Daily Price Outlook

The EUR/USD currency pair began the week with early losses in Asian trading on Monday. However, it managed to recover during the European session when an encouraging German GDP report was released, leading to a 0.2% increase, bringing it to 1.0565. In fact, the pair completely erased its losses following the release of this positive data.

This week is packed with economic data, and traders are closely monitoring the Eurozone GDP and inflation data. These reports are pivotal because they offer insights into what can be anticipated during the eagerly awaited Federal Reserve (Fed) meeting scheduled for Wednesday.

German Q3 2023 Economic Performance

According to the latest report from Destatis, the German economy experienced a minor setback in the third quarter of 2023. It contracted by 0.1% during this period, which was better than the anticipated 0.3% contraction. In the preceding quarter (Q2), there was no growth at all.

On an annual basis, the GDP rate declined by 0.3% in Q3, which was slightly worse than the previous reading of -0.2%, but it still outperformed the expectations of market experts who had predicted a 0.7% slowdown. Therefore, although there was a slowdown, it wasn't as severe as some had feared, offering a glimmer of optimism for the German economy.

Fed's Rate Decision and US Inflation Data

It's worth noting that the Federal Reserve (Fed) is expected to maintain interest rates at their current levels at the conclusion of its two-day meeting this Wednesday. Fed Chair Jerome Powell has recently indicated that inflation remains relatively high, suggesting the possibility of further interest rate hikes before the year concludes. This potential scenario could lead to a stronger US Dollar, which might not bode well for the EUR/USD pair.

In recent data, the Core US Personal Consumption Expenditure Index (PCE) indicated a 3.7% increase in September, a slight decrease from the 3.8% reported previously. On a monthly basis, it rose from 0.1% to 0.3%. Furthermore, the PCE Price Index for September stood at 3.4% year-on-year, in line with expectations. These figures offer valuable insights into the prevailing inflation situation in the United States, which the Fed is closely monitoring.

EUR/USD - Technical Analysis

The EUR/USD currency pair, a cornerstone of the forex market, remains a major focus for global investors. As of October 30, the pair is priced at 1.05594, witnessing a marginal upward movement of 0.03% over the preceding 24 hours. While specific rankings shift, the sheer volume and liquidity of the EUR/USD position it as a frontrunner in the forex trading arena. The substantial market capitalization and vast supply, transacted in the millions and billions, further accentuate its significance in the global currency market landscape.

Digging into the technicals, the pivot point for the pair stands at 1.0578. On the resistance side, immediate levels are pegged at 1.0610, followed by 1.0645, and then 1.0682. Conversely, the support structures are found at 1.0524, 1.0491, and deeper at 1.0454. The RSI, a pivotal momentum oscillator, registers a value of 46. An RSI below 50 typically signals bearish sentiment among traders, and this current positioning hints at a cautious or bearish outlook. In the realm of MACD, the line, with a reading of 0.001, is in line with the signal, indicating a neutral stance, but any divergence here would be telling of momentum shifts. The 50 EMA for EUR/USD is currently at 1.0574. Given that the price is slightly below this level, this suggests a potential short-term bearish inclination.

While specific chart patterns are not detailed here, they play a pivotal role in shaping the narrative for the asset. Patterns like symmetrical triangles or channels can provide valuable insight into potential price breakouts or breakdowns.

In conclusion, the broader sentiment for EUR/USD appears to lean bearish, especially if it trades below the crucial 1.0578 mark. However, the currency pair's inherent volatility and susceptibility to macroeconomic events mean traders should exercise vigilance and continuously monitor geopolitical and economic developments that could influence its trajectory.

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Daily Price Outlook

Gold price (XAU/USD) has maintained its bullish bias and has been going up for three days. It's now getting close to its multi-month high level. However, this upward movement is mainly because people see gold as a safe place to put their money, especially during times when conflict risks in the Middle East are rising. Investors tend to turn to gold when things are uncertain. Furthermore, the stable value of the US Dollar, which hasn't been fluctuating much, is also boosting the demand for gold.

Nevertheless, the price of gold has not yet reached the levels it attained five months ago. This is largely due to the belief that the Federal Reserve will maintain a cautious approach to interest rates, thereby keeping them higher for an extended duration. When interest rates are high, gold becomes a less enticing investment option.

Global Tensions and Fed's Stance Impacting Gold Prices

It's important to mention that the ongoing global tensions are still supporting the demand for safe-haven assets like gold. Recent events, such as the brief entry of Israeli troops and tanks into Gaza, and talks about a possible larger-scale invasion, have heightened market and investor concerns. As a result, the price of gold has been on the rise.

Moreover, the US military carried out airstrikes in Syria as a response to attacks on American troops in that area. President Joe Biden directly warned Iran's leader about the consequences of targeting US military bases and personnel in the Middle East. All of these events together are playing a part in the ups and downs we're seeing in the price of gold.

US Economic Growth Strong, But Fed's Next Move Uncertain

Recent data shows that the US economy had a strong third quarter, with a 4.9% expansion. This is the fastest growth in almost two years. With this robust performance, it suggests that the Federal Reserve can stick to its strict policies and might even think about raising interest rates again before the year ends.

However, the latest data indicating lower-than-expected inflation has sparked speculation that the Federal Reserve could opt to keep its current approach intact come November. Consequently, investors are on the edge, eagerly anticipating the release of the US PCE Price Index data to better understand the Federal Reserve's possible moves before making substantial investment choices.

GOLD (XAU/USD) - Technical Analysis

Amidst the volatile global economic landscape, gold has consistently stood as a beacon for investors, offering a sanctuary during unpredictable times. On October 27, gold was traded at $1989.045, marking a rise of 0.21% within the last 24 hours. This data, sourced from a 4-hour chart, offers a granular look at the precious metal's intraday movements. The pivot point for the day stood at $1986, with immediate resistances marked at $1998, $2012, and $2023. On the flip side, support levels were established at $1963, $1947, and $1932.

The technical indicators paint an interesting picture. The Relative Strength Index (RSI) positioned itself at 62, indicating a bullish sentiment. While not in the overbought territory, it's noteworthy that the RSI is above the midpoint of 50, suggesting potential for further upside. Additionally, gold's price trajectory over its 50-Day Exponential Moving Average (50 EMA) further cements its short-term bullish stance, given that the metal is trading above the 50 EMA benchmark of $1960.

Chart analysis reveals an upward channel, highlighting a series of higher highs and lows. This pattern underscores a bullish bias, suggesting that if the current trend persists, gold might touch the upper echelons of the channel in the near future. In conclusion, the overall sentiment for gold appears bullish, especially given its position above the critical 50 EMA and the observed upward channel.

However, a dip below $1812 might tilt the scales to a bearish outlook. In the upcoming sessions, it's plausible that gold could challenge the resistance level at $1998. As global events and economic indicators continuously shift, investors should remain vigilant and abreast of updates that might impact gold's trajectory.

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Despite the robust U.S. growth figures, the global market sentiment has failed to turn positive, and it continues to show negative trends on Friday. Specifically, U.S. markets are facing a downturn, with the S&P 500 falling below 4,200 points after experiencing its worst one-day drop on the Nasdaq since February. However, this decline mirrors the performance of the European markets, as the STOXX 600 index has dropped by 1% and is hovering near a seven-month low, just ahead of the European Central Bank's (ECB) policy decision scheduled for Thursday.

Strong US Economic Data Supports Higher Interest Rates and Market Sentiment

Notably, the S&P 500 experienced a significant 2% drop on Thursday, just ahead of Fed Chair Powell's latest speech. Many people are awaiting guidance from the Federal Reserve Chair regarding the bank's potential actions at the upcoming meeting. It's anticipated that the Fed will maintain the current interest rates at 5.5% next week, despite the sustained strength of the U.S. economy. Furthermore, given the current impact of tensions in the Middle East, Powell may be inclined to provide reassurances about price stability. As of the time of this writing, the S&P 500 was trading 1.18% lower.

Although, the losses in the Standard & Poor's 500 major equity index might turn out to be short-lived, thanks to the strong U.S. growth figures that support the argument for prolonged higher interest rates. It is worth noting that the recent data revealed that the U.S. economy experienced its fastest expansion in almost two years during the third quarter. This growth was fueled by increased wages resulting from a tight labor market, which, in turn, boosted consumer spending.

Hence, this has heightened expectations that the Federal Reserve will continue to keep monetary conditions restrictive for an extended duration, leading to a rise in the dollar against various currencies.

Strong US Economic Data Supports Higher Interest Rates and Market Sentiment

On the economic data front, the US economy expanded by 4.9% in the third quarter, driven by robust consumer spending, surpassing expectations of 4.5%. Furthermore, there was a notable 4.7% increase in September in U.S. Durable Goods Orders, representing the most substantial rise since July 2020. Meanwhile, recent macroeconomic data from the U.S. continues to underscore the resilience of the economy, despite previous warnings of an impending recession.

Therefore, this economic strength should empower the Federal Reserve to sustain higher interest rates, subsequently offering support to market sentiment and acting as a favorable factor for the Standard & Poor's 500 major equity index.

S&P500 (SPX) - Technical Analysis

On October 27, the S&P500 exhibited a noticeable descent, settling at 4137.22, marking a reduction of 1.18% within a 24-hour span. When referring to the 4-hour chart, it’s clear that this benchmark index is currently wrestling with significant resistance and support levels. The pivot point, a crucial metric that traders often rely on to gauge potential price movement, stands firm at 4201. Immediate resistance is perceived at 4278, with subsequent levels at 4340 and 4399. On the converse, the immediate support is close to the day's low at 4131, with further supports expected at 4059 and a significant level at 4002.

Diving deeper into the technical indicators, the Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, is currently at 28. This figure suggests an oversold condition, indicating potential upward price movement in the near term as the market could be due for a corrective bounce. However, one must also consider the broader trend, and currently, the price is trending below the 50-Day Exponential Moving Average (EMA50) of 4299. This is a classic bearish signal, suggesting a prevailing short-term downtrend.

When evaluating chart patterns, which are fundamental tools for traders, no definitive patterns are immediately discernible. However, it's essential to observe that the S&P500's current price levels are teetering close to significant support and resistance zones. This typically indicates that the market is at a crossroads, and traders should be on the lookout for potential breakouts or breakdowns.

In summary, the prevailing trend for the S&P500 is bearish, especially when the price is below the pivotal level of $4170. However, the RSI indicates potential oversold conditions, suggesting that a short-term rebound might be on the horizon. Traders and investors should keep a close eye on these key levels and indicators to gauge the market's next move.

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The EUR/USD currency pair continued its downward slide and remained under pressure around the 1.0550 level on Friday. However, this bearish trend can be attributed to the strength of the US dollar. The Greenback is maintaining its position near 106.70 when assessed by the USD Index (DXY), remaining towards the higher end of the weekly range. Notably, the modest increase in the US dollar was backed by an uptick in U.S. yields. Furthermore, geopolitical tensions in the Middle East have played a significant role in bolstering the US dollar and have added to the losses in the EUR/USD pair.

Federal Reserve Monetary Policy and USD Strength

Moreover, a growing consensus has emerged among market participants that the Federal Reserve (Fed) will maintain its current stance of keeping interest rates unchanged at the meeting on November 1. However, the possibility of a rate hike in December remains on the table, supported by the strength of the US economy and the persistently high levels of inflation. This, in turn, has kept the US dollar strong and has contributed to the losses in the EUR/USD currency pair.

Central Bank Actions and Upcoming Economic Data

It's worth noting that the European Central Bank (ECB) didn't deliver any surprises during their recent event on Thursday. They unanimously decided to maintain the current policies. The President of the ECB, Christine Lagarde, reiterated the need for further efforts to combat inflation. They expect inflation to remain at elevated levels for an extended period. Adding a pessimistic tone to the meeting, Lagarde also acknowledged that the risks to the economic outlook are leaning towards the downside.

Looking ahead, the ECB will soon publish its Survey of Professional Forecasters (SPF). In the United States, a key event to keep an eye on is the release of inflation data, specifically the Personal Consumption Expenditures (PCE) Price Index and Core PCE for September.

EUR/USD - Technical Analysis

As the world keeps a close eye on major currency movements, the EUR/USD pair, a critical metric in the global forex market, has been under the lens. On October 27, the pair was trading at 1.05652, seeing a marginal rise of 0.04% within the 24-hour window. This analysis is based on a 4-hour chart that provides investors with a snapshot of the currency duo's intraday fluctuations.

The pivot point for the day rests at 1.0578. On the upside, traders should be cautious of resistance levels positioned at 1.0610, 1.0645, and 1.0682. Conversely, should the pair take a downward turn, it will likely find support at 1.0524, 1.0491, and further down at 1.0454.

The Relative Strength Index (RSI) stands at 46, illustrating a bearish sentiment. Though not drastically bearish, an RSI below 50 does hint at the prevailing bearish mood among traders. Furthermore, the price's proximity to the 50-Day Exponential Moving Average (50 EMA) at 1.0577 suggests a tense equilibrium. The currency pair is treading just below this average, hinting at a short-term bearish trend.

While we haven't pinpointed any specific chart patterns for the day, these often hold the key to predicting future movements. For example, patterns like the Symmetrical Triangle or an upward channel can provide insights into potential bullish or bearish momentum.

As of now, the overall trend for the EUR/USD seems bearish, especially given its current stance below the crucial 1.05763 mark. However, any shift above this point could flip the sentiment. In the near future, we can anticipate the pair to potentially test the immediate resistance of 1.0610. With every tick and transaction, the forex market is continually evolving, making it imperative for traders to stay updated and adjust their strategies accordingly. 

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The price of gold (XAU/USD) has maintained its upward trajectory, rising for the second consecutive day during the first half of the European trading session. This precious metal, regarded as a safe-haven asset, has surged to its highest level since May 16, a level reached last Friday. However, the reason for its upward rally can be linked to the concerns about a escalation in the conflict between Israel and Hamas. Conversely, the increase in US Treasury bond yields, fueled by expectations of a more assertive stance from the Federal Reserve (Fed), has pushed the US Dollar to a three-week peak. This was seen as one of the key factors that has exerted downward pressure on gold and limited its gains.

Moreover, investors are anticipating key economic reports from the United States. These reports will provide insights into the Federal Reserve's future decisions regarding interest rates, and they will play a significant role in determining the near-future trajectory of the gold price. On Thursday, the US is set to release crucial data, including Q3 GDP figures, Durable Goods Orders, the usual weekly Initial Jobless Claims, and Pending Home Sales statistics.

These reports, coupled with an anticipated speech by Fed Governor Christopher Waller and developments in US bond yields, have the potential to impact the value of the US Dollar. Traders will be closely monitoring these factors to identify short-term trading opportunities with XAU/USD.

Gold Prices Supported by Geopolitical Concerns Amid Escalation in Israel-Hamas Conflict

Despite the increase in US Treasury bond yields and the strengthening of the US Dollar (USD), gold prices continue to find support due to ongoing geopolitical concerns. Israel has escalated its military operations in Gaza, and the potential for a ground invasion increases the risk of a broader conflict in the Middle East. Various international powers are actively engaged in diplomatic efforts to de-escalate the ongoing conflict between Israel and the Palestinian militant group, Hamas. Consequently, the safe-haven gold has approached its most elevated level since May 16, which was reached last Friday.

GOLD (XAU/USD) - Technical Analysis

As the world watches the tumultuous dance of numbers on the stock exchange, Gold's resolute march demands attention. Recently trading at a commendable price of $1988.770, marking an increase of 0.45% in the last 24 hours, the precious metal reveals a story that's as old as commerce itself, yet as current as the 4H chart it's mapped on.

The pivot point, often the traders' North Star, stands steady for Gold at $1986. Resistance levels, the metaphorical ceilings to Gold's ascension, have been meticulously mapped out. The immediate barrier stands at $1998, but should Gold's rally remain unbridled, the subsequent resistances to watch are $2012 and then $2023. Conversely, if the winds turn south, the immediate cushioning for Gold is at $1963, followed by defenses at $1947 and $1932.

The Relative Strength Index (RSI) provides a snapshot of the momentum, with its current value at 67. This suggests a bullish sentiment since the RSI is above 50 but is nearing the overbought threshold of 70. Traders should tread with caution as values nearing 70 often indicate a potential pullback.

Gold's overall trend seems bullish, especially when it sustains above the $1986 mark. Any downward movement below this might hint at a bearish reversal. In the immediate future, given the current trajectory and market sentiments, it wouldn't be surprising to see Gold testing the resistance at $1998, and possibly beyond.

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The USD/JPY currency pair has maintained its upward trend and continued to climb, hitting its highest point for the year at around 150.50. However, this upward trend could be linked to the improved US Treasury yields, which have bolstered the US dollar and contributed to the gains in the USD/JPY pair.

Moreover, the risk-off sentiment due to geopolitical uncertainties has played a key role in bolstering the US dollar. The announcement made by Israel's Prime Minister, Benjamin Netanyahu, regarding the potential ground assault in Gaza, has further heightened the prevailing risk aversion, impacting the currency pair.

Bank of Japan's Economic Strategies and Market Impact

It's worth noting that the Bank of Japan is actively engaged in efforts to manage inflation and promote higher wages. They have refrained from raising interest rates for a period of two years in order to stimulate long-term inflation. However, there is a concern that they may not achieve their 2% inflation target. Murai Hideki, Japan's Deputy Chief Cabinet Secretary, emphasizes the importance of maintaining stable currency values that align with economic fundamentals.

He is not a fan of significant fluctuations in foreign exchange rates and refrains from discussing interventions in currency markets. He is dedicated to making appropriate decisions regarding currency issues. Investors are keeping a close eye on the upcoming release of the Tokyo Consumer Price Index for October. Depending on the Bank of Japan's potential policy adjustments, this could have an impact on the market.

Geopolitical Factors Driving US Dollar Strength

Moreover, the US Dollar Index (DXY) is experiencing a series of gains, primarily fueled by the surge in US Treasury yields. These yields have recently achieved their highest levels in 16 years, with the 10-year Treasury note currently standing at 4.95%. The US dollar's robust performance can also be attributed to the prevailing geopolitical uncertainties. Israel has intensified its military actions in Gaza, increasing the likelihood of a ground invasion and heightening the risk of a broader conflict in the Middle East.

USD/JPY - Technical Analysis

The USD/JPY pair, an integral component of the forex market, offers a fascinating narrative in today's trading landscape. As of the current session, it's registering a price of 150.386, reflecting a modest uptick of 0.16%. This movement is captured on the 4H chart, which provides traders a condensed view of the currency pair's direction.

Our analysis begins with the pivot point, situated at 150.00. This serves as the linchpin around which the pair's movement revolves. On the upside, traders should keep an eye out for the immediate resistance level of 150.49. If the bullish momentum persists, the next resistance levels to watch are 150.97 and 151.48. However, should the tables turn, and the market leans bearish, the USD/JPY will likely find support at 149.51, followed by subsequent supports at 148.99 and 148.43.

Now, turning our attention to the technical indicators, the Relative Strength Index (RSI) stands at 73. This is an important marker, as an RSI above 70 indicates overbought conditions. Such a reading suggests the market might be in need of a correction, though it also highlights the prevailing bullish sentiment surrounding the USD/JPY.

Further insights are provided by the MACD, which currently rests at 0.056, while its signal line is at 0.119. This configuration indicates the MACD line is below the signal line, hinting at potential downward momentum. It's a subtle reminder for traders to remain vigilant for any shifts in market sentiment.

The 50-Day Exponential Moving Average (50 EMA) for the USD/JPY is noted at 149.77. With the pair trading above this average, it suggests a bullish short-term trend. This positioning is a testament to the sustained buying interest in recent times.

Conclusion:

For the USD/JPY pair, the prevailing trend leans bullish, especially when trading above the critical 150.00 mark. This level serves as a pivotal point in determining the pair's trajectory. In the short term, given the current data and prevailing market sentiment, the USD/JPY might aim for the immediate resistance of 150.49, signaling the continuation of its bullish stance.

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The AUD/USD currency pair has failed to stop its downward rally and continued its decline for a second consecutive session, trading near its yearly lows on Thursday. However, the reason for its decline can be attributed to the strength of the US Dollar, which has been bolstered by higher US Treasury yields. Furthermore, Israel's Prime Minister, Benjamin Netanyahu, has announced the readiness for a potential ground assault in Gaza. This action could dampen risk sentiment in the market and further contribute to losses in riskier assets like the Australian Dollar. In contrast, the Reserve Bank of Australia (RBA) is expected to raise interest rates, a move that could help limit the losses of the AUD/USD pair.

Impact of Australian Inflation Data and RBA's Actions on AUD/USD

It's worth noting that Australia's recent inflation data has strengthened the probability of the Reserve Bank of Australia (RBA) raising interest rates by 25 basis points in its November meeting. Notably, the Consumer Price Index (CPI) showed a slight uptick in the third quarter of 2023, according to the Australian Bureau of Statistics.

RBA Governor Michele Bullock stated that the CPI increase, which was slightly higher than anticipated but still within the expected range, underscores the RBA's cautious approach. Their aim is to support the economy without pushing it into a recession.

In the current quarter, Australia's CPI has risen to 1.2%, up from the previous quarter's 0.8% and slightly above the market's expected 1.1%. On the economic front, Australia's S&P Global Composite PMI for October has declined to 47.3 from the previous 51.5. Both the Manufacturing and Services PMIs have also displayed a noticeable slowdown.

Hence, the prospect of an RBA interest rate hike in response to higher CPI could potentially strengthen the AUD and boost the AUD/USD currency pair, but concerns about economic slowdown may limit its impact.

Recent Developments and Their Impact on Currency Markets

Furthermore, the US Dollar Index (DXY) is currently on a winning streak, buoyed by robust US Treasury yields and improved preliminary S&P Global PMI figures. Geopolitical tensions are also driving investments in safe-haven assets. Israel's Prime Minister, Benjamin Netanyahu, has announced the potential for ground action in Gaza, and Iran's Foreign Minister, Hossein Amir-Abdollahian, has arrived in the USA for talks regarding the Hamas-Israel situation.

Therefore, this news could further bolster the US Dollar, which will likely exert downward pressure on the AUD/USD pair as demand for the USD as a safe-haven currency increases.

Meanwhile, the US S&P Global Composite PMI for October increased to 51.0, with the Services PMI at 50.9 and the Manufacturing PMI at 50.0. Moving on, investor attention will shift towards the US Q3 Gross Domestic Product (GDP) report on Thursday, with a specific focus on the US Core Personal Consumption Expenditures (PCE). In the meantime, Australia's Producer Price Index (PPI) will be in the spotlight on Friday.

AUD/USD - Technical Analysis

In the grand theater of the forex market, the AUD/USD currency pair has played a significant role. On this day, the pair trades at 0.627778, showing a decline of 0.49% during the Asian session. This movement occurs on a 4H chart timeframe, revealing a short-term glimpse of the pair's trajectory.

The pivot point, a linchpin for many traders, is set at 0.6287. This means that the immediate resistance level the AUD/USD might face lies at 0.6338. If the bullish sentiment continues, traders should keep an eye on the subsequent resistance levels at 0.6391 and 0.6432. However, if the bears dominate the scene, the AUD/USD could seek support at 0.6251, followed by 0.6214, and then at the crucial 0.6178 mark.

Delving into the technical indicators, the Relative Strength Index (RSI) stands at 34. This value indicates a bearish sentiment, as it's below the neutral 50 mark. Moreover, nearing the 30 level, it's inching closer to the oversold territory, hinting that the selling momentum might be overextended.

The MACD, which offers insights into the pair's momentum and potential reversals, currently reads a value of 0.00, with its signal line at -0.0008. This means the MACD line is slightly above the signal line, suggesting a potential shift towards an upward momentum, albeit weak.

The 50-Day Exponential Moving Average (50 EMA) for the AUD/USD stands at 0.6408. With the current price trading below this EMA, it underscores a short-term bearish trend. This is a noteworthy sign, implying that sellers have had the upper hand recently.

The overarching trend for AUD/USD is bearish, especially when trading below the 0.6287 mark, which interestingly forms a triple top pattern. This pattern, known for its bearish reversal connotation, could be indicative of a potential downward push. In the coming days, given the current data and market sentiment, the AUD/USD might test its immediate support levels, unless a significant bullish trigger enters the fray.

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Despite expectations that the Bank of England (BoE) would likely maintain steady interest rates in November, the GBP/USD currency pair managed to remain stable and even saw a slight upward movement during the European session on Wednesday. However, this upward rally can be primarily attributed to the weakening US dollar, which is influenced by factors such as declining US Treasury bond yields and a generally positive risk sentiment. Ultimately, this provided some support for the GBP/USD pair.

It's important to highlight that the US Dollar has failed to halt its downward trend and continues to remain bearish. This trend may be attributed to the decline in US Treasury bond yields. Additionally, the weakness of the US Dollar can be linked to the prevailing positive risk sentiment. However, it's noteworthy that the US economy remains robust despite the rising interest rates. This suggests that the Federal Reserve is likely to persist with its plan to raise rates as a measure to control inflation.

GBP/USD Prospects and Market Focus for the Week

On the other hand, the UK's Purchasing Managers' Index (PMI) has remained in a contraction phase for three consecutive months. This has led to speculation that the Bank of England (BoE) may not make any policy changes in November.Consequently, traders appear to be hesitant to take strong positions or make aggressive bets.

Looking ahead, no major economic news is expected from the UK. In the US, the spotlight will be on the release of New Home Sales figures. Investors will closely monitor a speech by Fed Chair Jerome Powell later in the US trading session. Also, keep an eye on the US Core PCE Price Index, which is the Fed's preferred way to measure inflation, set to be released on Friday. It will be a key focus for the market.

GBP/USD - Technical Analysis

On October 25, GBP/USD displayed a nominal upward adjustment, with a 0.11% increase, pegging its current price at 1.21743. Delving into its 4-hour chart, the pair's trajectory paints a nuanced story. The pivot point for GBP/USD is marked at 1.2159, a figure that holds paramount importance for traders.

In the realm of resistance, GBP/USD confronts its first hurdle at 1.2225. Further headwinds might arise at 1.2288, and should bullish momentum persist, 1.2357 could be the next target. Conversely, if the pair encounters downward pressure, immediate support has established itself at 1.2096, followed by subsequent safety nets at 1.2030 and 1.1965.

The Relative Strength Index (RSI) reads 48, signaling a neutral-to-bearish sentiment, hovering just below the midline. The MACD, interestingly, stands at a flat 0.00, with its signal line marginally higher at 0.0003400, suggesting a lack of strong momentum in either direction. Moreover, the GBP/USD rate slightly trails its 50-Day Exponential Moving Average (EMA) at 1.2185, hinting at a delicate bearish undertone in the short term.

Conclusion: The GBP/USD's broader sentiment leans bearish, especially if it descends below the 1.2170 threshold. As traders and investors dissect the intricate balance between resistance and support levels, the immediate resistance of 1.2225 becomes a focal point in the short-term forecast.

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During the Asian session on Wednesday, the gold prices (XAU/USD) maintained their upward trajectory, continuing to gain positive momentum. However, this upward trend can be attributed to the decline in US Treasury bond yields, which is putting pressure on the US dollar and providing some support to gold price. Meanwhile, the growing concerns about a potential economic recession and geopolitical risks are further bolstering the appeal of gold as a safe-haven asset.

Multiple Factors Driving Increased Investment in Gold

It's worth noting that several factors are driving people to invest in gold. One key factor is the concern of a potential economic downturn, which was exacerbated by disappointing economic data from Europe. Furthermore, concerns regarding conflicts in the Middle East, particularly the Israel-Hamas situation, are increasing the appeal of gold as a safe-haven asset.

Moreover, the decline in US Treasury bond yields is exerting downward pressure on the US dollar and bolstering gold prices. It shoud be noted that the 10-year US Treasury yield had recently surpassed 5%, a level not witnessed since 2007, but has subsequently retreated from that point. Hence, These factors are contributing to the upward performance of gold (XAU/USD).

Federal Reserve's Interest Rate Impact and US Economic Resilience on Gold Price Outlook

Furthermore, the gold prices has been influenced by the potential for the Federal Reserve to raise interest rates. This is making investors cautious and limiting the upward potential for Gold. On a positive note, the US manufacturing sector recently rebounded after a five-month decline, and service-related businesses are also showing modest growth. This indicates that the US economy remains relatively robust.

Therefore, the Federal Reserve is likely to maintain its current policies in place in November. However, there is a chance that they might opt for a 25 basis point interest rate increase before the year's end, a development closely monitored by investors. This type of policy tightening could affect the prices of various assets, including Gold.

Key Events Ahead

Looking forward, investors are awaiting Jerome Powell's statements at the Federal Reserve, as they could provide insights into potential interest rate changes. Plus, investors are also closely monitoring the upcoming US third-quarter economic report and the European Central Bank's decision on interest rates.

GOLD (XAU/USD) - Technical Analysis

On October 25, gold exhibited a minor upward movement, registering a modest increase of 0.01%, with its price settling at $1972.25. Analyzing its price trajectory on a 4-hour chart provides a clearer picture of its potential path forward. Gold's pivot point stands firmly at $1962, a level that traders are closely monitoring.

Gold faces formidable resistance levels, starting at $2016, progressing to $2051, and further stretching to a significant $2105. Conversely, should the asset face selling pressures, immediate support is found at $1927, followed by deeper support levels at $1873 and $1837.

Technically, the Relative Strength Index (RSI) for gold is at 56, suggesting a slightly bullish momentum, as it's above the neutral 50 mark but still under the typically overbought threshold of 70. The MACD, however, paints a different picture. With a value of -2.67 and a signal line at 6.64, the MACD line's position below the signal line indicates possible bearish momentum in the near term. Interestingly, gold's current price surpasses its 50-Day Exponential Moving Average (EMA) which stands at $1948, reinforcing the short-term bullish trend.

While the chart patterns need further clarity, the overall sentiment surrounding gold appears bullish, especially if it maintains its position above the pivotal $1962 mark.

Conclusion:

In the broader scheme, gold's trajectory appears bullish, provided it remains above the $1962 benchmark. Market participants are eagerly anticipating potential tests of the resistance levels, particularly eyeing the $2016 mark in the short term.

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Daily Price Outlook

Despite the optimistic German IFO survey, the EUR/USD currency pair failed to stop its bearish sentiment and continued trading below the 1.0570 level. However, this downward trend can be attributed to the strengthening US dollar, which has regained stability after a minor decline on Tuesday. Meanwhile, investors are contemplating whether the European Central Bank (ECB) will halt its interest rate hikes. This is occurring despite inflation in the Eurozone surpassing the ECB's target, and concerns about a potential economic slowdown or even stagnation. If the ECB indeed decides to stop raising interest rates due to these inflation and economic worries, it could lead to a weaker Euro (EUR) and a decline in the EUR/USD pair.

German IFO Business Climate Index Up in October, Indicates Economic Improvement

It's worth noting that the German IFO Business Climate Index for October came in at 86.9, indicating an improvement from September's 85.8 and surpassing the market's expected figure of 85.9. Additionally, the Current Economic Assessment Index increased to 89.2 in October, up from September's 88.7 and exceeding the estimated value of 88.5. The IFO Expectations Index, which reflects businesses' outlook for the next six months, rose to 84.7 in October, compared to 83.1 in September, exceeding the market's consensus of 83.3.

Therefore, despite this positive data, the EUR/USD currency pair continued to trade with a bearish bias and did not receive any support.

US Dollar Stabilizes and Gains Strength on Improved Bond Yields and Fed's Rate Expectations

Moreover, the broad-based US dollar is regaining stability following a slight decline on Tuesday. This is driving the USD Index (DXY) closer to the 106.50 level. However, the recovery in the dollar can be attributed to the improvement in US bond yields across both short and long-term categories. In terms of monetary policy, many market participants now anticipate that the Federal Reserve (Fed) will maintain interest rates at their current levels during the November 1 meeting.

Hence, this belief was further reinforced by comments made by Fed Chair Jerome Powell in his recent speech at the Economic Club of New York. This news is exerting upward pressure on the USD, which could lead to a decline in the EUR/USD pair as the dollar strengthens against the euro.

EUR/USD - Technical Analysis

The EUR/USD, the world's most traded currency pair, has positioned itself at 1.06034 as of October 25. By analyzing its 4-hour chart, several pertinent insights emerge. The currency pair's pivotal point stands at 1.0574, a significant figure that seasoned traders are likely to keep their eyes on.

The European currency faces a series of resistance levels. The immediate barrier stands at 1.0637, with subsequent challenges potentially coming in at 1.0682 and 1.0745. Should the currency pair experience selling pressures, it could find support at 1.0530, followed by 1.0466 and the more formidable 1.0422.

The Relative Strength Index (RSI) for EUR/USD reads 49, indicating a neutral stance. It's teetering on the edge of a bullish sentiment but hasn't quite crossed over. In another technical observation, the pair is trading above its 50-Day Exponential Moving Average (EMA) at 1.0589, suggesting a short-term bullish inclination. The chart pattern reveals an upward trendline offering robust support at 1.05891, buttressing the currency pair's current position.

Conclusion: The prevailing sentiment for EUR/USD can be termed as cautiously bullish, particularly if it sustains above the 1.0589 mark. As market participants evaluate the interplay of the outlined resistance and support levels, they'll likely focus on the immediate resistance of 1.0637 in their short-term projections.

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