GOLD Price Analysis – Aug 05, 2024
Daily Price Outlook
Despite multiple supportive factors like a bearish US dollar and risk-off market sentiment, the gold price (XAU/USD) failed to sustain its early-day upward trend and remained well offered around the 2,421 level, hitting an intraday low of 2,414.
The precious metal faced selling pressure as profit booking kicked in while attempting to recapture all-time highs above $2,480.
However, the losses could be short-lived as the Fed is expected to cut interest rates by more than 100 basis points this year. This undermined the US dollar and helped the gold price stay bid. Additionally, rising tensions in the Middle East are likely to boost safe-haven assets like gold.
Weaker US Economic Data and Rate Cut Expectations Boost Gold Prices
On the US front, the broad-based US dollar struggled to gain momentum and remained under pressure due to the Federal Open Market Committee's dovish stance and a weaker employment report.
According to the CME FedWatch tool, traders expect a 50-basis point (bp) interest rate cut in September and anticipate a reduction of more than 100 bps this year.
This expectation stems from recent weak US economic data, which suggest an economic slowdown and raise doubts about the Fed achieving a "soft landing," where inflation is controlled without causing a recession.
However, the deteriorating labor market and a sharp slowdown in the manufacturing sector have increased hopes for significant rate cuts. The July Nonfarm Payrolls (NFP) report highlighted a slowdown in labor demand and an unexpected rise in the unemployment rate to its highest level since November 2021.
On the data front, US Nonfarm Payrolls increased by 114,000 in July, falling short of the 175,000 expected and down from 179,000 in June.
The unemployment rate rose to 4.3%, the highest since November 2021, and Average Hourly Earnings grew by just 0.2%, below the 0.3% forecast.
Meanwhile, the ISM Manufacturing Purchasing Managers Index (PMI) showed a faster contraction in manufacturing activity, dropping to 46.8 in July. These figures indicate weaker-than-expected labor market conditions and economic activity.
Therefore, the weaker US economic data and increased rate cut expectations have bolstered gold prices, as investors seek safe-haven assets amidst economic uncertainty and potential Fed policy adjustments.
Geopolitical Tensions in the Middle East Boost Gold Prices
Another factor that helps gold stay bid is the rising tensions in the Middle East. US Secretary of State Antony Blinken has warned that Iran and Hezbollah might soon attack Israel, prompting President Joe Biden to meet with the National Security Council.
Israel is considering a preemptive strike on Iran, and Hezbollah has vowed to escalate attacks following the killing of a senior commander.
Hence, the situation is further strained by the assassination of a Hamas leader and ongoing clashes between Hezbollah and Israeli forces. These geopolitical tensions, along with a weaker US dollar and lower bond yields, are likely to support gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,443.92, reflecting a modest increase of 0.05% as investors continue to navigate economic uncertainties.
The metal has maintained a positive trajectory amid geopolitical tensions and a softer U.S. dollar, making it an attractive safe-haven asset.
The 4-hour chart suggests that gold is trading above the pivot point at $2,425.34, indicating a bullish bias as long as prices remain above this level.
The technical landscape reveals that gold is facing immediate resistance at $2,459.16. If the price manages to break through this level, further resistance can be expected at $2,478.38 and $2,499.25.
On the downside, immediate support is seen at $2,404.34, followed by additional support levels at $2,377.99 and $2,353.43.
The Relative Strength Index (RSI) is neutral at 51, indicating that the market is neither overbought nor oversold, and leaving room for further movement in either direction.
The 50-day Exponential Moving Average (EMA) is positioned at $2,432.19, providing a dynamic support level that aligns with the current market sentiment.
A sustained move above this EMA could further reinforce the bullish outlook for gold. Investors might consider entering long positions if gold dips below $2,425, with a target of $2,455 and a stop-loss at $2,405 to mitigate risk.
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EUR/USD Price Analysis – Aug 05, 2024
GOLD Price Analysis – Aug 02, 2024
Daily Price Outlook
Gold price (XAU/USD) prolonged its previous upward trend and drew further bids around the 2,464 level, reaching an intraday high of $2,468. This rebound can be attributed to speculation that the Federal Reserve may begin reducing interest rates in September.
This undermined the US dollar and contributed to the gold price gains. Meanwhile, the risk-off market sentiment driven by growing concerns about the US economy and escalating geopolitical tensions in the Middle East was seen as another key factor that boosted the gold price.
Looking ahead, traders are awaiting upcoming US labor market data, including Nonfarm Payrolls and Average Hourly Earnings for July. The official Employment data will indicate the current status of the labor market, which will influence market speculation for a US Federal Reserve (Fed) rate cut in September.
The US NFP report is expected to show that 175K new workers were hired in July, a decrease from the previous addition of 206K. The Unemployment Rate is expected to remain steady at 4.1%.
US Economic Concerns and Dovish Fed Policy Bolster Gold's Appeal
On the US front, the previously released manufacturing and employment data raised concerns about the economy, boosting risk aversion and supporting gold. Meanwhile, the yellow metal gained further traction due to dovish sentiment surrounding the Federal Reserve's policy.
The Fed kept rates unchanged at 5.25%-5.50% in July and signaled potential rate cuts due to cooling inflation and a moderating labor market. This pressured the US dollar and contributed to gold's gains, as lower interest rates tend to increase the appeal of non-yielding assets like gold.
On the data front, the US ISM Manufacturing PMI dropped to an eight-month low of 46.8 in July, down from 48.5 and below the expected 48.8. Additionally, US Initial Jobless Claims for the week ending July 26 rose to 249K, exceeding the forecast of 236K and the previous week's 235K.
The official Employment data will indicate the current status of the labor market, influencing market speculation for a Fed rate cut in September. The US NFP report is expected to show that 175K new workers were hired in July, a decrease from the previous addition of 206K, while the Unemployment Rate is expected to remain steady at 4.1%.
Investors will also focus on the Average Hourly Earnings data, a key measure of wage growth that fuels consumer spending and drives price pressures.
Annually, wage growth is estimated to have decelerated to 3.7% from the prior reading of 3.9%, with the monthly figure growing steadily by 0.3%. Softer-than-expected wage growth data will diminish fears of persistent inflation, strengthening Fed rate-cut prospects, while stubborn numbers would weaken them.
Thus, the concerns over US manufacturing and employment, dovish Fed policy, and expectations of rate cuts due to cooling inflation and moderating labor market support gold, increasing its appeal as a non-yielding asset.
Rising Middle East Tensions Boost Gold Demand Following Assassination of Hamas Leader
On the geopolitical front, the geopolitical tensions in the Middle East have recently fueled a rise in gold prices. The assassination of Hamas leader Ismail Haniyeh in Tehran, following his attendance at the new president's inauguration, has intensified these tensions.
The New York Times reports that Haniyeh was killed in the Iranian capital, with both Iranian officials and Hamas accusing Israel of orchestrating the attack. This escalation has further bolstered gold's appeal as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,464.83, up 0.45%, as investors look for safe-haven assets amid global economic uncertainties. The 4-hour chart shows that gold has breached key resistance levels, indicating bullish momentum.
The immediate resistance is at $2,469.89, followed by $2,483.50 and $2,503.94. If gold manages to break above these levels, it could potentially test higher targets.
On the downside, immediate support is seen at $2,430.57, with subsequent support at $2,408.91 and $2,386.97. A decline below these levels might trigger a bearish trend, but the overall outlook remains positive as long as gold stays above the pivot point of $2,483.00.
The RSI stands at 72, signaling that the metal is currently overbought, which could lead to a short-term correction before further gains.
The 50-day Exponential Moving Average (EMA) at $2,405.75 further supports the bullish trend. This indicator highlights strong buying interest and suggests that the uptrend might continue, especially if macroeconomic conditions continue to favor risk-averse investments.
In terms of trading strategy, an entry price is recommended above $2,455, with a target take-profit level at $2,483 and a stop-loss set at $2,433. This approach aims to capitalize on the current bullish sentiment while managing risk effectively.
Investors should remain cautious, as geopolitical tensions and economic data releases could influence gold prices.
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EUR/USD Price Analysis – Aug 02, 2024
S&P500 (SPX) Price Analysis – Aug 02, 2024
Daily Price Outlook
S&P 500 (SPX) failed to stop its downward trend and remains under pressure around the 5,446 level, hitting an intraday low of 5,410. This decline is driven by economic uncertainties, dovish Federal Reserve policies, and escalating geopolitical tensions.
Looking ahead, traders are awaiting upcoming US labor market data, including Nonfarm Payrolls (NFP) and Average Hourly Earnings for July.
The official employment data will indicate the current status of the labor market, which will influence market speculation for a potential US Federal Reserve (Fed) rate cut in September.
The US NFP report is expected to show that 175K new jobs were added in July, a decrease from the previous addition of 206K. The Unemployment Rate is expected to remain steady at 4.1%.
US Economic Data and Fed Speculation Intensify S&P 500 Pressure
On the US front, speculation about potential Federal Reserve rate cuts in September has increased pressure on the S&P 500. Recent manufacturing and employment data have heightened concerns about the economy. The ISM Manufacturing PMI dropped to an eight-month low of 46.8 in July, down from 48.5 and falling short of the expected 48.8.
Additionally, US Initial Jobless Claims rose to 249K for the week ending July 26, surpassing both the forecast of 236K and the previous week's 235K.
These data points have heightened risk aversion among investors and affected the S&P 500's performance. The Fed's decision to keep rates unchanged at 5.25%-5.50% in July, along with indications of potential rate cuts due to cooling inflation and a moderating labor market, has contributed to market uncertainty.
If the upcoming Nonfarm Payrolls (NFP) report reveals a lower job addition of 175K for July, compared to the previous 206K, and if the Unemployment Rate holds steady at 4.1%, it could impact the Fed's future rate cut decisions.
Investors will also be closely monitoring the Average Hourly Earnings data, which is expected to show annual wage growth slowing to 3.7% from 3.9%, with a monthly increase of 0.3%. Softer wage growth could reinforce expectations for a Federal Reserve rate cut, while stronger numbers might diminish those prospects.
Middle East Tensions Heighten Instability and Impact S&P 500
On the geopolitical front, tensions in the Middle East have further impacted market sentiment. The assassination of Hamas leader Ismail Haniyeh in Tehran has intensified regional instability. According to The New York Times, Haniyeh was killed after attending the new president's inauguration, with accusations from both Iranian officials and Hamas pointing to Israel.
This escalation has contributed to a risk-off sentiment in global markets, affecting the S&P 500.
S&P 500 - Technical Analysis
The S&P 500 (SPX) index is currently trading at $5,446.69, down 1.37% as investor sentiment shifts amid economic uncertainties and corporate earnings reports. The 4-hour chart reveals that the index is trading below the pivot point of $5,412.99, indicating potential further downside unless key support levels hold.
Immediate support is found at $5,327.98, with subsequent levels at $5,259.24 and $5,190.50. If the index breaches these supports, it may face additional downward pressure.
The immediate resistance stands at $5,502.69, followed by $5,577.16 and $5,665.95. To regain upward momentum, the S&P 500 needs to break through these resistance levels decisively.
The Relative Strength Index (RSI) is currently at 44, indicating that the index is approaching oversold territory. This suggests that while there is bearish sentiment, there might be potential for a rebound if positive economic data or earnings surprises materialize.
The 50-day Exponential Moving Average (EMA) is positioned at $5,530.15, further highlighting the need for a break above immediate resistance to shift the short-term outlook to bullish.
In terms of strategy, buying is recommended above $5,415, with a take-profit target set at $5,500 and a stop-loss at $5,350. This approach allows traders to capitalize on potential rebounds while managing downside risks.
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EUR/USD Price Analysis – Aug 02, 2024
EUR/USD Price Analysis – Aug 02, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend and edged higher around 1.0830, hitting an intra-day high of 1.0838.
This upward movement can be attributed to the hotter-than-expected Eurozone preliminary Harmonized Index of Consumer Prices (HICP) in July, which has increased inflation concerns and led to reduced investor confidence in the euro.
Meanwhile, the US dollar shows a subdued performance as a string of weak US economic data points to a slowdown in the economy. The major currency pair is expected to remain on the sidelines as investors await the United States (US) Nonfarm Payrolls (NFP) data for July, which will be published at 12:30 GMT.
EUR/USD May Rise as US Dollar Weakens on Dovish Fed Guidance and Economic Data
On the US front, the broad-based US dollar failed to stop its downward trend and edged lower, even though the Fed leaned towards policy normalization in September. On Wednesday, the Fed kept interest rates unchanged at 5.25%-5.50% but gave dovish guidance.
Fed Chair Jerome Powell suggested that a rate cut could be possible in September if inflation aligns with expectations and the economy remains strong. Ahead of the US Nonfarm Payrolls (NFP) report, the dollar shows weakness due to recent poor economic data, and the US Dollar Index (DXY) fell to around 104.20.
On the data front, economists estimate that 175,000 new jobs were added in July, down from 206,000 previously, with the Unemployment Rate expected to hold steady at 4.1%. Investors will watch the Average Hourly Earnings data, which is forecasted to show a slowdown in annual wage growth to 3.7% from 3.9%, with a monthly increase of 0.3%.
Additionally, the US ISM Manufacturing PMI report for July revealed a faster-than-expected contraction to 46.8, compared to the estimated 48.8. Initial Jobless Claims for the week ending July 26 rose to 249,000, higher than the expected 236,000 and the previous 235,000.
Therefore, the EUR/USD pair could benefit from the US dollar's weakness and dovish Fed outlook. With weaker US economic data and potential rate cuts, the euro gains an advantage, driving the EUR/USD pair higher as investors react to these conditions.
Euro Faces Pressure Amidst Strong Eurozone Inflation and GDP Growth
On the EUR front, the euro struggles to gain traction despite higher-than-expected Eurozone inflation and GDP growth. The Eurozone's preliminary HICP for July rose to 2.6%, surpassing expectations of 2.4%, and core HICP increased to 2.9% from an expected 2.8%. Additionally, the GDP growth for Q2 was 0.3%, above the anticipated 0.2%.
This combination of persistent inflation and steady growth dampens expectations for European Central Bank (ECB) rate cuts. While some ECB policymakers are open to the possibility of rate cuts, others remain cautious about committing to this path.
Therefore, the EUR/USD pair face pressure as higher inflation and stronger GDP growth in the Eurozone reduce expectations for ECB rate cuts. This limit the euro's upward momentum against the dollar.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.08040, marking a slight increase of 0.05% as markets digest recent economic data and central bank signals. The 4-hour chart indicates that the pair is currently trading just below the pivot point of $1.0819, suggesting a cautious market sentiment.
Immediate resistance is at $1.0849, with further barriers at $1.0870 and $1.0903. For the euro to gain upward momentum, it needs to break decisively above these levels.
On the downside, support is found at $1.0777, with additional support at $1.0741 and $1.0710. A breach of these support levels could lead to a more pronounced decline, especially if US economic data continues to show resilience.
The Relative Strength Index (RSI) is at 45, indicating that the pair is neither overbought nor oversold, providing room for potential moves in either direction.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0834, which the pair is currently trading below, suggesting a bearish outlook in the short term.
Traders are advised to consider selling below $1.08182, with a target take-profit level at $1.07584 and a stop-loss set at $1.08481. This strategy allows traders to capitalize on potential downward moves while managing risk effectively.
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S&P500 (SPX) Price Analysis – Aug 02, 2024
GOLD Price Analysis – Aug 01, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to stop their early-day downward trend and remained well-offered around the 2,435 level, hitting an intra-day low of 2,430. This downward trend can be attributed to the renewed strength of the US dollar, which gained traction due to market expectations that the US economy remains robust, despite the Federal Reserve's dovish guidance on interest rates.
However, the expectation that the Fed will start lowering its key borrowing rates from September helped limit gold's deeper losses. Additionally, the widening Middle East conflicts were seen as another key factor that might help limit gold's losses.
US Dollar Strength and Economic Data Influence Gold Prices Amid Fed Rate Cut Expectations
On the US front, the broad-based US dollar has gained bullish traction, with the US Dollar Index (DXY) rebounding strongly to 104.20 from an intraday low of 103.86, making gold investments less attractive.
However, gold's broader appeal remains firm as US bond yields have tumbled, with 10-year US Treasury yields dropping to near a six-month low of 4.03% amid expectations that the Federal Reserve will start reducing interest rates from September.
This comes after the Fed's dovish guidance, leaving rates unchanged at 5.25%-5.50%, and signaling potential rate cuts due to cooling inflation and a moderating labor market.
On the data front, investors are focusing on the US ISM Manufacturing PMI report for July, expected at 14:00 GMT.
The PMI is anticipated to rise slightly to 48.8 from June’s 48.5, indicating continued contraction in manufacturing. Meanwhile, the Manufacturing Prices Paid index is predicted to grow more slowly at 51.8, suggesting cooling inflation.
Whereas, the key event for the FX market is the US Nonfarm Payrolls (NFP) report on Friday, with an expected hiring of 175K in July, down from 206K. The Unemployment Rate should hold steady at 4.1%, and wage growth is forecasted to slow to 3.7% annually.
Therefore, the rebound in the US dollar and upcoming economic data, like the ISM Manufacturing PMI and Nonfarm Payrolls report, could pressure gold prices. However, expectations of Fed rate cuts and lower US bond yields may support gold's appeal.
Middle East Tensions Boost Gold’s Safe-Haven Appeal Amid Rising Conflict
On the geopolitical front, escalating Middle Eastern conflicts have boosted gold's appeal as a safe-haven. However, the killing of a Hamas leader in Iran has raised fears of a broader conflict, increasing demand for gold.
Meanwhile, the UN Security Council held an emergency meeting amid rising tensions, with calls for peace from Palestine’s deputy UN representative and accusations from Iran against Israel.
In Gaza, an Israeli attack has resulted in deaths and injuries, adding to the already high toll of over 39,000 deaths and 91,000 injuries in the ongoing conflict.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,445.795, showing little change, but the metal remains poised for volatility given the current technical setup. On the 4-hour chart, gold hovers just below a critical pivot point at $2,450.64, a level that could signal a shift in momentum depending on the direction of the next breakout.
Immediate resistance lies at $2,467.87, followed by more formidable barriers at $2,483.50 and $2,503.94. These levels suggest potential zones where sellers might regain control. A sustained move above these resistances could attract momentum buyers, potentially propelling gold to new highs in the short term.
However, with the Relative Strength Index (RSI) at 71, gold is approaching overbought territory, indicating the possibility of a corrective pullback.
On the downside, immediate support is seen at $2,426.59, with additional supports at $2,404.15 and $2,380.90. These levels could serve as potential entry points for buyers should gold prices dip.
The 50-day Exponential Moving Average (EMA) at $2,399.53 suggests a bullish undertone, as the price remains above this moving average, indicating underlying buying interest.
Traders might consider entering a short position below the pivot point of $2,450, targeting a take profit at $2,425. Given the proximity to resistance and the overbought conditions, a stop loss at $2,468 would help manage risk.
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USD/JPY Price Analysis – Aug 01, 2024
USD/JPY Price Analysis – Aug 01, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair has recently shown bullish performance due to several factors. The Japanese Yen (JPY) initially surged, reaching a four-month high of 148.50 against the US Dollar (USD) during early Asian trading hours.
This rally was driven by the Bank of Japan's (BoJ) unexpectedly hawkish policy announcements, including a 15 basis point increase in its short-term rate target to 0.15%-0.25% and a plan to reduce Japanese government bond (JGB) purchases starting in 2026.
These measures improved expectations for wages and inflation, temporarily boosting the Yen. However, the USD/JPY pair's upward trend faced resistance as the Yen's gains were offset by a strengthening USD, which ultimately boosted the USD/JPY pair.
Bullish US Dollar Drives USD/JPY Pair Higher Amid Fed's Stable Rates and Positive Economic Data
On the US front, the US Dollar has recently experienced a bullish trend, influenced by several factors including the Federal Reserve's decision to maintain interest rates at 5.25%-5.50%. This decision has reinforced expectations of a stable and resilient US economy.
Federal Reserve Chair Jerome Powell's remarks about a potential rate cut in September have further fueled investor interest in the USD. The USD's strength is also supported by positive economic data, such as the ADP report showing a rise in private sector employment and wage growth.
As a result, the USD has advanced against other currencies, including the Yen, impacting the USD/JPY pair positively. Traders are now looking to upcoming US economic data, including the ISM Manufacturing PMI and weekly Initial Jobless Claims, for further direction on the USD/JPY pair.
BoJ's Policy Moves and Japan’s Massive Intervention Impact on USD/JPY Volatility
On the BoJ front, the USD/JPY pair was also influenced by the Bank of Japan's recent policy decisions. The BoJ raised its short-term interest rates by 15 basis points to 0.15%-0.25% and announced plans to cut its purchases of Japanese government bonds (JGBs) starting in 2026.
These moves were aimed at addressing rising inflation and a tight labor market.
In July, Japan’s Ministry of Finance intervened significantly in the foreign exchange market, spending ¥5.53 trillion ($36.8 billion) to stabilize the Yen, which had hit its lowest level in 38 years.
This substantial intervention helped temporarily stabilize the Yen. However, the impact on the USD/JPY pair has been mixed.
While the Yen was somewhat stabilized, the USD/JPY exchange rate continues to be influenced by other factors, such as Federal Reserve policies and global economic conditions. This ongoing volatility highlights the complex nature of forex markets and the challenges in managing currency value fluctuations.
USD/JPY - Technical Analysis
The USD/JPY pair is trading at $150.013, down 0.12%, reflecting a period of consolidation as traders assess recent economic data and central bank policies. The currency pair remains under pressure, hovering below the critical pivot point of $150.789 on the 4-hour chart.
This level is crucial for traders seeking to determine the next directional move. The USD/JPY is exhibiting bearish tendencies, influenced by mixed signals from the Federal Reserve's recent statements and ongoing economic uncertainty.
Immediate resistance is positioned at $150.937, with further resistance levels at $152.030 and $153.152. These thresholds are essential for bullish traders looking to capitalize on potential upward momentum, especially if U.S. economic data continues to show resilience.
However, the Relative Strength Index (RSI) at 29 indicates that the pair is in oversold territory, suggesting the potential for a corrective rebound.
On the downside, immediate support is found at $148.047, with additional supports at $147.346 and $146.476. These levels are pivotal for sustaining the recent range-bound trading and could invite buying interest if the pair dips further.
The 50-day Exponential Moving Average (EMA) at $153.878 is significantly above the current price, highlighting the prevailing bearish sentiment unless a strong recovery materializes.
Traders might consider a buy position above $149.050, targeting a take profit at $150.789, while setting a stop loss at $148.069 to manage downside risks.
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AUD/USD Price Analysis – Aug 01, 2024
AUD/USD Price Analysis – Aug 01, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to stop its downward rally and remained under pressure around the 0.6528 level, hitting an intra-day low of 0.6514.
This decline in the AUD/USD pair can be attributed to the renewed strength of the US dollar, which gained traction due to robust economic data and expectations for Federal Reserve policy adjustments.
Despite the Federal Reserve's dovish guidance on interest rates, the US dollar has appreciated, making the Australian dollar less attractive.
Furthermore, the latest inflation report released on Wednesday has reduced expectations that the Reserve Bank of Australia (RBA) will implement another rate hike at its policy meeting next week.
This was seen as another key factor that undermined the AUD currency and contributed to the AUD/USD pair losses.
US Dollar Strength and Anticipated Economic Data Likely to Weaken AUD/USD
On the US front, the broad-based US dollar has seen significant bullish momentum, with the US Dollar Index (DXY) rebounding strongly to 104.20 from an intraday low of 103.86.
This rise in the US dollar is primarily due to market expectations of a robust US economy, despite the Federal Reserve's dovish guidance on interest rates. This has made the Australian dollar less attractive to investors.
On the data front, investors are keenly awaiting the US ISM Manufacturing PMI report for July, set for release at 14:00 GMT.
The PMI is expected to rise slightly to 48.8 from June’s 48.5, indicating continued contraction in manufacturing. Furthermore, the Manufacturing Prices Paid index is predicted to grow more slowly at 51.8, suggesting a moderation in inflation.
The key event for the FX market will be the US Nonfarm Payrolls (NFP) report on Friday, with expectations of a hiring increase of 175K in July, down from 206K. The Unemployment Rate is forecasted to hold steady at 4.1%, while wage growth is expected to slow to 3.7% annually.
Therefore, the US dollar’s strength and anticipated economic data, including the ISM Manufacturing PMI and Nonfarm Payrolls report, are likely to put downward pressure on the AUD/USD pair. The stronger US dollar makes the Australian dollar less attractive to investors.
Mixed Economic Data and Lower RBA Rate Hike Expectations Pressure AUD/USD
On the AUD front, better-than-expected Trade Balance data combined with a softer inflation report has lowered expectations for a Reserve Bank of Australia (RBA) rate hike at the upcoming policy meeting. Economists caution that further rate increases could jeopardize Australia's economic recovery.
Consequently, markets are now pricing in a 50% chance of an RBA rate cut in November, much earlier than the previously anticipated April next year. National Australia Bank (NAB) expects the RBA's cash rate to remain at 4.35% until May 2025, then decline to 3.6% by December 2025, with further decreases in 2026.
On the data front, Australia reported a trade surplus of 5,589 million for June, beating the expected 5,000 million but down from 5,773 million previously. The Judo Bank Manufacturing PMI rose slightly to 47.5 in July, indicating continued but slower deterioration in manufacturing conditions.
Meanwhile, the Monthly CPI increased by 3.8% year-over-year to June, easing from 4% in May, while the RBA Trimmed Mean CPI rose by 3.9% YoY, just under the forecast of 4.0%. Building Permits fell by 6.5% in June, worse than the 3.0% decline expected, but improved from a 3.7% YoY drop in May.
Therefore, the mixed economic data, including a trade surplus and weaker inflation, combined with reduced expectations for an RBA rate hike, has put pressure on the AUD. This could lead to a potential weakening of the AUD/USD pair in the near term.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.65284, reflecting a decline of 0.18% as the currency struggles to maintain upward momentum amidst a strengthening U.S. dollar. On the 4-hour chart, the pair is navigating just below the pivot point at $0.6542, a crucial threshold that could determine near-term direction.
The current price action suggests potential for further declines, especially if the pair fails to reclaim ground above this pivot level.
Immediate resistance is seen at $0.6569, with subsequent hurdles at $0.6610 and $0.6643. These levels are key for bulls looking to reassert control and drive prices higher.
However, with the Relative Strength Index (RSI) at 47, the pair is hovering near the midpoint, indicating a lack of definitive momentum and the possibility of further consolidation.
On the downside, immediate support is located at $0.6493, with additional supports at $0.6459 and $0.6423. These levels are critical for maintaining the current trading range and could attract buyers if the AUD/USD tests these lows.
The 50-day Exponential Moving Average (EMA) at $0.6541 is slightly above the current price, suggesting that bearish pressures may persist unless a decisive move above this average occurs.
Traders might consider entering a short position below $0.65391, targeting a take profit at $0.64931, with a stop loss at $0.65718 to mitigate risk.
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USD/JPY Price Analysis – Aug 01, 2024
GOLD Price Analysis – July 31, 2024
Daily Price Outlook
Gold prices (XAU/USD) continued their early-day upward momentum, staying well-supported around the $2,416 level and reaching an intra-day high of $2,425. The bullish trend in gold is primarily driven by a weaker US dollar, which has lost traction amid expectations of the Federal Reserve beginning a rate-cutting cycle in September.
Additionally, geopolitical tensions have heightened following an Israeli attack on Lebanon's capital in retaliation for a rocket strike in the Golan Heights. The increasing risk of further conflict in the Middle East has bolstered gold's safe-haven appeal.
Furthermore, concerns over sluggish global economic growth have also contributed to the upward pressure on gold prices.
Weakening US Dollar and Mixed Economic Data Boost Gold Prices Amid Fed Rate Cut Expectations
On the US front, the broad-based US dollar declined as many investors believed the Federal Reserve might begin cutting interest rates in September. Although the US dollar saw a brief uptick in response to positive macroeconomic data, the momentum quickly dissipated amid expectations of an imminent rate-cutting cycle.
On the data front, the US reported 8.18 million job openings in June, slightly down from 8.23 million in May but above the expected 8.03 million. Additionally, the Consumer Confidence Index rose to 100.3 in July from a revised 97.8 in June, reflecting continued optimism about the job market.
Therefore, the weakening US dollar and mixed economic data, coupled with expectations of the Federal Reserve beginning rate cuts soon, are likely to support higher gold prices. Investors are turning to safe-haven assets like gold amid uncertain interest rate and economic conditions.
Gold Prices Surge Amid Escalating Middle East Tensions and Global Economic Uncertainty
On the geopolitical front, escalating tensions in the Middle East have driven gold prices to a one-week high. The Israeli military's attack on Beirut, targeting a Hezbollah commander in response to a rocket strike, has heightened fears of a broader conflict.
This increased geopolitical risk, combined with a slight pullback in the US dollar and concerns about a global economic slowdown, has led investors to seek refuge in gold as a safe-haven asset.
Meanwhile, economic data from Europe and China also impacted gold prices. Germany's economy unexpectedly contracted by 0.1% in the second quarter, reversing earlier growth, while China's manufacturing sector shrank for the third consecutive month in July, with the services sector showing only modest growth.
These global economic uncertainties have further enhanced gold's appeal as a protective investment amidst fluctuating economic conditions and geopolitical instability.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2417.835, up 0.28% on the day. The 4-hour chart shows a strong bullish momentum, with prices surpassing the pivot point at $2415.905.
Immediate resistance is noted at $2432.609, with subsequent resistance levels at $2451.437 and $2475.643. On the downside, immediate support is observed at $2385.740, followed by $2369.345 and $2353.647.
Technical indicators suggest a bullish bias. The Relative Strength Index (RSI) is at 64, indicating positive momentum but still below overbought levels, suggesting there is room for further gains.
The 50-day Exponential Moving Average (EMA) stands at $2415, supporting the bullish outlook. The recommended trade setup is to enter a buy limit at $2415, with a take profit target at $2440 and a stop loss at $2400, reflecting a favorable risk-to-reward ratio.
The overall technical picture remains positive for gold as long as prices stay above the pivot point at $2415.905. A sustained move above immediate resistance at $2432.609 could open the path towards the next resistance levels at $2451.437 and $2475.643.
Conversely, a break below immediate support at $2385.740 may signal a potential shift in the short-term trend, targeting the next support levels.
In conclusion, the technical outlook for gold remains bullish above $2415.905.
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GBP/USD Price Analysis – July 31, 2024
EUR/USD Price Analysis – July 31, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend and drew further bids around $1.0842, hitting an intra-day high of $1.0848. However, this rise was driven by stronger-than-expected Eurozone inflation for July and a notable decline in the US Dollar.
The higher Eurozone inflation has fueled speculation about whether the European Central Bank (ECB) might resume its policy easing cycle at the upcoming September meeting.
Concurrently, the US Dollar has weakened in anticipation of dovish guidance from the Federal Reserve, which is expected to keep interest rates unchanged for the eighth consecutive time within the 5.25%-5.50% range. This combination of factors has supported gains in the EUR/USD pair.
Eurozone Inflation Surge Challenges ECB Rate Cuts and Boosts EUR/USD
On the EUR front, the shared currency pair has gained traction as Eurozone inflation surged unexpectedly in July. This has raised doubt on whether the European Central Bank (ECB) will continue its planned policy easing in the September meeting. investors had anticipated that the ECB would cut interest rates two more times this year.
However, the persistent inflation data suggests that returning to the 2% target will face challenges, potentially delaying this goal until 2025.
On the data front, the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) report revealed that both headline and core inflation, which excludes volatile items like food and energy, accelerated more than anticipated.
Headline HICP increased to 2.6%, defying expectations of a drop to 2.4% from June's 2.5%. Core HICP also rose to 2.9%, surpassing the forecast of 2.8%.
Therefore, the unexpected rise in Eurozone inflation and the potential delay in ECB rate cuts have bolstered the EUR/USD pair. The higher inflation figures support the euro, contributing to its strength against the US dollar.
Impact of Weakening USD and Fed Expectations on EUR/USD Pair
On the US front, the broad-based US dollar has lost its traction and edged lower ahead of the Federal Reserve (Fed) policy announcement at 18:00 GMT. This decline is driven by expectations that the Fed will provide dovish guidance on interest rates, keeping them unchanged for the eighth consecutive time in the 5.25%-5.50% range.
Investors are also awaiting the ADP Employment Change data, set for release at 12:15 GMT, which is expected to show 150K new private sector jobs added in July, similar to June’s figure.
Therefore, the US dollar decline, driven by dovish Fed expectations, could boost the EUR/USD pair. Meanwhile, the stable Fed and positive ADP data may further support the euro's strength against the dollar.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.08142, up 0.01% on the day. The 4-hour chart indicates a mixed sentiment, with the pair hovering just below the pivot point at $1.08358. Immediate resistance is identified at $1.08701, followed by $1.09025 and $1.09288.
On the downside, immediate support is seen at $1.08021, with further support levels at $1.07772 and $1.07533.
Technical indicators provide a neutral to slightly bearish outlook. The Relative Strength Index (RSI) is at 42, suggesting the pair is not in overbought or oversold territory, but leaning towards bearishness.
The 50-day Exponential Moving Average (EMA) stands at $1.08530, indicating a potential resistance level if prices attempt to rally.
The recommended trade setup is to enter a sell position below $1.08264, with a take profit target at $1.07765 and a stop loss at $1.08720. This strategy aims to capitalize on the bearish momentum while managing risk effectively.
Overall, the technical outlook for EUR/USD suggests a cautious approach with a slight bearish bias below the pivot point at $1.08358. A sustained move above immediate resistance at $1.08701 could signal a shift towards a bullish trend, targeting higher resistance levels.
Conversely, a break below immediate support at $1.08021 may reinforce the bearish trend, aiming for lower support levels.
In conclusion, traders should monitor the EUR/USD closely for potential bearish opportunities below $1.08358, while remaining vigilant for any signs of a trend reversal at key resistance levels.
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GBP/USD Price Analysis – July 31, 2024
GBP/USD Price Analysis – July 31, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair failed to gain any strong bullish traction and remained subdued around the 1.2835 level, hitting an intra-day low of 1.2820. The subdued trend can be attributed to expectations that the BoE will reduce interest rates in its August meeting for the first time since March 2020.
This anticipation has undermined the GBP and contributed to the GBP/USD pair's losses. However, the bearish US dollar, pressured by expectations for the Fed to begin reducing interest rates, has helped limit the GBP/USD pair's losses.
GBP Weakens on BoE Rate Cut Expectations, but USD Outlook Limits Losses
On the BoE front, the British currency has fallen against most major peers as investors anticipate the BoE might cut interest rates in August for the first time since March 2020. The BoE has maintained a tight monetary policy since December 2021 to combat inflation driven by pandemic-related stimulus.
Market experts believe a 25 basis point cut is challenging, as policymakers are cautious due to high service sector inflation.
On the data front, the UK's annual service inflation reached 5.7% in June, exceeding the BoE’s forecast of 5.1% and doubling the level needed to justify rate cuts. Despite growing expectations for a rate cut, the BoE is unlikely to commit to a clear policy change due to strong wage growth momentum.
Therefore, the anticipated BoE rate cut has weakened the GBP against most major currencies, including the USD. Despite this, the GBP/USD pair's losses are limited by a bearish USD outlook.
GBP/USD Decline Despite USD Weakness and Anticipated Fed Rate Cut
Despite the weakness in the US dollar, the GBP/USD pair is falling, indicating strong selling pressure on the British currency.
The US Dollar Index (DXY), which measures the Greenback against six major currencies, has dropped 0.2% to 104.20 as investors await the Federal Reserve’s (Fed) monetary policy decision, scheduled for 18:00 GMT.
However, the Fed is expected to keep interest rates unchanged at 5.25%-5.50% for the eighth consecutive meeting since July 2023.
However, investors are closely monitoring for signals of future rate cuts. According to the CME FedWatch Tool, a 25 basis point rate cut in September is already anticipated, driven by improved inflation data and moderating labor market conditions.
Despite the weakness of the USD, the GBP/USD pair is declining due to significant selling pressure on the GBP. The anticipated Fed rate cut in September is further exacerbating the GBP’s challenges.
GBP/USD - Technical Analysis
GBP/USD is trading at $1.28266, down 0.06% on the day. The 4-hour chart reveals a bearish trend, with the pair trading below the pivot point at $1.28448. Immediate resistance is located at $1.28885, followed by $1.29327 and $1.29865.
On the downside, immediate support is seen at $1.27819, with further support levels at $1.27566 and $1.27351.
Technical indicators support the bearish sentiment. The Relative Strength Index (RSI) is at 40, indicating that the pair is approaching oversold conditions but still has room for further declines.
The 50-day Exponential Moving Average (EMA) is at $1.28853, reinforcing the bearish outlook as long as the price remains below this level.
The recommended trade setup is a buy limit at $1.28190, with a take profit target at $1.28958 and a stop loss at $1.27792. This setup provides a balanced risk-to-reward ratio, allowing for potential gains while managing downside risk effectively.
The overall technical perspective for GBP/USD remains bearish below the pivot point at $1.28448. A move above immediate resistance at $1.28885 could indicate a shift towards a bullish trend, targeting higher resistance levels.
However, failure to hold above the immediate support at $1.27819 might lead to further declines, targeting the next support levels at $1.27566 and $1.27351.
In conclusion, the technical outlook for GBP/USD suggests continued bearish momentum below $1.28448.
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