EUR/USD Price Analysis – Oct 25, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair is steady around 1.0830, continuing its recovery from Thursday. This rise is mainly due to a drop in the US Dollar. However, the Euro's gains may not last as the latest preliminary PMI report shows that economic activity in the Eurozone is still struggling, with the flash Composite PMI falling to 49.7 in October.
Meanwhile, the manufacturing sector has been contracting for 28 months, remaining below the key 50 mark. Although the service sector saw some growth, it was slower than expected. This ongoing decline in business activity raises concerns about the Eurozone's economic growth, leaving many unsure about the future.
Eurozone Economic Decline and ECB Rate Cut Speculation Weigh on Euro, Impacting EUR/USD Pair
As we mentioned, the gains in the shared currency might be short-lived as the latest PMI report indicates that the Eurozone's economic activity continues to decline. The flash Composite PMI dropped to 49.7 in October, showing that the manufacturing sector has been shrinking for 28 months, remaining below the crucial 50 mark that signals growth.
Although the service sector saw some unexpected growth, it was slower than hoped. This ongoing decline in business activity raises concerns about the Eurozone's economic future. Furthermore, there is increasing speculation that the European Central Bank (ECB) may implement a larger-than-usual interest rate cut in its December meeting, which could further weigh down the Euro.
This year, the ECB has already lowered its Deposit Facility Rate three times by 25 basis points, bringing it to 3.25%. Market expectations are now leaning towards a potential 50 basis point cut in December, fueled by comments from some ECB policymakers who expressed concerns about inflation staying below the bank's 2% target.
Mario Centeno, the Governor of the Bank of Portugal and an ECB policymaker noted that a 50 basis point cut is a possibility and warned of growing risks to economic growth.
Meanwhile, data released on Friday showed that the German IFO Business Climate, Current Assessment, and Expectations for October were better than expected. However, improving sentiment may not lead to a significant economic revival due to overall weak business activity.
Therefore, the ongoing decline in Eurozone economic activity and speculation of a larger interest rate cut by the ECB could weaken the Euro, putting downward pressure on the EUR/USD pair. This uncertainty may lead to increased volatility and potential losses for Euro traders.
US Dollar Recovery Supported by Fed Expectations and Economic Data, Impacting EUR/USD Pair
On the US front, the broad-based US Dollar is seeing a recovery, supported by several factors, including growing expectations that the Federal Reserve (Fed) will take a gradual approach to cutting interest rates and increasing hopes that former President Donald Trump could win the upcoming presidential election against Vice President Kamala Harris.
Investor confidence in the Fed's cautious policy is bolstered by positive economic data, including strong Nonfarm Payrolls (NFP) and Retail Sales figures for September, as well as better-than-expected flash S&P Global PMI data for October, indicating sustainable economic growth.
Moving ahead, attention will turn to the US Durable Goods Orders data for September, set to be released at 12:30 GMT, which is expected to show a decline of 1% after remaining unchanged in August.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.08213, down by 0.06% as the currency pair struggles to maintain momentum near the $1.08465 pivot point. Immediate support stands at $1.08291, a level crucial for short-term sentiment.
Should EUR/USD breach this level, it could extend the bearish move toward the immediate support target of $1.07712, with a further downside likely to test $1.07486 if selling pressure intensifies.
On the upside, EUR/USD will face strong resistance at $1.08692, a level reinforced by the 50-day EMA, which is currently sitting at $1.08092. This EMA acts as a significant pivot, potentially limiting any bullish moves unless there is a sustained break above it.
Additional resistance can be found at $1.08880, providing a key barrier for bullish sentiment should the pair reverse.
The RSI reading of 59 signals modestly bullish momentum, suggesting the pair may be on the verge of testing higher resistance levels. However, the bearish pressure currently weighs heavier as the price action remains below the pivotal $1.08465 level.
Traders may want to consider a short position below $1.08288, with a take-profit target of $1.07976 and a stop-loss at $1.08465.
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- GOLD Price Analysis – Oct 25, 2024
GOLD Price Analysis – Oct 25, 2024
Daily Price Outlook
Gold (XAU/USD) struggled to sustain its earlier bullish momentum, edging lower to around the $2,720 level on Friday as the US dollar regained strength amid rising expectations that the Federal Reserve might slow the pace of rate cuts.
Despite this, Gold remains bolstered by safe-haven demand, driven by elevated geopolitical risks. The ongoing Middle Eastern conflict and heightened uncertainty surrounding the upcoming US election are key factors steering investors toward safe assets like Gold.
Gold's Resilience Amid Escalating Geopolitical Tensions and US Election Uncertainty
Gold is expected to find continued support from safe-haven demand as tensions in the Middle East escalate. On Friday, three Lebanese journalists were killed in a bombing targeting a guesthouse frequently used by international press outlets, including Al Jazeera and Reuters.
This tragic event capped a week of intensified airstrikes by Israel on residential areas in Beirut, with bombs striking close to hospitals and leading to casualties, including a child and several Lebanese soldiers aiding in evacuations.
In diplomatic efforts, US Secretary of State Antony Blinken is meeting with representatives from Israel and Qatar in Doha to negotiate an end to the violence. This follows discussions in Cairo between Egyptian diplomats and Hamas members aimed at the same goal.
However, Hamas official Osama Hamdan has stated that the group’s position remains firm: hostages will only be released once aggression stops and a full withdrawal occurs.
In the US, election uncertainties add another layer of risk. Republican nominee Donald Trump is gaining traction, leading in recent polls in key states like Pennsylvania and North Carolina.
Although FiveThirtyEight’s model shows Vice President Kamala Harris slightly ahead, Trump’s growing odds have raised concerns over potential shifts in foreign policy, which could further support safe-haven flows into Gold.
Therefore, the intensifying Middle Eastern conflict and US election uncertainties are bolstering Gold's appeal as a safe-haven asset, likely driving prices higher as investors seek stability amid geopolitical risks and the potential for shifts in US foreign policy.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,723.99, down 0.30%, showing some weakness after briefly breaching the $2,727.96 pivot point. The precious metal remains under pressure as it hovers just above the key support at $2,720.89. Should gold fail to hold this support level, the next downside target is $2,701.94, followed by deeper support at $2,693.29.
On the upside, gold will need to overcome immediate resistance at $2,733.87 to regain some bullish momentum. Further resistance levels lie at $2,739.63 and $2,748.90, which could serve as key areas to watch for any potential recovery. The 50-day EMA sits at $2,733.22, acting as another significant resistance point.
Technically, the RSI is currently at 46, signaling a neutral to slightly bearish sentiment. This reading indicates that momentum remains weak, and further declines could be on the horizon unless we see a bullish push past the $2,733 resistance zone. However, should gold find support above $2,720 and manage to bounce back, we could witness a rally targeting $2,740 in the short term.
For traders, a buy-limit entry around $2,725, with a take-profit target of $2,740 and a stop-loss at $2,715, could provide a balanced risk-reward opportunity. However, the failure to maintain above $2,720 could open doors for further downside.
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AUD/USD Price Analysis – Oct 24, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its upward trend, remaining well bid around 0.6656 and reaching an intraday high of 0.6662. However, this upward trend was driven by a modest decline in the US Dollar (USD), which lost its traction in the wake of weaker US Treasury bond yields.
Moreover, the risk-on performance in equity markets has prompted profit-taking on the safe-haven USD, benefiting the risk-sensitive Australian Dollar (AUD). However, a combination of factors is likely to limit any significant decline in the USD, capping the potential gains for the AUD/USD pair.
US Dollar Index Retreats as Bond Yields Correct, Impacting AUD/USD Pair
On the US front, the broad-based US Dollar has retreated from a nearly three-month high and faced mild decline on Thursday. This decline is linked to a correction in US Treasury bond yields as well as stable performance in equity markets has led to profit-taking on the safe-haven USD, which benefits the risk-sensitive Australian Dollar (AUD).
Meanwhile, the market participants have fully priced out the chances of a more aggressive policy easing by the Federal Reserve, as recent US economic data indicates that the economy remains strong.
However, the concerns about increased deficits from spending plans by Vice President Kamala Harris and Republican nominee Donald Trump are expected to support US bond yields and revive demand for the USD.
Looking ahead, traders are eager for the release of the flash US PMI figures for October. Meanwhile, US bond yields and overall risk sentiment will influence USD price movements, creating potential short-term trading opportunities for the AUD/USD pair.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.66459, marking a 0.19% gain in today's session. The price hovers just below the pivot point at $0.66509, with immediate resistance at $0.66682. Should the pair break above this level, further resistance can be found at $0.66895 and $0.67071. However, if AUD/USD fails to hold its current position, immediate support lies at $0.66302, followed by deeper support levels at $0.66135 and $0.65993.
The technical indicators suggest a cautious outlook. The 50-day Exponential Moving Average (EMA) is at $0.66622, indicating that the pair is slightly below this key technical level, which could cap further upside momentum. Traders will be closely watching to see if the pair can break above the EMA or if downward pressure resumes.
Given the current price action, a sell limit order at $0.66548 might offer an opportunity, with a take-profit target of $0.66294. A stop-loss at $0.66722 would help manage potential risks should the pair break above key resistance levels.
Conclusion: AUD/USD remains below its 50 EMA, with resistance at $0.66682 posing a challenge. A sell limit order at $0.66548 with a target of $0.66294 could capitalize on short-term bearish momentum, though traders should watch for any break above $0.66722 for potential upside risks.
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USD/JPY Price Analysis – Oct 24, 2024
Daily Price Outlook
The USD/JPY pair has been on a bearish trend recently, influenced by several factors. The Japanese Yen (JPY) has gained strength, while the US Dollar (USD) has weakened slightly. This came after Japanese officials made verbal interventions, expressing concerns over the Yen's rapid depreciation.
This prompted some buyers to turn to the Yen, which, along with a modest decline in the USD, pushed the USD/JPY pair down to around 152.00. Fears of government intervention to stabilize the Yen further fueled this downward movement in the USD/JPY pair.
Japanese Yen Edges Higher After Verbal Intervention and BoJ Rate-Hike Uncertainty
The Japanese Yen's recent rise has been influenced by verbal intervention from Finance Minister Katsunobu Kato, who voiced concerns about one-sided currency movements. Additionally, Deputy Chief Cabinet Secretary Kazuhiko Aoki emphasized that the government is closely monitoring foreign exchange fluctuations.
However, uncertainty surrounding the Bank of Japan's (BoJ) interest rate hike decisions looms large, especially with the general election approaching on October 27.
Recent opinion polls indicate that the ruling Liberal Democratic Party (LDP) may lose its majority, raising doubts about the BoJ's ability to continue raising rates. This uncertainty is limiting the Yen's recovery, preventing it from gaining significant ground and creating mixed sentiment in the USD/JPY pair.
Support for the US Dollar Amid Fed Expectations and Economic Data Insights
On the other hand, expectations of a less aggressive approach from the Federal Reserve (Fed) are providing some support to the US Dollar. Market participants expect the Fed to implement modest rate cuts over the coming year, especially after the US election.
This view, combined with concerns over increased deficit spending under a new US administration, has driven US bond yields higher, limiting the downside for the USD. As a result, this has helped prevent further declines in the USD/JPY pair.
Traders are now awaiting fresh economic data, particularly the release of flash US PMI prints, which will influence USD price dynamics and likely set the short-term direction for the USD/JPY. Additionally, stability in the equity markets could lead to dip-buying, helping to stabilize the pair. (edited)
USD/JPY – Technical Analysis
USD/JPY is currently trading at 152.151, down 0.39% during the session, signaling potential bearish momentum. The pair is approaching its pivot point at 152.575, indicating that traders are eyeing key support and resistance levels closely.
Immediate resistance lies at 153.180, with further upside potential at 153.698 if USD/JPY gains strength. However, the current downward pressure suggests that a retest of key support levels is more likely. Immediate support is seen at 151.908, with stronger support at 151.601 and a deeper level at 151.171.
The technical indicators present a mixed picture. The Relative Strength Index (RSI) stands at 56, suggesting that the pair is in a neutral range, although slightly favoring sellers. Additionally, the 50-day Exponential Moving Average (EMA) is positioned at 150.911, providing a lower boundary that could act as strong support should the pair continue to fall.
With USD/JPY trading near the 152.300 level, a sell entry could be considered, aiming for a take-profit level at 151.600. Traders should set a stop-loss at 152.950 to manage risks effectively if the pair reverses direction.
USD/JPY faces immediate bearish pressure, with a key sell entry below 152.300. Traders should watch for potential downside toward 151.600, while resistance at 153.180 could limit any rebound.
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- GOLD Price Analysis – Oct 24, 2024
GOLD Price Analysis – Oct 24, 2024
Daily Price Outlook
Gold (XAU/USD) has bounced back, trading around $2,739 on Thursday after a slight drop of 1.2% the day before, likely due to profit-taking. However, the precious metal is seeing renewed interest as investors turn to safe-haven assets amid the escalating conflict in the Middle East, which shows no signs of easing.
Moreover, the reports of North Korea sending troops to Russia to potentially engage in the Ukraine war have ramped up geopolitical tensions. Plus, rising electoral uncertainties in the U.S. are adding to market jitters.
As investors look for stability in these turbulent times, gold is becoming increasingly appealing, proving once again its value as a reliable safe haven during crises. Given these developments, it seems that gold will continue to attract those seeking a protective asset in today’s unpredictable global landscape.
Gold Gains Momentum Amid Central Bank Rate Cuts and BRICS Summit Focus
On the flip side, gold is gaining traction after the Bank of Canada decided to cut its cash rate by 50 basis points on Wednesday. This has people wondering if the European Central Bank (ECB) might follow suit and lower rates in December, especially with some disappointing economic data coming out of Europe.
As interest rates around the world are expected to drop, gold starts looking like a more attractive option. After all, it doesn’t pay interest, so when rates fall, investors who want some stability often turn to gold as a safe haven.
However, things are shifting in the U.S. regarding interest rates. Strong labor market data has made it less likely that the Federal Reserve will aggressively cut rates anytime soon. Meanwhile, everyone's eyes are on the upcoming BRICS summit in Kazan, Russia.
Countries like Russia are starting to look for alternatives to the U.S. dollar’s dominance, and the idea of a currency backed by gold is gaining some buzz. This shift towards gold as a potential alternative currency, combined with actions from central banks around the globe, is likely to give gold prices a nice boost in the weeks ahead.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,725.85, showing modest gains of 0.38% during the current session. The price is hovering around the pivot point at $2,727.96, indicating potential consolidation before a decisive move.
Immediate resistance lies at $2,733.87, and if this level is breached, the next key resistance points to watch are $2,739.63 and $2,746.70. On the downside, immediate support can be found at $2,720.89, with further support levels at $2,708.90 and $2,701.94, respectively.
The technical indicators present a mixed outlook. The Relative Strength Index (RSI) is at 46, suggesting a neutral stance, neither overbought nor oversold. However, Gold remains below its 50-day Exponential Moving Average (EMA) of $2,735.70, signaling continued downward pressure unless the metal can break above this level.
A close above the 50 EMA could encourage further bullish momentum, pushing prices toward the higher resistance zones.
Given the current positioning, traders might consider an entry above $2,720, with a target of $2,733 for potential profit-taking. However, a stop-loss at $2,710 is advisable to manage downside risks, particularly if Gold dips below the immediate support level.
Conclusion: Gold remains in a neutral technical zone, with the pivot point at $2,727.96 being critical for the next move. A break above $2,733.87 could spark further gains, while a drop below $2,720.89 could increase bearish pressure.
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GBP/USD Price Analysis – Oct 23, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward momentum, holding strong around the 1.2995 level. This is quite impressive, especially given the typically bullish US dollar, which tends to push prices down.
However, the Pound Sterling (GBP) found support following comments from Bank of England Monetary Policy Committee member Megan Greene. She shared a slightly hawkish perspective on interest rates during her discussion with the Atlantic Council at the IMF meeting on Tuesday. This was seen as a key factor that kept the GBP/USD pair higher.
Looking ahead, traders are keeping a close eye on the upcoming flash S&P Global/CIPS Purchasing Managers Index (PMI) data for October, set to be released on Thursday. Meanwhile, the expectations are for the PMI report to show modest growth in overall business activity, which could further influence market sentiment.
Pound Sterling Strengthens on Hawkish BoE Outlook Amid Upcoming Key Speech
As we mentioned, the British currency has gained traction right after hawkish comments from Bank of England (BoE) Monetary Policy Committee member Megan Greene. During a discussion with the Atlantic Council at the International Monetary Fund (IMF) meeting, Greene provided a slightly hawkish outlook on interest rates.
She emphasized the need for monetary policy to continue addressing inflation to meet target levels. When asked if the recent decline in UK inflation would affect her vote in November, Greene noted that the drop was influenced by volatile factors and suggested she wouldn’t rely too heavily on this data.
It's important to remember that Greene was one of the four MPC members who voted to keep interest rates unchanged in August when the BoE reduced rates by 25 basis points to 5%. Moving ahead, the next key event for the Pound Sterling will be BoE Governor Andrew Bailey’s speech scheduled for 18:45 GMT.
Investors will be keen to hear his insights for clues on potential monetary policy changes in November and December. Meanwhile, traders are already anticipating another interest rate cut in November, which could further influence the Pound's performance.
Therefore, the Pound's strengthening due to Megan Greene's hawkish comments may bolster the GBP/USD pair. If BoE Governor Bailey's upcoming speech suggests a more cautious stance on rate cuts, it could support the Pound further, enhancing its value against the US dollar.
US Dollar Strengthens Amid Election Uncertainty, Pressuring GBP/USD
On the US front, the broad-based US dollar has been gaining strength, putting pressure on the Pound Sterling, which is struggling to stay above the psychological resistance level of 1.3000 against the US dollar during Wednesday's London session. This increase in the dollar's appeal as a safe haven comes amid uncertainty surrounding the upcoming US presidential elections on November 5.
However, recent polls show Vice President Kamala Harris with a slight lead over former President Donald Trump, raising concerns among investors. Market participants are worried that if Trump wins, it could lead to higher tariffs, negatively affecting exports from key trading partners such as the Eurozone, Canada, Mexico, China, and Japan.
Moreover, expectations for a gradual easing of Federal Reserve policies this year and into 2025 have further boosted the dollar's appeal. The International Monetary Fund (IMF) has also raised its growth forecast for the US in 2023 to 2.8% from 2.6% previously, along with increasing GDP projections for 2025 to 2.2%.
Therefore, the strengthening US dollar, driven by election uncertainties and higher growth forecasts, places downward pressure on the GBP/USD pair.
GBP/USD – Technical Analysis
Technically, GBP/USD is trading just below its pivot point of $1.30087, indicating a potential for range-bound price action in the short term. Immediate resistance is noted at $1.30716, with higher resistance levels at $1.31246 and $1.31760. A move above $1.30716 could push the pair toward these higher resistance levels, but momentum appears to be fading.
On the downside, immediate support is found at $1.29495, with subsequent support at $1.28987 and a deeper level at $1.28242. A breach below $1.29495 would likely signal increased selling pressure, potentially leading to a more significant correction toward the lower support zones.
The Relative Strength Index (RSI) is at 44, suggesting a lack of strong directional bias as the pair remains in neutral territory. Meanwhile, the 50-day Exponential Moving Average (EMA) at $1.30268 indicates that GBP/USD is struggling to break back above critical resistance, which reinforces a slightly bearish outlook for the near term.
For traders, a short position may be considered if GBP/USD drops below $1.30252, with a take-profit target at $1.28981 and a stop-loss at $1.30761 to manage potential upside risks.
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EUR/USD Price Analysis – Oct 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair failed to stop its downward trend and remains under pressure due to a faster-than-expected decline in inflation and increasing concerns over a potential downturn in the Eurozone economy, leading to speculation about further interest rate cuts by the European Central Bank (ECB).
Concurrently, the US dollar has strengthened, driven by various factors, including political uncertainty ahead of the upcoming US presidential election and expectations that the Federal Reserve’s (Fed) policy-easing cycle will proceed more gradually than anticipated. Investors will be particularly focused on the Fed’s Beige Book, set to be released on Wednesday at 18:00 GMT, along with speeches from several Fed and ECB members, including President Lagarde.
EUR Under Pressure as Inflation Declines and ECB Rate Cut Speculation Grows
On the EUR front, the outlook for the Euro (EUR) has worsened due to a faster-than-expected decline in inflation and rising concerns about a potential downturn in the Eurozone economy. This situation has sparked speculation about more interest rate cuts by the European Central Bank (ECB), which has already lowered its Deposit Facility Rate three times this year. Many traders expect another cut in December, prompting discussions about what level of borrowing rates would effectively control inflation while also encouraging economic growth.
Recently, some ECB officials have debated whether to lower interest rates below the so-called neutral rate, which is estimated to be around 2% to 2.25%. Lithuanian central bank governor Gediminas Šimkus highlighted concerns about inflation potentially staying too low, suggesting that if disinflation continues, rates may drop below natural levels.
Meanwhile, ECB President Christine Lagarde expressed confidence that inflation would return to the bank’s target of 2% by 2025, earlier than expected. She noted that while the direction of monetary policy is clear, the pace of future interest rate cuts will depend on incoming economic data.
Therefore, the worsening outlook for the Euro and expectations of further ECB rate cuts are likely to keep the EUR/USD pair under pressure. A weaker Euro combined with a stronger US dollar could lead to continued declines in the EUR/USD exchange rate.
US Dollar Strength Pressures EUR/USD Amid Political Uncertainty and Fed Expectations
On the US front, the broad-based US dollar (USD) is gaining strength, pushing the EUR/USD pair down to near 1.0780 level. However, this strength in the dollar is fueled by political uncertainty ahead of the upcoming US presidential election and expectations that the Federal Reserve (Fed) will adopt a more gradual approach to any policy easing than previously thought.
Market sentiment has shifted due to increasing bets that former President Donald Trump could win the election, scheduled in less than two weeks. While recent polls show Vice President Kamala Harris with a slight lead, a Trump victory could lead to higher tariffs and lower taxes, potentially pushing the Fed to adopt a more restrictive policy stance.
Currently, markets anticipate two 25 basis point interest rate cuts from the Fed in November and December. However, analysts suggest that the Fed is unlikely to implement another large rate cut like the one in September, especially since recent Nonfarm Payrolls (NFP) data indicates that labor demand remains strong. Investors are closely watching the Fed’s Beige Book release at 18:00 GMT, along with speeches from Fed and ECB officials, including President Lagarde.
Therefore, the strengthening US dollar, driven by political uncertainty and expectations of gradual Fed policy easing, is likely to continue putting downward pressure on the EUR/USD pair.
EUR/USD – Technical Analysis
From a technical perspective, EUR/USD is trading just below its pivot point of $1.08117, signaling indecision in the market and the potential for a breakout in either direction.
Immediate resistance is found at $1.08309, followed by $1.08475, and a stronger level at $1.08698. A breach of these resistance levels may trigger a broader upward move, but current momentum remains subdued.
On the downside, immediate support sits at $1.07920, with additional levels at $1.07712 and $1.07486. A break below $1.07920 would likely signal renewed selling pressure, pushing the pair toward these lower support levels.
The Relative Strength Index (RSI) is at 36, indicating mild bearish momentum, as EUR/USD remains in a consolidative phase. The 50-day Exponential Moving Average (EMA), currently at $1.08344, suggests that prices are trading below a critical threshold, reinforcing the short-term bearish outlook.
For traders, a short position could be considered if EUR/USD drops below $1.08179, with a target at $1.07716 and a stop-loss at $1.08478 to manage upside risks.
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- GOLD Price Analysis – Oct 23, 2024
GOLD Price Analysis – Oct 23, 2024
Daily Price Outlook
Gold (XAU/USD) is on a remarkable upward trend, breaking into the $2,750 level on Wednesday and setting new all-time highs. This surge is largely fueled by a heightened demand for safe havens as tensions continue to escalate in the Middle East and uncertainty looms over the upcoming elections in the US.
With former President Donald Trump and Vice President Kamala Harris locked in a tight race in the polls, the prospect of a Trump win raises concerns about stability on the geopolitical front.
Rising Geopolitical Tensions in the Middle East Fuel Gold Price Surge
On the geopolitical front, the increasing tension in the Middle East is pushing gold prices higher as investors seek safe-haven assets. Despite efforts for a ceasefire, fighting continues between the Israeli army, Hamas, and Hezbollah in Gaza and Lebanon.
The death of Hamas leader Yahya Sinwar has not opened any new avenues for negotiations, which many had hoped for. U.S. Secretary of State Antony Blinken, on his eleventh visit to the region, appears no closer to securing a ceasefire, even as reports suggest progress. Recently, he had to take cover in a bunker during air-raid sirens in Tel Aviv.
However, the situation is escalating, with the Israeli military launching attacks on the ancient city of Tyre in Lebanon after warning residents to evacuate. Furthermore, conflict is expected to intensify as Israel prepares for a potential retaliatory strike against Iran.
This urgency follows an incident where an Iranian drone breached Israeli air defenses and exploded near Prime Minister Benjamin Netanyahu’s residence.
Impact of Strengthening US Dollar and Rate Cut Expectations on Gold Prices
On the US front, the broad-based US dollar is gaining strength as recent signs of economic resilience and inflation concerns reduce the likelihood of significant interest rate cuts by the Federal Reserve in November.
The CME FedWatch Tool shows a 91% chance of a modest 25-basis-point rate cut, but expectations for a larger 50-basis-point cut are absent. Currently, the yields on 2-year and 10-year US Treasury bonds are 4.04% and 4.21%, respectively.
Federal Reserve Bank of Minneapolis President Neel Kashkari noted that the Fed is carefully watching the labor market for any signs of instability. He advised investors to prepare for a gradual pace of rate cuts in the upcoming quarters, indicating that any easing will be moderate rather than aggressive.
Meanwhile, San Francisco Fed President Mary Daly expressed support for further easing, believing there is no reason to stop lowering rates.
In contrast, Kansas City Fed President Jeffrey Schmid took a more cautious stance, suggesting restraint in large rate cuts and emphasizing that the labor market is stabilizing rather than deteriorating.
Consequently, the strengthening US dollar and reduced expectations for significant interest rate cuts may pressure gold prices, as higher interest rates typically increase the opportunity cost of holding non-yielding assets like gold. This could lead to decreased investor demand for gold.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) continued their modest upward trend on Wednesday, edging 0.04% higher to $2750.14 during the early European session. The precious metal remains buoyant, underpinned by global macroeconomic concerns and a weakening U.S. dollar, providing solid ground for bullish sentiment.
On the 4-hour chart, key technical levels reveal that Gold is positioned just above its pivot point of $2739.97, which could act as a critical marker for further upside momentum. Immediate resistance stands at $2752.73, followed by stronger hurdles at $2764.86 and $2776.39. If prices close above the immediate resistance level, Gold may gather enough momentum to test the higher resistance at $2764.86.
On the downside, initial support lies at $2729.46, with subsequent supports at $2716.59 and $2701.94. A breach of $2729.46 could trigger a deeper corrective pullback toward these lower levels.
From a technical standpoint, the Relative Strength Index (RSI) is currently at 66.00, indicating that Gold is nearing overbought territory but still has room for upward movement before significant correction risk emerges.
The 50-day Exponential Moving Average (EMA) of $2718.48 provides additional bullish confirmation, as prices remain comfortably above this key moving average, suggesting ongoing bullish strength in the short term.
For traders looking for entry points, the outlook remains positive with a buy entry above $2740, targeting the next resistance at $2764. However, caution is warranted with a stop loss at $2729 to manage downside risks.
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AUD/USD Price Analysis – Oct 22, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, gaining positive traction around the 0.6687 level and reaching an intra-day high of 0.6694.
This upward movement can be attributed to the hawkish outlook from the Reserve Bank of Australia (RBA), driven by strong employment data from Australia. Additionally, China's recent rate cuts provided further support for the AUD, as China is Australia’s largest trading partner.
However, the pair gains could be limited amid sharp rise in US Treasury yields, which surged over 2% on Monday due to signs of robust economic activity and concerns about a potential resurgence of inflation in the United States.
Traders are now anticipating the upcoming Purchasing Managers Index (PMI) reports from both the US and Australia, set for release on Thursday. These reports could offer further insights into the economic outlooks and influence future monetary policy decisions.
Positive RBA Outlook and Strong Employment Data Support AUD/USD, But Future Rate Cut Expectations May Limit Gains
On the AUD front, the Australian Dollar received support from a positive outlook on the Reserve Bank of Australia’s (RBA) policy, fueled by strong employment data. China's recent interest rate cuts also benefited the AUD, as China is Australia’s largest trading partner.
RBA Deputy Governor Andrew Hauser, speaking at the CBA 2024 Global Markets Conference, highlighted the surprisingly strong employment growth and noted that while the RBA closely watches data, it remains flexible and not overly focused on short-term changes.
On the data front, Australia’s job market showed impressive gains in September, with employment rising by 64.1K, much higher than the expected 25K increase. This pushed total employment to a record 14.52 million.
Meanwhile, the unemployment rate held steady at 4.1%, below the forecasted 4.2%. In response to these developments, the National Australia Bank revised its outlook for RBA rate cuts, now predicting the first reduction in February 2025, instead of May, with rates expected to drop gradually to 3.10% by early 2026.
Therefore, the strong employment data and positive RBA outlook boosted the AUD/USD pair, but future rate cut expectations could limit gains as market focus shifts to long-term monetary easing by the RBA.
US Dollar Strengthens on Strong Economic Data and Reduced Fed Rate Cut Expectations, Pressuring AUD/USD Pair
On the US front, the US Dollar gained strength as recent economic data reduced the chances of a large interest rate cut by the Federal Reserve (Fed) in November. The CME FedWatch Tool now indicates an 89.1% likelihood of a 25-basis-point rate cut, with no expectation of a bigger 50-basis-point cut.
US Treasury bond yields also reflect this sentiment, with 2-year yields at 4.02% and 10-year yields at 4.19%. Federal Reserve officials, including Minneapolis President Neel Kashkari, have noted that while the Fed will eventually ease rates, the process will likely be gradual, not aggressive.
On the data front, US economic indicators showed strength. Retail sales increased by 0.4% month-over-month in September, better than both the previous month's 0.1% rise and market expectations of a 0.3% gain.
Additionally, Initial Jobless Claims fell by 19,000 in the week ending October 11, the largest drop in three months, with total claims at 241,000, much lower than the expected 260,000. These figures suggest a healthy labor market, further supporting the Fed’s cautious approach to cutting interest rates gradually.
Therefore, the strong US economic data and reduced chances of aggressive Fed rate cuts boosted the US Dollar, putting downward pressure on the AUD/USD pair as the USD gained strength against the Aussie Dollar.
AUD/USD – Technical Analysis
The Australian dollar is showing a modest uptick against the U.S. dollar, with the AUD/USD pair currently trading at $0.66875, up 0.44% on the day. On the 4-hour chart, the pair remains near key pivot levels, indicating potential for both upside and downside movement depending on upcoming economic data and market sentiment.
The immediate pivot point stands at $0.66985, with the pair's direction largely dictated by price action around this level.
Immediate resistance lies at $0.67233, and if breached, could lead to further upside with targets at $0.67454 and $0.67688. On the flip side, should bearish momentum take over, the price could slip toward immediate support at $0.66687, followed by $0.66512 and $0.66302.
The 50-day Exponential Moving Average (EMA), which is currently positioned at $0.66883, serves as a dynamic support level and will play a critical role in determining near-term direction.
The Relative Strength Index (RSI) is currently at 52, indicating neutral momentum, suggesting that neither buyers nor sellers have a strong grip on the market at present. With the RSI hovering around the mid-point, traders should watch for potential shifts in sentiment based on global risk factors and U.S. dollar dynamics.
In conclusion, the current price action suggests a possible short-term bearish bias if the price slips below $0.66982. A sell entry below this level with a target of $0.66681 and a stop-loss at $0.67158 may provide favorable risk-reward opportunities. However, upside potential remains viable if resistance levels are tested.
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USD/CAD Price Analysis – Oct 22, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair struggled to maintain its bullish momentum, dropping to around the 1.3830 level despite a strong US dollar and a dovish stance from the Bank of Canada (BoC) regarding interest rate cuts.
However, the recent losses in the USD/CAD pair may be short-lived, as the BoC is anticipated to cut interest rates by 50 basis points to 3.75%.
Moreover, a bullish US dollar could help limit further declines in the pair. The outlook for the US dollar remains positive, with investors expecting a gradual rate-cut cycle from the Federal Reserve for the remainder of the year.
Anticipated Rate Cuts and Economic Challenges for the Canadian Dollar
On the CAD front, the USD/CAD pair experiencing fluctuations as investors await the Bank of Canada’s (BoC) interest rate decision, set to be announced on Wednesday. However, the BoC is expected to cut its key borrowing rate by 50 basis points (bps) to 3.75%.
This would mark the fourth consecutive interest rate reduction by the central bank. The larger cut is a response to a rising unemployment rate and slowing inflation, indicating the need for stronger economic support.
On the data front, the latest figures highlight ongoing challenges in the Canadian economy. The slight decrease in the unemployment rate to 6.5% suggests some improvement, but it is still above the 5% level typically associated with full employment. This indicates that many Canadians are still struggling to find jobs.
These factors have prompted discussions around the need for more stimulus to encourage spending and job creation. As a result, the anticipated rate cuts from the BoC are seen as crucial to supporting economic recovery and addressing these persistent issues.
US Dollar Strength and Its Impact on the USD/CAD Pair
On the US front, a strong US dollar has been helping the USD/CAD pair. Investors are optimistic about the USD’s outlook, as many expect the Federal Reserve (Fed) to start a gradual rate-cut cycle later this year.
According to the CME FedWatch tool, the Fed is likely to reduce interest rates by 25 basis points (bps) in both November and December. This potential rate cut is contributing to the USD's strength and helping the USD/CAD pair to limit its losses.
In addition, the upcoming presidential election, just two weeks away, is adding uncertainty to the Canadian dollar. However, the competition between former President Donald Trump and current Vice President Kamala Harris is intense, and a Trump victory could lead to higher import tariffs. This would negatively impact the currencies of the US's trading partners, including Canada.
On the economic front, investors are also keenly awaiting the flash S&P Global PMI data for October, scheduled for release on Thursday. This data will provide insights into the economic health of both the US and Canada, further influencing the currency markets.
USD/CAD – Technical Analysis
The USD/CAD pair is trading near $1.38294, slightly down by 0.02% on the 4-hour chart. Currently, the pair remains below the pivot point at $1.38441, showing a neutral-to-bearish bias in the short term. Despite the minor decline, the pair is holding above key support levels, which could provide a bounce, though resistance areas will need to be tested for further upside momentum.
Immediate resistance is positioned at $1.38623, followed by $1.38821 and $1.39030. A successful break above these resistance levels could signal renewed bullish momentum. However, failure to breach these areas may result in further consolidation or a deeper pullback.
On the downside, immediate support is at $1.38120, with subsequent support levels at $1.37911 and $1.37691. The 50-day Exponential Moving Average (EMA), located at $1.37976, is acting as a dynamic support level and will be a critical indicator for traders to watch. A move below this EMA could lead to additional downside pressure.
The Relative Strength Index (RSI) is currently at 58, indicating that there is still room for upward movement, though momentum remains moderate.
In conclusion, the technical picture for USD/CAD remains mixed, with critical support and resistance levels providing the next directional cues.
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