GOLD Price Analysis – Aug 23, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their upward rally, gaining traction around the $2,498.40 level and reaching an intra-day high of $2,501.85. This rebound is primarily fueled by a bearish US dollar, which lost its traction on the back of dovish expectations from the Federal Reserve. The overall outlook for gold remains positive ahead of a key event: Federal Reserve Chairman Jerome Powell's speech at the central banker symposium in Jackson Hole. Powell is anticipated to affirm market expectations of a rate cut at the Fed’s September 18 meeting. Additionally, persistent geopolitical tensions continue to lend support to gold prices.
Impact of Weakening US Dollar and Fed Rate Cut Expectations on Gold Prices
On the US front, the broad-based US Dollar (USD) is losing momentum as expectations grow that the Federal Reserve (Fed) may begin lowering interest rates at its September policy meeting. Although the USD had briefly rebounded from its year-to-date low, thanks to a rise in US Treasury bond yields, this recovery has been weak. Investors are increasingly betting on an imminent start to the Fed's rate-cutting cycle, which has helped limit losses for gold (XAU/USD).
On the data side, the US Department of Labor reported that Initial Jobless Claims rose to 232,000 in the week ending August 17, slightly above the previous 228,000. A review also showed that US employers added 818,000 fewer jobs than initially reported for the year through March.
Additionally, minutes from the July Federal Open Market Committee (FOMC) meeting revealed growing support among policymakers for a rate cut next month as inflation shows signs of easing. Meanwhile, the S&P Global flash PMI pointed to a sharp contraction in the manufacturing sector, while the services sector saw unexpected growth. Some Fed officials remain cautious, expressing the need for more data before fully endorsing a rate cut.
Therefore, these developments positively impact gold prices by weakening the US dollar and increasing expectations of Federal Reserve rate cuts. Economic uncertainties highlighted by recent data boost gold's appeal as a safe-haven asset, supporting and potentially elevating its value.
GOLD (XAU/USD) - Technical Analysis
Gold is currently demonstrating strength, trading at $2,492.85, up 0.33% for the day. The key pivot point at $2,503.37 will be crucial in determining gold's next move. Immediate resistance lies at $2,520.98, with further resistance levels at $2,540.75.
On the downside, support is found at $2,475.81, with additional levels at $2,450.95 and $2,432.88. The Relative Strength Index (RSI) is at 48, indicating neutral momentum, while the 50-day Exponential Moving Average (EMA) at $2,485.74 provides underlying support.
If gold manages to break above the $2,503.37 pivot point, it could sustain its upward trend, potentially reaching the $2,520.98 resistance level. However, if the price falls below the $2,475.81 support level, it could signal a deeper correction.
Conclusion: Consider buying above $2,480, with a target of $2,505 and a stop loss at $2,462. This strategy offers a balanced risk-to-reward ratio, especially if gold maintains its upward momentum.
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- EUR/USD Price Analysis – Aug 23, 2024
EUR/USD Price Analysis – Aug 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair made a modest recovery, edging higher to near 1.1113, hitting the intra-day high of 1.1132 level.
This upward movement was largely driven by a weaker US dollar, which dropped as traders shifted their focus to Federal Reserve (Fed) Chair Jerome Powell’s anticipated speech at the Jackson Hole Symposium. The US dollar resumed its recent weakness following a brief recovery, amid caution ahead of Powell's remarks.
Meanwhile, the expectations that the European Central Bank (ECB) might cut interest rates further in September also contributed to the euro's gains. However, increasing expectations of further ECB rate cuts could limit the upside potential for the EUR/USD pair.
Impact of Federal Reserve's Anticipated Guidance on EUR/USD Amid Weak US Dollar
Despite the stronger-than-expected US S&P Global PMI report for August, which showed a robust expansion in the services sector and a slight contraction in manufacturing, the US dollar edged lower.
The market anticipates that Jerome Powell will provide fresh guidance on interest rates and the US economic outlook during his Jackson Hole speech. Federal Reserve officials have hinted that a rate cut in September may be appropriate if economic data continues to align with expectations.
This dovish sentiment is likely to influence the EUR/USD pair, potentially weakening the dollar further against the euro if Powell’s remarks suggest a more accommodative monetary policy stance.
Anticipated ECB Rate Cuts and Their Impact on EUR/USD Outlook
On the EUR front, the European Central Bank is widely anticipated to cut interest rates again in September, driven by uncertainties over the Eurozone’s economic outlook and lower wage growth.
The recent flash Eurozone HCOB PMI report for August showed improved business activity, but this positive signal may be short-lived due to weak foreign demand, especially in Germany. The decline in Q2 Negotiated Wage Rates, which eased inflation concerns, has bolstered expectations for more ECB rate cuts.
As such, while the EUR/USD pair benefits from a weaker US dollar, the potential for additional ECB rate cuts could limit further gains. Traders are now looking ahead to Powell’s speech for fresh direction and weighing the implications of ongoing economic developments on the EUR/USD outlook.
EUR/USD - Technical Analysis
The EUR/USD is currently holding steady at $1.11136, showing a modest increase of 0.01% for the day. The pair is navigating a relatively narrow trading range, with the pivot point resting at $1.11092, acting as a critical level for determining the short-term direction.
As we look at the 4-hour chart, the immediate resistance is marked at $1.11644, followed by higher levels at $1.11910 and $1.12238. On the downside, immediate support can be found at $1.10769, with further support levels at $1.10491 and $1.10194.
The technical indicators offer a mixed picture, with the RSI sitting at 58, signaling neutral momentum that could sway in either direction depending on the upcoming price action.
Meanwhile, the 50-day EMA at $1.10510 is providing solid support, indicating that the pair is maintaining a bullish bias above this level.
If the EUR/USD manages to break above the $1.11644 resistance, we could see a continuation of the upward trend, potentially driving the price toward the $1.11910 level.
However, if the pair fails to hold above the $1.11092 pivot point, a decline toward the $1.10769 support level could be on the cards. Traders should be cautious, as a break below $1.10769 might trigger a deeper correction.
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- GOLD Price Analysis – Aug 23, 2024
GOLD Price Analysis – Aug 22, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to stop its downward trend and remained well offered around 2,509.22 and hitting an intraday low of 2,499.44.
This decline is mainly because the US dollar has strengthened again after falling for four days. Meanwhile, the strong global financial markets are making gold less attractive as a safe investment.
However, if the Federal Reserve is expected to be less aggressive with interest rates, it might slow down the US dollar's rise and help gold avoid further losses.
Meanwhile, the delay in peace talks between Israel and Hamas increases the risk of a wider conflict in the Middle East, making investors more cautious.
This uncertainty could boost gold prices, as investors often turn to gold for safety during times of geopolitical tension.
Moving ahead, traders are paying close attention to upcoming US economic reports, like Weekly Initial Jobless Claims and Existing Home Sales.
These data releases could create short-term trading opportunities, as they provide insights into the US economy and may influence market movements.
US Dollar Strength and Fed Rate Cut Expectations Support Gold Prices
On the US front, the US Dollar has recently gained strength, ending a four-day decline. However, expectations that the Federal Reserve might take a more cautious approach could limit the dollar’s rise and support gold prices.
Recent data revealed that US job growth was weaker than expected, with 818,000 fewer jobs added than initially reported.
This weaker job growth has led to speculation that the Federal Reserve might begin cutting interest rates soon, possibly as early as September.
Furthermore, the minutes from the July 30-31 Federal Reserve meeting showed that many officials were in favor of a rate cut in September, with some wanting action right away.
This has increased market expectations for a 50 basis points rate cut next month to 38%, up from 29% the day before.
As a result, gold prices have been supported, as a potential rate cut would likely weaken the US Dollar and make gold more appealing as it doesn’t earn interest. This news has helped keep gold prices stable above $2,500.
Ongoing Israel-Hamas Conflict Boosts Gold Prices Amidst Geopolitical Uncertainty
On the geopolitical front, the ongoing Israel-Hamas conflict remains unresolved, raising fears of a wider Middle Eastern conflict. This uncertainty has boosted gold prices, as investors look for safe places to invest.
The situation has worsened with new Israeli military actions in Deir el-Balah and a tragic attack on a school-turned-shelter in Gaza, causing several casualties.
Meanwhile, US President Joe Biden has urged Israeli Prime Minister Benjamin Netanyahu to agree to a temporary ceasefire, but negotiations have stalled.
The ongoing conflict, which has resulted in tens of thousands of deaths and many injuries, continues to create market uncertainty. This volatile situation is keeping gold prices stable, as investors seek safety in gold amid the ongoing instability.
GOLD (XAU/USD) - Technical Analysis
Gold has been trending lower, currently trading around $2504.035, as bearish sentiment prevails in the market.
The pivot point at $2507.75 is crucial for determining the next move. If prices remain below this level, we could see further declines towards the immediate support at $2491.41, followed by $2480.08 and $2461.98.
On the upside, breaking above the immediate resistance at $2526.46 could open the door for a move towards $2540.75 and $2556.71.
The RSI at 53 suggests that the market is neither overbought nor oversold, but leaning slightly towards a bearish bias.
The 50-day EMA, currently at $2481.3620, is providing additional support, making this level key for further downside movement.
Conclusion: Consider selling below $2506 with a target of $2480, placing a stop loss at $2530.
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USD/JPY Price Analysis – Aug 22, 2024
USD/JPY Price Analysis – Aug 22, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair gained ground and remained well bid around 145.87 level, hitting the intra-day high of 145.91 level.
However, the reason for its upward momentum was supported by the US Federal Reserve's (Fed) indication of a possible rate cut in September, coupled with Japan's trade deficit data that dragged the Japanese Yen (JPY) lower.
Moving ahead, traders are closely monitoring upcoming US economic reports, such as Weekly Initial Jobless Claims and Existing Home Sales.
These data releases are crucial as they offer insights into the US economy and can create short-term trading opportunities by potentially influencing market movements.
US Dollar Gains Strength Amid Fed Rate Cut Expectations
On the US front, the broad-based US dollar has recently gained strength, ending a four-day decline. However, the Fed Minutes released on Wednesday revealed that most Federal Reserve officials are leaning towards a rate cut in the upcoming September meeting, provided inflation continues to cool.
The Fed has kept its benchmark rate at 5.3% since July 2023, and markets are anticipating a cut of up to a full percentage point by the end of the year.
Despite the US dollar gaining traction from a slight recovery in Treasury yields, this anticipation of a rate cut might weigh on the USD and limit the upside potential of USD/JPY in the near term.
Mixed Japanese Data and BoJ Rate Hike Expectations Provide Limited Support for JPY
On the other hand, Japan's economic data and expectations for the Bank of Japan (BoJ) are providing some support for the USD/JPY pair.
On the data front, the Jibun Bank Manufacturing PMI for August rose to 49.5, slightly below the expected 49.8, while the Services PMI improved to 54.0.
Although these figures highlight a mixed economic outlook, they are overshadowed by Japan's record trade deficit, which has weakened the Yen.
Moreover, economists anticipate that the BoJ might raise interest rates by the end of the year. However, the Reuters poll indicates a median forecast of a 0.50% rate at year-end, marking a 25 basis points increase.
The market will closely watch BoJ Governor Kazuo Ueda's speech on Friday for any hawkish remarks that could lift the JPY against the USD.
Therefore, the mixed Japanese economic data and expectations of a BoJ rate hike may offer limited support for the JPY. However, Japan’s record trade deficit weakens the Yen, likely keeping the USD/JPY pair stronger in the near term.
USD/JPY - Technical Analysis
The USD/JPY pair is experiencing a modest uptick, trading at $145.486. The pair is hovering near a crucial pivot point at $146.1270, which will play a key role in determining the next direction.
If the price fails to sustain above this level, the downside risks could increase, with immediate support at $144.3320, followed by $143.2110 and $141.7870.
On the upside, if the pair manages to break above the pivot, it could face resistance at $147.3240, $149.3650, and ultimately $150.9000. The RSI is currently at 41, indicating a neutral to slightly bearish sentiment.
Additionally, the 50-day EMA at $146.9510 suggests that there’s room for further downside correction if the current momentum does not pick up.
Conclusion: Consider selling below $146.161, targeting $143.998 with a stop loss at $147.340.
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AUD/USD Price Analysis – Aug 22, 2024
AUD/USD Price Analysis – Aug 22, 2024
Daily Price Outlook
Despite the hawkish sentiment surrounding the RBA's rate trajectory, the AUD/USD currency pair failed to sustain its early-day upward momentum and turned bearish around the 0.6738 level, hitting an intra-day low of 0.6727.
This downward trend can be attributed to the mild renewed strength of the US dollar, which gained traction following a slight recovery in Treasury yields on Thursday.
On the positive side, Australia's Judo Bank Composite PMI increased to 51.4 in August, fueled by stronger service sector growth.
However, the downside of the AUD/USD pair could be limited due to the hawkish stance adopted by the Reserve Bank of Australia (RBA) regarding its policy outlook.
RBA's Hawkish Stance and Strong Services PMI Support AUD/USD Pair
On the AUD front, the downside of the AUD/USD pair may be limited due to the Reserve Bank of Australia's (RBA) hawkish stance. The RBA's August Meeting Minutes revealed that the cash rate is likely to remain unchanged for some time.
Earlier this month, the board considered raising rates but decided that holding steady would better manage risks.
RBA Governor Michele Bullock emphasized that the central bank is ready to raise rates again if necessary to combat inflation. This decision marks the sixth consecutive meeting where the RBA has kept rates at 4.35%.
On the data front, Australia's Judo Bank Composite PMI rose to 51.4 in August, up from 49.9 in July, indicating the fastest expansion in three months.
This improvement was driven by a stronger services sector, even though manufacturing continued to decline. Meanwhile, the Services PMI increased to 52.2 in August from 50.4 in July, showing the fastest growth in services output in three months.
However, the Manufacturing PMI slightly rose to 48.7 from 47.5, indicating a continued, though slower, contraction in the sector for the seventh month in a row.
Therefore, the news is likely to support the AUD/USD pair. The RBA's hawkish stance and steady rates, combined with strong service sector growth, provide a positive outlook for the Australian dollar, despite ongoing manufacturing sector weakness.
Impact of US Rate Cut Expectations and Fed Caution on AUD/USD Pair
On the US front, the US Dollar (USD) gained slightly due to a minor recovery in Treasury yields on Thursday. However, it faced some challenges as the FOMC Minutes for July indicated that most Federal Reserve officials are likely to cut the benchmark interest rate in September.
Traders are closely watching Fed Chair Jerome Powell's upcoming speech at Jackson Hole.
According to the CME FedWatch Tool, the likelihood of a 25 basis point rate cut in September is now about 65.5%, down from 71.0% a day earlier. Meanwhile, the chance of a 50 basis point cut has increased to 34.5% from 29.0%.
Furthermore, Federal Reserve Governor Michelle Bowman expressed caution on Tuesday about making policy changes too quickly, citing risks to inflation. She warned that reacting too strongly to single data points could harm the progress made.
Meanwhile, Minneapolis Fed President Neel Kashkari suggested that discussing potential rate cuts in September might be appropriate due to concerns about a weakening labor market.
Therefore, the news could lead to a stronger AUD/USD pair as the expectations of a Fed rate cut, combined with ongoing caution from Fed officials, may weaken the USD, while the prospect of lower interest rates supports the Australian dollar.
AUD/USD - Technical Analysis
The AUD/USD pair is showing signs of strength, currently trading at $0.67517. The pivot point at $0.6772 will be crucial in determining whether the pair can sustain its upward momentum. Immediate resistance is at $0.6754, with further hurdles at $0.6771 and $0.6792.
If the price breaks above these levels, the pair could see further gains. On the downside, immediate support is found at $0.6714, followed by $0.6684 and $0.6666.
The RSI is nearing overbought territory at 69, indicating that the bullish momentum may soon face some resistance.
However, the 50-day EMA at $0.6662 is supportive, suggesting that the underlying trend remains positive.
Conclusion: Consider buying above $0.67372, with a target of $0.67715 and a stop loss at $0.67143.
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USD/JPY Price Analysis – Aug 22, 2024
GBP/USD Price Analysis – Aug 21, 2024
Daily Price Outlook
Despite upbeat PMI data, the GBP/USD currency pair has managed to stay above the key 1.3000 level, reaching new highs near 1.3050.
This strength is attributed to growing expectations that the Federal Reserve (Fed) may cut interest rates in September.
However, the pair's upward momentum is tempered by concerns about UK wage growth and potential impacts of monetary policy changes.
US Dollar Weakens Amid Fed Rate-Cut Speculation and Upcoming FOMC Minutes
On the US front, the broad-based US dollar has found temporary support around 101.30, following its recent decline.
This weakness is largely due to market speculation that the Fed will initiate rate cuts in September.
Investors are eagerly awaiting the Federal Open Market Committee (FOMC) minutes from the July meeting, set for release at 18:00 GMT, to gain further insights into the Fed's policy direction.
The Fed had maintained its key rates at 5.25%-5.50% but highlighted economic uncertainties that could influence future decisions.
It should be noted that the CME Group's FedWatch Tool shows a 70% chance of a rate cut, with a Reuters poll suggesting the Fed might reduce rates by 25 basis points at each of the remaining three meetings in 2024. However, Fed Governor Michelle Bowman cautions that inflation remains above the 2% target.
Mixed Economic Signals in the UK Raise Questions on BoE Rate Cuts
On the UK side, recent economic data shows mixed signals. UK wage growth has declined to 4.5% in the three months ending July, down from the previous 5%.
This decrease reflects lower inflation pressures, adding to speculation that the Bank of England (BoE) may cut rates in September.
Additionally, the UK's Consumer Price Index (CPI) report for July revealed a core inflation rate of 3.3%, and service sector inflation fell to 5.2%.
Despite these factors, the BoE remains cautious about rate cuts due to persistent inflation in the service sector.
The upcoming S&P Global Purchasing Managers' Index (PMI) data for August, scheduled for release on Thursday, is expected to show a steady Manufacturing PMI at 52.1 and an improved Services PMI at 52.8.
Therefore, the mixed economic signals from the UK, including declining wage growth and inflation, create uncertainty for the GBP/USD pair.
While speculation about BoE rate cuts might support the pound, persistent inflation concerns could limit gains and keep the pair volatile.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.30261, down by 0.03% as the pair hovers around its immediate support levels.
The 4-hour chart indicates that the pivot point is set at $1.3040, which is critical for determining the next direction. Immediate resistance is at $1.3097, followed by $1.3133 and $1.3174.
On the downside, the immediate support lies at $1.2978, with additional support at $1.2933 and $1.2887.
The Relative Strength Index (RSI) is currently at 75, suggesting that GBP/USD is in overbought territory, which might trigger a pullback.
Meanwhile, the 50-day Exponential Moving Average (EMA) is at $1.2872, reinforcing the bearish outlook if the pair fails to break above its pivot point.
Given the overbought RSI and the resistance levels ahead, there’s a good chance we could see some selling pressure emerge.
If the pair fails to maintain its position above $1.3040, a bearish correction might ensue, driving the price towards the next support levels.
Conclusion: Selling below $1.30398 could be a strategic move, with a target profit at $1.29802 and a stop loss at $1.30911.
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EUR/USD Price Analysis – Aug 21, 2024
GOLD Price Analysis – Aug 21, 2024
Daily Price Outlook
Gold (XAU/USD) struggled to sustain its upward momentum, falling to around $2,507 after an intraday low of $2,504.55.
The price initially surged to a new all-time high on Tuesday, fueled by a dovish Federal Reserve stance and selling pressure on the US dollar. Additionally, geopolitical tensions enhanced gold’s appeal as a safe-haven asset.
However, optimism for a ceasefire in Gaza and a modest rebound in the US dollar from its lowest level since January pressured gold prices and limited further gains.
Traders are exercising caution ahead of today's release of the July FOMC meeting minutes and Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Symposium on Friday.
Both events are expected to provide crucial insights into future monetary policy directions and will be closely scrutinized by the market.
US Rate Cut Expectations and Overbought Conditions Impact Gold Prices
On the US front, expectations that the Federal Reserve (Fed) will start cutting interest rates in September have significantly boosted gold prices.
Many investors anticipate a 25 basis point (bps) rate reduction during the September meeting, which would pressure US Treasury bond yields and the US dollar. This sentiment led gold to reach a new record high on Tuesday.
Despite this dovish stance, gold has since started to lose ground. According to the CME Group's FedWatch Tool, markets are currently pricing in a 70% probability of the rate cut.
Additionally, a Reuters poll indicates that a slim majority of economists now anticipate the Federal Reserve will cut rates by 25 basis points at each of the remaining three meetings in 2024, surpassing previous predictions.
However, Fed Governor Michelle Bowman has warned that inflation remains above the Fed's 2% target, aiming to temper expectations for any immediate rate cuts.
Meanwhile, according to TD Securities, the gold market is extremely overbought, as shown by futures and options market positioning data.
Macro fund positioning is already consistent with 370 bps of cuts, and further returns might be limited by this frothy positioning. Shanghai trader positioning has also reverted to record highs, and Commodity Trading Advisors (CTAs) are holding onto their 'max long.'
This suggests that while gold has surged, the upside potential may be limited due to overbought conditions.
Geopolitical Tensions in the Middle East Boost Gold Demand
On the geopolitical front, ongoing tensions in the Middle East, especially between Israel and Hamas, are keeping investors cautious and bolstering gold prices.
The conflict has led to significant casualties, including at least 52 Palestinians killed in recent Israeli strikes.
These tragic incidents have occurred at a Gaza City school and a crowded market in Deir el-Balah, contributing to the heightened demand for gold as a safe-haven asset.
Meanwhile, U.S. Secretary of State Antony Blinken has called for a ceasefire in Gaza, but his Middle East tour concluded without an agreement between Israel and Hamas.
The ongoing conflict has resulted in heavy casualties, with over 40,000 people killed in Gaza and more than 1,100 in Israel since October 7. These severe geopolitical concerns are driving increased demand for gold as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,513.440, down slightly by 0.03%. The 4-hour chart shows that the precious metal is facing immediate resistance at $2,526.46, with additional resistance levels at $2,540.75 and $2,556.71.
On the downside, key support levels are found at $2,491.41, $2,480.08, and $2,461.80.
The Relative Strength Index (RSI) is holding at 60, which suggests that while gold is not yet overbought, it still has room for upward movement.
The 50-day Exponential Moving Average (EMA) is positioned at $2,471.9390, further supporting a bullish outlook as long as the price stays above this level.
Gold has recently been trading within a tight range, but with the pivot point set at $2,526.19, breaking above this level could signal a continuation of the bullish trend.
The recent small decline suggests some consolidation, but with the broader trend still intact, there’s a good chance that gold could resume its upward trajectory, especially if it holds above the $2,507 level.
Conclusion: Buy above $2,507 with a take profit target at $2,526 and a stop loss at $2,495.
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EUR/USD Price Analysis – Aug 21, 2024
EUR/USD Price Analysis – Aug 21, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has faced downward pressure, slipping from its earlier highs as the US dollar stages a rebound.
The pair, which had previously held above the 1.1133 support level, is now trading near 1.1109. This decline highlights a shift in market dynamics, with the US dollar strengthening against the Euro.
US Dollar Strengthens Despite Expected Fed Rate Cuts, Pressuring EUR/USD
On the US front, the recent strengthening of the US dollar comes despite anticipated rate cuts by the Federal Reserve.
Typically, rate cuts by the Fed lead to a weaker greenback; however, the current rebound is driven by broader market factors and speculation about future economic conditions.
The US Dollar Index (DXY) has climbed to approximately 101.50, reflecting heightened investor confidence in the US economy despite expected monetary easing.
Therefore, the US dollar's strength and rising US Dollar Index (DXY) pressure the EUR/USD pair, causing it to decline.
Increased investor confidence in the US economy, despite expected Fed rate cuts, boosts the dollar and weighs on the euro.
Euro Faces Pressure from Mixed Economic Data and Geopolitical Uncertainties
On the Euro side, the European Central Bank (ECB) has been cautious about committing to aggressive rate cuts, which has provided some support to the Euro. However, recent data from the Eurozone has painted a mixed picture.
The ECB's reluctance to cut rates aggressively stems from persistent inflationary pressures in the Eurozone and slower growth in key economies like Germany.
Although slower wage growth in Germany has eased some pressure on the ECB, overall Eurozone economic performance remains uneven.
The Euro has faced challenges from a combination of weaker-than-expected economic data and ongoing geopolitical uncertainties.
Market participants are also keeping an eye on upcoming Eurozone data, including the HCOB Purchasing Managers’ Index (PMI) and Q2 Negotiated Wage Rates, which will provide further insights into the economic outlook for the Eurozone.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.11205, showing a modest increase of 0.05% on the day. On the 4-hour chart, the pivot point is situated at $1.1132, a critical level that could dictate the pair's next move.
Immediate resistance is at $1.1164, followed by $1.1191 and $1.1224. On the downside, immediate support is seen at $1.1089, with further levels at $1.1063 and $1.1041.
The Relative Strength Index (RSI) stands at 76, indicating that the pair is firmly in overbought territory. This suggests that the upward momentum may be losing steam, potentially opening the door for a bearish correction.
The 50-day Exponential Moving Average (EMA) is positioned at $1.1000, providing a longer-term bullish signal, but the short-term outlook remains cautious due to the overbought conditions.
Given the overbought RSI and the strong resistance levels ahead, a pullback could be on the horizon. If the pair fails to sustain its upward momentum above the pivot point at $1.1132, a decline toward the next support levels could be expected.
Traders may consider selling below $1.11316, targeting a take profit at $1.10640 with a stop loss at $1.11651.
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GBP/USD Price Analysis – Aug 21, 2024
AUD/USD Price Analysis – Aug 20, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained a bullish stance and remained well bid around the 0.6732 level, reaching an intra-day high of 0.6739.
This upward momentum was driven by several factors, including hawkish sentiment surrounding the Reserve Bank of Australia (RBA).
Additionally, the US Dollar (USD) continues to face downward pressure following comments from Federal Reserve (Fed) officials, which have increased the likelihood of upcoming rate cuts by the US central bank.
Looking forward, traders are cautious ahead of the July FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell’s speech at Jackson Hole on Friday.
Meanwhile, dovish Fed expectations and ongoing geopolitical risks could provide some support for the AUD/USD pair, potentially limiting further declines.
RBA’s Steady Rates and PBoC’s Unchanged LPRs Impact on AUD/USD
On the AUD front, the AUD/USD pair could see some appreciation following the Reserve Bank of Australia's (RBA) August meeting minutes.
These minutes revealed that the RBA considered raising interest rates but ultimately decided that keeping the cash rate steady would better balance the economic risks.
RBA members agreed that a rate cut is unlikely in the near future, suggesting that the cash rate could remain unchanged for an extended period.
This decision reflects the RBA's cautious approach to managing inflation and economic growth, which may provide some support for the Australian dollar against the US dollar.
On the other side, the People's Bank of China (PBoC) kept its one-year and five-year Loan Prime Rates (LPRs) unchanged in August at 3.35% and 3.85%.
Since China is a key trade partner for Australia, any shifts in the Chinese economy could affect Australian markets.
Therefore, RBA's decision to keep rates steady could boost the AUD/USD pair, supporting the Australian dollar. However, China's unchanged LPRs mean any economic changes in China might also impact the pair.
Impact of US Economic Data and Fed Signals on AUD/USD Pair
On the US front, the US Dollar (USD) is under pressure following comments from Federal Reserve (Fed) officials hinting at possible rate cuts.
Minneapolis Fed President Neel Kashkari suggested discussing rate cuts in September due to concerns about a weakening job market.
San Francisco Fed President Mary Daly advocated for a gradual approach to lowering borrowing costs. Chicago Fed President Austan Goolsbee warned against keeping restrictive policies too long.
On the data front, US Housing Starts fell by 6.8% to 1.238 million units in July after a slight increase in June.
However, the University of Michigan’s Consumer Sentiment Index rose to 67.8 in August, marking its first gain in five months. US Retail Sales surged 1.0% in July, a sharp rebound from June’s decline, and Initial Jobless Claims for early August were lower than expected at 227,000.
Meanwhile, the Consumer Price Index (CPI) rose 2.9% year-over-year in July, slightly below June's rate, while Core CPI increased 3.2%, matching forecasts.
The USD's weakness from potential Fed rate cuts and mixed economic data could support the AUD/USD pair. Strong retail sales and consumer sentiment may bolster the Australian dollar against the USD.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.67258, showing a modest decline of 0.18%. The pivot point at $0.6738 is crucial for determining the short-term direction.
Immediate resistance is located at $0.6754, with further resistance levels at $0.6771 and $0.6792. On the downside, support levels are found at $0.6704, $0.6684, and $0.6666.
The Relative Strength Index (RSI) stands at 74, indicating that the pair is in overbought territory, which could suggest a potential pullback or correction.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6621, providing a strong support level that reinforces the ongoing bullish trend.
Given the current technical setup, if AUD/USD remains above the $0.6704 support level, the bullish outlook is likely to continue.
A break above the immediate resistance at $0.6754 could push the pair higher towards $0.6771 and beyond.
However, if the pair falls below $0.6704, it could trigger a deeper correction towards the next support levels.
Conclusion: The strategy here is to buy above $0.67037, targeting a profit at $0.67652 with a stop loss at $0.66693.
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GOLD Price Analysis – Aug 20, 2024
GOLD Price Analysis – Aug 20, 2024
Daily Price Outlook
Gold prices (XAU/USD) halted their downward trend and gained bullish momentum, climbing to the 2,522.20 level and reaching an intra-day high of 2,525.23.
The rally was fueled by expectations of Federal Reserve rate cuts, which pushed the US Dollar (USD) to a multi-month low, benefiting XAU/USD.
Geopolitical risks also provided additional support as traders await further cues on the Fed's rate-cut trajectory.
The USD has experienced a sustained selling bias for the third consecutive day, driven by the growing belief that the Fed will initiate its rate-cutting cycle in September, a key factor attracting investors to the non-yielding yellow metal.
Weakening US Dollar and Fed Rate Cut Expectations Drive Gold Prices Higher
On the US front, the US Dollar continues to weaken as expectations grow that the Federal Reserve will start cutting interest rates in September.
This belief has fueled demand for gold, which benefits from lower interest rates. The CME Group’s FedWatch Tool indicates a higher likelihood of rate cuts beginning in September, with potential reductions totaling over 200 basis points by the end of 2025.
Fed officials, including Neel Kashkari and Austan Goolsbee, have suggested that discussions about rate cuts are warranted, as the US economy shows no signs of overheating.
However, recent positive Retail Sales data have alleviated recession fears, leading to some uncertainty about the pace of rate cuts.
Investors are now closely watching the July FOMC meeting minutes and Fed Chair Jerome Powell’s upcoming comments for clues on the Fed’s next move.
This news is likely to boost gold prices as the weakening US Dollar and anticipated Federal Reserve rate cuts increase demand for the non-yielding metal, which benefits from lower interest rates and serves as a safe haven during economic uncertainty.
Middle East Ceasefire Hopes Rise as Israel-Hamas Negotiations Resume Amid Escalating Tensions
On the geopolitical front, US Secretary of State Antony Blinken announced that Israeli Prime Minister Benjamin Netanyahu has accepted a proposal aimed at resolving disagreements hindering a hostage release deal with Hamas, raising hopes for a ceasefire that could ease Middle East tensions.
Negotiations are set to resume this week, increasing optimism for a ceasefire, which in turn has boosted investor interest in riskier assets.
Meanwhile, the Israeli army reported recovering the bodies of six hostages from Hamas, while Hezbollah launched rocket attacks on Israeli military targets following Israeli strikes deep into Lebanon’s Bekaa Valley.
Amid ongoing violence, Hamas accused the US of enabling Israel's actions, and protests erupted in Chicago against the Biden administration’s support for Israel.
The conflict has claimed over 40,000 lives in Gaza, with more than 200 people taken captive during Hamas's attacks on October 7.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2512.66, showing a minor decline of 0.09%. The key level to watch is the pivot point at $2523.98.
This level will likely determine the short-term direction of the market. Immediate resistance is found at $2524.11, with further resistance levels at $2540.75 and $2556.71.
On the downside, support is seen at $2491.41, with additional support at $2480.08 and $2461.80.
The Relative Strength Index (RSI) is currently at 66, indicating that gold is nearing overbought territory, which could signal a potential correction.
The 50-day Exponential Moving Average (EMA) is positioned at $2459.26, providing strong support for the current uptrend.
Given the technical setup, if gold breaks above the pivot point of $2523.98, it could lead to further bullish momentum. However, if the price falls below $2491.41, we could see a deeper correction.
Conclusion: Consider buying above $2508, targeting $2523, with a stop loss at $2490. A break below $2491.41 could trigger further downside.
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