EUR/USD Price Analysis – Oct 14, 2024
Daily Price Outlook
The EUR/USD pair has extended its decline, hovering around 1.0920 in the early Asian session on Monday. This downward trend is largely fueled by rising risk aversion amid escalating geopolitical tensions in the Middle East and the ongoing conflicts between China and Taiwan, putting selling pressure on the Euro (EUR), which is considered a riskier currency.
Meanwhile, the Euro is feeling the heat from the European Central Bank (ECB), which is expected to cut interest rates further in its remaining monetary policy meetings this year. The ECB's dovish outlook is being reinforced by a faster-than-anticipated drop in Eurozone inflation and a 'fragile' economic recovery.
As these factors combine, the Euro faces significant headwinds, reflecting broader concerns in the global market and highlighting the interconnectedness of geopolitical events and economic policy decisions.
EUR/USD Under Pressure Amid Geopolitical Tensions and Rate Cut Expectations
As we mentioned, the EUR/USD pair has been under pressure, recently declining to around 1.0920 in the early Asian session on Monday. This drop is primarily due to rising risk aversion amid escalating geopolitical tensions in the Middle East and conflicts between China and Taiwan, which are weighing on the Euro (EUR), a riskier currency.
However, the spokesperson from the U.S. Department of State expressed serious concerns about the People's Liberation Army (PLA) military drills in the Taiwan Strait, indicating that the U.S. will closely monitor China's activities and coordinate with allies. Any further escalation in these tensions could lead to increased demand for safe-haven assets like the U.S. dollar (Greenback), putting additional pressure on the EUR/USD pair.
Traders are also anticipating a 25 basis point (bps) rate cut from the Federal Reserve (Fed) in November, following the release of the U.S. Producer Price Index (PPI) on Friday. The CME FedWatch Tool indicates that the market is now pricing in an 86.8% chance of this rate cut, up from 83.3% before the PPI data was released.
This shift in expectations further contributes to the bearish sentiment surrounding the Euro, as the prospect of lower interest rates in the U.S. tends to support the dollar against other currencies.
Euro Faces Pressure Amid ECB Rate Cut Expectations
Moreover, the Euro is experiencing pressure as the European Central Bank (ECB) is expected to cut interest rates further in its upcoming monetary policy meetings this year. This anticipated move stems from a recent and faster-than-expected drop in inflation across the Eurozone, which has raised concerns about the region's economic health.
The ECB's dovish stance is strengthened by a quicker-than-expected decline in inflation within the Eurozone and signs of a weak economic recovery. As inflation drops, the ECB is likely to lower rates to support growth, which could further weaken the Euro against other currencies. Overall, these factors contribute to a bearish outlook for the Euro, as traders respond to the changing economic landscape in Europe.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.09268, down 0.08% as it flirts with its immediate pivot point of $1.09220. The euro faces resistance at $1.09389, and a break above this level could trigger further bullish momentum toward the next resistance levels of $1.09522 and $1.09673.
On the downside, immediate support is found at $1.09135, with further support at $1.08997 and $1.08868, which will likely serve as key zones to watch if bearish pressure intensifies.
Technically, the 50-day Exponential Moving Average (EMA) at $1.09480 is providing strong resistance and could be a critical point in determining whether the pair moves higher or faces rejection. A failure to break above the 50-day EMA might suggest that further downside is likely in the near term.
The Relative Strength Index (RSI) is currently sitting at 44, indicating neutral momentum. This suggests that the pair has room to move in either direction, depending on upcoming market developments.
Traders may look to buy above $1.09221, with a take-profit target of $1.09492, aligning with resistance zones. A stop-loss at $1.09070 will help limit downside risk if EUR/USD slips below its immediate support level.
In conclusion, while EUR/USD remains in a neutral position, any break above or below the pivot point at $1.09220 will dictate its short-term direction. The pair’s ability to hold above or breach the 50-day EMA will be pivotal in determining its next move.
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EUR/USD Price Analysis – Oct 11, 2024
Daily Price Outlook
The EUR/USD pair maintained its upward trend, trading strongly around the 1.0950 level and reaching an intra-day high of 1.0955. This upward movement can be attributed to a bearish US dollar, which declined following disappointing economic data from the United States.
Initial jobless claims rose to 258,000, exceeding expectations and prompting speculation that the Federal Reserve may need to reconsider its rate cut plans.
This economic weakness puts downward pressure on the US dollar and supports gains in the EUR/USD pair. Despite expectations that the European Central Bank (ECB) may implement further interest rate cuts in its remaining monetary policy meetings this year, the euro continues to outperform.
Euro Resilience Amid ECB Rate Cut Expectations and Economic Concerns
On the EUR front, the euro is performing well, even as market participants anticipate that the European Central Bank (ECB) will cut interest rates further in its remaining meetings this year.
The ECB has already lowered its Deposit Facility Rate by 50 basis points (bps) to 3.5% this year and is expected to reduce it by another 50 bps.
Traders predict two rate cuts of 25 bps each, with one likely coming next week and another in December. Despite these anticipated cuts, the euro continues to show strength against the US dollar.
However, the dovish sentiment surrounding the ECB has increased due to a quicker-than-expected drop in inflation and concerns about economic growth.
ECB policymaker Yannis Stournaras recently stated that price pressures are easing faster than the ECB had predicted in September and supported two more rate cuts in the remaining meetings this year, with further reductions likely in 2025.
Moreover, revised estimates for Germany’s Harmonized Index of Consumer Prices (HICP) for September showed inflation at 1.8%, below the ECB’s target of 2%.
On the economic front, growth prospects in the Eurozone appear vulnerable, particularly as Germany is projected to end the year with a 0.2% decline in output.
Therefore, the anticipated ECB rate cuts may initially weaken the euro, but ongoing inflation declines and economic concerns in the Eurozone support the euro's strength against the US dollar.
This dynamic contributes to the EUR/USD pair's upward momentum despite rate cut expectations.
EUR/USD - Technical Analysis
The EUR/USD is trading at $1.09337, down 0.02% for the day, as the pair struggles to break through key resistance levels. The currency pair remains below its pivot point at $1.0942, suggesting that bearish momentum is still in play.
Immediate resistance is observed at $1.0955, followed by the 50-day Exponential Moving Average (EMA) at $1.0957, which has been capping the upside for the past week.
A clear break above $1.0955 could pave the way for EUR/USD to target the next resistance levels at $1.0967 and $1.0981.
On the downside, immediate support is seen at $1.0926, with further support levels at $1.0914 and $1.0900. A drop below $1.0926 could trigger additional selling pressure, pushing the pair toward the psychological $1.0900 mark.
The Relative Strength Index (RSI) is currently at 44, indicating neutral momentum and leaving room for further downside if the pair fails to reclaim $1.0942.
Given the current technical setup, a sustained move below $1.0942 may signal a bearish trend continuation, targeting lower support levels. Conversely, a breakout above the 50-day EMA at $1.0957 would shift the outlook to bullish, potentially driving the EUR/USD higher.
Overall, the EUR/USD outlook remains cautiously bearish below the pivot point of $1.0942, and traders should watch for a confirmed break above or below key levels to determine the pair’s next directional move.
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GOLD Price Analysis – Oct 11, 2024
GOLD Price Analysis – Oct 11, 2024
Daily Price Outlook
Gold (XAU/USD) continued its upward trend, remaining well-supported around the 2,639 mark and reaching an intra-day high of 2,647. This momentum was fueled by weak US jobs data, which reinforced expectations for a Federal Reserve (Fed) rate cut in November.
Such a rate cut typically enhances gold's appeal, as it reduces the opportunity cost of holding this non-yielding asset, making it more attractive to investors.
However, the recent US Jobless Claims report revealed an unexpected increase in unemployment claims, contributing to a dip in US Treasury yields and a slight weakening of the US dollar. This environment further bolstered gold prices.
Moreover, safe-haven inflows into gold have increased amid escalating geopolitical tensions. Israel has intensified its bombings of Hezbollah targets in Lebanon, resulting in significant collateral damage, while fears of Israel's potential retaliation against Iran add to market uncertainty and elevate demand for the precious metal.
US Economic Data and Fed Policy Shift Boost Gold Prices Amid Job Market Weakness
On the US front, the broad-based US dollar weakened slightly on Thursday after a surprise rise in jobless claims, which showed 258K new claims, much higher than the expected 230K.
This rise in unemployment claims, partly attributed to people leaving Florida ahead of Hurricane Milton, signaled some weakness in the job market.
US Treasury yields dipped, and gold prices rebounded from just above the $2,600 psychological level.
Continuing jobless claims also increased to 1.861 million, indicating a slowing labor market, which could lead the Federal Reserve to cut interest rates at its November meeting to stimulate the economy.
Despite slightly higher-than-expected inflation figures, with September’s Consumer Price Index (CPI) showing a 2.4% year-over-year increase, the Fed appears to be focusing more on employment than inflation.
This led to an increase in market expectations for a 25-basis-point rate cut in November, with an 89% probability according to the CME FedWatch tool.
Upcoming economic data, including the Producer Price Index (PPI) and the US Michigan Consumer Sentiment survey, could further impact gold prices, but any significant effect is expected only if the data surprises market forecasts.
Therefore, the rising US jobless claims and the Fed's focus on employment over inflation boosted gold prices, as it increased expectations of a Fed rate cut in November, making gold more attractive as a safe-haven asset amid economic uncertainty.
Rising Geopolitical Tensions Fuel Safe-Haven Demand for Gold
On the geopolitical front, tensions are rising as Israel intensifies airstrikes on Hezbollah targets in Lebanon, resulting in at least 22 deaths and many injuries. This marks the deadliest attack in Beirut since 2006, aimed at a location where a senior Hezbollah official was present, though he survived.
Meanwhile, a UN inquiry has accused Israel of intentionally damaging Gaza's healthcare system during its conflict with Hamas, describing these actions as potential war crimes.
Israel's military has confirmed it killed a commander from Hezbollah and targeted several facilities in southern Lebanon.
As tensions escalate, the Israeli security cabinet is discussing its response to recent missile attacks from Iran, with U.S. President Joe Biden urging a "proportional" reaction.
Consequently, the rising geopolitical tensions and conflict in the Middle East are driving safe-haven demand for gold.
Investors often turn to gold during periods of uncertainty and violence, leading to increased prices as they seek stability amid the escalating risks.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,639.53, up 0.42% on the day, as the metal consolidates above its immediate support at $2,619.22. The price remains below the pivot point of $2,655.00, suggesting that bullish momentum is cautiously building.
However, the metal faces a significant challenge near $2,654.00, where the 50-day Exponential Moving Average (EMA) at $2,640.54 is capping further gains.
A sustained move above the $2,655 resistance could open the path toward the next resistance levels at $2,670.00 and $2,686.09.
On the downside, a failure to maintain levels above $2,632 could trigger a short-term correction, exposing gold to immediate support at $2,619.22, followed by deeper levels at $2,605.24 and $2,592.16.
The Relative Strength Index (RSI) stands at 55, reflecting moderate bullish sentiment but lacking strong momentum to push the price beyond the key $2,655 level.
If prices close above $2,655, gold could target $2,670 and potentially test $2,686.09 in the near term. However, if sellers regain control and drive the price below $2,619.22, a drop toward $2,605.24 could ensue, signaling potential downside risks.
Overall, the short-term outlook for gold remains cautiously bullish above $2,632. A breakout above $2,655 would confirm renewed upward momentum, while a dip below $2,619.22 could shift the trend toward a bearish stance.
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S&P500 (SPX) Price Analysis – Oct 11, 2024
Daily Price Outlook
The S&P 500 index is currently experiencing a bearish trend, primarily due to three key factors. First, rising jobless claims, which recently reached 258,000, indicate a slowing labor market.
Second, inflation remains a concern, with the Consumer Price Index (CPI) rising by 2.4% year-over-year in September.
Lastly, increasing geopolitical tensions are adding uncertainty to the market. Together, these issues are contributing to a decline in investor confidence and a cautious outlook for the index.
U.S. Job Market Weakness and Its Implications for the S&P 500
On the U.S. front, the recent jobless claims data has raised concerns among investors, highlighting significant challenges in the labor market. The uptick in jobless claims suggests an increase in layoffs, which could lead to reduced consumer spending and lower corporate profits. This creates a mixed outlook for the S&P 500 index.
On one hand, a weakening job market might encourage the Federal Reserve to lower interest rates, potentially benefiting stocks. On the other hand, higher-than-expected inflation data complicates the situation, indicating that interest rates may stay elevated for longer than anticipated.
As a result, the weakness in the job market contradicts the idea of a strong economy, creating uncertainty about the future direction of the S&P 500. Investors are concerned about the implications of potentially high interest rates amid signs of economic stagnation.
This uncertainty may discourage investment in equities, further contributing to the index's bearish performance as market participants await clearer signals from the Federal Reserve and additional economic data.
Geopolitical Tensions Impacting S&P 500 Performance
Geopolitical tensions are further complicating the performance of the S&P 500. Recent developments in the Middle East, particularly Israel's intensified airstrikes on Hezbollah targets in Lebanon, have heightened concerns about regional stability.
These actions have resulted in significant casualties and have been accompanied by accusations of war crimes, escalating the crisis.
In response to such geopolitical instability, investors often seek safe-haven assets like gold, which can lead to reduced investment in equities and contribute to the S&P 500's downward trend.
S&P 500 - Technical Analysis
The S&P 500 is currently trading at $5,780.04, down 0.21% for the day, as the index faces resistance around the $5,796.45 level. Despite the slight decline, the overall trend remains positive, with the index holding above the key pivot point at $5,762.91.
A successful breakout above $5,796.45 could propel the S&P 500 toward the next resistance levels at $5,822.06 and $5,852.82, indicating potential for further gains.
On the downside, immediate support lies at $5,734.58, just above the 50-day Exponential Moving Average (EMA) at $5,733.94, which has historically provided strong support during pullbacks.
A drop below this level could signal increased selling pressure, targeting further support at $5,707.99 and $5,676.19.
The Relative Strength Index (RSI) is currently at 60, suggesting that the market is approaching overbought territory but still has room for additional upside.
If the RSI climbs above 65, it could indicate strengthening bullish momentum, reinforcing the likelihood of an upward move past the $5,796.45 resistance level.
If prices break above $5,796.45, expect the S&P 500 to test the $5,822.06 resistance level. Conversely, if the index falls below the $5,734.58 support, it could face further declines toward $5,707.99, potentially shifting the trend toward a bearish stance.
Overall, the outlook remains cautiously bullish as long as the S&P 500 holds above $5,734.58.
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USD/JPY Price Analysis – Oct 10, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair struggled to gain positive traction despite a bullish US dollar.
This downward trend can be attributed to the official data released today, which indicated that Japan's Producer Price Index (PPI) remained unchanged in September, while the annual rate increased more than anticipated.
This data is seen as providing some support for the JPY. Meanwhile, the US dollar consolidates its recent strong gains, reaching an eight-week high as traders await the release of the latest US consumer inflation figures.
This bullish sentiment surrounding the US dollar may help the USD/JPY pair limit deeper losses moving forward.
Mixed Economic Data and Uncertainty Weigh on JPY, Allowing USD/JPY Pair to Rise
On the JPY front, recent data shows that Japan's Producer Price Index (PPI) remained unchanged in September, contrary to expectations of a 0.3% decline. The annual rate, however, unexpectedly rose from 2.6% in August to 2.8%. This information is seen as providing some support to the Japanese Yen (JPY).
In the meantime, data released on Tuesday revealed that real wages in Japan fell in August after two months of gains, along with a drop in household spending. These factors raise concerns about the strength of private consumption and the sustainability of economic recovery.
Adding to this uncertainty, Japanese Prime Minister Shigeru Ishiba made blunt comments regarding monetary policy, which have fueled doubts about the Bank of Japan's plans for a rate hike. This situation has weighed on the Japanese yen, allowing the USD/JPY pair to rise.
Furthermore, a quarterly survey from the Bank of Japan showed that while 85.6% of Japanese households expect prices to rise over the next year, this figure is down from 87.5% in the previous survey. This slight decrease offers some support to the yen but reflects ongoing concerns about inflation expectations.
Therefore, the mixed economic data and uncertainty surrounding Japan's monetary policy have contributed to a weaker JPY, enabling the USD/JPY pair to rise. The decline in household spending and real wages raises concerns about Japan's economic recovery, further supporting this upward movement.
US Dollar Strengthens as FOMC Minutes Signal Cautious Approach to Rate Cuts
On the US front, the US dollar has risen to its highest level since August 16, driven by the hawkish minutes from Wednesday's Federal Open Market Committee (FOMC) meeting. Some policymakers expressed a preference for only a 25 basis point rate reduction due to ongoing concerns about elevated inflation.
Moreover, Boston Fed President Susan Collins mentioned that the Fed's policy will remain data-dependent and stressed the importance of maintaining healthy labor market conditions.
San Francisco Fed President Mary Daly noted that the size of the September rate cut does not determine future cuts and suggested that one or two more reductions might occur this year if the economy progresses as anticipated.
Market participants, according to the CME Group's FedWatch Tool, are now pricing in a higher chance of a 25 basis point cut in November, with more than a 20% probability of holding rates steady.
Investors are now awaiting the US Consumer Price Index (CPI) release, as well as the Producer Price Index (PPI) due on Friday, which could impact expectations for the Fed's rate-cutting path and influence the USD/JPY pair.
USD/JPY - Technical Analysis
The USD/JPY pair is trading at 149.386, up 0.06%, maintaining a bullish bias as it hovers near recent highs. On the 4-hour chart, the pair is holding above the key pivot point at 149.009, suggesting continued upward momentum.
If USD/JPY manages to break above the immediate resistance at 149.759, it could potentially aim for the next resistance levels at 150.494 and 151.244, marking a potential new multi-year high.
The pair’s bullish momentum is further supported by the 50-day Exponential Moving Average (EMA) at 146.506, which is significantly below the current price, indicating strong underlying support.
Additionally, the Relative Strength Index (RSI) is currently at 72, placing the pair in overbought territory. While this suggests the possibility of a short-term pullback, it also highlights the strength of the current bullish trend.
If USD/JPY reverses direction and fails to hold above the pivot point at 149.009, immediate support can be found at 148.275, followed by deeper support levels at 147.349 and 146.200.
A breach below these levels could signal a bearish reversal, but as long as the pair remains above the 50-day EMA, the overall outlook stays positive.
Given the strong uptrend and high RSI, traders should watch for potential profit-taking or consolidation near the 150 level. The current technical setup indicates that any dips may be considered as buying opportunities, provided the pair holds above 148.275.
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AUD/USD Price Analysis – Oct 10, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair found itself in positive territory on Thursday, breaking a five-day losing streak and trading around 0.6730 level. This upward movement can be linked to a risk-on market sentiment, which generally supports the Australian dollar (AUD) and helped boost the pair’s value.
However, the stronger US dollar (USD) is casting a shadow, fueled by growing speculation that the Federal Reserve may implement a 25 basis point rate cut in November, putting pressure on the Aussie in the near term.
Moreover, recent efforts by Beijing to stimulate its economy fell short of expectations, disappointing investors.
China's top economic planning authority did not announce any new measures to boost growth, which raises concerns, especially since China is one of Australia’s major trading partners.
These worries about China's slowing economy could weigh on the value of the Australian dollar, highlighting the interconnectedness of global economies.
Fed Rate Cut and Its Impact on AUD/USD Pair
On the US front, the stronger US dollar is facing potential challenges as speculation grows around a possible 25 basis point rate cut by the Federal Reserve in November. Investors are keeping a close eye on the upcoming Consumer Price Index (CPI) inflation data, which will be released later on Thursday.
Notably, the headline CPI is expected to show a 2.3% year-over-year increase for September, while core CPI inflation is projected to rise by 3.2% in the same period.
If the report reveals softer inflation than expected, it could increase the likelihood of a significant Fed rate cut, which might weaken the dollar and support the Australian dollar (AUD).
In the meantime, the recent comments from Federal Reserve officials also suggest the possibility of rate cuts.
San Francisco Fed President Mary Daly mentioned that one or two more cuts could happen this year if economic conditions align with her expectations, expressing confidence that inflation is moving toward the Fed's 2% target.
Similarly, Boston Fed President Susan Collins indicated that weaker inflation trends make further rate reductions likely. Markets are currently pricing in nearly an 80% chance of a 25 basis point cut in November, a significant rise from 31.1% just last week, according to the CME FedWatch Tool.
Therefore, the potential for a Fed rate cut and softer inflation data could weaken the US dollar, providing support for the AUD/USD pair. This environment may help the Australian dollar recover some of its losses, counteracting the stronger dollar's influence.
Impact of China's Economic Challenges on the AUD/USD Pair
On the other side, Beijing's efforts to boost the economy have left investors disappointed, as the country's top economic planning authority did not introduce new measures to address slowing growth.
This is significant because China is a major trading partner for Australia, and concerns about its economic performance typically weaken the Australian dollar (AUD).
Meanwhile, the Reserve Bank of Australia's (RBA) September meeting minutes indicated that board members noted there would be no rate cuts in the near future but want to remain flexible to see if the economy improves later this year.
This approach keeps the possibility open for a neutral stance by the end of the year, with potential rate cuts in early 2025. ANZ analysts predict that the first cash rate cut may occur in February 2025.
Furthermore, the World Bank has forecasted a slowdown in China’s growth rate to 4.3% in 2025, down from a projected 4.8% this year.
Therefore, the disappointment in China's economic efforts and forecasts of slower growth are likely to weaken the Australian dollar (AUD), which may lead to a bearish outlook for the AUD/USD pair as investors react to these economic signals.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) is trading at $0.67392, up 0.33%, signaling a potential rebound from recent lows. On the 4-hour chart, the pair is testing the pivot point at $0.67389, which aligns with a minor support level.
If the AUD/USD sustains its position above this level, it could target the immediate resistance at $0.67621, followed by the 50-day Exponential Moving Average (EMA) at $0.67612.
A successful breakout above the 50-day EMA would pave the way for further gains toward the next resistance levels at $0.67861 and $0.68105.
Conversely, if the AUD/USD fails to hold above $0.67389, the pair may encounter initial support at $0.67108, followed by deeper support levels at $0.66915 and $0.66708.
A breach below $0.66708 would likely signal increased bearish pressure, exposing the pair to further downside risks.
The Relative Strength Index (RSI) stands at 50, indicating neutral market sentiment. This suggests that AUD/USD could move in either direction depending on whether it breaks above or below the current pivot level.
With the RSI at equilibrium, traders should watch for a clear breakout above $0.67621 or a breakdown below $0.67108 for directional cues.
Given the current technical setup, buying interest above $0.67223 could drive the pair toward $0.67616, while a failure to maintain above this level may trigger selling pressure.
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GOLD Price Analysis – Oct 10, 2024
Daily Price Outlook
Gold prices (XAU/USD) managed to break a six-day losing streak on Thursday, bouncing back from a nearly three-week low and hovering around the 2,618 level.
However, this rebound lacks strong support and may lose some momentum due to rising expectations for a 25 basis points interest rate cut by the Federal Reserve (Fed) in November.
This scenario helps the US Dollar maintain its recent gains, reaching an eight-week high, which could weigh on the demand for gold.
Looking forward, traders are likely to adopt a wait-and-see approach ahead of the important US consumer inflation figures to be released later in the North American session.
The Consumer Price Index (CPI) report will be crucial in shaping expectations about the size of the Fed's rate cut next month, which could impact USD demand and influence gold prices.
Moreover, ongoing conflicts in the Middle East may present short-term trading opportunities for investors in the safe-haven metal.
Strong US Dollar and Rate Cut Expectations Pressure Gold Prices
On the US front, the broad-based US Dollar (USD) is maintaining its strong gains, recently reaching an eight-week high. This upward momentum is due to rising expectations for a 25 basis points (bps) interest rate cut by the Federal Reserve (Fed) in November.
Minutes from the September Federal Open Market Committee (FOMC) meeting revealed that most members supported a larger 50 bps cut, believing inflation would trend towards the 2% target.
However, some members preferred a smaller 25 bps reduction, citing ongoing high inflation, strong economic growth, and low unemployment rates.
Traders are now anticipating a higher chance that the Fed will only reduce rates by 25 bps in November, with over a 20% possibility that rates will remain unchanged. Dallas Fed President Lorie Logan expressed concerns about the economic outlook but favored smaller cuts.
Boston Fed President Susan Collins emphasized that the Fed's decisions will be data-dependent, aiming to maintain a healthy labor market. San Francisco Fed President Mary Daly noted that one or two more cuts could happen this year, but the September cut doesn't determine future moves.
Meanwhile, yields on the two-year and ten-year US government bonds have reached their highest levels since mid-August and late July, respectively.
Therefore, the strong US Dollar and rising interest rate expectations may pressure gold prices as higher rates increase the opportunity cost of holding non-yielding assets. Consequently, gold might struggle to gain traction, limiting its appeal to investors.
Escalating Middle East Tensions Boost Demand for Gold as a Safe Haven
Apart from this, the ongoing conflicts in the Middle East are attracting attention from investors seeking short-term opportunities in gold, a safe-haven asset.
There is growing concern over escalating tensions, particularly between Israel and Iran. Israeli Defense Minister Yoav Gallant has warned that any military action against Iran would be "lethal, precise, and surprising."
This raises fears of further instability in the region, prompting investors to consider gold as a protective measure against potential risks. As a result, gold could see increased demand if tensions continue to rise, impacting its price positively.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,614.40, up 0.26%, as the precious metal attempts to stage a recovery after several days of decline. The 4-hour chart shows Gold finding support near the $2,606 pivot point, which aligns with the trendline support observed since early October.
This level is critical, as maintaining it could foster further bullish momentum. Immediate resistance is positioned at $2,624, followed by the 50-day Exponential Moving Average (EMA) at $2,635.
A break above $2,635 could open the door for an advance toward $2,647, where stronger selling pressure may re-emerge.
However, if Gold fails to hold above the $2,606 pivot, the immediate support level shifts to $2,596, with deeper support at $2,587. A breach below these levels could signal a bearish shift, exposing prices to the $2,576 area.
The Relative Strength Index (RSI) currently stands at 43, indicating neutral sentiment but hovering near oversold territory.
This suggests that while bears have a slight upper hand, a potential reversal could be on the horizon if buying interest gains traction above $2,624.
The technical outlook remains cautious yet slightly optimistic, contingent on Gold's ability to stay above the $2,606 support level. Traders should watch for a decisive break above $2,635 to confirm the bullish bias, while a drop below $2,596 could trigger further selling.
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GBP/USD Price Analysis – Oct 09, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair continued its downward trend, trading under pressure around the 1.3090 level and reaching an intra-day low of 1.3056. This decline can largely be attributed to growing market speculation that the Bank of England (BoE) is likely to accelerate its rate-cutting cycle.
This sentiment was bolstered by dovish comments from BoE Governor Andrew Bailey last week, who suggested that the central bank might adopt a more aggressive approach to rate cuts if favorable inflation data emerges. These remarks have been a significant factor exerting downward pressure on the GBP/USD pair.
Conversely, the US Dollar (USD) remains strong, hovering near a seven-week high reached last week, fueled by reduced expectations for aggressive policy easing by the Federal Reserve (Fed). This dynamic has further contributed to the downward movement of the GBP/USD pair.
Challenges for the British Pound Amid BoE Rate-Cutting Expectations
On the BoE front, the British Pound (GBP) is facing challenges as market expectations grow that the Bank of England (BoE) may speed up its rate-cutting cycle. This shift in sentiment follows dovish comments from BoE Governor Andrew Bailey last week. He indicated that the central bank might take a more aggressive approach to cutting rates if there is positive news on inflation. As a result, many traders are betting on the possibility of lower interest rates in the UK.
These developments are putting downward pressure on the GBP/USD currency pair. Investors are concerned that a rate cut could weaken the pound further, leading to increased selling. As the market reacts to these expectations, the GBP continues to struggle against the US Dollar, which remains strong due to diminishing chances of aggressive policy easing from the Federal Reserve. This combination of factors is contributing to the pound's relative underperformance in the currency markets.
US Dollar Strength and its Impact on GBP/USD Outlook
On the US front, the US Dollar (USD) is performing well, sitting close to a seven-week high reached last week. This strength is driven by decreasing expectations for aggressive policy easing by the Federal Reserve (Fed). Currently, markets believe there is over an 85% chance that the Fed will lower interest rates by 25 basis points (bps) in November.
Besides this, rising geopolitical tensions in the Middle East and disappointing news regarding China's economic stimulus are supporting the dollar. These factors are contributing to a negative outlook for the GBP/USD pair.
Given this situation, the most likely direction for the GBP/USD is downward. However, bearish traders may hold back on making significant bets until they see the release of the FOMC meeting minutes later today.
Furthermore, key reports such as the US Consumer Price Index (CPI) and the Producer Price Index (PPI), scheduled for Thursday and Friday, will also affect USD price movements. These reports could play a crucial role in determining the next significant shift in the GBP/USD pair's direction.
GBP/USD - Technical Analysis
The British Pound (GBP/USD) is trading lower at $1.30776, down 0.21% on the day, as bearish sentiment prevails. On the 4-hour chart, the pair is currently hovering below the pivot point at $1.31065, indicating selling pressure. Immediate resistance is located at $1.31345, followed by $1.31666 and $1.31972, suggesting that the pair needs to clear these levels to signal a potential bullish reversal.
On the downside, immediate support is found at $1.30595, with further levels at $1.30320 and $1.30021 providing additional protection. A drop below these levels could increase downside momentum. The 50-day Exponential Moving Average (EMA) at $1.31060 is positioned close to the pivot point, acting as a strong resistance. The Relative Strength Index (RSI) stands at 41, which is approaching oversold territory but remains neutral.
Given the current market structure, traders might consider a buying opportunity above $1.30588, targeting the pivot point at $1.31065 with a stop-loss set below $1.30310. However, failing to hold above $1.30595 could lead to further selling pressure, pushing the pair toward $1.30320. For a potential bullish reversal, GBP/USD would need to sustain a move above $1.31065, which could open the path toward $1.31345 and beyond.
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EUR/USD Price Analysis – Oct 09, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continues its bearish trend, hovering around 1.0960 as the US Dollar strengthens ahead of the release of the FOMC Minutes. Meanwhile, the Euro (EUR) remains under selling pressure as traders have factored in expectations of further rate cuts by the European Central Bank (ECB).
The ECB is anticipated to lower its Deposit Facility Rate by 50 basis points to 3% by year-end, implying two 25 basis point cuts in the upcoming policy meetings scheduled for next week and December.
Euro Under Pressure as ECB Signals More Rate Cuts
On the EUR front, the Euro is under pressure as traders expect more rate cuts from the European Central Bank (ECB). The ECB is anticipated to lower its Deposit Facility Rate by 50 basis points (bps) to 3% by the end of this year, with two 25 bps cuts planned for the upcoming policy meetings in November and December.
This comes after the ECB already cut borrowing rates by 50 bps earlier this year, as officials believe inflation will return to the target of 2% by 2025. The declining trend in price pressures and weak economic growth in the Eurozone have fueled these expectations.
ECB policymaker and Governor of the Greek Central Bank, Yannis Stournaras, also supports two more rate cuts this year and suggests further reductions in 2025 as inflation continues to ease. In a recent interview with the Financial Times, he mentioned that inflation is slowing down faster than the ECB had predicted in September, reinforcing the case for additional rate cuts. This has increased market expectations for continued monetary easing as the Eurozone economy remains vulnerable.
Therefore, the anticipated rate cuts by the ECB are likely to weaken the Euro against the US Dollar, leading to continued bearish pressure on the EUR/USD pair. As traders react to these expectations, the Euro may struggle to regain strength.
US Dollar Strengthening Puts Pressure on EUR/USD Pair
On the US front, the broad-based US Dollar (USD) continues to strengthen, putting pressure on the EUR/USD pair. The US Dollar Index (DXY) has climbed to a seven-week high of 102.70 as traders adjust their expectations regarding future interest rate cuts from the Federal Reserve (Fed).
Following a strong Nonfarm Payrolls (NFP) report for September, concerns about economic growth and consumer spending have eased, leading many traders to unwind their earlier bets on significant rate cuts. Moreover, heightened tensions in the Middle East have increased the appeal of the USD as a safe haven asset.
Looking ahead, financial market participants expect the Fed to implement a smaller rate cut of 25 basis points in the remaining two policy meetings this year. Investors will be closely watching the Federal Open Market Committee (FOMC) Minutes from September, scheduled for release on Wednesday at 18:00 GMT.
The strengthening US Dollar, driven by positive economic data and shifting rate expectations, is likely to maintain downward pressure on the EUR/USD pair. As traders adjust their positions, the Euro may struggle to recover against the robust Greenback.
EUR/USD - Technical Analysis
The Euro (EUR/USD) is currently trading at $1.09616, down 0.17% for the day, as bearish momentum dominates. The pair is moving below the key pivot point of $1.09529 on the 4-hour chart, signaling continued downward pressure. Immediate resistance is situated at $1.09991, followed by $1.10163 and $1.10362, suggesting that buyers will need to push the pair above these levels to regain control.
On the downside, immediate support lies at $1.09400, with additional supports at $1.09275 and $1.09141. A break below $1.09400 could lead to further declines, targeting these lower levels. The 50-day Exponential Moving Average (EMA) at $1.09906 is currently acting as a critical resistance level, reflecting a bearish bias as long as prices remain beneath it.
The Relative Strength Index (RSI) stands at 39, indicating a nearing oversold condition that could trigger a potential consolidation or short-term rebound if support holds.
Traders may consider a buying opportunity if EUR/USD breaks above $1.09527, targeting a move to $1.09924, with a stop-loss set below $1.09278 to manage risk. On the other hand, failure to hold above $1.09529 could signal a deeper correction toward the next support at $1.09275.
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GOLD Price Analysis – Oct 09, 2024
Daily Price Outlook
Gold prices (XAU/USD) prolonged its six-day downward trend and remained well offered around $2,621 after hitting an intra-day low of $2,615. This downward trend is triggered by the bullish US dollar, which gained positive traction in the wake of decreasing expectations for a significant Fed rate cut in November. Traders seems cautious to place any strong position ahead of the upcoming FOMC meeting minutes and U.S. inflation data. Alongside these factors, reports of a potential ceasefire between Hezbollah and Israel are intensifying the downward pressure on gold prices.
Strong US Dollar and Mixed Fed Signals Weigh on Gold Prices
On the U.S. side, the US dollar continued its upward trend, remaining well-supported around the multi-week high reached last Friday. This strength is driven by a reduction in investor expectations for an aggressive rate cut by the Federal Reserve in November, which has placed additional pressure on gold prices, pushing them below the $2,630 support level. According to the CME Group's FedWatch Tool, there is now an 85% chance of a 25-basis-point rate cut in November, with a 50-basis-point cut anticipated by year-end.
Fed officials have conveyed mixed signals regarding interest rate policy. New York Fed President John Williams suggested that a gradual reduction in interest rates is appropriate, using the September 50-basis-point cut as a reference for future actions. In contrast, Fed Governor Adriana Kugler emphasized that policy decisions would be data-driven, indicating that more cuts could occur if inflation continues to improve.
Meanwhile, Boston Fed President Susan Collins pointed out that while inflation is cooling, the U.S. economy and labor markets remain robust. Fed Vice Chair Philip Jefferson also noted that economic growth is solid, inflation has eased, and the labor market has cooled from its previous overheating.
In the meantime, the 10-year U.S. government bond yield remains above 4%, exerting further pressure on gold. As a result, the reduced expectations for aggressive Fed rate cuts, coupled with strong U.S. economic data, have bolstered the US dollar, pushing gold prices lower.
Easing Geopolitical Tensions and Technical Selling Pressure Gold Prices Downward
On the geopolitical front, Iran-backed Hezbollah indicated on Tuesday that it might be willing to consider a ceasefire without requiring an end to the Gaza war as a precondition. This development has sparked hopes for reduced tensions between Lebanon and Israel, which could diminish the demand for safe-haven assets like gold. Consequently, the combination of easing geopolitical tensions and technical factors is contributing to the current downturn in gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading lower at $2,613.02, down 0.34% for the day, signaling continued selling pressure as the metal struggles to hold above critical support levels. On the 4-hour chart, gold is trading below the pivot point at $2,623.02, indicating a bearish outlook in the near term. Immediate resistance is seen at $2,632.79, with additional hurdles at $2,640.56 and $2,655.51 if buying interest picks up.
On the downside, immediate support is located at $2,606.30, followed by deeper support levels at $2,596.45 and $2,586.52. The 50-day Exponential Moving Average (EMA) at $2,635.53 suggests a strong resistance level, reinforcing the bearish sentiment. The Relative Strength Index (RSI) stands at 37, indicating the metal is approaching oversold territory, which may suggest a potential rebound if prices stabilize above the $2,620 mark.
Given the bearish momentum, traders may consider selling below $2,620 with a target at $2,606, while a stop-loss order above $2,627 could limit risk. A decisive break below $2,606 could accelerate selling pressure, driving prices toward the next support level at $2,596. Conversely, a recovery above $2,623 could signal a reversal, with potential gains toward $2,635.
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