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.
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USD/JPY Price Analysis – Jan 09, 2025
Daily Price Outlook
During the European trading session, the USD/JPY currency pair extended its bearish trend, remaining under pressure around the 158.17 level, before hitting an intra-day low of 157.76.
Despite Japan's strong wage growth data, there’s uncertainty about when the Bank of Japan (BoJ) will raise interest rates again, which has been holding back the yen. Meanwhile, the widening yield gap between the US and Japan, fueled by the Federal Reserve’s hawkish stance, continues to weigh on the yen.
However, speculation that Japanese authorities might step in to support the yen is preventing aggressive selling. This, along with global geopolitical risks and concerns over US President-elect Donald Trump’s protectionist policies, is providing some support for the yen.
On the flip side, the recent pullback in US bond yields due to a flight to safety has kept the USD bulls on the defensive, limiting the extent of the dollar's strength.
This cautious sentiment in the market is putting a lid on the USD/JPY pair's movement, as the yen's safe-haven appeal is offering some support, despite the broader strength of the US dollar.
Impact of BoJ Data and US Policy Uncertainty on USD/JPY Pair Volatility
On the BoJ front, government data released this Thursday showed Japan's base salary increased by 2.7% in November, marking the fastest rise since 1992.
Overtime pay also saw growth, rising 1.6% from the previous month's 0.7% gain. However, inflation-adjusted real wages fell for the fourth month in a row, dropping by 0.3%.
This came as the inflation rate used for wage calculations jumped from 2.6% in October to 3.4% in November. The BoJ has said that sustained wage increases are necessary for raising borrowing costs, and these figures provide a modest boost to the Japanese yen.
Despite this positive data, investors remain skeptical that the BoJ will raise rates in its January meeting. Many expect the BoJ to wait until March, partly due to uncertainty over US President-elect Donald Trump's potential protectionist policies.
CNN reported that Trump is considering declaring a national economic emergency to justify imposing tariffs on both allies and adversaries, which sent the yield on the 10-year US government bond to its highest level since April 25.
This overshadowed the mixed labor market data from the US, which showed a slower-than-expected rise in private sector jobs for December but a drop in unemployment claims to an 11-month low.
Looking ahead, market focus will remain on speeches from influential FOMC members later today, but the most important event will be Friday's US Nonfarm Payrolls (NFP) report.
Investors are keen to see how the US labor market is performing and how this could impact future interest rate decisions by the Federal Reserve. The mixed economic data, combined with the uncertainty surrounding US policies, is adding volatility to global markets, including the USD/JPY pair.
Therefore, the data and uncertainty surrounding the BoJ’s rate hike and US policies contribute to volatility in the USD/JPY pair. A cautious market sentiment, influenced by mixed economic data and geopolitical risks, may limit significant movements in the pair.
USD/JPY – Technical Analysis
USD/JPY is trading at 157.930, down 0.25%, reflecting a bearish tone as the pair struggles to hold above key technical levels. The pivot point at 158.475 remains a critical marker, and the pair's inability to reclaim this level suggests further downside pressure.
The 50 EMA at 157.544 acts as near-term resistance, aligning with broader selling momentum. RSI readings indicate bearish sentiment, with the pair at risk of deeper declines if momentum persists.
Immediate resistance lies at 159.406, followed by 160.406 and 161.117, which may limit any bullish recovery.
On the downside, immediate support is found at 156.904, with further levels at 155.975 and 154.924 offering potential buffers against an extended selloff. A sustained move below the pivot point could trigger a decline toward 156.904 and beyond.
Traders considering short positions may look to sell below 158.448, targeting 156.904 while setting a stop-loss at 157.074.
A break above 158.475 would be required to negate the bearish outlook, paving the way for a test of 159.406. With a cautious sentiment prevailing, traders should monitor price action near the pivot for further clues on directional strength.
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AUD/USD Price Analysis – Jan 09, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its losing streak, staying under pressure around the 0.6193 level.
The main reason for its downward rally can be traced to disappointing domestic economic data and concerns about China’s economic outlook.
China's Consumer Price Index (CPI) data, released on Thursday, showed that inflation is facing deflationary risks. In December, the annual inflation only rose by 0.1%, slightly lower than November's 0.2% increase, which aligned with market expectations.
Besides this, traders are awaiting Friday’s US Nonfarm Payroll (NFP) report, as it may provide further direction for US Federal Reserve policy.
The US Dollar (USD) has been supported by hawkish signals from the Federal Open Market Committee (FOMC) meeting minutes and growing concerns over potential tariff plans under the incoming Trump administration.
US Dollar Strengthens Amid Strong Economic Data, While Australian Dollar Faces Pressure from Soft Inflation
On the US front, the broad-based US dollar has been holding strong, with the US Dollar Index (DXY) staying near the 109.00 level.
The Greenback is benefiting from hawkish signals in the Federal Reserve's (Fed) meeting minutes, as well as concerns over tariff plans from the incoming Trump administration. This strength in the dollar is also supported by rising US Treasury bond yields.
Moreover, the US labor market data provided positive signals. Initial Jobless Claims fell to 201,000, better than the expected 218,000. Meanwhile, the ADP Employment report showed a gain of 122K jobs in December, although this was below market expectations of 140K.
The ISM Services PMI also showed strong growth, rising to 54.1 from 52.1, beating the 53.3 forecast. The Prices Paid Index, a key inflation measure, also increased, indicating that inflationary pressures remain present.
Therefore, the strong US Dollar, supported by positive economic data and rising bond yields, puts pressure on the AUD/USD pair, likely causing the Australian Dollar to weaken further against the Greenback.
In contrast, the Australian Dollar (AUD) is facing challenges due to softer inflation data. Australia's core inflation, measured by the trimmed mean, fell to 3.2% annually from 3.5%, bringing it closer to the Reserve Bank of Australia's (RBA) target range of 2-3%. This has led traders to expect a potential interest rate cut from the RBA.
Australia's CPI rose 2.3% year-over-year in November, slightly above expectations, but it remains within the RBA’s target range. Despite this, there is a growing expectation of a rate cut in the coming months.
Hence, the softer inflation data and expectations of an interest rate cut by the RBA are likely to weigh on the Australian Dollar, potentially leading to further weakness in the AUD/USD pair.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.61964, down 0.28%, as bearish sentiment dominates amid global risk-off conditions. The pair is struggling to maintain ground above its pivot point at $0.62190, signaling potential downside risks.
The 50 EMA at $0.62228 has turned into a near-term resistance level, further weighing on the currency pair. The RSI is hovering in bearish territory, reflecting subdued momentum.
Immediate resistance is located at $0.62730, followed by $0.63058 and $0.63393, marking levels to watch for any bullish recovery.
On the downside, immediate support lies at $0.61781, with stronger support at $0.61488 and $0.61208. A sustained move below the pivot point could trigger further selling pressure, targeting the $0.61781 level initially, followed by $0.61530.
Traders considering short positions might look to enter below $0.62172, targeting $0.61530 with a stop-loss at $0.62523.
While the pair remains bearish in the short term, a break above $0.62190 and the 50 EMA could signal a reversal, paving the way for a test of $0.62730.
However, the broader trend remains cautious as the pair reacts to key technical and macroeconomic drivers.
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- GOLD Price Analysis – Jan 09, 2025
GOLD Price Analysis – Jan 09, 2025
Daily Price Outlook
Gold price (XAU/USD) failed to continue its recent upward trend and turned bearish around the 2,659 level, hitting an intra-day low of 2,655.
This decline is mainly driven by expectations that the Federal Reserve may slow down its interest rate cuts, which has helped the US Dollar stay strong near its two-year high.
On the flip side, the geopolitical tensions and concerns over a potential trade war continue to offer support to gold, which is often seen as a safe-haven asset in times of uncertainty.
Investors seem to be holding back from making major moves, possibly waiting for the release of the US Nonfarm Payrolls (NFP) report on Friday.
Moreover, speeches from key Federal Reserve members scheduled for later today could offer additional clues about the central bank’s stance on future interest rate moves.
These factors make the short-term outlook for gold uncertain, and its price could be influenced by both the US economic data and any developments in global geopolitical tensions.
US Dollar Strengthens Amid Hawkish Fed Signals and Rising Treasury Yields, Pressuring Gold
On the US front, the broad-based US Dollar has been holding strong and received support from recent hawkish comments in the Federal Open Market Committee (FOMC) Meeting Minutes and concerns about tariff plans under the incoming Trump administration.
The US Dollar has been further bolstered by rising Treasury bond yields, with the 10-year yield climbing to nearly 4.73% before easing slightly to 4.67%, while the 30-year bond approached 4.93%.
However, the FOMC Minutes from December's meeting showed that most members were in favor of a 25 basis point rate cut, but they were also cautious.
They are worried that trade and immigration policy changes could keep inflation high for longer than expected.
On the data front, US Initial Jobless Claims for the week ending January 3 dropped to 201,000, which was better than the expected 218,000.
However, the ADP Employment Change for December was 122,000, falling short of the expected 140,000.
Meanwhile, the US ISM Services PMI (a key indicator of economic activity) rose to 54.1 in November, up from 52.1, beating expectations of 53.3. However, the Prices Paid Index, which reflects inflation, increased sharply to 64.4 from 58.2.
Federal Reserve officials have expressed concerns about the pace of inflation reduction. Atlanta Fed President Raphael Bostic urged caution in policy decisions, suggesting that interest rates should remain high until inflation reaches the 2% target.
Consequently, the US Dollar's strength, rising Treasury yields, and cautious Federal Reserve stance are putting pressure on gold prices.
GOLD (XAU/USD) – Technical Analysis
Gold is trading at $2,657.43, down 0.16%, as traders digest recent price movements within a consolidation phase.
The 4-hour chart shows gold trading just above its pivot point at $2,646.10, supported by the 50 EMA at $2,636.37, suggesting near-term stability.
However, the RSI at 57 reflects neutral momentum, leaving the next directional move dependent on price action near key levels.
Immediate resistance lies at $2,670.45, with subsequent targets at $2,692.82 and $2,710.72, signaling potential upside if bullish momentum builds.
On the downside, immediate support is at $2,624.44, followed by stronger levels at $2,603.20 and $2,583.91. A break below $2,646.10 could drive bearish sentiment toward these levels, while a bounce from the pivot point may reignite upward momentum.
Traders eyeing long positions could consider a buy limit near $2,652 with a take-profit target of $2,672 and a stop-loss at $2,640.
The tight trading range suggests caution as gold remains influenced by broader market drivers, including dollar strength and geopolitical factors. Watch for a breakout above $2,670.45 or a decisive move below $2,646.10 for clearer direction.
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GBP/USD Price Analysis – Jan 08, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair found a mild bid around the 1.2494 level. However, buyers struggled to gain any strong momentum amid the combination of factors including risk aversion, tepid UK retail sales, and dampened Fed rate cut expectations that has pressured the GBP/USD pair.
This leaves the pair struggling for momentum, likely keeping it range-bound unless stronger economic catalysts emerge to drive price action.
US Dollar Strengthens Amid Positive Economic Data and Fed's Hawkish Stance, Weighing on GBP/USD
On the US front, the broad-based US dollar gained traction and remains bullish as the US Dollar Index (DXY) stays above 108.50. The US Dollar saw a boost following a rise in the 10-year US Treasury bond yield, which climbed by over 1% to 4.67%.
This increase signals shifting investor sentiment around the Federal Reserve’s interest rate outlook, with expectations leaning toward higher rates for longer.
The positive economic data from the US also played a role. On the data front, the ISM Services PMI for November surged to 54.1, beating expectations of 53.3, with the Prices Paid Index rising sharply to 64.4, indicating inflation pressures.
Meanwhile, the ISM Manufacturing PMI improved slightly to 49.3 in December, signaling some stability in the manufacturing sector. These figures suggest that the US economy remains resilient, further supporting the dollar’s strength.
In contrast, concerns about future economic policies under President-elect Trump, such as potential tariffs, and the Fed’s cautious approach toward rate cuts in 2025, have added uncertainty. This combination of factors, including persistent inflation, makes traders wary.
For the GBP/USD pair, the strong US dollar, driven by these factors, is likely to keep pressure on the Pound, with the pair remaining sensitive to any shifts in US economic or Fed policy outlooks.
UK Retail Sales Growth Unable to Lift GBP Amid Risk Aversion and Economic Concerns
On the data front, UK Like-For-Like Retail Sales rose by 3.1% for the year ending in December, showing positive growth. However, this good news wasn't enough to support the GBP. Despite the retail sales increase, the Pound struggled to gain momentum as market sentiment shifted toward risk aversion.
The risk-off mood was driven by weaker global economic outlooks and growing concerns about potential inflationary pressures. This, in turn, caused investors to pull back from riskier assets, limiting the Pound's upside potential.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.24863, up 0.08% on the day, hovering just below the pivot point of $1.25034. The 4-hour chart highlights immediate resistance at $1.25601, followed by key levels at $1.26142 and $1.26639, indicating areas where bullish momentum may face challenges.
On the downside, immediate support is at $1.24349, with subsequent levels at $1.23624 and $1.23014, marking critical zones for potential bearish moves.
The RSI at 48 reflects neutral market sentiment, while the 50 EMA at $1.25028 is nearly aligned with the pivot point, suggesting a critical zone for price action.
A decisive break below $1.25029 could initiate selling pressure, with the first target at $1.24338. Conversely, a sustained move above $1.25601 may signal bullish momentum, targeting higher resistance levels.
Traders are advised to watch the $1.25034 pivot point closely. Selling below this level offers a favorable risk-to-reward setup, with a take-profit target of $1.24338 and a stop-loss at $1.25520.
However, a break above $1.25601 could attract buying interest, signaling potential upside toward $1.26142. Market participants should monitor economic releases and central bank statements for directional cues.
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GOLD Price Analysis – Jan 08, 2025
Daily Price Outlook
Gold prices (XAU/USD) have been fluctuating within a narrow range, hovering around $2,645 to $2,650. The precious metal is showing a slight upward trend, but overall movement remains subdued. This pause in momentum comes as investors are taking a cautious stance ahead of the release of the Federal Open Market Committee (FOMC) Minutes on Wednesday.
Market participants are hoping for clearer insights into the Fed's future policy decisions, especially regarding potential interest rate cuts, which could influence gold’s price direction.
At the same time, gold faces some resistance due to rising U.S. Treasury bond yields. Higher yields make gold less appealing, as it doesn't offer interest or dividends like other investments.
In the meantime, the strength of the U.S. Dollar continues to add downward pressure on the yellow metal, making it more expensive for buyers holding other currencies.
On the other hand, geopolitical risks, such as the ongoing trade tensions and global political instability, continue to provide a safety net for gold. Investors are still turning to the precious metal as a hedge against potential inflation and economic turmoil.
US Dollar Strength and Fed’s Cautious Stance Weigh on Gold Price Outlook
On the US front, the broad-based US dollar has been holding steady above 108.50, reflecting its strength in the global market. The recent rise in the 10-year US Treasury bond yield, which is now at 4.67%, has contributed to this. This increase highlights the changing outlook of investors on the Federal Reserve’s interest rate plans. As the yield rises, it signals that the market expects the Fed to maintain a more aggressive stance on interest rates for a while.
In addition to the bond market, economic data has been supportive of the dollar. The ISM Services PMI for November increased to 54.1, surpassing expectations, and showing growth in the service sector. However, the Prices Paid Index, a measure of inflation, also surged, indicating rising costs.
Meanwhile, the ISM Manufacturing PMI improved slightly to 49.3 in December, hinting that the manufacturing sector is showing some signs of recovery, even if still in contraction territory.
Traders remain cautious due to concerns about President-elect Trump’s potential economic policies, especially regarding tariffs that could raise living costs. Federal Reserve officials have also expressed concerns about inflation. The latest projections from the Federal Open Market Committee (FOMC) show fewer expected rate cuts in 2025, reflecting caution as inflation remains persistent.
Fed officials like Raphael Bostic and Thomas Barkin have emphasized that interest rates should stay high until inflation is better controlled, which has added to the uncertainty in the market.
Therefore, the stronger US Dollar and rising Treasury bond yields create headwinds for gold, as higher yields make non-yielding assets like gold less attractive. Additionally, the Fed’s cautious stance on inflation may limit gold's potential for significant price increases.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,649.84, up 0.04%, as the precious metal holds within a tight consolidation range near its pivot point of $2,639.12.
On the 4-hour chart, immediate resistance is seen at $2,662.21, with further hurdles at $2,676.49 and $2,692.86, reflecting a strong bullish zone if prices sustain above the pivot level.
Immediate support lies at $2,624.44, with deeper levels at $2,603.20 and $2,583.91, marking critical zones for bearish shifts.
The technical setup aligns with a cautiously bullish bias. The 50 EMA at $2,632.77 is acting as a dynamic support level, reinforcing the upward trend.
The RSI at 56 indicates moderate bullish momentum without signs of overbought conditions, providing room for price advancement.
A clean break above $2,662.21 could trigger buying interest, pushing prices toward the next resistance at $2,676.49.
Conversely, a breach below $2,639 may lead to a retest of support at $2,624.44, signaling potential bearish pressure.
Traders are advised to consider long positions above $2,640, with a take-profit target at $2,662 and a stop-loss at $2,628.
Market sentiment hinges on upcoming U.S. economic data, which could influence gold’s safe-haven appeal.
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EUR/USD Price Analysis – Jan 08, 2025
Daily Price Outlook
During the early European trading session on Wednesday, the EUR/USD currency pair sustained its upward trend, climbing toward 1.0350. However, the gains may be limited as investors look ahead to the Federal Reserve's stance on interest rates in 2025.
The market is currently adjusting its expectations for a slower pace of rate cuts by the Fed, which could cap the euro's momentum against the US dollar. Traders are closely awaiting the release of the Federal Open Market Committee (FOMC) Minutes later today, which could provide more clarity on the Fed's plans.
On the other side of the Atlantic, the European Central Bank (ECB) is facing its own set of challenges. Despite rising inflation, the market expects the ECB to remain aggressive with rate cuts in 2025.
The anticipation is that the ECB will cut rates by 25 basis points in its upcoming meeting on January 30, and traders are predicting a total of just over 100 basis points of cuts for the year.
This prospect of ECB rate cuts could put some pressure on the Euro (EUR) against the US Dollar (USD), limiting the potential for significant movement in the EUR/USD pair in the short term. The balance between these central bank policies will likely be a key factor influencing the currency pair's future performance.
Euro Faces Pressure from ECB Rate Cut Expectations and Weak German Data
On the EUR front, markets are still expecting aggressive rate cuts from the European Central Bank (ECB) in 2025, even though inflation continues to rise. This could create selling pressure on the Euro (EUR) against the US Dollar (USD).
The ECB is anticipated to cut rates by 25 basis points (bps) in their next meeting on January 30. For the rest of the year, traders expect a total of over 100 bps in rate cuts, which could weaken the Euro further and limit its potential for gains against the USD.
Moving ahead, traders will be looking closely at key economic data from Germany and the Eurozone. German Retail Sales, along with Eurozone Consumer Confidence and the Producer Price Index (PPI), will be in focus.
If these reports come in stronger than expected, it could provide some support for the Euro. Positive results could lift the shared currency and potentially boost the EUR/USD pair.
However, the outlook isn't all positive for the Euro. Recent data from Germany showed a sharp decline in Factory Orders for November, with contracts for goods “Made in Germany” falling by 5.4%, following a 1.5% drop in October.
This unexpected slump suggests that Germany’s manufacturing sector continues to struggle, which is concerning for the Eurozone's economic recovery.
The weaker-than-expected data could add pressure on the Euro, making it harder for the EUR/USD pair to sustain its upward movement.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.3539, up 0.14% for the day, maintaining a steady trajectory around its pivot point of $1.03731.
The 4-hour chart highlights immediate resistance at $1.04424, with subsequent levels at $1.05287 and $1.06035, reflecting potential targets if the pair gains momentum.
Immediate support lies at $1.02884, with additional key levels at $1.02240 and $1.01664, which serve as critical zones for bearish activity.
The RSI at 48 indicates neutral momentum, reflecting a balanced market sentiment. The 50 EMA, currently at $1.03718, aligns closely with the pivot point, signaling its importance as a dynamic support-resistance zone.
A break below $1.03725 could trigger selling pressure, targeting support at $1.02850. On the other hand, a sustained move above $1.04424 may pave the way for bullish moves toward higher resistance levels.
Traders are advised to consider short positions below $1.03725, with a take-profit target at $1.02850 and a stop-loss at $1.04208.
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USD/CAD Price Analysis – Jan 07, 2025
Daily Price Outlook
During the European trading session, the USD/CAD pair slipped lower, hovering around the 1.4306 level and reaching a low of 1.4302.
The Canadian Dollar (CAD) found some support following the news that Canadian Prime Minister Justin Trudeau would announce his plans to step down, with the expectation that it would happen before an emergency meeting of Liberal legislators on Wednesday.
Meanwhile, the US Dollar (USD) managed to hold steady, partly due to President-elect Donald Trump's comments, in which he stated that his tariff policy would remain unchanged. This helped keep the USD/CAD pair higher for the time being.
Impact of Retaliatory Tariffs, Oil Prices, and US Economic Data on the USD/CAD Pair
On the CAD front, the Canadian media outlet “The Globe and Mail” reported that Canada’s federal government might soon release a list of American goods that would face retaliatory tariffs.
This move comes in response to the potential tariffs that incoming US President Donald Trump may impose on Canadian products. This has raised concerns about the trade relationship between the two countries.
At the same time, lower crude oil prices could weigh on the Canadian Dollar, as Canada is the largest oil exporter to the US. Oil prices have been falling, with West Texas Intermediate (WTI) oil trading around $72.90 per barrel, continuing a downward trend for the second day.
However, oil prices might find some support due to a decline in OPEC's oil production in December, particularly after the UAE's efforts to cut supply and stabilize global oil markets.
Looking ahead, traders are closely watching Canada’s Ivey Purchasing Managers Index (PMI) data, as well as the US ISM Services PMI, which will be released on Tuesday. Attention will also turn to the Federal Reserve's December meeting minutes on Wednesday.
Meanwhile, US business activity showed a strong increase in December, with the S&P Global US Services PMI reaching a 33-month high. President-elect Trump’s comments about his tariff policy could offer some support for the US Dollar in the coming days.
Therefore, the potential release of retaliatory tariffs by Canada and falling oil prices could pressure the Canadian Dollar, while strong US business activity and Trump's tariff policy comments may support the US Dollar. This could lead to further strength in the USD/CAD pair.
US Economic Growth and Trump’s Tariff Stance Support the US Dollar, Impacting USD/CAD Pair
On the US front, the S&P Global US Services PMI Business Activity Index rose for the second month in a row in December, reaching a 33-month high of 56.8, up from 56.1 in November.
This indicates that business activity in the services sector continued to grow at a strong pace. In addition, the S&P Global US Composite PMI Output Index also increased to 55.4 in December, up from 54.9 in November, showing a broad-based improvement in overall economic activity.
This rise in business activity marks the fastest expansion since April 2022, reflecting a healthy economic environment in the US.
The increase in both the services and composite PMI indexes signals that the US economy is continuing to recover and expand, which could support the US Dollar in the near term.
Furthermore, President-elect Donald Trump’s comments on his tariff policy added to the US Dollar's strength.
Trump confirmed that he would not scale back his tariff plan and dismissed a report suggesting that his team was considering limiting the tariffs to only cover specific critical imports.
His stance on tariffs could lead to continued uncertainty and potential market reactions, providing support for the US Dollar.
Therefore, the positive US economic data, along with President-elect Trump's firm stance on tariffs, could strengthen the US Dollar.
This may put upward pressure on the USD/CAD pair, as the US Dollar gains support from economic growth and tariff policy certainty.
USD/CAD – Technical Analysis
USD/CAD is trading at $1.43112, down 0.12% on the day, as bearish momentum dominates. The pair is consolidating below the pivot point at $1.43454 on the 4-hour chart, suggesting potential for further downside.
The Relative Strength Index (RSI) is at 39, indicating weak momentum and room for additional selling pressure. The 50-day Exponential Moving Average (EMA) at $1.43855 acts as a key resistance level, reinforcing the bearish sentiment.
Immediate support is observed at $1.42799, with additional levels at $1.42108 and $1.41342, aligning with prior price action and technical indicators.
A break below $1.42799 could accelerate the downside move, targeting $1.42108. On the upside, resistance stands at $1.44587, followed by $1.45428 and $1.46163.
To negate the bearish outlook, the pair would need to break and sustain above the pivot point and the 50 EMA at $1.43454 and $1.43855, respectively.
The technical structure indicates that sellers maintain control, with the descending price action below the pivot and EMA levels affirming bearish dominance.
Traders should monitor the $1.43454 pivot closely for a potential reversal or continuation signal, with key support and resistance levels dictating short-term moves.
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AUD/USD Price Analysis – Jan 07, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its upward movement, holding steady around the 0.6285 level and even reaching a high of 0.6288, despite weaker-than-expected Building Permits data for November.
However, the rise in the Australian dollar can largely be attributed to the overall positive market sentiment, which tends to favor riskier assets like the Aussie.
Nevertheless, the strength of the US dollar, driven by the Federal Reserve’s hawkish stance, kept a lid on further gains for the AUD/USD pair.
Looking ahead, traders are eyeing the US ISM Services PMI report due later today, with the market also focused on the Federal Reserve’s December meeting minutes set to be released on Wednesday.
Australia's Economic Weakness and China's Uncertainty Pose Risks to AUD/USD Pair
On the data front, Australia’s Building Permits for November 2024 showed a 3.6% month-on-month decline, falling short of the expected 1.0% decrease. This came after a 5.2% rise in October, marking the first decline in three months.
On Wednesday, all eyes will be on Australia’s Monthly Consumer Price Index (CPI) for November. If the data comes in lower than expected, it could increase the chances of a rate cut by the Reserve Bank of Australia (RBA) in February, which could put downward pressure on the Australian dollar.
In China, the services sector showed strong growth in December. The Caixin China Services PMI rose to 52.2, higher than the expected 51.7, signaling the fastest growth since May.
However, the Caixin Manufacturing PMI dropped to 50.5, missing forecasts. China’s economic resilience is seen in reports of continued market openness, with the Shanghai Stock Exchange discussing plans to deepen the opening of capital markets. These economic changes in China often affect Australia due to their close trade ties.
Furthermore, the Judo Bank Australia Composite PMI for December 2024 was revised higher to 50.2, indicating modest growth in the private sector, with the services sector leading the way.
Meanwhile, the services sector in Australia has now grown for the eleventh consecutive month. The People’s Bank of China (PBoC) also hinted at an interest rate cut in the near future, a move that could further influence the Australian economy due to the close trade relationship between the two countries.
Therefore, the weaker-than-expected Australian data, along with potential rate cuts by the RBA and economic uncertainty in China, could put downward pressure on the AUD. This may limit gains for the AUD/USD pair, especially with a strong US dollar.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.62702, gaining 0.41% in the past 24 hours, as the pair builds momentum above the pivot point at $0.62433.
On the 4-hour chart, the price action reflects bullish sentiment, with the Relative Strength Index (RSI) at 61, indicating moderate strength.
The 50-day Exponential Moving Average (EMA) at $0.62250 provides a solid support base, aligning with the pivot point to sustain the upward trajectory.
Immediate resistance lies at $0.63058, and a break above this level could open the door for further gains toward $0.63393 and $0.63835. These targets align with key Fibonacci retracement levels, enhancing the bullish outlook.
On the downside, immediate support is seen at $0.61979, followed by $0.61616 and $0.61208. A breach below $0.61979 could expose the pair to additional downside risks, challenging the current bullish momentum.
The technical structure indicates a favorable setup for buyers, with the pair holding above the 50 EMA and pivot point.
A sustained move above $0.63058 would confirm the bullish trend, while a failure to maintain this level could trigger consolidation or a pullback.
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GOLD Price Analysis – Jan 07, 2025
Daily Price Outlook
Despite the strong US dollar and the Fed's hawkish stance, gold (XAU/USD) has managed to maintain its upward momentum, pushing up to around the 2,645 level and even hitting an intra-day high of 2,646.
This surprising strength in gold can largely be attributed to the ongoing geopolitical risks, particularly the extended Russia-Ukraine conflict and rising tensions in the Middle East, which are pushing investors towards the safety of gold.
On the other hand, a stronger-than-expected rise in China’s services sector might boost global risk sentiment, which could reduce the demand for gold as a safe-haven asset.
However, the unexpected dip in China's manufacturing PMI and the possibility of an interest rate cut by the People's Bank of China may help maintain gold’s appeal for the time being.
US Dollar Strengthens Amid Improving Economic Data and Fed’s Cautious Outlook
On the US front, the broad-based US dollar has been edging higher, approaching the 108.00 mark on the US Dollar Index (DXY), which tracks the USD against six major currencies.
This comes as the ISM Manufacturing PMI improved to 49.3 in December, up from 48.4 in November, beating market expectations. The stronger PMI signals a slight recovery in the manufacturing sector, adding support to the dollar.
Richmond Fed President Thomas Barkin mentioned that the US central bank’s policy rate should remain restrictive until inflation shows clearer signs of heading back to the 2% target.
Similarly, Fed Governor Adriana Kugler and San Francisco Fed President Mary Daly pointed out the challenges central bankers face in balancing interest rates this year, with a focus on slowing monetary easing.
Traders are keeping a close eye on the economic policies of President-elect Trump, particularly concerns over potential tariffs that could raise living costs.
These worries, along with the Federal Reserve’s recent projection of fewer rate cuts in 2025, reflect caution in the markets due to persistent inflation pressures.
China’s Economic Growth Strategies and Their Potential Impact on Gold Prices
On the other hand, the officials from the People’s Bank of China (PBoC), the National Development and Reform Commission (NDRC), and the Ministry of Finance (MoF) are scheduled to hold a briefing on Wednesday to discuss expanding the consumer goods trade-in program. This initiative is part of China’s efforts to boost domestic consumption and support economic growth.
On the data front, the Caixin China Services PMI showed positive growth, rising to 52.2 in December from 51.5 in November, surpassing expectations.
This marks the fastest growth in the services sector since May 2024. However, the Caixin Manufacturing PMI fell unexpectedly to 50.5 in December, down from 51.5 in November, missing market predictions. This highlights the mixed performance between China's service and manufacturing sectors.
In addition, the Shanghai Stock Exchange has committed to further opening up China’s capital markets during a meeting with foreign institutions, signaling a move to attract more international investment. Despite challenges in the global economy, China’s strong fundamentals continue to show resilience.
According to the Financial Times, the PBoC is considering an interest rate cut at an appropriate time this year, which could impact markets, particularly in Australia, given their strong trade ties with China.
Therefore the positive growth in China’s services sector and plans to boost domestic consumption could strengthen market sentiment, potentially reducing gold’s appeal as a safe-haven asset. However, any interest rate cuts by the PBoC may support gold’s attractiveness.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,640.11, up 0.15% in the last session, as it continues to consolidate within a moderately bullish framework on the 4-hour chart.
The price hovers above the pivot point at $2,637.83, signaling a potential breakout from key levels. Immediate resistance is set at $2,662.22, followed by $2,675.23 and the critical $2,692.86 level. A successful breach above these levels could extend the bullish momentum.
On the downside, immediate support is observed at $2,624.44, with further safety levels at $2,603.20 and $2,583.91.
The 50-day EMA at $2,629.15 acts as a key support zone, maintaining the positive bias. The RSI stands at 54, suggesting neutral to moderate bullish momentum, with room for additional upside.
The consolidation phase reflects market indecision, but sustained movement above $2,637.83 may trigger buying interest targeting the $2,660 range.
Conversely, a break below $2,624.44 could shift sentiment, exposing gold to deeper retracements toward $2,583.91. Traders should monitor these levels closely for near-term directional clarity.
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