GOLD Price Analysis – Nov 08, 2024
Daily Price Outlook
Gold prices (XAU/USD) unable to stop its downward trend and facing strong bearish pressure around 2,680 level amid several factors. Investors are feeling hopeful that former President Trump’s policies could boost economic growth and inflation, which has helped lift demand for the US Dollar, despite the Federal Reserve’s more cautious outlook. Moreover, the upbeat mood in the markets has reduced interest in safe-haven assets like gold.
Impact of Strong US Dollar and Fed Rate Cuts on Gold Prices
On the US front, the US Dollar regained its strength, largely due to expectations that Donald Trump’s policies might boost economic growth and inflation. Many investors believe that Trump’s plans could lead to higher spending and deficits, which would likely raise inflation.
This optimism about growth has overshadowed the Federal Reserve’s cautious (dovish) outlook, which normally would weaken the Dollar. This dollar strength, combined with a positive mood in the market, has put pressure on gold prices, as demand for safe-haven assets like gold tends to drop when the dollar is strong.
During his post-meeting speech, Fed Chair Jerome Powell did not indicate any pause in future rate cuts, suggesting that the central bank may continue easing to manage inflation. The market reacted quickly, with traders now seeing a 75% chance of another rate cut in December.
This has led to a decline in US Treasury bond yields, which might limit further gains in the Dollar. The prospect of Trump’s policies increasing inflation and deficits has also made it harder for the Fed to consider rate cuts down the road, adding to the Dollar’s current strength.
Therefore, the strong US Dollar and potential Fed rate cuts have pressured gold prices, as a stronger dollar reduces gold’s appeal for non-US buyers. Lower bond yields may slow this decline, but the Dollar’s gains generally decrease gold’s demand as a safe-haven.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading slightly lower at $2,694.61, down 0.45% as it hovers around crucial support levels amid renewed selling pressure. With immediate support at $2,687.30, gold remains in a tentative position. A breakdown below this level could expose gold to further downside risk, with the next key support points at $2,673.76 and $2,654.69.
Conversely, on the upside, immediate resistance is noted at $2,707.64, which aligns with recent intraday highs. Any sustained move above this level could allow for a bullish run towards the next resistance zones at $2,725.76 and $2,743.00, with a more formidable barrier at $2,758.57.
The Relative Strength Index (RSI) stands at 52, indicating neutral momentum, neither overbought nor oversold, which implies room for movement in either direction. Meanwhile, the 50 EMA, currently at $2,688.07, supports the notion of a short-term bearish trend if prices remain below this level.
Traders might consider a selling entry below $2,707.64, with a target at $2,673.76 and a stop-loss set at $2,726, as market dynamics lean toward downside risk given the subdued momentum.
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S&P500 (SPX) Price Analysis – Nov 08, 2024
Daily Price Outlook
The global market sentiment has been positive, with the S&P 500 having its best week in nearly a year, reaching 5,973 points and hitting an intra-day high of 5,983 level. Despite no clear catalyst for the market’s rise, analysts suggest that the gains were mainly a continuation of the post-election rally, driven by the expectation of tax cuts and less regulation under Trump’s leadership, which could boost corporate profits.
However, the S&P 500, along with the Dow and Nasdaq, saw impressive gains this week, with all three major indexes closing near record highs. The Fed’s rate cut and strong earnings have given investors confidence, but there are concerns about Trump’s proposed fiscal policies, like increased spending and tariffs, which could push inflation higher and complicate future rate cuts.
Despite these risks, market sentiment remains strong, and the S&P 500’s positive performance is expected to continue in the medium term, fueled by economic growth and investor optimism.
US Federal Reserve Rate Cut and Mixed Economic Data Impact on S&P 500
On the US front, the Federal Open Market Committee (FOMC) reduced its key interest rate by 0.25% to a target range of 4.50%-4.75% during its November meeting. This rate cut is part of the Federal Reserve’s effort to ease monetary policy as inflation slowly moves closer to its 2% target. Fed Chair Jerome Powell explained that the central bank is continuing with rate cuts due to tight monetary conditions, but will carefully monitor economic data to decide on future rate changes.
This move has fueled expectations that the Fed may continue easing policies, especially since inflation is slowly moving towards the 2% target. As a result, the US Dollar Index (DXY) rose to 104.50, while US Treasury bond yields stood at 4.20% for 2-year bonds and 4.33% for 10-year bonds.
On the data front, US economic data showed mixed signals. Initial Jobless Claims for the week ending November 1 came in at 221,000, which was slightly higher than the previous week’s revised 218,000. On the other hand, the ISM Services PMI rose to 56.0 in October, above expectations, signaling strength in the services sector.
These economic developments impact the S&P 500 index as investors assess the Fed’s policy direction and economic growth. The rate cuts and strong services data could support further gains in the S&P 500, though concerns about inflation and jobless claims may limit upside potential.
S&P 500 – Technical Analysis
The S&P 500 (SPX) has seen upward momentum, currently trading at 5,973.09, marking a 0.74% gain. After breaking above the pivot level at 5,928.40, the index is approaching immediate resistance at 5,988.57.
Should SPX hold above this pivot, it could extend gains to the next resistance levels at 6,056.54 and 6,103.34, bolstered by strong bullish sentiment. However, with the Relative Strength Index (RSI) at 76, the market is in overbought territory, which raises the likelihood of a short-term pullback or consolidation phase.
On the downside, immediate support lies at 5,877.15, followed by additional support levels at 5,838.15 and 5,809.17. The 50 EMA is positioned at 5,816.12, acting as a foundational support level that aligns with a bullish trend.
Traders may view 5,988 as a critical level; failing to sustain above it could trigger selling pressure with a potential target of 5,928.40. A recommended stop-loss can be set near 6,033.14 to limit risk on short positions if the market reverses.
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EUR/USD Price Analysis – Nov 08, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to maintain momentum and slipped to around the 1.0789 level, hitting an intra-day low of 1.0761. This dip could be linked to the strength of the US dollar, which got a boost after Donald Trump’s victory in the US presidential election. Many believe that Trump's win is pushing the dollar higher due to his promises of raising import tariffs by 10% and cutting corporate taxes.
On the flip side, the euro is under pressure as investors are concerned about the Eurozone's economic future, with factors like Trump's win, political instability in Germany, and worries about inflation staying below the European Central Bank's target.
EUR/USD Pressure Due to Eurozone Economic Worries, ECB Rate Cuts, and Political Instability
On the EUR front, the shared currency (EUR) is facing pressure due to its underperformance against major peers. Investors are concerned about the Eurozone’s economic outlook, which has been worsened by Trump’s victory in the US, as well as, the collapse of Germany’s three-party coalition, and fears that inflation will stay below the European Central Bank’s (ECB) target of 2%.
However, the US’s plan to raise tariffs could hurt the Eurozone’s export sector, potentially slowing economic growth. At the same time, Deutsche Bank predicts that the ECB will lower its Deposit Facility rate to 1.5%, down from the 2.25% it previously expected, due to weak economic conditions and inflation risks falling below target.
In addition, political instability in Germany is adding pressure on shared currency. The recent collapse of Germany’s coalition government, after Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, has led to the possibility of snap elections in early 2025. This uncertainty delays government spending, which could further limit the Eurozone’s economic growth.
The concerns over the Eurozone’s economic outlook, ECB rate cuts, and political instability in Germany are likely to weigh on the euro, pushing the EUR/USD pair lower as investors shift towards the stronger US dollar amid rising uncertainty.
US Dollar Recovery and Fed’s Rate Cut Likely to Weigh on EUR/USD Pair
On the US front, the broad-based US dollar regained its momentum after a brief correction, with the US Dollar Index (DXY) rising back to nearly 104.65. The index had dropped to 104.20 on Thursday after reaching a high of 105.50, its highest level in over four months, following Donald Trump’s presidential election victory.
However, the US dollar’s recovery is mainly due to Trump’s promise to raise import tariffs by 10% and cut corporate taxes. Market analysts believe that these policies could boost investment, spending, and labor demand, which may lead to higher inflation and force the Federal Reserve (Fed) to take a more restrictive approach to monetary policy.
Fed Chair Jerome Powell downplayed the immediate impact of Trump's victory on US monetary policy. He said the Fed doesn't make decisions based on future government policies. Powell confirmed the Fed's decision to cut interest rates by 0.25% to 4.50%-4.75%, as expected.
He also expressed confidence that inflation would stay on track to reach the 2% target, even with some weakness in the job market, indicating that the Fed will keep its policy-easing approach for now. Therefore, the US dollar's recovery, driven by Trump’s policies and the Fed's interest rate cut, could strengthen the USD further, likely putting downward pressure on the EUR/USD pair.
EUR/USD – Technical Analysis
The EUR/USD pair is trading modestly lower at $1.07811, marking a 0.19% decline. After failing to breach the pivot level at $1.08115, the pair has found resistance, with immediate levels of concern at $1.08558 and higher at $1.08921 and $1.09363.
These levels present potential challenges for any bullish attempts, especially as the market momentum remains muted. The Relative Strength Index (RSI) sits at 48, indicating neutral sentiment, which suggests limited upward movement unless the pair breaks above these resistance points decisively.
On the downside, immediate support lies at $1.07463, with stronger support levels at $1.06982 and $1.06471, which could come into play if selling pressure intensifies. The 50 EMA, positioned at $1.08229, acts as a dynamic resistance that further validates the current bearish stance.
Given the neutral RSI and resistance from the 50 EMA, traders may find selling opportunities below $1.08112, targeting a move towards $1.07455. A stop-loss at $1.08549 could help manage risk in case of an unexpected reversal.
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GOLD Price Analysis – Nov 07, 2024
Daily Price Outlook
Gold (XAU/USD) was able to stop its downward trend and turned bullish around the $2,666 on Thursday, after a sharp 3% drop following Donald Trump's victory in the U.S. presidential election.
The drop was mainly due to a stronger U.S. Dollar (USD), as Trump’s pro-tariff policies were seen as good for the Dollar. Since gold is priced in USD, a stronger Dollar usually lowers gold prices.
Investors also moved toward riskier assets like Bitcoin (BTC), which hit new highs due to expectations of Trump easing crypto regulations. Moreover, the stock markets rose on hopes for tax cuts and fewer regulations, reducing demand for gold.
Investors are starting to return to gold as a hedge against uncertainty, especially as concerns about inflation and economic instability remain. Besides this, the U.S. Dollar’s strength has shown signs of weakening, which has helped lift gold prices.
In the meantime, the ongoing geopolitical tensions and economic concerns, particularly around trade wars and global unrest, continue to support gold’s role as a safe-haven asset. As a result, gold has regained some of its appeal, attracting buyers looking for stability amid market volatility.
Gold Under Pressure as Investors Shift to Riskier Assets Amid Strong Dollar and Economic Uncertainty
On the US front, the broad-based US dollar (USD) remains relatively strong despite expectations that the Federal Reserve will lower interest rates by 25 basis points at its November meeting.
Normally, a Fed rate cut would weaken the USD by making it less attractive to investors, but strong economic data, like the recent rise in the ISM Services PMI to 56.0, has shown resilience in the US economy. This has helped support the dollar even amid anticipated rate cuts.
On the data front, the US economy showed mixed signals in October, with the ISM Services Purchasing Managers' Index (PMI) rising to 56.0, above expectations, signaling growth in the services sector.
However, the S&P Global Services PMI slightly missed expectations at 55.0, suggesting some slowing growth. These mixed economic data added to market uncertainty, which could support gold as a safe-haven asset.
Meanwhile, Trump’s presidential win and Republican control of both the Senate and potentially Congress have raised expectations of tax cuts and a more relaxed regulatory environment, pushing investors toward riskier assets like Bitcoin (BTC) and stocks. These moves away from gold led to outflows from the precious metal, as investors adjusted their portfolios.
Gold has faced downward pressure as investors shift toward riskier assets like Bitcoin and stocks, driven by optimism around Trump’s win and potential tax cuts. However, economic uncertainty and mixed data could still support gold’s safe-haven appeal.
GOLD (XAU/USD) – Technical Analysis
Gold prices have continued their recent descent, trading at $2,655 as of Thursday, pressured by dollar strength and shifting risk sentiment in global markets. Currently, gold is hovering above a critical support pivot at $2,644. Holding this level is essential for bulls aiming to stabilize the metal.
On the upside, immediate resistance stands at $2,670, followed by the $2,690 mark, with a more robust cap at $2,708. A break above these resistance points would be necessary to trigger any sustained bullish reversal, especially with the 50-day Exponential Moving Average (EMA) positioned significantly higher at $2,741, underscoring the current bearish trend.
If gold fails to maintain support at $2,644, traders may see increased selling pressure, with support levels potentially coming into play at $2,626 and $2,605. An extended decline could push prices toward the $2,585 zone, which would be critical for assessing whether this downtrend has more room to run.
The Relative Strength Index (RSI) sits at a low 22, firmly indicating oversold conditions and suggesting that a short-term bounce may be on the horizon. However, the overall technical landscape remains bearish, and gold's path forward is likely to depend on whether it can break above $2,670 or if support at $2,644 gives way to further downside.
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USD/JPY Price Analysis – Nov 07, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair has been showing a bearish trend, with the Japanese Yen (JPY) strengthening against the US Dollar (USD). However, the reason behind this move is the growing speculation that the Japanese government might intervene in the foreign exchange market to support the weakening Yen.
This has raised concerns that Japanese authorities could step in, adding pressure on the USD/JPY pair. On top of that, a slight pullback in the US Dollar has also contributed to the downward momentum, leading to a small dip from the pair’s recent highs.
Japanese Yen Faces Mixed Outlook Amid Intervention Concerns and BoJ Uncertainty
As we mentioned, the Japanese Yen has gained support recently due to concerns over potential government intervention. Japanese officials, including Chief Cabinet Secretary Yoshimasa Hayashi and Vice Finance Minister Atsushi Mimura, have increasingly expressed vigilance regarding currency movements.
Mimura specifically noted that the government is prepared to act against excessive speculative behavior in the FX market.
This heightened sense of urgency from Japanese authorities has bolstered confidence in the Yen, as traders anticipate potential intervention to prevent further depreciation. As a result, the USD/JPY pair is facing resistance, with the Yen gaining strength amid these intervention concerns.
Despite receiving some support from fears of intervention, the Japanese Yen faces significant challenges due to the ongoing uncertainty surrounding the Bank of Japan’s (BoJ) rate-hike plans.
The BoJ has remained cautious about raising interest rates, citing concerns over global economic risks, particularly from the US. This hesitation has limited the Yen’s ability to gain ground against the US Dollar.
Moreover, the current risk-on environment, fueled by optimism in global equity markets, further undermines the Yen. As investors gravitate toward higher yields and riskier assets, demand for the low-yielding Yen diminishes, restricting any potential recovery. As a result, these factors continue to weigh on the USD/JPY pair, leaving it vulnerable to fluctuations.
US Dollar Strengthens Amid Republican Success, Boosting USD/JPY Outlook
On the US front, the US dollar saw a strong rally, boosted by the Republican party's success, with markets giving them a 93% chance of winning the House. This raised expectations that Donald Trump could push his policies forward, strengthening the dollar.
Investors reacted by buying the dollar, increasing their expectations for a slower pace of Fed rate cuts, and selling US Treasury bonds. As a result, US stocks rose, and the market started pricing in higher inflation and slower rate cuts.
This situation put pressure on the Japanese yen, as the widening interest rate differential between the US and Japan continued to favor the US dollar.
Therefore, the strong rally in the US dollar, driven by expectations of slower Fed rate cuts and higher inflation, has widened the interest rate gap between the US and Japan. This pressure on the Japanese yen suggests that the USD/JPY pair may continue to rise.
USD/PJPY – Technical Analysis
USD/JPY is trading slightly lower at ¥154.053, displaying a bearish bias as it approaches a critical pivot point at ¥155.155. This level will serve as a key decision point for traders, with a potential reversal or further decline hinging on whether the pair can hold or breach this mark.
The immediate resistance stands at ¥155.557, followed by the next barriers at ¥155.984. A break above these levels would indicate a reversal back to bullish sentiment. However, with current momentum skewed to the downside, resistance appears unlikely to be tested unless the pair finds a solid footing above the pivot.
On the downside, USD/JPY has immediate support at ¥153.907, a level closely aligned with the 50-day Exponential Moving Average (EMA) of ¥153.307, which reinforces the pair’s lower boundary. Should this support level fail to hold, traders may see further declines towards ¥153.415 and then ¥153.008.
The Relative Strength Index (RSI) sits at 49, indicating neutral momentum. However, a reading near 50 suggests a potential shift is forthcoming; a dip below this could strengthen bearish sentiment.
In conclusion, USD/JPY remains vulnerable to further losses below the pivot level of ¥155.155. Traders may consider short positions below ¥154.245, aiming for a target near ¥153.425 with a stop loss at ¥154.935.
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AUD/USD Price Analysis – Nov 07, 2024
Daily Price Outlook
Despite a weaker-than-expected Australian Trade Balance for September, the AUD/USD currency pair continued its upward trend, staying strong around the 0.6632 level and reaching a daily high of 0.6639.
The Australian Dollar (AUD) outperformed its major peers, while the US Dollar (USD) faced a pullback after a rally sparked by Trump’s comments on Wednesday, ahead of the Federal Reserve’s (Fed) policy meeting at 19:00 GMT.
On the flip side, the US Dollar Index (DXY), which measures the USD against six major currencies, dropped from a four-month high of 105.30 to around 104.80. The Fed is widely expected to reduce interest rates by 25 basis points (bps), bringing them to a range of 4.50%-4.75%, according to the CME FedWatch tool.
AUD/USD Strengthened Amid RBA's Hawkish Stance and China Stimulus Expectations
On the AUD front, the Australian Dollar (AUD) bounced back strongly, despite a weaker-than-expected Australian Trade Balance for September. The Australian Dollar strengthened on the back of strong expectations regarding the Reserve Bank of Australia’s (RBA) hawkish stance on interest rates.
However, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35% and highlighted the need for a strict policy to control inflation, driven by a strong labor market. This has given the AUD a boost.
On the data front, the Australian Trade Balance for September showed a surprising drop. The trade surplus fell to 4,609 million AUD from 5,284 million AUD in August, which was below economists' expectations of 5,300 million AUD. This was the lowest surplus since March, due to a decline in both exports and imports.
Despite this, the AUD continued to rise, supported by the possibility of China rolling out economic stimulus to boost its economy. The potential boost in Chinese investments and consumption, especially following US Republican Donald Trump’s presidential election victory, is positive for Australia as China is its main trading partner.
Therefore, the stronger Australian Dollar, driven by the RBA's hawkish stance and expectations of Chinese economic stimulus, supported the AUD/USD pair, despite a weaker-than-expected Trade Balance. This likely contributed to upward pressure on the AUD/USD pair, boosting its value.
AUD/USD – Technical Analysis
AUD/USD is showing strength, trading at $0.66208, following a rebound that lifted the pair above the crucial support level of $0.66235. The immediate resistance sits at $0.66612, and if breached, it could open the door to further gains towards $0.66849.
However, the pivot point at $0.66395 remains a critical level for traders, with the 50-day Exponential Moving Average (EMA) at $0.65940, suggesting underlying support.
Technical indicators present a mixed picture; the Relative Strength Index (RSI) is currently at 63, leaning towards overbought territory but not yet signaling a full reversal. This level indicates that buyers maintain control, though caution may be warranted as momentum could slow if resistance levels hold.
For bears, a drop below the immediate support of $0.65929 could shift the bias downward, potentially driving prices towards $0.65646 and then to the next support at $0.65471.
In the short term, the Australian dollar appears poised to extend its rally, though this optimism is fragile and reliant on maintaining levels above $0.66235. A close below the 50-day EMA at $0.65940 would signal a possible shift to bearish sentiment.
Given the current dynamics, traders may look to sell below $0.66260 with targets near $0.65933 while setting a stop loss at $0.66444.
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GOLD Price Analysis – Nov 06, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their downward trend and edging lower to the 2,728 level, hitting an intraday low of 2,701.65. However, the bearish trend can largely be attributed to the strength of the US dollar, which surged to a nearly four-month high in response to US election exit polls suggesting former President Donald Trump may be favored.
This shift in sentiment, coupled with the market's optimism surrounding a potential Republican victory in the upcoming US presidential election, contributed to further pressure on gold prices.
However, ongoing geopolitical risks, particularly the long-lasting conflicts in the Middle East, continue to provide some support to the safe-haven demand for gold. Moving ahead, traders are closely watching the Federal Reserve's interest rate decision this Thursday.
Most market participants are expecting a 25 basis point cut, with the CME FedWatch Tool showing a 96.4% probability of a quarter-point reduction. Thus, the 25 basis point rate cut by the Fed could weaken the US dollar, making gold more appealing as a safe-haven asset, potentially pushing gold prices higher.
US Dollar Strengthens Amid Trump’s Growing Election Support, Putting Pressure on Gold Prices
On the US front, the broad-based US dollar maintained its upward trend and strengthened further, largely due to increasing confidence in Donald Trump’s chances of winning the US presidential election.
The latest polls suggest a tight race between Trump and Kamala Harris, with Trump currently holding a slight edge. On platforms like Kalshi and Polymarket, Trump leads Harris by about 57% to 43% and 60.7% to 39.5%, signaling growing support for Trump as election day nears.
It should be noted that early exit polls from key states show strong support for Trump. In Wisconsin, he’s leading with 56% of the vote, while Harris has 42.5%. North Carolina is a close race, and in Michigan, Harris’ lead has dropped from 61% to 53%. Early data from Georgia also shows Trump ahead, but these numbers are based on a small portion of votes counted, so the final outcome is still uncertain.
On the data front, the US ISM Services PMI showed stronger-than-expected growth in October, which further boosted confidence in the economy and supported the US dollar. This data, along with the ongoing political uncertainty, has kept gold prices under pressure, as investors tend to favor the stronger dollar in such times.
GOLD (XAU/USD) – Technical Analysis
Gold prices continue to face downward pressure, trading around $2,725.41 after a failed attempt to break above key resistance levels. Currently, the metal is struggling below the pivotal $2,731 level, suggesting a bearish sentiment in the short term.
Sellers seem in control, with price action slipping further below the 50-day EMA at $2,745, reinforcing the downside bias. Immediate resistance now lies at $2,731, followed by the next levels at $2,747 and $2,760.
On the support side, the first level to watch is at $2,710, with further support emerging at $2,702 and $2,693. A decisive break below $2,710 could open the door for deeper declines, especially if bearish momentum accelerates.
The Relative Strength Index (RSI) stands at 35.68, showing that gold is approaching oversold territory, but not quite there yet. This indicates that while further downside is possible, some traders might begin looking for buying opportunities if the RSI dips below 30.
The recent sell-off was triggered after prices failed to sustain above the $2,731 mark, leading to increased bearish momentum in the market.
Traders are likely eyeing a sell position below $2,731, with a target price around $2,710 and a stop loss near the resistance at $2,747. A close below $2,710 would likely confirm bearish continuation and could signal a further slide toward the $2,693 support level.
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GBP/USD Price Analysis – Nov 06, 2024
Daily Price Outlook
During Asian trading hours on Wednesday, the GBP/USD pair continued its downward trend, turning bearish at the 1.2889 level and reaching an intra-day low of 1.2846. This depreciation was mainly driven by a surge in the US Dollar after Donald Trump claimed victory in the 2024 presidential election, with Republicans poised to take control of both the Senate and the House.
On the GBP front, the Bank of England’s upcoming rate decision, scheduled for Thursday, is expected to result in a quarter-point reduction. The BoE’s Monetary Policy Committee is likely to vote 7-2 in favor of lowering the main reference rate to 4.75% from the current 5.0%. As a result, the anticipated rate cut is expected to weigh on the GBP, as lower interest rates generally reduce the currency’s appeal to investors.
Trump’s Victory and Fed Rate Cut Expectations Drive Bearish Momentum in GBP/USD
On the US front, the broad-based US dollar sustained its upward trend and gained further momentum after Donald Trump claimed victory in the 2024 presidential election. Although the election is not officially decided yet, Trump declared himself the winner, stating that his victory gives him a strong mandate to push forward his economic policies.
Trump won key battleground states like North Carolina, Georgia, and Pennsylvania, and Fox News has already called him the winner over Democrat Kamala Harris.
Alongside Trump's win, the Republican Party is also set to take control of the Senate and is likely to win the House of Representatives.
This Republican sweep in Congress will make it easier for Trump to implement his policies, which are expected to be more inflationary, especially given his protectionist stance on trade and immigration.
The US dollar and Treasury yields surged on the news of Trump’s victory, with the greenback reaching a near four-month high.
However, the quick conclusion to the election also reduces uncertainty in the stock market, which had faced turmoil following the 2020 election.
Meanwhile, traders are awaiting the Federal Reserve’s decision on interest rates, with strong expectations for a 25 basis point cut on Thursday.
Therefore, the US dollar's strength, driven by Trump's victory and Republican control, likely pressures the GBP/USD pair, as the greenback gains momentum. Additionally, expectations of a Fed rate cut add further downward pressure on the GBP, amplifying the pair’s bearish trend.
GBP/USD – Technical Analysis
The British pound is under pressure against the U.S. dollar, with GBP/USD dropping to $1.28510, reflecting a 1.45% decline on the day. The pair has slipped below key support levels, signaling a bearish outlook as the dollar strengthens.
The immediate support now stands at $1.28134, with further downside targets at $1.27817 if selling momentum continues. On the upside, resistance sits at $1.29125, with additional resistance levels at $1.29524 (pivot) and $1.29950.
A break above these levels would be necessary to ease the bearish tone, though current indicators suggest that the pound is likely to remain under pressure in the near term.
Technical indicators paint a bearish picture, with the 50-day EMA positioned at $1.29512, well above the current price. This moving average underscores the downward trend and suggests limited upside potential for the pound unless it can reclaim levels above $1.29524.
The RSI stands at 31, edging close to oversold territory. Although this level could suggest a short-term bounce, the broader trend remains bearish, particularly as dollar strength persists.
For traders, a short position below the pivot of $1.29118 may be prudent, with a take-profit target near $1.28273 and a stop loss at $1.29526. With the pound struggling to find traction, maintaining positions below key levels aligns with current market sentiment.
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EUR/USD Price Analysis – Nov 06, 2024
Daily Price Outlook
During Wednesday’s European session, the EUR/USD currency pair struggled to recover and remained under pressure around the 1.0750 mark, hitting an intraday low of 1.0703.
The pair took a significant hit as Republican candidate Donald Trump claimed victory in the 2024 U.S.presidential election, with Republicans expected to gain control of both the Senate and the House. This development triggered a surge in the U.S. Dollar, driving a wave of selling pressure on the Euro.
On the flip side, the Euro’s outlook has weakened as markets anticipate that Trump’s proposed protectionist policies could weigh heavily on European economic growth. Consequently, the Euro depreciated not only against the Dollar but also against other major currencies, reflecting broad concerns about the impact of U.S. policy shifts on the European economy.
US Dollar Strengthens Amid Trump’s Victory, Putting Pressure on EUR/USD
On the US front, the US dollar has been flashing green and gained strong bullish traction as Donald Trump claimed victory in the 2024 presidential election. While the result is not officially confirmed, Trump declared himself the winner, having won key battleground states like North Carolina, Georgia, and Pennsylvania. Fox News has already called him the winner over Democrat Kamala Harris.
As a result, the US dollar surged, reaching its highest level in nearly four months, with Treasury yields rising alongside it. Meanwhile, traders are awaiting the Federal Reserve’s decision on interest rates, with expectations of a 25 basis point rate cut on Thursday.
Therefore, the strength of the US dollar, fueled by Trump’s victory and Republican control, is putting pressure on the EUR/USD pair, adding to the bearish trend for the Euro against the greenback.
EUR/USD Faces Strong Selling Pressure Amid Trump’s Tariffs and ECB Rate Cut Expectations
On the other hand, the shared currency weakened as the US Dollar outperformed and the Euro (EUR) saw a sharp decline against other major currencies. The outlook for the Euro has become more negative, as market participants worry that Trump’s protectionist policies, such as tariffs, could severely hurt European economic growth.
According to a Dutch bank, Trump's tariffs could reduce European growth by 1.5 percentage points, which could result in an economic loss of around €260 billion based on Europe’s 2024 GDP of €17.4 trillion.
If Europe’s economy slows down because of Trump’s tariffs, the European Central Bank (ECB) may need to act quickly, possibly cutting interest rates to near zero by 2025. Euronews reports that Trump’s victory could push the ECB to make a larger-than-usual rate cut of 50 basis points in its next meeting in December.
This would be the fourth interest rate cut by the ECB this year, as they try to support the Eurozone economy. These factors are putting strong selling pressure on the EUR/USD pair, further weakening the Euro against the US Dollar.
Therefore, the negative outlook for the Euro, driven by concerns over Trump’s tariffs and potential ECB rate cuts, is putting significant pressure on the EUR/USD pair. This has led to further weakening of the Euro against the stronger US Dollar, intensifying the bearish trend.
EUR/USD – Technical Analysis
EUR/USD has dropped to $1.07183, shedding nearly 2% as the pair struggles to find support amidst continued dollar strength. The sharp decline in the euro signals bearish momentum, with immediate support now positioned at $1.06791.
Should this level fail to hold, the next critical support zones lie at $1.06375 and potentially lower, putting additional downside pressure on the euro. The pair faces resistance at $1.07760, with further resistance levels at $1.08108 and $1.08558. A push above these levels would be needed to shift momentum back in favor of the euro.
Technical indicators confirm the bearish outlook, with the RSI hovering at an oversold level of 24, suggesting intense selling pressure. While an oversold RSI could hint at a potential short-term bounce, the broader trend remains downward. The 50-day EMA, currently at $1.08728, sits well above the current price, reinforcing the bearish bias and indicating that any upside attempt may be limited.
Given the strong dollar environment, traders might consider selling positions below the pivot point at $1.07767, with a target take-profit level around $1.06941 and a stop loss near $1.08204. If EUR/USD remains under $1.07760, sellers are likely to stay in control, pushing the pair lower towards key support levels.
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GOLD Price Analysis – Nov 05, 2024
Daily Price Outlook
Gold prices (XAU/USD) have managed to recover some of their early losses but are still trading sluggishly around the 2,736 level. However, the safe-haven demand for gold is likely to rise amid the uncertainty surrounding the election and the potential for escalating geopolitical tensions in the Middle East. This risk-off environment provides some support for the precious metal.
Meanwhile, the ongoing expectations that the Federal Reserve may cut interest rates due to a slowing labor market are leading to a drop in US Treasury bond yields. This, in turn, weakens the US Dollar, benefiting gold prices.
Rising Safe-Haven Demand Drives Gold Prices Amid US Election and Geopolitical Uncertainty
Despite some early losses, gold demand remains supported by the uncertainty surrounding the closely contested US presidential election and escalating geopolitical tensions in the Middle East. The political situation is creating a caution among investors, leading them to seek safety in gold. It is worth noting that the recent opinion polls show Democratic candidate Kamala Harris and Republican Donald Trump are in a tight race, which adds to the political uncertainty.
At the same time, the market is seeing a shift away from the “Trump trade,” as Donald Trump’s chances of winning have decreased. This has contributed to lower US Treasury bond yields. The yield on the benchmark 10-year US government bond experienced its biggest drop in two months, while the two-year Treasury note also saw a significant decline.
Investors are anticipating that the Federal Reserve will cut interest rates further, especially as signs indicate a slowing US labor market. These lower yields are not helping the US Dollar strengthen and are instead providing support for gold prices, which do not earn interest.
Moreover, geopolitical tensions are escalating, particularly with Iran warning of a harsh response to recent Israeli strikes, while the US has cautioned Iran against attacking Israel. This situation adds to market uncertainty. Later today, the US will release the ISM Services PMI report, but it is unlikely to impact the market much as everyone awaits the outcome of the presidential election.
Therefore, the uncertainty from the US presidential election and rising geopolitical tensions, combined with lower US Treasury yields and interest rate cut expectations, are boosting safe-haven demand for gold, helping to support its prices in a cautious market environment.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,735.45, showing a modest decline of 0.04% on the day. The metal remains under pressure as it navigates around a crucial pivot point at $2,741.63, and technical indicators are signaling further downside potential if prices break below this level. The Relative Strength Index (RSI) stands at 44, indicating a bearish sentiment without reaching oversold territory.
Immediate resistance is situated at $2,748.35, with further upside targets at $2,753.68 and $2,762.36. For bullish momentum to gain traction, gold would need to surpass these levels convincingly. However, a looming resistance at the 50-day EMA, currently at $2,741.23, could cap gains in the short term.
On the downside, immediate support is found at $2,731.72, followed by stronger floors at $2,725.00 and $2,717.20. A break below the $2,731.72 support may prompt increased selling pressure, potentially driving gold toward the $2,725 target.
Given the downward trend and the pressure from key resistance points, a prudent strategy may involve selling below $2,740 with a take-profit target set at $2,725, while setting a stop loss near $2,750 to manage risk.