USD/CAD Price Analysis – Sep 24, 2024
Daily Price Outlook
During the European session on Tuesday, the USD/CAD pair extended its downward trend, dropping to approximately 1.3510.
This decline was largely attributed to the weakening of the US dollar. Market participants are closely watching the upcoming release of the US September Consumer Confidence data, along with speeches from Federal Reserve Governor Michelle Bowman and Bank of Canada Governor Tiff Macklem.
Both events could have a substantial impact on market sentiment and influence trading decisions.
Impact of US Economic Data and Fed Policy on USD/CAD Pair
However, the ongoing weakness in the US dollar is putting pressure on the USD/CAD pair. Investors are closely monitoring the upcoming release of the US September Consumer
Confidence data, along with speeches from Federal Reserve Governor Michelle Bowman. Recently, several Federal Reserve officials have hinted at the potential for significant interest rate cuts later this year.
Chicago Fed President Austan Goolsbee noted that lowering rates could facilitate a smooth economic landing while effectively managing inflation and safeguarding jobs.
In addition, Atlanta Fed President Raphael Bostic noted that a substantial rate cut could bring interest rates closer to neutral levels, balancing the risks between inflation and employment.
Minneapolis Fed President Neel Kashkari expects to lower rates by a quarter-point at each of the Fed's two remaining meetings this year.
Recent data showed a slight slowdown in US manufacturing activity, with the Manufacturing Purchasing Managers Index (PMI) dropping to 47.0 in September, the lowest in 15 months.
The Services PMI eased to 55.4, slightly above market expectations, indicating a gradual decline in the service sector.
Therefore, the weakness of the US dollar, coupled with anticipated interest rate cuts by the Federal Reserve, is likely to put further downward pressure on the USD/CAD pair. This sentiment may lead to continued declines as investors reassess their positions.
Potential Impact of Macklem's Speech on USD/CAD Pair
On the other hand, Bank of Canada (BoC) Governor Tiff Macklem is scheduled to speak later on Tuesday, and his remarks may shed light on the central bank's plans for interest rate cuts by year-end.
According to TD Economics, the BoC must exercise caution in implementing significant cuts, as this could drive inflation below its target range.
They estimate that Canada's "neutral" overnight rate stands at approximately 2.25 percent, which is two percentage points lower than the current rate.
Macklem's speech is expected to highlight the delicate balance the BoC must maintain between fostering economic growth and controlling inflation. If he indicates a readiness to implement significant rate cuts, it may weaken the Canadian dollar as investors recalibrate their expectations.
Conversely, a more cautious stance could strengthen the Canadian dollar, providing support for the USD/CAD pair. Market participants will be attentively monitoring his remarks for insights into the future direction of Canadian monetary policy.
USD/CAD - Technical Analysis
The USD/CAD pair is currently trading at $1.35105, down 0.19%, as the U.S. dollar weakens against the Canadian dollar during the early trading hours.
The price has slipped below its 50-day Exponential Moving Average (EMA) of $1.3561, signaling growing bearish momentum in the short term.
Immediate support is found at $1.3493, a key level that, if broken, could lead to further downside towards $1.3467 and $1.3442.
On the upside, the pair faces immediate resistance at $1.3572, which aligns with the pivot point at $1.3544. A sustained break above this could challenge higher resistance levels at $1.3601 and $1.3635, though the current downtrend suggests selling pressure may persist.
The Relative Strength Index (RSI) stands at 39, indicating the pair is approaching oversold territory but has room for further declines before a significant reversal.
Traders are watching for a potential sell-off below the $1.35298 level, with a take-profit target set at $1.34758.
Overall, the technical setup favors bearish sentiment, especially with the price trading below the 50 EMA and the RSI leaning towards oversold. If support at $1.3493 gives way, a sharper decline could be triggered.
In conclusion, USD/CAD presents a bearish outlook below $1.35298, with a potential downside target of $1.34758 and stop-loss at $1.35619.
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AUD/USD Price Analysis – Sep 24, 2024
AUD/USD Price Analysis – Sep 24, 2024
Daily Price Outlook
During the European trading session on Tuesday, the AUD/USD currency pair maintained its upward momentum, remaining well bid around the 0.6850 level and reaching an intra-day high of 0.6870.
The pair's upward movement was supported by upbeat market sentiment, which generally benefits risk-sensitive currencies like the Australian dollar.
Furthermore, a bearish US dollar, pressured by expectations of more aggressive policy easing by the Federal Reserve, provided further support for the AUD/USD pair.
Furthermore, China's announcement of a broad range of stimulus measures to boost its faltering economy also bolstered the Australian dollar.
RBA’s Steady Policy and China’s Stimulus Measures Boost AUD/USD Outlook
On the AUD front, the Australian central bank kept interest rates unchanged for the seventh consecutive meeting, as expected. The Reserve Bank of Australia (RBA) emphasized that monetary policy will remain restrictive until inflation shows clear signs of moving toward the target range.
RBA Governor Michele Bullock noted that recent data has not significantly changed the bank's policy outlook, reinforcing the central bank’s cautious stance.
Meanwhile, China's efforts to boost its slowing economy added support to the AUD/USD pair. On Tuesday, China announced a broad range of stimulus measures, including the People's Bank of China (PBOC) cutting the Reserve Requirement Ratio (RRR) by 50 basis points, which will release about 1 trillion yuan for new lending.
This move, combined with renewed US dollar weakness, has been a positive factor for the Australian dollar, as stronger economic ties with China benefit Australia's economy.
These factors are expected to act as a tailwind for the AUD/USD pair, supporting its upward momentum.
Weak US Dollar and Global Equity Strength Boost AUD/USD Prospects
On the US front, the US dollar has been losing momentum due to expectations that the Federal Reserve may adopt more aggressive policy easing. This outlook has weighed on the dollar's recovery from its year-to-date low.
Additionally, the strong performance of global equity markets has further reduced demand for the US dollar as a safe-haven asset.
These factors are helping to limit any potential losses for the AUD/USD pair and are likely to support further short-term gains.
As the US dollar remains weak, it provides a favorable environment for the Australian dollar to strengthen against it.
AUD/USD - Technical Analysis
The Australian dollar (AUD/USD) is currently trading at $0.68304, up 0.25%, as the pair shows a modest recovery during the Asian session. The price remains above its 50-day Exponential Moving Average (EMA) of $0.6811, indicating short-term bullish momentum.
Immediate resistance is seen at $0.6870, just above the pivot point of $0.6869. A break above this level could lead the pair toward the next resistance at $0.6902, and potentially extend to $0.6928 if momentum holds.
On the downside, immediate support is located at $0.6784, with further key levels at $0.6757 and $0.6725.
Technically, the RSI (Relative Strength Index) is positioned at 51, suggesting a neutral stance, with neither overbought nor oversold conditions.
This gives the market room to maneuver in either direction, depending on upcoming catalysts, such as U.S. and Australian economic data releases.
The pair’s trajectory remains cautiously bullish as long as it stays above the 50 EMA. However, the pivot point at $0.6869 will be crucial for further upside. If prices can break above immediate resistance, AUD/USD could see an extension toward the $0.6902 and $0.6928 resistance levels.
Conversely, a dip below $0.68084 could shift sentiment toward the downside, with targets near the $0.67798 stop-loss level.
Overall, AUD/USD looks poised for a potential rally above $0.68084, targeting $0.68693, while maintaining a stop-loss at $0.67798 to manage downside risk.
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USD/CAD Price Analysis – Sep 24, 2024
GOLD Price Analysis – Sep 23, 2024
Daily Price Outlook
Gold (XAU/USD) has extended its early bullish rally, trading around the 2,627 level and reaching an intraday high of 2,631.
This upward movement is driven by a weaker US dollar, which has struggled following the Federal Reserve’s shift towards a monetary easing cycle and increasing expectations for further rate cuts this year.
Analysts anticipate an additional 75 basis points (bps) of cuts in 2024, following last week’s aggressive 50 bps reduction to a 4.75-5.00% range. This monetary policy shift is a key factor propelling gold prices higher.
Furthermore, the heightened geopolitical tensions in the Middle East have created a risk-off market sentiment, prompting investors to seek refuge in safe-haven assets like gold.
Fed Rate Cuts Weaken US Dollar, Boost Gold Prices
On the US front, the broad-based US dollar has been flashing red after the Federal Reserve (Fed) cut interest rates by a larger-than-usual half-percentage point to a range of 4.75% to 5.00%. This decision aims to support the economy while keeping unemployment low as inflation starts to ease.
Fed Chair Jerome Powell emphasized that this move reflects the policymakers' commitment to these goals. Furthermore, Fed officials expect another 75 basis points (bps) of rate cuts by the end of the year, which could further weaken the US dollar.
Meanwhile, Philadelphia Fed President Patrick Harker highlighted that the central bank has successfully navigated a challenging economic environment in recent years. He pointed out that both "hard" and "soft" economic data play crucial roles in their decision-making process.
Therefore, the Fed's rate cuts and a weaker US dollar typically boost gold prices, as gold becomes more attractive to investors seeking safe-haven assets. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, driving demand higher.
Escalating Middle East Tensions Boost Demand for Gold
On the geopolitical front, tensions in the Middle East are escalating as Israeli forces have launched new attacks in southern and eastern Lebanon, resulting in at least one civilian death.
Concerns about a potential full-scale war are growing, especially after Hezbollah declared a "battle of reckoning" with Israel. In Gaza, Israeli airstrikes have tragically killed a mother and her four children, along with several others in attacks on schools that are currently serving as shelters.
However, the humanitarian toll is staggering, with at least 41,431 people reported killed and 95,818 injured due to the ongoing conflict in Gaza.
Consequently, the escalating tensions and humanitarian crisis in the Middle East typically increase demand for safe-haven assets like gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is showing bullish momentum as the price continues to edge higher, currently trading at $2,624.20, up by 0.27%.
The recent price action suggests the market is testing critical resistance levels, while overall momentum remains strong. With a 4-hour chart timeframe, traders are focusing on key technical levels to gauge the next possible moves.
Gold is hovering near the pivot point at $2,630, which serves as both an immediate resistance and a crucial level to watch. A successful break above this point could see gold testing higher resistance levels at $2,639 and $2,648.
However, if the price fails to breach this level, we could see a pullback toward immediate support at $2,609. Below that, key support levels lie at $2,600 and $2,589, which will be crucial to maintaining the overall uptrend.
The technical indicators support the bullish outlook. The RSI is at 71, indicating that gold is in overbought territory, which could potentially lead to a short-term correction.
Nevertheless, the 50-day EMA at $2,585 is providing a strong base for the upward trend, suggesting that any dips could be viewed as buying opportunities.
In conclusion, the current technical setup favors a buy-above strategy with an entry price at $2,616.
Traders should target $2,630 for profit-taking, while setting a stop-loss at $2,610 to manage downside risk. Given the overbought conditions, a cautious approach is advised as gold approaches key resistance.
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GBP/USD Price Analysis – Sep 23, 2024
GBP/USD Price Analysis – Sep 23, 2024
Daily Price Outlook
During the early European trading session, the GBP/USD currency pair continued its three-day losing streak, dropping to 1.3266 on Monday. This decline comes as the US Dollar sees a modest recovery, putting additional pressure on the major pair.
The Bank of England's cautious approach to interest rates, combined with steady inflation, adds to the uncertainty surrounding the pound, as traders look for clearer signals on monetary policy.
Looking ahead, all eyes will be on the flash reading of the US Purchasing Managers Index (PMI) scheduled for release later today.
A stronger-than-expected PMI could bolster the US dollar further, leading to additional selling pressure on the GBP/USD pair.
US Dollar Faces Pressure Amid Fed Rate Cut and Economic Uncertainty
Despite the rising expectations of a Fed rate cut, the broad-based US dollar has regained mild positive traction ahead of the flash reading of the US Purchasing Managers Index (PMI). Last week, the US Federal Reserve lowered its key overnight borrowing rate by half a percentage point, marking its first cut since the early days of the Covid pandemic.
The Fed's statement expressed greater confidence that inflation is moving toward its 2% target, with risks to employment and inflation goals now seen as roughly balanced.
However, Fed Chair Jerome Powell was careful not to claim victory over inflation, as pricing pressures still persist.
Looking ahead, the US Personal Consumption Expenditures (PCE) index, which is the Fed's preferred measure of inflation, is set to be released on Friday. This report may provide insights into inflation trends and the future of US interest rates.
Meanwhile, uncertainty about the US economic outlook, coupled with rising expectations of further Fed rate cuts later this year, is likely to keep pressure on the US dollar, particularly against the Pound Sterling (GBP).
Bank of England's Cautious Stance Bolsters GBP Against USD
On the other hand, Bank of England (BoE) Governor Andrew Bailey emphasized the importance of keeping inflation low. He stated that it’s crucial not to reduce interest rates too quickly or by too much to maintain stability.
In their latest monetary policy meeting, the BoE decided to hold interest rates steady at 5.0%. This decision came right after the UK reported its Consumer Price Index (CPI) inflation data, which remained unchanged at 2.2% year-over-year in August.
Bailey's cautious approach reflects the ongoing challenges in managing inflation and economic growth. By keeping interest rates steady, the BoE aims to balance the need for economic support while preventing inflation from rising.
As inflation data shows signs of stability, the central bank is carefully considering its next steps. Market participants will be watching closely for any signals from the BoE regarding future interest rate decisions, as these choices will play a significant role in shaping the UK’s economic outlook.
Therefore, the Bank of England's decision to hold rates steady and focus on inflation stability may strengthen the GBP against the USD. As market participants anticipate cautious monetary policy, the GBP/USD pair could see upward pressure if inflation remains controlled.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.33131, down by 0.05% as the pound faces modest pressure amidst a subdued market environment. Despite the minor dip, the broader technical outlook remains cautiously optimistic, with the pair poised near key levels.
The pivot point stands at $1.3419, a critical juncture that, if breached, could signal further upward movement. Immediate resistance is situated at $1.3361, with additional hurdles at $1.3438 and $1.3507. Should the pair rally above these levels, a renewed bullish push could unfold.
However, on the downside, the first support lies at $1.3198. A move below this level could trigger a deeper correction, with further supports at $1.3114 and $1.3035. These levels will be crucial in determining whether the pound can maintain its overall uptrend or if bearish momentum takes control.
Technically, the RSI is hovering at 66, suggesting that the pair is approaching overbought conditions, signaling caution for traders eyeing further gains.
Meanwhile, the 50-day Exponential Moving Average (EMA) sits at $1.3005, continuing to provide a solid foundation for the pair’s upward trajectory. As long as the price remains above this level, the broader trend remains supportive of the bulls.
In conclusion, a buy-above strategy remains attractive, with an entry price at $1.32643 and a profit target at the pivot level of $1.34194. Traders should consider placing a stop-loss at $1.31995 to protect against downside risks, particularly if the pair fails to break above its immediate resistance.
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GOLD Price Analysis – Sep 23, 2024
EUR/USD Price Analysis – Sep 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD extended its downward trend, dropping to the 1.1111 level and hitting an intra-day low of 1.1083. This decline was primarily driven by disappointing German economic data, which weighed heavily on the pair.
The downturn in Germany’s manufacturing sector worsened in September, while services sector activity also suffered, as highlighted by the preliminary HCOB business activity report.
Moreover, the European Central Bank’s cautious approach to monetary policy and uncertainty about the eurozone’s economic outlook further dampened investor confidence.
In the meantime, the renewed mild strength in the US dollar ahead of US Purchasing Managers Index (PMI) also played a major role in pushing the EUR/USD pair lower.
Economic Challenges in Germany and Their Impact on the EUR/USD Pair
On the EUR front, Germany's manufacturing sector is facing significant challenges, with a downturn worsening in September.
The HCOB Manufacturing PMI fell to 40.3 this month, down from 42.4 in August and below the expected 42.4. This marks a yearly low for the sector, indicating a slowdown in manufacturing activity.
In addition, the services sector is also struggling, as shown by a decline in the Services PMI from 51.2 in August to 50.6 in September, falling short of the forecasted 51.0.
The HCOB Preliminary German Composite Output Index came in at 47.2, lower than the expected 48.2 and down from 48.4 in August, reaching its weakest point in seven months.
These figures highlight the ongoing economic difficulties in Germany, raising concerns about the overall health of the eurozone economy.
Therefore, the worsening manufacturing and services data in Germany raises concerns about economic stability, likely putting downward pressure on the EUR/USD pair as investors anticipate further challenges for the eurozone economy.
Impact of ECB's Flexible Monetary Policy on EUR/USD Pair
Moreover, European Central Bank President Christine Lagarde emphasized the need for flexible monetary policy in her recent speech. She stated that while the main goal of maintaining price stability remains the same, central banks must adapt to the rapidly changing global economy.
This flexibility is crucial for effectively addressing various challenges. By highlighting this, Lagarde acknowledges the current uncertainties in the market and the importance of adjusting policies to ensure economic stability and support growth in the eurozone.
Therefore, the Lagarde's focus on flexible monetary policy may lead to uncertainty about the ECB's future actions, likely putting downward pressure on the EUR/USD pair as traders reassess the euro's strength.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.11625, marking a flat session with minimal movement. The market is in a phase of consolidation, with a neutral bias, though technical indicators suggest the potential for further upside in the coming sessions.
The key to unlocking the next move lies around the pivot point at $1.1199. Should the pair break above this level, immediate resistance awaits at $1.1181, followed by stronger barriers at $1.1210 and $1.1241.
On the downside, the first line of support is at $1.1118, with deeper supports at $1.1094 and $1.1067.
The technical indicators support a cautious bullish outlook. The Relative Strength Index (RSI) stands at 58, indicating positive momentum but not yet overbought territory, leaving room for further gains.
Meanwhile, the 50-day Exponential Moving Average (EMA) is positioned at $1.1103, providing a solid foundation for the pair. As long as the EUR/USD remains above this level, the overall trend favors the bulls.
In terms of trade strategy, a buy-above approach seems prudent, with an entry point at $1.11466. A reasonable profit target would be the pivot level of $1.11988, with a stop-loss set at $1.11174 to mitigate downside risk.
Given the relative calm in the market, the focus will be on whether the pair can gather enough momentum to break through resistance levels and sustain any rally.
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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
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
EUR/USD Price Analysis – Sep 20, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair extended its upward momentum, gaining strength around the 1.1180 level.
The Euro (EUR) is rallying, fueled by growing speculation that the European Central Bank (ECB) will keep its Deposit Facility rate steady at 3.5% during its October meeting.
Meanwhile, the US dollar (USD) is facing a bearish trend, which is contributing to the rise of the euro. The US Dollar Index (DXY), which measures the Greenback against six major currencies, remains just above its year-to-date low of 100.21.
This combination of factors is helping to bolster the EUR/USD pair as traders navigate the shifting economic landscape.
US Dollar Weakens Amid Fed Rate Cuts, Boosting EUR/USD Momentum
The US dollar has weakened following the Federal Reserve's recent interest rate cut, as expectations rise that the central bank will continue easing its policies.
The Fed recently reduced rates by 50 basis points to stimulate the labor market while inflation approaches its 2% target. According to the latest dot plot, Fed officials expect the federal funds rate to reach around 4.4% by the end of the year.
However, traders anticipate further declines, with predictions suggesting rates could drop by up to 75 basis points, potentially bringing them down to a range of 4.00% to 4.25%, as indicated by the CME FedWatch tool.
This suggests a more cautious stance from the Fed as it navigates a challenging economic environment.
Therefore, the Fed's interest rate cut and expectations for further easing have weakened the US Dollar, making the Euro more attractive. This has contributed to the EUR/USD pair's upward momentum, pushing it higher as traders react to the shifting economic landscape.
EUR/USD Gaining Momentum as ECB Signals Steady Interest Rates
On the EUR front, the EUR/USD pair is gaining momentum, aiming to break through the key resistance level of 1.1200 during Friday’s European session.
The Euro is strengthening amid growing speculation that the European Central Bank (ECB) will keep its Deposit Facility rate unchanged at 3.5% in the upcoming October meeting.
Some ECB officials have expressed a preference for a gradual approach to policy easing, seeking more evidence of a slowdown in inflation.
Recent comments from policymakers, including Peter Kazimir, Isabel Schnabel, and Joachim Nagel, suggest that price pressures are still above the bank's target.
Specifically, Isabel Schnabel highlighted that persistent inflation in the services sector is keeping overall inflation elevated. Investors are now looking forward to ECB President Christine Lagarde’s speech at 15:00 GMT for more insights on interest rates.
In her recent remarks at the ECB's press conference on September 12, Lagarde emphasized that future interest rate decisions will hinge on inflation assessments and incoming economic data.
She stressed the need to understand underlying inflation dynamics and the effectiveness of monetary policy before committing to a specific rate path.
As a result, the EUR/USD pair is likely to rise as the Euro gains strength from speculation of unchanged interest rates from the ECB. Positive sentiment from ECB officials and anticipation of Lagarde's speech could further support the pair's upward momentum.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.11650, up by 0.04%, maintaining a slightly bullish tone as it holds above the key pivot point at $1.1146. Immediate resistance is seen at $1.1181, with additional resistance targets at $1.1210 and $1.1241.
A break above these levels could indicate further upside potential for the euro, especially if market sentiment towards the U.S. dollar remains weak.
On the downside, immediate support is located at $1.1118, followed by $1.1094 and $1.1067. These levels could serve as key turning points if bearish pressure intensifies.
The 50-day Exponential Moving Average (EMA) at $1.1131 is providing near-term support, reinforcing the bullish bias as long as prices stay above this level.
The Relative Strength Index (RSI) currently stands at 58, suggesting that the market still has room to move higher before hitting overbought territory.
With the RSI not yet signaling overextension, there is potential for the pair to continue its upward momentum. However, traders should monitor any break below $1.1118, which could signal a deeper pullback or trend reversal.
In conclusion, the EUR/USD outlook remains bullish as long as the pair holds above $1.1146. A break above $1.1181 would confirm continued bullish momentum, while a fall below $1.1118 could lead to a bearish correction.
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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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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