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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EUR/USD Price Analysis – March 13, 2024
Daily Price Outlook
Despite the dovish remarks from ECB members, the EUR/USD currency pair managed to regain strength and turned bullish around the 1.0930 level. However, the upticks in the pair can be attributed to the bearish US dollar, which is losing its traction in the wake of increasing bets that the Federal Reserve (Fed) will begin cutting interest rates at its June policy meeting. The US dollar initially gained some support from the warmer US CPI report, but it was short-lived.
On the flip side, the report of Germany's Harmonized Index of Consumer Prices meeting expectations is likely to have a neutral impact on the EUR currency, as it reflects stability in inflation levels, which was already anticipated by the market. Meanwhile, the comments from ECB members regarding potential interest rate cuts have the potential to weaken the EUR currency, as they suggest a dovish stance from the ECB in response to inflation concerns, which could lead to lower interest rates.
Looking forward, traders are cautious, awaiting cues from upcoming US Core Producer Price Index (PPI) and Retail Sales data scheduled for release on Thursday.
Impact of ECB Policy Expectations on the EUR/USD Pair
On the Euro front, recent developments suggest a mixed outlook. The German Harmonized Index of Consumer Prices remained steady at 2.7% year-over-year, meeting expectations. However, there are indications from ECB officials, including Governing Council member François Villeroy de Galhau, of a potential interest rate cut in the spring. This is in response to progress in addressing inflation concerns.
Bank of France Governor Robert Holzmann believes a rate cut is more likely in June, citing the need for confirmed projections amidst high uncertainty. Governor Pierre Wunsch of the National Bank of Belgium also emphasized the ECB's need to consider a rate cut, despite challenges posed by wage inflation and price rises for services.
Therefore, the mixed outlook, with potential interest rate cuts from the ECB, weaken the EUR as uncertainty surrounding inflation and differing views among officials could lead to downward pressure on the EUR/USD pair.
Impact of Fed Policy Expectations on the EUR/USD Pair
Despite reports of higher consumer prices, the US dollar is under pressure as investors increasingly believe the Federal Reserve will start cutting interest rates as early as June. This belief, coupled with a generally positive market sentiment, is weakening the US dollar. The latest US Consumer Price Index (CPI) report showed 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%. These numbers suggest a continued rise in inflation, impacting consumer purchasing power and the overall economy.
Therefore, the weakening US dollar could strengthen the EUR/USD pair as investors anticipate Fed interest rate cuts, boosting the euro's value against the dollar amid positive market sentiment.
EUR/USD - Technical Analysis
In the current trading environment, the EUR/USD pair has shown a slight decline of 0.01%, positioning itself at 1.0921. This minor adjustment mirrors the broader market's cautious anticipation of economic indicators and geopolitical events, influencing investor sentiment towards the Euro against the US Dollar.
Technical analysis reveals that the pair is trading just above a critical pivot point at 1.0914, hinting at underlying support that might pave the way for potential upward movement. Immediate resistance levels are identified at 1.0979, 1.1043, and 1.1106, marking potential hurdles the pair might face in its ascent. Conversely, support is observed at lower thresholds of 1.0868, 1.0817, and 1.0762, serving as vital markers that could trigger a bearish trend if breached.
The Relative Strength Index (RSI) stands at 51, suggesting a relatively balanced market with a slight tilt towards buying pressure. The 50-day Exponential Moving Average (EMA) at 1.0899 further supports the notion of a bullish bias, provided the pair maintains its stance above this moving average.
Conclusion: The EUR/USD pair exhibits potential for a bullish trend, conditional on sustaining above the pivot point of 1.0914. An entry price for buying is recommended above 1.09146, targeting a take profit at 1.09772, with a stop loss placed at 1.08731 to mitigate risks associated with unforeseen market movements.
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- GBP/USD Price Analysis – March 13, 2024
GBP/USD Price Analysis – March 13, 2024
Daily Price Outlook
The GBP/USD currency pair maintained its previous day's winning streak, hitting an intraday high of $1.2800 mark. The upward movement was supported by delayed BoE rate cut bets, underpinning the GBP and lending support to the GBP/USD pair. Furthermore, the bearish US dollar, pressured by increasing bets that the Federal Reserve (Fed) will begin cutting interest rates at its June policy meeting, was seen as another key factor that kept the GBP/USD pair higher.
Impact of BoE Rate Expectations on GBP/USD Pair and Market Sentiment
On the UK front, the Bank of England (BoE) is expected to maintain higher interest rates for a longer period. This anticipation provided additional support to the GBP/USD currency pair, which had already been bolstered by bets against a BoE rate cut. Essentially, investors were betting that the BoE would delay any potential rate cuts, which strengthened the GBP against the US dollar.
Hence, the expectations of prolonged higher interest rates from the Bank of England (BoE) create a positive outlook for the GBP, as it signifies confidence in the UK economy, attracting foreign investment and strengthening the currency.
Impact of Fed Expectations on GBP/USD Pair and Market Sentiment
Despite reports of higher consumer inflation, the increasing bets that the Federal Reserve (Fed) will begin cutting interest rates as early as June are putting pressure on the US dollar. Additionally, a generally positive sentiment in the market is also weighing on the US dollar's strength.
On the US front, the broad-based US Dollar remained bearish and continuously lost ground despite the warmer US CPI report. On the data front, the latest report on the US Consumer Price Index (CPI) shows a 3.2% year-over-year increase in February, slightly higher than the expected 3.1%. This indicates a slight uptick in inflation. Additionally, the annual Core CPI, which excludes volatile food and energy prices, came in at 3.8%, slightly above the anticipated 3.7%. These numbers suggest a continued upward trend in inflation, which could impact consumers' purchasing power and the overall economy.
Despite the warmer US CPI report, the GBP/USD pair maintained its bullish momentum, supported by expectations of Fed interest rate cuts and a generally positive market sentiment, which weakened the US dollar. Moving ahead, traders are cautious ahead of the highly anticipated two-day FOMC monetary policy meeting starting next Tuesday.
GBP/USD - Technical Analysis
The GBP/USD pair experienced a nominal decrease of 0.01%, landing at 1.27795, indicating a market teetering on the brink of directional bias. This slight movement reflects the broader market's ongoing assessment of economic data releases and geopolitical developments, impacting the Sterling against the Dollar.
The currency pair hovers just below its pivot point at 1.2781, suggesting that it is at a critical juncture. Resistance levels at 1.2824, 1.2857, and 1.2893 delineate the potential challenges ahead for bullish momentum. Conversely, immediate support is established at 1.2747, with further cushions at 1.2713 and 1.2672, marking essential levels that could influence a bearish turn if the pair dips below these markers.
The Relative Strength Index (RSI) at 47 points towards a market equilibrium, with a slight inclination towards selling pressure. Meanwhile, the 50-day Exponential Moving Average (EMA) at 1.2760 supports a cautious bullish outlook, suggesting a potential for upside movement if the pair can consolidate above this average.
Conclusion: The GBP/USD's current positioning indicates a neutral to slightly bearish trend, with an opportunity for reversal should it maintain above 1.27526. An advisable strategy would be to enter a buy position above this threshold, targeting 1.28055 for profit-taking, while placing a stop loss at 1.27207 to mitigate potential losses.
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- GOLD Price Analysis – March 13, 2024
GOLD Price Analysis – March 13, 2024
Daily Price Outlook
Despite the warmer US CPI report, indicating an increase in consumer prices, the price of gold (XAU/USD) continued to rise and remained steady above the $2,160 level. This upward trend was driven by the weakening US dollar, which did not strengthen even as US Treasury bond yields increased following the slightly higher-than-expected US consumer inflation for February. However, this lack of dollar strength could be attributed to the increasing belief among market participants that the Federal Reserve (Fed) will begin cutting interest rates at its June policy meeting.
In addition to this, the risk-off market sentiment, pressured by geopolitical risks, was seen as another key factor that provided support to the safe-haven gold. Meanwhile, cautious sentiment continue in the market ahead of the highly anticipated two-day FOMC monetary policy meeting starting next Tuesday. This keeps investors cautious, leading them to invest in gold as a safe-haven asset.
US Dollar Remains Weak Despite Inflation Report; Fed Rate Cut Speculation Grows
Despite the hot US inflation report, which fueled speculations that the Federal Reserve may delay interest rate cuts, the broad-based US dollar failed to gain much support and remained under pressure on the day. This is due to the growing acceptance that the Federal Reserve (Fed) will start cutting interest rates at the June policy meeting. According to the CME Group's FedWatch tool, there's about a 70% chance that the US central bank will lower interest rates at its June meeting, as per market expectations.
On the data front, the latest report on the US Consumer Price Index (CPI) shows a 3.2% year-over-year increase in February, slightly higher than the expected 3.1%. This indicates a slight uptick in inflation. Additionally, the annual Core CPI, which excludes volatile food and energy prices, came in at 3.8%, slightly above the anticipated 3.7%. These numbers suggest a continued upward trend in inflation, which could impact consumers' purchasing power and the overall economy.
Therefore, the impact of the US inflation report on the gold price was muted, as the dollar remained weak. In the meantime, the expectations of Fed rate cuts in June offset concerns about rising inflation, keeping gold attractive as a safe-haven asset. Moving on, policymakers need to closely monitor these developments to assess the need for any adjustments to monetary policy in order to maintain price stability and economic growth.
Geopolitical Developments Boost Gold's Safe-Haven Appeal
On the geopolitical front, the ongoing discussions to resolve the Israel-Hamas conflict showing no progress, which is creating uncertainty in the market. Also, Houthi rebels in Yemen, backed by Iran, plan to increase military actions during Ramadan in support of Palestinians and in response to Gaza. Furthermore, the US has conducted defensive strikes against Houthi targets following anti-ship missile attacks. These events are escalating global tension, prompting investors to seek safety in assets like gold.
Therefore, geopolitical tensions, including stalled talks in Gaza and Houthi escalations in Yemen, along with US strikes, bolster the safe-haven appeal of gold, attracting investors amid uncertainty.
GOLD (XAU/USD) - Technical Analysis
In today's market, gold prices exhibited a marginal decline of 0.01%, settling at $2159.745. The subtle movement in price points towards a cautious stance among investors, reflecting on broader market sentiments and economic indicators. The pivot point for today is set at $2198, suggesting a tentative balance in trader expectations.
Technical indicators for gold present a nuanced picture. The Relative Strength Index (RSI) stands at 49, hovering near the midpoint of the scale, which indicates a balanced field between buying and selling pressures. Meanwhile, the 50-day Exponential Moving Average (EMA) at 2139 underscores a potentially bullish undercurrent, as current prices flirt closely with this level.
The immediate resistance and support levels further delineate the battleground for gold's short-term trajectory. Resistance is first encountered at $2197, with subsequent ceilings at $2227 and $2252. Conversely, the asset finds immediate support at $2131, with additional safety nets at $2111 and $2090.
Conclusion: The overall trend leans towards bullish above the $2155 mark, encouraging a strategic entry point for buyers. A targeted take profit at $2197 and a stop loss set at $2132 are recommended to navigate the anticipated volatility.
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USD/CAD Price Analysis – March 12, 2024
Daily Price Outlook
The USD/CAD currency pair continued its bearish trend, remaining well offered around the 1.3472 level. However, the downward trend can be attributed to the bearish US dollar, which was being pressured by increasing speculation of a Fed rate cut in June. However, the bearish US dollar was seen as a key factor that kept the USD/CAD pair down. Furthermore, crude oil prices rose as geopolitical tensions in the Middle East continued to spur concern. Hence, higher crude oil prices typically support the Canadian dollar, as Canada is a major exporter of oil, which often leads to a decrease in the USD/CAD pair.
In contrast to this, Bank of Canada Governor Tiff Macklem's statement that it's premature to ease monetary policy despite cooling inflation could be seen as negative for the Canadian dollar. It suggests interest rates may not rise soon, weakening the currency.
Impact of Bank of Canada's Interest Rate Decision on USD/CAD Pair
On the Canadian front, the Bank of Canada (BoC) recently decided to keep its interest rate steady at 5.0%, which was widely anticipated. BoC Governor Tiff Macklem emphasized during a press conference that they're not ready to lower interest rates yet. He explained that they want to see more progress in controlling core inflation before considering any rate cuts. Macklem said they need to wait longer for higher rates to work. So, the market now expects a rate cut in July instead of June, making the Canadian Dollar stronger against the US Dollar.
Therefore, the delay in expected rate cuts by the Bank of Canada has strengthened the Canadian Dollar (CAD), causing the USD/CAD pair to face downward pressure as the CAD gains strength.
Impact of US Labor Market Data and Fed's Dovish Remarks on USD/CAD Pair
On the US front, the labor market data for February showed mixed results, failing to meet the Fed's expectations for a strong recovery. Moreover, dovish remarks from Federal Reserve officials last week reinforced the anticipation of a rate cut in June. Fed Chair Powell mentioned during his semiannual testimony that while more confidence is needed before lowering rates, they're not far from considering it. Currently, around 70% odds of a rate cut by June are being priced in by money markets, according to the CME FedWatch tool. This uncertainty about future interest rates is influencing the market sentiment regarding the US Dollar.
Therefore, the anticipation of a rate cut by the Fed in June, due to mixed US labor market data and dovish remarks, could weaken the US Dollar (USD) against the Canadian Dollar (CAD).
USD/CAD - Technical Analysis
In today's trading, the USD/CAD pair experienced a minor decline of 0.07%, settling at 1.34724. This slight movement reflects a cautious sentiment in the market, underscoring the pair's struggle for direction amid conflicting economic indicators from both the United States and Canada. Analyzing the four-hour chart, the pair currently trades just above the pivot point of 1.34587, indicating a precarious balance between buyers and sellers.
Resistance levels identified at 1.35140, 1.35453, and 1.35696 denote potential obstacles for any bullish momentum. Conversely, immediate support lies at 1.34522, with further cushions at 1.34130 and 1.33766 to arrest any downward movement. The Relative Strength Index (RSI) standing at 42 points towards a slight bearish bias but remains distant from the oversold territory, suggesting room for downward movement without immediate risk of reversal.
The 50-day Exponential Moving Average (EMA) at 1.35099, currently above the price, serves as a short-term resistance level, reinforcing the bearish outlook. The observation of multiple Doji candles below the pivot point hints at market indecision, yet leans towards a potential bearish shift given the current positioning.
Given these technical insights, the USD/CAD pair exhibits a cautious bearish sentiment. Traders might consider entering a sell position below 1.34829, targeting a take profit at 1.34528, with a stop loss set at 1.35143 to mitigate risk. This strategy aligns with the observed market dynamics and technical indicators, suggesting a slight selling pressure might prevail in the near term.
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- GOLD Price Analysis – March 12, 2024
GOLD Price Analysis – March 12, 2024
Daily Price Outlook
Despite the bearish US dollar, the gold price (XAU/USD) failed to extend its previous nine-day upward rally and lost some of its traction around the $2,174 level. However, the reason for its downward trend can be attributed to the ongoing cautious sentiment in the market ahead of latest US consumer inflation figures. Investors are awaiting this data for more clues about the Federal Reserve's (Fed) rate-cut path before placing fresh directional bets. In contrast to this, the increasing acceptance that the US central bank will cut its key interest rate at the June policy meeting leads to a further decline in the US dollar, which may help the gold price to limit its losing streak.
Impact of Fed Comments and CPI Report on USD and Gold Prices
On the US front, the broad-based US dollar has been showing bearish performance, struggling to regain strength. This could be attributed to previously released mixed data, increasing speculation of a Fed rate cut in June. Powell suggested that rates might be lowered later in the year if inflation remains around 2%. On the previously released data front, a spike in the US unemployment rate suggested a possible change in the Federal Reserve's policy.
After a mixed US jobs report, more people expect the Federal Reserve to lower interest rates. This has caused the yield on the 10-year US government bond to drop to a five-week low near 4.0%. Traders now think there's a 70% chance of a rate cut by June, which is making people who support the US dollar more careful and is helping gold prices.
On the upcoming data front, the crucial US CPI report is expected to influence expectations about the Federal Reserve's rate cuts, boosting XAU/USD. The headline CPI is predicted to rise to 0.4% in February, with the yearly rate staying at 3.1%. Meanwhile, the Core CPI is forecasted to ease to a 3.7% YoY rate from the previous 3.9%.
However, Fed Chair Jerome Powell, in his recent testimony, indicated that high inflation might delay any rate cuts. If the upcoming US CPI data shows high inflation, the Fed may signal fewer rate cuts, leading to a drop in gold prices. Conversely, a lower CPI reading could suggest an early rate cut, boosting gold prices. This data is likely to create volatility and short-term trading opportunities for gold.
Therefore, the speculation of a Fed rate cut and comments from Powell have weakened the USD, boosting gold prices. Traders are now pricing in a 70% chance of a rate cut by June, supporting gold further.
Market Sentiment and Gold Price Stability Ahead of CPI Data
On the other hand, the risk-off market sentiment limited additional losses in gold prices. Investors awaited key U.S. Consumer Price Index data, expected to influence the Federal Reserve's interest rate cut plans in 2024. On the geopolitical front, there were reports of Israeli forces attacking people seeking aid in Gaza, causing injuries or deaths. Meanwhile, the World Health Organization provided aid to al-Shifa Hospital in Gaza, which is facing shortages. Furthermore, Israel also carried out strikes near Lebanon's Baalbek.
Hence, the geopolitical tensions, including Israeli attacks in Gaza and strikes near Lebanon, alongside restrictions at Al-Aqsa Mosque, heighten investor concerns, boosting the safe-haven appeal of gold.
GOLD (XAU/USD) - Technical Analysis
Gold's performance on March 12 exhibited a mild decline, with the price dropping to $2176.425, marking a 0.29% decrease. This subtle shift in value places the precious metal in a precarious position as it navigates the volatile markets. The four-hour chart indicates that the pivot point stands at $2196.42, suggesting a critical juncture for future price movements. Notably, gold seems to be grappling with resistance levels at $2227.22, $2251.98, and $2277.02, which could hinder its upward trajectory. Conversely, support levels at $2156.18, $2130.57, and $2111.27 provide a cushion, potentially halting further declines.
The Relative Strength Index (RSI) reads at 66, indicating that gold is teetering on the edge of the overbought zone. This positioning suggests caution, as prices could be prone to a reversal if investors decide to lock in profits. Moreover, the 50-day Exponential Moving Average (EMA) at $2132.845 reinforces the bullish undertone observed over recent sessions, yet the current price movement hints at potential selling pressure below the $2195 level.
Considering these dynamics, the overall trend for gold leans towards a cautious outlook. Investors are advised to consider a selling strategy below $2185, targeting a take profit at $2130, with a stop loss set at $2215. This approach aligns with the observed resistance and suggests that, despite gold's resilience, market sentiment may pivot towards bearish tendencies in the short term.
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- GOLD Price Analysis – March 11, 2024
AUD/USD Price Analysis – March 12, 2024
Daily Price Outlook
Despite the bearish US dollar, the AUD/USD currency pair was unable to halt its previous session's losing streak and is still showing sluggish performance around 0.6609. However, the sluggish bias could be attributed to the decrease in the NAB Business Confidence Index, suggesting weakened business sentiment. This could potentially impact the Australian dollar negatively due to reduced investor confidence. Furthermore, the risk-off market sentiment tends to undermine riskier assets like the Australian Dollar (AUD) and has contributed to the AUD/USD pair's losses.
In contrast, the increased trade surplus indicates a strong economy, but the slightly lower-than-expected GDP growth might temper the positive impact on the Australian dollar. Furthermore, the abolition of import tariffs is likely positive for the Australian dollar as it enhances trade efficiency, reduces business costs, and signals economic liberalization, boosting investor confidence in the currency. Meanwhile, the mixed data from China, with CPI beating expectations but PPI falling short, have a neutral impact on the Australian dollar as it reflects both positive and negative economic indicators from Australia's largest trading partner.
Impact of Australian Economic Data on AUD/USD Pair
On the data front, Australia's NAB Business Confidence Index dipped to 0 in February, down from 1 in the previous month, while the NAB Business Conditions Index improved to 10 from 7 (revised from 6). Meanwhile, the Australian Trade Balance surplus rose to $11,027 million in February, slightly below the market's expected increase to $11,500 million. GDP grew by 0.2% QoQ in Q4 2023, slightly below expectations of 0.3%, with YoY expansion at 1.5%, surpassing expectations of 1.4% but falling short of the previous 2.1% growth.
Moreover, Treasurer Jim Chalmers announced the government's plan to abolish nearly 500 import tariffs from July 1, 2024, aiming to streamline trade and save businesses over A$30 million annually in compliance costs.
Therefore, the mixed economic data, including the drop in business confidence and the slight GDP growth miss, weaken the Australian dollar (AUD) against the US dollar (USD). However, the tariff abolition announcement provide some support, potentially limiting the AUD/USD downside.
Impact of Chinese Economic Data on AUD/USD Pair
On the China front, China's Consumer Price Index (CPI) rebounded in February, rising by 0.7% year-over-year after a 0.8% decline in January, surpassing market expectations. Monthly CPI inflation also exceeded expectations, increasing by 1.0% compared to a 0.3% rise in January. However, the Producer Price Index (PPI) dropped by 2.7% year-over-year in February, a larger decline than the 2.5% seen in January and below market expectations.
Therefore, the mixed data from China, with CPI surpassing expectations but PPI weakening, could influence the AUD/USD pair. The CPI rebound might offer support to the Australian dollar (AUD) against the US dollar (USD), while concerns over deflationary pressures from the weaker PPI could weigh on sentiment.
Impact of US Economic Data and Geopolitical Tensions on AUD/USD Pair
On the US front, the weakening US dollar could support the AUD/USD pair as disappointing macro data fuels expectations of rate cuts. Federal Reserve Chair Jerome Powell hinted at potential rate reductions if inflation hovers around 2%, further dampening the dollar. Meanwhile, the upcoming US CPI report could intensify rate cut expectations, impacting dollar. Powell's remarks on inflation's influence on rate cuts add to market uncertainty, creating short-term trading opportunities for gold.
On the geopolitical front, ongoing tensions in the Middle East have created a risk-off market sentiment. This has negatively impacted riskier assets like the Australian Dollar (AUD), keeping the AUD/USD pair under pressure. However, the situation intensified with ongoing Israeli attacks on Gaza, resulting in a high number of casualties and injuries. This instability has contributed to a cautious market environment, affecting currencies like the Australian Dollar.
AUD/USD - Technical Analysis
The Australian Dollar against the US Dollar (AUD/USD) saw a minor uptick, registering a 0.03% increase to 0.66156. The currency pair's movement remains constrained, signaling a cautious approach among traders. A detailed look at the four-hour chart reveals a critical pivot point at 0.66162, which the AUD/USD hovers just below, indicating a delicate balance in market sentiment.
Resistance levels are outlined at 0.66506, 0.66856, and 0.67296, suggesting potential hurdles should the pair attempt an upward movement. Conversely, support is established at lower thresholds of 0.65733, 0.65348, and 0.64777, marking zones where declines may be arrested. The Relative Strength Index (RSI) at 57 denotes a neutral market condition, neither overbought nor oversold, supporting the potential for either direction.
Additionally, the 50-day Exponential Moving Average (EMA) at 0.65746, slightly below the current price, could offer a foundation for support. However, the presence of several Doji candles below the pivot point of 0.6616 hints at indecision and a potential tilt towards slight selling pressure.
Given these dynamics, the overall outlook suggests a cautious bearish sentiment for the AUD/USD pair. Traders might consider a selling strategy below the pivot point of 0.66161, targeting a take profit level at 0.65755, with a stop loss placed at 0.66357. This recommendation aligns with the observed technical patterns and the current stance of the market indicators.
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GOLD Price Analysis – March 11, 2024
Daily Price Outlook
Gold price (XAU/USD) consolidating within its bullish range and remained well bid around $2,190 marks. However, the reason for its upward trend can be attributed to a combination of factors, including risk-off market sentiment, which was being pressured by geopolitical tensions, along with expectations that the global economy could weaken in 2024. The risk-off market sentiment underpinned the gold price as it recently hit the fresh record high touched on Friday. Furthermore, the upticks in the gold price were bolstered by increasing expectations that the Federal Reserve (Fed) will start cutting interest rates in June amid downbeat US unemployment data.
Impact of US Economic Indicators on Gold Prices
It's worth noting that the recent rise in the US unemployment rate has led to expectations that the Federal Reserve will lower interest rates in June. This has kept US dollar low and contributed to the gold gains. This data was released on Friday showed the US unemployment rate reaching its highest level in two years, further increasing the likelihood of a rate cut by the Federal Reserve. This uncertainty and risk aversion are likely to continue supporting gold prices in the near term.
On the data front, the US economy added 275,000 new jobs in February, surpassing the estimated 200,000, although January's numbers were revised down to 229,000 from 353,000. Meanwhile, the wage growth, measured by Average Hourly Earnings, increased by 4.3% annually, slightly lower than January's 4.4%, missing market expectations. However, the possibility of a Fed interest rate cut in May rose to 30% after the report, but June remains the most anticipated timing for any such action. Consequently, the yield on the 10-year US government bond fell to a one-month low, dragging the US Dollar down and boosting gold prices.
Therefore, the increased likelihood of a Fed rate cut due to higher unemployment, are expected to continue supporting gold prices in the near term amid uncertainty and risk aversion.
Impact of Geopolitical Tensions and Economic Concerns on Gold Prices
On the geopolitical front, the ongoing tensions in the middle east and concerns about a global economic slowdown in 2024 are driving investors towards the safe-haven XAU/USD, supporting gold prices. It should be noted that the reports from UNRWA highlight widespread hunger in Gaza as Ramadan begins, emphasizing the need for an immediate ceasefire. Israeli forces reportedly barred Palestinians from entering al-Aqsa Mosque in East Jerusalem, sparking tensions. Ismail Haniyeh of Hamas blames Israel for the failure to secure a ceasefire before Ramadan, emphasizing the desire for peace.
Therefore, the ongoing geopolitical tensions and economic concerns may continue to drive investors towards the safe-haven XAU/USD, supporting gold prices amid uncertainty and the need for stability.
Looking forward, traders are awaiting the release of the latest US consumer inflation figures on Tuesday as it will play a key role in influencing expectations about the Fed's rate-cut path.
GOLD (XAU/USD) - Technical Analysis
Gold's market stance on March 11, with a price holding steady at $2,179.18, reflects a moment of equilibrium amidst fluctuating market sentiments. The technical landscape, as delineated by a 4-hour chart perspective, places the pivot point at $2,196.42, indicating a critical juncture for future price movements. Resistance levels are charted progressively higher at $2,227.22, $2,251.98, and $2,277.02, suggesting potential barriers to upward momentum. Conversely, support is firmly established at $2,156.18, with additional safety nets at $2,130.57 and $2,111.27, delineating zones where buying interest may resurge.
The Relative Strength Index (RSI) at 74 veers into the overbought territory, hinting at potential for a price pullback, while the 50-Day Exponential Moving Average (EMA) at $2,120.30 provides a bullish backdrop, underscoring a prevailing uptrend that has buoyed gold prices above recent averages.
Given these dynamics, the current technical outlook suggests a cautious approach to gold trading. Entry for a sell position is advised below $2,179.18, with a take-profit target set at approximately $2,130.57, and a stop-loss order should be placed to limit potential losses at around $2,196.42.
EUR/USD Price Analysis – March 11, 2024
Daily Price Outlook
Despite the renewed strength of the US dollar, the EUR/USD currency pair managed to regain strength and turned bullish around the 1.0948 level. However, the upticks in the pair can be attributed to the Eurozone's steady GDP growth in Q4 2023, which is generally positive for the EUR currency. Furthermore, the ECB's decision to maintain high borrowing costs and Lagarde's cautious tone can also be viewed as positive for the EUR currency.
In contrast to this, the US dollar regained its strength and flashed green at the start of the new week, possibly due to the upbeat US Nonfarm Payrolls data. This was seen as one of the key factors that kept the lid on any additional gains in the EUR/USD pair.
Looking forward, traders are cautious, awaiting cues from upcoming US and German February CPI inflation data, due on Tuesday. US Retail Sales will be in focus on Thursday. These events could influence Fed officials' decisions on the timing of potential interest rate cuts.
Eurozone Economic Outlook and ECB Policy's Impact on EUR/USD Pair
On the Euro front, the European Central Bank (ECB) decided to keep borrowing costs at their highest levels, which was largely anticipated. The ECB's President, Lagarde, was careful in her statements, highlighting the need for more evidence before considering rate cuts.
Furthermore, Eurostat's data for the fourth quarter of 2023 showed that the Eurozone's Gross Domestic Product (GDP) remained unchanged month-on-month and grew by 0.1% year-on-year. This means that the Eurozone's economy didn't decline further but also didn't show strong growth, indicating a period of stability but with cautious optimism for future improvements.
Therefore, the ECB's cautious stance and stable GDP growth in the Eurozone could strengthen the EUR against the USD, reflecting confidence in the Eurozone economy compared to the US.
US Labor Market Strength and Rate Cut Expectations Impact on EUR/USD Pair
On the US front, the February Nonfarm Payrolls data showed a robust labor market with 275K jobs added, surpassing expectations. However, the Unemployment Rate increased to 3.9%, and wage growth slightly dipped to 4.3%. Despite this, Fed Chair Powell indicated that the central bank is cautious about cutting rates, but the prospect of a rate cut in June weakened the dollar against the Euro.
Therefore, the strong US jobs report and potential rate cut expectations weakened the Greenback against the Euro, reflecting market sentiment favoring the Euro over the US Dollar.
EUR/USD - Technical Analysis
The EUR/USD pair experienced a slight decline of 0.04%, positioning the price at 1.09358 on March 11. This subtle movement reflects the currency pair's current stability within a narrowly defined trading range. On the 4-hour chart, the technical landscape highlights a pivot point at 1.09812, indicating the critical level for short-term price direction. Resistance is mapped out at successive levels of 1.10323, 1.10802, and 1.11369, outlining potential hurdles for upward price movements.
Conversely, support levels are placed at 1.09149, 1.08431, and 1.07940, suggesting zones where the market may find a floor to rally. The Relative Strength Index (RSI) at 61 nudges towards the upper end of the neutral range, hinting at a slightly bullish momentum, but without veering into overbought territory. The 50-Day Exponential Moving Average (EMA) at 1.08825 further reinforces the bullish sentiment, as the current price remains above this indicator, suggesting underlying strength in the upward trend.
Considering these factors, a strategic entry for a long position is recommended above 1.09253, with an aim for a take-profit at 1.09852, and setting a stop-loss at 1.08885 to protect against potential downturns.
GBP/USD Price Analysis – March 11, 2024
Daily Price Outlook
The GBP/USD pair failed to halt its downward rally and still showed a bearish bias around the 1.2847 level. However, the reason for its downward trend can be attributed to the renewed strength of the US dollar, which recently dropped on the back of downbeat US unemployment data. Although it gained traction in the wake of upbeat US Nonfarm Payrolls data. Apart from this, the losses in the GBP/USD pair were further bolstered by the narrowing policy divergence between the Federal Reserve and the Bank of England, exerting downward pressure on the pound.
Investors are also awaiting employment data from the United Kingdom (UK), including the ILO Unemployment Rate (3M) and Employment Change figures, scheduled for release on Tuesday. Additionally, the Consumer Price Index data for February will also be in the spotlight.
Interest Rate Cut Speculation Pressures GBP/USD Amid Positive UK Economic Sentiment
On the UK front, investors are predicting that the Bank of England (BoE) might start cutting interest rates as early as May, with expectations of three more cuts throughout 2024. This news is driving a bearish tone for the GBP/USD pair as markets anticipate the Federal Reserve (Fed) to cut interest rates before the BoE, potentially narrowing the policy gap between the two central banks.
Federal Reserve Chair Jerome Powell recently hinted at potential rate cuts this year, dependent on inflation aligning with the Fed's 2% target. Therefore, the anticipation of interest rate cuts by the Bank of England, coupled with the possibility of earlier cuts by the Federal Reserve, is creating a bearish outlook for the GBP/USD pair, narrowing the policy gap between the two central banks.
In contrast to this, the positive sentiment from the UK's Spring Budget announcement, coupled with forecasted stronger economic growth, is generally positive for the GBP.
US Dollar Rebounds on Upbeat Nonfarm Payrolls Data
On the US front, the broad-based US dollar managed to stop its losing streak and regained its strength at the start of the week. The previous losses in the dollar were mainly driven by the rise in the US unemployment rate, leading to expectations that the Federal Reserve will lower interest rates in June. However, the release of upbeat US Nonfarm Payrolls data helped the US dollar to gain traction.
On the data front, the US economy added 275,000 new jobs in February, beating expectations, but January's figures were revised down. Wage growth was slightly lower than expected. The chance of a Fed rate cut in May increased to 30% after the report, but June is still expected to be the most likely time for any such action.
On the positive side, the US Nonfarm Payrolls in February rose by 275,000, surpassing January's 229,000 and beating the expected 200,000. However, US Average Hourly Earnings (YoY) grew by 4.3%, slightly below both the estimated and previous reading of 4.4%. Monthly, there was a 0.1% increase, lower than the anticipated 0.3% and the previous month's 0.5%.
Therefore, the US dollar rebounded after a losing streak, buoyed by better-than-expected Nonfarm Payrolls. However, concerns about a Fed rate cut persist, impacting GBP/USD with uncertainty and potential volatility.
GBP/USD - Technical Analysis
The GBP/USD pair's subtle decline to 1.28512, marking a 0.03% decrease on March 11, reveals a cautious market sentiment. Analyzing the 4-hour chart, the currency pair's technical structure showcases a pivot point at 1.28308, which serves as a baseline for short-term directional biases. Resistance levels identified at 1.28950, 1.29903, and 1.30912 delineate potential ceilings that could cap upward movements, whereas support levels at 1.27654, 1.26955, and 1.25977 suggest areas where buying interest might re-emerge.
The Relative Strength Index (RSI) hovering around 70 signals that GBP/USD is approaching overbought territory, suggesting that a corrective pullback might be on the horizon. Meanwhile, the 50-Day Exponential Moving Average (EMA) at 1.26657 underscores a bullish undertone, having maintained a trajectory above this moving average.
Given these observations, the trading strategy recommends initiating a sell position below 1.28939, targeting a take-profit level at 1.27836, while employing a stop loss at 1.29503 to mitigate potential losses.