest rate cuts by the Bank of Canada (BoC). Recent comments from BoC Governor Tiff Macklem have intensified this pressure.
Macklem hinted that the BoC might accelerate its rate cuts, potentially implementing a 50 basis point reduction if economic growth falters. This has raised concerns about further weakening of the CAD.
Traders will be closely watching Canada’s Consumer Price Index (CPI) data for August, which is set to be released later in the North American session. This inflation report could provide new insights into the Bank of Canada’s future policy decisions, especially as they prepare for their October meeting.
The CPI data will be crucial in determining whether the BoC will follow through on its plans for additional rate cuts, influencing the CAD’s performance in the currency markets.
USD/CAD - Technical Analysis
The U.S. dollar (USD/CAD) is trading at $1.35918, up 0.08% on the day, reflecting a mild upward movement as the pair inches above the key pivot point at $1.3583.
The 4-hour chart shows steady price action, with the 50-day EMA positioned at $1.3567 providing a supportive floor for bulls.
Immediate resistance stands at $1.3615, and a break above this level could pave the way for further gains toward $1.3640 and $1.3662.
Despite the upward momentum, the RSI is neutral at 55, suggesting that neither bulls nor bears have full control at the moment. However, the pair remains above the 50-day EMA, signaling that buyers still hold an edge.
On the downside, support is found at $1.3548, with subsequent levels at $1.3519 and $1.3486, should selling pressure intensify.
Traders looking to capitalize on bullish momentum could consider buying above $1.35833, targeting $1.36262, with a stop loss placed near $1.35568 to manage downside risk. However, a failure to hold above $1.3583 could see the pair test lower supports.
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