EUR/USD Price Analysis – Oct 04, 2024
Daily Price Outlook
During Friday's European session, the EUR/USD currency pair continued its downward trend, turning bearish as it faced selling pressure around the 1.1030 mark, reaching an intraday low of 1.1020. The pair has edged lower, with the US Dollar (USD) maintaining its strength ahead of the upcoming Nonfarm Payrolls (NFP) report for September, scheduled for release at 12:30 GMT.
Investors are closely monitoring the NFP report, as it is expected to significantly influence the pace of the Federal Reserve's policy adjustments for the remainder of the year. Economists project that US employers added 140,000 new jobs in September, a slight decrease from 142,000 in August. Meanwhile, the unemployment rate is anticipated to remain stable at 4.2%.
Strong US Dollar and Inflation Concerns Weigh on EUR/USD Pair
On the US front, the US Dollar (USD) remains strong as traders await the Nonfarm Payrolls (NFP) report for September, set to be released at 12:30 GMT. The US Dollar Index (DXY), which measures the value of the dollar against six major currencies, is holding steady around 102.00 after a successful four-day streak. Traders have started to adjust their expectations for interest rate cuts by the Federal Reserve in November.
Recent data indicates that the likelihood of a 50 basis point rate cut has dropped from 53% to 33% in just a week. This shift comes after positive reports on employment from the ADP Employment Change and JOLTS Job Openings for August.
Moreover, concerns about persistent inflation are causing traders to reduce their bets on significant rate cuts by the Fed. The ISM Services PMI report for September revealed that input costs, measured by the Prices Paid component, unexpectedly rose to 59.4, indicating increasing inflationary pressures.
The overall Services PMI, which reflects activities in the service sector that makes up two-thirds of the economy, grew robustly to 54.9, surpassing estimates of 51.7 and the previous month’s figure of 51.5. These developments suggest that inflation may remain a key concern for the Fed moving forward.
This news has put additional pressure on the EUR/USD pair, as the strong US Dollar and reduced expectations for Fed rate cuts, combined with persistent inflation concerns, weigh on the euro, pushing the pair lower in the short term.
Euro Faces Pressure Amid Middle East Tensions and ECB Rate Cut Speculation
On the EUR front, the euro is under pressure due to worsening market sentiment, largely driven by escalating conflict in the Middle East. However, the tensions between Iran and Israel intensified after the killing of Hezbollah leader Hassan Nasrallah, which led to Tehran retaliating with ballistic missile attacks on military bases in Tel Aviv. This growing instability is weighing on risk-sensitive assets like the euro, adding to its recent decline.
At the same time, speculation about the European Central Bank (ECB) cutting interest rates at its upcoming meeting on October 17 is pushing the euro further down. In the meantime, the concerns about slower economic growth in the Eurozone and a drop in inflation, with the Harmonized Index of Consumer Prices (HICP) falling below the ECB's 2% target in September, are fueling these rate cut expectations.
ECB board member Isabel Schnabel, who has typically supported higher rates, acknowledged risks to economic growth in a recent speech. However, she remains optimistic that inflation will continue to drop toward the ECB's target, supported by weakening labor demand and progress in reducing price pressures.
This news is likely to exert downward pressure on the EUR/USD pair, as escalating geopolitical tensions and increasing speculation of ECB rate cuts contribute to a negative outlook for the euro, making the currency less attractive to investors.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.10275, a slight dip of 0.02%, as the euro struggles to find direction amid a stronger US dollar. The pair is hovering just below its pivot point of $1.1039, signaling potential weakness ahead. Immediate resistance is seen at $1.1055, followed by $1.1066 and $1.1083. A break above these levels could trigger a bullish recovery, but the broader trend remains cautious as the 50-day Exponential Moving Average (EMA) at $1.1082 continues to cap upside momentum.
On the downside, immediate support is noted at $1.1017, followed by $1.1002 and $1.0984. A breach below $1.1017 could accelerate selling pressure, with the next target at $1.1002. The RSI stands at 38, suggesting a bearish bias, though not yet in oversold territory, indicating the pair still has room for further declines.
Traders might consider a sell entry below $1.10387, targeting $1.10072, with a stop-loss placed at $1.10550. This setup aligns with the ongoing bearish momentum, as the pair remains below key moving averages and continues to test lower support levels. A sustained move below $1.1017 would confirm further downside potential, possibly pushing the pair toward $1.0984.
In the near term, the outlook for EUR/USD is tilted to the downside unless we see a significant break above $1.1055, which could negate the bearish scenario and attract new buyers.
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AUD/USD Price Analysis – Oct 03, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair has extended its downward trend, currently hovering around 0.6843 and hitting an intra-day low of 0.6841.
This decline is largely driven by the bullish performance of the US Dollar (USD), influenced by key economic data released on Thursday.
Moreover, a risk-off sentiment in the market has added to the downward pressure on the AUD/USD pair, as rising geopolitical tensions in the Middle East have shaken investor confidence.
According to the Israeli Broadcasting Authority (IBA), Israel's security cabinet has decided to take decisive action in response to a recent Iranian attack. On Tuesday night, Iran launched over 200 ballistic missiles and drones targeting Israel, escalating tensions in the region.
Despite these challenges, the downside risk for the AUD could be limited due to the hawkish stance of the Reserve Bank of Australia (RBA).
Recent data showed stronger-than-expected retail sales growth for August, reducing the chances of an early rate cut by the RBA.
Besides this, the AUD is receiving some support from stimulus measures implemented by China, Australia’s largest trading partner, which have helped boost commodity prices.
Impact of Strong US Labor Market Data on AUD/USD Pair
On the US front, the broad-based US dollar is gaining strength as recent economic data highlights a resilient labor market. This has led to tempered expectations for aggressive interest rate cuts by the Federal Reserve (Fed).
According to the CME FedWatch Tool, there’s a 65.4% chance of a 25 basis point rate cut in November, while the likelihood of a 50 basis point cut is at 34.6%, down from 57.4% just a week ago.
Tom Barkin, President of the Federal Reserve Bank of Richmond, emphasized that the fight against inflation isn’t over, noting that while a 50 basis point cut in September was justified, risks still exist.
Recent reports show positive employment trends, with the ADP Employment Change report revealing an increase of 143,000 jobs in September, exceeding the forecast of 120,000. Annual pay also rose by 4.7%.
However, the AiG Industry Index improved slightly but still indicates contraction for the 29th month in a row. The AiG Manufacturing PMI continued to decline, reaching its lowest level since the series began.
Meanwhile, Fed Chairman Jerome Powell stated that the central bank is not rushing to cut rates further, indicating that any future rate changes are likely to be more modest.
Therefore, the strengthening US dollar, driven by positive labor market data and tempered rate cut expectations, is likely to put further downward pressure on the AUD/USD pair, as investors may favor the USD over the Australian dollar in the current environment.
Positive Economic Indicators Support Australian Dollar Amid Global Uncertainties
Moreover, the downside risk for the Australian dollar (AUD) could be limited due to the hawkish outlook of the Reserve Bank of Australia (RBA). Recent data revealed stronger-than-expected retail sales growth of 0.7% month-over-month in August, surpassing forecasts of a 0.4% increase.
This growth has lowered the chances of an early rate cut by the RBA, with markets almost fully discounting a rate cut in November. In the meantime, stimulus measures from China, Australia’s largest trading partner, have boosted commodity prices, providing further support to the AUD.
In terms of trade balance, Australia recorded a surplus of 5,644 million in August, exceeding market expectations of 5,500 million and slightly higher than July’s surplus of 5,636 million.
However, both exports and imports saw a decline of 0.2% month-over-month during this period. The Judo Bank Services Purchasing Managers' Index (PMI) stood at 50.5 in September, down from 52.5 in August, indicating continued growth in services activity but at a slower pace.
Meanwhile, the Composite PMI dipped slightly to 49.6 in September from 49.8 the previous month, suggesting a slight contraction in overall economic activity.
Therefore, the hawkish stance of the Reserve Bank of Australia, supported by strong retail sales growth and a positive trade balance, bolster the AUD against the USD, mitigating some downward pressure on the AUD/USD pair amid global uncertainties.
AUD/USD - Technical Analysis
The Australian Dollar (AUD) is losing ground against the U.S. Dollar (USD), currently trading at $0.68622, down 0.33% for the session.
The bearish pressure comes amid heightened risk aversion, as investors digest mixed U.S. economic data and concerns over China’s economic slowdown, which is weighing on commodity-linked currencies like the AUD.
The 4-hour chart shows that the AUD/USD pair is struggling to hold above its pivot point at $0.68873, indicating sellers are dominating the market. Immediate support is found at $0.68423, with subsequent support levels at $0.68211 and $0.67994.
The technical indicators reinforce a cautious outlook. The 50-day Exponential Moving Average (EMA) hovers at $0.69022, well above the current price, underscoring the bearish momentum.
Meanwhile, the Relative Strength Index (RSI) is at 37, approaching oversold territory but not yet signaling a reversal. Traders should remain vigilant as a break below $0.68423 could see the AUD/USD pair testing deeper support levels.
Immediate resistance stands at $0.69160, and for any significant recovery, the pair would need to surpass this barrier, targeting $0.69403 and $0.69622 as next upside objectives.
The short-term outlook remains bearish, particularly if the pair continues to trade below its 50 EMA, which could open doors for further declines.
Conclusion: Traders might consider entering short positions below $0.6878, aiming for a take profit around $0.68426, while maintaining a stop-loss at $0.69051 to manage risk effectively.
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USD/JPY Price Analysis – Oct 03, 2024
GOLD Price Analysis – Oct 03, 2024
Daily Price Outlook
Gold (XAU/USD) continued its downward trend on Thursday, trading around $2,640 as expectations for aggressive Federal Reserve rate cuts diminished.
The resilient US labor market bolstered the US Dollar (USD), which reached a multi-week high, diminishing the appeal of non-yielding assets like gold.
Despite this, concerns over escalating conflicts in the Middle East and a general decline in global interest rates are providing some support, limiting further downside for gold prices.
Strengthening US Dollar and Shifting Labor Market Expectations Weigh on Gold Prices
On the US front, the broad-based US dollar is gaining strength as recent economic data highlights a resilient labor market. This has tempered expectations for aggressive interest rate cuts by the Federal Reserve (Fed).
Following stronger labor market reports and hawkish comments from Fed Chair Jerome Powell, the dollar has recovered from its lowest levels since July 2023, rising to a three-week high.
This increase has negatively impacted demand for gold, which is a non-yielding asset typically priced in USD.
Gold’s price upside is also limited by fluctuating expectations about future US interest rates. Last week, the chances of the Fed cutting rates by 50 basis points in November were above 60%, but those odds have since dropped to around 30%.
This shift follows the release of stronger-than-expected US jobs data, suggesting the economy is stable.
For instance, the JOLTS Job Openings survey showed a surprising increase in available jobs, rising from 7.711 million to 8.040 million in August.
Additionally, the ADP report revealed that private-sector employers added 143,000 jobs in September, exceeding expectations. These developments are influencing gold's demand as market sentiment shifts.
Escalating Tensions in the Middle East and Its Impact on Gold Prices
On the geopolitical front, tensions in the Middle East have risen sharply as Iran launched over 200 ballistic missiles at Israel on Tuesday.
Iran claims these missiles targeted key military and security sites in Israel in retaliation for deadly attacks on Gaza and Lebanon and the killings of senior leaders from Hamas, Hezbollah, and the IRGC.
Israel reported that many of the missiles were intercepted and has vowed to respond, but Iran has warned of “crushing” attacks if Israel takes action.
Meanwhile, Israeli forces have conducted ongoing attacks across the Gaza Strip, resulting in the deaths of at least 29 Palestinians. Since October, the situation has worsened, with reports indicating that over 41,638 people have been killed and around 96,460 injured in Gaza due to Israeli strikes.
Therefore, the escalating conflict and instability in the region could increase demand for gold as a safe-haven asset amidst rising uncertainties.
GOLD (XAU/USD) - Technical Analysis
Gold prices are currently trading at $2,656.04, marking a slight decline of 0.11% as investors await key U.S. economic data later in the week.
The precious metal has entered a consolidation phase, oscillating within a narrow range as market participants assess the impact of the upcoming Non-Farm Employment report and Average Hourly Earnings data.
The 4-hour chart indicates a symmetrical triangle formation, with immediate resistance seen at $2,663.03 and support levels around $2,644.53.
This pattern typically suggests that a significant price breakout is on the horizon, though the direction remains contingent on the forthcoming economic indicators.
The 50-day Exponential Moving Average (EMA) is positioned at $2,652.76, acting as a short-term pivot point for price movements. If the metal stays above this level, it could pave the way for a bullish run, targeting $2,671.80 and $2,685.66 in the coming sessions.
On the downside, if prices dip below $2,644.53, gold may see further declines towards the next support at $2,636.09 and potentially $2,627.49.
The Relative Strength Index (RSI) sits at 53, reflecting a neutral stance with no clear overbought or oversold signals, suggesting that traders should remain cautious as volatility could surge.
Market participants should look for a break above the $2,663.03 resistance to signal a bullish continuation, while a fall below $2,644.53 may reignite bearish sentiment.
Conclusion: Traders looking to enter positions could consider buying above $2,653, targeting $2,670 with a stop-loss set at $2,645, given the current technical setup and near-term economic calendar.
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AUD/USD Price Analysis – Oct 03, 2024
USD/JPY Price Analysis – Oct 03, 2024
Daily Price Outlook
During the Asian trading session, the USD/JPY currency pair maintained its upward trend, remaining well-bid around the 146.72 level and hitting an intraday high of 147.24.
The upward movement can be attributed to dovish comments from Prime Minister Ishiba, along with uncertainty surrounding the Bank of Japan's monetary policy, which has weakened the Japanese Yen (JPY).
Consequently, the USD/JPY pair is likely to experience upward momentum, reflecting increased demand for the US Dollar amid growing market uncertainty.
Moreover, the US dollar has received support from safe-haven flows due to rising geopolitical tensions in the Middle East, further boosting the USD/JPY pair.
Strengthening US Dollar and Its Impact on the USD/JPY Pair
On the US front, the US dollar is gaining strength as recent economic data shows a resilient labor market. This has led to lower expectations for aggressive interest rate cuts by the Federal Reserve (Fed).
According to the CME FedWatch Tool, there is a 65.4% chance of a 25 basis point rate cut in November, while the likelihood of a 50 basis point cut has dropped to 34.6%, down from 57.4% a week ago.
Tom Barkin, President of the Federal Reserve Bank of Richmond, emphasized that the fight against inflation isn’t over. He noted that while a 50 basis point cut in September was justified, risks still exist.
Positive employment trends, such as a reported increase of 143,000 jobs in September, have also contributed to the dollar's strength.
However, while the AiG Industry Index shows slight improvement, it still indicates contraction for the 29th consecutive month, and the AiG Manufacturing PMI has reached its lowest level.
Fed Chairman Jerome Powell mentioned that the central bank is not rushing to cut rates further, suggesting that any future rate changes will be modest.
As a result, the strengthening US dollar, supported by solid labor market data and tempered rate cut expectations, is likely to apply further upward pressure on the USD/JPY pair.
Impact of Japan's Dovish Monetary Policy on the USD/JPY Pair
On the other side, Japan's new Prime Minister, Shigeru Ishiba, has made clear comments about the country's monetary policy after meeting with Bank of Japan (BoJ) Governor Kazuo Ueda.
Ishiba stated, "I do not believe that we are in an environment that would require us to raise interest rates further," which has raised concerns among investors.
Following his remarks, the Japanese Yen (JPY) fell nearly 2% against the US Dollar (USD), marking its biggest drop since February last year.
Japan’s Chief Cabinet Secretary, Yoshimasa Hayashi, clarified that Ishiba did not ask Ueda for specific monetary policy details during their meeting, indicating a cautious approach.
Furthermore, Japan's Economic Revitalization Minister, Ryosei Akazawa, mentioned that Ishiba expects the BoJ to conduct thorough economic assessments before considering any interest rate hikes. Market futures show less than a 50% chance that the BoJ will raise rates by 10 basis points by December.
Meanwhile, projections suggest that interest rates will only reach 0.5% by the end of next year, up from the current 0.25%.
This lack of urgency regarding interest rate increases is likely to continue putting downward pressure on the yen as investors seek stronger returns elsewhere.
Therefore, the dovish comments from Japan’s Prime Minister Shigeru Ishiba, coupled with reduced expectations for interest rate hikes, are likely to weaken the Japanese Yen (JPY).
This scenario is expected to support the USD/JPY pair, driving it higher as investors favor the US Dollar (USD).
USD/JPY - Technical Analysis
The U.S. Dollar (USD) is maintaining its upward trajectory against the Japanese Yen (JPY), currently trading at 146.768, up 0.22% for the session.
The pair’s strength can be attributed to a combination of favorable U.S. economic data and continued monetary policy divergence between the Federal Reserve and the Bank of Japan.
The 4-hour chart shows USD/JPY trading above its pivot point of 146.231, with bullish momentum pushing the price towards the immediate resistance level at 147.248. Further resistance is noted at 147.866 and 148.567, where a breakout could spark another leg higher.
Technical indicators reveal a mixed outlook. The Relative Strength Index (RSI) has surged to 70, suggesting that the pair is now approaching overbought territory.
This could result in a short-term pullback or consolidation phase as traders look to lock in profits. On the support side, the 50-day Exponential Moving Average (EMA) is positioned at 144.045, providing a solid floor that could limit any downward movement.
Immediate support stands at 145.585, followed by additional support levels at 145.104 and 144.609.
A break below 145.585 could see the pair testing the 50 EMA near 144.045, though the overall uptrend remains intact as long as prices hold above the pivot point at 146.231.
Conclusion: With the pair nearing overbought conditions, traders may consider short positions if the price drops below 147.255, targeting 145.620, while placing a stop-loss at 148.227 to limit potential losses.
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GBP/USD Price Analysis – Oct 02, 2024
EUR/USD Price Analysis – Oct 02, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair is trading slightly lower in the 1.1070s on Wednesday, following a sharp decline from 1.1135 on Tuesday. This downturn can be largely attributed to disappointing inflation data from the Eurozone. The Harmonized Index of Consumer Prices (HICP) reported a year-over-year increase of only 1.8% in September, a drop from 2.2% previously and below expectations of 1.9%.
Meanwhile, core inflation fell to 2.7%, slightly down from August’s 2.8%. These figures suggest that inflation is now trailing the European Central Bank's (ECB) target of 2.0%, raising concerns about the economic outlook. Consequently, the likelihood of further interest rate cuts by the ECB has increased, which could lead to capital outflows and exert additional pressure on the euro.
Impact of Eurozone Economic Data on EUR/USD Pair
As we mentioned, the previously released Eurozone unemployment rate has had a minimal impact on the pair, remaining steady at 6.4% in August, unchanged from July and in line with economists' expectations. However, the recent inflation figures have heightened concerns regarding the economic outlook in the region, suggesting that further ECB rate cuts could weaken the euro.
Moreover, the EUR/USD pair has faced additional downward pressure due to the strengthening US dollar, which rebounded sharply on Tuesday following positive job data. The JOLTS Job Openings report revealed an unexpected increase in job openings to 8.04 million in August, significantly above the revised figure of 7.71 million in July and exceeding expectations of 7.66 million.
This robust labor market data offsets weaker manufacturing activity in the US, as indicated by the ISM Manufacturing PMI, which remained in contraction territory for September.
Therefore, the steady Eurozone unemployment rate has done little to support the euro amid rising inflation concerns, while strengthening US labor market data, particularly the surge in job openings, has boosted the dollar, increasing downward pressure on the EUR/USD pair.
Geopolitical Tensions and Economic Indicators Weigh on EUR/USD Outlook
The recent sell-off in the EUR/USD pair has intensified, driven largely by escalating geopolitical tensions in the Middle East. Iran's recent missile strikes on Israel have prompted a surge in safe-haven investments, pushing traders toward the US dollar and putting further downward pressure on the EURUSD pair.
As we look ahead, traders will be keeping a keen eye on the US ADP Employment Change data for September, along with statements from Federal Reserve officials, for further clues about market direction. Additionally, the ongoing situation in the Middle East and its repercussions on global markets will play a crucial role in shaping future movements of the EUR/USD pair.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.10651, down 0.02% in today’s session. The pair has struggled to gain traction, reflecting the broader uncertainty in global currency markets. After testing the $1.10832 resistance level earlier today, EUR/USD failed to break higher, suggesting that bearish momentum is still intact. The 50-day Exponential Moving Average (EMA) at $1.11405 continues to act as a strong resistance, capping further upside potential.
The Relative Strength Index (RSI) has dipped to 32, indicating bearish momentum and suggesting that EUR/USD could face additional downward pressure if it drops below 30. On the downside, immediate support is seen at $1.10461. A break below this level could accelerate declines toward $1.10254 and $1.10051. Conversely, for a bullish reversal to take hold, the pair must decisively break above the pivot point at $1.10695 and test the resistance levels at $1.10832 and $1.10952.
Short-term technical indicators suggest that EUR/USD may experience further declines if it fails to regain ground above $1.10695. The pair remains under selling pressure, with an entry below $1.10694 offering potential profit at $1.10453. Traders should watch for a move above $1.10832 to signal a potential bullish reversal.
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- GOLD Price Analysis – Oct 02, 2024
GOLD Price Analysis – Oct 02, 2024
Daily Price Outlook
During the early European trading session, Gold (XAU/USD) faced challenges in sustaining its overnight upward momentum, turning bearish around the 2,655 level and hitting an intra-day low of 2,644.
However, the precious metal had rebounded over 1% on Tuesday amid escalating tensions in the Middle East, prompted by Israel's attack on Hezbollah and Iran's subsequent response, which included nearly 200 missile launches. However, this bullish trend proved short-lived as the US dollar gained strength and contributing to gold's current decline.
Escalating Middle East Tensions Drive Gold Demand Amid Conflict and Economic Uncertainty
Tensions in the Middle East have reached new heights following Iran’s recent missile strikes against Israel. This military action is seen as a response to Israel's aggressive operations against Hezbollah in Lebanon, a group that receives substantial backing from Iran.
In light of these developments, Israeli Prime Minister Benjamin Netanyahu warned of significant consequences for Iran, while Iranian authorities cautioned that further attacks would lead to catastrophic retaliation. Such escalation raises concerns about a wider conflict in the region and has fueled demand for gold, which is often viewed as a safe-haven asset during turbulent times.
Therefore, the escalating tensions in the Middle East, driven by Iran's missile strikes against Israel and potential retaliation, have heightened demand for gold as a safe-haven asset, leading to increased buying interest amid fears of a broader regional conflict.
Strengthening US Dollar Caps Gold Gains Amid Labor Market Resilience and Rate Cut Speculation
On the US front, the broad-based US dollar is gaining strength, supported by a resilient labor market. The Job Openings and Labor Turnover Survey (JOLTS) indicated an unexpected increase in job openings, reaching 8.04 million in August. Meanwhile, the Institute for Supply Management (ISM) reported that the Manufacturing PMI remained steady at 47.2 in September, signaling a continued contraction in business activity for the sixth consecutive month.
Investors are now closely monitoring the likelihood of additional interest rate cuts by the Federal Reserve. Although Fed Chair Jerome Powell recently indicated the potential for two more rate cuts of 25 basis points each this year, there is still speculation about a more significant 50 basis point cut in November.
However, the CME Group's FedWatch Tool currently assigns a 35% probability to this larger cut. Furthermore, Atlanta Fed President Raphael Bostic has noted that larger reductions might be warranted if the labor market shows signs of weakness.
Market participants are closely watching the upcoming US ADP private-sector employment report, expected to reveal an addition of 120,000 jobs in September, alongside the Nonfarm Payrolls report, both of which could significantly impact market trends.
Consequently, the stronger US dollar, supported by a robust labor market, has constrained gold's recent upward momentum. Moreover, ongoing speculation about potential rate cuts adds uncertainty to the market, typically reducing gold's attractiveness. Rising interest rates and a stronger dollar tend to suppress demand for this non-yielding asset.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,654.30, down 0.35% for the day, as the metal faces renewed selling pressure. Despite a modest recovery attempt, gold failed to breach the immediate resistance level at $2,669.37, which aligns with its descending trendline and the 50-day Exponential Moving Average (EMA) at $2,656.41. This has reinforced bearish sentiment among traders.
The Relative Strength Index (RSI) is holding at 50, indicating a lack of strong momentum in either direction. If gold prices break below the immediate support at $2,648.16, it could trigger a deeper correction toward the next support levels at $2,639.79 and $2,631.27. Conversely, if gold manages to clear the $2,669.37 resistance, it could set the stage for a move higher to $2,677.74 and potentially $2,685.39.
Short-term technical indicators suggest a cautious outlook, with gold needing to maintain support above $2,648.16 to avoid further declines. Traders should watch for a clear break above $2,669.37 to confirm any renewed bullish momentum.
Gold remains under bearish pressure. An entry position could be considered below $2,660, targeting support at $2,648. For upside potential, a break above $2,669 is required to open further gains.
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GBP/USD Price Analysis – Oct 02, 2024
Daily Price Outlook
Despite a bullish US dollar, the GBP/USD pair is struggling to maintain its upward momentum, though it’s still trading positively around 1.3291, with an intra-day high of 1.3306. The recent gains in the pair can be attributed to the Bank of England's reassurance regarding financial stability, highlighting the resilience of households and businesses despite high interest rates, as well as the robust position of the UK banking system, which has bolstered investor confidence.
However, the pair's upside potential may be constrained by concerns that a consumption-driven recovery could trigger inflation, especially as the Bank of England is anticipated to cut rates in the near future.
Conversely, the US dollar has gained support following recent comments from Federal Reserve Chairman Jerome Powell, who signaled that the central bank intends to gradually lower interest rates over time. Additionally, the dollar is bolstered by a robust labor market, which further restricts the GBP/USD pair's potential for significant gains.
Impact of Bank of England's Financial Outlook on GBP/USD Pair
On the GBP front, the Bank of England's Financial Policy Committee (FPC) recently reported that risks to the UK’s financial stability have remained largely unchanged since June. They noted that valuations of equities and other assets are "stretched," suggesting a potential for sharp corrections. However, the survey also indicated that a record number of financial firms are concerned about geopolitical risks.
Despite these challenges, the BoE has maintained a counter-cyclical capital buffer at 2%, ensuring that the UK banking system is well-positioned to support lending. While households and corporate borrowers exhibit resilience to high interest rates, some small businesses and private equity-backed firms continue to experience pressure.
Besides this, BoE policymaker Megan Greene cautioned that a recovery driven by consumer spending could lead to renewed inflation. However, she noted that further interest rate cuts are likely, as prices are trending in the right direction. Greene mentioned that the neutral interest rate has likely increased since the inflation shock, although she didn’t provide a specific figure.
Traders will be watching the upcoming US ADP Employment Change report and comments from Federal Reserve officials for insights, while the BoE's Monetary Policy Report Hearings on Thursday will also be closely monitored for guidance.
Therefore, the Bank of England's cautious stance on financial stability and potential interest rate cuts may weaken the GBP against the USD. If inflation concerns persist, traders might anticipate further rate adjustments, leading to increased volatility in the GBP/USD pair.
Impact of Federal Reserve's Stance on GBP/USD Pair
On the US front, the US dollar is getting stronger because Federal Reserve Chairman Jerome Powell said the central bank will slowly lower interest rates. He clarified that the recent half-point cut doesn’t mean there will be big cuts soon; instead, future cuts will be smaller. The US dollar is also supported by a strong job market, as shown by a report that job openings increased unexpectedly to 8.04 million in August. This means more people are needed for jobs, which is a good sign for the economy.
Furthermore, the Institute for Supply Management (ISM) reported that the Manufacturing PMI remained steady at 47.2 in September, indicating a continued contraction in business activity for the sixth month in a row.
Investors are closely monitoring the potential for further interest rate cuts by the Federal Reserve. While Chairman Powell hinted at the possibility of two additional cuts of 25 basis points each this year, speculation persists regarding a larger 50 basis point cut in November, with the CME Group's FedWatch Tool indicating a 35% probability for this scenario.
Therefore, the US Dollar's strength, driven by Powell's comments on gradual interest rate cuts and a resilient labor market, weaken the GBP/USD pair. If the Fed maintains a hawkish stance, it could further pressure the GBP against the USD.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.32756, down 0.07% for the day, reflecting bearish sentiment amid concerns over potential interest rate decisions by the Bank of England (BoE). The pair has been under pressure since failing to sustain above the 50-day Exponential Moving Average (EMA) at $1.33647, a critical resistance that capped recent bullish attempts. The Relative Strength Index (RSI) stands at 34, indicating weak momentum, but not yet oversold, suggesting room for further declines.
On the downside, immediate support is seen at $1.32724, closely followed by $1.32368 and $1.32084. If the pair breaks below these levels, it could trigger additional selling pressure, pushing GBP/USD further down.
Conversely, on the upside, the pivot point at $1.32951 will be crucial for the pair to reclaim a bullish bias. Immediate resistance is pegged at $1.33299, with subsequent resistance levels at $1.33569 and $1.33889. A sustained break above these levels would indicate renewed bullish momentum.
The 50-day EMA at $1.33647 remains a key barrier for GBP/USD. If the pair can rise above this level, it would signal a potential trend reversal. Until then, the outlook remains cautiously bearish.
The pair remains under bearish pressure, with an entry above $1.32722 offering potential profit at $1.33299. Monitor resistance at $1.33299 for signs of a bullish reversal.
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- GOLD Price Analysis – Oct 02, 2024
GOLD Price Analysis – Oct 01, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward trend and found some positive momentum on Tuesday, rising to $2,644 after reaching an intraday high of $2,645, representing a 0.39% increase for the day.
However, the recent surge in geopolitical tensions in the Middle East has heightened demand for safe-haven assets, particularly gold. Furthermore, expectations of a slowdown in US inflation suggest that the Federal Reserve may continue to cut interest rates, while hopes for China's economic stimulus are also contributing to a boost in physical demand for precious metals.
These factors are collectively creating a favorable environment for gold upward trend, making it an attractive option for investors seeking stability amid uncertainty.
At the same time, the gains in the gold price could be faded as Fed Chair Jerome Powell's hawkish comments on Monday prompted investors to reassess their expectations for aggressive rate cuts.
This shift led to a strengthened demand for the US dollar, which has limited upward momentum for gold. Besides this, the positive sentiment in global financial markets cap gold's potential as investors focus on key US economic data releases this week.
Federal Reserve Outlook and Geopolitical Tensions Impacting Gold and Silver Markets
On the US front, hopes for a continued slowdown in inflation had fueled expectations that the Federal Reserve might cut interest rates further.
However, Fed Chair Jerome Powell's hawkish remarks on Monday prompted investors to rethink those expectations. He indicated that two more 25 basis point rate cuts could be on the table this year, provided the economy performs as anticipated.
This shift in sentiment has bolstered the US Dollar for the second consecutive day, following its rebound from the lowest level seen since July 2023.
Despite this, markets continue to price in the possibility of a larger Federal Reserve rate cut by the end of the year. Meanwhile, the ongoing geopolitical tensions are further bolstering demand for safe-haven assets like gold.
As investors seek clarity on the Fed’s future actions, they are turning their attention to upcoming US economic data, including the ISM Manufacturing PMI and JOLTS Job Openings.
Consequently, the uncertainty surrounding the Fed's rate cuts and ongoing geopolitical tensions are likely to keep gold in demand as a safe-haven asset. However, a stronger US Dollar may limit gold's upward potential as investors await key economic data for further guidance.
GOLD (XAU/USD) - Technical Analysis
Gold prices are trading in a narrow range, reflecting a consolidation phase as the market digests recent comments from the U.S. Federal Reserve and awaits pivotal economic data releases. The precious metal is currently hovering around $2,638.40, showing a modest uptick of 0.14%.
The recent price action has positioned gold just below its immediate resistance at $2,650.27, which coincides closely with the 50-day Exponential Moving Average (EMA) of $2,651.13.
This technical confluence suggests a robust barrier to any upside moves unless a substantial catalyst emerges.
The Relative Strength Index (RSI) reads 45.00, indicating that momentum is neutral, with a slight bearish tilt. Given the lack of strong directional momentum, gold is likely to continue oscillating between key support and resistance levels in the short term.
On the downside, immediate support is observed at $2,633.19, a level that, if breached, could accelerate declines toward $2,624.76 and potentially $2,615.24.
For traders, the pivot point at $2,643.35 is crucial. A sustained break below this level could signal further downside risk, making a short position attractive with a target of $2,630.
Conversely, a rebound above the 50-EMA resistance could pave the way for gold to test $2,660.86 and $2,671.02, offering a possible bullish reversal.
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USD/CAD Price Analysis – Oct 01, 2024
USD/CAD Price Analysis – Oct 01, 2024
Daily Price Outlook
During the early European session on Tuesday, the USD/CAD pair prolonged its upward rally and climbing close to 1.3535. This uptick is largely supported by a stronger US Dollar, following comments from Federal Reserve Chair Jerome Powell.
He indicated that the central bank isn't in a rush and plans to lower its benchmark rate gradually. Investors are eagerly awaiting the US ISM Manufacturing Purchasing Managers Index (PMI), which is expected to rise to 47.5 in September from 47.2 in August, potentially providing fresh momentum for the markets.
On the Canadian side, the economy experienced faster-than-anticipated growth in July, but the pace seems to be slowing down in August.
This has led to increasing expectations of a significant interest rate cut by the Bank of Canada (BoC) in October.
As concerns about the economy and the labor market grow, financial markets are betting that the BoC will continue to lower rates, which could exert downward pressure on the Canadian Dollar (CAD). This scenario is likely to create a favorable environment for the USD/CAD pair to gain further traction.
USD/CAD Pair Strengthens Amid Fed Chair Powell's Gradual Rate Cut Remarks
On the US front, the USD/CAD pair is gaining strength, largely due to a stronger US Dollar (USD).
This boost follows remarks from Federal Reserve Chair Jerome Powell, who stated that the central bank is not in a hurry to make aggressive cuts and will lower its benchmark rate gradually over time.
Investors are now looking ahead to the US ISM Manufacturing Purchasing Managers Index (PMI), which is expected to improve slightly from 47.2 in August to 47.5 in September, as a potential catalyst for market movement.
Recently, Powell clarified that the recent half-percentage point interest rate cut should not be seen as a signal for more aggressive future moves.
Instead, he mentioned that upcoming changes will likely be smaller. Following the Fed's decision to cut rates by 50 basis points, officials have projected a total of half a point in additional cuts for the remainder of 2024 and one percentage point more in 2025.
However, some officials believe that only a modest amount of easing will occur by year’s end, which offers some support to the US Dollar. Overall, these developments create a cautious but optimistic outlook for the USD in the near term.
Therefore, the positive remarks from Fed Chair Powell and the projected gradual rate cuts support the USD, boosting the USD/CAD pair. As expectations for a modest economic recovery grow, the CAD may weaken, further enhancing the upward momentum for USD/CAD.
USD/CAD - Technical Analysis
The U.S. dollar is holding steady against the Canadian dollar, with the USD/CAD pair currently trading at $1.35264, a marginal dip of 0.01% as traders await key economic data releases.
The pair is hovering near its pivot point of $1.35174, which suggests that the market is seeking directional clarity amid fluctuating crude oil prices and shifts in U.S. interest rate expectations.
With the pair’s Relative Strength Index (RSI) sitting at 61, momentum is slightly in favor of the bulls, but the market is approaching overbought territory, which could cap any immediate upside movement.
Immediate resistance is noted at $1.35440, a level that aligns with recent highs and may act as a short-term barrier for further gains. A break above this resistance would pave the way for the next upside targets at $1.35811 and $1.36118.
On the downside, immediate support stands at $1.34900, followed by $1.34631, which coincides closely with the 50-day Exponential Moving Average (EMA) at $1.34861. A sustained move below these levels would likely trigger additional selling pressure, driving the pair towards the lower support at $1.34328.
The technical landscape suggests a potential buy setup above the $1.35150 mark, with a take-profit target at $1.35500 and a stop-loss at $1.34900. As long as the pair remains above the 50-EMA, the bias is slightly bullish, with buyers likely to defend the key $1.34900 support level.
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GOLD Price Analysis – Oct 01, 2024
AUD/USD Price Analysis – Oct 01, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, trading strongly around the 0.6920 level and reaching an intraday high of 0.6935, driven by strong Retail Sales data.
However, the Australian Bureau of Statistics (ABS) reported a month-over-month increase in consumer spending of 0.7% for August, significantly exceeding market expectations of a 0.4% rise.
This positive development, coupled with the Reserve Bank of Australia's (RBA) hawkish stance on interest rates, has further supported the Australian Dollar.
It should be noted that RBA held its cash rate steady at 4.35% for the seventh consecutive meeting, highlighting the necessity of a restrictive policy to combat inflation.
Moreover, China’s recent stimulus measures have bolstered the demand outlook in Australia’s largest trading partner, driving up commodity prices and further strengthening the commodity-linked Australian Dollar.
Australian Dollar Supported by RBA's Hawkish Stance and China's Stimulus Measures
As we mentioned above the Australian dollar gained traction after the hawkish stance by the Reserve Bank of Australia (RBA) regarding interest rates.
The RBA has held its cash rate steady at 4.35% for the seventh consecutive meeting, emphasizing the need for a restrictive policy to keep inflation in check.
Meanwhile, China’s recent stimulus measures have improved demand from Australia’s largest trading partner, driving up commodity prices and bolstering the Australian Dollar.
However, there are mixed signals emerging from China’s manufacturing sector. The Caixin Manufacturing Purchasing Managers' Index (PMI) fell to 49.3 in September, signaling contraction, while the NBS Manufacturing PMI showed improvement at 49.8, surpassing expectations.
During his recent visit to China, Australian Treasurer Jim Chalmers addressed the country’s economic slowdown, expressing optimism about the new stimulus measures as a positive step forward.
China plans to inject over CNY 1 trillion into its largest state banks to tackle issues like shrinking profit margins and rising bad loans, marking the first major capital infusion since the 2008 financial crisis.
Meanwhile, the RBA reported that Australia’s domestic financial system remains resilient, although concerns linger about stress in China’s financial sector and a small but growing number of Australian borrowers struggling with mortgage payments.
Therefore, the hawkish stance of the RBA and China's stimulus measures support the Australian Dollar, strengthening the AUD/USD pair. However, mixed manufacturing data from China and concerns about domestic borrower defaults may limit significant gains for the AUD.
Impact of Federal Reserve's Rate Cut Stance on AUD/USD Pair
On the US front, recent comments from Federal Reserve Chairman Jerome Powell indicate that the central bank is not in a hurry to implement aggressive rate cuts. He emphasized that any reductions to the benchmark rate will be made gradually over time, reassuring markets that the recent half-point cut should not be interpreted as a signal for more drastic actions in the future.
Current market expectations, reflected in the CME FedWatch Tool, show a 61.8% chance of a 25 basis point rate cut in November. Meanwhile, the likelihood of a larger 50 basis point cut has fallen to 38.2%. This cautious approach underscores the Fed's commitment to carefully navigating the economic landscape, ensuring that any adjustments align with broader economic conditions.
Additionally, St. Louis Federal Reserve President Alberto Musalem emphasized that the Fed should consider implementing gradual interest rate cuts after the significant half-point reduction in September. He acknowledged the possibility of economic weakness and suggested that a quicker pace of cuts might be necessary if conditions deteriorate.
On the data front, the US Core Personal Consumption Expenditures (PCE) Price Index rose by just 0.1% month-over-month in August, falling short of the expected 0.2% increase. This softer inflation reading aligns with the Fed's outlook of easing inflation in the US and reinforces the idea that a more aggressive rate-cutting cycle could be on the horizon.
Therefore, the cautious approach of the Federal Reserve regarding rate cuts, combined with lower-than-expected inflation data, may bolster the US Dollar. This could limit the upward potential of the AUD/USD pair, as the Australian Dollar faces pressure from a stronger USD.
AUD/USD - Technical Analysis
The Australian dollar (AUD) continues to edge higher against the U.S. dollar (USD), maintaining a cautious upward trajectory. As of the latest trading session, the AUD/USD pair is trading at $0.69223, marking a slight 0.15% increase.
This recent climb positions the pair above its pivot point at $0.69069, suggesting a potential for further gains if key resistance levels are breached.
Immediate resistance is observed at $0.69403, followed by additional hurdles at $0.69622 and $0.69823. The 50-day Exponential Moving Average (EMA) is currently situated at $0.69140, serving as a critical support area that underpins the current bullish bias.
A sustained hold above this level could reinforce the bullish outlook, encouraging further buying interest.
The Relative Strength Index (RSI) reads 48, signaling neutral momentum with a slight inclination towards the upside. This neutral reading suggests that the market is not yet overbought or oversold, offering room for additional price movement in either direction.
On the downside, immediate support is identified at $0.68886. Should the price break below this level, it could trigger a deeper correction towards $0.68696 and $0.68478, where buyers might step in.
Given the technical setup, a potential buy entry above $0.69069 appears favorable, targeting $0.69406 while maintaining a stop-loss just below immediate support at $0.68886.
The AUD/USD’s recent resilience hints at a measured bullish sentiment, provided it remains above the 50-EMA.
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