GBP/USD Price Analysis – June 12, 2024
Daily Price Outlook
Despite the bullish US dollar and downbeat US economic data, the GBP/USD currency pair maintained its upward trend and remained well-bid around the 1.2757 level, hitting the intra-day high of 1.2760 level.
However, its upward trend can be attributed to the high wage growth in the UK. Higher wages typically indicate a strong economy, as consumers have more purchasing power, which can lead to increased spending and economic growth.
As a result, investors perceive the currency as more valuable and therefore be more inclined to invest in it, leading to an appreciation of the GBP.
On the flip side, the UK economy failed to grow in April as a mild expansion in the services sector was offset by a decline in Industrial Production and construction output. The decrease in manufacturing sector activity was driven by lower production in the pharmaceutical and food sectors, the data showed.
The UK Office for National Statistics (ONS) reported that the economy remained stagnant, as economists expected, signaling a subdued start to the second quarter. This was seen as a key factor ttat kept the lid on any additional gains in the GBP/USD pair.
Impact of UK Economic Performance on Monetary Policy
On the UK front, the economy showed no growth in April, as predicted by economists, signaling a slow start to the second quarter. This was due to a slight expansion in the services sector being offset by declines in industrial production and construction output.
Manufacturing output and industrial production, which measure factory activity, dropped more than expected, with manufacturing output falling by 1.4% and industrial production by 0.9%.
This weaker factory data suggests that households and businesses are struggling with high interest rates set by the Bank of England, potentially prompting the Bank to consider easing its monetary policy sooner. However, high wage growth remains a hurdle for the Bank, with wages rising by 6.0% in the three months to April, well above the desired inflation rate of 2%.
The stagnant economy and weak industrial data may weaken the GBP, but high wage growth could support it by reducing the likelihood of immediate monetary easing by the Bank of England.
Impact of US Inflation Data and Fed Policy on GBP/USD Pair
On the US front, the broad-based US Dollar has been gaining momentum before the release of the US Consumer Price Index (CPI) data for May and the Federal Reserve’s monetary policy announcement.
The CPI figures will shape expectations on whether the Fed will adjust interest rates. With recent robust job creation and wage growth, there's less anticipation for rate cuts starting in September. Annual core inflation is predicted to slow to 3.5%, while headline inflation is expected to hold at 3.4%.
The Fed is likely to maintain rates but investors will scrutinize the dot plot, signaling future rate movements, with expectations for fewer cuts than previously thought due to tight labor market conditions and lingering price pressures.
Therefore, the GBP/USD pair could experience fluctuations against the US Dollar based on the US inflation data and the Fed's monetary policy decision, influencing market sentiment and expectations for future interest rate changes.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27507, showing a marginal decline of 0.00% for the session. The pivot point at $1.28 is a crucial level for today's trading. Immediate resistance is exactly at this pivot point, followed by further resistance at $1.2850 and $1.2900.
These levels are critical as they indicate potential barriers for any upward movement in price.
On the downside, immediate support lies at $1.2700, followed by $1.2650 and $1.2600. A break below these support levels could suggest a continuation of the bearish trend, adding downward pressure on the pound.
Technical indicators provide a mixed outlook. The Relative Strength Index (RSI) stands at 56, indicating a neutral momentum with a slight bullish bias.
The 50-day Exponential Moving Average (EMA) is positioned at $1.27, with the current price trading just above this level. This setup suggests a potential for upward movement if the pair maintains its position above the EMA.
Given the current technical environment, the outlook for GBP/USD remains cautiously bullish. An entry price for a buy limit order is recommended at $1.27337, with a take profit level set at $1.27712. To manage risk, a stop loss is suggested at $1.27167.
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GOLD Price Analysis – June 12, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its early-day losing streak and remained bearish around the 2,313 level, hitting an intraday low of 2,310.
The downward trend can be attributed to the renewed strength of the US dollar, which gained traction on the back of previously released stronger US economic data and the Fed's hawkish outlook towards the interest rate.
Moving ahead, traders seem cautious to place any strong bids due to a cautious sentiment ahead of the release of the latest consumer inflation figures from the United States (US) and the outcome of the highly anticipated Federal Open Market Committee (FOMC) meeting later this Wednesday.
US Economic Factors Impacting Gold Prices
On the US front, the broad-based US dollar has been gaining momentum amid growing investor confidence in the economy. In the meantime, the expectations for a Federal Reserve interest rate cut in September are fading due to strong labor market conditions and persistent inflation. This has pushed the US dollar to nearly a one-month high.
Investors are now focused on the release of the latest US consumer inflation figures and the upcoming FOMC monetary policy decision. The headline US Consumer Price Index is expected to ease slightly to 0.1% in May from the previous 0.3%, while the yearly rate is predicted to remain at 3.4%, surpassing the Fed's target of 2%.
Meanwhile, Core CPI is forecasted to stay at 0.3% for the month and decrease slightly to a 3.5% yearly rate from April's 3.6%, indicating persistent inflationary pressure. As a result, the Fed may opt for a modest 25 basis points rate cut later in the year, possibly in November or December.
Therefore, the strengthening US dollar, fading expectations of a Fed rate cut, and persistent inflationary pressures influence gold prices, with traders closely watching signals from the upcoming FOMC meeting.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,313.670, down 0.15% for the session. The pivot point at $2,318.74 is crucial, serving as a key level for determining market direction. Immediate resistance levels are situated at $2,337.06, $2,354.43, and $2,370.11.
These resistance points are critical as they represent potential obstacles for any upward movement in price.
On the downside, immediate support is found at $2,290.40, followed by $2,267.65 and $2,247.21. A break below these levels could indicate a more bearish trend, putting additional pressure on gold prices.
Technical indicators provide a mixed outlook. The Relative Strength Index (RSI) is currently at 45, suggesting neutral momentum with a slight lean towards bearish sentiment.
The 50-day Exponential Moving Average (EMA) stands at $2,332.64, with the current price trading below this level. This positioning indicates a bearish trend in the near term.
Given the current market setup, the conclusion remains bearish below the pivot point of $2,318. A recommended entry price for a sell position is $2,318, with a take profit level at $2,302. To manage risk, a stop loss is set at $2,326.
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EUR/USD Price Analysis – June 12, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair has showed a bullish performance, finding support near 1.0764 and edging higher to 1.0765 in the European session. Despite caution ahead of an eventful New York session and uncertainty surrounding the French elections, the pair has shown strength.
However, the drivers behind this upward trend is the anticipation surrounding the US Consumer Price Index (CPI) data for May and the Federal Reserve’s (Fed) interest rate decision.
ECB Policymakers Exercise Caution, Impacting EUR/USD Pair
On the EUR front, the shared currency gained traction as investors monitored the European Central Bank's (ECB) cautious approach to managing inflation and wage growth dynamics within the Eurozone. ECB officials, led by Governor Francois Villeroy de Galhau, have expressed confidence in the Eurozone's ability to return inflation to its 2% target next year.
However, they emphasize the need to navigate through short-term fluctuations in economic data. This prudent stance by the ECB has influenced market sentiment, notably impacting the performance of the EUR/USD pair.
The ECB is optimistic about inflation in the Eurozone eventually reaching its target of 2% but acknowledges the uncertainty and variability in economic indicators in the near term.
This cautious approach by the ECB has an impact on market sentiment, particularly on currency markets like the EUR/USD pair, as investors and traders adjust their expectations based on the central bank's guidance and economic outlook
US CPI and Fed’s Outlook Regarding Interest Rate Impact on EUR/USD Pair
On the US front, the overall US dollar has been gaining strength as investors become more confident in the economy. Expectations for a Federal Reserve interest rate cut in September are dwindling due to strong job market conditions and ongoing inflation.
This has pushed the US dollar to nearly a one-month high. Investors are now waiting for the latest US consumer inflation data and the upcoming FOMC monetary policy decision.
It's expected that the headline US Consumer Price Index will slightly ease to 0.1% in May from 0.3% previously, while the yearly rate is anticipated to stay at 3.4%, exceeding the Fed's 2% target.
Core CPI is also predicted to remain steady at 0.3% for the month and slightly decrease to a 3.5% yearly rate from April's 3.6%, indicating sustained inflationary pressure. Consequently, the Fed might consider a modest 25 basis points rate cut later in the year, potentially in November or December.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.07447, down 0.03% in today's session. The pivot point at $1.0766 serves as a critical level for today's market activity. Immediate resistance is found precisely at this pivot point, $1.0766, followed by $1.0798 and $1.0827. These resistance levels are essential to watch as they represent potential hurdles for any upward movement in price.
On the downside, immediate support lies at $1.0701, followed by $1.0674 and $1.0650. A breach below these support levels could signal a continuation of the bearish trend, putting further pressure on the euro.
Technical indicators offer a mixed view. The Relative Strength Index (RSI) is at 42, suggesting a slight bearish momentum. The 50-day Exponential Moving Average (EMA) is positioned at $1.0797, with the current price trading below this average, reinforcing the bearish sentiment in the short term.
Given the current technical setup, the outlook for EUR/USD remains cautious. An entry price for a buy limit order is suggested at $1.07248, with a take profit level set at $1.07664. To mitigate risk, a stop loss is recommended at $1.07005.
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AUD/USD Price Analysis – June 11, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to halt its bearish rally and remained under pressure around the 0.6595 level, hitting an intraday low of 0.6592. However, the downward trend can be attributed to risk-off market sentiment, which undermined riskier assets like the Australian dollar and contributed to the AUD/USD pair's declines.
Meanwhile, the decline in Australia's NAB Business Confidence and Business Conditions indices exerted pressure on the AUD currency. On the flip side, the bullish US dollar, backed by robust US jobs data for May, which has reduced the odds of two Federal Reserve interest rate cuts in 2024, was seen as another key factor that kept the AUD/USD pair under pressure.
AUD/USD Pair Analysis: Economic Indicators and RBA Policy Uncertainties
On the AUD front, traders anticipate that the Reserve Bank of Australia (RBA) will maintain higher interest rates this year. RBA Governor Michele Bullock suggested that if the Consumer Price Index (CPI) doesn't return to the target range of 1%-3%, they're ready to increase rates, as reported by NCA NewsWire.
National Australia Bank (NAB) Chief Economist Alan Oster noted concerns about economic growth but also highlighted worries about inflation. He expects the RBA to keep rates steady for a while as they navigate through these contrasting risks, according to the official transcript.
On the data front, Australia's NAB Business Confidence index hit a six-month low of -3 index points in May, turning negative for the first time since November. Business Conditions also dipped to 6 index points, slightly below the long-run average.
On Friday, Australia's Trade Balance widened to A$6,548 million in May, surpassing the expected A$5,500 million and April's balance of A$5,024 million. Imports fell sharply by 7.2% in May, reversing April’s 4.2% increase, while exports contracted by 2.5%, following a 0.6% decline previously.
Therefore, the AUD/USD pair may face pressure due to concerns over Australia's economic growth and inflation, alongside uncertainties regarding RBA's interest rate decisions, exacerbated by negative trade balance and business sentiment data.
Bullish US Dollar Impact on AUD/USD Pair Amidst Positive Jobs Data
On the US front, the broad-based dollar has strengthened following positive jobs data, reducing expectations of an imminent interest rate cut by the Federal Reserve in September. This has kept US Treasury bond yields high, bolstering the dollar.
However, the speculation that the Fed will maintain higher rates for a longer period has lowered the probability of a September rate cut to about 50%, with markets now anticipating only one 25 basis point cut later in the year.
According to the US Bureau of Labor Statistics (BLS), May's US Nonfarm Payrolls (NFP) rose to 272,000, up from April's 165,000. Average Hourly Earnings, a measure of wage inflation, increased to 4.1% YoY in May from April's revised 4.0%, exceeding the market expectation of 3.9%.
Therefore, the AUD/USD pair may face pressure as the stronger US dollar, buoyed by robust jobs data, reduces expectations for a near-term Fed rate cut. This could keep the pair under downward pressure.
AUD/USD - Technical Analysis
The AUD/USD pair experienced a slight decline of 0.19%, bringing its price to $0.66020. This minor dip suggests a bearish sentiment in the market, with technical indicators pointing towards potential further declines. As we analyze the 4-hour chart, key support and resistance levels come into sharp focus, guiding traders on possible price movements.
The pivot point is positioned at $0.6612, slightly above the current price, serving as a critical juncture. Immediate resistance is seen at $0.6650, with subsequent resistance levels at $0.6699 and $0.6735.
Should the price manage to break through these levels, it could signal a shift towards a bullish trend. However, the bearish momentum is more pronounced, as indicated by the immediate support at $0.6575. Further support can be found at $0.6538 and $0.6497, levels that could be tested if the downward pressure continues.
The Relative Strength Index (RSI) is currently at 42, indicating a bearish momentum but not yet oversold. This suggests there is room for further declines before a potential rebound. The 50-Day Exponential Moving Average (EMA) is at $0.6639, reinforcing the bearish outlook as the current price remains below this significant moving average.
In conclusion, given the prevailing technical indicators and key price levels, a bearish strategy is advisable. An entry price with a sell order below $0.66267 is recommended, targeting a take profit at $0.65748 while maintaining a stop loss at $0.66596 to manage risk.
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- USD/CAD Price Analysis – June 11, 2024
USD/CAD Price Analysis – June 11, 2024
Daily Price Outlook
The USD/CAD currency pair has prolonged its upward trend and remained well bid around 1.3777 level, hitting the intra-day high of 1.3785 level. This upward trend can be attributed to a combination of factors, including the strength of the US dollar and the decline in the price of West Texas Intermediate (WTI) crude oil.
The US dollar still bullish amidst a hawkish sentiment surrounding the Federal Reserve. However, the anticipation of the Fed maintaining interest rates steady within the range of 5.25%-5.50% to curb inflation toward its 2% target bolsters the US dollar's position.
Simultaneously, the decline in WTI crude oil prices exerts pressure on the commodity-linked Canadian dollar (CAD). Given Canada's status as the largest oil exporter to the United States, fluctuations in oil prices significantly impact the CAD.
Hawkish Sentiment Surrounding the Fed Boosts the US Dollar and Its Impact on USD/CAD
However, the bullish performance of the USD/CAD pair is closely tied to the hawkish sentiment surrounding the Federal Reserve as the robust US jobs data for May has diminished the odds of two Federal Reserve interest rate cuts in 2024, as indicated by the CME FedWatch Tool.
This reduction in the likelihood of a rate cut, particularly in September, supports the strength of the US dollar.
Investors are closely monitoring the Federal Reserve's upcoming interest rate decision scheduled for Wednesday, anticipating the central bank to maintain rates within the current range. This anticipation of monetary policy stability underpins the bullish outlook for the US dollar, consequently driving the USD/CAD pair higher.
Decline in WTI Price Puts Pressure on Commodity-Linked Canadian Dollar and Its Impact on USD/CAD
Despite positive job growth and wage increases in Canada, the Canadian dollar (CAD) faces challenges due to a rise in the unemployment rate to 6.2%, its highest in over two years.
Canada's heavy reliance on oil exports makes it vulnerable to fluctuations in oil prices, and the recent decline in the price of West Texas Intermediate (WTI) crude oil has exacerbated pressures on the CAD.
While crude oil prices are expected to rise due to increased fuel demand this summer, the current downturn in WTI prices adds strain to the Canadian economy.
Traders are closely watching Bank of Canada Governor Tiff Macklem's upcoming speech at the Conference of Montreal 2024 for insights into inflation discussions, which could further impact the USD/CAD pair's trend.
USD/CAD - Technical Analysis
The USD/CAD pair saw a modest increase of 0.05%, bringing its price to $1.37648. The pivot point is established at $1.3808, acting as a crucial level that the pair is currently trading below. Immediate resistance is observed at $1.3781, which, if breached, could open the path towards the next resistance levels at $1.3808 and $1.3846.
The ability to overcome these resistance points would indicate a strengthening bullish trend. On the flip side, immediate support is identified at $1.3702, with further support levels at $1.3663 and $1.3619, providing a safety net against potential declines.
The Relative Strength Index (RSI) is positioned at 65, indicating that the pair is approaching overbought territory. This suggests that while the upward momentum is strong, there may be limited room for additional gains without a correction.
Additionally, the 50-Day Exponential Moving Average (EMA) is located at $1.3690, supporting the bullish outlook as the current price is above this critical moving average.
In conclusion, the current technical setup favors a bullish strategy. An entry price with a buy limit at $1.37496 is recommended, targeting a take profit at $1.38084 while maintaining a stop loss at $1.37160 to manage risk.
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GOLD Price Analysis – June 11, 2024
Daily Price Outlook
The price of gold (XAU/USD) continued its downward trend, remaining under pressure around $2,303 and hitting an intraday low of $2,297. The decline was largely driven by the positive US Nonfarm Payrolls data released on Friday, which sparked speculation that the Federal Reserve might maintain higher interest rates for an extended period.
This bolstered the US dollar, contributing to the drop in gold prices. However, ongoing political instability in Europe and various geopolitical risks are expected to potentially mitigate further losses in gold prices.
Traders appear hesitant to take strong positions as they await the release of the latest US consumer inflation data and the upcoming FOMC decision on Wednesday. These events are expected to provide insights into the timing of potential rate cuts by the Federal Reserve.
Impact of Reduced PBoC Buying and European Political Uncertainty on Gold Prices
On the flip side, the People's Bank of China (PBoC) sharply reduced its gold buying in May, ending a one-and-a-half-year buying spree and contributing to the decline in gold prices. However, political uncertainty in Europe, such as French President Emmanuel Macron's decision to call snap elections, could support gold prices by increasing demand for safe-haven assets.
Additionally, ongoing geopolitical risks might help limit further losses for gold, despite the pressure from a stronger US dollar and reduced expectations of an imminent interest rate cut by the Federal Reserve.
Bullish US Dollar and Rate Cut Expectations Impact On Gold Prices
On the US front, the broad-based dollar has strengthened following positive jobs data, reducing expectations of an imminent interest rate cut by the Federal Reserve in September. This has kept US Treasury bond yields high, bolstering the dollar and weakening demand for gold.
Speculation that the Fed will maintain higher rates for a longer period has lowered the probability of a September rate cut to about 50%, with markets now anticipating only one 25 basis point cut later in the year.
This has pressured gold prices, as the stronger dollar and reduced likelihood of a September rate cut have diminished the metal's appeal to investors.
This has led to a decline in gold prices as the stronger dollar and reduced rate cut expectations weigh on the precious metal. Traders are cautious amid uncertainty about the Fed's future policy decisions.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) has experienced a modest decline of 0.39%, bringing its price to $2305.92. The 4-hour chart indicates a pivot point at $2305.19, just above the current trading price. Immediate resistance is noted at $2324.00, which, if breached, could lead to further gains towards $2354.43 and $2376.51.
However, if the price fails to overcome this resistance, it could continue to trend downwards. On the downside, immediate support is found at $2277.44, with additional support levels at $2255.06 and $2235.81, providing potential entry points for buyers looking to capitalize on lower prices.
The Relative Strength Index (RSI) is currently at 40, reflecting bearish momentum but not yet indicating an oversold condition. This leaves room for additional downward pressure before any significant rebound occurs.
Additionally, the 50-Day Exponential Moving Average (EMA) is at $2335.95, reinforcing the bearish outlook as the price remains below this critical moving average.
In conclusion, given the current technical indicators and price levels, a bearish strategy is advisable. An entry price with a sell stop at $2305 is recommended, targeting a take profit at $2277, while maintaining a stop loss at $2324 to mitigate risk.
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GOLD Price Analysis – June 10, 2024
Daily Price Outlook
Despite the bullish US dollar, the precious metal gold has maintained its upward momentum, edging higher to around the $2,295 level and hitting an intra-day high of $2,300.
However, this upward trend can be attributed to the risk-off market sentiment, which has boosted demand for safe-haven assets like gold amid geopolitical tensions and uncertainty in financial markets.
Furthermore, the stronger US non-farm payrolls (NFP) report suggests that the Fed might delay starting its rate-cutting cycle. This keeps US Treasury bond yields higher and lifts the US dollar to a nearly one-month high, which, in turn, is seen as limiting gains in the gold price.
Moving ahead, traders seems cautious to place any strong bets ahead of the release of US consumer inflation data and the outcome of the two-day FOMC policy meeting.
Escalating Israel-Hamas Conflict and Gold Price Dynamics
In the ongoing conflict between Israel and Hamas, tensions have escalated with accusations of war crimes and significant casualties reported in the Gaza Strip. Hamas has accused Israel of committing a serious war crime in its attack on the Nuseirat refugee camp, resulting in the deaths of several individuals, including a US citizen. However, Israel denies these claims.
Meanwhile, the death toll in Gaza has risen to 274, including 64 children, with over 700 Palestinians injured. Additionally, Israeli war cabinet minister Benny Gantz has resigned, blaming Prime Minister Netanyahu for perceived failures in the Gaza war and calling for early elections.
The conflict has seen a significant loss of life and ongoing turmoil, with casualties and no immediate resolution in sight.
Therefore, the escalation of tensions between Israel and Hamas, coupled with accusations of war crimes and significant casualties, heightened geopolitical uncertainty. Investors may flock to safe-haven assets like gold, driving its price higher.
Impact of Positive US Job Data on Gold Prices
On the US front, the broad-based US dollar gained traction thanks to positive job data, putting downward pressure on gold prices.
The Nonfarm Payrolls report for May surpassed expectations, leading investors to revise their forecasts for a Federal Reserve interest rate cut in September. This has kept Treasury bond yields elevated and pushed the US Dollar to its highest level in nearly a month.
As a result, the likelihood of a September rate cut fell from 70% to around 50%, with markets now anticipating only one 25-basis-point reduction later in the year, possibly in November or December.
On the data front, the headline Nonfarm Payrolls (NFP) report showed that the US economy added 272,000 jobs in May, surpassing the expected 185,000 and the previous month's revised 175,000. This strong job growth overshadowed a rise in the unemployment rate to 4.0%.
Furthermore, Average Hourly Earnings increased by 4.1% over the past year, exceeding expectations. This wage growth could push prices higher and might require the Federal Reserve to keep interest rates elevated for a longer period.
Therefore, the stronger US dollar and positive job data exerted downward pressure on gold prices as investors revised expectations for a Federal Reserve interest rate cut, reducing the likelihood of September easing and delaying future cuts, impacting gold prices negatively.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,292.09, marking a slight decline of 0.02% on the day. On the 4-hour chart, gold is navigating a narrow range, reflecting cautious market sentiment amid broader economic uncertainties.
The pivot point, situated at $2,305.19, serves as a critical juncture for the day’s trading activities. Immediate resistance is identified at $2,327.58, followed by $2,354.43 and $2,387.56. These levels represent potential barriers that could cap any short-term rallies.
On the downside, immediate support lies at $2,277.44, with further support levels at $2,255.06 and $2,235.81. The technical indicators present a mixed outlook. The Relative Strength Index (RSI) stands at 31, indicating that gold is approaching oversold territory.
This could potentially signal a buying opportunity if the broader market conditions align. However, the 50-day Exponential Moving Average (EMA) at $2,340.10 suggests that there is significant resistance ahead, making upward movements challenging.
Given these conditions, the recommended strategy for traders is to set a sell limit at $2,305, with a take profit target at $2,255 and a stop loss at $2,330. This setup leverages the pivot point and immediate resistance level to manage potential risk and reward effectively.
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GBP/USD Price Analysis – June 10, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair continued its downward trend, remaining under pressure around the 1.2691 level and hitting an intra-day low of 1.2689. The reason for this can be attributed to the bullish US dollar, which gained traction following stronger-than-expected US Nonfarm Payrolls (NFP) data.
This dampened expectations of Fed rate cuts in September, pushing the US dollar higher and contributing to the GBP/USD pair's losses. Additionally, signs of more layoffs in the UK employment data could undermine the Pound Sterling (GBP) by increasing expectations of early rate cuts by the Bank of England (BoE).
Impact of US Nonfarm Payrolls on GBP/USD Pair and Key Events Ahead
On the US front, stronger-than-expected Nonfarm Payrolls (NFP) data has lowered the chances of Federal Reserve (Fed) rate cuts this year. This has strengthened the US Dollar (USD) and contributed to gains in the GBP/USD pair.
The robust US employment report has reduced expectations of a Fed rate cut before September, with futures traders seeing almost no chance of this happening, which is likely to support the USD for now.
On the data front, US Nonfarm Payrolls rose by 272,000 in May, exceeding the expected 185,000. The unemployment rate increased slightly to 4.0%, and average hourly earnings grew by 4.1% year-over-year, beating the 3.9% estimate. These figures indicate a stronger-than-expected job market.
The strong US job figures and reduced expectations of Fed rate cuts have bolstered the US Dollar, putting pressure on the GBP/USD pair. Investors are now focused on the UK employment data for May, due on Tuesday.
Additionally, the US Consumer Price Index (CPI) and the Fed's decision this week will be in the spotlight.
Impact of UK Employment Data on GBP/USD Pair
On the UK front, upcoming employment data on Tuesday, including Claimant Count Change, Employment Change, and Average Earnings, will be closely watched. If there are indications of increased layoffs, it could lead to expectations of early rate cuts by the Bank of England (BoE), weakening the Pound Sterling (GBP).
Investors are particularly sensitive to signs of economic weakness amid uncertainties, which may prompt the BoE to take preemptive measures. Thus, any negative surprises in the employment figures could put downward pressure on the GBP, contrasting with the strengthened USD due to favorable US job data.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27176, reflecting a modest decline of 0.06% for the day.
Analyzing the 4-hour chart, the pair is moving within a defined range, indicative of cautious market sentiment ahead of key economic events. The pivot point at $1.2762 is crucial for determining the short-term direction of the pair.
Immediate resistance is observed at $1.2745, followed by higher resistance levels at $1.2779 and $1.2814. These levels represent potential barriers that the GBP/USD pair needs to overcome to initiate a sustained upward movement.
On the flip side, immediate support is noted at $1.2681, with subsequent support levels at $1.2645 and $1.2611. These support zones could provide a buffer against further declines.
Technical indicators present a mixed picture. The Relative Strength Index (RSI) is at 35, suggesting that the market is approaching oversold territory, which might indicate a potential rebound if broader market conditions support it.
Additionally, the 50-day Exponential Moving Average (EMA) is positioned at $1.2755, slightly above the current price. This suggests that the immediate resistance could be reinforced by the EMA, making it a critical level to watch for any potential breakout or reversal.
In conclusion, traders should consider a buy limit order at $1.27046, targeting a take profit level at $1.27618, with a stop loss set at $1.26667.
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EUR/USD Price Analysis – June 10, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend and remained under pressure around the 1.0744 level, hitting an intra-day high of 1.0782.
The upward trend could be attributed to political uncertainty in the Eurozone after French President Emmanuel Macron called for a snap election, which weighed heavily on the Euro.
In the meantime, the bullish US dollar, gaining traction following stronger-than-expected US Nonfarm Payrolls (NFP) data, was seen as another key factor keeping the EUR/USD pair lower. This dampened expectations of Fed rate cuts in September, pushing the US dollar higher and contributing to losses in the EUR/USD pair.
Impact of Eurozone Political Uncertainty and ECB Policy on EUR/USD Pair
On the EUR front, the shared currency weakened due to political uncertainty in the Eurozone after French President Emmanuel Macron called for a snap election following strong gains by Marine Le Pen's far-right National Rally in European parliamentary elections. Macron's decision raised worries about political stability, thereby exerting pressure on the Euro.
Meanwhile, ECB policymakers expressed concerns about persistent inflation, particularly in the service sector, which could slow down the central bank's policy-easing efforts.
Despite this, ECB President Christine Lagarde emphasized the bank's data-dependent approach, indicating that future interest rate decisions will be based on economic conditions, especially considering the possibility of volatile inflation in the coming months.
Impact of Strong US Jobs Data on Currency Markets and Monetary Policy
On the US front, the previously released stronger-than-expected Nonfarm Payrolls (NFP) data has lowered the chances of Federal Reserve (Fed) rate cuts this year. This has strengthened the US Dollar and contributed to gains in the EUR/USD pair.
The robust US employment report has reduced expectations of a Fed rate cut before September, with futures traders seeing almost no chance of this happening, which is likely to support the USD for now.
On the data front, the US Nonfarm Payrolls (NFP) report for May surpassed expectations, with 272K fresh jobs added compared to the anticipated 185K. This strong labor demand extends Fed policymakers' leeway to maintain current interest rates.
Furthermore, Average Hourly Earnings, a gauge of wage inflation, exceeded forecasts, with annual wage inflation accelerating to 4.1% from the expected 3.9%. Month-on-month, wage inflation also rose sharply by 0.4%, higher than the projected 0.3%.
These robust figures indicate growing pressure on household spending, impacting future monetary policy decisions by the Federal Reserve.
Therefore, the strong US job figures and reduced expectations of Fed rate cuts have bolstered the US Dollar, putting pressure on the GBP/USD pair. Investors are now focused on the UK employment data for May, due on Tuesday.
Meanwhile, the US Consumer Price Index (CPI) and the Fed's decision this week will be in the spotlight.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.07498, down 0.48% for the day. The 4-hour chart reveals a critical pivot point at $1.0798, which is essential for determining the pair’s short-term direction. Immediate resistance levels are at $1.0806, $1.0836, and $1.0872. On the downside, immediate support is seen at $1.0728, followed by $1.0701 and $1.0674.
Technical indicators provide a mixed view. The Relative Strength Index (RSI) is at 23, indicating that the pair is in oversold territory, which might suggest a potential rebound if broader market conditions align.
The 50-day Exponential Moving Average (EMA) is positioned at $1.08528, which is above the current price, suggesting that the immediate resistance could be reinforced by the EMA, making it a critical level to watch for any potential breakout or reversal.
For traders, the recommended strategy would be to set a buy limit at $1.07383, with a take profit target at $1.07977 and a stop loss at $1.07043.
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GOLD Price Analysis – June 07, 2024
Daily Price Outlook
Gold prices (XAU/USD) have continued their upward momentum, holding firm around the $2,339 mark and peaking at $2,387 during intraday trading. This surge is closely tied to the weakness of the US dollar, which has been losing ground amid growing expectations of a potential interest rate reduction by the Federal Reserve in September. However, the market sentiment favoring a rate cut, which has been reinforced by lackluster macroeconomic indicators from the United States.
Market participants are closely monitoring the upcoming release of the highly anticipated monthly employment data from the United States (US). The Nonfarm Payrolls (NFP) report, widely followed by traders, is expected to have a significant impact on the Federal Reserve's (Fed) future monetary policy choices.
Weak US Dollar and Fed Rate Cut Expectations Drive Gold Gains
On the other side, the US dollar experienced a decline, largely driven by the release of lackluster macroeconomic data from the United States. This has further solidified expectations that the Federal Reserve will initiate interest rate cuts in the coming months. Consequently, market sentiment is leaning towards an imminent rate reduction by the Fed in response to signs of economic deceleration.
As a result, expectations of a dovish stance from the Fed are keeping both US Treasury bond yields and the value of the US dollar subdued, hovering near multi-week lows.
On the data front, the US Department of Labor (DoL) recently reported an unexpected increase in the number of Americans filing for unemployment benefits, with claims rising to 229,000 for the week ending June 1. This data, along with the ADP's report on private-sector employment, suggests a slowing US labor market.
These indicators have reinforced expectations for a Federal Reserve rate cut in September and have contributed to a decline in US Treasury bond yields. Looking ahead, the upcoming Nonfarm Payrolls (NFP) report is projected to show an addition of 185,000 jobs in May, up from 175,000 the previous month, with the unemployment rate expected to remain steady at 3.9%.
Therefore, the bearish US dollar, fueled by sluggish economic data and expectations of a Fed rate cut, has kept US dollar lower and contributed to the gold gains.
Increasing tension In Gaza Spurs Demand for Safe-Haven Assets
On the geopolitical front, the recent Israeli attack on a UN-operated school in central Gaza has resulted in at least 40 fatalities, including children and women, and left dozens injured. The Israeli military stated that the strike targeted and killed Hamas fighters at the school. The Gaza Health Ministry reported that in the past 24 hours, at least 68 Palestinians have been killed and 235 have been wounded.
Meanwhile, Spain announces its intention to join South Africa's case against Israel at the International Court of Justice, accusing it of genocide. Since October 7, Israel's war on Gaza has claimed 36,654 lives and injured 83,309.
Therefore, the geopolitical tensions from the Israeli attack and ongoing conflict in Gaza, along with Spain joining a genocide case against Israel, are likely to increase gold prices as investors seek safe-haven assets.
GOLD (XAU/USD) - Technical Analysis
Gold prices are currently trading at $2373.21, reflecting a slight decline of 0.12%. The key pivot point is marked at $2387.24, which is crucial for today’s trading. Immediate resistance levels are positioned at $2406.55, $2428.05, and $2446.26, indicating potential upward barriers. On the downside, the immediate support levels are found at $2362.46, $2342.78, and $2315.46, providing key points where buyers might step in.
The technical indicators suggest a cautious outlook for gold. The Relative Strength Index (RSI) is currently at 59, showing a balanced market sentiment without a clear overbought or oversold condition. The 50-Day Exponential Moving Average (EMA) is positioned at $2346.95, which serves as a significant support level. A break below this EMA could indicate further bearish trends.
Considering the current technical setup, traders might consider an entry point for a sell position below $2385. The suggested take profit target is $2350, with a stop loss at $2405, offering a risk-to-reward ratio of 1:75. This strategy is designed to capitalize on the potential downside while minimizing risks.
In conclusion, gold's price trajectory suggests caution for traders. Maintaining below the pivot point of $2387.24 points to bearish potential, while a break above immediate resistance could signal a bullish reversal.
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