EUR/USD Price Analysis – Jan 15, 2025
Daily Price Outlook
Despite the upbeat Eurozone Industrial Production data, the EUR/USD currency pair struggled to maintain its bullish momentum and shifted bearish around the 1.0311 level, hitting an intra-day low of 1.0287.
The downward shift could be attributed to cautious market sentiment ahead of the release of key US economic data.
Investors are eagerly awaiting the US Consumer Price Index (CPI) for December, due at 13:30 GMT, which will likely have a significant impact on market expectations for the Federal Reserve’s monetary policy.
Apart from this, the Euro faced pressure as investors adopted a wait-and-see approach before the return of President-elect Donald Trump to the White House.
Market participants are concerned that higher import tariffs under his administration may hurt Eurozone exports, making them more expensive for US buyers.
This uncertainty over trade policies contributed to the Euro’s weakness against the Dollar on Wednesday. As a result, the EUR/USD pair is consolidating near the 1.0300 level, reflecting the cautious mood among investors as they monitor developments on both sides of the Atlantic.
EUR/USD Struggles to Gain Momentum Amid Economic Concerns and US Trade Uncertainty
On the EUR front, the Euro remains weak against its major peers on Wednesday. Investors are cautious as they await the return of President-elect Donald Trump to the White House.
Meanwhile, the concerns are rising that his administration may introduce higher import tariffs, which could negatively affect Eurozone exports, making them more expensive for US importers. This uncertainty is putting pressure on the Euro, causing it to underperform.
In addition, worries about Eurozone economic growth and the potential for further interest rate cuts from the European Central Bank (ECB) are contributing to the Euro’s weakness.
The ECB has already cut its Deposit Facility rate by 100 basis points in 2024, and further rate cuts are expected.
ECB Chief Economist Philip Lane mentioned that inflation in the services sector is likely to decrease in the coming months, which could bring inflation closer to the ECB's 2% target.
However, some ECB policymakers, like Austrian Central Bank Governor Robert Holzmann, believe that the path to lower rates may not be as straightforward as it seems.
Holzmann pointed out that core inflation is still relatively high, and energy-related issues could complicate the ECB's decisions.
On the economic data front, Eurozone industrial output showed steady performance in November, with a slight 0.2% month-on-month increase.
This was slightly below the expected 0.3% rise, but it was consistent with the previous month’s performance.
However, the annual rate of industrial production dropped by 1.9% in November, which was a larger decline compared to October's 1.1% fall, in line with market expectations.
The combination of cautious investor sentiment, concerns over higher US import tariffs, and expectations of further ECB rate cuts is weighing on the Euro, leading to a weaker EUR. This is limiting EUR/USD's upside potential, keeping it near the 1.0300 level.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.03006, up 0.07%, as the pair consolidates below the critical pivot point at $1.03187. This level marks a key threshold for market direction.
The 50-day EMA at $1.03032 reinforces near-term resistance, aligning with a descending trendline. Immediate resistance stands at $1.03187, with further levels at $1.03683 and $1.04338. A failure to breach these levels could invite selling pressure.
On the downside, immediate support lies at $1.02392, followed by $1.01867 and $1.01288. A break below $1.02392 could open the door for further declines toward the $1.01867 level, intensifying bearish momentum.
The pair is currently trading within a downtrend, with lower highs and lows indicating continued bearish sentiment. The risk-to-reward setup favors selling at $1.03187, targeting $1.02392, with a stop loss at $1.03683.
This scenario presents a potential profit of $795 per standard lot against a risk of $496. The alignment of technical resistance levels with a bearish trendline further validates the downside bias.
Related News
- GOLD Price Analysis – Jan 15, 2025
GBP/USD Price Analysis – Jan 15, 2025
Daily Price Outlook
During the European trading session, the GBP/USD pair struggled to gain positive momentum, staying relatively subdued around the 1.2223 mark and even dipping to an intra-day low of 1.2161.
This hesitation can largely be attributed to the cautious sentiment among investors, who are now focusing on the upcoming high-impact Consumer Price Index (CPI) data from both the UK and the US.
Another factor putting pressure on the GBP/USD pair is the recent surge in UK borrowing costs, which has contributed to a weakening outlook for the GBP. This has become a key factor weighing down the GBP/USD pair as investors remain wary of the potential impact on the UK economy.
On the flip side, the US Dollar (USD) is also struggling, lingering near its weekly low after softer US producer prices were released on Tuesday.
This slowdown in inflation has provided some relief to the dollar, limiting any significant downside moves for the GBP/USD pair.
As the market looks ahead to these important data releases, the currency pair is likely to remain in a state of uncertainty, with the next major price movement contingent on the outcomes of these economic reports.
GBP/USD Struggles Amid Rising UK Borrowing Costs and Fed's Hawkish Stance
On the GBP front, the recent rise in UK borrowing costs has created a negative sentiment around the British Pound.
This has become a key factor pressuring the GBP/USD pair, as higher borrowing costs can weigh on economic activity and investor confidence. As a result, the pound remains under pressure, struggling to recover strongly in the market.
Meanwhile, the US Dollar (USD) is hovering near its weekly low after weaker-than-expected US producer price data earlier this week.
This has limited further losses for the GBP/USD pair. However, the Federal Reserve’s increasingly hawkish stance is providing support for the dollar.
The Fed’s position suggests it may not reduce interest rates anytime soon, helping maintain higher US Treasury bond yields and boosting the dollar’s appeal.
Market participants are now confident that the Fed will pause its rate-cutting plans during its next meeting. This belief was reinforced by last Friday’s strong US Nonfarm Payrolls (NFP) report, which signaled a healthy job market.
These developments support USD bulls and suggest that any recovery attempt in the GBP/USD pair could face selling pressure, keeping gains limited. Traders are likely to watch upcoming economic data closely for further direction.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.22109, up 0.10%, as the pair consolidates below a critical resistance zone.
The key pivot point at $1.22439 marks a significant level for market direction. A failure to break above this level could invite further selling pressure, aligning with the broader downtrend.
Immediate resistance lies at $1.22439, with additional hurdles at $1.23155 and $1.23335. Conversely, a decisive break below the support level of $1.21019 may trigger sharper declines, with subsequent support levels at $1.20194 and $1.19346.
The bearish bias is supported by the descending trendline and the 50-day SMA at $1.23335, which caps upside potential.
The risk-to-reward setup favors selling below $1.22439, with a target of $1.21019 and a stop loss at $1.23155.
This trade setup offers a potential profit of $1,420 per standard lot against a risk of $716, with a favorable risk-to-reward ratio of 1:1.9.
Related News
- GOLD Price Analysis – Jan 15, 2025
GOLD Price Analysis – Jan 14, 2025
Daily Price Outlook
Gold (XAU/USD) continued its upward trend, reaching a high of $2,675, fueled by reports that President-elect Donald Trump’s economic advisers are considering a gradual increase in tariffs to avoid inflation spikes.
This news prompted a slight pullback in US Treasury bond yields, lending support to gold, a non-yielding asset. However, despite the boost, the precious metal's upward momentum remains capped, hindered by the Federal Reserve's hawkish stance on interest rates.
On the other hand, the previously released robust US Nonfarm Payrolls (NFP) report from Friday reinforced the Fed’s outlook, fueling expectations for a slower pace of interest rate cuts in the US. Consequently, the US Dollar (USD) found support, stalling its recent decline after hitting a two-year peak on Monday.
US Labor Market Data and Federal Reserve Outlook
On the data front, the NFP report for December showed a strong increase of 256,000 jobs, significantly exceeding market expectations of 160,000 and surpassing the revised November figure.
This has further solidified expectations for a more gradual pace of rate cuts, as emphasized by several Federal Reserve officials.
Kansas Fed President Jeffrey Schmid noted that most of the Fed’s targets have been met, suggesting that any future rate cuts will be slow and data-dependent.
In other developments, China’s central bank pledged to support the Chinese Yuan, and the People's Bank of China (PBOC) raised the macro-prudential adjustment parameter for cross-border financing.
Meanwhile, inflation in the US, as measured by the TD-MI Inflation Gauge, saw a significant acceleration, climbing by 0.6% month-over-month in December, reinforcing concerns about inflation pressures.
Therefore, the strong NFP report and expectations of slower rate cuts from the Fed support the US Dollar and Treasury yields, limiting gold's upside potential.
Meanwhile, rising US inflation concerns may pressure gold as a non-yielding asset, reducing its appeal.
As traders await the upcoming US Producer Price Index (PPI) report, the market remains in wait-and-see mode for further economic data and developments that could influence the direction of gold and broader markets.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,669.19, up 0.22%, as the metal sustains modest upward momentum, driven by a retreat in U.S. Treasury bond yields. The price remains above the critical pivot point at $2,687.13, signaling a cautiously bullish sentiment.
Immediate resistance stands at $2,696.72, with higher targets at $2,710.98 and $2,724.66. On the downside, key support levels are at $2,645.00, followed by $2,627.99 and $2,614.89, providing strong safety nets for potential corrections.
The 50-day EMA at $2,657.96 underscores short-term support, confirming that the broader trend remains upward. However, gold's momentum is tempered by the Federal Reserve's hawkish policy outlook and steady U.S. bond yields, which cap significant price gains.
A sustained break above $2,696.72 could pave the way for higher levels, while a drop below $2,687.13 may trigger selling pressure, potentially testing lower supports.
The Relative Strength Index (RSI) signals neutral territory, suggesting limited immediate momentum but scope for a directional breakout. Traders should monitor the $2,687.13 pivot closely; holding above it supports bullish continuation, while a breach could indicate bearish pressure.
Related News
- AUD/USD Price Analysis – Jan 14, 2025
USD/CAD Price Analysis – Jan 14, 2025
Daily Price Outlook
During the European trading session, the USD/CAD currency pair is trading weakly around 1.4380 during Tuesday’s early European session, pressured by Canadian Dollar (CAD) strength and shifting market sentiment.
Following stronger-than-expected Canadian labor market data for December, traders have adjusted their outlook on the Bank of Canada’s (BoC) rate cut trajectory.
Simultaneously, rising crude oil prices have bolstered the CAD, further weighing on the pair. With the US Producer Price Index (PPI) for December scheduled for release later on Tuesday, market participants await additional cues on the US Dollar (USD) outlook, which could influence the pair’s trajectory.
US Dollar Supported by Strong Economic Data and Hawkish Fed Outlook
On the US front, robust economic data is supporting a hawkish Federal Reserve (Fed) stance, limiting the USD’s downside.
The Bureau of Labor Statistics’ December Nonfarm Payrolls (NFP) report showed an increase of 256,000 jobs, the highest since March, alongside a decline in the Unemployment Rate to 4.1%.
These figures reinforce expectations that the Fed will maintain higher interest rates through much of 2025.
According to the CME FedWatch tool, markets are currently discounting the likelihood of a 25 basis points rate cut at the January 28-29 Federal Open Market Committee (FOMC) meeting, with a probability of just 2.7%.
The USD’s resilience, driven by these factors, prevents a steeper decline in the USD/CAD pair, even as external pressures weigh on the Greenback’s performance.
Canadian Dollar Gains Support from Strong Domestic Data and Rising Oil Prices
The Canadian Dollar finds support from robust domestic data and favorable oil market conditions. Canada’s December labor market report revealed unexpected strength, with higher job creation reducing the likelihood of a BoC interest rate cut in January.
Reuters data indicates that expectations for a January 29 rate cut have dropped to 61%, down from 70% before the labor report’s release.
Moreover, crude oil prices have surged amid expanded US sanctions on Russian oil, providing a further boost to the CAD. As Canada is the largest oil exporter to the US, higher oil prices directly enhance the CAD’s appeal, creating downward pressure on the USD/CAD pair.
This oil-driven momentum underscores the Loonie’s sensitivity to commodity market dynamics, which will likely remain a key driver of the pair in the near term.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.43825, up 0.03%, as the U.S. Dollar holds steady against the Canadian Dollar. The price hovers just above the pivot point at $1.43442, maintaining a cautiously bullish sentiment.
Immediate resistance is observed at $1.44631, followed by stronger hurdles at $1.45272 and $1.45861. On the downside, support lies at $1.42799, with additional levels at $1.42108 and $1.41342, marking critical thresholds for a potential retracement.
The 50-day EMA at $1.43861 provides dynamic resistance, reinforcing the importance of sustained momentum above the pivot point.
A successful break above $1.43442 could set the stage for further gains, targeting the immediate resistance zone at $1.44631. Conversely, a failure to hold above the pivot could lead to selling pressure, testing the $1.42799 support level.
The RSI indicates neutral to bullish momentum, suggesting a balanced market outlook but with an upside bias. Traders should keep an eye on U.S. and Canadian economic data, including oil prices, which heavily influence the Canadian Dollar’s movement.
The overall sentiment remains bullish, but a decisive move above $1.43861 is crucial for validating further gains.
Related News
- GOLD Price Analysis – Jan 14, 2025
AUD/USD Price Analysis – Jan 14, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair has rebounded strongly extending gains for the second consecutive day and recovering from 0.6131, its lowest level since April 2020.
This resurgence is fueled by robust commodity prices and improved global market sentiment, which supported risk-sensitive assets like the AUD.
However, economic challenges persist in Australia. The Westpac Consumer Confidence Index fell for the second month in a row, dropping 0.7% in January to 92.1 points, signaling consumer pessimism.
Meanwhile, markets are factoring in a 75% probability of a rate cut by the Reserve Bank of Australia (RBA) in February, keeping the AUD/USD pair under pressure.
Traders are eyeing the upcoming Australian employment data, which could provide further insights into the RBA’s policy trajectory.
US Dollar Strength and Its Impact on the Pair
On the US front, the broad-based US Dollar continues to exert pressure on the AUD/USD pair, supported by strong economic data and a hawkish outlook from the Federal Reserve.
The US Dollar Index (DXY) remains near 109.60, its highest level since November 2022, reflecting sustained demand for the greenback.
On the data front, the December’s Nonfarm Payrolls (NFP) data exceeded expectations, showing a robust 256,000 job additions, compared to forecasts of 160,000.
This robust labor market data has pushed US Treasury yields higher, with the 2-year yield at 4.42% and the 10-year yield at 4.80%.
Federal Reserve policymakers, including Kansas Fed President Jeffrey Schmid, have emphasized the need for a measured approach to rate cuts in 2025, reinforcing the USD’s strength.
Additionally, the upcoming US Producer Price Index (PPI) report is expected to provide further clarity on inflation trends, which could influence the Fed’s rate decisions and the trajectory of the AUD/USD pair.
China's Economic Stimulus and Its Ripple Effect on AUD/USD Amid Australia's Domestic Challenges
On the other hand, China’s economic developments remain a critical factor influencing the AUD, given Australia’s close trade ties with its largest trading partner.
The People’s Bank of China (PBOC) recently announced measures to support the Chinese Yuan, including raising the macro-prudential adjustment parameter for cross-border financing.
These measures are intended to maintain ample liquidity and stabilize China’s financial markets, indirectly benefiting the AUD through strengthened demand for Australian exports.
PBOC Governor Pan Gongsheng reaffirmed China’s commitment to bolstering the global economy, highlighting plans to utilize fiscal and monetary tools to sustain growth.
This optimism has provided additional support for the AUD/USD pair, as improved Chinese economic conditions typically lead to increased demand for Australian commodities.
Domestically, Australia’s TD-MI Inflation Gauge surged by 0.6% month-over-month in December, the largest monthly increase since 2023, complicating the RBA’s policy outlook.
Despite these challenges, China’s stimulus measures offer some relief for the AUD, underscoring the intertwined economic relationship between the two nations.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.61918, up 0.26%, as the Australian Dollar shows slight recovery amid a stabilizing U.S. Dollar. The price remains below the pivot point at $0.62071, maintaining a bearish tone despite the recent uptick.
Immediate resistance is located at $0.62615, with higher levels at $0.62898 and $0.63274. On the downside, support stands at $0.61781, with deeper thresholds at $0.61488 and $0.61208.
The 50-day EMA at $0.62069 aligns closely with the pivot point, reinforcing its significance as a key decision level. A break above $0.62071 may shift sentiment toward bullishness, potentially targeting the immediate resistance zone.
Conversely, failure to hold above this pivot point could trigger renewed selling pressure, targeting the $0.61480 region.
The Relative Strength Index (RSI) suggests neutral momentum, indicating that the market could go either way depending on the break of key levels.
While the near-term outlook leans bearish, a decisive break above $0.62071 would challenge the prevailing sentiment.
Traders should monitor U.S. economic data and commodity trends, as these remain critical drivers for the Australian Dollar’s trajectory.
Related News
- GOLD Price Analysis – Jan 14, 2025
GBP/USD Price Analysis – Jan 13, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has continued its bearish slide, struggling to find any support and remaining around 1.2149.
It even touched an intra-day low of 1.2123. This downward movement can be attributed to ongoing concerns over the UK's economic troubles, with stubborn inflation and stagnant growth fueling worries of stagflation. The British Pound (GBP) has been facing significant pressure as a result.
Meanwhile, the US dollar surged to its highest level in over two years on the back of strong US jobs data released on Friday.
This combination of weak economic data from the UK and a stronger US Dollar has been pushing the GBP/USD pair lower.
GBP Struggles Amid Stagflation and Rising Bond Yields, Weighing on GBP/USD
On the GBP front, the British Pound (GBP) continues to struggle, primarily due to concerns about stagflation in the UK. Stubborn inflation combined with weak economic growth has created a challenging environment for the currency.
This combination is raising fears that the UK economy may remain stuck in a difficult situation for longer, keeping the GBP under pressure.
In addition to economic struggles, the recent increase in UK government bond yields is adding to the anxiety about the country’s financial stability.
Rising bond yields signal that investors may be worried about the UK's fiscal health, which is weakening confidence in the Pound.
Therefore, the UK’s economic struggles, including stagflation and rising bond yields, are weakening the British Pound (GBP).
Meanwhile, the US Dollar (USD) strengthens due to positive economic data. As a result, the GBP/USD pair is likely to continue its bearish trend.
US Dollar Strengthens on Positive Jobs Data, Weighing on GBP/USD Outlook
On the US front, the broad-based US dollar has gained strong momentum, reaching a two-year high against other currencies.
This surge was triggered by positive US jobs data, particularly the Nonfarm Payrolls (NFP) report, which showed the US economy added 256,000 jobs in December.
This exceeded expectations and boosted confidence in the US economy. Additionally, the unemployment rate dropped unexpectedly to 4.1%, reinforcing the view that the Federal Reserve (Fed) may maintain its aggressive stance on interest rates.
Investors are now expecting the Fed to pause its rate-cutting cycle at its upcoming policy meeting. Some are even speculating that the Fed may raise interest rates later this year, further supporting the US dollar.
As a result, US Treasury bond yields are likely to remain elevated, which adds to the strength of the US dollar.
This bullish outlook for the dollar, coupled with a risk-off sentiment in the market, is putting pressure on other currencies, including the British Pound (GBP).
However, the Relative Strength Index (RSI) on the daily chart for the GBP/USD pair is showing signs of being slightly oversold.
This suggests that the pair may experience a period of consolidation or a modest bounce before continuing its downward movement.
Investors may want to wait for a more favorable entry point before positioning for further declines in GBP/USD.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.21306, down 0.53% on the day, reflecting continued selling pressure amid a stronger U.S. dollar.
The 4-hour chart indicates that $1.21993, the pivot point, serves as a critical barrier for any potential recovery. Below this level, immediate support is located at $1.20880, with subsequent targets at $1.20174 and $1.19346.
On the upside, resistance levels are positioned at $1.23209, $1.24064, and $1.24962. The 50-day EMA at $1.24042 underscores a bearish outlook, with prices consistently trading below this trend indicator.
The RSI suggests a continuation of bearish momentum, though it approaches oversold territory, hinting at a possible consolidation phase.
The preferred strategy is to enter short positions below $1.22011, with a target of $1.20898 and a stop-loss set at $1.22710.
A sustained breach of the immediate support at $1.20880 could accelerate selling pressure, while a rebound above the pivot point might provide an opportunity for bulls to retest resistance levels. Traders should monitor the pair closely for volatility near these key levels.
Related News
- GOLD Price Analysis – Jan 13, 2025
EUR/USD Price Analysis – Jan 13, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has been under significant pressure, sliding to a fresh two-year low near 1.0200 as the week begins.
This sharp decline is largely attributed to the strengthening of the US Dollar (USD), which has been performing well amidst soaring bond yields.
The US Dollar Index (DXY), which tracks the Greenback’s performance against six major currencies, has surged to nearly 110.00, marking the highest level seen in over two years.
Moreover, the Euro (EUR) is facing strong selling pressure due to a combination of factors, including a generally bleak market sentiment.
Investors are growing increasingly risk-averse as fears mount over the potential economic fallout from protectionist policies under US President-elect Donald Trump.
There are rising concerns that these policies could lead to a global trade war, which would undermine the stability of international markets and diminish the appeal of risk-sensitive assets like the Euro.
This growing uncertainty has left the EUR/USD pair vulnerable, with investors turning to the US Dollar as a safe-haven amidst the prevailing global economic jitters.
EUR/USD Faces Pressure Amid Global Trade Concerns and ECB's Dovish Stance
On the EUR front, the Euro (EUR) is facing significant selling pressure due to weak market sentiment. Investors are becoming more cautious as fears grow that US President-elect Donald Trump’s protectionist policies could lead to a global trade war.
During his campaign, Trump threatened that the European Union (EU) would face heavy penalties for not buying enough American exports, raising concerns about economic tensions between the US and Europe.
At home, the Euro is also under pressure from expectations that the European Central Bank (ECB) will continue to ease its monetary policy.
ECB Chief Economist Philip Lane recently suggested that more interest rate cuts are likely as the central bank seeks to prevent the economy from slowing down too much.
He mentioned that the ECB’s approach should be balanced, avoiding being too aggressive or too cautious in its decisions this year.
In addition to this, ECB policymaker Boris Vujčić commented that he is comfortable with market expectations for more interest rate cuts, but he pushed back against ideas of speeding up the current pace of easing.
Vujčić emphasized the need for gradual cuts in interest rates, given the uncertainty surrounding the global economy. This ongoing policy stance has kept the Euro weak, as investors remain wary of the ECB's actions.
Therefore, the combination of global trade war concerns, ECB's policy easing expectations, and cautious sentiment towards the Euro has led to continued weakness in EUR/USD, causing the currency pair to experience selling pressure and a downward trend.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.02137, down 0.26% on the day, reflecting bearish momentum as the dollar strengthens. On the 4-hour chart, the pivot point at $1.02487 serves as a crucial threshold for the pair’s short-term direction.
A sustained break below this level could push prices toward immediate support at $1.01664, with further downside targets at $1.01118 and $1.00691.
Resistance levels remain intact at $1.03198, $1.03632, and $1.04534. Notably, the 50-day EMA at $1.03232 highlights a bearish bias, with prices trading consistently below this average.
The RSI confirms downward momentum, although it is nearing oversold territory, which could signal a potential short-term consolidation.
The recommended strategy is to enter short positions below $1.02478, targeting $1.01656 while managing risk with a stop-loss at $1.02947.
A decisive break below $1.01664 could trigger an accelerated bearish move, while a rebound above the pivot point might shift sentiment toward the resistance zones.
Related News
- GOLD Price Analysis – Jan 13, 2025
GOLD Price Analysis – Jan 13, 2025
Daily Price Outlook
Gold prices (XAU/USD) struggled to halt their bearish trend, lingering around the 2,687 mark and touching an intra-day low of 2,679.
However, the main catalyst for this decline was stronger-than-expected U.S. jobs data, which suggested a healthier job market and reduced the likelihood of aggressive interest rate cuts by the Federal Reserve. This provided a boost to the U.S. dollar, further pressuring gold prices.
Traders, who had initially hoped for rate cuts, quickly adjusted their expectations after the robust nonfarm payrolls report, which dampened the outlook for future rate reductions.
As a result, gold's appeal as a safe haven diminished, with higher interest rates making non-interest-bearing assets like gold less attractive.
However, gold prices did not experience a sharp decline due to ongoing uncertainty surrounding the economic outlook, particularly with the potential changes under U.S. leadership. This uncertainty has kept some demand for gold intact.
US Labor Data and Fed's Hawkish Stance Push Gold Lower
On the U.S. front, the US dollar remains strong, holding near a two-year peak, while U.S. Treasury yields have stayed elevated at their highest levels in over a year. This strength in the USD and yields has put pressure on gold prices, which do not offer yield.
The catalyst for this shift is the upbeat U.S. Nonfarm Payrolls (NFP) report, which has reinforced expectations that the Federal Reserve (Fed) will pause its rate-cutting cycle this month.
On the data front, the U.S. Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls increased by 256,000 in December, significantly surpassing market expectations of 160,000, as well as the previous month's figure of 212,000. Moreover, the Unemployment Rate dropped unexpectedly to 4.1% from 4.2%.
Despite these positive numbers, there was some relief for inflation concerns as annual wage growth, measured by Average Hourly Earnings, slowed to 3.9%.
This strong labor market data highlights the resilience of the U.S. economy, diminishing the likelihood of further rate cuts.
Therefore, the strong U.S. labor market data, including robust Nonfarm Payrolls and lower unemployment, reduces the likelihood of Fed rate cuts.
This strengthens the U.S. dollar and Treasury yields, making gold less attractive, leading to downward pressure on its price.
Geopolitical Tensions Drive Safe-Haven Demand, Supporting Gold Prices
On the geopolitical front, persistent global tensions have heightened investor demand for safer assets, providing some support for gold prices.
Recent developments, including increased sanctions by the U.S. and U.K. against Russia’s oil industry, have added to market uncertainty.
These sanctions, targeting nearly 200 vessels in Russia’s shadow fleet, have further strained the global market.
Moreover, ongoing military actions between Russia and Ukraine have escalated, with reports of intensified strikes by Russian forces on Ukrainian military targets, including airfields and vehicles.
The continued use of drones, missiles, and artillery underscores the growing instability, boosting demand for gold as a safe-haven asset.
Tensions in the Middle East also remain elevated, with violations of the ceasefire agreement between Israel and Hezbollah, as well as ongoing Israeli strikes in Gaza.
These geopolitical uncertainties have further fueled demand for gold, as investors seek protection from increasing instability in key regions around the world.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,686.40, down 0.12% on the day, as markets navigate between conflicting technical signals. The 4-hour chart highlights $2,679.88 as the critical pivot point.
A break above this level could push prices toward immediate resistance at $2,705.44, with further targets at $2,724.66 and $2,741.68. However, if prices fail to hold above $2,679.88, immediate support lies at $2,663.62, followed by stronger levels at $2,645.00 and $2,614.89.
The 50-day EMA at $2,652.30 confirms a bullish undertone, with prices consistently trading above this average.
However, the RSI signals consolidation, suggesting reduced momentum. Traders should monitor for a potential breakout above $2,680 to confirm a bullish continuation. On the downside, a break below $2,663 could lead to a sharper decline.
The current strategy suggests entering long positions above $2,680 with a target of $2,704, placing stop-loss orders at $2,663 to manage risk effectively.
Related News
- EUR/USD Price Analysis – Jan 13, 2025
S&P500 (SPX) Price Analysis – Jan 10, 2025
Daily Price Outlook
The S&P 500 index is currently trading at the 5,918 level, having reached an intra-day high of 5,927, reflecting a notable upward trend.
The index’s growth is driven by several key factors, including strong corporate earnings and investor optimism surrounding the US economy.
Despite some headwinds, particularly concerns about inflation, the overall sentiment has been positive, especially as US companies continue to report solid earnings results. This has bolstered investor confidence in the broader market.
Moreover, the Federal Reserve’s stance on rate cuts and its cautious approach toward further monetary tightening have provided further support to risk assets like equities.
Investors are also anticipating a recovery in key sectors, such as technology and consumer goods, which is boosting the overall index performance.
US Dollar and Economic Data's Impact on S&P 500
The US Dollar's strength, bolstered by recent economic data, plays a crucial role in shaping the performance of the S&P 500.
The Fed’s policy stance, which signals fewer rate cuts in the coming months, has led to higher yields on US Treasury bonds, supporting the USD’s positive momentum.
Hence, the stronger dollar tends to exert pressure on US exporters by making their goods more expensive overseas, potentially impacting earnings growth in international markets.
However, the overall economic backdrop, including job growth and inflation data, continues to favor the broader equity market.
In particular, strong job numbers and resilient consumer spending have helped maintain investor optimism, which is evident in the positive movements of the S&P 500 index.
The anticipated data release for the US Nonfarm Payrolls (NFP) report may influence the market further, with any positive surprise likely to provide additional momentum for the index.
Geopolitical Instability and Its Indirect Impact on the S&P 500 Index
On the geopolitical front, recent developments in Ukraine and Israel have also had an indirect impact on market sentiment.
Investors tend to seek safety in times of geopolitical instability, which can lead to increased volatility in equity markets like the S&P 500.
Despite this, the index has managed to maintain an upward trajectory, reflecting a balance between positive economic indicators and the ongoing geopolitical risks that could influence investor behavior.
S&P 500 – Technical Analysis
The S&P 500 index (SPX) is trading near the pivot point of 5918.26, reflecting a cautious yet optimistic market tone.
Immediate resistance is seen at 6011.99, with further upside targets at 6099.55 and 6175.48. On the downside, immediate support lies at 5834.66, followed by deeper levels at 5764.34 and 5672.94.
The 50 EMA, positioned at 5997.91, highlights resistance to the ongoing bullish trend, signaling that bulls must clear this hurdle to sustain upward momentum. RSI readings hover near neutral, suggesting consolidation before a potential breakout.
A sustained move above 5918.26 could pave the way for gains toward 6011.99, with further buying interest likely targeting 6099.55.
Conversely, failure to hold above the pivot may trigger a retest of support at 5834.66, where a break could shift sentiment toward bearish territory.
Market participants are closely monitoring key economic data, particularly the U.S. labor report, for its potential impact on Federal Reserve policy.
A strong breakout above 6011.99 would confirm bullish momentum, while sustained pressure below 5834.66 may signal a deeper correction.
Related News
- GOLD Price Analysis – Jan 10, 2025
EUR/USD Price Analysis – Jan 10, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair edged lower on the day as the market sentiment remained cautious.
The pair traded with a mild negative bias around 1.0300 on Friday. This decline comes as the US dollar continues to gain strength, fueled by the Federal Reserve’s decision to hold off on any interest rate cuts for the time being.
The Fed’s stance on rates has provided support to the Greenback, creating some selling pressure on the euro.
On the other side of the Atlantic, the Eurozone's Retail Sales figures, released on Thursday, failed to offer much support for the euro.
Eurostat reported a 1.2% year-on-year increase in retail sales for November, although it was lower than the revised 2.1% rise seen in October.
With the focus shifting to US employment data, the euro seems to be under pressure as market participants weigh the potential outcomes.
Fed’s Cautious Stance on Rate Cuts Strengthens US Dollar, Weighing on EUR/USD
On the US front, the broad-based US dollar has been rising as the Federal Reserve’s decision to delay interest rate cuts continues to support the Greenback.
This is putting some pressure on the EUR/USD pair. Traders are waiting for the US December Nonfarm Payrolls (NFP) report, which is expected later on Friday.
This report could offer important insights into the US job market and influence future Fed decisions.
Several Fed officials have shown caution about cutting interest rates, mainly due to ongoing inflation concerns and uncertainty surrounding the incoming Donald Trump administration.
For example, Susan Collins, President of the Fed Bank of Boston, said that the uncertainty in the economic outlook suggests the Fed should be careful with rate cuts.
Moreover, Fed Governor Michelle Bowman mentioned that she believes the Fed should keep rates steady until there is clear evidence that inflation is decreasing.
These hawkish comments from Fed officials could help strengthen the US dollar against the euro in the short term.
Therefore, the Federal Reserve’s cautious stance on rate cuts and inflation concerns are strengthening the US dollar.
This puts downward pressure on the EUR/USD pair, as a stronger dollar makes the euro less attractive in comparison, leading to a potential decline.
Euro Faces Pressure as Retail Sales Slow, but HICP Data Offers Some Support
On the EUR front, the Eurozone’s Retail Sales figures failed to provide much support for the euro. Data released by Eurostat on Thursday showed that retail sales increased by 1.2% year-on-year in November, but this was a slowdown compared to the revised 2.1% rise in October.
This weaker retail sales growth did not help lift the euro ahead of the key US employment data expected later on Friday.
However, there is some positive news for the euro. The Eurozone's preliminary Harmonized Index of Consumer Prices (HICP) data for December has pushed back expectations that the European Central Bank (ECB) will make a large interest rate cut.
This could help limit the euro's losses for now, as traders may feel more confident about the ECB's stance, which provides some support for the shared currency in the short term.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.02969, reflecting mild bearish sentiment as it dips below the pivot point at $1.03423.
The pair faces immediate resistance at $1.04424, with further upside barriers at $1.05222 and $1.06035.
On the downside, immediate support lies at $1.02240, followed by deeper levels at $1.01664 and $1.01118.
The 50 EMA at $1.03471 signals bearish momentum as prices hover below this critical moving average. RSI readings remain neutral, indicating limited directional bias for now.
However, a sustained break below $1.03423 could accelerate bearish momentum, driving the pair toward key support levels. Conversely, a recovery above $1.03423 may trigger a bullish reversal, targeting $1.04424.
Market participants are closely monitoring broader economic cues, including U.S. Nonfarm Payrolls data and ECB commentary, which could impact the euro's trajectory.
A decisive move below the $1.03423 pivot point will likely validate bearish sentiment, paving the way for further declines.
On the flip side, a break above $1.03423 could signal a near-term recovery toward $1.04424 and higher levels.
Related News
- GOLD Price Analysis – Jan 10, 2025