USD/JPY Price Analysis – Oct 17, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair maintained its bullish momentum, holding strong around the 149.80 level. Earlier in the day, the Japanese Yen surrendered modest intraday gains, edging back towards its lowest level since early August. This decline was triggered by disappointing data showing Japan's exports fell in September for the first time in 10 months, raising concerns about weakening global demand.
Adding to the pressure, Japanese Prime Minister Shigeru Ishiba's unexpected opposition to further rate hikes complicated the Bank of Japan's efforts to move away from its ultra-easy monetary policy.
Meanwhile, a positive sentiment in equity markets further undermined the Yen’s safe-haven appeal. On the other hand, the US Dollar held firm, bolstered by expectations of modest rate cuts by the Federal Reserve next year and supported by strong US Treasury yields, which kept the USD/JPY pair comfortably above the 149.50-149.55 range.
Weak Japanese Export Data and Political Uncertainty Pressure the Yen
On the JPY front, the Japanese Yen faces pressure due to Prime Minister Shigeru Ishiba’s unexpected opposition to further rate hikes. This adds uncertainty to the Bank of Japan’s (BoJ) plans to exit its long-standing ultra-easy monetary policy. A recent Reuters poll indicates that most economists expect the BoJ will hold off on raising interest rates again this year, given the uncertainty over the new political leadership’s stance on monetary policy.
Adding to the Yen's challenges, data from Japan's Ministry of Finance revealed that exports fell by 1.7% in September, missing expectations and marking the first decline in 10 months. This drop was influenced by weak demand from China, Japan's biggest trading partner, and a slowdown in the US economy.
The Yen's recent appreciation following the BoJ's interest rate hike in July also impacted export values. While this complicates the BoJ's rate hike plans, geopolitical risks from the Middle East may still offer some support for the Yen.
Consequently, the combination of weak Japanese export data and political uncertainty around future rate hikes is keeping the Yen under pressure, which supports the US Dollar. As a result, the USD/JPY pair remains strong, trading above the 149.50 level.
Impact of US Economic Conditions and Middle East Tensions on the USD/JPY Pair
On the US front, the US Dollar hit its highest level since early August due to expectations of a more gradual easing of Federal Reserve policy. Investors are betting on a potential 25 basis points rate cut at the Fed's November meeting. Although the yield on the 10-year US government bond dropped to a one-week low, it remains above 4.0%, which supports USD strength and helps keep the USD/JPY pair well-supported.
In the Middle East, tensions are rising as the United Nations reported Israeli forces firing at its peacekeeping troops, injuring over a dozen in southern Lebanon. A potential Israeli counterstrike, following Iran's October 1 attack, is reportedly prepared, increasing fears of broader regional conflict.
Traders are also watching for key US economic data, including Retail Sales, Weekly Jobless Claims, and the Philly Fed Manufacturing Index, which could impact market sentiment during the North American session.
Therefore, the rising US Dollar strengthens against the Yen, supported by expectations of a rate cut and resilient bond yields. Meanwhile, escalating tensions in the Middle East may further boost demand for the safe-haven Yen, adding volatility to the USD/JPY pair.
USD/JPY – Technical Analysis
The USD/JPY pair is trading at 149.598, down 0.10% for the day, hovering near the critical pivot point at 150.24. Immediate resistance is seen at 149.97, and a break above this level could open the door for further gains toward 150.59 and 151.17.
The 50-day Exponential Moving Average (EMA) at 149.37 acts as crucial support, helping maintain a bullish outlook. The RSI is at 55, signaling neutral-to-slightly bullish conditions. Traders are closely watching the 150.24 pivot point for signs of a breakout.
If the pair clears this level, bullish momentum could accelerate, while a failure may push USD/JPY toward the support at 148.47.
For a short-term strategy, traders could consider entering a buy position above 149.052, targeting a take-profit level of 150.24. A stop-loss at 148.37 is recommended to limit downside risks.
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- GOLD Price Analysis – Oct 17, 2024
GOLD Price Analysis – Oct 17, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained a bullish trend, climbing for the third consecutive day and reaching a fresh all-time high of 2,685 ahead of the European session on Thursday. This bullish momentum is supported by weak inflation data from Europe and the UK, which have heightened expectations for more aggressive monetary easing by both the European Central Bank (ECB) and the Bank of England (BoE). Apart from this, the ongoing speculation of a 25 basis point (bps) rate cut by the Federal Reserve in November has bolstered demand for the non-yielding yellow metal.
Moreover, the escalating conflicts in the Middle East have heightened the appeal of gold as a safe haven. Nevertheless, traders have moderated their expectations for more aggressive easing by the Fed, which has led to higher US Treasury bond yields. This keeps the US Dollar (USD) near its highest level since early August, limiting the upside for gold.
Weak Inflation and Central Bank Actions Heighten Gold Demand
As we mentioned, weak inflation data from Europe and the UK has increased expectations for more aggressive policy easing by the European Central Bank (ECB) and the Bank of England (BoE). This aligns with predictions of a 25 basis point (bps) rate cut by the Federal Reserve (Fed) in November, supporting demand for gold, a non-yielding asset.
Notably, the ECB is expected to announce its third interest rate cut of the year this Thursday, while falling UK inflation strengthens the case for a BoE rate cut next month. Meanwhile, the CME Group's FedWatch Tool shows over a 90% probability of a 25 bps rate cut from the Fed, which has lowered US bond yields to a one-week low.
As a result, the US Dollar has continued its upward trend, reaching its highest level since early August, but this hasn’t deterred gold buyers. Moving ahead, traders will watch key US economic data, including Retail Sales, Weekly Initial Jobless Claims, and the Philly Fed Manufacturing Index. In the meantime, the ECB’s monetary policy decision may also increase market volatility and provide opportunities for traders, especially in the safe-haven gold market.
Geopolitical Tensions and Central Bank Purchases Drive Demand for Gold
Apart from this, recent comments from officials at the London Bullion Market Association's annual conference indicate that central banks are continuing to purchase gold. They are doing this to diversify their reserves for both financial stability and strategic reasons. This trend highlights gold's ongoing importance as a safe-haven asset amid global uncertainties.
In southern Lebanon, the United Nations (UN) reported that Israeli forces have fired at its peacekeeping position, forcibly entered a base, and halted critical logistical movements. This situation has resulted in injuries to more than a dozen UN troops. The escalating tensions in this region raise concerns about stability and security in the area.
Furthermore, a source familiar with the situation revealed that Israel has prepared a plan to respond to Iran’s attack on October 1. This development heightens the risk of further geopolitical tensions and could lead to a full-scale war in the Middle East.
In another part of the world, China’s housing minister announced plans to add 1 million village urbanization projects and implement monetization measures for these initiatives, reflecting the government's commitment to urban development.
Therefore, the ongoing geopolitical tensions, particularly in the Middle East, coupled with central banks' increased gold purchases for diversification, are likely to boost demand for gold as a safe-haven asset, driving prices higher amid market uncertainties and global instability.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is showing bullish momentum, trading at $2,682.10, up 0.36% on the day. The 4-hour chart reveals that the price is approaching a critical resistance at $2,674.26, which, if broken, could trigger further gains toward the next resistance levels at $2,685.25 and $2,694.23. However, a failure to break this level may see gold retreat to immediate support at $2,655.79, with further support lying at $2,646.42 and $2,637.84.
From a technical perspective, the 50-day Exponential Moving Average (EMA) at $2,659.66 is providing solid support, suggesting a positive outlook for gold as long as the price remains above this level. The Relative Strength Index (RSI) is currently at 63, indicating a bullish trend without reaching overbought territory, leaving room for further upward movement.
The pivot point at $2,693.00 serves as a key indicator, with potential gains if prices surpass this level. Traders may look to enter positions above $2,674, aiming for a take-profit target around $2,693. However, caution is advised if the price falls below $2,665, where a stop-loss could help mitigate risks in a downward scenario.
Overall, gold remains bullish as long as the price holds above the $2,674 mark, supported by strong technical indicators. A break above immediate resistance could see gold testing new highs, while a drop below key support may signal a short-term pullback.
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GBP/USD Price Analysis – Oct 16, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair extended its downward slide, facing significant selling pressure. This came after the UK’s Office for National Statistics (ONS) released a weaker-than-expected Consumer Price Index (CPI) report for September, adding to concerns about the UK economy.
At the same time, the US Dollar remained strong, hovering near a two-month high, as traders factored in the possibility of only moderate rate cuts from the Federal Reserve (Fed) later this year. These combined factors weighed heavily on the GBP/USD pair.
Looking ahead, market participants will be closely watching Thursday’s release of the US Retail Sales data for September. The report, which is a key indicator of consumer spending, is projected to show a 0.3% increase.
GBP/USD Declines as Weak Inflation Data Fuels Rate Cut Expectations
As we mentioned, the GBP/USD pair is facing heavy selling pressure after the UK Office for National Statistics (ONS) released a weaker-than-expected Consumer Price Index (CPI) report for September. The annual headline inflation rate dropped to 1.7%, falling short of the anticipated 1.9% and down from 2.2% in August.
Month-on-month inflation stayed flat, while core CPI inflation, which excludes volatile items like food and energy, also decreased faster than expected to 3.2%, below the 3.4% estimate. Services inflation, a key focus for the Bank of England (BoE), slowed to 4.9% from 5.6%.
This significant drop in inflation is increasing expectations that the BoE will cut interest rates in its upcoming policy meetings in November or December, possibly by 25 basis points. A slowdown in wage growth, which rose by 4.9% in the three months ending in August—the slowest in two years—also contributed to the market's belief that inflationary pressures will ease further. Market participants are now more confident that the BoE will move toward rate cuts as inflation continues to decelerate.
Therefore, the weaker inflation data and rising expectations of a Bank of England interest rate cut are driving the GBP/USD pair lower, as reduced rate hike prospects make the British pound less attractive to investors, increasing selling pressure on the currency.
US Dollar Strengthens Amid Rate Cut Expectations and Resilient Economic Data
On the US front, the US Dollar is holding strong near a two-month high as traders anticipate moderate interest rate cuts from the Federal Reserve (Fed) in upcoming policy meetings. The US Dollar Index (DXY) is maintaining its gains around 103.30 after the Fed initiated its policy-easing cycle with a significant 50 basis point (bps) cut in September. According to the CME FedWatch tool, traders are expecting further rate cuts of 25 bps in both November and December meetings.
Despite these expectations, recent positive US economic data has reduced fears of an economic slowdown. Key indicators like Nonfarm Payrolls (NFP) and ISM Services PMI showed strong growth in September, suggesting economic resilience. Additionally, inflation pressures increased unexpectedly, indicating that the battle against rising prices is ongoing.
Therefore, the strength of the US Dollar, supported by anticipated Fed rate cuts and positive economic data, is exerting downward pressure on the GBP/USD pair. Looking ahead, investors are keenly awaiting the release of September's US Retail Sales data.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.30095, down 0.51% as bearish momentum continues to pressure the currency pair. On the 4-hour chart, the price has dipped below the pivot point of $1.3037, signaling a continuation of the recent downtrend.
Immediate resistance is observed at $1.3076, with further levels at $1.3102 and $1.3133. However, with the pair trading near key support at $1.3002, a break below this level could accelerate selling toward the next support zones at $1.2969 and $1.2942.
Technical indicators point to a bearish outlook, with the Relative Strength Index (RSI) at 31, hovering near oversold territory. This suggests the possibility of a short-term bounce, but the overall trend remains downward.
The 50-period Exponential Moving Average (EMA) is currently at $1.3062, reinforcing the bearish sentiment as the price remains well below this level. Traders should watch for further declines, especially if the pair breaches $1.3002.
A potential trading strategy could involve selling below $1.30353, targeting $1.29842, with a stop loss set at $1.30636 to mitigate risks.
The oversold RSI offers a note of caution, signaling the possibility of a short-term corrective move, but overall, the downward trend appears dominant.
This analysis highlights the key levels and indicators driving the GBP/USD’s short-term outlook, with a bearish bias prevailing for now.
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GOLD Price Analysis – Oct 16, 2024
Daily Price Outlook
Gold prices (XAU/USD) continued their upward momentum, reaching around $2,675, marking a three-week high during the first half of the European session on Wednesday. This rise is largely driven by ongoing geopolitical tensions and disappointment over the lack of details surrounding China’s fiscal stimulus, which has dampened investors’ enthusiasm for riskier assets. Moreover, the current risk-averse sentiment has contributed to a decline in U.S. Treasury bond yields, further supporting gold's appeal as a non-yielding asset.
However, there are some headwinds for gold as well including stronger expectations for a less aggressive policy shift from the Federal Reserve, along with predictions for a standard 25 basis points (bps) rate cut in November, which are likely to boost U.S. bond yields. This environment has also lifted the U.S. dollar to its highest level in over two months, which may deter bullish traders from making new investments in gold.
Impact of U.S. Dollar Strength and Fed Policy on Gold Prices
On the U.S. front, the broad-based U.S. dollar has reached its highest level in over two months, driven by expectations for a less aggressive approach to policy easing by the Federal Reserve (Fed). Many investors anticipate a standard 25 basis points (bps) rate cut at the upcoming November meeting, which has contributed to higher U.S. bond yields. However, this stronger dollar could limit new investments in gold, which is seen as a safe-haven asset.
On Tuesday, U.S. Treasury bond yields fell for the second consecutive day due to weaker-than-expected manufacturing data and a decrease in inflation risks from declining oil prices. The New York Federal Reserve's Empire State Manufacturing Index dropped to -11.9 in October, indicating deteriorating economic conditions, the lowest reading since May.
As fears of supply disruptions ease and the outlook for demand weakens, crude oil prices fell to a two-week low, reducing inflationary pressures and making it easier for the Fed to consider further interest rate cuts.
Despite this, the market is pricing in a greater chance of smaller interest rate cuts at the next Federal Open Market Committee (FOMC) meeting in November. This is expected to support the U.S. dollar and limit any significant gains for gold (XAU/USD).
Additionally, comments from Fed officials like San Francisco Fed President Mary Daly suggest that the central bank is making progress in controlling inflation, with one or two more rate cuts possible this year, while Atlanta Fed President Raphael Bostic notes that the economy is performing well, with inflation trending back towards the 2% target.
Therefore the strengthening U.S. dollar and higher bond yields, alongside expectations of smaller interest rate cuts, may limit gold's gains. While easing inflation risks provide some support, overall sentiment could lead to reduced bullish activity in gold markets.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,670.6, up 0.51%, reflecting a continuation of its bullish momentum. On the 4-hour chart, prices are hovering near key resistance at $2,674, just below the pivot point of $2,682.
A break above this level could lead to further gains, with next resistance levels at $2,685 and $2,694. However, if gold fails to maintain momentum, immediate support is found at $2,656, with further downside potential toward $2,646 and $2,638.
The Relative Strength Index (RSI) is currently at 64, indicating that while bullish momentum remains intact, gold is approaching overbought territory. This suggests some caution for traders, as a pullback may be on the horizon.
The 50-period Exponential Moving Average (EMA) sits at $2,647, providing dynamic support. As long as prices remain above this level, the outlook remains positive.
Traders looking to capitalize on this trend might consider entering buy positions above $2,665, with a target of $2,682. A stop loss at $2,655 would protect against downside risks, particularly if gold dips below key support levels.
In conclusion, gold’s current trajectory remains bullish, but traders should watch key levels closely. A break above $2,674 could signal further gains, while a move below $2,656 might indicate a broader correction.
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- EUR/USD Price Analysis – Oct 16, 2024
EUR/USD Price Analysis – Oct 16, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair continued its downward trend, falling to around 1.0880. The Euro (EUR) is struggling amid growing expectations that the European Central Bank (ECB) will lower interest rates again on Thursday. This outlook has put significant pressure on the major currency pair.
At the same time, the US dollar has been on a strong upswing over the past few weeks, contributing to the Euro's decline. The US Dollar Index, which measures the Greenback against six major currencies, climbed to approximately 103.40. Traders are increasingly confident that the US Federal Reserve (Fed) will gradually reduce interest rates for the rest of the year, further bolstering the Dollar's strength.
EUR/USD Declines as ECB Rate Cut Expectations and Economic Concerns Weigh on the Euro
On the EUR front, the EUR/USD currency pair has dropped due to expectations that the European Central Bank (ECB) will cut interest rates again on Thursday. Analysts predict the ECB will lower its Rate on Deposit Facility by 25 basis points to 3.25%, marking the second consecutive rate cut. Investors are closely watching the monetary policy statement and ECB President Christine Lagarde’s press conference for insights into the future of interest rates.
Lagarde is likely to take a dovish stance, as inflation pressures in the Eurozone seem to be easing, while concerns about an economic slowdown are growing. Preliminary data shows that the Eurozone's Harmonized Index of Consumer Prices (HICP) fell to 1.8% in September.
Moreover, recent estimates for the Consumer Price Index (CPI) in France and Italy indicate lower-than-expected inflation. Compounding these concerns, speculation about former US President Donald Trump potentially winning the upcoming US presidential elections has raised worries about the EU’s export outlook. If Trump wins, tariffs on automotive imports to the US could increase, negatively impacting exports from Europe and further slowing economic growth.
Therefore, the anticipated rate cut by the ECB and easing inflation pressures are likely to weaken the Euro further, contributing to the EUR/USD pair's decline. In the meantime, concerns over potential tariffs from a Trump presidency could negatively affect EU exports, exacerbating Euro weakness.
US Dollar Strengthens as Fed Signals Gradual Rate Cuts and Retail Sales Data Looms
On the US front, the EUR/USD pair is facing pressure due to the strong performance of the US Dollar in recent weeks. The US Dollar Index (DXY), which measures the Greenback against six major currencies, has risen to nearly 103.40. The Dollar is gaining strength as traders expect the US Federal Reserve (Fed) to gradually lower interest rates for the rest of the year.
Analysts believe the Fed will shift from an "aggressive" to a "moderate" policy-easing approach, especially after strong Nonfarm Payrolls (NFP) data and the US Services Purchasing Managers Index (PMI) showed growth, along with rising price pressures in September.
However, Fed Governor Christopher Waller has warned against rushing into interest rate cuts. In a recent speech, he mentioned that while he anticipates gradual rate reductions over the next year, the labor market remains healthy even as demand for workers is slowing.
Looking ahead, the next important indicator for the US Dollar will be the Retail Sales data for September, set to be released on Thursday. Economists predict a 0.3% increase in Retail Sales after a modest rise of 0.1% in August, which could further influence the Dollar's trajectory.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.08798, down 0.09%, as the pair remains under mild bearish pressure. The price has dropped below the pivot point of $1.0892, indicating a continued downtrend.
Immediate resistance is seen at $1.0916, with further resistance levels at $1.0933 and $1.0952. On the downside, key support is located at $1.0866, followed by $1.0852 and $1.0837. If the pair breaks below these levels, further downside movement could follow.
The Relative Strength Index (RSI) is currently at 35, suggesting that while the pair is approaching oversold territory, there is still room for additional downward movement.
The 50-period Exponential Moving Average (EMA) at $1.0917 is acting as a dynamic resistance, reinforcing the bearish bias as long as the price stays below this level.
The overall trend appears bearish, with a potential for further declines if key support levels are breached.
Traders may consider entering short positions below $1.08922, with a target of $1.08570, and a stop loss at $1.09160 to protect against any upside reversal. The combination of the bearish trend and a low RSI suggests the possibility of continued weakness in the near term.
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AUD/USD Price Analysis – Oct 15, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its downward trend, hovering around 0.6710 despite a generally risk-on market sentiment. This bearish movement was primarily influenced by disappointing trade balance data from China, which is Australia's largest trading partner, released on Monday.
Moreover, China announced a fiscal stimulus plan, but it did little to bolster the Australian dollar, as investors were left unsure about the package's size and impact. Compounding these challenges, the US dollar remained strong, fueled by expectations that the Federal Reserve will take a less aggressive approach to easing its monetary policy. As a result, traders are now looking ahead to the release of the Empire State Manufacturing Index and further comments from Fed officials.
Expectations of RBA Rate Cuts and Low Consumer Confidence Weigh on AUD/USD Pair
On the AUD front, the currency is facing downward pressure due to a report from the Commonwealth Bank of Australia. The report indicates that the Reserve Bank of Australia (RBA) is expected to cut interest rates by 25 basis points by the end of 2024. It also highlights that for the RBA to consider easing its policy this year, a stronger disinflationary trend than currently anticipated is needed. This expectation has contributed to the bearish sentiment surrounding the Australian dollar.
In addition, the latest weekly survey on Consumer Confidence showed little change, with the ANZ-Roy Morgan Consumer Confidence index remaining steady at 83.4. While this figure hasn't changed, it’s important to note that Consumer Confidence has stayed below the 85.0 mark for an unprecedented 89 weeks. However, the current reading is slightly above the 2024 weekly average of 82.1.
Last week, the RBA also released minutes from its September meeting, revealing that board members discussed possible scenarios for both increasing and decreasing interest rates in the future. They noted that future financial conditions might need to be either tighter or looser than they are now to achieve the RBA's objectives.
Therefore, the expectations of an RBA rate cut and persistently low Consumer Confidence are likely to weaken the AUD/USD pair, as traders may anticipate a bearish outlook for the Australian dollar amid ongoing uncertainty regarding Australia's economic conditions.
Impact of China's Fiscal Stimulus and Economic Data on AUD/USD Pair
On the other hand, China’s recent fiscal stimulus plan announced over the weekend did not strengthen the Australian dollar, as investors remained uncertain about the details and scale of the initiative. Adding to the tension, China conducted military drills in the Taiwan Strait on Monday. The US Department of State expressed serious concerns over these military actions, while Taiwan’s Defense Ministry assured that it would not escalate the situation further.
Moreover, China's National Bureau of Statistics reported that the Consumer Price Index (CPI) remained flat at 0% in September, down from a 0.4% increase in August. The annual inflation rate rose by only 0.4%, which was below the expected 0.6%. Meanwhile, the Producer Price Index (PPI) saw a more significant decline, dropping by 2.8% year-on-year, compared to a previous drop of 1.8% and exceeding expectations of a 2.5% decrease.
On a more positive note, the National People’s Congress expressed optimism after a briefing from China’s Ministry of Finance. The ministry highlighted its commitment to stabilizing the property market and addressing local government debt by issuing special bonds to support bank recapitalization and the real estate sector.
Therefore, the lack of clarity surrounding China’s fiscal stimulus, coupled with military tensions and weak inflation data, is likely to further pressure the Australian dollar. This uncertainty may lead to a continued decline in the AUD/USD pair as investor confidence wanes.
AUD/USD - Technical Analysis
AUD/USD is currently trading at $0.67130, down 0.19%, as the pair experiences selling pressure following its failure to break key resistance levels. The pivot point stands at $0.67304, with immediate resistance at $0.67576. A move above this could push the pair towards the next resistance levels at $0.67810 and $0.68105. However, current market sentiment appears bearish, suggesting that any rally may struggle to gain traction.
On the downside, immediate support is seen at $0.67025, with deeper support at $0.66828 and $0.66615. If AUD/USD breaks below these levels, it could signal further downside movement. The 50-day EMA at $0.67292 is trending just above current prices, indicating potential resistance on the path to recovery.
The RSI currently sits at 41, suggesting that the pair is in bearish territory. Momentum is skewed to the downside, indicating increased selling pressure. A break below the pivot point at $0.67304 may confirm further declines, with bears likely to target support at $0.66828.
Given the bearish technical signals, traders may consider short positions below $0.67304, with a take-profit target of $0.66908 and a stop-loss at $0.67522.
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GOLD Price Analysis – Oct 15, 2024
GOLD Price Analysis – Oct 15, 2024
Daily Price Outlook
Gold prices (XAU/USD) have managed to halt their overnight losses, finding solid support around the $2,655 level during the early European session on Tuesday. This stability comes amid ongoing geopolitical tensions and growing concerns about a broader conflict in the Middle East, which continue to boost demand for safe-haven assets like gold.
However, the US dollar remains strong, bolstered by expectations that the Federal Reserve will adopt a less aggressive approach to policy easing. This strength in the dollar could limit any potential gains for gold. Additionally, disappointment over China’s fiscal stimulus measures has dampened investor confidence, which may also contribute to capping XAU/USD’s upward momentum.
US Dollar Strength Limits Gold’s Gains Amid Geopolitical Tensions
On the US front, the broad-based US Dollar surged to its highest level since August 8, driven by expectations that the Federal Reserve will ease its policy less aggressively. Traders are now betting on a 25 basis point interest rate cut in November. Minneapolis Fed President Neel Kashkari said on Monday that the current monetary policy is still restrictive, and modest interest rate cuts may be appropriate as the job market remains strong.
Similarly, Fed Governor Christopher Waller noted that the economy is on solid ground and may not be slowing down as much as expected, suggesting that the Fed should be cautious with further rate cuts.
This bullish bias in the US Dollar could limit gains in gold prices, as a stronger dollar typically makes gold more expensive for foreign investors. However, gold remains supported by concerns over geopolitical tensions and potential conflicts in the Middle East, which are boosting demand for safe-haven assets.
Traders will now turn their attention to the release of the Empire State Manufacturing Index and more comments from Fed officials, both of which could provide short-term trading opportunities for XAU/USD later in the North American session.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,644.41, down 0.16% in the last session, as it hovers near key technical levels. The precious metal has struggled to break above the critical resistance level of $2,659, indicating that bullish momentum may be fading. Immediate resistance stands at $2,665, and a breakout above this level could signal a push toward higher targets at $2,674 and $2,685, which align with Fibonacci retracement levels. However, failure to overcome resistance may open the door for further downside.
On the support side, gold finds immediate support at $2,635, which is also the level of the 50-day EMA, providing a key area of defense for bulls. A breach below this could see prices testing $2,622, with the next critical support at $2,611. The RSI is currently at 48, indicating neutral momentum with a slight bearish tilt, suggesting that the market could be vulnerable to further selling pressure if key support levels fail to hold.
In conclusion, the immediate strategy is to buy above $2,637, with a target of $2,659 and a stop-loss at $2,626. Traders should monitor the $2,665 resistance carefully, as a break above could shift the short-term outlook to bullish.
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USD/CAD Price Analysis – Oct 15, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair maintained its upward trend and remained well-bid around $1.3815 level, hitting the intra-day high of 1.3816 level. However, the reason for its upward trend can be attributed to the bullish US dollar, which gained positive traction on the back of expectations that the Federal Reserve will ease its policy less aggressively.
Apart from this, the upcoming CPI data from Canada could impact the USD/CAD pair significantly. A higher-than-expected inflation rate may strengthen the Canadian dollar as it raises prospects for tighter monetary policy, while weaker data might lead to a weaker CAD against the USD.
Canadian Inflation Data and Its Impact on the CAD Outlook
On the CAD front, Canada is set to release its latest inflation data on Tuesday, with forecasts suggesting that the Consumer Price Index (CPI) could have risen by 1.8% year-over-year in September. Alongside the headline CPI, the Bank of Canada (BoC) will publish its core CPI, which excludes volatile food and energy prices. In August, the core CPI decreased by 0.1% from the previous month and rose by 1.5% year-over-year.
However, the headline CPI also showed a modest increase of 2.0% over the past year, marking its lowest level since February 2021. The BoC has been in an easing cycle, having cut its policy rate by 25 basis points during its meetings in June, July, and September, bringing the rate down to 4.25%.
The Canadian Dollar (CAD) has been under pressure. Analysts are divided on the future of price pressures in Canada, but many expect the headline inflation to remain below the BoC’s target for now. The BoC's Governor, Tiff Macklem, indicated that while further rate cuts are likely, it’s crucial to keep inflation near the midpoint of the control range of 1%–3%.
US Dollar Strengthens Amid Fed Rate Cut Speculation, Impacting USD/CAD Trends
On the US front, the US Dollar has risen to its highest level since August 8, primarily due to expectations that the Federal Reserve will not be as aggressive in cutting interest rates. Traders are now anticipating a 25 basis point cut in November. Minneapolis Fed President Neel Kashkari mentioned that current monetary policy remains restrictive and that moderate rate cuts may be appropriate since the job market is still strong.
Furthermore, Fed Governor Christopher Waller pointed out that the economy is doing well and may not be slowing as much as previously thought, indicating that the Fed should be cautious with further cuts. This positive sentiment around the US Dollar could limit gains for the Canadian Dollar (CAD) against the USD, as a stronger dollar typically leads to a weaker CAD. Despite this, the CAD could receive support from ongoing concerns about geopolitical tensions, which often drive investors toward safe-haven assets.
As traders look ahead, attention will shift to the upcoming Empire State Manufacturing Index release and additional comments from Fed officials. These events could present short-term trading opportunities for the USD/CAD pair, influencing the currency's movements in the North American session.
USD/CAD - Technical Analysis
USD/CAD is trading at $1.38066, up 0.08%, as it continues its upward momentum, testing key resistance levels. The pivot point stands at $1.38387, indicating bullish sentiment in the market. Immediate resistance is seen at $1.38703, with further resistance levels at $1.39030. If USD/CAD breaks above these levels, we could see the pair push higher toward $1.39500.
On the downside, immediate support is located at $1.37583, with deeper support at $1.37273 and $1.37044. Any break below these levels could signal a pullback, potentially weakening the current uptrend. The 50-day EMA is at $1.35957, offering strong support, suggesting that the overall bias remains bullish.
The RSI is at 72, signaling that USD/CAD is in overbought territory. While this indicates strong buying pressure, it also suggests a potential short-term correction.
Given the technical outlook, traders may look to buy above $1.37914, targeting $1.38703, with a stop loss set at $1.37409.
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GBP/USD Price Analysis – Oct 14, 2024
Daily Price Outlook
During the early European session on Monday, the GBP/USD pair is seeing some mild losses, hovering around 1.3060, hitting the intra-day low of 1.3041. The rise in safe-haven flows, driven by increasing geopolitical risks, is lending support to the US dollar and pulling the major pair lower. Investors are keenly awaiting UK employment data scheduled for Tuesday, which could provide insight into the health of the labor market and the future trajectory of interest rates.
On the GBP side, dovish comments from Bank of England Governor Andrew Bailey are also weighing on the currency. He hinted that the central bank might take a more aggressive stance on rate cuts, with markets currently pricing in a 90% likelihood of a rate cut in November. This sentiment is contributing to the downward pressure on the GBP and impacting the GBP/USD pair's performance.
US Dollar Strengthens Against GBP Amid Geopolitical Tensions and Economic Data
On the US front, the broad-based US dollar is gaining strength due to safe-haven flows amid rising geopolitical tensions. This is putting downward pressure on the GBP/USD pair as investors look ahead to key economic data. Investors are closely watching UK employment data set to be released on Tuesday.
Meanwhile, data from the US Bureau of Labor Statistics showed that the annual Producer Price Index (PPI) rose by 1.8% year-over-year in September, slightly down from 1.9% in August but higher than the expected 1.6%. The core PPI, which excludes food and energy, increased by 2.8% year-over-year, beating analysts’ forecasts of 2.7%. On a monthly basis, the overall PPI remained unchanged, while the core PPI rose by 0.2%.
However, the Federal Reserve has shifted its focus from tackling inflation to maintaining a healthy job market, which is part of their dual mandate. However, a stronger-than-expected jobs report for September and reduced expectations for a 50 basis point rate cut in November could boost the USD against the British pound.
Therefore, the strengthening USD, driven by safe-haven flows and economic data, along with reduced rate cut expectations, is likely to exert downward pressure on the GBP/USD pair in the near term.
Impact of Dovish Bank of England Remarks on GBP and Upcoming Economic Data
On the GBP front, dovish comments from Bank of England (BoE) Governor Andrew Bailey are affecting the currency. He indicated that the central bank might take a more aggressive approach to cutting interest rates. Currently, markets are anticipating a 90% chance that the BoE will cut rates in November. The BoE's Monetary Policy Committee (MPC) is scheduled to meet on November 7 to announce their decision on interest rates.
Looking forward, the BoE’s Monetary Policy Committee (MPC) is scheduled to meet on November 7 to make their decision. Ahead of this important event, investors are closely watching UK employment data set to be released on Tuesday. This data could provide valuable insights into the labor market and help shape expectations for the UK’s interest rate outlook.
GBP/USD - Technical Analysis
GBP/USD is trading at $1.30658, up 0.01%, reflecting a neutral yet slightly bullish tone. The pair is currently hovering around the pivot point at $1.30509, which could serve as a crucial level for the next directional move. Immediate resistance stands at $1.30832, followed by higher levels at $1.31051 and $1.31329. A break above these levels could signal more upside potential for the pound, possibly driving it towards $1.31329.
On the downside, the first line of defense is at $1.30217, with additional support at $1.29945 and $1.29659. A drop below $1.30217 could trigger a more bearish sentiment, testing the lower levels, especially if the pound fails to hold above the pivot point.
The 50-day Exponential Moving Average (EMA) sits at $1.30726, serving as a critical resistance level. A failure to break above this EMA could indicate some consolidation, with the pair needing a stronger push to continue the uptrend. The Relative Strength Index (RSI) is currently at 50, reflecting neutral momentum and signaling that the market could swing either way depending on key developments in the coming sessions.
A buying opportunity presents itself above $1.30399, with a target to take profit at $1.31049. Traders should be cautious of downside risks, placing a stop-loss at $1.30085 to mitigate any potential losses from a reversal.
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- GOLD Price Analysis – Oct 14, 2024
GOLD Price Analysis – Oct 14, 2024
Daily Price Outlook
During the early part of the European session on Monday, gold prices (XAU/USD) maintained an upward trend, rising to around 2,665, with an intraday high of 2,666. However, the expectations that the Federal Reserve will continue cutting interest rates, supported by a favorable inflation outlook, have been a key driver for flows toward the non-yielding yellow metal. Apart from this, escalating geopolitical tensions in the Middle East provide further support for safe-haven bullion.
Meanwhile, US Treasury bond yields and the US dollar remain higher due to rising bets for a less aggressive policy easing by the Fed. This, coupled with a positive risk tone and optimism over China’s pledge to increase debt to revive its economy, limit any further gains for gold.
Looking forward, traders seem cautious to place strong positions as the US market is closed on Monday for the Columbus Day holiday, leaving XAU/USD vulnerable to USD price dynamics and fresh geopolitical developments. This uncertainty may lead to fluctuations in gold prices until the market reopens.
Gold Prices Rise Amid Fed Rate Cut Expectations and Inflation Slowdown
Despite higher US Treasury bond yields due to rising bets for less aggressive policy easing by the Federal Reserve (Fed), the broad-based US dollar struggled to gain traction and showed a mild bearish trend. This has led to fresh buying pressure on gold prices at the start of the new week. The market’s focus remains on expectations that the Fed will continue cutting interest rates, driven by a favorable inflation outlook. These expectations support flows toward gold, which is a non-yielding asset.
On the data front, the US Bureau of Labor Statistics reported that the headline Producer Price Index (PPI) for final demand increased by 1.8% in September, while the core gauge rose by 2.8% year-over-year. Although these readings were slightly above consensus estimates, they indicate a slowdown in price increases, which may allow the Fed to continue lowering interest rates.
According to the CME Group's FedWatch Tool, there is currently over a 90% chance that the Fed will cut borrowing costs by 25 basis points in November. However, the yield on the benchmark 10-year US government bond remains steady above 4%, supporting the US dollar near a two-month peak.
Therefore, the expectation of continued interest rate cuts by the Federal Reserve, combined with a slowing inflation rate, boosts demand for gold as a safe-haven asset. However, higher US Treasury yields could limit significant gains for gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,663.50, up 0.24%, as bullish momentum continues to drive prices higher. The immediate pivot point stands at $2,655, and gold is showing resilience above this level, supported by broader inflation concerns and geopolitical uncertainties. Immediate resistance is at $2,670, followed by stronger resistance at $2,684 and $2,699. A break above these levels could signal further bullish movement.
On the downside, immediate support is at $2,642, with further levels of defense at $2,625 and $2,606. A drop below $2,642 would suggest a shift in sentiment, potentially triggering selling pressure. The 50-day Exponential Moving Average (EMA) at $2,630 is providing solid support, reinforcing the bullish outlook as long as prices remain above this threshold.
From a technical standpoint, the Relative Strength Index (RSI) currently sits at 69, indicating bullish momentum but nearing overbought territory. Traders should watch for potential exhaustion as prices approach the key resistance zone. However, as long as gold holds above the $2,655 pivot point, the outlook remains constructive for further upside.
The strategy here would be to buy on dips above $2,660, with an ideal take profit target at $2,684. A stop-loss should be placed around $2,642 to mitigate downside risk in case of a reversal.
Gold remains in a positive technical posture, but traders should be cautious of overbought signals and prepare for potential pullbacks if support at $2,642 fails to hold.
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