GOLD Price Analysis – Feb 09, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its declining streak and remained well offered around the 2,031 level. However, the reason for its bearish rally can be tied to the risk-on market sentiment, which was backed by the upbeat US economy data. The risk-on tone in the market tended to undermine safe-haven gold prices. Furthermore, the broad-based US dollar bullish bias was seen as another key factor that kept the gold price lower. The incoming stronger US macro data, along with hawkish remarks by a slew of influential FOMC members, suggested that the Federal Reserve (Fed) will keep interest rates higher for longer. This boosted the US dollar and pushed the precious metal under pressure.
Impact on Gold Prices of Reduced Expectations for Fed Rate Cuts
The broad-based US dollar maintained its upward trend and remained steady below its three-month peak as uncertainty loomed over the Fed's stance on interest rate cuts. Meanwhile, the previously released strong US economic data and upbeat remarks from Fed officials are reducing expectations for aggressive rate cuts this year, which is bearish news for gold. Fed Chair Jerome Powell's recent statement dashed hopes for a rate cut in March.
Therefore, the news of reduced expectations for rate cuts and Fed's cautious stance lifted the US dollar, dampening gold's appeal as an alternative investment, likely leading to further downward pressure on gold prices.
Impact of Strengthening US Dollar and Reduced Likelihood of Fed Rate Cut on Gold Prices
Despite ongoing conflicts in the Middle East, the market sentiment gained momentum, driven by positive earnings and jobs data. Meanwhile, the Fed and ECB are cautious about rate cuts, given inflation concerns. The probability of a March Fed rate cut dropped to 16.5%. Therefore, the strengthening U.S. dollar and reduced likelihood of a Fed rate cut may diminish the appeal of gold as a safe-haven asset, potentially leading to downward pressure on gold prices.
GOLD (XAU/USD) - Technical Analysis
In the world of precious metals, Gold (XAU/USD) presents a complex narrative, with the latest figures showing a nominal decrease of 0.04%, placing the metal at $2,034.37. As we delve into the four-hour chart, the pivot point at $2,016.84 stands as a sentinel for price movements, marking the battleground between bulls and bears.
The immediate resistance level breathes at $2,042.63, with subsequent layers of resistance standing at $2,064.12 and a more formidable $2,087.77. These levels are the gates that bulls must charge through to signal a stronger market conviction. On the other hand, the gold price finds its support at $1,994.27, with further potential safety nets at $1,969.55 and $1,945.90, which could catch a bearish descent.
The Relative Strength Index (RSI) hovers around the midpoint, indicating a market in balance, while the MACD's positive divergence from its signal line at 0.200 against -0.365 suggests a simmering bullish momentum under the surface.
The 50-Day EMA at $2,033.06 serves as both a support and resistance level, acting as a pivot for gold's short-term trajectory. A close below this level might entice bears, signaling a potential downtrend.
Yet, within this technical framework lies a cautionary tale; the 50 EMA's proximity poses a resistance challenge, where a conclusive close below could spur a trend reversal favoring the bears.
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S&P500 (SPX) Price Analysis – Feb 09, 2024
Daily Price Outlook
The global market sentiment maintained its upward trend and is still flashing green on the day. This can be witnessed by the strong performance of the S&P 500 index, which crossed a significant milestone as it surged the historic 5,000 mark. However, this upward trend underscores the strength of the market, driven by several factors including a robust earnings season, easing inflation data, and a resilient economy. Despite facing challenges, the S&P 500 has managed to climb steadily, reflecting investors' confidence in the market's long-term prospects.
Federal Reserve's Impact on S&P 500 Trajectory
The Federal Reserve, the central bank of the United States, has a major impact on the S&P 500 and other financial markets. Recently, top Fed officials like Jerome Powell and Thomas Barkin have been careful about making changes to interest rates, even though the economy is doing well. Powell has been saying that they need to be cautious and won't be cutting rates right away. This has made investors less worried and caused bond yields to go up, like the 10-year Treasury yield hitting a two-week high of 4.169%. Investors closely follow the Fed's statements because they can influence market sentiment and perceptions of the value of stocks in the S&P 500.
Geopolitical Concerns Impacting Stock Market Stability
The global stock market is doing really well, but there are some worries about conflicts happening between Israel and Hamas. The recent conflict between Israel and Hamas has raised concerns about the humanitarian situation and regional stability. The US has cautioned Israel against making significant military actions without careful planning. Such geopolitical tensions can unsettle the market as investors become nervous.
S&P500 (SPX) - Technical Analysis
The S&P 500 Index continues to flirt with the precipice of bullish momentum, evidenced by a modest uptick of 0.06%, placing the market valuation at $4,997.92. A closer examination of the four-hour chart reveals a pivot point at $4,926.25, a crucial fulcrum around which trading strategies might pivot.
Immediate resistance presents itself at $5,005.83, challenging traders to break through to confirm continued bullish intent. Further resistance benchmarks are found at $5,053.58 and an ambitious $5,137.14, levels that may either cap the rally or, if surpassed, signal a new leg of bullish fervor.
Conversely, the support mechanism activates at $4,878.50, with additional safety nets at $4,794.95 and $4,747.20, which stand ready to absorb any bearish blows.
The Relative Strength Index (RSI), currently at a relatively high 70, suggests that the market is approaching overbought territory, yet there is no immediate indication of a reversal. The MACD's current value at 3.41, versus its signal at 41.06, presents a mixed narrative, hinting at a potential plateau in momentum.
The 50-day Exponential Moving Average (EMA) precisely aligns with the current market price at $4,997.92, reinforcing the index's strength at these levels.
A notable chart pattern is the index's closure above the significant $4,985 level. This development near the all-time high underscores the market's robust appetite for risk and sets the stage for potential acquisition trends.
In summary, the S&P 500's technical outlook suggests a strong buy signal above the $4,986 mark, targeting profits at $5,040 with a safety net stop loss placed at $4,950. This bullish outlook is predicated on the market maintaining its current trajectory and breaking past immediate resistance levels with conviction.
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EUR/USD Price Analysis – Feb 09, 2024
Daily Price Outlook
The EUR/USD currency pair continued its downward trend and remained well offered around the 1.0768 level. However, the declines could be associated with bets that the ECB will start cutting rates in April, which undermined the EUR currency and contributed to the EUR/USD pair's losses. Furthermore, the broad-based US dollar renewed strength, supported by positive economic data as well as a hawkish Fed stance, was seen as another key factor that kept the EUR/USD pair lower.
Fed's Stance and US Bond Yields Impact EUR/USD Dynamics
Traders seems cautious to place any strong position because they are waiting for more clarity from the Federal Reserve regarding interest rates. Some key members of the Federal Open Market Committee (FOMC) are saying no to lowering rates quickly in 2024 because they think the economy is doing well. As a result, US bond yields remain high and boosted the US dollar. Moving ahead, traders eyes are on upcoming US consumer inflation data to see what it reveals about future Fed actions, which will influence short-term USD movements and EUR/USD trends.
Therefore, this hawkish tone may strengthen the US dollar against the euro, as it suggests a delay in rate cuts and boosts bond yields, potentially leading to a stronger USD.
ECB's Cautious Stance Supports Euro amid Rate Cut Expectations
On the other hand, People are betting that the European Central Bank (ECB) will start lowering interest rates in April, which could limit the gains for the euro. Despite this, European Central Bank officials are working to ease expectations of early interest rate cuts, which is supporting the EUR/USD pair to limit its losses.
It should be noted that Governing Council member Pierre Wunsch says we should wait for wage data before cutting rates to hit the inflation target. ECB board member Isabel Schnabel also says we need to be patient, as inflation might rise again. The ECB won't change rates before June, despite a possible economic downturn. Traders are unsure about betting on the euro's rise due to expectations of a rate cut later.
EUR/USD - Technical Analysis
The EUR/USD pair is navigating cautious waters, having edged down a slight 0.07%, currently trading at $1.07721. The minor retreat suggests an ongoing indecision among traders as the pair hovers near the pivot point of $1.07510, which could set the tone for subsequent movements.
Looking at key price levels, there’s immediate resistance at $1.08210, with further ceilings at $1.08613 and $1.09420 that may stifle any bullish impulses. On the support side, $1.07080 stands as the first buffer against bearish pressure, followed by $1.06272 and $1.05546, critical levels where buyers may potentially re-emerge.
Technical indicators offer a nuanced perspective: the RSI is neutral at 48, and the MACD shows a positive value of 0.00037, albeit the signal stands at -0.00048, hinting at a possible shift in momentum.
The 50-day EMA at $1.07711 is particularly noteworthy, acting as a dynamic resistance level. A bearish flag formation on the chart suggests a potential continuation of the downtrend, warranting attention for those eyeing entry points.
In conclusion, the current technical landscape points towards a potential sell below $1.07837, with a prudent take-profit level at $1.07428 and a stop loss at $1.08074 to manage risks effectively.
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AUD/USD Price Analysis – Feb 08, 2024
Daily Price Outlook
Despite the risk-on market sentiment, the AUD/USD currency pair failed to stop its downward trend and lost some of its traction around the 0.6490 level. However, the declines were mainly driven by the renewed strength of the US dollar, which recently gained traction in the wake of upbeat US macro data, along with hawkish remarks by several Federal Reserve (Fed) officials. On the flip side, the Reserve Bank of Australia kept interest rates steady and hinted at potential future hikes, which is generally positive for the Australian dollar. This hawkish stance was seen as a key factor that kept the lid on any additional losses in the AUD/USD pair.
Influence of Fed Officials' Stance on AUD/USD Pair
Additionally, some Federal Reserve officials support the idea of keeping interest rates high for a longer time. Federal Reserve Governor Adriana Kugler mentioned that even though inflation seems to be slowing down, she's not ready to lower rates. Minneapolis Fed President Kashkari agrees, saying the Fed needs to be more sure about inflation trends before reducing rates, suggesting there might be two to three rate cuts in 2024. Boston Fed President Collins sees the chances of inflation going above 2% decreasing but admits there are challenges in reaching the target. She wants to see more evidence before thinking about rate cuts. Overall, the Fed is waiting for more inflation data to achieve its goal of a sustainable 2% inflation rate.
Therefore, the cautious stance of several Fed officials on interest rates may influence the AUD/USD pair by potentially strengthening the USD against the AUD due to higher expected interest rates in the US.
Impact of RBA Interest Rate Decision on AUD/USD Pair
Furthermore, the Reserve Bank of Australia (RBA) maintained the interest rate on Tuesday, suggesting a potential hike due to persistently high inflation. Traders in the futures market predict the first rate cut by the RBA may happen in September, rather than August. This positive outlook supports the Australian Dollar, providing momentum for the AUD/USD pair.
Therefore, the RBA's stance on potentially raising interest rates boosts the Australian Dollar, helping the AUD/USD pair to limit its losses.
AUD/USD - Technical Analysis
As the currency markets open on February 8th, the Australian Dollar against the US Dollar (AUD/USD) is trading marginally lower at $0.65181, reflecting a subtle 0.04% decline. The currency pair hovers near a pivotal point marked by the 50-Day Exponential Moving Average (EMA) at $0.65420, suggesting potential directional momentum.
The key technical pivot point for AUD/USD stands at $0.65182. This level is crucial as it signifies the balance of buyer and seller momentum. Should the pair ascend, immediate resistance is likely to be encountered at $0.65209, followed by $0.65248 and a more significant threshold at $0.65283. Conversely, should the pair trend downward, it may find support at $0.65151, with further potential cushions at $0.65100 and $0.65058.
With the Relative Strength Index (RSI) at a neutral 46.44, there is room for movement in either direction without immediate overbought or oversold concerns. The proximity of the current price to the 50 EMA suggests that there is a tussle between bearish and bullish sentiment, with the potential for a breakout.
For traders looking to capitalize on the AUD/USD pair's movements, a Sell Limit order at $0.65315 might be considered, targeting a Take Profit level at $0.64897, while maintaining a Stop Loss at $0.65622 to manage risk.
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GOLD Price Analysis – Feb 08, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to halt its previous downward trend and dropped significantly to around the $2,027 level. However, the reason for its decline can be attributed to the bullish US dollar, which has been gaining momentum thanks to recent upbeat US macro data, along with hawkish remarks by several Federal Reserve (Fed) officials. These factors tend to support the US dollar and contribute to the losses in gold prices. Additionally, Israeli Prime Minister Benjamin Netanyahu rejected Hamas' ceasefire offer. This decision is likely to create uncertainty in the market and may help limit gold's deeper losses.
Impact of Federal Reserve's Monetary Policy Statements on Gold Prices
The Federal Reserve, the central bank of the United States, has recently signaled that they are cautious about lowering interest rates quickly in 2024. This cautious stance has caused pressure on the price of gold.
Fed Chair Jerome Powell mentioned that they will be careful about reducing interest rates because the economy is currently performing well. Even though some officials, like Fed Governor Adriana Kugler, believe that inflation is getting better, they might still consider lowering rates if inflation slows down further. Many investors in the market anticipate this possibility, which supports the XAU/USD pair, a measure of gold's value against the US dollar.
Minneapolis Fed President Kashkari stated that the Fed needs more time to understand where inflation is heading before considering rate cuts. He suggests they might need to lower rates two or three times in 2024 based on current information.
Boston Fed President Collins mentioned that the likelihood of inflation surpassing 2% has decreased, but reaching the 2% target could still be challenging. She believes they require more evidence before deciding on rate cuts. In summary, the Fed is waiting for more data on inflation before making significant policy changes.
Israel's Rejection of Hamas Ceasefire Proposal and Potential Impact on Gold Price
Israeli Prime Minister Benjamin Netanyahu has turned down a ceasefire proposal from Hamas, the group governing Gaza. Meanwhile, US Secretary of State Antony Blinken hinted at the possibility of further discussions. Khalil Al-Hayya, leading Hamas, is set to meet with Egypt and Qatar in Cairo soon. While Netanyahu rejected the offer, Qatar has shown optimism about Hamas's response. Israel's rejection of this proposal may introduce uncertainty, potentially bolstering the price of gold amid heightened geopolitical tensions.
GOLD (XAU/USD) - Technical Analysis
In the financial world, where volatility is the only constant, Gold's behavior on February 8 offers a glimpse into the complex interplay of market forces. The precious metal recorded a minor decline, settling at $2,033, down by 0.11%. This subtle movement belies the underlying tensions between bullish optimism and bearish caution, as investors parse through Federal Reserve signals and global economic indicators.
At the heart of today's analysis is the pivot point at $2,031.61, a fulcrum around which Gold's immediate future pivots. Resistance levels at $2,042.53, $2,049.99, and $2,058.63 delineate the barriers to upward momentum. Conversely, support at $2,022.75, followed by $2,015.15 and $2,007.03, outlines potential fallback positions. The Relative Strength Index (RSI) and the proximity of the 50-Day and 200-Day Exponential Moving Averages at $2,033.85 and $2,033.08, respectively, reinforce a cautiously optimistic outlook, suggesting that Gold may indeed test these thresholds shortly.
Given the current landscape, a strategic approach suggests a Sell Stop at $2,030, with a Take Profit target set at $2,017 and a Stop Loss at $2,040. This tactical positioning anticipates potential fluctuations, aiming to capitalize on the anticipated resistance challenge.
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GBP/USD Price Analysis – Feb 07, 2024
Daily Price Outlook
During the early trading hours in Europe on Wednesday, the GBP/USD currency pair stayed on an upward trend, hovering around the 1.2620 level as the US Dollar (USD) showed weakness. The dollar remained under pressure on Wednesday after stepping back from its nearly three-month high. Additionally, the possibility of a technical recession in the UK economy might push Bank of England (BoE) officials towards a more dovish stance on interest rates. This news could cause the British Pound to weaken against the US Dollar due to expectations of lower interest rates.
Impact of Economic Data and Fed Statements on GBP/USD
Despite the recent release of upbeat economic indicators in the US and a reduced likelihood of Federal Reserve interest rate reductions, the broad-based strength of the US dollar faltered, stepping back from its nearly three-month peak. Chair Jerome Powell underscored the Fed's dedication to achieving a 2% inflation target before contemplating any rate cuts. This has led investors to reassess their expectations, with only a 15% probability of rate cuts in March and a 50% likelihood in May.
Consequently, the US Dollar has gained ground against the British Pound. While there were anticipations for rate cuts, Powell's cautious approach and the robust economic data have aligned market sentiment more closely with the Fed's stance, prompting shifts in the bond market.
Therefore, the decreased chance of Fed rate cuts and a stronger US Dollar are pressuring GBP/USD, making it more challenging for the British Pound to maintain its upward trend against the US Dollar.
Impact of Bank of England's Potential Rate Cuts on GBP/USD
Another reason limiting the increase in the value of the British Pound is worries about a potential recession in the UK. This concern could lead the Bank of England (BoE) to think about reducing interest rates. Key figures at the BoE, such as Chief Economist Huw Pill and Governor Andrew Bailey, have hinted at the possibility of lowering rates. Pill has talked about conversations regarding rate cuts, while Bailey has highlighted some improvements in inflation.
Additionally, a BoE spokesperson has indicated that a rate reduction is likely, citing inflation and job market statistics. Despite uncertainties, the BoE is closely watching inflation patterns, postponing rate decisions due to incomplete job market information. These factors are causing the Pound to face pressure as investors adjust their forecasts accordingly.
Therefore, the news of potential rate cuts by the Bank of England and concerns over a recession add downward pressure on the Pound, likely weakening its position against the US Dollar in the GBP/USD pair.
GBP/USD - Technical Analysis
The GBP/USD pair is witnessing modest gains, trading up by 0.07% around the 1.26067 mark. As traders navigate a relatively calm market, the currency pair finds its immediate pivot point at 1.2513, a crucial level that could dictate short-term direction. Resistance is waiting at 1.2576, with further upside barriers at 1.2668 and 1.2737, which could stall any bullish advances. Supports are forming at 1.2421, with additional safety nets at 1.2317 and 1.2217, to catch any bearish dips.
The Relative Strength Index (RSI) lingers near the neutral 47 mark, suggesting a balance in market sentiment. The MACD indicator presents a marginally positive picture, with a value of 0.0006 just above the signal line at -0.0025, hinting at potential for an uptick. However, the proximity of the 50-day EMA at 1.2606 to the current price level underscores a market in equilibrium, neither overbought nor oversold.
Given the current market conditions, a cautious approach is advisable. Traders might consider a sell limit order at 1.26300, targeting a take profit at 1.25600, with a stop loss set at 1.26900 to manage risk effectively.
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EUR/USD Price Analysis – Feb 07, 2024
Daily Price Outlook
Despite the downbeat German Industrial Production and Eurozone Retail Sales, the EUR/USD currency pair maintained its upward stance and gained significant traction around the 1.0771 level. However, its upward trend can be tied to the bearish bias in the US Dollar (USD). In contrast to this, the sharp 1.1% monthly decline in Eurozone Retail Sales in December could potentially weigh on the EUR/USD pair due to concerns about economic weakness in the Eurozone.
Impact of Economic Struggles in Germany and Eurozone Retail Sales on EUR/USD Pair
In December, Germany's factories faced challenges, with industrial output dropping by 1.6%, worse than expected. Economists were predicting only a 0.4% decline. This follows a 0.7% decrease in November. Compared to last year, industrial production in December dropped by 3.0%, showing a slowdown in Germany's manufacturing sector, although it's slightly better than November's 4.8% decrease.
Meanwhile, the retail sales in the Eurozone dropped by 1.1% compared to last month and 0.8% compared to last year. Pablo Hernandez de Cos from the ECB thinks inflation will hit the 2% target and wants to lower interest rates. But Boris Vujcic, another ECB member, wants to wait and see if wage costs drive long-term inflation before cutting rates.
Therefore, this news could potentially weaken the euro against the US dollar, as it suggests economic struggles in Eurozone economy, leading to decreased investor confidence in the euro.
Delayed Fed Rate Cuts Strengthen US Dollar Temporarily
Besides this, Patrick Harker, President of the Federal Reserve Bank of Philadelphia, confirmed that the Fed decided to keep interest rates unchanged last week due to expectations of further decreases in inflation. Meanwhile, Loretta Mester, President of the Federal Reserve Bank of Cleveland, mentioned the possibility of lowering rates later this year if the economy progresses as expected. Fed Chair Jerome Powell supported this idea, suggesting a plan for three rate cuts in 2024, possibly starting in May. The Fed's delay in easing monetary policy could temporarily strengthen the US dollar. Market expectations, as per CME's FedWatch Tool, indicate a 15% chance of rate cuts at the March meeting.
Therefore, the prospect of delayed rate cuts by the Fed may strengthen the US dollar temporarily against the euro, as it signals a more cautious approach to monetary policy easing, influencing the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD currency pair is experiencing a slight uptick, appreciating by 0.09% to 1.07636. The current market sentiment hinges on the pivot point at 1.0747, a key indicator for near-term price movements. Immediate resistance is established at 1.0821, with subsequent barriers at 1.0860 and 1.0942 potentially capping upward trends. On the downside, support begins to form at 1.0702, with further layers at 1.0628 and 1.0554 set to absorb any bearish pressure.
The Relative Strength Index (RSI) is resting at 44, pointing to a somewhat subdued bullish momentum. The MACD index, with a current value of 0.0002 slightly above the signal line at -0.0021, is indicating a marginal bullish crossover, albeit within a cautious market context. Furthermore, the 50-day Exponential Moving Average (EMA) at 1.0756 closely trails the pivot point, underscoring the currency pair's ongoing consolidation phase.
From a technical perspective, the EUR/USD pair presents a delicate balance between bulls and bears. A tactical approach would be to set a sell limit order at 1.07693, with a take profit target at 1.07153 and a stop loss at 1.08074. This strategy aligns with the current market structure and offers a prudent risk-reward ratio for traders.
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GOLD Price Analysis – Feb 07, 2024
Daily Price Outlook
Despite the US dollar bearish bias, the price of gold (XAU/USD) remained on a downward track, hovering around the $2,033 mark. However, this bearish trend in the gold price was driven by positive market sentiment, which was boosted by strong US economic indicators and hawkish comments from several FOMC members, including Fed Chair Jerome Powell. Consequently, investors adjusted their expectations for potential rate cuts in 2024. However, despite these developments, the US dollar continued to weaken as it showed signs of weakness after pulling back from a nearly three-month high, with declining US bond yields contributing to its downward pressure.
Impact of Fed Interest Rate Decisions on Gold Prices
Moving ahead, traders are currently adopting a cautious approach, preferring to wait and observe the Federal Reserve's stance on interest rates. This cautious sentiment is keeping the gold price lower. Despite the apparent strength of the US economy, particularly highlighted by the recent positive job figures, there is uncertainty regarding the Fed's future interest rate decisions. The cautious approach suggests that significant rate cuts won't happen quickly, primarily due to concerns about persistently high inflation. Consequently, the yield on US government bonds is edging towards 4.0%, which is contributing to a weaker dollar.
Impact of Economic Slowdown in China and Middle East Tensions on Gold Prices
Despite concerns about an economic slowdown in China and ongoing military actions in the Middle East, gold prices are finding support as safe-haven assets. However, the United States continued operations against Houthi rebels in Yemen and its plans for strikes on Iran-backed groups are heightening tensions in the region, further helping gold price to limit its losses. This is because the fear of further escalation in the Middle East, combined with China's economic worries, is prompting investors to seek refuge in gold.
Therefore, the news of economic slowdown in China and ongoing military tensions in the Middle East boosts demand for Gold as a safe-haven asset amid global instability, lifting its price.
GOLD (XAU/USD) - Technical Analysis
Gold remains subdued in today’s session, recording a minor decline to $2034.40, down by 0.07%. The precious metal hovers near a pivot point of $2,017.23, facing immediate resistance levels at $2,042.32, $2,065.40, and $2,086.48. These thresholds will challenge any bullish attempts. On the downside, supports are established at $1,995.15, followed by $1,972.07 and $1,944.97, crucial for preventing further dips.
The Relative Strength Index (RSI) reads at a neutral 50, suggesting a market in balance, while the MACD exhibits a value of 0.57 against a signal of -1.087, hinting at a latent bullish undertone. The 50-day EMA at $2,032.56 closely aligns with the pivot, indicating a potential inflection point for price direction.
Concluding, today’s gold market presents a tactical opportunity, recommending a sell limit at 2033, targeting profits at 2014, with a stop loss set at 2045, navigating through a market that treads cautiously.
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USD/CAD Price Analysis – Feb 06, 2024
Daily Price Outlook
Despite the expected interest rate cut by the Bank of Canada, the USD/CAD currency pair failed to stop its downward trend and remained well offered around the 1.3520 level. However, the reason for its downward trend can be associated with sluggish US dollar movement. The US dollar was gaining momentum and hit a three-month high recently, supported by the Federal Reserve adopting a hawkish stance and upbeat US economic data. But recently, it started losing its traction, and the reason is unknown right now. Hence, the mixed performance of the US dollar kept the USD/CAD currency pair under pressure.
On the other hand, oil prices remained firm at around $72.95 on Tuesday. This uptrend was driven by the US Dollar's modest decline and ongoing geopolitical tensions in the Middle East and Russia's actions in Ukraine, which raised concerns about oil supply disruptions. The stability in oil prices could support the Canadian dollar and contributed to losses in the USD/CAD pair.
Fed Plans for Interest Rate Cuts and Potential Impact on USD/CAD Pair
Federal Reserve Chair Jerome Powell announced plans to lower interest rates three times this year, potentially starting in May. However, the probability of a rate cut in March has fallen to 15%, down from 38% previously. This shift towards keeping rates higher for longer could strengthen the US dollar, which may benefit the USD/CAD pair.
Anticipated Bank of Canada Rate Cuts and Impact on USD/CAD Pair
According to a survey conducted by the central bank, investors anticipate that the Bank of Canada (BoC) will commence reducing its benchmark interest rate from its 22-year high of 5% in April. Market projections suggest that by the ending of 2024, the median forecast for the policy rate is expected to decline to 4%, consistent with earlier forecasts made in November.
Therefore, the anticipated rate cuts by the Bank of Canada may weaken the Canadian dollar, potentially causing the USD/CAD currency pair to rise as the US dollar gains strength.
Upcoming Economic Data Releases Impacting CAD Currency Pairs
Investors will keep thier eyes on Canadian Building Permits and Ivey PMI data on Tuesday, with a focus on Friday's labor market report, including the Unemployment Rate.
USD/CAD - Technical Analysis
The USD/CAD pair has seen a marginal descent of 0.14% to $1.35227, entering the North American session on a slightly softer note. In the 4-hour chart, a minor pullback from recent highs has brought traders' focus to key technical levels that could dictate short-term price action.
The pivot point stands at $1.3436, a level that may underpin the currency pair's movements today. Resistance levels have materialized at $1.3510, followed by $1.3551 and $1.3630, each presenting a barrier to upside progression. Conversely, immediate support falls at $1.3393, with additional floors at $1.3316 and $1.3276 possibly providing a buffer against further depreciation.
Technical indicators such as the Relative Strength Index (RSI) show a reading of 65, which, while on the higher side, doesn't yet suggest overbought conditions. The Moving Average Convergence Divergence (MACD) presents a nuanced picture; with a value of 0.001 and a signal of 0.003, it indicates the potential for a slight bearish shift as the MACD line is below the signal line.
The 50-day Exponential Moving Average (EMA) is currently at $1.3501, just below the current price, suggesting that the pair is testing a critical juncture where bearish and bullish sentiments are contested.
Concluding this technical snapshot, the USD/CAD's immediate trend leans towards a neutral to bearish bias. Considering this, a sell limit order at $1.35419 could be strategic, with a take profit objective set at $1.34487 and a stop loss at $1.36054 to mitigate potential upside risks.
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AUD/USD Price Analysis – Feb 06, 2024
Daily Price Outlook
The AUD/USD currency pair maintained its bullish bias and surged to the 0.6510 level. However, the reason for its upward trend can be attributed to the upbeat Australia's Retail Sales data, which tends to underpin the AUD currency and contribute to the AUD/USD pair gains. Furthermore, the Reserve Bank of Australia (RBA) maintained its Official Cash Rate (OCR) at 4.35% at February's meeting, as expected. The maintenance of the OCR at 4.35% by the RBA can be seen as positive news for the AUD because it indicates stability in monetary policy, which can attract investors and support the currency.
In contrast to this, upbeat US economy data and the hawkish comments from Federal Reserve (Fed) Chair Jerome Powell boosted the US dollar, which was seen as a key factor that capped further gains in the AUD/USD pair. Apart from this, the risk-off market sentiment, backed by the ongoing geopolitical tension in the Middle East and China's economy woes, was seen as another key factor that kept the lid on any additional gains in the AUD/USD pair.
RBA's Cautious Approach and its Potential Impact on AUD/USD Pair
It is worth noting that the latest Retail Sales data in Australia showed a slight uptick of 0.3% in the fourth quarter, indicating a modest improvement compared to the previous growth. However, Australia is currently facing a significant cost-of-living crisis, which poses challenges for the Reserve Bank of Australia (RBA) in terms of further interest rate hikes.Investors are eagerly waiting for RBA Governor Michele Bullock's speech to understand what the central bank might do next. Bullock said the bank is considering different ways to manage the economy and is watching inflation closely.
Consequently, this news could positively affect the AUD/USD pair as the RBA's cautious approach may stabilize the Australian economy, boosting investor confidence and potentially strengthening the Australian dollar against the US dollar.
Impact of Federal Reserve's Hawkish Stance on AUD/USD Pair
Furthermore, the broad-based US Dollar maintained its position near a three-month high after the Federal Reserve adopted a hawkish stance, supported by strong ISM Services data for January. Notably, the ISM Services PMI exceeded expectations, reaching 53.4, above both the consensus of 52.0 and the previous month's 50.5. Federal Reserve Chair Jerome Powell's remarks, emphasizing the importance of closely monitoring inflation's movement toward the 2% target, reduced expectations of rate cuts, further bolstering the dollar.
Therefore this news likely led to a decline in the AUD/USD pair due to the US Dollar's strength following the Federal Reserve's hawkish stance and positive ISM Services data, coupled with rising US Treasury yields.
AUD/USD - Technical Analysis
The Australian dollar edged up against its US counterpart, with the AUD/USD pair noting a modest rise of 0.16% to $0.64930 as of February 6. The currency pair has seen a slight lift in the 4-hour chart, reflecting a tempered but positive sentiment among traders.
The pivot point for the session is set at $0.6426, marking the immediate baseline for any shifts in market dynamics. Resistance levels are charted at $0.6471, followed by $0.6548 and $0.6588, which could serve as ceilings in the pair's upward trajectory. Supports are delineated at $0.6346, $0.6272, and $0.6195, potentially halting any bearish pullback.
The Relative Strength Index (RSI) at 37 indicates a market that is neither overbought nor oversold, leaving room for potential price swings in either direction. The Moving Average Convergence Divergence (MACD) presents a value of -0.00040 with its signal at -0.00243, implying that the negative momentum is abating, as the MACD line is closer to crossing above the signal line, potentially signaling an upcoming bullish phase.
The 50-day Exponential Moving Average (EMA) stands at $0.6502, just above the current price, suggesting a very tight trading range with the potential for the currency to oscillate around this key moving average.
In light of these observations, the overall technical outlook for the AUD/USD appears cautiously optimistic, with a strategy to buy above $0.64999, targeting profits at $0.65437, and placing a stop loss at $0.64674 to manage risk.
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