EUR/USD Price Analysis – May 29, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair continued its downward trend, remaining firmly offered around the 1.0845 level. However, the reason for this decline can be attributed to cautious market sentiment ahead of key economic data releases.
Investors are exercising caution as they await the Eurozone's preliminary Consumer Price Index (CPI) data for May and the US core Personal Consumption Expenditure Price Index (PCE) data for April.
These figures are eagerly anticipated and will impact market speculation regarding interest rate adjustments by the European Central Bank (ECB) and the US Federal Reserve (Fed).
ECB’s Gradual Rate-Cut Approach and Its Impact on EUR/USD
On the EUR front, the decline in the EUR/USD pair has also been influenced by recent comments from ECB officials regarding the approach to future interest rate cuts. ECB governing council member and Dutch central bank chief Klaas Knot suggested a cautious approach to future interest rate cuts, considering factors like inflation, demand, and wage growth.
He noted that earlier projections of multiple rate cuts based on March data might need revision due to improving economic indicators like rising wage growth and a better Manufacturing Purchasing Managers' Index (PMI).
However, the ECB's cautious stance, as highlighted by Knot and fellow policymaker François Villeroy de Galhau, has created uncertainty among investors.
They are unsure about the ECB's specific plan for rate cuts, leading to speculation about the timing and extent of future monetary easing measures. Therefore, this uncertainty has contributed to the weakening of the euro against the US dollar.
US Dollar Bounces Back Amid Fed Rate Cut Expectations
In contrast, the broad-based US dollar has shown a strong recovery on the day. However, the dollar's strength is attributed to positive economic indicators from the United States and a stance from the Federal Reserve (Fed) that suggests a reluctance to cut interest rates soon.
Traders have adjusted their expectations accordingly, reducing the probability of a rate cut by the Fed in September.
Besides this, the anticipation surrounding the upcoming US core Personal Consumption Expenditure (PCE) data, which is expected to show steady growth, is further supporting the US Dollar's position and contributing to the downward trend in the EUR/USD pair.
Hence, the EUR/USD pair is experiencing a downward trend due to the US Dollar's strength driven by positive economic indicators, Fed's reluctance to cut interest rates, and anticipation of steady growth in US core PCE data.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.08460, reflecting a decline of 0.11% in the latest session. The pivot point, marked at $1.0857, serves as a critical level for determining market direction.
Immediate resistance levels are identified at $1.0877, $1.0895, and $1.0914. On the downside, immediate support is found at $1.0833, followed by $1.0808 and $1.0783.
The Relative Strength Index (RSI) is at 46, indicating a slightly bearish sentiment as it hovers below the neutral 50 mark.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0851, suggesting that the current price is below this short-term average, reinforcing the bearish outlook.
The recent decline in the EUR/USD pair can be attributed to stronger US economic data and hawkish comments from Federal Reserve officials, which have dampened expectations for an imminent rate cut.
This has provided support for the US Dollar, exerting downward pressure on the Euro. Additionally, market participants are awaiting key economic data releases from both the Eurozone and the United States, which could further influence the pair's direction.
From a technical perspective, a sustained move below the pivot point of $1.0857 could lead to further declines towards the immediate support levels at $1.0833 and $1.0808.
Conversely, if the EUR/USD pair manages to break above the immediate resistance level of $1.0877, it could target higher resistance levels at $1.0895 and $1.0914.
In conclusion, the outlook for EUR/USD remains bearish below the pivot point of $1.0857. The recommended entry price for a potential sell position is $1.08572, with a take profit target set at $1.08328 and a stop loss at $1.08764.
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- GBP/USD Price Analysis – May 29, 2024
GBP/USD Price Analysis – May 29, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has been unable to stop its downward trend, remaining well-offered around the 1.2760 level and hitting an intra-day low of 1.2746.
The decline can be attributed to a combination of factors, including a soft UK inflation outlook and uncertainty surrounding central bank policies. Traders and investors are closely monitoring economic data releases and central bank statements for further guidance on the future trajectory of the currency pair.
However, the recent data from the British Retail Consortium (BRC) revealed a slowdown in shop price inflation in the UK, with prices of both food and non-food items easing notably in May.
This reduction in inflationary pressures suggests weaker consumer spending and economic activity, dampening investor confidence in the Pound.
Moreover, the prospect of the Bank of England (BoE) unwinding its higher interest rate stance adds further pressure on the Pound. With the UK inflation outlook softening, there are increasing expectations that the BoE may consider rate cuts to stimulate economic growth.
This speculation has weighed on investor sentiment towards the Pound, leading to its depreciation against the US Dollar.
Soft UK Inflation Outlook Raises Speculation of BoE Policy Shift, Impacting GBP/USD Pair
On the UK front, the soft UK inflation outlook has raised concerns about the Bank of England's monetary policy stance, prompting a shift towards lower interest rates. As inflationary pressures in the UK ease, investors anticipate that the BoE may initiate policy normalization by lowering borrowing costs.
However, the potential shift towards lower interest rates by the BoE could significantly impact the GBP/USD currency pair. The expectation of monetary policy divergence between the UK and the US, with the Federal Reserve maintaining a relatively hawkish stance, has led to a depreciation of the Pound against the US Dollar.
Traders and investors are closely monitoring developments in UK inflation and BoE policy decisions for further cues on the future direction of the GBP/USD pair.
US Dollar Strengthens Amid Uncertainty Surrounding US Core PCE Price Index
Amidst uncertainty ahead of the release of the US core Personal Consumption Expenditure (PCE) Price Index, the US Dollar has strengthened, further impacting the GBP/USD currency pair. Investors are awaiting the PCE data for fresh insights into the Federal Reserve's interest rate outlook.
Therefore, the anticipation of steady inflation growth in the US, as indicated by forecasts for the core PCE Price Index, has bolstered expectations of the Federal Reserve maintaining higher interest rates.
This contrasts with the speculation surrounding potential rate cuts by the Bank of England, contributing to the relative strength of the US Dollar against the Pound Sterling.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27490, reflecting a decline of 0.12% in the latest session. The pivot point, marked at $1.2793, serves as a crucial level for determining market direction.
Immediate resistance levels are observed at $1.2765, $1.2793, and $1.2822. On the downside, immediate support is found at $1.2711, followed by $1.2676 and $1.2648.
The Relative Strength Index (RSI) is positioned at 52, indicating a neutral market sentiment with a slight bullish bias.
The 50-day Exponential Moving Average (EMA) stands at $1.2724, suggesting that the current price is slightly above this short-term average, which generally supports a bullish outlook.
The recent decline in the GBP/USD pair can be attributed to a stronger US Dollar, bolstered by robust US economic data and hawkish comments from Federal Reserve officials.
This has raised expectations that the Fed may not cut interest rates in the near term, supporting the USD and putting downward pressure on the British Pound. However, the market remains cautious as traders await key economic indicators and potential developments in the UK's economic landscape.
From a technical perspective, a bullish trend may be initiated if the price manages to sustain above the pivot point of $1.2793. This could lead to potential gains towards the immediate resistance levels at $1.2765 and beyond.
Conversely, if the GBP/USD pair falls below the immediate support level of $1.2711, further declines towards $1.2676 and $1.2648 are likely.
In conclusion, the outlook for GBP/USD remains cautiously bullish above the pivot point of $1.2793. The recommended entry price for a potential buy position is $1.27332, with a take profit target set at $1.27927 and a stop loss at $1.27036.
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USD/CAD Price Analysis – May 28, 2024
Daily Price Outlook
During the European trading session, the USD/CAD pair has been on a downward trend, edging down to the 1.3620 level. This bearish performance can be attributed to several factors including the bearish US dollar.
Meanwhile, the Canadian Dollar is bolstered by upbeat market sentiment, which contributed to the USD/CAD pair's declines.
Impact of Weakening US Dollar on USD/CAD Pair
On the US front, the broad-based US Dollar is experiencing a weakening trend, even as traders anticipate the Federal Reserve (Fed) to keep interest rates unchanged in their upcoming September meeting. This unexpected decline in the USD's value is influencing the USD/CAD pair's performance, pushing it further down towards the support level of 1.3600.
The market sentiment remains positive, with S&P 500 futures posting gains and the US Dollar dropping for the third consecutive trading session.
Therefore, the weakening trend of the US Dollar, despite expectations of unchanged interest rates by the Fed, is pushing the USD/CAD pair lower towards the 1.3600 support level amid positive market sentiment.
Canadian Dollar Strengthens Amid Upbeat Market Sentiment
On the other hand, the Canadian Dollar (CAD) is gaining strength, capitalizing on the upbeat market sentiment. However, the near-term outlook for the CAD remains uncertain as investors anticipate the Bank of Canada (BoC) to begin interest rate cuts starting from the June meeting. This anticipation is fueled by weak household spending and easing price pressures in Canada.
Additionally, concerns about persistent inflation in Canada have eased due to lackluster consumer spending and a gloomy economic outlook. Investors will closely monitor the upcoming release of Q1 Gross Domestic Product (GDP) data, which will provide insights into the economic health of Canada and potentially impact the performance of the USD/CAD pair.
USD/CAD - Technical Analysis
USD/CAD is currently trading at $1.36269, reflecting a 0.12% decline on the 4-hour chart. The pivot point, set at $1.3615, is critical for determining the market direction. Immediate resistance levels are $1.3643, $1.3662, and $1.3677. On the downside, immediate support is identified at $1.3591, followed by $1.3564 and $1.3537.
The Relative Strength Index (RSI) is at 38, indicating potential bearish momentum. The 50-day Exponential Moving Average (EMA) is positioned at $1.3650, suggesting that the current price is below this short-term average, reinforcing a bearish outlook.
The outlook for USD/CAD remains bearish below the pivot point of $1.3615. Traders may consider buying above $1.36146, with a take profit target at $1.36521 and a stop loss at $1.35909.
The technical landscape suggests that USD/CAD is under pressure with limited upward momentum unless key resistance levels are breached. The RSI at 38 supports a bearish outlook, while the position below the 50-day EMA at $1.3650 adds to the bearish sentiment.
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GOLD Price Analysis – May 28, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to prolong their upward trend and turned bearish around the 2,345 level, hitting an intra-day low of 2,340. The reason for this downward trend can be attributed to the regained strength of the US dollar, which gained traction on the back of hawkish Fed minutes and stronger US economic data.
This boosted the US dollar and contributed to the losses in gold prices. Furthermore, the risk-on market sentiment, triggered by the upbeat US economic data and the recovering US economy, was seen as another key factor that kept gold prices under pressure.
Moving ahead, traders are keeping their eyes on the US Conference Board’s Consumer Confidence report on Tuesday, along with speeches from Fed officials Neel Kashkari, Mary Daly, and Lisa Cook.
On Friday, the focus will be on the US Core PCE Price Index. Hawkish Fed comments and signs of persistent inflation could boost the USD and pressure gold prices.
Israeli Airstrike in Gaza Sparks International Outcry and Gold Price Surge
On the geopolitical front, an Israeli airstrike caused a fire that killed 45 people in a tent camp in Rafah, a city in Gaza. Global leaders are urging Israel to stop its attacks, following an order from the World Court, according to Reuters.
This incident has increased international pressure on Israel to cease military actions in Gaza. The situation has drawn widespread condemnation and calls for a ceasefire to prevent further civilian casualties.
This geopolitical tension could drive up gold prices as investors seek safe-haven assets amid increased uncertainty and international pressure on Israel to cease its military actions in Gaza.
Fed Meeting Minutes and Economic Data Impact Gold Price and USD Strength
On the US front, recent Fed meeting minutes indicate it will take longer than expected to reach the 2% inflation target. Traders have reduced their bets on a September interest rate cut by the Fed to 49%, down from 63% last week, according to the CME FedWatch tool. Moving on, the preliminary US GDP growth for Q1 is estimated at 1.4%, down from 1.6%.
The US Core PCE Price Index, the Fed’s preferred inflation measure, is expected to rise 0.3% MoM and 2.8% YoY in April. Furthermore, the UBS analysts project gold will reach $2,600 by the end of 2024, while Citi experts forecast $3,000 within six to eighteen months.
Therefore, the gold price may decline as reduced expectations of a September Fed rate cut and stronger US economic indicators bolster the dollar, offsetting bullish forecasts by UBS and Citi analysts.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,343.770, reflecting a marginal decline of 0.01% on the 4-hour chart. The pivot point at $2,351.57 is crucial for determining market direction. Immediate resistance levels are $2,367.51, $2,380.52, and $2,392.98. On the downside, immediate support is found at $2,326.60, followed by $2,307.23 and $2,291.85.
The Relative Strength Index (RSI) is at 39, indicating potential bearish momentum. The 50-day Exponential Moving Average (EMA) stands at $2,381.81, suggesting the current price is below a significant resistance level.
The outlook for gold remains bearish below the pivot point of $2,351.57. Traders are advised to consider selling below $2,350, with a take profit target of $2,330 and a stop loss at $2,365. The combination of resistance levels and technical indicators suggests limited upside potential unless the price breaks above the immediate resistance levels.
The technical landscape suggests that gold is under pressure with limited upward momentum unless key resistance levels are breached.
The RSI at 39 supports a bearish outlook, while the position below the 50-day EMA at $2,381.81 adds to the bearish sentiment. Investors should monitor these key levels closely for potential shifts in market dynamics.
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- AUD/USD Price Analysis – May 28, 2024
AUD/USD Price Analysis – May 28, 2024
Daily Price Outlook
Despite the hawkish Fed minutes and stronger US economic data, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6666 level, hitting an intraday high of 0.6674.
However, the reason for its upward trend could be attributed to the risk-on market sentiment, supported by the upbeat US economic data. This was evident with April's Durable Goods Orders, showing a solid recovery with a 0.7% month-over-month increase, compared to the forecasted 0.8% decline.
On the other hand, the US Dollar lost traction despite upbeat US data and hawkish remarks by the Fed, due to lower US Treasury yields. Hence, the bearish US dollar was seen as another key factor that kept the AUD/USD pair higher.
In contrast, the lower-than-expected growth in Australia's April Retail Sales, coupled with a previous decline, might weigh on the AUD currency, suggesting potential challenges for the country's economic recovery.
US Dollar Weakens Amid Mixed Signals; Impact on AUD/USD Pair
On the US front, the broad-based US dollar is losing ground due to declining Treasury yields. However, the probability of a September rate cut by the Federal Reserve has decreased to 44.9%.
Fed officials, including Michelle Bowman and Loretta Mester, are scheduled to speak this week. Mester emphasizes the need for clearer economic assessments in Fed statements, while Bowman stresses the importance of shrinking the balance sheet, especially during economic strength.
On the data front, the University of Michigan's Consumer Inflation Expectations for May eased slightly to 3.0%. The Consumer Sentiment Index rose to 69.1 but remains the lowest in six months.
Durable Goods Orders for April increased by 0.7%, contrasting with the forecasted decline of 0.8%, though March's figure was revised down to 0.8% from the initial 2.6%.
Therefore, the weakening dollar, reduced rate cut odds, and positive economic data support the AUD/USD pair. However, lingering economic uncertainties and Fed policy adjustments could introduce volatility.
AUD's Strength and China's Economic Measures Support AUD/USD Pair
On the AUD front, the uptick in the AUD/USD pair is further bolstered by an improved risk appetite. The latest Reserve Bank of Australia (RBA) meeting minutes indicate uncertainty in predicting future cash rate changes, with recent data suggesting inflation may stay above the 2-3% target for a while.
On the China front, Shanghai has announced support measures for the property sector. They're cutting down payment requirements and lowering mortgage rates. Plus, China launched a huge $47 billion fund to boost its semiconductor industry. This could affect Australia because they're closely tied in trade.
Therefore, the AUD/USD pair is further supported by the AUD's strength due to improved risk appetite and uncertainty in future cash rate changes, along with China's measures to stimulate its economy.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.66583, showing a 0.24% increase on the 4-hour chart. The pivot point, marked at $0.6669, is crucial for determining the market direction. Immediate resistance levels are $0.6684, $0.6711, and $0.6731. On the downside, immediate support is identified at $0.6638, followed by $0.6617 and $0.6595.
The Relative Strength Index (RSI) stands at 57, indicating moderate bullish momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.6654, suggesting that the current price is slightly above this short-term average, reinforcing a bullish outlook.
The outlook for AUD/USD remains slightly bullish above the pivot point of $0.6669. Traders may consider selling below $0.66691, with a take profit target at $0.66371 and a stop loss at $0.66844.
The technical landscape suggests that AUD/USD is experiencing moderate bullish momentum, with the RSI at 57 supporting this outlook. The price above the 50-day EMA at $0.6654 adds to the bullish sentiment.
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EUR/USD Price Analysis – May 27, 2024
Daily Price Outlook
Despite the downbeat German IFO survey, the EUR/USD currency pair maintained its upward trend and remained well-bid around the 1.0855 level, hitting an intraday high of 1.0868. However, the reason for its upward trend could be associated with uncertainty over the ECB reducing rates in July too.
However, the major currency pair shows strength as European Central Bank (ECB) policymakers avoid committing to extending the rate-cut cycle beyond the June meeting.
Furthermore, the US dollar has been losing its traction despite strong US economic data and a hawkish Fed stance on interest rates. However, it was being pressured by the risk-on market mood, which tends to undermine safe-haven assets including the US dollar.
Euro Strength Amid ECB Hesitation and Mixed German IFO Data
It's worth noting that the major currency pair is showing strength as European Central Bank (ECB) officials refrain from promising more interest rate cuts beyond the June meeting. They're concerned that aggressive easing might spark inflation.
Traders have adjusted their expectations, now anticipating two rate cuts instead of three for this year. This change is influenced by recent economic data indicating ongoing price pressures, like wage growth and PMI figures.
Therefore, the EUR/USD pair strengthens as the ECB hesitates on further rate cuts to avoid inflation risks. Traders are reducing expected cuts to two amid wage growth and PMI data indicating persistent price pressures.
On the data front, the German IFO Business Climate Index for May slightly dropped to 89.3 from April's 89.4, missing the market's expectation of 90.3. Similarly, the Current Economic Assessment Index decreased to 88.3 from 88.9, below estimates of 89.9.
However, the IFO Expectations Index, which gauges firms' outlook for the next six months, increased to 90.4 compared to April's 89.7 but fell short of the market consensus of 90.5.
Therefore, the slightly disappointing German IFO data for May could exert downward pressure on the EUR/USD pair due to concerns about the Eurozone's economic recovery and potential implications for ECB policy.
Impact on EUR/USD Pair Amid Fed Rate Cut Uncertainty
Despite doubts about the Federal Reserve (Fed) cutting interest rates in September, the US Dollar struggled and remained under pressure in the early European session. Traders now perceive a slightly over 50% chance that the Fed will keep rates steady in September, up from 38% last week, fueled by robust US economic data.
On the data front, US Durable Goods Orders increased by 0.7% in April, surprising experts who had anticipated a decline of 0.8%, following a downward revision in March.
Concurrently, the University of Michigan's Consumer Sentiment Index rose to 69.1 in May from April's 67.4, surpassing the anticipated 67.5. Inflation expectations for the next year edged up slightly to 3.3% from 3.2%, while expectations for the next five years saw a slight dip to 3% from 3.1%.
Hence, the EUR/USD pair experience volatility as uncertainty surrounding Fed rate cuts influences the US Dollar. Traders' shifting expectations toward steady rates and upcoming core PCE inflation data could impact market sentiment, affecting the dynamics of the currency pair.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.08496, up 0.02% as the pair shows slight gains amid ongoing market uncertainties. The pivot point at $1.0853 is critical for determining the market’s next move.
Immediate resistance levels are located at $1.0875, $1.0895, and $1.0914, suggesting potential upward targets if bullish momentum persists. On the downside, immediate support is found at $1.0833, followed by $1.0808 and $1.0783, providing key levels to watch if the price faces selling pressure.
The Relative Strength Index (RSI) is currently at 54, indicating a neutral stance with no immediate overbought or oversold conditions. The 50-day Exponential Moving Average (EMA) is at $1.0852, with the price hovering around this level, suggesting a balanced outlook in the near term.
Given the current technical configuration, a prudent strategy would be a buy stop order above $1.08585. This approach targets potential gains up to $1.08930 while setting a stop loss at $1.08408 to manage risk.
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- GBP/USD Price Analysis – May 27, 2024
GBP/USD Price Analysis – May 27, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend, edging higher around the 1.2746 level and hitting an intra-day high of 1.2748. This upward trend can be attributed to the risk-on sentiment, which undermined the US dollar and contributed to gains in the GBP/USD pair.
Despite diminishing expectations for Federal Reserve interest rate cuts and previously released strong US economic data, the US dollar lost traction. Additionally, the GBP/USD pair was boosted by a moderation in the UK's annual inflation rate, which is edging closer to the Bank of England's target.
Looking ahead, the UK and US markets will be closed on Monday for bank holidays. Traders will focus on speeches from Federal Reserve officials Michelle Bowman, Loretta Mester, and Neel Kashkari on Tuesday.
Strong US Economic Data and Fed's Cautious Stance Weaken USD, Boosting GBPUSD Pair
On the US front, recent strong economic data and cautious remarks from Federal Reserve officials have lowered the chances of interest rate cuts. The financial market now expects only one rate cut by year-end instead of several. This change has led investors to adjust their strategies, affecting various assets.
The healthier economy suggests the Fed might keep interest rates higher for longer to manage inflation. According to the CME FedWatch Tool, the probability of a 25 basis-point rate cut in September has dropped to 44.9%, down from 49.0% a week earlier.
On the data front, the University of Michigan's 5-year Consumer Inflation Expectations for May eased slightly to 3.0%, below the expected 3.1%. Despite an upward revision of the Consumer Sentiment Index to 69.1 from a preliminary 67.4, it still hit a six-month low.
These numbers likely boosted investors' confidence in potential rate cuts by the Federal Reserve. Consequently, the US dollar weakened, supporting the GBP/USD pair.
Weak Retail Sales, Improved Consumer Confidence, and Moderated Inflation Boost GBP, Strengthening GBPUSD Pair
On the UK front, traders are reacting to worse-than-expected Retail Sales data for April, which fell by 2.3% monthly and 2.7% annually, exceeding expectations. GfK Consumer Confidence improved slightly to -17 in May, better than the expected -18. Additionally, the UK's annual inflation rate is nearing the Bank of England's 2% target.
This moderation in inflation has reduced expectations for a rate cut in June, which could support the Pound Sterling (GBP).
Therefore, the weak UK retail sales data and improved consumer confidence, combined with moderated inflation-reducing rate cut expectations, support the Pound Sterling (GBP), strengthening the GBPUSD pair.
GBP/USD - Technical Analysis
GBP/USD is trading at $1.27412, up 0.03% in the latest session, reflecting modest gains amid cautious market sentiment. The pivot point at $1.2750 is a crucial level to watch for potential market direction.
Immediate resistance levels are located at $1.2773, $1.2803, and $1.2828, suggesting possible hurdles if the price attempts to move higher. Conversely, immediate support is identified at $1.2714, with further supports at $1.2685 and $1.2648, providing a safety net on the downside.
The Relative Strength Index (RSI) is currently at 62, indicating that the currency pair is approaching overbought territory. This could signal a potential pullback if selling pressure increases.
The 50-day Exponential Moving Average (EMA) is positioned at $1.2699, with the current price trading just above this level, hinting at a short-term bullish trend.
Given the technical setup, a recommended strategy would be to sell below $1.27488, with a take profit target set at $1.27043 and a stop loss at $1.27734.
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GOLD Price Analysis – May 27, 2024
Daily Price Outlook
Despite the hawkish remarks from Federal Reserve (Fed) officials and strong US economic data, Gold (XAU/USD) has managed to prolong its upward trend and remained well bid around $2,338, hitting the intraday high of $2,347.
However, the bullish bias can be attributed to recent Israeli airstrikes in Rafah's displaced people camp, which killed 35 Palestinians and wounded many more. This boosted safe-haven demand for gold, as investors seek refuge from market uncertainty.
Conversely, the robust economic indicators and hawkish statements from US Federal Reserve (Fed) officials tempered anticipations for rate cuts, curbing upward momentum in the gold market.
Recent Developments and Outlook in the US Economy
On the US front, recent economic reports have been positive, indicating a robust economy. Additionally, Federal Reserve officials have adopted a hawkish stance, signaling a preference for policies aimed at controlling inflation rather than stimulating growth.
As a result, hopes for future interest rate cuts have diminished among investors. Previously, investors may have anticipated multiple rate cuts, but now they are leaning towards only one cut by the end of the year. This shift in sentiment is prompting investors to reassess their investment strategies.
Meanwhile, the indication of a stronger economy implies that the Federal Reserve may choose to maintain interest rates at their current levels for a longer period to address concerns about inflation.
On the data front, US Durable Goods Orders increased by 0.7% in April, surprising experts who had anticipated a decline of 0.8%, following a downward revision in March.
Concurrently, the University of Michigan's Consumer Sentiment Index rose to 69.1 in May from April's 67.4, surpassing the anticipated 67.5. Inflation expectations for the next year edged up slightly to 3.3% from 3.2%, while expectations for the next five years saw a slight dip to 3% from 3.1%.
Therefore, the positive economic reports and hawkish stance from the Federal Reserve have diminished expectations for interest rate cuts, reducing the demand for gold as an inflation hedge.
Looking ahead, US banks will be closed on Monday for Memorial Day. Traders will be paying attention to speeches from Federal Reserve officials such as Michelle Bowman, Loretta Mester, and Neel Kashkari on Tuesday.
Additionally, the release of the first-quarter US GDP is anticipated to show growth of 1.5%. Positive GDP data may bolster the US dollar, impacting gold prices.
Geopolitical Tensions Between Israel and Hamas Drive Safe-Haven Demand for Gold
Another factor boosting the gold price is the recent Israeli airstrikes on a displaced people's camp in Rafah. These attacks, resulting in significant casualties, escalated tensions between Israel and Hamas, prompting fears of further conflict.
With geopolitical uncertainty rising and concerns about stability in the region mounting, investors are turning to gold as a safe-haven asset, driving up its demand and price.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,338.895, marking a 0.34% increase in value. This uptick comes amidst a backdrop of mixed market signals, with investors cautiously optimistic about the metal’s short-term prospects.
The pivot point at $2,360.00 is a critical level for market direction. Immediate resistance levels are found at $2,352.61, $2,368.37, and $2,392.98. On the downside, immediate support is at $2,307.23, followed by $2,291.85 and $2,277.62.
The Relative Strength Index (RSI) stands at 35, indicating that the metal is approaching oversold conditions, which could suggest potential upward momentum if buying interest increases.
The 50-day Exponential Moving Average (EMA) is at $2,385.05, positioning the current price below this key indicator and suggesting a bearish trend in the medium term.
Given the current technical setup, the strategy would be to buy above $2,327, with a take profit target at the pivot point of $2,360 and a stop loss at $2,313. This approach capitalizes on the potential for a rebound from current support levels while managing downside risk effectively.
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EUR/USD Price Analysis – May 24, 2024
Daily Price Outlook
During the early European session on Friday, the EUR/USD pair has been losing traction and hit the intra-day low of 1.0805 level. However, the downward trend was largely driven by a stronger US dollar and weaker sentiment surrounding the Euro (EUR).
Traders are responding to the upbeat US economic data and increasing speculations about potential interest rate cuts by the European Central Bank (ECB). These factors have contributed to the bearish performance of the EUR/USD pair.
Notably, the shared currency (Euro) has been under pressure due to growing expectations that the ECB may cut interest rates in June.
This outlook is based on comments from ECB President Christine Lagarde, who expressed confidence in Eurozone inflation being under control. Apart from this, financial markets have priced in a 25 basis point (bps) rate cut, adding to the Euro’s weakness.
Upbeat US PMI Data and the Fed’s Hawkish Comments Support the US Dollar
On the US front, the broad-based US dollar has been gaining strength, supported by stronger-than-expected US economic data. Moreover, hawkish comments from Atlanta Fed President Raphael Bostic have further strengthened the dollar.
On the data front, the latest S&P Global flash May Composite Purchasing Managers Index (PMI) data showed significant improvement, climbing to 54.4 in May from 51.3 in April. This is the highest level since April 2022.
Similarly, the Manufacturing PMI rose to 50.9 from 50.0, and the Services PMI increased to 54.8 from 51.3, both exceeding market expectations.
Additionally, the weekly Initial Jobless Claims data was better than anticipated, dropping to 215,000 from 223,000, indicating a robust labor market. These positive economic indicators have boosted confidence in the US economy and supported the USD.
Atlanta Fed President Raphael Bostic suggested that the US central bank might delay cutting interest rates due to persistent inflationary pressures. His remarks have reinforced the market’s expectation of prolonged higher interest rates in the US. This put further pressure on EUR/USD pair by underpinning the US dollar.
Traders Bet on ECB Rate Cuts in June, Weighing on the Euro
On the other hand, the increasing speculation about potential rate cuts by the ECB has intensified, putting additional selling pressure on the Euro.
ECB President Christine Lagarde’s recent statements have increased market expectations for a rate cut, with financial markets now pricing in a 25 bps cut in June. This speculation is rooted in the belief that Eurozone inflation is under control, which might allow the ECB to lower rates sooner than previously anticipated.
As a result, the expectation of a rate cut has diminished the Euro's appeal to investors. They are now favoring the US Dollar, which offers higher interest rates and a stronger economic outlook. This change in investor sentiment has led to more selling of the Euro, pushing the EUR/USD pair further down.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.08102, down 0.07%. The technical outlook suggests a mixed sentiment as the price hovers around the pivot point of $1.0806. Immediate resistance is observed at $1.0828, followed by $1.0853 and $1.0882.
On the downside, immediate support is noted at $1.0784, with further support levels at $1.0767 and $1.0751.
The Relative Strength Index (RSI) is currently at 38, indicating that the pair is approaching oversold conditions. This suggests a potential for a reversal or stabilization in the near term.
The 50-day Exponential Moving Average (EMA) stands at $1.0846, which serves as a significant resistance level that the price needs to break to confirm a bullish trend.
For traders, an entry strategy would be to buy above $1.0806, aiming for a take-profit level of $1.08407 while setting a stop-loss at $1.07857. This approach leverages the potential for an upward movement while managing downside risks.
In summary, the EUR/USD is experiencing a slight decline, with mixed signals from technical indicators. The pivot point at $1.0806 is crucial for determining the next move, with resistance and support levels providing key areas to watch.
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GOLD Price Analysis – May 24, 2024
Daily Price Outlook
Despite strong U.S. economic data and a bullish U.S. dollar, the price of Gold (XAU/USD) managed to halt its early-day downward trend and regain traction around the $2,338 level, reaching an intraday high of $2,340.
However, the reason behind this upward trend could be linked to risk-off market sentiment, which was triggered by increasing geopolitical tensions in the Middle East. These tensions have boosted safe-haven assets, including Gold.
As we look forward, gold investors will keep an eye on speeches from Federal Reserve officials. Fed Governor Christopher Waller is set to speak on Friday, and any hint of hawkish sentiment from Fed members could exert downward pressure on gold prices.
Meanwhile, upcoming economic indicators such as US Durable Goods Orders and the Michigan Consumer Sentiment Index will play a significant role in shaping market sentiment.
Geopolitical Tensions in the Middle East Support Gold Prices
The global risk sentiment has been flashing red as tensions in the Middle East remain on the cards, which could support safe-haven gold prices. According to the latest report, over 900,000 Palestinians have been displaced in just two weeks, facing severe shortages of shelter, food, water, and medicine.
Hospitals are struggling without fuel for generators, endangering patients' lives. Israeli forces are advancing in Gaza, besieging critical health facilities. The death toll is increasing, with over 35,800 killed and 80,011 wounded in Gaza. Therefore, the heightens geopolitical uncertainty boosting demand for gold as a safe-haven asset and supporting its price.
US Economic Strength and Fed Outlook Drive Gold Price Downward
On the US front, the robust economic data bolstered the US dollar, hinting at the possibility of higher interest rates, consequently putting pressure on Gold prices. Atlanta Fed President Raphael Bostic highlighted concerns about inflation, suggesting the Fed might delay rate cuts to prevent overheating the economy.
According to the CME FedWatch Tool, the chances of the Fed maintaining rates in September rose from 41.9% to 48.4% on May 23rd, indicating a shift in market expectations towards a hold on rates.
On the data front, US Initial Jobless Claims dropped by 8,000 to 215,000 for the week ending May 18, beating the expected 220,000 and the previous week's 223,000.
Furthermore, the flash US S&P Global Manufacturing PMI rose to 50.9 in May from April's 50.0, while Services PMI climbed to 54.8 from 51.3, both exceeding expectations. Moreover, the US S&P Global Composite PMI surged to 54.4 in May from April's 51.3, surpassing the market's forecast of 51.1 and marking its highest level since April 2022.
Therefore, the robust US economic data, coupled with hints of potential rate hikes, pressured Gold prices lower. Positive jobless claims and PMI figures boosted the dollar, diminishing demand for the precious metal.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2338.97, up 0.21%. The technical outlook suggests a bullish trend as the price is positioned above the pivot point of $2326.84. Immediate resistance is observed at $2352.61, with subsequent resistance levels at $2368.37 and $2392.98. On the downside, immediate support is noted at $2307.23, followed by $2291.85 and $2277.62.
The Relative Strength Index (RSI) is currently at 31, indicating that gold is approaching oversold conditions, which could suggest a potential reversal or stabilization around this level. The 50-day Exponential Moving Average (EMA) is at $2386.60, providing significant resistance near the upper levels.
Traders should consider an entry price for buying above $2327, with a take-profit target of $2358 and a stop-loss set at $2307. This strategy leverages the potential for further upside while managing risk. The current market conditions, highlighted by the RSI and EMA, suggest a cautiously optimistic outlook for gold.
In conclusion, the bullish trend is supported by the price positioning above the pivot point and the RSI indicating oversold conditions.
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