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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USD/CAD Price Analysis – Aug 06, 2024
EUR/USD Price Analysis – Aug 05, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained bullish momentum and remained well-supported around the 1.0945 level despite disappointing Eurozone data.
This upward trend can be attributed to the weakening US dollar, which lost strength due to dovish sentiment surrounding the Federal Reserve’s policy stance.
Although the downbeat Eurozone data contributed to limiting further gains in the EUR/USD pair, the overall bearish outlook on the US dollar played a crucial role in driving the currency’s rise.
Looking ahead, traders will closely monitor the US ISM Services Purchasing Managers Index (PMI). Expected to rise to 51.0 in July from 48.8 in June, the PMI could significantly influence the market. A stronger-than-anticipated PMI might bolster the USD and potentially limit gains in other assets.
Impact of Weak US Labor Market and Dovish Fed Outlook on EUR/USD
On the US front, the US dollar struggled to gain traction and edged lower due to the Federal Reserve's dovish stance and weak employment data. Traders anticipate a 50-basis point rate cut in September and over 100 basis points in total this year, according to the CME FedWatch tool.
These expectations stem from disappointing US economic data, which suggest a slowdown and raise concerns about the possibility of a "soft landing" for the economy.
Meanwhile, the labor market is weakening, and the manufacturing sector is experiencing a sharp slowdown.
The July Nonfarm Payrolls report revealed a decline in labor demand and a rise in unemployment to its highest level since November 2021. This deterioration heightens the likelihood of rate cuts.
On the data front, US Nonfarm Payrolls increased by 114,000 in July, falling short of the 175,000 expected and down from 179,000 in June. The unemployment rate rose to 4.3%, the highest since November 2021, and Average Hourly Earnings grew by just 0.2%, below the 0.3% forecast.
Therefore, the weakening US labor market and lower-than-expected Nonfarm Payrolls may boost the EUR/USD pair, as dovish Fed expectations could weaken the USD and enhance the euro's appeal.
Impact of Eurozone Economic and Geopolitical Uncertainty on EUR/USD
On the Eurozone front, higher preliminary Harmonized Index of Consumer Prices (HICP) for July has cast doubt on potential European Central Bank (ECB) rate cuts in September. The Eurozone Sentix Investor Confidence Index dropped sharply from -7.3 in July to -13.9 in August, reflecting growing concerns.
In the meantime, the Expectations Index also fell from 1.5 in July to -8.8 in August. Sentix attributed these declines to worries about the fragile geopolitical situation, including issues in the Middle East, upcoming German state elections, and uncertainty surrounding the US presidential election later this year.
Therefore, the uncertainty over ECB rate cuts and declining Eurozone investor confidence could weigh on the EUR/USD pair, as concerns about economic and geopolitical instability may undermine the euro's strength.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.09566, showing a modest decline of 0.09% as investors react to mixed economic signals from both sides of the Atlantic.
The pair has recently navigated a challenging environment, with traders keeping a close eye on technical levels for clues about its next move.
The 4-hour chart reveals that EUR/USD is slightly above its pivot point of $1.0946, indicating a potential bullish outlook if it maintains support above this level.
Immediate resistance is observed at $1.0988, which could act as a hurdle for any upward movement. If the pair manages to break through this resistance, it may target further gains at $1.1022 and $1.1048.
On the downside, immediate support is positioned at $1.0892, with additional support levels at $1.0858 and $1.0822. Traders should monitor these support levels closely, as a breach could signal further bearish momentum.
The Relative Strength Index (RSI) stands at 73, indicating that the EUR/USD is currently in overbought territory. This suggests a possible correction could be on the horizon if the buying pressure eases.
Meanwhile, the 50-day Exponential Moving Average (EMA) is situated at $1.0852, offering dynamic support that aligns with the bullish sentiment observed in recent sessions.
Given the current technical setup, traders might consider buying EUR/USD above the entry price of $1.09457, aiming for a potential upside toward the target of $1.10107. To manage risk, a stop-loss should be placed at $1.08909.
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GBP/USD Price Analysis – Aug 05, 2024
GBP/USD Price Analysis – Aug 05, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair failed to gain traction and remained under pressure around the 1.2755 level even though the US dollar is losing its traction amid dovish sentiment surrounding the Fed’s policy stance.
The reason for its downward trend can be attributed to the Bank of England (BoE) delivering a broadly expected 25-basis point rate hike at its August meeting on Thursday. This undermined the GBP currency and contributed to the GBP/USD pair losses.
Looking ahead, traders will be watching the US ISM Services Purchasing Managers Index (PMI) closely.
The PMI, which is anticipated to rise to 51.0 in July from 48.8 in June, could have a significant impact on the market. A stronger-than-expected PMI might strengthen the USD and potentially cap gains in other assets.
US Dollar Weakness and Impact of Employment Data on GBP/USD Pair
On the US front, the US dollar struggled to gain traction and edged lower on the day due to the Federal Reserve's dovish stance and weak employment data.
Traders expect a 50-basis point rate cut in September and over 100 bps cuts this year, according to the CME FedWatch tool. This expectation arises from weak US economic data suggesting a slowdown and casting doubt on a "soft landing" for the economy.
Meanwhile, the labor market is deteriorating, and the manufacturing sector is slowing down sharply.
The July Nonfarm Payrolls report showed a drop in labor demand and a rise in unemployment to its highest since November 2021, increasing the likelihood of rate cuts.
On the data front, US Nonfarm Payrolls increased by 114,000 in July, falling short of the 175,000 expected and down from 179,000 in June. The unemployment rate rose to 4.3%, the highest since November 2021, and Average Hourly Earnings grew by just 0.2%, below the 0.3% forecast.
Therefore, the weak US employment data and rising unemployment rate have increased the possibility of rate cuts, putting pressure on the US dollar and impacting the GBP/USD pair, which remains under pressure.
Impact of BoE Rate Cut and Inflation Outlook on GBP/USD Pair
On the other side, the losses in the GBP/USD pair were mainly due to the Bank of England (BoE) implementing a widely expected 25-basis point rate cut at its August meeting. BoE Governor Andrew Bailey added that the increase in the minimum wage has not caused major concerns for the bank.
He also mentioned that the overall inflation trend, including some potential risks, is now closer to the 2% target.
This rate cut and the positive inflation outlook contributed to the GBP's weakness, as lower interest rates generally make a currency less attractive to investors. As a result, the GBP/USD pair faced downward pressure despite the US dollar's struggles.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27991, reflecting a slight decrease of 0.07% as market participants continue to assess the impact of recent economic data and geopolitical events.
The currency pair has been navigating a tight range, with traders closely watching key technical levels for potential breakout opportunities. The 4-hour chart shows that GBP/USD is trading just below its pivot point at $1.2802, suggesting a bearish bias in the short term.
Immediate resistance is identified at $1.2840, which could serve as a critical barrier for bullish momentum. If the pair breaks above this resistance, further upside potential may be capped at $1.2862 and $1.2890.
Conversely, immediate support is found at $1.2741, with subsequent support levels at $1.2711 and $1.2678. These support levels are essential for traders to monitor, as a breach below could signal further downside pressure.
The Relative Strength Index (RSI) is currently at 52, indicating a neutral stance that suggests neither overbought nor oversold conditions.
This neutrality implies that GBP/USD has room to move in either direction, depending on market catalysts. The 50-day Exponential Moving Average (EMA) is aligned with the pivot point at $1.2802, reinforcing its significance as a critical level for near-term price action.
Given the current technical landscape, traders might consider selling if GBP/USD remains below $1.28017, targeting a potential decline toward $1.27409. A stop-loss above $1.28438 is recommended to manage risk and protect against unexpected volatility.
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GOLD Price Analysis – Aug 05, 2024
GOLD Price Analysis – Aug 05, 2024
Daily Price Outlook
Despite multiple supportive factors like a bearish US dollar and risk-off market sentiment, the gold price (XAU/USD) failed to sustain its early-day upward trend and remained well offered around the 2,421 level, hitting an intraday low of 2,414.
The precious metal faced selling pressure as profit booking kicked in while attempting to recapture all-time highs above $2,480.
However, the losses could be short-lived as the Fed is expected to cut interest rates by more than 100 basis points this year. This undermined the US dollar and helped the gold price stay bid. Additionally, rising tensions in the Middle East are likely to boost safe-haven assets like gold.
Weaker US Economic Data and Rate Cut Expectations Boost Gold Prices
On the US front, the broad-based US dollar struggled to gain momentum and remained under pressure due to the Federal Open Market Committee's dovish stance and a weaker employment report.
According to the CME FedWatch tool, traders expect a 50-basis point (bp) interest rate cut in September and anticipate a reduction of more than 100 bps this year.
This expectation stems from recent weak US economic data, which suggest an economic slowdown and raise doubts about the Fed achieving a "soft landing," where inflation is controlled without causing a recession.
However, the deteriorating labor market and a sharp slowdown in the manufacturing sector have increased hopes for significant rate cuts. The July Nonfarm Payrolls (NFP) report highlighted a slowdown in labor demand and an unexpected rise in the unemployment rate to its highest level since November 2021.
On the data front, US Nonfarm Payrolls increased by 114,000 in July, falling short of the 175,000 expected and down from 179,000 in June.
The unemployment rate rose to 4.3%, the highest since November 2021, and Average Hourly Earnings grew by just 0.2%, below the 0.3% forecast.
Meanwhile, the ISM Manufacturing Purchasing Managers Index (PMI) showed a faster contraction in manufacturing activity, dropping to 46.8 in July. These figures indicate weaker-than-expected labor market conditions and economic activity.
Therefore, the weaker US economic data and increased rate cut expectations have bolstered gold prices, as investors seek safe-haven assets amidst economic uncertainty and potential Fed policy adjustments.
Geopolitical Tensions in the Middle East Boost Gold Prices
Another factor that helps gold stay bid is the rising tensions in the Middle East. US Secretary of State Antony Blinken has warned that Iran and Hezbollah might soon attack Israel, prompting President Joe Biden to meet with the National Security Council.
Israel is considering a preemptive strike on Iran, and Hezbollah has vowed to escalate attacks following the killing of a senior commander.
Hence, the situation is further strained by the assassination of a Hamas leader and ongoing clashes between Hezbollah and Israeli forces. These geopolitical tensions, along with a weaker US dollar and lower bond yields, are likely to support gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,443.92, reflecting a modest increase of 0.05% as investors continue to navigate economic uncertainties.
The metal has maintained a positive trajectory amid geopolitical tensions and a softer U.S. dollar, making it an attractive safe-haven asset.
The 4-hour chart suggests that gold is trading above the pivot point at $2,425.34, indicating a bullish bias as long as prices remain above this level.
The technical landscape reveals that gold is facing immediate resistance at $2,459.16. If the price manages to break through this level, further resistance can be expected at $2,478.38 and $2,499.25.
On the downside, immediate support is seen at $2,404.34, followed by additional support levels at $2,377.99 and $2,353.43.
The Relative Strength Index (RSI) is neutral at 51, indicating that the market is neither overbought nor oversold, and leaving room for further movement in either direction.
The 50-day Exponential Moving Average (EMA) is positioned at $2,432.19, providing a dynamic support level that aligns with the current market sentiment.
A sustained move above this EMA could further reinforce the bullish outlook for gold. Investors might consider entering long positions if gold dips below $2,425, with a target of $2,455 and a stop-loss at $2,405 to mitigate risk.
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EUR/USD Price Analysis – Aug 05, 2024
GOLD Price Analysis – Aug 02, 2024
Daily Price Outlook
Gold price (XAU/USD) prolonged its previous upward trend and drew further bids around the 2,464 level, reaching an intraday high of $2,468. This rebound can be attributed to speculation that the Federal Reserve may begin reducing interest rates in September.
This undermined the US dollar and contributed to the gold price gains. Meanwhile, the risk-off market sentiment driven by growing concerns about the US economy and escalating geopolitical tensions in the Middle East was seen as another key factor that boosted the gold price.
Looking ahead, traders are awaiting upcoming US labor market data, including Nonfarm Payrolls and Average Hourly Earnings for July. The official Employment data will indicate the current status of the labor market, which will influence market speculation for a US Federal Reserve (Fed) rate cut in September.
The US NFP report is expected to show that 175K new workers were hired in July, a decrease from the previous addition of 206K. The Unemployment Rate is expected to remain steady at 4.1%.
US Economic Concerns and Dovish Fed Policy Bolster Gold's Appeal
On the US front, the previously released manufacturing and employment data raised concerns about the economy, boosting risk aversion and supporting gold. Meanwhile, the yellow metal gained further traction due to dovish sentiment surrounding the Federal Reserve's policy.
The Fed kept rates unchanged at 5.25%-5.50% in July and signaled potential rate cuts due to cooling inflation and a moderating labor market. This pressured the US dollar and contributed to gold's gains, as lower interest rates tend to increase the appeal of non-yielding assets like gold.
On the data front, the US ISM Manufacturing PMI dropped to an eight-month low of 46.8 in July, down from 48.5 and below the expected 48.8. Additionally, US Initial Jobless Claims for the week ending July 26 rose to 249K, exceeding the forecast of 236K and the previous week's 235K.
The official Employment data will indicate the current status of the labor market, influencing market speculation for a Fed rate cut in September. The US NFP report is expected to show that 175K new workers were hired in July, a decrease from the previous addition of 206K, while the Unemployment Rate is expected to remain steady at 4.1%.
Investors will also focus on the Average Hourly Earnings data, a key measure of wage growth that fuels consumer spending and drives price pressures.
Annually, wage growth is estimated to have decelerated to 3.7% from the prior reading of 3.9%, with the monthly figure growing steadily by 0.3%. Softer-than-expected wage growth data will diminish fears of persistent inflation, strengthening Fed rate-cut prospects, while stubborn numbers would weaken them.
Thus, the concerns over US manufacturing and employment, dovish Fed policy, and expectations of rate cuts due to cooling inflation and moderating labor market support gold, increasing its appeal as a non-yielding asset.
Rising Middle East Tensions Boost Gold Demand Following Assassination of Hamas Leader
On the geopolitical front, the geopolitical tensions in the Middle East have recently fueled a rise in gold prices. The assassination of Hamas leader Ismail Haniyeh in Tehran, following his attendance at the new president's inauguration, has intensified these tensions.
The New York Times reports that Haniyeh was killed in the Iranian capital, with both Iranian officials and Hamas accusing Israel of orchestrating the attack. This escalation has further bolstered gold's appeal as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,464.83, up 0.45%, as investors look for safe-haven assets amid global economic uncertainties. The 4-hour chart shows that gold has breached key resistance levels, indicating bullish momentum.
The immediate resistance is at $2,469.89, followed by $2,483.50 and $2,503.94. If gold manages to break above these levels, it could potentially test higher targets.
On the downside, immediate support is seen at $2,430.57, with subsequent support at $2,408.91 and $2,386.97. A decline below these levels might trigger a bearish trend, but the overall outlook remains positive as long as gold stays above the pivot point of $2,483.00.
The RSI stands at 72, signaling that the metal is currently overbought, which could lead to a short-term correction before further gains.
The 50-day Exponential Moving Average (EMA) at $2,405.75 further supports the bullish trend. This indicator highlights strong buying interest and suggests that the uptrend might continue, especially if macroeconomic conditions continue to favor risk-averse investments.
In terms of trading strategy, an entry price is recommended above $2,455, with a target take-profit level at $2,483 and a stop-loss set at $2,433. This approach aims to capitalize on the current bullish sentiment while managing risk effectively.
Investors should remain cautious, as geopolitical tensions and economic data releases could influence gold prices.
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EUR/USD Price Analysis – Aug 02, 2024
S&P500 (SPX) Price Analysis – Aug 02, 2024
Daily Price Outlook
S&P 500 (SPX) failed to stop its downward trend and remains under pressure around the 5,446 level, hitting an intraday low of 5,410. This decline is driven by economic uncertainties, dovish Federal Reserve policies, and escalating geopolitical tensions.
Looking ahead, traders are awaiting upcoming US labor market data, including Nonfarm Payrolls (NFP) and Average Hourly Earnings for July.
The official employment data will indicate the current status of the labor market, which will influence market speculation for a potential US Federal Reserve (Fed) rate cut in September.
The US NFP report is expected to show that 175K new jobs were added in July, a decrease from the previous addition of 206K. The Unemployment Rate is expected to remain steady at 4.1%.
US Economic Data and Fed Speculation Intensify S&P 500 Pressure
On the US front, speculation about potential Federal Reserve rate cuts in September has increased pressure on the S&P 500. Recent manufacturing and employment data have heightened concerns about the economy. The ISM Manufacturing PMI dropped to an eight-month low of 46.8 in July, down from 48.5 and falling short of the expected 48.8.
Additionally, US Initial Jobless Claims rose to 249K for the week ending July 26, surpassing both the forecast of 236K and the previous week's 235K.
These data points have heightened risk aversion among investors and affected the S&P 500's performance. The Fed's decision to keep rates unchanged at 5.25%-5.50% in July, along with indications of potential rate cuts due to cooling inflation and a moderating labor market, has contributed to market uncertainty.
If the upcoming Nonfarm Payrolls (NFP) report reveals a lower job addition of 175K for July, compared to the previous 206K, and if the Unemployment Rate holds steady at 4.1%, it could impact the Fed's future rate cut decisions.
Investors will also be closely monitoring the Average Hourly Earnings data, which is expected to show annual wage growth slowing to 3.7% from 3.9%, with a monthly increase of 0.3%. Softer wage growth could reinforce expectations for a Federal Reserve rate cut, while stronger numbers might diminish those prospects.
Middle East Tensions Heighten Instability and Impact S&P 500
On the geopolitical front, tensions in the Middle East have further impacted market sentiment. The assassination of Hamas leader Ismail Haniyeh in Tehran has intensified regional instability. According to The New York Times, Haniyeh was killed after attending the new president's inauguration, with accusations from both Iranian officials and Hamas pointing to Israel.
This escalation has contributed to a risk-off sentiment in global markets, affecting the S&P 500.
S&P 500 - Technical Analysis
The S&P 500 (SPX) index is currently trading at $5,446.69, down 1.37% as investor sentiment shifts amid economic uncertainties and corporate earnings reports. The 4-hour chart reveals that the index is trading below the pivot point of $5,412.99, indicating potential further downside unless key support levels hold.
Immediate support is found at $5,327.98, with subsequent levels at $5,259.24 and $5,190.50. If the index breaches these supports, it may face additional downward pressure.
The immediate resistance stands at $5,502.69, followed by $5,577.16 and $5,665.95. To regain upward momentum, the S&P 500 needs to break through these resistance levels decisively.
The Relative Strength Index (RSI) is currently at 44, indicating that the index is approaching oversold territory. This suggests that while there is bearish sentiment, there might be potential for a rebound if positive economic data or earnings surprises materialize.
The 50-day Exponential Moving Average (EMA) is positioned at $5,530.15, further highlighting the need for a break above immediate resistance to shift the short-term outlook to bullish.
In terms of strategy, buying is recommended above $5,415, with a take-profit target set at $5,500 and a stop-loss at $5,350. This approach allows traders to capitalize on potential rebounds while managing downside risks.
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EUR/USD Price Analysis – Aug 02, 2024
EUR/USD Price Analysis – Aug 02, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend and edged higher around 1.0830, hitting an intra-day high of 1.0838.
This upward movement can be attributed to the hotter-than-expected Eurozone preliminary Harmonized Index of Consumer Prices (HICP) in July, which has increased inflation concerns and led to reduced investor confidence in the euro.
Meanwhile, the US dollar shows a subdued performance as a string of weak US economic data points to a slowdown in the economy. The major currency pair is expected to remain on the sidelines as investors await the United States (US) Nonfarm Payrolls (NFP) data for July, which will be published at 12:30 GMT.
EUR/USD May Rise as US Dollar Weakens on Dovish Fed Guidance and Economic Data
On the US front, the broad-based US dollar failed to stop its downward trend and edged lower, even though the Fed leaned towards policy normalization in September. On Wednesday, the Fed kept interest rates unchanged at 5.25%-5.50% but gave dovish guidance.
Fed Chair Jerome Powell suggested that a rate cut could be possible in September if inflation aligns with expectations and the economy remains strong. Ahead of the US Nonfarm Payrolls (NFP) report, the dollar shows weakness due to recent poor economic data, and the US Dollar Index (DXY) fell to around 104.20.
On the data front, economists estimate that 175,000 new jobs were added in July, down from 206,000 previously, with the Unemployment Rate expected to hold steady at 4.1%. Investors will watch the Average Hourly Earnings data, which is forecasted to show a slowdown in annual wage growth to 3.7% from 3.9%, with a monthly increase of 0.3%.
Additionally, the US ISM Manufacturing PMI report for July revealed a faster-than-expected contraction to 46.8, compared to the estimated 48.8. Initial Jobless Claims for the week ending July 26 rose to 249,000, higher than the expected 236,000 and the previous 235,000.
Therefore, the EUR/USD pair could benefit from the US dollar's weakness and dovish Fed outlook. With weaker US economic data and potential rate cuts, the euro gains an advantage, driving the EUR/USD pair higher as investors react to these conditions.
Euro Faces Pressure Amidst Strong Eurozone Inflation and GDP Growth
On the EUR front, the euro struggles to gain traction despite higher-than-expected Eurozone inflation and GDP growth. The Eurozone's preliminary HICP for July rose to 2.6%, surpassing expectations of 2.4%, and core HICP increased to 2.9% from an expected 2.8%. Additionally, the GDP growth for Q2 was 0.3%, above the anticipated 0.2%.
This combination of persistent inflation and steady growth dampens expectations for European Central Bank (ECB) rate cuts. While some ECB policymakers are open to the possibility of rate cuts, others remain cautious about committing to this path.
Therefore, the EUR/USD pair face pressure as higher inflation and stronger GDP growth in the Eurozone reduce expectations for ECB rate cuts. This limit the euro's upward momentum against the dollar.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.08040, marking a slight increase of 0.05% as markets digest recent economic data and central bank signals. The 4-hour chart indicates that the pair is currently trading just below the pivot point of $1.0819, suggesting a cautious market sentiment.
Immediate resistance is at $1.0849, with further barriers at $1.0870 and $1.0903. For the euro to gain upward momentum, it needs to break decisively above these levels.
On the downside, support is found at $1.0777, with additional support at $1.0741 and $1.0710. A breach of these support levels could lead to a more pronounced decline, especially if US economic data continues to show resilience.
The Relative Strength Index (RSI) is at 45, indicating that the pair is neither overbought nor oversold, providing room for potential moves in either direction.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0834, which the pair is currently trading below, suggesting a bearish outlook in the short term.
Traders are advised to consider selling below $1.08182, with a target take-profit level at $1.07584 and a stop-loss set at $1.08481. This strategy allows traders to capitalize on potential downward moves while managing risk effectively.
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S&P500 (SPX) Price Analysis – Aug 02, 2024
USD/JPY Price Analysis – Aug 01, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair has recently shown bullish performance due to several factors. The Japanese Yen (JPY) initially surged, reaching a four-month high of 148.50 against the US Dollar (USD) during early Asian trading hours.
This rally was driven by the Bank of Japan's (BoJ) unexpectedly hawkish policy announcements, including a 15 basis point increase in its short-term rate target to 0.15%-0.25% and a plan to reduce Japanese government bond (JGB) purchases starting in 2026.
These measures improved expectations for wages and inflation, temporarily boosting the Yen. However, the USD/JPY pair's upward trend faced resistance as the Yen's gains were offset by a strengthening USD, which ultimately boosted the USD/JPY pair.
Bullish US Dollar Drives USD/JPY Pair Higher Amid Fed's Stable Rates and Positive Economic Data
On the US front, the US Dollar has recently experienced a bullish trend, influenced by several factors including the Federal Reserve's decision to maintain interest rates at 5.25%-5.50%. This decision has reinforced expectations of a stable and resilient US economy.
Federal Reserve Chair Jerome Powell's remarks about a potential rate cut in September have further fueled investor interest in the USD. The USD's strength is also supported by positive economic data, such as the ADP report showing a rise in private sector employment and wage growth.
As a result, the USD has advanced against other currencies, including the Yen, impacting the USD/JPY pair positively. Traders are now looking to upcoming US economic data, including the ISM Manufacturing PMI and weekly Initial Jobless Claims, for further direction on the USD/JPY pair.
BoJ's Policy Moves and Japan’s Massive Intervention Impact on USD/JPY Volatility
On the BoJ front, the USD/JPY pair was also influenced by the Bank of Japan's recent policy decisions. The BoJ raised its short-term interest rates by 15 basis points to 0.15%-0.25% and announced plans to cut its purchases of Japanese government bonds (JGBs) starting in 2026.
These moves were aimed at addressing rising inflation and a tight labor market.
In July, Japan’s Ministry of Finance intervened significantly in the foreign exchange market, spending ¥5.53 trillion ($36.8 billion) to stabilize the Yen, which had hit its lowest level in 38 years.
This substantial intervention helped temporarily stabilize the Yen. However, the impact on the USD/JPY pair has been mixed.
While the Yen was somewhat stabilized, the USD/JPY exchange rate continues to be influenced by other factors, such as Federal Reserve policies and global economic conditions. This ongoing volatility highlights the complex nature of forex markets and the challenges in managing currency value fluctuations.
USD/JPY - Technical Analysis
The USD/JPY pair is trading at $150.013, down 0.12%, reflecting a period of consolidation as traders assess recent economic data and central bank policies. The currency pair remains under pressure, hovering below the critical pivot point of $150.789 on the 4-hour chart.
This level is crucial for traders seeking to determine the next directional move. The USD/JPY is exhibiting bearish tendencies, influenced by mixed signals from the Federal Reserve's recent statements and ongoing economic uncertainty.
Immediate resistance is positioned at $150.937, with further resistance levels at $152.030 and $153.152. These thresholds are essential for bullish traders looking to capitalize on potential upward momentum, especially if U.S. economic data continues to show resilience.
However, the Relative Strength Index (RSI) at 29 indicates that the pair is in oversold territory, suggesting the potential for a corrective rebound.
On the downside, immediate support is found at $148.047, with additional supports at $147.346 and $146.476. These levels are pivotal for sustaining the recent range-bound trading and could invite buying interest if the pair dips further.
The 50-day Exponential Moving Average (EMA) at $153.878 is significantly above the current price, highlighting the prevailing bearish sentiment unless a strong recovery materializes.
Traders might consider a buy position above $149.050, targeting a take profit at $150.789, while setting a stop loss at $148.069 to manage downside risks.
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AUD/USD Price Analysis – Aug 01, 2024
AUD/USD Price Analysis – Aug 01, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to stop its downward rally and remained under pressure around the 0.6528 level, hitting an intra-day low of 0.6514.
This decline in the AUD/USD pair can be attributed to the renewed strength of the US dollar, which gained traction due to robust economic data and expectations for Federal Reserve policy adjustments.
Despite the Federal Reserve's dovish guidance on interest rates, the US dollar has appreciated, making the Australian dollar less attractive.
Furthermore, the latest inflation report released on Wednesday has reduced expectations that the Reserve Bank of Australia (RBA) will implement another rate hike at its policy meeting next week.
This was seen as another key factor that undermined the AUD currency and contributed to the AUD/USD pair losses.
US Dollar Strength and Anticipated Economic Data Likely to Weaken AUD/USD
On the US front, the broad-based US dollar has seen significant bullish momentum, with the US Dollar Index (DXY) rebounding strongly to 104.20 from an intraday low of 103.86.
This rise in the US dollar is primarily due to market expectations of a robust US economy, despite the Federal Reserve's dovish guidance on interest rates. This has made the Australian dollar less attractive to investors.
On the data front, investors are keenly awaiting the US ISM Manufacturing PMI report for July, set for release at 14:00 GMT.
The PMI is expected to rise slightly to 48.8 from June’s 48.5, indicating continued contraction in manufacturing. Furthermore, the Manufacturing Prices Paid index is predicted to grow more slowly at 51.8, suggesting a moderation in inflation.
The key event for the FX market will be the US Nonfarm Payrolls (NFP) report on Friday, with expectations of a hiring increase of 175K in July, down from 206K. The Unemployment Rate is forecasted to hold steady at 4.1%, while wage growth is expected to slow to 3.7% annually.
Therefore, the US dollar’s strength and anticipated economic data, including the ISM Manufacturing PMI and Nonfarm Payrolls report, are likely to put downward pressure on the AUD/USD pair. The stronger US dollar makes the Australian dollar less attractive to investors.
Mixed Economic Data and Lower RBA Rate Hike Expectations Pressure AUD/USD
On the AUD front, better-than-expected Trade Balance data combined with a softer inflation report has lowered expectations for a Reserve Bank of Australia (RBA) rate hike at the upcoming policy meeting. Economists caution that further rate increases could jeopardize Australia's economic recovery.
Consequently, markets are now pricing in a 50% chance of an RBA rate cut in November, much earlier than the previously anticipated April next year. National Australia Bank (NAB) expects the RBA's cash rate to remain at 4.35% until May 2025, then decline to 3.6% by December 2025, with further decreases in 2026.
On the data front, Australia reported a trade surplus of 5,589 million for June, beating the expected 5,000 million but down from 5,773 million previously. The Judo Bank Manufacturing PMI rose slightly to 47.5 in July, indicating continued but slower deterioration in manufacturing conditions.
Meanwhile, the Monthly CPI increased by 3.8% year-over-year to June, easing from 4% in May, while the RBA Trimmed Mean CPI rose by 3.9% YoY, just under the forecast of 4.0%. Building Permits fell by 6.5% in June, worse than the 3.0% decline expected, but improved from a 3.7% YoY drop in May.
Therefore, the mixed economic data, including a trade surplus and weaker inflation, combined with reduced expectations for an RBA rate hike, has put pressure on the AUD. This could lead to a potential weakening of the AUD/USD pair in the near term.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.65284, reflecting a decline of 0.18% as the currency struggles to maintain upward momentum amidst a strengthening U.S. dollar. On the 4-hour chart, the pair is navigating just below the pivot point at $0.6542, a crucial threshold that could determine near-term direction.
The current price action suggests potential for further declines, especially if the pair fails to reclaim ground above this pivot level.
Immediate resistance is seen at $0.6569, with subsequent hurdles at $0.6610 and $0.6643. These levels are key for bulls looking to reassert control and drive prices higher.
However, with the Relative Strength Index (RSI) at 47, the pair is hovering near the midpoint, indicating a lack of definitive momentum and the possibility of further consolidation.
On the downside, immediate support is located at $0.6493, with additional supports at $0.6459 and $0.6423. These levels are critical for maintaining the current trading range and could attract buyers if the AUD/USD tests these lows.
The 50-day Exponential Moving Average (EMA) at $0.6541 is slightly above the current price, suggesting that bearish pressures may persist unless a decisive move above this average occurs.
Traders might consider entering a short position below $0.65391, targeting a take profit at $0.64931, with a stop loss at $0.65718 to mitigate risk.
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USD/JPY Price Analysis – Aug 01, 2024
GOLD Price Analysis – Aug 01, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to stop their early-day downward trend and remained well-offered around the 2,435 level, hitting an intra-day low of 2,430. This downward trend can be attributed to the renewed strength of the US dollar, which gained traction due to market expectations that the US economy remains robust, despite the Federal Reserve's dovish guidance on interest rates.
However, the expectation that the Fed will start lowering its key borrowing rates from September helped limit gold's deeper losses. Additionally, the widening Middle East conflicts were seen as another key factor that might help limit gold's losses.
US Dollar Strength and Economic Data Influence Gold Prices Amid Fed Rate Cut Expectations
On the US front, the broad-based US dollar has gained bullish traction, with the US Dollar Index (DXY) rebounding strongly to 104.20 from an intraday low of 103.86, making gold investments less attractive.
However, gold's broader appeal remains firm as US bond yields have tumbled, with 10-year US Treasury yields dropping to near a six-month low of 4.03% amid expectations that the Federal Reserve will start reducing interest rates from September.
This comes after the Fed's dovish guidance, leaving rates unchanged at 5.25%-5.50%, and signaling potential rate cuts due to cooling inflation and a moderating labor market.
On the data front, investors are focusing on the US ISM Manufacturing PMI report for July, expected at 14:00 GMT.
The PMI is anticipated to rise slightly to 48.8 from June’s 48.5, indicating continued contraction in manufacturing. Meanwhile, the Manufacturing Prices Paid index is predicted to grow more slowly at 51.8, suggesting cooling inflation.
Whereas, the key event for the FX market is the US Nonfarm Payrolls (NFP) report on Friday, with an expected hiring of 175K in July, down from 206K. The Unemployment Rate should hold steady at 4.1%, and wage growth is forecasted to slow to 3.7% annually.
Therefore, the rebound in the US dollar and upcoming economic data, like the ISM Manufacturing PMI and Nonfarm Payrolls report, could pressure gold prices. However, expectations of Fed rate cuts and lower US bond yields may support gold's appeal.
Middle East Tensions Boost Gold’s Safe-Haven Appeal Amid Rising Conflict
On the geopolitical front, escalating Middle Eastern conflicts have boosted gold's appeal as a safe-haven. However, the killing of a Hamas leader in Iran has raised fears of a broader conflict, increasing demand for gold.
Meanwhile, the UN Security Council held an emergency meeting amid rising tensions, with calls for peace from Palestine’s deputy UN representative and accusations from Iran against Israel.
In Gaza, an Israeli attack has resulted in deaths and injuries, adding to the already high toll of over 39,000 deaths and 91,000 injuries in the ongoing conflict.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,445.795, showing little change, but the metal remains poised for volatility given the current technical setup. On the 4-hour chart, gold hovers just below a critical pivot point at $2,450.64, a level that could signal a shift in momentum depending on the direction of the next breakout.
Immediate resistance lies at $2,467.87, followed by more formidable barriers at $2,483.50 and $2,503.94. These levels suggest potential zones where sellers might regain control. A sustained move above these resistances could attract momentum buyers, potentially propelling gold to new highs in the short term.
However, with the Relative Strength Index (RSI) at 71, gold is approaching overbought territory, indicating the possibility of a corrective pullback.
On the downside, immediate support is seen at $2,426.59, with additional supports at $2,404.15 and $2,380.90. These levels could serve as potential entry points for buyers should gold prices dip.
The 50-day Exponential Moving Average (EMA) at $2,399.53 suggests a bullish undertone, as the price remains above this moving average, indicating underlying buying interest.
Traders might consider entering a short position below the pivot point of $2,450, targeting a take profit at $2,425. Given the proximity to resistance and the overbought conditions, a stop loss at $2,468 would help manage risk.
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