EUR/USD Price Analysis – Oct 28, 2024
Daily Price Outlook
The EUR/USD currency pair continued its upward trend, attracting strong bids around the 1.0820 level as the US dollar lost traction and dropped from an almost three-month high. However, the outlook for the US dollar remains strong amid risk-off market sentiment ahead of the US presidential election.
Meanwhile, the Euro is trading sideways ahead of a data-packed week, during which traders will receive key economic growth and inflation figures for both the US and the Eurozone.
Economic Outlook for the Eurozone and Its Impact on the EUR/USD Pair
On the EUR front, the shared currency is largely moving sideways as traders anticipate a busy week of economic data, including growth and inflation figures for both the United States and the Eurozone. These economic indicators are important because they often influence interest rate decisions.
In the Eurozone, investors are particularly focused on economic growth data, as inflation is expected to stay close to the European Central Bank's (ECB) target of 2%. Economists project the Eurozone economy will grow by 0.8% year-on-year, an increase from the 0.6% seen in the second quarter, with growth expected to hold steady at 0.2% compared to the previous quarter.
Germany, the largest economy in the Eurozone, is anticipated to see a decline of 0.3% in Q3, which could weigh on overall growth. In light of this, ECB policymaker and Bundesbank President Joachim Nagel highlighted the importance of implementing a growth package recently announced by the German government to support the economy.
He noted that while a significant 50-basis points interest rate cut might be considered in December, decisions will depend on several factors, including the US presidential election results and inflation data.
Therefore, the anticipated economic growth and inflation data in the Eurozone could lead to fluctuations in the EUR/USD pair. If growth exceeds expectations, it may strengthen the Euro, while weak German performance could weigh on the Euro, leading to volatility.
Impact of US Economic Outlook on the EUR/USD Pair
On the US front, the US dollar has dropped and showed mild bearish trend. Despite this decline, the outlook for the US Dollar remains strong as investors adopt a risk-averse stance with the US presidential election just a week away. Central bankers discussed the potential implications of a former President Donald Trump victory over current Vice President Kamala Harris during panels at the recent IMF meeting.
Many traders view this scenario positively for the US Dollar, as Trump has promised to increase tariffs by 10% on all countries except China, which would face even steeper tariffs of 60%.
In addition to election-related uncertainties, the US Dollar's direction will be influenced by a series of economic data releases this week. Market participants are particularly focused on the Job Openings and Labor Turnover Survey (JOLTS) and the Nonfarm Payrolls (NFP) data, as these will provide insights into job demand in the economy.
Plus, Q3 GDP data will help gauge the current health of the US economy, further influencing the dollar's value as traders seek cues for future market movements.
Therefore, the US Dollar's mild bearish trend and upcoming economic data releases may create volatility in the EUR/USD pair. If US data shows strong job demand or GDP growth, it could strengthen the dollar, potentially leading to a decline in the Euro's value.
EUR/USD – Technical Analysis
EUR/USD is experiencing bearish momentum, with the currency pair trading below its 50-day Exponential Moving Average (EMA) of $1.08085. The pivot level for today is at $1.07964, just above the current price. This positioning suggests that the pair is under selling pressure, with immediate resistance located at $1.08152, followed by stronger resistance at $1.08388 and $1.08655.
The Relative Strength Index (RSI) currently stands at 34, reflecting bearish momentum and indicating that the pair may still have room to the downside before reaching oversold conditions. A sustained move below the pivot and the 50 EMA could expose EUR/USD to immediate support at $1.07615, with additional downside targets at $1.07139 if selling pressure intensifies.
For traders considering short positions, an entry below $1.07957 could present a favorable opportunity, with a target set at $1.07613. A stop-loss placed slightly above the immediate resistance level at $1.08148 would help limit risk, ensuring a balanced risk-to-reward setup.
Overall, as the EUR/USD pair trades below its pivot and the 50 EMA, the outlook remains bearish. Market participants should monitor the pair’s reaction to the support at $1.07615 closely, as a break could accelerate further downside movement.
Conclusion: EUR/USD’s current positioning below the pivot and 50 EMA signals continued bearishness. Traders may consider short entries below $1.07957, targeting $1.07613, with a protective stop-loss near $1.08148.
Related News
- GOLD Price Analysis – Oct 28, 2024
GOLD Price Analysis – Oct 28, 2024
Daily Price Outlook
Gold prices (XAU/USD) have struggled to stop its downward trend but remined bearish around $2,732. However, the US dollar is gaining strength, driven by rising Treasury yields, which was seen as a key factor putting pressure on gold.
Many investors are shifting their expectations, anticipating only modest rate cuts from the Federal Reserve, which further weighs on the precious metal. Apart from this, the risk-on market sentiment has also limited demand for gold as a safe-haven asset.
On the flip side, losses in gold might be limited due to ongoing tensions in the Middle East and concerns surrounding the upcoming US elections, which are increasing demand for safe-haven assets and providing some support for prices.
Looking forward, traders appear hesitant to make strong moves in gold as they await several key US economic reports this week, including the Q3 GDP, the PCE Price Index, and the Nonfarm Payrolls (NFP) report.
Strengthening US Dollar and Economic Optimism Put Pressure on Gold Prices
On the US front, the broad-based US dollar is edging higher amid growing expectations that the Federal Reserve will opt for smaller rate cuts. Recently, the dollar reached its highest level since July 30, buoyed by market speculation for a more measured approach to easing monetary policy.
According to the CME Group's FedWatch Tool, traders have nearly fully priced in a standard 25 basis points rate cut by the Fed at its upcoming November meeting.
Looking at US economic data, recent indicators have reinforced this bullish outlook. In September, Durable Goods Orders fell by 0.8%, which is better than the anticipated 1% drop, and orders excluding transportation increased by 0.4%.
Meanwhile, the University of Michigan’s Consumer Sentiment Index for October rose to a six-month high of 70.5, surpassing both the preliminary estimate and last month’s figure.
Therefore, the bullish US dollar, driven by rising Treasury yields and positive economic data, makes gold less attractive as a non-yielding asset. Consequently, this upward pressure on the dollar and expectations of smaller Fed rate cuts can depress gold prices.
Geopolitical and Economic Shifts Could Weaken Gold's Safe-Haven Appeal
On the geopolitical front, Iran announced on Saturday that it would refrain from retaliating against Israeli airstrikes on its military targets, provided a ceasefire agreement is reached for the ongoing conflict in Gaza and Lebanon.
This statement suggests that Iran may prioritize diplomacy over military action to stabilize the situation.
Meanwhile, China is taking steps to boost its economy as it enters the fourth quarter. On Monday, Vice Minister of Finance Liao Min stated that the country will enhance its macroeconomic policies to support economic recovery.
This indicates that China is actively seeking ways to stimulate its economy and strengthen growth as it faces various challenges.
Hence, Iran's restraint in retaliation ease geopolitical tensions, reducing safe-haven demand for gold. Meanwhile, China's efforts to stimulate economic growth could strengthen the yuan, further pressuring gold prices as investors shift towards riskier assets and away from precious metals.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is experiencing a mild downturn as it tests the critical support level near $2,724.61. The 50-day Exponential Moving Average (EMA) at $2,732.56 is in close alignment with the current price, acting as a pivotal point that could determine the next directional move.
The Relative Strength Index (RSI) stands at 48, signaling a neutral momentum and leaving room for potential upside if the price can hold above the $2,726 pivot level. A solid rebound from this area could see Gold challenging immediate resistance at $2,741.59, with further targets set at $2,750.07 and $2,758.54.
On the downside, a decisive break below $2,724.61 could expose Gold to lower support levels at $2,717.49 and $2,708.90, reflecting potential selling pressure. Given the global economic uncertainty, Gold's price action remains sensitive to shifts in investor sentiment, which often directs funds toward safe-haven assets.
For traders considering entry, a buy-limit order near $2,726 could yield a favorable risk-to-reward scenario, targeting the $2,741 resistance. This setup anticipates a potential bounce while safeguarding against deeper declines with a stop loss set just below $2,717. Overall, maintaining a watch on key levels around the pivot and EMA will be crucial for gauging further price movements.
Conclusion: Gold’s price trajectory hinges on the $2,726 pivot level, with a potential upside to $2,741 if support holds. A break below this level could trigger further downside, while a buy-limit entry at $2,726 offers an opportunity for gains with limited risk.
Related News
- EUR/USD Price Analysis – Oct 28, 2024
EUR/USD Price Analysis – Oct 25, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair is steady around 1.0830, continuing its recovery from Thursday. This rise is mainly due to a drop in the US Dollar. However, the Euro's gains may not last as the latest preliminary PMI report shows that economic activity in the Eurozone is still struggling, with the flash Composite PMI falling to 49.7 in October.
Meanwhile, the manufacturing sector has been contracting for 28 months, remaining below the key 50 mark. Although the service sector saw some growth, it was slower than expected. This ongoing decline in business activity raises concerns about the Eurozone's economic growth, leaving many unsure about the future.
Eurozone Economic Decline and ECB Rate Cut Speculation Weigh on Euro, Impacting EUR/USD Pair
As we mentioned, the gains in the shared currency might be short-lived as the latest PMI report indicates that the Eurozone's economic activity continues to decline. The flash Composite PMI dropped to 49.7 in October, showing that the manufacturing sector has been shrinking for 28 months, remaining below the crucial 50 mark that signals growth.
Although the service sector saw some unexpected growth, it was slower than hoped. This ongoing decline in business activity raises concerns about the Eurozone's economic future. Furthermore, there is increasing speculation that the European Central Bank (ECB) may implement a larger-than-usual interest rate cut in its December meeting, which could further weigh down the Euro.
This year, the ECB has already lowered its Deposit Facility Rate three times by 25 basis points, bringing it to 3.25%. Market expectations are now leaning towards a potential 50 basis point cut in December, fueled by comments from some ECB policymakers who expressed concerns about inflation staying below the bank's 2% target.
Mario Centeno, the Governor of the Bank of Portugal and an ECB policymaker noted that a 50 basis point cut is a possibility and warned of growing risks to economic growth.
Meanwhile, data released on Friday showed that the German IFO Business Climate, Current Assessment, and Expectations for October were better than expected. However, improving sentiment may not lead to a significant economic revival due to overall weak business activity.
Therefore, the ongoing decline in Eurozone economic activity and speculation of a larger interest rate cut by the ECB could weaken the Euro, putting downward pressure on the EUR/USD pair. This uncertainty may lead to increased volatility and potential losses for Euro traders.
US Dollar Recovery Supported by Fed Expectations and Economic Data, Impacting EUR/USD Pair
On the US front, the broad-based US Dollar is seeing a recovery, supported by several factors, including growing expectations that the Federal Reserve (Fed) will take a gradual approach to cutting interest rates and increasing hopes that former President Donald Trump could win the upcoming presidential election against Vice President Kamala Harris.
Investor confidence in the Fed's cautious policy is bolstered by positive economic data, including strong Nonfarm Payrolls (NFP) and Retail Sales figures for September, as well as better-than-expected flash S&P Global PMI data for October, indicating sustainable economic growth.
Moving ahead, attention will turn to the US Durable Goods Orders data for September, set to be released at 12:30 GMT, which is expected to show a decline of 1% after remaining unchanged in August.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.08213, down by 0.06% as the currency pair struggles to maintain momentum near the $1.08465 pivot point. Immediate support stands at $1.08291, a level crucial for short-term sentiment.
Should EUR/USD breach this level, it could extend the bearish move toward the immediate support target of $1.07712, with a further downside likely to test $1.07486 if selling pressure intensifies.
On the upside, EUR/USD will face strong resistance at $1.08692, a level reinforced by the 50-day EMA, which is currently sitting at $1.08092. This EMA acts as a significant pivot, potentially limiting any bullish moves unless there is a sustained break above it.
Additional resistance can be found at $1.08880, providing a key barrier for bullish sentiment should the pair reverse.
The RSI reading of 59 signals modestly bullish momentum, suggesting the pair may be on the verge of testing higher resistance levels. However, the bearish pressure currently weighs heavier as the price action remains below the pivotal $1.08465 level.
Traders may want to consider a short position below $1.08288, with a take-profit target of $1.07976 and a stop-loss at $1.08465.
Related News
- GOLD Price Analysis – Oct 25, 2024
S&P500 (SPX) Price Analysis – Oct 25, 2024
Daily Price Outlook
The S&P 500 index is experiencing upward momentum, bolstered by positive economic indicators and a stabilizing dollar. It is currently trading at 5,809.86, recently reaching an intra-day high of 5,817.80. This surge reflects a strong sentiment in the equity markets, driven by positive economic indicators and investor optimism.
Positive Economic Data and Fed Expectations Fuel S&P 500 Growth
However, the recent stability of the U.S. dollar, alongside robust economic data, has provided a conducive environment for the S&P 500's ascent. Markets are responding favorably to the resilience demonstrated by the U.S. economy, which is reflected in the latest economic releases.
In the meantime, the expectations of a less aggressive Federal Reserve, particularly regarding rate cuts, have contributed to increased investor confidence. The Fed's potential moderation in its approach to monetary policy could bolster economic growth, further supporting equities.
Hence, this sentiment is echoed in the strong performance of key sectors within the S&P 500. As companies continue to report solid earnings and optimistic forward guidance, investors are increasingly willing to embrace risk, shifting their focus from safe-haven assets to equities.
Economic Data and Political Uncertainties Impacting S&P 500 Trading
Looking forward, traders keep an eye on the upcoming U.S. economic data, including Durable Goods Orders and the revised Michigan Consumer Sentiment Index. However, the positive figures could reinforce the notion of a resilient economy, prompting further buying activity in the S&P 500. Conversely, any unexpected downturn in these metrics may lead to volatility as traders recalibrate their strategies.
Moreover, the gains in the S&P 500 could be limited amid ongoing political uncertainties ahead of the November 5 presidential election. This uncertainty may prompt a cautious approach among traders as they navigate potential market shifts.
S&P 500 – Technical Analysis
The S&P 500 (SPX) currently trades at $5,809.87, down 0.21% in a slightly bearish move. Positioned below the pivotal $5,835 level, the index signals potential downside if it fails to reclaim this threshold. Immediate support is nearby at $5,800, serving as a crucial level to watch; a break below may drive the SPX toward $5,762, with deeper support waiting at $5,727.
Technically, the 50-day EMA at $5,822 acts as short-term resistance and aligns with the pivot, suggesting the index may struggle to gain bullish momentum unless a clear break above occurs.
Beyond this, resistance lies at $5,878 and $5,913, levels that could attract sellers should the SPX attempt a rally. Currently, the RSI stands at 45, hinting at waning momentum and a cautious market sentiment, as the index hovers near support.
For traders eyeing entry, a buy limit around $5,800 with a take-profit at $5,877 offers a conservative approach, while a stop-loss at $5,770 protects against deeper declines. Given global market volatility, especially around inflationary data and central bank announcements, the SPX could see reactive moves as it tests these critical levels.
Related News
- GOLD Price Analysis – Oct 25, 2024
GOLD Price Analysis – Oct 25, 2024
Daily Price Outlook
Gold (XAU/USD) struggled to sustain its earlier bullish momentum, edging lower to around the $2,720 level on Friday as the US dollar regained strength amid rising expectations that the Federal Reserve might slow the pace of rate cuts.
Despite this, Gold remains bolstered by safe-haven demand, driven by elevated geopolitical risks. The ongoing Middle Eastern conflict and heightened uncertainty surrounding the upcoming US election are key factors steering investors toward safe assets like Gold.
Gold's Resilience Amid Escalating Geopolitical Tensions and US Election Uncertainty
Gold is expected to find continued support from safe-haven demand as tensions in the Middle East escalate. On Friday, three Lebanese journalists were killed in a bombing targeting a guesthouse frequently used by international press outlets, including Al Jazeera and Reuters.
This tragic event capped a week of intensified airstrikes by Israel on residential areas in Beirut, with bombs striking close to hospitals and leading to casualties, including a child and several Lebanese soldiers aiding in evacuations.
In diplomatic efforts, US Secretary of State Antony Blinken is meeting with representatives from Israel and Qatar in Doha to negotiate an end to the violence. This follows discussions in Cairo between Egyptian diplomats and Hamas members aimed at the same goal.
However, Hamas official Osama Hamdan has stated that the group’s position remains firm: hostages will only be released once aggression stops and a full withdrawal occurs.
In the US, election uncertainties add another layer of risk. Republican nominee Donald Trump is gaining traction, leading in recent polls in key states like Pennsylvania and North Carolina.
Although FiveThirtyEight’s model shows Vice President Kamala Harris slightly ahead, Trump’s growing odds have raised concerns over potential shifts in foreign policy, which could further support safe-haven flows into Gold.
Therefore, the intensifying Middle Eastern conflict and US election uncertainties are bolstering Gold's appeal as a safe-haven asset, likely driving prices higher as investors seek stability amid geopolitical risks and the potential for shifts in US foreign policy.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,723.99, down 0.30%, showing some weakness after briefly breaching the $2,727.96 pivot point. The precious metal remains under pressure as it hovers just above the key support at $2,720.89. Should gold fail to hold this support level, the next downside target is $2,701.94, followed by deeper support at $2,693.29.
On the upside, gold will need to overcome immediate resistance at $2,733.87 to regain some bullish momentum. Further resistance levels lie at $2,739.63 and $2,748.90, which could serve as key areas to watch for any potential recovery. The 50-day EMA sits at $2,733.22, acting as another significant resistance point.
Technically, the RSI is currently at 46, signaling a neutral to slightly bearish sentiment. This reading indicates that momentum remains weak, and further declines could be on the horizon unless we see a bullish push past the $2,733 resistance zone. However, should gold find support above $2,720 and manage to bounce back, we could witness a rally targeting $2,740 in the short term.
For traders, a buy-limit entry around $2,725, with a take-profit target of $2,740 and a stop-loss at $2,715, could provide a balanced risk-reward opportunity. However, the failure to maintain above $2,720 could open doors for further downside.
Related News
- S&P500 (SPX) Price Analysis – Oct 25, 2024
GOLD Price Analysis – Oct 24, 2024
Daily Price Outlook
Gold (XAU/USD) has bounced back, trading around $2,739 on Thursday after a slight drop of 1.2% the day before, likely due to profit-taking. However, the precious metal is seeing renewed interest as investors turn to safe-haven assets amid the escalating conflict in the Middle East, which shows no signs of easing.
Moreover, the reports of North Korea sending troops to Russia to potentially engage in the Ukraine war have ramped up geopolitical tensions. Plus, rising electoral uncertainties in the U.S. are adding to market jitters.
As investors look for stability in these turbulent times, gold is becoming increasingly appealing, proving once again its value as a reliable safe haven during crises. Given these developments, it seems that gold will continue to attract those seeking a protective asset in today’s unpredictable global landscape.
Gold Gains Momentum Amid Central Bank Rate Cuts and BRICS Summit Focus
On the flip side, gold is gaining traction after the Bank of Canada decided to cut its cash rate by 50 basis points on Wednesday. This has people wondering if the European Central Bank (ECB) might follow suit and lower rates in December, especially with some disappointing economic data coming out of Europe.
As interest rates around the world are expected to drop, gold starts looking like a more attractive option. After all, it doesn’t pay interest, so when rates fall, investors who want some stability often turn to gold as a safe haven.
However, things are shifting in the U.S. regarding interest rates. Strong labor market data has made it less likely that the Federal Reserve will aggressively cut rates anytime soon. Meanwhile, everyone's eyes are on the upcoming BRICS summit in Kazan, Russia.
Countries like Russia are starting to look for alternatives to the U.S. dollar’s dominance, and the idea of a currency backed by gold is gaining some buzz. This shift towards gold as a potential alternative currency, combined with actions from central banks around the globe, is likely to give gold prices a nice boost in the weeks ahead.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,725.85, showing modest gains of 0.38% during the current session. The price is hovering around the pivot point at $2,727.96, indicating potential consolidation before a decisive move.
Immediate resistance lies at $2,733.87, and if this level is breached, the next key resistance points to watch are $2,739.63 and $2,746.70. On the downside, immediate support can be found at $2,720.89, with further support levels at $2,708.90 and $2,701.94, respectively.
The technical indicators present a mixed outlook. The Relative Strength Index (RSI) is at 46, suggesting a neutral stance, neither overbought nor oversold. However, Gold remains below its 50-day Exponential Moving Average (EMA) of $2,735.70, signaling continued downward pressure unless the metal can break above this level.
A close above the 50 EMA could encourage further bullish momentum, pushing prices toward the higher resistance zones.
Given the current positioning, traders might consider an entry above $2,720, with a target of $2,733 for potential profit-taking. However, a stop-loss at $2,710 is advisable to manage downside risks, particularly if Gold dips below the immediate support level.
Conclusion: Gold remains in a neutral technical zone, with the pivot point at $2,727.96 being critical for the next move. A break above $2,733.87 could spark further gains, while a drop below $2,720.89 could increase bearish pressure.
Related News
- USD/JPY Price Analysis – Oct 24, 2024
USD/JPY Price Analysis – Oct 24, 2024
Daily Price Outlook
The USD/JPY pair has been on a bearish trend recently, influenced by several factors. The Japanese Yen (JPY) has gained strength, while the US Dollar (USD) has weakened slightly. This came after Japanese officials made verbal interventions, expressing concerns over the Yen's rapid depreciation.
This prompted some buyers to turn to the Yen, which, along with a modest decline in the USD, pushed the USD/JPY pair down to around 152.00. Fears of government intervention to stabilize the Yen further fueled this downward movement in the USD/JPY pair.
Japanese Yen Edges Higher After Verbal Intervention and BoJ Rate-Hike Uncertainty
The Japanese Yen's recent rise has been influenced by verbal intervention from Finance Minister Katsunobu Kato, who voiced concerns about one-sided currency movements. Additionally, Deputy Chief Cabinet Secretary Kazuhiko Aoki emphasized that the government is closely monitoring foreign exchange fluctuations.
However, uncertainty surrounding the Bank of Japan's (BoJ) interest rate hike decisions looms large, especially with the general election approaching on October 27.
Recent opinion polls indicate that the ruling Liberal Democratic Party (LDP) may lose its majority, raising doubts about the BoJ's ability to continue raising rates. This uncertainty is limiting the Yen's recovery, preventing it from gaining significant ground and creating mixed sentiment in the USD/JPY pair.
Support for the US Dollar Amid Fed Expectations and Economic Data Insights
On the other hand, expectations of a less aggressive approach from the Federal Reserve (Fed) are providing some support to the US Dollar. Market participants expect the Fed to implement modest rate cuts over the coming year, especially after the US election.
This view, combined with concerns over increased deficit spending under a new US administration, has driven US bond yields higher, limiting the downside for the USD. As a result, this has helped prevent further declines in the USD/JPY pair.
Traders are now awaiting fresh economic data, particularly the release of flash US PMI prints, which will influence USD price dynamics and likely set the short-term direction for the USD/JPY. Additionally, stability in the equity markets could lead to dip-buying, helping to stabilize the pair. (edited)
USD/JPY – Technical Analysis
USD/JPY is currently trading at 152.151, down 0.39% during the session, signaling potential bearish momentum. The pair is approaching its pivot point at 152.575, indicating that traders are eyeing key support and resistance levels closely.
Immediate resistance lies at 153.180, with further upside potential at 153.698 if USD/JPY gains strength. However, the current downward pressure suggests that a retest of key support levels is more likely. Immediate support is seen at 151.908, with stronger support at 151.601 and a deeper level at 151.171.
The technical indicators present a mixed picture. The Relative Strength Index (RSI) stands at 56, suggesting that the pair is in a neutral range, although slightly favoring sellers. Additionally, the 50-day Exponential Moving Average (EMA) is positioned at 150.911, providing a lower boundary that could act as strong support should the pair continue to fall.
With USD/JPY trading near the 152.300 level, a sell entry could be considered, aiming for a take-profit level at 151.600. Traders should set a stop-loss at 152.950 to manage risks effectively if the pair reverses direction.
USD/JPY faces immediate bearish pressure, with a key sell entry below 152.300. Traders should watch for potential downside toward 151.600, while resistance at 153.180 could limit any rebound.
Related News
- GOLD Price Analysis – Oct 24, 2024
AUD/USD Price Analysis – Oct 24, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its upward trend, remaining well bid around 0.6656 and reaching an intraday high of 0.6662. However, this upward trend was driven by a modest decline in the US Dollar (USD), which lost its traction in the wake of weaker US Treasury bond yields.
Moreover, the risk-on performance in equity markets has prompted profit-taking on the safe-haven USD, benefiting the risk-sensitive Australian Dollar (AUD). However, a combination of factors is likely to limit any significant decline in the USD, capping the potential gains for the AUD/USD pair.
US Dollar Index Retreats as Bond Yields Correct, Impacting AUD/USD Pair
On the US front, the broad-based US Dollar has retreated from a nearly three-month high and faced mild decline on Thursday. This decline is linked to a correction in US Treasury bond yields as well as stable performance in equity markets has led to profit-taking on the safe-haven USD, which benefits the risk-sensitive Australian Dollar (AUD).
Meanwhile, the market participants have fully priced out the chances of a more aggressive policy easing by the Federal Reserve, as recent US economic data indicates that the economy remains strong.
However, the concerns about increased deficits from spending plans by Vice President Kamala Harris and Republican nominee Donald Trump are expected to support US bond yields and revive demand for the USD.
Looking ahead, traders are eager for the release of the flash US PMI figures for October. Meanwhile, US bond yields and overall risk sentiment will influence USD price movements, creating potential short-term trading opportunities for the AUD/USD pair.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.66459, marking a 0.19% gain in today's session. The price hovers just below the pivot point at $0.66509, with immediate resistance at $0.66682. Should the pair break above this level, further resistance can be found at $0.66895 and $0.67071. However, if AUD/USD fails to hold its current position, immediate support lies at $0.66302, followed by deeper support levels at $0.66135 and $0.65993.
The technical indicators suggest a cautious outlook. The 50-day Exponential Moving Average (EMA) is at $0.66622, indicating that the pair is slightly below this key technical level, which could cap further upside momentum. Traders will be closely watching to see if the pair can break above the EMA or if downward pressure resumes.
Given the current price action, a sell limit order at $0.66548 might offer an opportunity, with a take-profit target of $0.66294. A stop-loss at $0.66722 would help manage potential risks should the pair break above key resistance levels.
Conclusion: AUD/USD remains below its 50 EMA, with resistance at $0.66682 posing a challenge. A sell limit order at $0.66548 with a target of $0.66294 could capitalize on short-term bearish momentum, though traders should watch for any break above $0.66722 for potential upside risks.
Related News
- GOLD Price Analysis – Oct 24, 2024
GOLD Price Analysis – Oct 23, 2024
Daily Price Outlook
Gold (XAU/USD) is on a remarkable upward trend, breaking into the $2,750 level on Wednesday and setting new all-time highs. This surge is largely fueled by a heightened demand for safe havens as tensions continue to escalate in the Middle East and uncertainty looms over the upcoming elections in the US.
With former President Donald Trump and Vice President Kamala Harris locked in a tight race in the polls, the prospect of a Trump win raises concerns about stability on the geopolitical front.
Rising Geopolitical Tensions in the Middle East Fuel Gold Price Surge
On the geopolitical front, the increasing tension in the Middle East is pushing gold prices higher as investors seek safe-haven assets. Despite efforts for a ceasefire, fighting continues between the Israeli army, Hamas, and Hezbollah in Gaza and Lebanon.
The death of Hamas leader Yahya Sinwar has not opened any new avenues for negotiations, which many had hoped for. U.S. Secretary of State Antony Blinken, on his eleventh visit to the region, appears no closer to securing a ceasefire, even as reports suggest progress. Recently, he had to take cover in a bunker during air-raid sirens in Tel Aviv.
However, the situation is escalating, with the Israeli military launching attacks on the ancient city of Tyre in Lebanon after warning residents to evacuate. Furthermore, conflict is expected to intensify as Israel prepares for a potential retaliatory strike against Iran.
This urgency follows an incident where an Iranian drone breached Israeli air defenses and exploded near Prime Minister Benjamin Netanyahu’s residence.
Impact of Strengthening US Dollar and Rate Cut Expectations on Gold Prices
On the US front, the broad-based US dollar is gaining strength as recent signs of economic resilience and inflation concerns reduce the likelihood of significant interest rate cuts by the Federal Reserve in November.
The CME FedWatch Tool shows a 91% chance of a modest 25-basis-point rate cut, but expectations for a larger 50-basis-point cut are absent. Currently, the yields on 2-year and 10-year US Treasury bonds are 4.04% and 4.21%, respectively.
Federal Reserve Bank of Minneapolis President Neel Kashkari noted that the Fed is carefully watching the labor market for any signs of instability. He advised investors to prepare for a gradual pace of rate cuts in the upcoming quarters, indicating that any easing will be moderate rather than aggressive.
Meanwhile, San Francisco Fed President Mary Daly expressed support for further easing, believing there is no reason to stop lowering rates.
In contrast, Kansas City Fed President Jeffrey Schmid took a more cautious stance, suggesting restraint in large rate cuts and emphasizing that the labor market is stabilizing rather than deteriorating.
Consequently, the strengthening US dollar and reduced expectations for significant interest rate cuts may pressure gold prices, as higher interest rates typically increase the opportunity cost of holding non-yielding assets like gold. This could lead to decreased investor demand for gold.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) continued their modest upward trend on Wednesday, edging 0.04% higher to $2750.14 during the early European session. The precious metal remains buoyant, underpinned by global macroeconomic concerns and a weakening U.S. dollar, providing solid ground for bullish sentiment.
On the 4-hour chart, key technical levels reveal that Gold is positioned just above its pivot point of $2739.97, which could act as a critical marker for further upside momentum. Immediate resistance stands at $2752.73, followed by stronger hurdles at $2764.86 and $2776.39. If prices close above the immediate resistance level, Gold may gather enough momentum to test the higher resistance at $2764.86.
On the downside, initial support lies at $2729.46, with subsequent supports at $2716.59 and $2701.94. A breach of $2729.46 could trigger a deeper corrective pullback toward these lower levels.
From a technical standpoint, the Relative Strength Index (RSI) is currently at 66.00, indicating that Gold is nearing overbought territory but still has room for upward movement before significant correction risk emerges.
The 50-day Exponential Moving Average (EMA) of $2718.48 provides additional bullish confirmation, as prices remain comfortably above this key moving average, suggesting ongoing bullish strength in the short term.
For traders looking for entry points, the outlook remains positive with a buy entry above $2740, targeting the next resistance at $2764. However, caution is warranted with a stop loss at $2729 to manage downside risks.
Related News
- EUR/USD Price Analysis – Oct 23, 2024
EUR/USD Price Analysis – Oct 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair failed to stop its downward trend and remains under pressure due to a faster-than-expected decline in inflation and increasing concerns over a potential downturn in the Eurozone economy, leading to speculation about further interest rate cuts by the European Central Bank (ECB).
Concurrently, the US dollar has strengthened, driven by various factors, including political uncertainty ahead of the upcoming US presidential election and expectations that the Federal Reserve’s (Fed) policy-easing cycle will proceed more gradually than anticipated. Investors will be particularly focused on the Fed’s Beige Book, set to be released on Wednesday at 18:00 GMT, along with speeches from several Fed and ECB members, including President Lagarde.
EUR Under Pressure as Inflation Declines and ECB Rate Cut Speculation Grows
On the EUR front, the outlook for the Euro (EUR) has worsened due to a faster-than-expected decline in inflation and rising concerns about a potential downturn in the Eurozone economy. This situation has sparked speculation about more interest rate cuts by the European Central Bank (ECB), which has already lowered its Deposit Facility Rate three times this year. Many traders expect another cut in December, prompting discussions about what level of borrowing rates would effectively control inflation while also encouraging economic growth.
Recently, some ECB officials have debated whether to lower interest rates below the so-called neutral rate, which is estimated to be around 2% to 2.25%. Lithuanian central bank governor Gediminas Šimkus highlighted concerns about inflation potentially staying too low, suggesting that if disinflation continues, rates may drop below natural levels.
Meanwhile, ECB President Christine Lagarde expressed confidence that inflation would return to the bank’s target of 2% by 2025, earlier than expected. She noted that while the direction of monetary policy is clear, the pace of future interest rate cuts will depend on incoming economic data.
Therefore, the worsening outlook for the Euro and expectations of further ECB rate cuts are likely to keep the EUR/USD pair under pressure. A weaker Euro combined with a stronger US dollar could lead to continued declines in the EUR/USD exchange rate.
US Dollar Strength Pressures EUR/USD Amid Political Uncertainty and Fed Expectations
On the US front, the broad-based US dollar (USD) is gaining strength, pushing the EUR/USD pair down to near 1.0780 level. However, this strength in the dollar is fueled by political uncertainty ahead of the upcoming US presidential election and expectations that the Federal Reserve (Fed) will adopt a more gradual approach to any policy easing than previously thought.
Market sentiment has shifted due to increasing bets that former President Donald Trump could win the election, scheduled in less than two weeks. While recent polls show Vice President Kamala Harris with a slight lead, a Trump victory could lead to higher tariffs and lower taxes, potentially pushing the Fed to adopt a more restrictive policy stance.
Currently, markets anticipate two 25 basis point interest rate cuts from the Fed in November and December. However, analysts suggest that the Fed is unlikely to implement another large rate cut like the one in September, especially since recent Nonfarm Payrolls (NFP) data indicates that labor demand remains strong. Investors are closely watching the Fed’s Beige Book release at 18:00 GMT, along with speeches from Fed and ECB officials, including President Lagarde.
Therefore, the strengthening US dollar, driven by political uncertainty and expectations of gradual Fed policy easing, is likely to continue putting downward pressure on the EUR/USD pair.
EUR/USD – Technical Analysis
From a technical perspective, EUR/USD is trading just below its pivot point of $1.08117, signaling indecision in the market and the potential for a breakout in either direction.
Immediate resistance is found at $1.08309, followed by $1.08475, and a stronger level at $1.08698. A breach of these resistance levels may trigger a broader upward move, but current momentum remains subdued.
On the downside, immediate support sits at $1.07920, with additional levels at $1.07712 and $1.07486. A break below $1.07920 would likely signal renewed selling pressure, pushing the pair toward these lower support levels.
The Relative Strength Index (RSI) is at 36, indicating mild bearish momentum, as EUR/USD remains in a consolidative phase. The 50-day Exponential Moving Average (EMA), currently at $1.08344, suggests that prices are trading below a critical threshold, reinforcing the short-term bearish outlook.
For traders, a short position could be considered if EUR/USD drops below $1.08179, with a target at $1.07716 and a stop-loss at $1.08478 to manage upside risks.
Related News
- GOLD Price Analysis – Oct 23, 2024