EUR/USD Price Analysis – Aug 09, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair failed to break its consolidating phase and remained sideways around the 1.0917 level, consolidating within the range of 1.0911 - 1.0929. However, the ECB is expected to deliver two more rate cuts this year.
This stance undermined the shared currency and contributed to the EUR/USD pair's subdued trend.
On the other hand, expectations for Federal Reserve rate cuts increased significantly following the weak US Nonfarm Payrolls (NFP) report for July, raising concerns about a potential recession.
However, these recession fears were tempered by lower-than-expected Initial Jobless Claims for the week ending August 2, which weakened the US dollar and may limit further losses in the EUR/USD pair.
Impact of Mixed Fed Rate Cut Expectations and Jobless Claims on EUR/USD
On the US front, the US Dollar Index (DXY) is trading around 103.00 after retreating from a high of 103.50.
This shift comes amid growing expectations for Federal Reserve rate cuts, spurred by a weak Nonfarm Payrolls (NFP) report for July, which heightened recession fears and triggered a global equity sell-off.
However, recent data on Initial Jobless Claims for the week ending August 2, which showed 233K claims versus the 240K estimate, suggests the labor market may be stronger than anticipated. This could provide support for the dollar.
Gennadiy Goldberg from TD Securities highlighted that the jobless claims data is positive, indicating that the labor market remains relatively strong despite the weaker payroll report.
According to the CME FedWatch tool, investors are now less certain about the size of potential Fed rate cuts in September, with a 54.5% chance of a 50 basis point cut, down from 74% a week earlier.
Therefore, the US Dollar Index’s pullback and mixed Fed rate cut expectations may lead to a modest rise in EUR/USD, as weaker dollar sentiment offsets potential support from positive jobless claims data.
Impact of ECB Rate Cut Expectations and Cautious Inflation Targets on EUR/USD
Conversely, the ECB is anticipated to implement two more rate cuts this year in response to the struggling Eurozone economy and its aim to achieve the 2% inflation target.
Despite this, ECB officials remain cautious and are not committing to a specific rate-cut schedule, acknowledging the challenging path to reaching their inflation goal.
Finnish ECB policymaker Olli Rehn emphasized that while inflation is easing, attaining the 2% target will be difficult.
He suggested that rate cuts could support the Eurozone’s fragile industrial sector and stimulate investment.
Rehn's remarks underscore the ECB's cautious stance and its focus on providing economic support amid uncertain conditions.
Hence, the expectations of further ECB rate cuts and a cautious approach to inflation could weaken the euro. This may lead to a rise in EUR/USD if the dollar remains under pressure from mixed Fed rate cut expectations and economic uncertainty.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.09202, up a modest 0.05% on the day, reflecting a cautious market sentiment.
The 4-hour chart suggests the pair is struggling to find clear direction, with the price hovering below the pivot point at $1.0956.
The Relative Strength Index (RSI) stands at 52, indicating a neutral market tone where neither the bulls nor bears have a clear advantage.
Immediate resistance is pegged at $1.0955, just below the pivot point. A break above this level could open the door for further gains, with the next resistance levels at $1.1010 and $1.1043.
These are crucial for the pair, as overcoming them could signal a shift towards a more sustained bullish trend.
The 50-day Exponential Moving Average (EMA), currently at $1.0881, serves as a key support, reinforcing the broader upward bias as long as the price remains above this level.
On the downside, immediate support lies at $1.0867, with further support at $1.0828 and $1.0777.
A breach of these levels could indicate a potential reversal in the current trend, inviting bearish momentum into the market.
Given the mixed technical signals, a strategic approach might involve entering a buy position near $1.08935, with a take profit target set at $1.09557 and a stop loss at $1.08653.
This setup offers a balanced risk-reward ratio while capitalizing on the potential for a near-term recovery.
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GOLD Price Analysis – Aug 09, 2024
Daily Price Outlook
Gold prices (XAU/USD) initially struggled to maintain their upward momentum but regained positive traction, climbing to around $2,426 and reaching an intra-day high of $2,428.
The mild bullish movement was driven by growing expectations that the Federal Reserve could begin reducing interest rates as early as September, which weakened the US dollar and supported gold gains.
However, the stronger-than-expected US labor market report released on Thursday eased recession fears and bolstered investor confidence, diminishing demand for safe-haven assets like gold.
Additionally, concerns over escalating geopolitical tensions in the Middle East provided further support, helping gold limit its losses.
Impact of US Economic Data and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar has been declining as markets have fully priced in a 25-basis point rate cut by the Federal Reserve in September, with speculation of a possible 50-basis point cut.
This expectation has provided some support for gold prices. However, a strong labor market report released on Thursday eased fears of an imminent recession and boosted investor confidence, reducing gold's appeal as a safe-haven asset.
This shift in sentiment led to a rally in US equity markets, which further limited gold's gains.
Meanwhile, the anticipation of a dovish Fed stance has pushed US Treasury bond yields lower and dragged the US dollar away from its weekly high, providing additional support for XAU/USD.
On the data front, the US report released on Thursday revealed that initial jobless claims for the week ending August 3 came in at 233,000, beating expectations of 240,000 and down from the previous week's 249,000.
This stronger-than-expected data alleviated concerns about a potential economic downturn in the US, leading to a rise in US Treasury bond yields and applying downward pressure on the US Dollar.
Therefore, the strong US labor market data and rising Treasury yields limited gold's appeal, but expectations of a dovish Fed and a weaker US Dollar provided some support for prices.
Rising Geopolitical Tensions and Its Impact on Gold Prices
On the geopolitical front, Israeli forces have launched a new offensive on Khan Younis in southern Gaza, targeting about 30 sites and issuing new evacuation orders to residents who have already been displaced multiple times.
Leaders from Qatar, Egypt, and the United States have invited Israel and Hamas to resume ceasefire talks on August 15 amid rising regional tensions and fears of retaliatory strikes.
Israel has accepted the invitation to meet in Cairo or Doha, but Hamas has not yet responded. Recent attacks by Israel on two schools in Gaza City have killed at least 15 people and injured 30.
As per the latest report, the conflict has resulted in approximately 39,699 deaths and 91,722 injuries in Gaza.
The ongoing conflict and geopolitical tensions typically drive gold prices higher as investors seek safe-haven assets. Increased uncertainty and violence often boost demand for gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,422.70, down 0.24% on the day. The 4-hour chart indicates a mixed technical landscape, with the price holding above the pivot point at $2,412.90 but showing signs of hesitancy near the immediate resistance level at $2,431.41.
The Relative Strength Index (RSI) at 55 suggests the market is in neutral territory, neither overbought nor oversold, indicating potential for both upward and downward movement.
The 50-day Exponential Moving Average (EMA) at $2,417.15 acts as a critical support level, reinforcing the bullish sentiment if the price remains above it.
However, should gold fail to breach the immediate resistance, it may retrace toward the first support level at $2,380.82.
Further downside could see the price testing the next support levels at $2,354.48 and $2,335.02, which are key areas to watch for potential buying interest.
On the upside, a break above $2,431.41 could trigger bullish momentum, pushing the price toward the next resistance levels at $2,452.64 and $2,477.89. These levels are crucial for gold bulls aiming for a sustained rally.
Given the current market dynamics, entering a buy position near the pivot point at $2,413, with a take profit target at $2,447 and a stop loss at $2,398, could offer a balanced risk-reward ratio.
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EUR/USD Price Analysis – Aug 09, 2024
AUD/USD Price Analysis – Aug 08, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6554 level, hitting an intra-day high of 0.6565. This upward trend can be attributed to Reserve Bank of Australia (RBA) Governor Michelle Bullock's hawkish guidance on interest rates, which supported the Australian dollar and contributed to the AUD/USD pair's gains.
Meanwhile, the US dollar losing traction was another key factor keeping the AUD/USD pair higher. However, market sentiment remains risk-averse due to fears of a potential global slowdown, which could cap gains in the AUD/USD pair as it undermines riskier assets, including the Australian dollar.
RBA's Hawkish Outlook Strengthens Australian Dollar and AUD/USD Pair
On the AUD front, the Australian dollar strengthened following Reserve Bank of Australia (RBA) Governor Michelle Bullock's hawkish outlook on interest rates. During a talk at the Rotary Club of Armidale, she emphasized that the RBA is prepared to increase the Official Cash Rate (OCR) to manage inflation risks.
Bullock also noted that inflation is unlikely to return to the target range of 2-3% before the end of 2025. Her comments show the RBA's strong commitment to controlling inflation, which boosted confidence in the Australian dollar and led to its increase in value.
She noted that the inflation rate is unlikely to return to the 2-3% target range before the end of 2025. This assertive stance on inflation and potential rate hikes bolstered the Australian dollar, reflecting increased confidence in the RBA's commitment to managing economic pressures.
Therefore, the hawkish stance by RBA Governor Bullock likely supports the Australian dollar, potentially strengthening the AUD/USD pair as markets anticipate further rate hikes and increased inflation vigilance.
US Dollar Pressure and Fed Rate Cut Speculation Boost AUD/USD
On the US front, the broad-based US dollar remained under pressure, struggling to gain traction amid softer economic data signaling a faster-than-expected slowdown in the world's largest economy. This has fueled speculation about larger interest rate cuts by the Federal Reserve, thereby supporting the non-yielding yellow metal, gold.
On the economic data front, government figures released on Tuesday showed that the US trade deficit narrowed by 2.5%, decreasing to $73.1 billion in June from $75.0 billion in May. This reduction was primarily driven by a 1.5% rise in exports, particularly in aircraft and US-produced oil and gas.
As a result, markets are now fully pricing in a 100% likelihood that the Federal Reserve will begin lowering borrowing costs at its upcoming policy meeting in September, with nearly a 70% probability of a 50-basis-point rate cut.
Therefore, the pressure on the US dollar and speculation about Fed rate cuts could strengthen the AUD/USD pair, as lower US interest rates may make the Australian dollar more attractive relative to the greenback.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.65553, reflecting a 0.57% increase on the day. On the 4-hour chart, the pivotal point to watch is $0.6511.
Immediate resistance levels are marked at $0.6576, $0.6610, and $0.6643, while support levels are positioned at $0.6475, $0.6436, and $0.6402. These levels are crucial in determining the pair's next move.
The Relative Strength Index (RSI) stands at 56, suggesting a moderately bullish sentiment. The 50-day Exponential Moving Average (EMA) is currently at $0.6523, indicating a slight upward trend.
If the price remains above the pivot point, it could signify continued bullish momentum. However, a fall below this level might shift the sentiment to bearish.
Given the current market conditions, a strategic entry at a buy limit order of $0.65235 is recommended, with a take profit target at $0.66096 and a stop loss at $0.64865.
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GOLD Price Analysis – Aug 08, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained their upward momentum, attracting strong bids around the 2,399 level and reaching an intra-day high of 2,400. The rally was fueled by growing expectations that the Federal Reserve will begin reducing interest rates as early as the September meeting.
This dovish outlook was reinforced by disappointing US economic data, signaling a faster-than-expected slowdown in the world's largest economy. The resulting economic uncertainty has heightened speculation about more substantial rate cuts by the Fed, further enhancing the appeal of non-yielding assets like gold. Additionally, escalating tensions between Iran and Israel have served as another key driver, boosting gold’s status as a safe-haven asset.
US Economic Data and Federal Reserve Expectations Boost Gold Prices
On the US front, the broad-based US dollar remained under pressure, struggling to gain traction as softer economic data signaled a faster-than-expected slowdown in the world's largest economy. This has fueled speculation about larger interest rate cuts by the Federal Reserve, thereby supporting the non-yielding yellow metal, gold.
On the economic data front, government figures released on Tuesday showed that the US trade deficit narrowed by 2.5%, falling to $73.1 billion in June from $75.0 billion in May. This decrease was largely driven by a 1.5% rise in exports, particularly in aircraft and US-produced oil and gas.
As a result, markets are now fully pricing in a 100% likelihood that the Federal Reserve will start lowering borrowing costs at its upcoming policy meeting in September, with nearly a 70% probability of a 50-basis-point rate cut.
Thus, this heightened anticipation of Federal Reserve rate cuts has significantly boosted gold prices, as lower borrowing costs make non-yielding assets like gold more attractive to investors.
Geopolitical Tensions and Economic Concerns Drive Up Gold Prices
On the geopolitical front, rising tensions in the Middle East and worries about China's slowing economy are pushing gold prices higher. Hezbollah has been launching drones into Israel, which has led to retaliatory strikes and ongoing clashes. Hezbollah's leader, Sayyed Hassan Nasrallah, has promised revenge for Israeli attacks, while Iran has demanded action against Israel for allegedly killing a Hamas leader.
This is why, the conflict has extended beyond Gaza, causing significant casualties and worsening the humanitarian crisis. Despite efforts by the U.S. to mediate, fighting continues, increasing geopolitical risks. This uncertainty makes gold more attractive as a safe investment, driving up its price.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2394.590, reflecting a 0.48% increase. The 4-hour chart highlights a pivotal point at $2405.21.
Immediate resistance levels are set at $2431.41, $2452.64, and $2477.89. These levels could act as barriers if the price attempts to rise.
On the downside, immediate support is found at $2374.89, followed by $2353.65 and $2353.02.
The Relative Strength Index (RSI) is currently at 45, suggesting that gold is in a neutral zone, neither overbought nor oversold.
The 50-day Exponential Moving Average (EMA) stands at $2413.24, indicating that if the price stays below this level, bearish momentum may continue.
A move above the pivot point of $2405.21 could trigger further buying interest, but failure to break this level could result in selling pressure.
In conclusion, the technical indicators and key price levels suggest a cautious approach. The recommended strategy is to enter a sell limit order at $2405, with a take profit at $2375 and a stop loss at $2425.
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USD/JPY Price Analysis – Aug 08, 2024
Daily Price Outlook
During Thursday's European session, the USD/JPY currency pair continued its bearish trend, remaining under pressure near the 146.25 level and reaching an intra-day low of 145.43. This decline is primarily due to the strengthening of the Japanese Yen (JPY), which gained traction after the release of the Bank of Japan’s (BoJ) Summary of Opinions (SoP) from the July 30-31 meeting.
The SoP indicated that officials acknowledged the need for more rate hikes to address inflationary pressures driven by higher import prices. This acknowledgment bolstered the Yen, contributing to the downward movement of the USD/JPY pair. On the other side, the US dollar losing traction was another key factor keeping the USD/JPY pair lower.
Impact of Fed Rate Cut Expectations on USD and Its Effect on USD/JPY Pair
On the US front, the broad-based US Dollar (USD) has also been under pressure, exacerbating the bearish trend of the USD/JPY pair. However, the anticipation of significant rate cuts by the Federal Reserve (Fed) has been weighing on the USD. Investors are expecting that the Fed will soon implement substantial rate reductions to support economic growth, which diminishes the appeal of holding USD. This expectation contributes to the USD’s decline against the Yen.
Impact of BoJ’s Summary of Opinions on Japanese Yen Strength and Market Stability
On the flip side, the Japanese Yen's recent strengthening is directly linked to the BoJ’s latest Summary of Opinions. The BoJ's acknowledgment of the need for further rate hikes to curb inflation has bolstered investor confidence in the Yen. The prospect of higher interest rates in Japan supports the Yen by increasing its yield compared to the USD.
However, the BoJ’s stance also highlights potential market instability. BoJ Deputy Governor Shinichi Uchida’s statement that rate hikes would not be pursued during market instability underscores the cautious approach of the central bank.
Therefore, the Japanese Yen's strengthening, driven by anticipated BoJ rate hikes, and concerns about market instability have intensified the USD/JPY pair's bearish trend, leading to further declines in the USD.
USD/JPY - Technical Analysis
The USD/JPY pair is currently trading at $145.99, marking a 0.44% decline. The 4-hour chart indicates a pivotal point at $146.93.
Immediate resistance levels are identified at $148.54, $150.10, and $152.34, which could act as barriers to any upward movement.
On the downside, immediate support is found at $144.96, with further support at $143.69 and $141.79, offering potential stabilization points if the price continues to fall.
The Relative Strength Index (RSI) is at 45, suggesting that the pair is neither overbought nor oversold, but closer to the lower end of the spectrum.
The 50-day Exponential Moving Average (EMA) stands at $148.89, indicating bearish momentum as the price is below this level.
A move above the pivot point of $146.93 could signal a reversal, while staying below this level may reinforce the bearish outlook.
In light of the current technical indicators and key price levels, the recommended strategy is to enter a sell limit order at $146.932, with a take profit target at $144.024 and a stop loss at $148.498.
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EUR/USD Price Analysis – Aug 07, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair failed to halt its downward trend and remained offered around the 1.0918 level, hitting an intra-day low of 1.0905.
This decline can be attributed to the European Central Bank's (ECB) downbeat view of the Eurozone's economic prospects, which continues to undermine the shared currency and exert downward pressure on the EUR/USD pair.
Conversely, rising expectations of a 50-basis point rate cut by the Fed in September have weakened the US dollar, helping to limit deeper losses in the EUR/USD pair.
The CME FedWatch tool indicates a 67.5% chance of a 50-basis point Fed rate cut in September, up from 13.2% last week.
US Dollar Weakens on Rate Cut Expectations, EUR/USD Limits Losses
On the US front, the broad-based US dollar struggled to sustain its bullish momentum and edged lower as expectations of a more aggressive rate cut in September increased.
This shift followed weaker US employment data for July, which heightened concerns about a potential recession.
The CME FedWatch tool now indicates a 67.5% probability of a 50-basis point interest rate cut by the Federal Reserve in September, a significant rise from 13.2% a week earlier.
According to Reuters, Federal Reserve Bank of San Francisco President Mary Daly indicated that risks to the Fed's mandates are becoming more balanced, suggesting a potential openness to cutting rates in future meetings.
Additionally, Chicago Fed President Austan Goolsbee mentioned that the central bank is ready to take action if economic or financial conditions deteriorate.
Therefore, the US dollar's decline due to increased rate cut expectations and weaker employment data has exerted upward pressure on the EUR/USD pair. The anticipated Fed rate cut and dovish Fed signals contribute to a more favorable environment for the euro.
Euro Faces Pressure as ECB Remains Cautious, but German Data Provides Support
On the EUR front, the shared currency is under pressure against the USD due to the European Central Bank's (ECB) gloomy outlook on the Eurozone economy.
However, strong economic data from Germany is providing some support. Recent figures from Destatis show that Germany’s industrial sector grew by 1.4% in June, exceeding expectations of a 1.0% increase and recovering from a 2.5% decline in May.
This growth in Germany, the Eurozone’s largest economy, helps stabilize the euro and mitigate further losses.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.09189, marking a 0.14% decline as the market remains cautious amidst mixed economic signals.
The pivot point for today is set at $1.0956, acting as a critical threshold that could determine the currency pair's short-term direction.
Immediate resistance is identified at $1.0955, with further resistance levels at $1.1010 and $1.1043. Overcoming these barriers could signal a potential shift in momentum toward a bullish trend.
On the downside, immediate support is seen at $1.0867, followed by additional support levels at $1.0828 and $1.0777.
The Relative Strength Index (RSI) is positioned at 54, indicating a neutral stance in terms of market momentum, as it sits in the middle of the scale.
The 50-day Exponential Moving Average (EMA) is at $1.0863, suggesting that the market is maintaining a slight bullish bias as long as the price remains above this indicator.
The recommended strategy for traders is to consider entering a long position with a buy limit at $1.08935, targeting a take-profit at $1.09557 while setting a stop-loss at $1.08653 to manage risk.
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GBP/USD Price Analysis – Aug 07, 2024
GOLD Price Analysis – Aug 07, 2024
Daily Price Outlook
Gold price (XAU/USD) maintained its early-day upward momentum and drew further bids around the 2,395 level, hitting an intra-day high of 2,397.
This rally was driven by weaker-than-expected US economic data, suggesting a faster-than-anticipated slowdown in the world's largest economy.
Economic uncertainty has fueled speculation about larger interest rate cuts by the Federal Reserve, which benefits non-yielding assets like gold.
Apart from this, concerns about an economic slowdown in China and potential escalations in geopolitical tensions in the Middle East have further bolstered gold's appeal as a safe-haven asset.
US Economic Slowdown and Federal Reserve Rate Cut Speculations Boost Gold Prices
On the US front, the broad-based US dollar failed to sustain its early-day bullish momentum and turned bearish as softer economic data suggested the world's largest economy was slowing faster than expected.
This led to speculation about bigger interest rate cuts by the Federal Reserve, which supports the non-yielding yellow metal (gold).
Government data released on Tuesday showed that the US trade deficit fell by 2.5% to $73.1 billion in June from $75.0 billion in May, mainly due to a 1.5% rise in exports of aircraft and US-produced oil and gas.
Markets are now pricing in a 100% chance that the Federal Reserve will start lowering borrowing costs at the upcoming policy meeting in September, with a near 70% probability of a 50-basis-point rate cut.
Therefore, this speculation about bigger interest rate cuts by the Federal Reserve supports gold prices, as lower rates reduce the opportunity cost of holding non-yielding assets like gold.
Geopolitical Tensions and Economic Concerns Bolster Gold Prices Amid Middle East Conflict and Chinese Slowdown
On the geopolitical front, the increasing concerns about an economic slowdown in China and rising tensions in the Middle East provide additional support for gold prices.
However, the latest reports indicate Hezbollah has launched multiple drones into Israel, hitting several areas and triggering air raid sirens. In response, Israeli forces have conducted raids in the West Bank, resulting in at least 12 Palestinian deaths.
It is also worth mentioning that Yahya Sinwar has been named the new Hamas chief following the assassination of Ismail Haniyeh.
Gaza's Health Ministry reports that recent Israeli attacks have killed at least 40 people and injured 71. Overall, Israel's war on Gaza has led to 39,653 deaths and 91,535 injuries.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,393.37, marking a 0.10% increase. The market remains in a cautious stance, with prices hovering below the key pivot point of $2,416.72.
This level acts as a significant threshold for potential market direction. Immediate resistance is noted at $2,452.64, followed by subsequent resistance at $2,477.89 and $2,498.73, which represents key levels for any bullish momentum.
On the downside, immediate support is established at $2,374.89, with further support at $2,353.65 and $2,335.02.
The Relative Strength Index (RSI) currently stands at 43, indicating that gold is neither in overbought nor oversold territory, but it is closer to the lower end, suggesting limited buying pressure.
The 50-day Exponential Moving Average (EMA) is at $2,411.84, which places the current price below this technical level, reinforcing the bearish sentiment.
The technical indicators suggest a bearish outlook unless prices can break above the pivot point and sustain momentum.
A recommended entry point for a short position is below $2,405, with a target of $2,375 for potential profit, and a stop-loss set at $2,425 to manage risk.
Given the recent price action, traders should be vigilant for any geopolitical or macroeconomic developments that might impact gold prices, including shifts in Federal Reserve policy or changes in global market risk sentiment.
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EUR/USD Price Analysis – Aug 07, 2024
GBP/USD Price Analysis – Aug 07, 2024
Daily Price Outlook
During the European trading session on Wednesday, the GBP/USD currency pair maintained its upward trend and remained well bid around 1.2712 level, hitting the intra-day high of 1.2718 level.
However, the reason for its upward trend can be attributed to the rising expectations of a 50-basis point rate cut by the Fed in September. This undermined the US dollar an contributed to the GBPUSD pair gains.
CME FedWatch tool indicates 67.5% odds of a 50-basis point Fed rate cut in September, up from 13.2% last week. On the other hand, the British Pound may struggle due to rising odds of a quarter-basis point rate cut by the BoE in August.
Bearish US Dollar Boosts GBP/USD Amid Rate Cut Expectations
On the US front, the broad-based US dollar failed to maintain its bullish bias and edged lower on the day as rising expectations of a more aggressive rate cut in September grew after weaker US employment data in July raised fears of a looming recession.
The CME FedWatch tool shows a 67.5% probability of a 50-basis point interest rate cut by the Federal Reserve in September, up from 13.2% a week earlier.
According to Reuters, Federal Reserve Bank of San Francisco President Mary Daly noted that risks to the Fed's mandates are becoming more balanced, and there is openness to cutting rates in upcoming meetings.
Additionally, Chicago Fed President Austan Goolsbee stated that the central bank is prepared to act if economic or financial conditions worsen.
Therefore, the bearish US dollar sentiment helped the GBP/USD pair gain traction, rising above the 1.2719 level as traders reacted to the increasing likelihood of a US interest rate cut.
Dovish BoE Stance and Geopolitical Tensions Cap Gains in GBP/USD Pair
On the other hand, the Pound Sterling (GBP) faced challenges as the Bank of England (BoE) implemented a widely anticipated 25-basis point rate cut at its August meeting. Furthermore, market expectations now include the possibility of two further quarter-point rate cuts by the BoE by December.
Meanwhile, the concerns about escalating Middle East conflicts were heightened after Iran-backed Hezbollah launched dozens of missiles at Israel in response to the assassination of Hamas leader Ismail Haniyeh by an Israeli airstrike in Tehran.
Thus, the dovish BoE stance and escalating Middle East tensions limited gains in the GBP/USD pair, capping its upside potential.
GBP/USD - Technical Analysis
The GBP/USD pair is trading at $1.27022, reflecting a 0.20% increase in today’s session. Despite this uptick, the pair remains below the pivot point of $1.2736, indicating a cautious outlook as traders weigh recent economic data and broader market trends.
Immediate resistance is encountered at $1.2802, with further resistance at $1.2839 and $1.2889, levels that need to be breached for the pair to establish a more sustained upward trajectory.
On the downside, immediate support is located at $1.2680, followed by significant levels at $1.2635 and $1.2614.
The Relative Strength Index (RSI) is currently at 39, suggesting that the pair is nearing oversold conditions, though not yet at levels typically associated with a reversal.
The 50-day Exponential Moving Average (EMA) is positioned at $1.2801, further underlining the bearish sentiment as the current price remains below this technical indicator.
The prevailing sentiment suggests a bearish bias unless the GBP/USD can rise above the pivot point and sustain momentum past immediate resistance.
An entry point for a short position is advised at $1.27349, with a take-profit target of $1.26621 and a stop-loss set at $1.27862.
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AUD/USD Price Analysis – Aug 06, 2024
Daily Price Outlook
Despite the RBA's hawkish stance, the AUD/USD currency pair continued its downward trend, trading around the 0.6481 level and hitting an intra-day low of 0.6473.
This decline can be attributed to the US dollar's mild strength, bolstered by the surge in Treasury bond yields, which has continued to exert pressure on the AUD/USD pair.
Furthermore, the escalating geopolitical tensions in the Middle East have undermined the riskier Australian dollar, contributing to further losses.
Moving ahead, traders are watching Tuesday’s US Trade Balance data, the only release for the day, which could impact the USD if bond yields fluctuate.
Risk sentiment will also play a role, while the upcoming Chinese Trade Balance data on Wednesday may influence the AUD/USD pair.
RBA’s Steady Rates and Positive Equity Markets Support AUD/USD, but Economic Concerns Limit Gains
On the AUD front, the Australian Dollar (AUD) gained some traction earlier on Tuesday after the Reserve Bank of Australia (RBA) decided to keep interest rates unchanged and maintain a tight policy to address ongoing inflation.
RBA Governor Michele Bullock supported this decision, noting that controlling inflation might take longer and could require higher rates for a while. This positive outlook, combined with a rise in global equity markets, helped boost the AUD/USD pair.
However, concerns about a potential economic downturn especially given the AUD’s sensitivity to Chinese economic conditions are limiting further gains.
Therefore, the RBA's decision to keep rates steady and maintain a restrictive policy, combined with a positive shift in global equity markets, supported the AUD/USD pair. However, concerns about a potential economic downturn are capping further gains.
Economic Uncertainty and Fed Speculation Keep AUD/USD Under Pressure
On the US front, the recent economic data showing declines in US manufacturing and slower job growth has raised recession fears and speculation about potential Federal Reserve rate cuts. This has led to a drop in US Treasury yields, which impacted the AUD/USD pair.
Despite this, San Francisco Fed President Mary Daly's reassurance that the job market slowdown isn’t a major concern has kept the US dollar relatively supported. The combination of a modestly stronger US dollar and broader economic uncertainties has kept the AUD/USD pair under pressure.
AUD/USD - Technical Analysis
The Australian Dollar (AUD) is showing modest strength against the US Dollar, with the AUD/USD pair trading at $0.64982, up 0.22% on the day.
The currency pair is experiencing a short-term bullish trend, although it remains below the key pivot point of $0.6538.
Immediate resistance is found at $0.6569, with further hurdles at $0.6610 and $0.6643. The AUD/USD must break through these resistance levels to establish a stronger upward trajectory.
On the downside, immediate support is located at $0.6481, followed by additional support levels at $0.6439 and $0.6402. These levels serve as critical markers for traders seeking to manage risk, as a decline below them could signify renewed bearish momentum.
The 50-day Exponential Moving Average (EMA) is currently at $0.6526, slightly above the current price, which could act as a barrier to further gains if the pair struggles to maintain its upward momentum.
The Relative Strength Index (RSI) is at 47, suggesting that the pair is neither overbought nor oversold.
This neutral reading indicates a balanced market, providing an opportunity for traders to capitalize on potential breakout or breakdown scenarios.
Given the current technical setup, the recommended strategy is to consider selling below $0.65234, with a take-profit target of $0.64399 and a stop-loss at $0.65687 to manage potential reversals.
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GOLD Price Analysis – Aug 06, 2024
Daily Price Outlook
Gold price (XAU/USD) trimmed its losses and regained some its bullish traction around the 2,411 level, hitting the intra-day high of 2,418 level.
However, the reason for its mild bullish trend can be associated with expectations for larger interest rate cuts by the Federal Reserve, which may keep US bond yields and the Greenback subdued.
Meanwhile, the ongoing geopolitical risks in the Middle East could support higher gold prices, limiting recent declines.
US Economic Data and Federal Reserve Speculation Affect Gold Prices Amid Mixed Market Reactions
On the US front, the broad-based US dollar and Treasury yields have been impacted by recent economic data showing sharper-than-expected declines in manufacturing activity and slower job growth.
This has raised concerns about a potential recession and led to speculation that the Federal Reserve might cut interest rates more aggressively.
As a result, the yield on the 10-year US Treasury bond fell to its lowest level since mid-2023, with traders predicting a high chance of a 50-basis points rate cut in September.
Despite these developments, San Francisco Fed President Mary Daly reassured that a slowing job market isn't a major concern and that rates will decrease to balance employment and price stability.
Consequently, the market's risk-on sentiment, coupled with rising Treasury yields and a modest increase in the US dollar, hasn't significantly boosted gold's appeal or attracted many buyers during the Asian session on Tuesday.
On the data front, Tuesday's positive US Services PMI report, which improved to 51.4 in July from 48.8, surpassing expectations of 51, was largely overshadowed by broader economic concerns.
This includes fears of a recession and speculation about more aggressive Federal Reserve rate cuts.
Middle East Conflicts Boost Gold Prices Amid Rising Tensions and Humanitarian Crisis
On the other hand, the conflicts in the Middle East are likely to push up gold prices as a safe investment.
Iran, Hamas, and Hezbollah have vowed to retaliate against Israel for killing Hamas leader Ismail Haniyeh in Tehran, increasing tensions. Recent violence in Gaza has resulted in at least 40 deaths and 71 injuries.
Meanwhile, child malnutrition has also risen by nearly 50% from June to July. The UN is calling for de-escalation to prevent further conflict.
Additionally, nearly 90 unidentified Palestinian bodies previously held by Israel have been returned to Gaza for burial.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,413.43, down 0.09% as the market reflects cautious sentiment amid global economic uncertainty.
The 4-hour chart shows the price has fallen below the pivot point of $2,437.41, signaling a bearish trend in the short term. Immediate resistance is at $2,452.64, with further resistance at $2,477.89 and $2,498.73.
These levels must be breached for gold to regain upward momentum. On the downside, immediate support is at $2,394.93, with subsequent support levels at $2,374.89 and $2,353.65.
The Relative Strength Index (RSI) is currently at 47, indicating that the market is neither overbought nor oversold.
This suggests a period of consolidation as traders await clearer market signals. Meanwhile, the 50-day Exponential Moving Average (EMA) is at $2,409.23, slightly below the current price.
This position of the EMA suggests that gold is experiencing short-term selling pressure, yet remains close enough to suggest that a rebound is possible if broader market conditions improve.
From a technical perspective, the entry strategy for traders is to consider buying above $2,400, with a target take-profit level at $2,437. A stop-loss should be set at $2,372 to protect against downside risk.
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