GOLD Price Analysis – March 19, 2024
Daily Price Outlook
Gold price has been facing downward pressure and maintaining a bearish trajectory near the 2,150 level over the past four days. This decline is attributed to the hawkish feds outlook mainly because investors believe the Federal Reserve will keep interest rates high, making the US dollar stronger. However, the recent release of robust inflation data has reinforced this expectation, strengthening the conviction that the Fed will maintain its current monetary policy stance.
Moreover, the geopolitical tensions such as the ongoing Russia-Ukraine conflict and disturbances in the Middle East have emerged as potential catalysts for supporting gold prices. Investors often turn to gold as a safe-haven asset during periods of heightened uncertainty.
Impact of US Economic Indicators on Gold and the Dollar
On the US front, the recent rise in inflation in the US suggests that the Federal Reserve might keep interest rates high for longer. This makes the US dollar stronger but lowers the price of gold. Investors are expecting fewer interest rate cuts from the Federal Reserve this year, with a 51% chance of a rate cut in June. Thereby, the lower interest rates usually make a currency less appealing to investors, which could limit gains for the US dollar. On the flip side, this could help gold prices because they often rise when the dollar weakens.
Geopolitical Conflicts and Their Impact on Gold Prices
On the geopolitical front, the ongoing conflicts like the Russia-Ukraine war and Middle East disputes make investors worried, so they invest in safe options like gold, increasing its demand and price. This uncertainty can also cause shifts in other financial markets, further boosting gold prices. Ukraine increased drone attacks on Russian oil refineries, and Israeli Prime Minister Benjamin Netanyahu announced intentions to enter Gaza's Rafah area. These actions add to global uncertainty, affecting oil markets and regional stability.
GOLD (XAU/USD) - Technical Analysis
Gold's price experienced a marginal decrease, trading at $2158.57, down by 0.01%. The precious metal is hovering around pivotal levels as traders and investors gauge market directions amidst fluctuating global economic cues. With a current pivot point at $2163, gold faces immediate resistance at $2169, followed by higher resistance levels at $2176 and $2184. On the downside, support is found at $2153, with further cushions at $2147 and $2139, indicating potential floors for price retracements.
The RSI indicator stands at 47, suggesting a neutral to slightly bearish sentiment among market participants. The 50-day Exponential Moving Average (EMA), positioned at $2153, is closely aligned with the current price, offering a potential support zone that could influence short-term price movements.
A downward trendline extending resistance near the $2160 level hints at a bearish bias below this mark. Investors might consider this a cue for potential sell trades, should the price fail to breach the $2162 resistance. Given the current technical setup, a cautious approach is advised, with a recommended entry price for selling below $2162, targeting a take profit at $2152, and setting a stop loss at $2168. This cautious stance reflects the market's ongoing evaluation of gold's value as it navigates through various economic indicators and geopolitical developments.
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- AUD/USD Price Analysis – March 19, 2024
AUD/USD Price Analysis – March 19, 2024
Daily Price Outlook
Despite the risk-on market sentiment, the AUD/USD currency pair failed to stop its downward trend and remained under pressure due to the combination of negative factors, including the performance of domestic equity markets which experience thin trading activity due to market caution. However, the reason for its downward trend can also be attributed to the bullish US dollar, which has been gaining support on the back of the Fed's hawkish outlook. This signals confidence in a stronger US economy, which can lead to increased investment and optimism among traders and investors, positively impacting market sentiment.
Australian Economic Outlook and Impact on AUD/USD Pair
On the Australian front, the benchmark S&P/ASX 200 Index maintained its upward trend, which was driven by gains in energy and real estate sectors. This uptick in the stock market lend some support to the Australian Dollar (AUD). However, Australia's economy grew less than expected in Q4 2023, sparking speculation about potential rate cuts by the Reserve Bank of Australia later this year.
On the data front, the ANZ-Roy Morgan Australian Consumer Confidence index dipped slightly to 81.7, with Westpac predicting the central bank will likely keep its cash rate steady at 4.35%. ANZ Bank analysts foresee the Reserve Bank of Australia maintaining a cautious stance, although no interest rate adjustments are anticipated.
Therefore, the rise in the S&P/ASX 200 Index support the AUD, but concerns about Australia's economic growth and potential rate cuts could weigh on sentiment.
Chinese Economic Resilience and Impact on AUD/USD Pair
Another factor that could boost the AUD/USD pair was the positive Retail Sales and Industrial Production figures from China, which signal resilience in its economy, boosting global sentiment. This could indirectly benefit the AUD/USD pair, as Australia's economy heavily relies on Chinese demand for its exports, potentially strengthening the Australian Dollar against the US Dollar.
On the China data front, Retail Sales in February surpassed expectations, growing by 5.5% year-on-year, higher than the anticipated 5.2% and the previous 7.4%. Meanwhile, Industrial Production also exceeded forecasts, rising by 7.0% year-on-year, compared to the expected 5.0% and the prior 6.8%. These positive figures indicate resilience in the world's second-largest economy, suggesting potential support for global sentiment.
US Economic Update and Impact on AUD/USD Pair
On the US front, the upward trend in the US dollar, backed by the hawkish Fed outlook, was seen as a key factor that could cap gains in the AUD/USD pair. However, the probability of a rate cut in March is low at 1.0%, increasing to 8.7% in May.
On the data front, the US Michigan Consumer Sentiment Index for March declined to 76.5 from 76.9, defying expectations of no change. Industrial Production edged up by 0.1% in February, contrary to the expected flat reading, but an improvement from the previous month's decline. The Core Producer Price Index held steady at 2.0% year-over-year in February, exceeding the expected 1.9%. US PPI rose by 1.6% year-over-year and 0.6% month-over-month, surpassing forecasts, suggesting heightened inflationary pressures. Therefore, the strengthening US dollar, supported by a hawkish Fed outlook, may limit gains for the AUD/USD pair.
AUD/USD - Technical Analysis
The AUD/USD pair faced a downturn, marking a 0.44% decrease to 0.65217. This movement places the pair in a delicate position as it navigates through significant technical levels. The currency faces its pivot point at 0.6551, suggesting a critical juncture for future price action. Resistance levels are staged at 0.6573, 0.6596, and 0.6624, providing potential barriers to upward movements. Conversely, immediate support at 0.6520, followed by further supports at 0.6479 and 0.6450, illustrates key levels where the pair might find a floor.
The technical outlook is further compounded by an RSI indicator at 26, indicating a strong bearish momentum and potential overselling conditions. The appearance of a bearish engulfing candlestick pattern below the 0.6550 level underscores the selling pressure, suggesting the likelihood of a continued downtrend. Additionally, the 50-day EMA at 0.6574 acts as a near-term resistance level, reinforcing the bearish outlook.
Given these conditions, a cautious approach is recommended for traders, with a proposed sell entry below 0.65368. The suggested take profit level at 0.64828 and a stop loss at 0.65718 aim to manage risk while capitalizing on the pair's current bearish trend.
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GBP/USD Price Analysis – March 18, 2024
Daily Price Outlook
The GBP/USD currency pair has been losing momentum and failed to stop its losing streak. It is currently trading at the 1.2730 level. However, the reason for its downward trend can be attributed to the bullish US dollar, which has been gaining traction in the wake of a hawkish Fed outlook. This outlook was anticipated to maintain heightened interest rates amidst recent inflationary pressures.
Furthermore, the rise in Consumer Inflation Expectations, along with a possible BoE rate cut, suggests weakness for the GBP currency, leading to downward pressure on the GBP/USD pair. In contrast, the strong increase in the Rightmove House Price Index could help limit losses for the GBP currency by indicating resilience in the UK housing market, potentially bolstering investor confidence.
US Economic Data and Interest Rate Speculation
On the US front, the US Dollar rose due to higher US Treasury yields, driven by expectations that the Federal Reserve would keep interest rates high to combat inflation. The recent strong inflation data suggested that policymakers might raise interest rates to manage inflation, indicating a more aggressive stance towards controlling rising prices. Hence, the indication of potential interest rate hikes in response to strong inflation data typically boosts the US dollar as it signals a more robust approach to controlling inflation.
At the time of writing, the likelihood of a rate cut in March is minimal, but it rises for June and July. These developments suggest uncertainty regarding the future direction of US interest rates, potentially influencing the value of the US dollar in international markets.
On the data front, the US Michigan Consumer Sentiment Index for March fell unexpectedly to 76.5, contrary to forecasts for stability. This suggests a potential decrease in consumer confidence. However, Industrial Production in February showed a slight increase of 0.1%, surpassing expectations, indicating a modest recovery in manufacturing activity after a previous decline. Therefore, the unexpected decrease in the US Michigan Consumer Sentiment Index may negatively impact the US dollar due to potential lower consumer confidence. However, the slight increase in Industrial Production could provide some support.
UK Economic Data and Market Speculation
On the UK front, Consumer Inflation Expectations, released by the Bank of England (BoE), rose to 3.0% but fell from the previous 3.3%. This led to speculation in the markets that the BoE might cut interest rates in June, potentially undermining the GBP currency and pushing the GBP/USD pair lower.
On the data front, the Rightmove House Price Index for March showed significant increases, both monthly and annually, indicating robust activity in the UK housing market. Thus, the significant increases in the Rightmove House Price Index for March suggest positive sentiment for the UK housing market, potentially bolstering investor confidence and supporting the GBP/USD pair. Traders are now eyeing upcoming UK market indicators such as the Consumer Price Index, Producer Price Index, and Retail Price Index for further insights into economic trends.
GBP/USD - Technical Analysis
On March 18, the GBP/USD pair saw a modest decline of 0.02%, positioning itself at 1.27332. This minor adjustment reflects the broader context of forex market fluctuations, where currency values are highly sensitive to geopolitical and economic news. For the British pound against the dollar, this particular day's trading activity underscores a cautious sentiment among investors, awaiting clearer signals from market drivers.
The GBP/USD is navigating through critical technical levels. With a pivot point at 1.2746, the currency faces immediate resistance at 1.2782, followed by higher barriers at 1.2825 and 1.2861. On the flip side, support levels are established at 1.2711, 1.2682, and 1.2648, marking thresholds where the pair might find some footing if the selling pressure intensifies.
The Relative Strength Index (RSI) at 36 suggests the pair is nearing the oversold territory, hinting at a potential upward correction if the sentiment shifts. However, the 50-Day Exponential Moving Average (EMA) at 1.2781 hovers near the first resistance level, indicating that the pound's path to recovery might not be smooth.
The trading strategy, considering these technical indicators, involves initiating a sell position below 1.27565, aiming for a take profit at 1.26927, and setting a stop loss at 1.27888, reflecting a tactful approach to navigating the GBP/USD's nuanced technical landscape.
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- GOLD Price Analysis – March 18, 2024
GOLD Price Analysis – March 18, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its previous three-day bearish rally and remained well offered around the 2,147 level. However, the downward trend can be associated with increasing expectations that the Fed will keep interest rates higher for longer, which continues to underpin the US dollar and contributes to gold losses. It is worth recalling that previously released stronger inflation data fueled speculation that the Federal Reserve would keep interest rates high for a longer time. In contrast, geopolitical tensions such as the Russia-Ukraine war and conflicts in the Middle East can support gold prices amid ongoing losses by increasing demand for the precious metal as a safe-haven asset.
Impact of US Economic Indicators on Gold and the Dollar
As we mentioned above that the previously released stronger inflation data reinforced hawkish outlook, suggesting an increase in interest rates to control inflation. Hence, the stronger inflation data and the possibility of the Federal Reserve maintaining higher interest rates underpinned the US dollar and had a negative impact on the gold price. Despite some stability in inflation expectations, the University of Michigan's survey showed a slight decrease in consumer sentiment.
Besides this, the CME Group's FedWatch Tool suggests a 60% chance of an interest rate cut in June, which dampens the US dollar as lower interest rates typically weaken a currency by making it less attractive to investors seeking higher yields. This could provide some support to the gold price due to its inverse relationship with the dollar.
Geopolitical Conflicts and Their Impact on Gold Prices
On the geopolitical front, the ongoing conflicts such as the Russia-Ukraine war and Middle East disputes are impacting gold prices. These uncertainties lead investors to choose safe-haven assets like gold, increasing its demand and price. Additionally, geopolitical tensions can affect other markets, causing investors to move investments to gold, further raising its price.
However, Ukraine's strikes on Russian oil refineries and Israel's actions in Gaza impacts commodity supply, raising prices and inflation concerns. This can increase demand for gold as a hedge against these risks, ultimately driving up gold prices.
GOLD (XAU/USD) - Technical Analysis
On March 18, Gold (XAU/USD) witnessed a slight decline of 0.38%, with the price settling at $2146.975. This movement occurred within a context where the precious metal's price dynamics have been keenly observed by traders seeking to navigate its short-term volatility against a backdrop of broader economic signals.
The technical landscape for gold reveals a nuanced picture. The pivot point stands at $2135, with immediate resistance levels identified at $2167, followed by $2176 and $2187. Conversely, the metal finds support at $2140, with subsequent levels at $2130 and $2119. This configuration suggests a battleground where $2150 emerges as a critical juncture; moving below this level might signal a bearish turn, while holding above it could indicate sustained bullish momentum.
Technical indicators add layers to this analysis. The Relative Strength Index (RSI) at 35 hints at a market that is edging towards being oversold, potentially setting the stage for a rebound. However, the presence of a bearish engulfing candle on the daily timeframe complicates this scenario, introducing the possibility of a downward correction. Meanwhile, the 50-Day Exponential Moving Average (EMA) at $2163, in conjunction with an upward channel on the 4-hour timeframe, generally supports a buying trend.
In conclusion, while the immediate trend for gold seems to favor buyers, especially within the upward channel, the recent bearish patterns observed warrant caution. Traders might consider a strategy of selling below $2150, with a take profit at $2135 and a stop loss also at $2135, carefully navigating the potential for a downward correction while remaining alert to the metal's broader bullish underpinnings.
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- EUR/USD Price Analysis – March 18, 2024
EUR/USD Price Analysis – March 18, 2024
Daily Price Outlook
Despite the renewed strength of the US dollar, the EUR/USD currency pair managed to halt its downward trend and turned bullish around the 1.0895 level. The upward trend can be attributed to positive incoming data, such as strong economic indicators from the Eurozone. Additionally, the indication of a potential rate cut by the ECB due to concerns over inflation could exert downward pressure on the EUR currency as investors anticipate looser monetary policy, potentially leading to decreased demand for the euro.
Impact of ECB Policy and Economic Indicators on EUR/USD Pair
On the EUR front, the European Central Bank (ECB) maintained its record-high borrowing costs in March. However, policymakers hinted at a potential rate cut in the future. ECB policymaker Pablo Hernandez de Cos mentioned that the bank has made progress in reducing inflation and is starting to discuss monetary easing. He suggested that interest rate cuts could begin in June following a decline in Eurozone inflation. This indicates that the ECB is closely monitoring economic conditions and is prepared to take action to support the economy if needed.
Therefore, the ECB's indication of potential rate cuts and monetary easing could exert downward pressure on the EUR currency as lower interest rates typically make a currency less attractive to investors, leading to a potential decrease in its value. This sentiment suggests a possible negative impact on the EUR currency in the near future.
Moving ahead, the upcoming release of Eurozone economic indicators and the ZEW Survey from Germany and the Eurozone, followed by the FOMC interest rate decision, could create volatility in the EUR/USD pair. Positive data may support the EUR, but the FOMC decision could also impact market sentiment, leading to potential trading opportunities.
Impact of FOMC Interest Rate Decision on EUR/USD Pair
On the US front, investors are eagerly awaiting the Federal Open Market Committee's (FOMC) decision on interest rates this Wednesday. It's widely anticipated that the FOMC will maintain the current rate, which is already at a 22-year high. This decision reflects the Fed's cautious approach, as they want to ensure inflation settles around the 2% target before considering any rate cuts. This steady stance might strengthen the US Dollar and create challenges for the EUR/USD pair, potentially impacting currency markets.
On the US data front, the University of Michigan's Consumer Sentiment Index dropped to 76.5 in March, slightly lower than expected. This indicates that consumers are feeling less optimistic about the economy. However, their expectations for inflation over the next year and five years remained unchanged. On a positive note, US Industrial Production rebounded in February, increasing by 0.1% compared to a decline in January. This suggests that manufacturing and other industrial activities are starting to recover.
Therefore, the cautious approach of the Federal Reserve and the mixed US economic data could lead to a stronger US Dollar, putting downward pressure on the EUR/USD pair.
EUR/USD - Technical Analysis
On March 18, the EUR/USD pair remained stable with a negligible decline, marking its position at 1.08879. This stability comes amidst a trading environment that meticulously watches for shifts in global economic indicators and central bank policies, potentially influencing the currency pair's trajectory.
The technical setup for EUR/USD indicates a closely contested battle between bulls and bears around the pivot point of 1.0898. Resistance levels are established at 1.0917, 1.0945, and 1.0964, delineating the hurdles that the euro needs to overcome to sustain an upward momentum against the dollar. Support levels, meanwhile, are situated at 1.0875, with further cushions at 1.0843 and 1.0820, acting as safety nets against a potential downturn.
The technical indicators provide a more nuanced view of the pair's future direction. The Relative Strength Index (RSI) at 39 suggests that the pair is nearing the oversold territory, possibly indicating an upcoming shift in momentum. The 50-Day Exponential Moving Average (EMA) at 1.0916 closely aligns with the first resistance level, underscoring a critical threshold for the currency pair. A notable breakout at the 1.08970 level, as indicated by the upward trendline, points towards the initiation of a selling trend.
In summary, the EUR/USD's current stance is delicately poised at a crucial juncture. While the pair shows potential for a selling trend following the breakout, traders should consider a strategic approach: selling below 1.08971, targeting a take profit at 1.08544, and setting a stop loss at 1.09177. This setup reflects a cautious optimism, tempered with the recognition of underlying volatility and the need for precise, risk-managed entries and exits.
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S&P500 (SPX) Price Analysis – March 15, 2024
Daily Price Outlook
The S&P 500 index ascended to unprecedented heights, buoyed by a string of positive economic indicators and growing investor confidence. The momentum from recent gains carried forward, propelling the index to close at a historic peak. This bullish sentiment was partly fueled by stronger-than-expected inflation and retail sales figures for February, signaling a robust economic resurgence and bolstering investor faith in corporate profitability.
Influence of US Economic Indicators:
The recent surge in 10-year US Treasury yields to 4.2%, coupled with an increase in the US Dollar, underscores heightened economic optimism. However, this rise in yields and the dollar's strength pose challenges, potentially elevating borrowing costs and affecting corporate earnings. Notably, February's Producer Price Index (PPI) and Retail Sales data have captured investor attention, offering insights into inflationary trends and consumer spending patterns.
An unexpectedly high PPI suggests escalating inflationary pressures, raising concerns over quicker Federal Reserve interest rate hikes. Conversely, a downturn in Retail Sales might indicate dwindling consumer expenditure, potentially dampening economic outlooks and pressuring the S&P 500 index.
Geopolitical Dynamics and Market Impact:
Amidst economic data, geopolitical unrest, particularly the Israel-Gaza conflict, introduces additional market uncertainty. Such tensions can provoke market volatility as the global community gauges the conflict's implications on stability and economic progression. With the humanitarian toll in Gaza escalating, and despite Germany's affirmation of Israel's adherence to humanitarian law, the persisting conflict may sway investor sentiment, influencing the S&P 500's trajectory.
S&P 500 - Technical Analysis
The S&P 500 experienced a modest downturn on March 15, closing at 5150.47 with a 0.29% decrease. This movement places the index below its significant pivot point of 5218.00, signaling a potential shift in market sentiment. Immediate resistance levels are identified at 5185.18, with subsequent hurdles at 5231.37 and 5279.23 that may cap any rebound efforts. Conversely, the index finds robust support at 5089.72, with additional safety nets at 5058.36 and 5006.75, crucial for preventing further dips.
Technical indicators suggest a cautiously optimistic outlook. The Relative Strength Index (RSI) stands at 57, indicating a market that is neither overbought nor oversold, suggesting potential for movement in either direction. Meanwhile, the 50-day Exponential Moving Average (EMA) at 5068.70 provides a solid base, hinting at underlying market strength. Based on these observations, a strategic approach could involve entering long positions above 5130, targeting the pivot point at 5218 for profit-taking, while setting a stop loss at 5090 to manage risk effectively.
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- GOLD Price Analysis – March 15, 2024
GOLD Price Analysis – March 15, 2024
Daily Price Outlook
On Friday, Gold (XAU/USD) witnessed a rebound, nearly recouping losses from the prior day, as it approached the $2,150 mark. Despite this resurgence, gold's trading range has been consistent since the week's start, as the market awaits further clarity on the Federal Reserve's potential rate adjustments. The focus is squarely on the forthcoming FOMC policy meeting slated for the upcoming Tuesday.
Anticipation of Fed's Monetary Policy Stirs Market Speculation
Recent data revealing a spike in the US Producer Price Index (PPI) has sparked debates over the Fed's timing on interest rate modifications, suggesting potential delays. Nonetheless, market sentiment still leans towards an anticipated rate cut by the Fed in June, buoyed by a dip in US Treasury yields, offering some reprieve to gold's non-yielding nature. However, a slight rise in the US Dollar could temper significant gains for the metal.
Key Economic Indicators and Their Impact on Gold Prices
Investors are gearing up for the release of crucial US economic indicators, including the Empire State Manufacturing Index, Industrial Production, and the Prelim Michigan Consumer Sentiment Index. These data points, along with US bond yield movements, are expected to shape the dollar's trajectory, influencing gold's value. Moreover, global risk sentiment is likely to generate short-term trading avenues for gold, although XAU/USD appears on the verge of concluding a three-week ascension, deviating from a record high achieved the previous Friday.
Economic Data Highlights and Market Reactions
Thursday's announcement indicated a higher-than-anticipated rise in US producer prices for February, potentially prompting the Fed to sustain elevated interest rates, impacting gold prices negatively. The Labor Department's reports on Initial Jobless Claims and Retail Sales further nuanced market perspectives, emphasizing a consumer spending slowdown amidst inflationary pressures. Despite this, there's a 60% probability, as per the CME Group's FedWatch Tool, of a rate cut in June, offering some stability to gold prices. The geopolitical tension, marked by Russia's tactical movements, alongside the awaited US economic data and the upcoming FOMC meeting, remains crucial in determining gold's short-term direction.
GOLD (XAU/USD) - Technical Analysis
On March 15, Gold witnessed a slight increase in its value, ticking up by 0.22% to $2165.285, a move reflecting a nuanced investor approach towards the precious metal amidst fluctuating market conditions. Positioned just below a pivotal $2178 mark, the price dynamics suggest a crucial juncture where the future direction could be determined.
Resistance levels are closely watched at $2181, extending to $2200 and $2219, which could potentially cap gains if the bullish momentum sustains. Conversely, the metal finds its immediate support at $2141, with further layers at $2125 and $2111, essential for halting any downward pressures. The trading indicators offer a mixed yet slightly optimistic narrative; the Relative Strength Index (RSI) at 51 hints at a balanced market sentiment with a lean towards buying, while the 50-day Exponential Moving Average (EMA) at $2150 serves as a critical support level, underpinning the potential for an upward trajectory.
The current technical outlook posits a guarded yet positive scenario for gold, recommending a buying strategy above $2153 to capitalize on potential upticks towards the pivot level. A take-profit point is advised at $2178, aligning with near resistance, to secure gains from anticipated movements. Conversely, a stop-loss order at $2140 is prudent, safeguarding against unexpected market reversals.
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- EUR/USD Price Analysis – March 15, 2024
EUR/USD Price Analysis – March 15, 2024
Daily Price Outlook
The EUR/USD pair has experienced a notable retreat into the 1.0800 range, a departure from its recent stance in the 1.0900, largely influenced by recent U.S. economic indicators. These indicators have cast doubts on the Federal Reserve's (Fed) pace of interest rate reductions.
U.S. Economic Data Signals a Warmer Economy
The U.S. Producer Price Index (PPI) for February reported an unexpected 1.6% year-over-year increase, surpassing the anticipated 1.1% and January's revised 1.0% rise. This, coupled with lower-than-expected Initial Jobless Claims and a modest 0.6% increase in Retail Sales, underscores the persistent economic heat in the U.S., suggesting prolonged higher interest rates—a scenario that dampens EUR/USD prospects while buoying the U.S. Dollar due to its appeal for foreign capital inflow.
Diverse Views from ECB Policymakers on Interest Rate Cuts
A flurry of public appearances by European Central Bank (ECB) officials has revealed divergent opinions on the timing of interest rate reductions. While ECB President Christine Lagarde pinpointed June for a reevaluation of rates, comments from the Bank of France's Francois Villeroy de Galhau introduced the possibility of an April cut, indicating a split within the ECB between those favoring earlier versus summer rate cuts.
Subsequent remarks from ECB officials, including Robert Holzmann, Yannis Stournaras, Klaas Knot, and Vice-President Luis de Guindos, further highlight the debate over the ECB's rate cut timeline. Stournaras's support for a spring rate reduction and Knot's June prediction, alongside de Guindos's anticipation of decisive information by June, reflect the ongoing deliberation on ECB's monetary policy path.
EUR/USD - Technical Analysis
On March 15, the EUR/USD pair witnessed a subtle decrement, registering a 0.09% fall to conclude at 1.08734. This minor shift underscores the currency pair's current predicament as it grapples with sustaining momentum amidst the ebbs and flows of market sentiment. Nudging slightly below the pivotal point of 1.0902, the EUR/USD now teeters at a critical juncture, poised for either resurgence or further decline based on forthcoming market cues.
The set resistance levels at 1.0930, escalating to 1.0966 and further stretching to 1.1010, mark significant hurdles that must be overcome to signal a shift towards a bullish outlook. Conversely, the terrain below is scaffolded by immediate support at 1.0842, extending down to 1.0800 and 1.0762, which stand ready to arrest any additional dips, safeguarding the pair from deeper retractions.
The trading environment is punctuated by the Relative Strength Index (RSI) dipping to 30, a marker possibly indicating the pair's drift into oversold territory. This, coupled with the pair's brush against the 50-day Exponential Moving Average (EMA) at 1.0904, paints a nuanced picture of the tug-of-war between buyers and sellers. The confluence of these technical indicators, alongside the pair's price action relative to the pivot point, encapsulates the delicate balance steering EUR/USD's short-term trajectory.
In navigating this landscape, a prudent strategy emerges: initiating sells below 1.08993 with an objective to lock in gains at 1.08420, while placing a stop loss at 1.09333 to curtail potential losses.
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GOLD Price Analysis – March 14, 2024
Daily Price Outlook
Despite increasing geopolitical tensions in the Middle East, the price of gold (XAU/USD) failed to extend its previous gains and turned bearish around below the $2,165 mark. This bearish trend can be attributed to the Fed's hawkish outlook, which tends to support the US dollar and contributing to gold's losses. The Federal Reserve might delay interest rate cuts due to high inflation in the US, as rising inflation often leads central banks to avoid lowering rates to prevent further inflationary pressure.
Apart from this, the current market mood favoring riskier investments has pushed down gold prices. Investors are opting for assets with higher potential returns rather than safer options like gold, causing its prices to drop. However, this trend might not last long. If tensions increase in the Middle East, demand for safe-haven assets like gold could rise again, leading to a rebound in its price. Additionally, uncertainty about the Federal Reserve's future interest rate decisions could also prevent gold prices from falling significantly lower.
Impact of High Inflation on the US Economy and Financial Markets
On the US front, the broad-based US dollar got stronger because people think the Federal Reserve might not cut interest rates soon. This is because a recent report showed that prices are going up in the US, meaning inflation is staying high. When inflation is high, the Fed might not want to lower interest rates because that could make inflation even higher. The expectation of delayed interest rate cuts by the Federal Reserve, due to high inflation, led to a stronger dollar and limited upward movement in gold prices.
On the data front, the latest US Consumer Price Index (CPI) report indicated a slight increase in inflation, with February's year-over-year rise at 3.2%, slightly higher than expected. The Core CPI, which excludes volatile food and energy prices, was also higher than anticipated at 3.8%. This suggests that inflation is going up, which can impact how much people can buy and the overall economy.
Impact of Risk-On Market Sentiment on Gold Prices
On the other hand, the risk-on-market sentiment has played a major role in undermining the safe-haven gold price as investors may prefer riskier assets over safe havens like gold, reducing its appeal and leading to price declines. However, the risk-on market sentiment was backed by the upbeat US inflation data and Fed's hawkish outlook, which positively impacts market sentiment by signaling confidence in the economy, leading to increased investment and a stronger dollar.
Geopolitical Tensions Drive Interest in Gold
On the geopolitical front, investors are expressing ongoing worries about the potential fallout from the prolonged conflicts between Russia and Ukraine, as well as the Israel-Hamas tension. These concerns are driving interest in precious metals like gold, which are traditionally seen as safe-haven assets during times of uncertainty. Russian President Vladimir Putin's recent remarks, suggesting readiness for a nuclear war if the US were to send troops to Ukraine, have escalated tensions further. Meanwhile, in the Middle East, Israeli attacks on locations including a UN aid distribution center in Rafah and Hezbollah fighters in the Bekaa Valley are exacerbating regional instability.
Therefore, the ongoing conflicts between Russia and Ukraine, along with tensions in the Middle East, are driving interest in gold as a safe-haven asset as geopolitical instability typically increases demand for gold, which could lead to an increase in its price.
GOLD (XAU/USD) - Technical Analysis
On March 14, gold experienced a slight decline, closing at $2,168.425, marking a 0.29% drop. This movement occurred amid mixed signals from technical indicators and key price levels that offer insights into potential future movements.
The pivot point for gold stands at $2,178, acting as a critical threshold for determining the metal's short-term direction. Resistance levels are mapped out at $2,197, $2,219, and $2,244, indicating potential points where upward momentum might face obstacles. Conversely, support levels are identified at $2,151, $2,131, and $2,111, which could provide floors for price dips.
Technical indicators present a nuanced view. The Relative Strength Index (RSI) at 54 suggests a neutral to slightly bullish sentiment among traders. Meanwhile, the 50-day Exponential Moving Average (EMA) at $2,146 supports an underlying upward trend. However, a double top formation near the $2,178 mark and a bearish engulfing candlestick pattern on the 4-hour timeframe signal caution, indicating possible selling pressure ahead.
Given these dynamics, the overall trend leans towards a cautious bearish outlook in the immediate term. Traders might consider a selling strategy below $2,177, targeting a take-profit level at $2,150, with a stop loss set at $2,196 to manage risk.
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USD/JPY Price Analysis – March 14, 2024
Daily Price Outlook
The USD/JPY currency pair has been on an upward trend, finding support around the 147.85 level. The reason for its upward trend can be attributed to speculation surrounding the Bank of Japan's (BoJ) monetary policy stance. BoJ Governor Ueda's concerns over subdued consumption and the potential delay in rate hikes have strengthened demand for USD/JPY as investors favor higher-yielding assets.
Furthermore, diminishing expectations for a June rate cut by the Federal Reserve, amidst persistent inflation concerns, have boosted the US dollar against the Japanese yen. This shift supports the USD/JPY pair's upward trajectory, influenced by the evolving Fed policy outlook. The resilience of US Treasury yields, coupled with expectations of prolonged higher interest rates by the Fed, bolsters the bullish sentiment for the USD/JPY pair.
Market participants will focus on upcoming US Retail Sales data for February, as positive figures would indicate strong consumer spending, supporting expectations for unchanged Fed interest rates. This scenario could maintain the USD/JPY pair's upward momentum.
Concerns Over Spending and Deflation Impact BOJ Policy
On the BOJ front, Governor Ueda is worried that people aren't spending enough money, which is holding back economic growth. Even though the economy is improving slightly, the lack of spending remains a significant issue. Because of this, people speculate that the Bank of Japan might wait longer before raising interest rates. The Finance Minister also mentioned that Japan isn't ready to declare victory over deflation yet.
Therefore, the uncertainty surrounding the Bank of Japan's actions is leading to fluctuations in the USD/JPY pair. Markets remain uncertain about when the Bank will decide to raise interest rates, given subdued consumption and ongoing deflation concerns.
Focus on US Economic Data and Federal Reserve Policy
On the US front, the likelihood of the Federal Reserve lowering interest rates has decreased, as indicated by the CME Fedwatch tool. This shift occurred following the release of the inflation report for February. A reduced probability of a rate cut implies that the Federal Reserve may maintain higher interest rates for an extended period. This typically benefits the US dollar.
Investors are paying close attention to US economic data, especially the upcoming Retail Sales report. They want to get more clues about what the Federal Reserve might do with its monetary policy.
USD/JPY - Technical Analysis
On March 14, the USD/JPY pair edged higher, trading up by 0.13% at 147.94. This subtle yet significant move highlights the ongoing fluctuations and investor sentiment in the currency markets.
The pair is currently navigating through a critical technical landscape, with the pivot point set at 147.62. This level serves as a baseline for determining the near-term market direction. Resistance is observed at 148.20, 149.10, and 149.82, marking potential hurdles for upward movements. Conversely, support levels are established at 146.72, 145.89, and 144.76, offering cushions that could arrest any downward trends.
The technical indicators provide a balanced perspective. The Relative Strength Index (RSI) is at 53, suggesting a neutral market momentum with a slight tilt towards buying interest. Meanwhile, the 50-day Exponential Moving Average (EMA) at 148.23 closely aligns with the first resistance level, indicating a pivotal point for future price action. Given this setup, a cautiously bearish outlook emerges, recommending a selling strategy below 148.206, with a take-profit target at 146.722 and a stop loss at 148.880.
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