GOLD Price Analysis – Sep 25, 2024
Daily Price Outlook
During the European trading session, gold prices (XAU/USD) have struggled to rise and are holding steady around $2,600. However, the market mood has shifted, with more investors willing to take risks due to China’s new economic stimulus, leading them to seek better returns elsewhere, which makes gold less attractive as a safe investment.
Despite this decline, a significant drop in gold prices isn’t expected, as the Federal Reserve's plans to ease monetary policy are putting pressure on the U.S. dollar, making gold more appealing. Moreover, ongoing tensions in the Middle East and uncertainty in U.S. politics ahead of the November elections are also supporting gold prices.
Weak US Economic Data and Rate Cut Expectations Propel Gold Prices to New Highs
On the US front, the broad-based US dollar is facing pressure, with markets currently estimating over a 75% chance that the Federal Reserve will cut interest rates by another 50 basis points in November. This outlook has been reinforced by Tuesday's disappointing US economic data, which pushed the dollar closer to its year-to-date low. As a result, gold prices have surged to a new all-time high.
On the data front, the Conference Board's Consumer Confidence Index fell to 98.7 in September, down from 105.6 in August, indicating a decline in consumer sentiment. Meanwhile, the Present Situation Index dropped from 134.6 to 124.3. Moreover, a survey from the Richmond Fed revealed that manufacturing activity remains weak, with the composite manufacturing index declining to -21 in September from -19.
Traders are closely watching speeches from Fed officials this week, especially from Fed Chair Jerome Powell on Thursday, as these may provide insights into future rate cuts and influence market trends. Moving on, attention will also be on the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday, which is expected to affect demand for the dollar in the short term.
Therefore, the expectation of a Federal Reserve interest rate cut, combined with weak US economic data, has driven gold prices to new highs. As the dollar weakens, gold becomes more attractive, prompting increased demand for the precious metal as a safe haven.
Rising Geopolitical Tensions in the Middle East Increase Demand for Gold as a Safe Haven Asset
On the geopolitical front, the ongoing conflict in the Middle East, particularly between Israel and Palestine, is escalating tensions and impacting global markets. Israel's attacks on Gaza have resulted in significant civilian casualties, with reports of at least 12 Palestinians killed in just the last day.
The situation in Lebanon is also dire, with over 558 fatalities, including many children, due to Israeli airstrikes. The United Nations has urged Israel to refrain from attacking schools that serve as shelters for displaced Palestinians, following tragic incidents that left dozens dead in school attacks.
These developments have raised concerns about further geopolitical instability, which could support gold prices in the market. As tensions rise, investors often turn to gold as a safe haven.
Additionally, the uncertainty surrounding the upcoming U.S. presidential election adds to the complexity of the situation, making it more challenging to predict market movements. As of now, the ongoing conflict has resulted in a staggering number of casualties, with over 41,000 people reported dead and many more injured in Gaza.
The escalating conflict in the Middle East is driving investors towards gold as a safe haven asset. Increased geopolitical instability typically supports higher gold prices, as uncertainties, including the U.S. presidential election, further enhance demand for secure investments.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,652.43, down 0.18% as profit-taking and market uncertainty weigh on prices. The key pivot point lies at $2,657.23, indicating potential bearish momentum if prices remain below this level.
Immediate resistance sits at $2,670.90, with higher resistance targets at $2,681.48 and $2,691.20. A break above these levels could signal a shift to a bullish bias. On the downside, immediate support is at $2,648.18, followed by $2,640.19 and $2,631.56.
The Relative Strength Index (RSI) is neutral at 55, indicating neither overbought nor oversold conditions. However, a move below the 50 mark could indicate growing bearish sentiment. The 50-day Exponential Moving Average (EMA) is positioned at $2,637.30, offering solid short-term support. If prices break below the $2,648 support level, a drop toward $2,640 or $2,631 is likely.
Given the current setup, traders are advised to adopt a cautious stance. The entry price for selling is recommended below $2,657 with a take-profit target of $2,640 and a stop-loss at $2,674.
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- EUR/USD Price Analysis – Sep 25, 2024
EUR/USD Price Analysis – Sep 25, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD pair climbed to approximately 1.1195, buoyed by a weakening US dollar amid growing speculation of a significant rate cut from the Federal Reserve in November. Market attention is focused on the upcoming releases of France’s Consumer Confidence and US New Home Sales data.
Meanwhile, Fed Governor Adriana Kugler is scheduled to speak. However, expectations of a potential interest rate cut from the European Central Bank (ECB) or any indications of economic weakness in the Eurozone may limit the Euro's (EUR) upward momentum against the USD.
USD Weakness and Fed Speculation Boost EUR/USD Outlook
On the US front, the US dollar (USD) is weakening as speculation grows about a significant rate cut from the Federal Reserve (Fed) in November. The Fed recently reduced its benchmark Federal Funds Rate by half a percentage point, bringing it to a range of 4.75% to 5%.
This decision was made due to progress on inflation and the changing balance of risks. As a result, investors are increasingly betting that the Fed will cut rates further in the upcoming meeting.
According to the CME FedWatch Tool, the market is pricing in a nearly 56% chance of a second 50 basis points (bps) rate cut in November, while the likelihood of a smaller 25 bps cut is around 44%. This uncertainty is adding pressure on the USD, making it less attractive to investors.
In addition to this, France’s Consumer Confidence and US New Home Sales data will be released on Wednesday, and Fed Governor Adriana Kugler is also set to speak, potentially influencing market sentiment further.
Therefore, the weakening US dollar due to speculation of further Fed rate cuts supports the EUR/USD pair, pushing it higher. Increased investor confidence in the Eurozone, coupled with upcoming economic data, could strengthen the Euro against the USD in the short term.
Euro Gains Amid Upbeat Market Sentiment, but ECB Rate Cut Concerns Loom
On the EUR front, the upbeat market sentiment is currently boosting the Euro (EUR) against the US dollar (USD). However, concerns about a potential interest rate cut by the European Central Bank (ECB) could limit the Euro's gains. ECB governing council member Klaas Knot stated that the bank plans to continue lowering interest rates at least through the first half of 2025, targeting a range between 2% and 3%. This indicates that further easing could be on the horizon.
Moreover, ECB policymaker Madis Muller mentioned that another interest rate cut next month cannot be ruled out. However, he emphasized that policymakers may not have enough data to make clear decisions regarding the struggling Eurozone economy.
This uncertainty could weigh on the Euro's performance. As a result, while the Euro benefits from the current risk appetite, any signs of weakness in the Eurozone or hints of additional ECB rate cuts may cap its upside against the USD.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.11872, up 0.07%, as it consolidates near recent highs. A break above the pivot point at $1.11983 could signal further bullish momentum, especially as traders eye immediate resistance at $1.12153. Additional resistance levels to watch include $1.12309 and $1.12485, which, if breached, could drive the pair higher in the short term.
On the downside, the immediate support level rests at $1.11618, followed by deeper supports at $1.11509 and $1.11350. The 50-day Exponential Moving Average (EMA), currently positioned at $1.11418, offers a strong support base, signaling a bullish outlook as long as the price remains above this average.
The Relative Strength Index (RSI) is currently at 65, indicating a bullish trend, but a move above 70 would signal overbought conditions, potentially leading to short-term profit-taking.
For short-term traders, a buy limit order around $1.11770 could provide an attractive entry point, targeting a take-profit level at $1.12153, with a conservative stop-loss set at $1.11626. This setup provides a balanced approach, capitalizing on upward momentum while safeguarding against downside risk.
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GBP/USD Price Analysis – Sep 25, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair edged lower but held near the 1.3400 level as the US dollar continued to weaken, nearing its yearly low. This weakness is driven by expectations that the Federal Reserve might deliver one more significant interest rate cut before the end of the year.
Meanwhile, Investors believe the Bank of England (BoE) will gradually lower interest rates, as hinted by BoE Governor Andrew Bailey, who recently stated that interest rates are likely to decrease slowly.
Looking ahead, the focus will shift to the US core Personal Consumption Expenditures (PCE) data for August, set to be released on Friday. This is the Fed's key inflation measure, and economists expect core inflation to rise slightly to 2.7% from 2.6% in July.
US Dollar Weakens Amid Fed Rate Cut Expectations, Boosting GBP/USD
On the US front, the broad-based US Dollar is weakening, pushing the GBP/USD pair near its yearly high. The US Dollar Index (DXY), which measures the dollar’s value against six major currencies, is hovering around 100.20.
This decline comes as investors expect the Federal Reserve (Fed) to implement one more large interest rate cut in its remaining two policy meetings this year. The Fed recently cut interest rates by 50 basis points (bps), bringing them to a range of 4.75%–5.00%, in an effort to strengthen the labor market and return inflation to its 2% target.
According to the CME FedWatch tool, the Fed is expected to reduce interest rates by another 75 bps before the year ends, likely through one 50 bps cut and one 25 bps cut. The probability of a 50 bps rate cut in November has jumped to 59%, up from 37% a week ago.
Out of the 12 members of the Federal Open Market Committee (FOMC), only Fed Governor Michelle Bowman favored a more cautious approach with a smaller, 25 bps cut. These expectations are putting downward pressure on the US Dollar, benefiting the GBP/USD pair.
BoE's Gradual Rate Cuts and Inflation Concerns Boost GBP/USD
Another factor boosting the GBP/USD pair is the expectation that the Bank of England (BoE) will gradually lower interest rates. BoE Governor Andrew Bailey recently mentioned that the path for interest rates is likely to trend downward, but slowly.
He expressed confidence that inflation will return to the bank’s target of 2%, though he did not specify exactly where rates would settle. Bailey also assured that interest rates are unlikely to drop back to the historic lows seen during the pandemic.
In the UK, inflation has been close to the 2% target in recent months. However, high inflation in the services sector remains a concern for BoE policymakers. The Service Consumer Price Index (CPI), which is closely watched by the bank, increased from 5.2% in July to 5.6% in August.
This persistent rise in service sector prices is one reason the BoE is carefully managing rate cuts, ensuring that inflation across all sectors stabilizes before making significant changes.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.33989, down 0.11%, showing signs of consolidation following a modest decline in the previous session. The pair’s pivot point is set at $1.33831, indicating that a break above this level could signal renewed bullish momentum.
Immediate resistance is found at $1.34293, with further resistance levels at $1.34551 and $1.34885. A break above these levels could push the pair higher, signaling a potential short-term trend reversal.
On the downside, immediate support is seen at $1.33594, followed by key levels at $1.33310 and $1.32993. If prices fall below these levels, the GBP/USD pair could experience a deeper pullback, especially as market participants remain cautious ahead of key economic data releases.
Technical indicators show mixed sentiment. The Relative Strength Index (RSI) is currently at 53, indicating neutral momentum, though a dip below 50 would suggest increased bearish pressure. The 50-day Exponential Moving Average (EMA) is positioned at $1.33655, offering a critical support level for short-term trading.
Given the current technical setup, traders might consider entering long positions above $1.33831, with a take-profit target of $1.34280 and a stop-loss set at $1.33591.
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USD/CAD Price Analysis – Sep 24, 2024
Daily Price Outlook
During the European session on Tuesday, the USD/CAD pair extended its downward trend, dropping to approximately 1.3510.
This decline was largely attributed to the weakening of the US dollar. Market participants are closely watching the upcoming release of the US September Consumer Confidence data, along with speeches from Federal Reserve Governor Michelle Bowman and Bank of Canada Governor Tiff Macklem.
Both events could have a substantial impact on market sentiment and influence trading decisions.
Impact of US Economic Data and Fed Policy on USD/CAD Pair
However, the ongoing weakness in the US dollar is putting pressure on the USD/CAD pair. Investors are closely monitoring the upcoming release of the US September Consumer
Confidence data, along with speeches from Federal Reserve Governor Michelle Bowman. Recently, several Federal Reserve officials have hinted at the potential for significant interest rate cuts later this year.
Chicago Fed President Austan Goolsbee noted that lowering rates could facilitate a smooth economic landing while effectively managing inflation and safeguarding jobs.
In addition, Atlanta Fed President Raphael Bostic noted that a substantial rate cut could bring interest rates closer to neutral levels, balancing the risks between inflation and employment.
Minneapolis Fed President Neel Kashkari expects to lower rates by a quarter-point at each of the Fed's two remaining meetings this year.
Recent data showed a slight slowdown in US manufacturing activity, with the Manufacturing Purchasing Managers Index (PMI) dropping to 47.0 in September, the lowest in 15 months.
The Services PMI eased to 55.4, slightly above market expectations, indicating a gradual decline in the service sector.
Therefore, the weakness of the US dollar, coupled with anticipated interest rate cuts by the Federal Reserve, is likely to put further downward pressure on the USD/CAD pair. This sentiment may lead to continued declines as investors reassess their positions.
Potential Impact of Macklem's Speech on USD/CAD Pair
On the other hand, Bank of Canada (BoC) Governor Tiff Macklem is scheduled to speak later on Tuesday, and his remarks may shed light on the central bank's plans for interest rate cuts by year-end.
According to TD Economics, the BoC must exercise caution in implementing significant cuts, as this could drive inflation below its target range.
They estimate that Canada's "neutral" overnight rate stands at approximately 2.25 percent, which is two percentage points lower than the current rate.
Macklem's speech is expected to highlight the delicate balance the BoC must maintain between fostering economic growth and controlling inflation. If he indicates a readiness to implement significant rate cuts, it may weaken the Canadian dollar as investors recalibrate their expectations.
Conversely, a more cautious stance could strengthen the Canadian dollar, providing support for the USD/CAD pair. Market participants will be attentively monitoring his remarks for insights into the future direction of Canadian monetary policy.
USD/CAD - Technical Analysis
The USD/CAD pair is currently trading at $1.35105, down 0.19%, as the U.S. dollar weakens against the Canadian dollar during the early trading hours.
The price has slipped below its 50-day Exponential Moving Average (EMA) of $1.3561, signaling growing bearish momentum in the short term.
Immediate support is found at $1.3493, a key level that, if broken, could lead to further downside towards $1.3467 and $1.3442.
On the upside, the pair faces immediate resistance at $1.3572, which aligns with the pivot point at $1.3544. A sustained break above this could challenge higher resistance levels at $1.3601 and $1.3635, though the current downtrend suggests selling pressure may persist.
The Relative Strength Index (RSI) stands at 39, indicating the pair is approaching oversold territory but has room for further declines before a significant reversal.
Traders are watching for a potential sell-off below the $1.35298 level, with a take-profit target set at $1.34758.
Overall, the technical setup favors bearish sentiment, especially with the price trading below the 50 EMA and the RSI leaning towards oversold. If support at $1.3493 gives way, a sharper decline could be triggered.
In conclusion, USD/CAD presents a bearish outlook below $1.35298, with a potential downside target of $1.34758 and stop-loss at $1.35619.
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AUD/USD Price Analysis – Sep 24, 2024
AUD/USD Price Analysis – Sep 24, 2024
Daily Price Outlook
During the European trading session on Tuesday, the AUD/USD currency pair maintained its upward momentum, remaining well bid around the 0.6850 level and reaching an intra-day high of 0.6870.
The pair's upward movement was supported by upbeat market sentiment, which generally benefits risk-sensitive currencies like the Australian dollar.
Furthermore, a bearish US dollar, pressured by expectations of more aggressive policy easing by the Federal Reserve, provided further support for the AUD/USD pair.
Furthermore, China's announcement of a broad range of stimulus measures to boost its faltering economy also bolstered the Australian dollar.
RBA’s Steady Policy and China’s Stimulus Measures Boost AUD/USD Outlook
On the AUD front, the Australian central bank kept interest rates unchanged for the seventh consecutive meeting, as expected. The Reserve Bank of Australia (RBA) emphasized that monetary policy will remain restrictive until inflation shows clear signs of moving toward the target range.
RBA Governor Michele Bullock noted that recent data has not significantly changed the bank's policy outlook, reinforcing the central bank’s cautious stance.
Meanwhile, China's efforts to boost its slowing economy added support to the AUD/USD pair. On Tuesday, China announced a broad range of stimulus measures, including the People's Bank of China (PBOC) cutting the Reserve Requirement Ratio (RRR) by 50 basis points, which will release about 1 trillion yuan for new lending.
This move, combined with renewed US dollar weakness, has been a positive factor for the Australian dollar, as stronger economic ties with China benefit Australia's economy.
These factors are expected to act as a tailwind for the AUD/USD pair, supporting its upward momentum.
Weak US Dollar and Global Equity Strength Boost AUD/USD Prospects
On the US front, the US dollar has been losing momentum due to expectations that the Federal Reserve may adopt more aggressive policy easing. This outlook has weighed on the dollar's recovery from its year-to-date low.
Additionally, the strong performance of global equity markets has further reduced demand for the US dollar as a safe-haven asset.
These factors are helping to limit any potential losses for the AUD/USD pair and are likely to support further short-term gains.
As the US dollar remains weak, it provides a favorable environment for the Australian dollar to strengthen against it.
AUD/USD - Technical Analysis
The Australian dollar (AUD/USD) is currently trading at $0.68304, up 0.25%, as the pair shows a modest recovery during the Asian session. The price remains above its 50-day Exponential Moving Average (EMA) of $0.6811, indicating short-term bullish momentum.
Immediate resistance is seen at $0.6870, just above the pivot point of $0.6869. A break above this level could lead the pair toward the next resistance at $0.6902, and potentially extend to $0.6928 if momentum holds.
On the downside, immediate support is located at $0.6784, with further key levels at $0.6757 and $0.6725.
Technically, the RSI (Relative Strength Index) is positioned at 51, suggesting a neutral stance, with neither overbought nor oversold conditions.
This gives the market room to maneuver in either direction, depending on upcoming catalysts, such as U.S. and Australian economic data releases.
The pair’s trajectory remains cautiously bullish as long as it stays above the 50 EMA. However, the pivot point at $0.6869 will be crucial for further upside. If prices can break above immediate resistance, AUD/USD could see an extension toward the $0.6902 and $0.6928 resistance levels.
Conversely, a dip below $0.68084 could shift sentiment toward the downside, with targets near the $0.67798 stop-loss level.
Overall, AUD/USD looks poised for a potential rally above $0.68084, targeting $0.68693, while maintaining a stop-loss at $0.67798 to manage downside risk.
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USD/CAD Price Analysis – Sep 24, 2024
GOLD Price Analysis – Sep 24, 2024
Daily Price Outlook
Gold prices (XAU/USD) experienced a pullback after reaching a record high of around $2,640 on Tuesday, retreating toward the lower end of its daily range.
However, the rise in US Treasury bond yields has strengthened demand for the US Dollar, leading to profit-taking in gold amid slightly overbought conditions on the daily chart.
Despite this retreat, any significant decline in gold prices seems limited due to increasing expectations for more aggressive policy easing by the Federal Reserve (Fed).
Furthermore, ongoing geopolitical tensions, US political uncertainty, and a challenging global economic outlook are likely to sustain the safe-haven appeal of XAU/USD.
Traders are also closely monitoring Fed Governor Michelle Bowman's upcoming speech for further insights into future policy direction.
Anticipated Fed Rate Cuts and Economic Data Boost Gold Price Outlook
On the US front, there is growing belief that the Federal Reserve will lower interest rates by 125 basis points in 2024. This follows a recent 50 basis point cut that pushed gold prices to an all-time high.
According to the CME Group's FedWatch Tool, investors expect another significant cut at the November meeting. As a result, the US Dollar has struggled to recover from its lowest point this year.
Minneapolis Fed President Neel Kashkari stated that the focus has shifted from controlling high inflation to addressing potential job market weaknesses, which highlights the need for lower interest rates.
Meanwhile, Atlanta Fed President Raphael Bostic pointed out that recent data shows the US is moving toward stable prices, but there are rising concerns about the job market.
Chicago Fed President Austan Goolsbee added that job market declines can happen quickly, suggesting that keeping interest rates high may not be wise if stability is the goal.
On the economic front, a survey from S&P Global revealed that business activity in the Eurozone unexpectedly fell sharply, while US business activity remained steady in September.
Additionally, the flash US PMI report showed that prices for goods and services rose at the fastest rate in six months, indicating potential inflation risks.
Therefore, the anticipated rate cuts by the Federal Reserve are likely to support gold prices, as lower interest rates decrease the opportunity cost of holding non-yielding assets like gold. Additionally, rising inflationary pressures may further boost gold's safe-haven appeal.
Geopolitical Tensions and Economic Measures Impact Gold Prices
On the other hand, Israeli airstrikes on Monday targeting Hezbollah weapons sites in southern and eastern Lebanon resulted in nearly 500 fatalities, escalating the risk of a broader conflict in the Middle East.
This situation, combined with ongoing US political uncertainty and a gloomy global economic outlook, suggests that gold, as a safe-haven asset, is likely to experience upward pressure.
Investors typically flock to gold during times of geopolitical tension and economic instability, making it a popular choice for preserving wealth.
Moreover, the unexpected interest rate cut by the People's Bank of China (PBOC) and the passing of a temporary spending bill to fund the US government until December 20 have limited the rise in gold prices (XAU/USD).
These events show that even though there is strong demand for gold due to geopolitical tensions, supportive actions from major economies, such as China's rate cut and US fiscal measures, might prevent significant increases in gold prices in the short term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,628.47, up 0.25%, showing a steady upward movement during the Asian session. The price remains in a short-term bullish trend, supported by a 50-day exponential moving average (EMA) at $2,601.19.
Immediate resistance is situated at $2,640.67, followed closely by the pivotal resistance level at $2,651.94. A break above these levels could propel the price to the next major resistance at $2,663.95.
On the downside, immediate support lies at $2,605.40, with further key supports at $2,593.64 and $2,581.15.
From a technical perspective, the RSI (Relative Strength Index) stands at 58, reflecting moderate bullish momentum without nearing overbought conditions. This indicates room for further gains before any potential pullback.
The key pivot point at $2,652.00 suggests that this level could be the critical threshold for bullish continuation.
Overall, a buy position above $2,623 could target the $2,652 resistance level, with a potential stop-loss at $2,607 to manage downside risk.
The price action suggests further bullish movement as long as gold remains supported by the 50 EMA and the broader sentiment around safe-haven assets remains intact amid global economic uncertainty.
Gold remains bullish above $2,623, with $2,652 as the next key target, supported by a strong technical setup and favorable market sentiment.
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USD/CAD Price Analysis – Sep 24, 2024
GBP/USD Price Analysis – Sep 23, 2024
Daily Price Outlook
During the early European trading session, the GBP/USD currency pair continued its three-day losing streak, dropping to 1.3266 on Monday. This decline comes as the US Dollar sees a modest recovery, putting additional pressure on the major pair.
The Bank of England's cautious approach to interest rates, combined with steady inflation, adds to the uncertainty surrounding the pound, as traders look for clearer signals on monetary policy.
Looking ahead, all eyes will be on the flash reading of the US Purchasing Managers Index (PMI) scheduled for release later today.
A stronger-than-expected PMI could bolster the US dollar further, leading to additional selling pressure on the GBP/USD pair.
US Dollar Faces Pressure Amid Fed Rate Cut and Economic Uncertainty
Despite the rising expectations of a Fed rate cut, the broad-based US dollar has regained mild positive traction ahead of the flash reading of the US Purchasing Managers Index (PMI). Last week, the US Federal Reserve lowered its key overnight borrowing rate by half a percentage point, marking its first cut since the early days of the Covid pandemic.
The Fed's statement expressed greater confidence that inflation is moving toward its 2% target, with risks to employment and inflation goals now seen as roughly balanced.
However, Fed Chair Jerome Powell was careful not to claim victory over inflation, as pricing pressures still persist.
Looking ahead, the US Personal Consumption Expenditures (PCE) index, which is the Fed's preferred measure of inflation, is set to be released on Friday. This report may provide insights into inflation trends and the future of US interest rates.
Meanwhile, uncertainty about the US economic outlook, coupled with rising expectations of further Fed rate cuts later this year, is likely to keep pressure on the US dollar, particularly against the Pound Sterling (GBP).
Bank of England's Cautious Stance Bolsters GBP Against USD
On the other hand, Bank of England (BoE) Governor Andrew Bailey emphasized the importance of keeping inflation low. He stated that it’s crucial not to reduce interest rates too quickly or by too much to maintain stability.
In their latest monetary policy meeting, the BoE decided to hold interest rates steady at 5.0%. This decision came right after the UK reported its Consumer Price Index (CPI) inflation data, which remained unchanged at 2.2% year-over-year in August.
Bailey's cautious approach reflects the ongoing challenges in managing inflation and economic growth. By keeping interest rates steady, the BoE aims to balance the need for economic support while preventing inflation from rising.
As inflation data shows signs of stability, the central bank is carefully considering its next steps. Market participants will be watching closely for any signals from the BoE regarding future interest rate decisions, as these choices will play a significant role in shaping the UK’s economic outlook.
Therefore, the Bank of England's decision to hold rates steady and focus on inflation stability may strengthen the GBP against the USD. As market participants anticipate cautious monetary policy, the GBP/USD pair could see upward pressure if inflation remains controlled.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.33131, down by 0.05% as the pound faces modest pressure amidst a subdued market environment. Despite the minor dip, the broader technical outlook remains cautiously optimistic, with the pair poised near key levels.
The pivot point stands at $1.3419, a critical juncture that, if breached, could signal further upward movement. Immediate resistance is situated at $1.3361, with additional hurdles at $1.3438 and $1.3507. Should the pair rally above these levels, a renewed bullish push could unfold.
However, on the downside, the first support lies at $1.3198. A move below this level could trigger a deeper correction, with further supports at $1.3114 and $1.3035. These levels will be crucial in determining whether the pound can maintain its overall uptrend or if bearish momentum takes control.
Technically, the RSI is hovering at 66, suggesting that the pair is approaching overbought conditions, signaling caution for traders eyeing further gains.
Meanwhile, the 50-day Exponential Moving Average (EMA) sits at $1.3005, continuing to provide a solid foundation for the pair’s upward trajectory. As long as the price remains above this level, the broader trend remains supportive of the bulls.
In conclusion, a buy-above strategy remains attractive, with an entry price at $1.32643 and a profit target at the pivot level of $1.34194. Traders should consider placing a stop-loss at $1.31995 to protect against downside risks, particularly if the pair fails to break above its immediate resistance.
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EUR/USD Price Analysis – Sep 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD extended its downward trend, dropping to the 1.1111 level and hitting an intra-day low of 1.1083. This decline was primarily driven by disappointing German economic data, which weighed heavily on the pair.
The downturn in Germany’s manufacturing sector worsened in September, while services sector activity also suffered, as highlighted by the preliminary HCOB business activity report.
Moreover, the European Central Bank’s cautious approach to monetary policy and uncertainty about the eurozone’s economic outlook further dampened investor confidence.
In the meantime, the renewed mild strength in the US dollar ahead of US Purchasing Managers Index (PMI) also played a major role in pushing the EUR/USD pair lower.
Economic Challenges in Germany and Their Impact on the EUR/USD Pair
On the EUR front, Germany's manufacturing sector is facing significant challenges, with a downturn worsening in September.
The HCOB Manufacturing PMI fell to 40.3 this month, down from 42.4 in August and below the expected 42.4. This marks a yearly low for the sector, indicating a slowdown in manufacturing activity.
In addition, the services sector is also struggling, as shown by a decline in the Services PMI from 51.2 in August to 50.6 in September, falling short of the forecasted 51.0.
The HCOB Preliminary German Composite Output Index came in at 47.2, lower than the expected 48.2 and down from 48.4 in August, reaching its weakest point in seven months.
These figures highlight the ongoing economic difficulties in Germany, raising concerns about the overall health of the eurozone economy.
Therefore, the worsening manufacturing and services data in Germany raises concerns about economic stability, likely putting downward pressure on the EUR/USD pair as investors anticipate further challenges for the eurozone economy.
Impact of ECB's Flexible Monetary Policy on EUR/USD Pair
Moreover, European Central Bank President Christine Lagarde emphasized the need for flexible monetary policy in her recent speech. She stated that while the main goal of maintaining price stability remains the same, central banks must adapt to the rapidly changing global economy.
This flexibility is crucial for effectively addressing various challenges. By highlighting this, Lagarde acknowledges the current uncertainties in the market and the importance of adjusting policies to ensure economic stability and support growth in the eurozone.
Therefore, the Lagarde's focus on flexible monetary policy may lead to uncertainty about the ECB's future actions, likely putting downward pressure on the EUR/USD pair as traders reassess the euro's strength.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.11625, marking a flat session with minimal movement. The market is in a phase of consolidation, with a neutral bias, though technical indicators suggest the potential for further upside in the coming sessions.
The key to unlocking the next move lies around the pivot point at $1.1199. Should the pair break above this level, immediate resistance awaits at $1.1181, followed by stronger barriers at $1.1210 and $1.1241.
On the downside, the first line of support is at $1.1118, with deeper supports at $1.1094 and $1.1067.
The technical indicators support a cautious bullish outlook. The Relative Strength Index (RSI) stands at 58, indicating positive momentum but not yet overbought territory, leaving room for further gains.
Meanwhile, the 50-day Exponential Moving Average (EMA) is positioned at $1.1103, providing a solid foundation for the pair. As long as the EUR/USD remains above this level, the overall trend favors the bulls.
In terms of trade strategy, a buy-above approach seems prudent, with an entry point at $1.11466. A reasonable profit target would be the pivot level of $1.11988, with a stop-loss set at $1.11174 to mitigate downside risk.
Given the relative calm in the market, the focus will be on whether the pair can gather enough momentum to break through resistance levels and sustain any rally.
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GOLD Price Analysis – Sep 23, 2024
GOLD Price Analysis – Sep 23, 2024
Daily Price Outlook
Gold (XAU/USD) has extended its early bullish rally, trading around the 2,627 level and reaching an intraday high of 2,631.
This upward movement is driven by a weaker US dollar, which has struggled following the Federal Reserve’s shift towards a monetary easing cycle and increasing expectations for further rate cuts this year.
Analysts anticipate an additional 75 basis points (bps) of cuts in 2024, following last week’s aggressive 50 bps reduction to a 4.75-5.00% range. This monetary policy shift is a key factor propelling gold prices higher.
Furthermore, the heightened geopolitical tensions in the Middle East have created a risk-off market sentiment, prompting investors to seek refuge in safe-haven assets like gold.
Fed Rate Cuts Weaken US Dollar, Boost Gold Prices
On the US front, the broad-based US dollar has been flashing red after the Federal Reserve (Fed) cut interest rates by a larger-than-usual half-percentage point to a range of 4.75% to 5.00%. This decision aims to support the economy while keeping unemployment low as inflation starts to ease.
Fed Chair Jerome Powell emphasized that this move reflects the policymakers' commitment to these goals. Furthermore, Fed officials expect another 75 basis points (bps) of rate cuts by the end of the year, which could further weaken the US dollar.
Meanwhile, Philadelphia Fed President Patrick Harker highlighted that the central bank has successfully navigated a challenging economic environment in recent years. He pointed out that both "hard" and "soft" economic data play crucial roles in their decision-making process.
Therefore, the Fed's rate cuts and a weaker US dollar typically boost gold prices, as gold becomes more attractive to investors seeking safe-haven assets. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, driving demand higher.
Escalating Middle East Tensions Boost Demand for Gold
On the geopolitical front, tensions in the Middle East are escalating as Israeli forces have launched new attacks in southern and eastern Lebanon, resulting in at least one civilian death.
Concerns about a potential full-scale war are growing, especially after Hezbollah declared a "battle of reckoning" with Israel. In Gaza, Israeli airstrikes have tragically killed a mother and her four children, along with several others in attacks on schools that are currently serving as shelters.
However, the humanitarian toll is staggering, with at least 41,431 people reported killed and 95,818 injured due to the ongoing conflict in Gaza.
Consequently, the escalating tensions and humanitarian crisis in the Middle East typically increase demand for safe-haven assets like gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is showing bullish momentum as the price continues to edge higher, currently trading at $2,624.20, up by 0.27%.
The recent price action suggests the market is testing critical resistance levels, while overall momentum remains strong. With a 4-hour chart timeframe, traders are focusing on key technical levels to gauge the next possible moves.
Gold is hovering near the pivot point at $2,630, which serves as both an immediate resistance and a crucial level to watch. A successful break above this point could see gold testing higher resistance levels at $2,639 and $2,648.
However, if the price fails to breach this level, we could see a pullback toward immediate support at $2,609. Below that, key support levels lie at $2,600 and $2,589, which will be crucial to maintaining the overall uptrend.
The technical indicators support the bullish outlook. The RSI is at 71, indicating that gold is in overbought territory, which could potentially lead to a short-term correction.
Nevertheless, the 50-day EMA at $2,585 is providing a strong base for the upward trend, suggesting that any dips could be viewed as buying opportunities.
In conclusion, the current technical setup favors a buy-above strategy with an entry price at $2,616.
Traders should target $2,630 for profit-taking, while setting a stop-loss at $2,610 to manage downside risk. Given the overbought conditions, a cautious approach is advised as gold approaches key resistance.
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S&P500 (SPX) Price Analysis – Sep 20, 2024
Daily Price Outlook
The S&P 500 index prolonged its upward trend and recently soared to an all-time high, closing at 5,713.64 after a remarkable 1.7% gain. This achievement marks the index's 39th record for 2024 and pushes its impressive year-to-date rise to about 20%.
The rally is largely fueled by the Federal Reserve's decision to implement a significant 50 basis-point rate cut, a move designed to ease economic worries and encourage growth.
Investors are clearly responding positively, reflecting a growing sense of optimism in the market.
This strong bullish move has sparked renewed investor confidence, driving a wave of buying in riskier assets, especially in the tech sector. Major technology companies took the lead, pushing the Nasdaq 100 up by an impressive 2.6%.
This surge highlights the strong link between lower interest rates and rising stock prices, as investors eagerly seek opportunities in a more favorable economic environment. It's a clear sign that optimism is back in the market.
Moreover, encouraging economic indicators, like the drop in jobless claims to their lowest levels since May, have strengthened the belief that the labor market is holding strong despite broader economic challenges.
Market analysts point out that the Fed's proactive stance reflects a commitment to steering clear of recession, which bodes well for the S&P 500's bullish trend. This combination of positive signals is fostering a sense of hope and stability among investors.
Global Interest Rate Cuts and Their Impact on the S&P 500 Index
However, the recent wave of interest rate cuts by central banks around the world has had a significant impact on the S&P 500 index.
Following the Federal Reserve's lead, other institutions, including the South African Reserve Bank and the Central Bank of the Philippines, have also slashed rates to boost their economies.
This collective action has created a supportive environment for U.S. equities, as investors look for better returns amid lower borrowing costs.
Therefore, the expectation of ongoing easing from central banks globally makes stocks even more appealing, particularly in high-growth sectors like technology.
Increased Geopolitical Risks and Their Impact on the S&P 500 Index
In contrast, the gains in the S&P 500 index could be limited as the rising geopolitical tensions create uncertainty for investors.
While the index has benefited from favorable economic conditions and interest rate cuts, concerns over escalating conflicts, particularly in the Middle East, may weigh on market sentiment.
Investors might shift their focus to safer assets like gold, reflecting a growing risk aversion. This uncertainty could weigh on stock prices, dampening the optimism surrounding interest rate cuts.
S&P 500 - Technical Analysis
The S&P 500 index is currently trading at $5,713.65, up by 1.70%, as bullish sentiment continues to drive the market higher. With the price nearing a key pivot point at $5,733.36, traders are eyeing the next levels of resistance.
Immediate resistance is seen at $5,766.23, with further targets at $5,818.03 and $5,868.94. A break above these levels could indicate further upside, particularly if macroeconomic conditions remain supportive.
On the downside, immediate support lies at $5,687.97, followed by $5,650.83 and $5,603.38. A sustained break below these support levels could signal a trend reversal or at least a short-term correction.
The 50-day Exponential Moving Average (EMA) at $5,558.58 continues to provide strong support, maintaining the index's bullish structure as long as prices remain above this key technical level.
The Relative Strength Index (RSI) is currently at 67, nearing overbought conditions, which suggests the possibility of a brief consolidation or pullback in the near term.
However, the market appears to be in a strong uptrend, with any dips likely seen as buying opportunities unless the price breaks below the $5,650 level.
In conclusion, the technical outlook for the S&P 500 remains bullish above $5,733.36. Traders should watch for a break above $5,766.23 to confirm the continuation of the upward trend, while a move below $5,687.97 may signal the beginning of a corrective phase.
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