EUR/USD Price Analysis – Sep 02, 2024
Daily Price Outlook
During the early European trading session, the EUR/USD currency pair reversed its downward trend, turning bullish at around the 1.1071 level and reaching an intra-day high of 1.1078.
This shift is primarily due to renewed selling pressure on the US dollar, driven by increased market optimism and expectations of a dovish stance from the US Federal Reserve (Fed).
Additionally, comments from European Central Bank (ECB) Governing Council member François Villeroy de Galhau, who hinted at the possibility of a rate cut in the upcoming September meeting, are influencing the EUR. This potential ECB rate cut could put additional downward pressure on the Euro (EUR).
US Dollar Faces Renewed Bearish Pressure Amid Dovish Fed Expectations
On the US front, the broad-based US dollar has struggled to maintain its early bullish momentum, facing renewed bearish pressure amid growing market optimism and expectations of a more dovish Federal Reserve (Fed).
The CME FedWatch Tool indicates a 70% chance of a 25 basis point rate cut by the Fed at its September meeting. However, recent economic data has led traders to reconsider the probability of a significant rate cut this month.
On the data front, July's Personal Consumption Expenditures (PCE) Index rose by 2.5% year-over-year, matching the previous month's figure but falling short of the 2.6% forecast.
The core PCE Index, which excludes food and energy, increased by 2.6% year-over-year in July, in line with the prior reading but slightly below the anticipated 2.7%.
These results suggest that while inflation remains stable, it may not be weak enough to justify a more substantial rate cut by the Fed.
Therefore, the renewed bearish pressure on the US dollar, coupled with stable yet insufficiently weak inflation data, supports a bullish outlook for the EUR/USD pair. Market optimism and dovish Fed expectations could drive further gains for the euro against the dollar.
Potential ECB Rate Cut Could Weaken Euro Against US Dollar
On the EUR front, European Central Bank (ECB) Governing Council member François Villeroy de Galhau recently hinted at a possible interest rate cut. According to Bloomberg, he believes there are "good reasons" for the ECB to lower its key interest rates in September.
Villeroy de Galhau emphasized that taking action at the upcoming meeting on September 12 would be both fair and prudent. He suggested that adjusting rates now could be beneficial for the Eurozone's economic stability.
This potential rate cut is being considered to support growth and address any economic challenges facing the region.
Therefore, the potential ECB interest rate cut could weaken the Euro against the US Dollar as lower rates might lead to reduced returns on Euro-denominated assets, making the EUR less attractive compared to the USD, leading to a decline in the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.10620, experiencing a slight gain of 0.02% in early trading. The currency pair is hovering near the pivotal level of $1.1070, which serves as a crucial point for determining the next directional move.
The 4-hour chart shows immediate resistance at $1.1101, followed by higher resistance levels at $1.1140 and $1.1189. A successful break above these levels could set the stage for further bullish momentum.
On the downside, immediate support lies at $1.1034, with additional support at $1.1000 and $1.0969. The Relative Strength Index (RSI) is currently at 42, suggesting that the pair is leaning towards a bearish bias but is not yet in oversold territory.
This implies that there may be room for additional downside movement if the pair fails to hold above the key pivot point at $1.1070.
The 50-day Exponential Moving Average (EMA), currently positioned at $1.1109, is acting as a resistance level, reinforcing the bearish outlook.
Given the current technical setup, traders might consider selling positions below $1.10831, with a potential target near the $1.10338 level.
Conversely, a break above $1.1101 could invalidate this bearish outlook, potentially paving the way for a rally toward $1.1140 and beyond.
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GBP/USD Price Analysis – Sep 02, 2024
EUR/USD Price Analysis – Aug 30, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair extended its downward trend and remained well-offered around the 1.1069 level.
This decline can be attributed to the bullish US dollar, which gained traction due to upwardly revised US Q2 GDP figures, reducing the chances of a more significant Federal Reserve rate cut.
Furthermore, the previously released soft German inflation data has bolstered expectations for another ECB interest rate cut in September.
Meanwhile, the Eurozone flash annual Harmonized Index of Consumer Prices (HICP) declined as expected in August, which typically weakens the EUR by suggesting lower inflation pressures and potentially prompting the ECB to maintain or adopt a dovish stance.
Strong US Economic Data and Lower Rate Cut Expectations Boost USD, Weigh on EUR/USD
On the US front, the broad-based US dollar is gaining strength due to strong economic data. The US Gross Domestic Product (GDP) grew by 3.0% annually in the second quarter, surpassing the initial estimate of 2.8%. Besides this, Initial Jobless Claims for the week ending August 24 fell to 231K from 233K, coming in below the expected 232K.
This economic strength has reduced expectations for a significant Federal Reserve rate cut in September. The US Dollar Index (DXY), which tracks the dollar against six major currencies, is trading just below a fresh weekly high of 101.58 as investors await the US Personal Consumption Expenditure (PCE) Price Index for July.
Currently, financial markets are confident that the Fed might start reducing interest rates in September, but there is uncertainty about the extent of the cut. According to the CME FedWatch tool, there's a 33% chance of a 50-basis points cut, while others expect a 25-basis points reduction.
The likelihood of a larger rate cut has decreased slightly since the BEA reported a higher-than-expected GDP growth rate of 3% for the second quarter.
Therefore, the strong US economic data and reduced rate cut expectations have strengthened the US dollar, leading to a decline in the EUR/USD pair. The higher GDP growth and lower jobless claims support a firmer dollar, weakening the euro.
Eurozone Inflation Data and Economic Weakness Pressure EUR/USD
Another factor that kept the EUR/USD pair lower is the Eurozone’s inflation data for August, which shows a decline. The flash annual Harmonized Index of Consumer Prices (HICP) dropped to 2.2% from 2.6% in July, mainly due to lower energy prices.
Core HICP, which excludes volatile items like food and energy, rose by 2.8%, slower than the previous 2.9%. This weaker inflation data is likely to boost speculation that the European Central Bank (ECB) will cut interest rates again in September and potentially more later in the year.
Market expectations for an ECB rate cut increased after data showed that inflation in Germany, the Eurozone’s largest economy, fell to 2% for the first time in over three years. Additionally, Germany's economy contracted by 0.1% in the second quarter, suggesting a technical recession.
Other Eurozone countries, like France and Spain, also reported significant inflation declines. Analysts, such as Carsten Brzeski from ING, believe that the combination of fading inflation and weak growth makes a strong case for more rate cuts.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.10757, down 0.01% as it hovers just above a key support level at $1.10695. The market sentiment appears cautious, with the Relative Strength Index (RSI) at 40, signaling a slight bearish bias in the short term.
This reflects some downward pressure as the pair remains below the 50-day Exponential Moving Average (EMA) of $1.11355, indicating that the bears might still have some control.
The immediate pivot point at $1.11005 serves as a critical juncture for traders. A decisive break above this level could signal a potential recovery, with immediate resistance at $1.11395 and further targets at $1.11892.
On the downside, if the price slips below $1.10695, the next support lies at $1.10337, with additional support levels at $1.09995 and $1.09685. These levels are crucial for maintaining the current range, and a breach could open the door to more significant declines.
Given the current technical setup, traders might consider entering a long position above $1.10697, with a take profit target near $1.11188. A stop loss placed around $1.10430 could help mitigate downside risk if the support fails to hold.
Overall, EUR/USD is trading within a tight range, with the possibility of a breakout depending on how the price interacts with the $1.11005 pivot point. As the market awaits further directional cues, the pair’s movement around these key levels will be pivotal in determining the next trend.
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S&P500 (SPX) Price Analysis – Aug 30, 2024
Daily Price Outlook
The S&P 500 index experienced a subdued performance on Friday, August 30, 2024, struggling to maintain its upward trajectory.
This slight downturn was driven by mixed signals from key economic indicators and corporate earnings reports.
Although the U.S. second-quarter GDP growth was revised upward, signaling economic resilience, the optimism was not uniformly reflected across all sectors.
Furthermore, escalating geopolitical tensions, particularly in the Middle East and between Russia and Ukraine, have further intensified global uncertainty, dampening investor sentiment.
Fed Rate Cut Expectations and Economic Data Impact on S&P 500
On the US front, the Federal Reserve's monetary policy outlook and recent U.S. economic data have played a key role in shaping the S&P 500's performance. The revised U.S. GDP growth figure of 3.0% for Q2 was stronger than initially estimated, suggesting a robust economy.
However, this positive data was tempered by the market's focus on the upcoming inflation reports, particularly the core Personal Consumption Expenditures (PCE) Price Index.
Investors are closely watching these figures, as they could influence the Fed's decision on rate cuts. The market currently prices in a 66% chance of a 25 basis point rate cut in September, but stronger-than-expected economic data might reduce the likelihood of deeper cuts, which could weigh on the S&P 500.
Atlanta Fed President Raphael Bostic's comments on the need for more evidence before moving forward with rate cuts further added uncertainty, leading to cautious trading behavior.
This news contributed to cautious trading, leading to a slight downturn in the S&P 500 index as investors weighed the stronger-than-expected GDP growth against the uncertainty surrounding potential Federal Reserve rate cuts and upcoming inflation data.
Geopolitical Tensions and Their Impact on S&P 500
On the geopolitical front, escalating tensions significantly influenced the S&P 500's performance. Heightened conflicts, particularly in the Middle East and between Russia and Ukraine, have exacerbated global uncertainty, dampening investor sentiment.
However, the ongoing conflict in Ukraine, underscored by Russia's air attacks and Ukraine's heightened alert due to troop buildups near Belarus, has created a volatile backdrop.
Meanwhile, increased violence in the West Bank, with Israeli forces targeting militants, has raised concerns about broader regional instability.
Although these events haven't directly triggered sharp movements in the S&P 500, they contribute to a riskier environment, prompting investors to adopt a more cautious stance.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,591.95, virtually flat for the day, as it navigates a critical juncture near its key support level of $5,584.24.
The index is consolidating just above the 50-day Exponential Moving Average (EMA) at $5,576.84, which provides a near-term safety net for bullish traders. The Relative Strength Index (RSI) is neutral at 48, indicating a lack of clear momentum in either direction.
The immediate pivot point at $5,641.79 serves as a crucial marker. A breakout above this level could pave the way for further gains, with immediate resistance at $5,699.82 and additional targets at $5,754.94. These levels represent key hurdles that the bulls must clear to regain control of the market's upward momentum.
On the flip side, if the S&P 500 fails to maintain its position above $5,584.24, the index could see a slide towards the immediate support at $5,519.94. Further downside targets include $5,441.61 and $5,381.03, which could come into play if selling pressure intensifies.
Traders might consider entering a long position above $5,583, targeting a profit near $5,676, with a stop loss around $5,528 to limit downside risk.
In summary, the S&P 500 is at a technical crossroads, with its next move likely dictated by how the price interacts with the $5,641.79 pivot point. Market participants should closely monitor these key levels as they could set the tone for the index's short-term direction.
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GOLD Price Analysis – Aug 30, 2024
Daily Price Outlook
Gold prices (XAU/USD) have been unable to halt their downward trend, remaining under pressure around the $2,517 level and hitting an intra-day low of $2,512. This decline is attributed to stronger-than-expected US GDP growth, which has supported the US dollar and contributed to gold's losses.
The positive US growth report and Initial Jobless Claims have led to reduced expectations for a deeper rate cut by the US Federal Reserve in September. This was seen as a key factor that boosted the US dollar and weighed on non-yielding gold.
However, escalating geopolitical tensions in the Middle East and the ongoing war between Russia and Ukraine could increase safe-haven demand, potentially limiting further losses for the yellow metal.
Investors will closely monitor US inflation data for clues on the potential size of a Federal Reserve rate cut. The core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, is expected to rise by 2.7% year-over-year in July, up from 2.6% in June.
A softer-than-expected PCE reading could prompt the Fed to initiate a rate-cutting cycle, which would likely provide support for XAU/USD.
US Dollar Strength and Reduced Rate Cut Expectations Pressure Gold Prices
On the US front, the dollar is gaining strength due to a strong US growth report and better-than-expected Initial Jobless Claims. The US Gross Domestic Product (GDP) grew by 3.0% annualized in the second quarter (Q2), surpassing the initial estimate of 2.8%.
Additionally, Initial Jobless Claims for the week ending August 24 fell to 231K from 233K, coming in below the expected 232K. This economic strength has led to reduced expectations for a significant rate cut by the Federal Reserve in September, which puts pressure on non-yielding assets like gold.
On the other side, Atlanta Fed President Raphael Bostic indicated that it might be "time to move" on rate cuts if inflation continues to ease and the unemployment rate rises more than expected. However, he wants more evidence from upcoming jobs and inflation reports before making a decision.
Currently, markets are pricing in a 66% chance of a 25 basis points (bps) rate cut in September, with the likelihood of a larger cut at 34%, down from 36.5% before the GDP data, according to the CME FedWatch Tool.
Therefore, the strengthening US dollar and reduced rate cut expectations pressure gold prices, as higher economic growth and job data diminish the appeal of non-yielding assets. Gold may face continued losses if the Fed's stance on rate cuts remains cautious.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,519.84, down 0.07% on the day, as it hovers near the key support level of $2,512.36.
The metal remains caught in a narrow range, reflecting a lack of strong directional momentum. The Relative Strength Index (RSI) is neutral at 52, indicating that neither bulls nor bears have a clear upper hand in the short term.
Technically, Gold is positioned just above the 50-day Exponential Moving Average (EMA) at $2,515.16, providing near-term support. A critical pivot point lies at $2,529.23, which traders should closely monitor.
If the price breaks above this level, it could open the door to further gains, with immediate resistance at $2,544.34 and subsequent targets at $2,560.54.
The market’s indecision is highlighted by the tight trading range, with Gold consolidating between $2,512.36 and $2,529.23. This consolidation phase could precede a significant move.
Given the broader market context, a break above $2,529.23 could be an entry point for bullish positions, targeting $2,530 with a stop-loss just below $2,512 to manage risk effectively.
Conversely, a break below the $2,512.36 support could signal a bearish turn, potentially driving prices towards $2,500 and lower.
In summary, Gold's near-term outlook hinges on key levels.
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USD/JPY Price Analysis – Aug 29, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair fluctuated around the 144.60 level. This range-bound behavior is expected to change with the upcoming US PCE inflation report and Japanese economic data.
The US PCE report could drive significant movement in the USD depending on the inflation figures.
Additionally, anticipated policy shifts from the Bank of Japan and the release of Tokyo CPI data may bolster the JPY. Traders are closely monitoring these factors to predict the future direction of the USD/JPY pair.
Market Focus: US PCE Inflation Report and Fed Policy Speculation Amid Upcoming Data Releases
On the US front, the market's focus is on the PCE inflation report, which is anticipated to drive the next major move in the US Dollar (USD).
The report will significantly influence speculation regarding the Federal Reserve’s (Fed) September policy meeting. According to the CME FedWatch tool, there is a strong expectation for the Fed to pivot towards policy normalization in September.
However, traders are divided on the magnitude of potential interest rate cuts, with the 30-day Federal Funds Futures pricing tool showing a 34.5% chance of a 50 basis points (bps) cut, while others favor a 25 bps reduction.
In addition, investors are closely monitoring revised estimates for Q2 Gross Domestic Product (GDP) and Initial Jobless Claims data for the week ending August 23.
The jobless claims data is particularly important as the Fed is increasingly concerned about weakening labor market conditions.
Japanese Yen Boosted by BoJ Rate Hike Expectations and Anticipation of Tokyo CPI Data
On the Japanese front, expectations of further interest rate hikes by the Bank of Japan (BoJ) are bolstering the Japanese Yen (JPY). BoJ Deputy Governor Ryozo Himino reaffirmed the bank’s commitment to adjusting monetary easing if economic activity and prices align with projections.
Additionally, investors are awaiting the Tokyo Consumer Price Index (CPI) data for August, scheduled for release on Friday, with forecasts predicting a steady 2.2% growth in the CPI, excluding Fresh Food.
USD/JPY - Technical Analysis
The USD/JPY pair is currently trading at 144.518, down by 0.06% as it flirts with the key pivot point set at 144.699.
This level will be crucial in determining the pair’s next move. The pair is trading near its 50-day Exponential Moving Average (EMA) at 144.505, which is acting as a critical support level.
The Relative Strength Index (RSI) is at a neutral 50, indicating a balanced market without a clear momentum bias at this point.
If the pair fails to hold above the 144.699 pivot point, immediate support is expected at 143.686, followed by deeper levels at 142.903 and 142.119. A sustained drop below these support levels could intensify the bearish sentiment, potentially leading to further declines.
Traders may consider entering a short position below 144.757, targeting 143.717 as the take-profit level while placing a stop-loss at 145.276 to manage risk.
On the upside, resistance starts at 145.303, a level that needs to be breached for any bullish momentum to gain traction. If the pair manages to break this resistance, the next targets would be 146.118 and 147.088.
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AUD/USD Price Analysis – Aug 29, 2024
GOLD Price Analysis – Aug 29, 2024
Daily Price Outlook
Gold (XAU/USD) extended its upward rally and remained well bid around the 2,523 level, hitting an intraday high of 2,524.49.
The strong bullish rally can be attributed to the revival of Chinese demand for the precious metal.
Gold likely gained support after data from the World Gold Council (WGC) on Tuesday showed that China’s net gold imports rose by 17% in July, marking the first monthly increase since March.
Additionally, fresh selling pressure on the US dollar was seen as another key factor that boosted gold prices.
The US Dollar Index (DXY) pulled back on Thursday, trading in the 100.90s, down from a peak of 101.18 reached on Wednesday.
Traders are now looking ahead to US Jobless Claims and Gross Domestic Product (GDP) data, set to be released on Thursday, for more clarity on the projected path of US interest rates.
Gold Gains on Increased Chinese Demand and North American Fund Inflows
On the China front, Gold's upward trend was boosted by increased demand from China. In July, China's net gold imports rose by 17%, marking the first monthly increase since March 2024, according to data from the World Gold Council (WGC).
This surge in demand is likely contributing to gold's recent strength. Additionally, a modest increase in net inflows of 8 metric tons ($403 million) from North American funds last week also supported gold prices. These factors, combined with the overall demand for gold, are helping to sustain its upward momentum.
Gold Gains Amid Weaker US Dollar and Anticipation of Key Economic Data
On the US front, the precious metal is benefiting from a weakening US Dollar (USD), as the US Dollar Index (DXY) is pulling back to the 100.90s on Thursday. Gold, which is negatively correlated with the USD, tends to rise when the dollar falls.
Traders are now awaiting US Jobless Claims and Gross Domestic Product (GDP) data for more insight into the future of US interest rates.
However, the jobs data is especially important after Federal Reserve Chairman Jerome Powell highlighted potential risks to the labor market from keeping interest rates high.
The GDP data is expected to remain steady at 2.8% for Q2, but any negative surprises could push Gold higher by suggesting that the Fed might need to lower interest rates sooner than expected.
Looking ahead, Friday could be a significant day for Gold as the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, will be released.
If the core PCE inflation rises to 2.7% as expected, it could suggest that the Fed will keep interest rates elevated, which may weaken Gold.
However, if inflation comes in lower than expected, Gold could see a boost. A risk to Gold's price is the extreme long positioning in the market, which could lead to a sharper decline if sentiment shifts, as noted by Daniel Ghali, Senior Commodity Strategist at TD Securities.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,517.26, marking a 0.52% increase on the day. The precious metal is showing resilience as it hovers just above the 50-day Exponential Moving Average (EMA) of $2,512.41.
This EMA level is crucial, acting as immediate support that has kept the bullish sentiment alive. The Relative Strength Index (RSI) sits at 56, suggesting moderate buying momentum, but not yet in overbought territory.
The pivot point is set at $2,530.00, serving as the primary threshold for any substantial upward movement. Immediate resistance is seen at $2,526.45, a key level that needs to be breached for the rally to gain further traction.
Should gold break this resistance, the next targets are $2,544.34 and $2,560.54, where the bulls could potentially extend their gains.
On the downside, the immediate support lies at $2,486.73. A breach below this level could shift the market sentiment to bearish, with further support levels at $2,471.29 and $2,455.47. These levels are crucial for traders to watch, as a dip below $2,455.47 could signal a deeper correction.
For traders considering a position, an entry above $2,512.00 appears favorable, with a take-profit target set at $2,530.00.
A stop-loss at $2,500.00 is advisable to mitigate downside risks. Overall, while the bullish momentum seems intact, the market remains in a sensitive zone, where breaking through either resistance or support could set the next directional trend.
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AUD/USD Price Analysis – Aug 29, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6821 level, hitting an intra-day high of 0.6825.
This upward trend can be attributed to several factors, including a bearish US dollar, which lost traction due to the US Federal Reserve signaling that lower interest rates are likely on the horizon.
Additionally, hotter-than-expected Australian CPI inflation data have pushed back expectations of a rate cut by the Reserve Bank of Australia (RBA), providing some support to the Aussie.
Traders are now looking ahead to US Jobless Claims and Gross Domestic Product (GDP) data, set to be released on Thursday, for more clarity on the projected path of US interest rates.
Australian Dollar Strengthens Amid Mixed Economic Signals
On the AUD front, the Australian dollar (AUD) gained strength against the US dollar (USD) following hotter-than-expected inflation data. The country’s Consumer Price Index (CPI) eased to 3.5% in July from 3.8% in June, matching forecasts.
This unexpected inflation level led investors to push back their expectations for a Reserve Bank of Australia (RBA) rate cut, providing support to the AUD/USD pair.
In addition, Australia’s private capital spending fell by 2.2% in Q2, a sharp decline from a 1.0% increase in the previous quarter and worse than the 1.0% growth expected.
Spending on buildings and structures dropped by 3.8%, and plant and machinery saw a 0.5% decline. Investors are now looking to Australian Retail Sales data, due on Friday, for further guidance.
Therefore, the stronger-than-expected Australian CPI data reduced rate cut expectations, supporting the AUD.
However, the drop in private capital spending could weigh on the currency. Overall, the AUD/USD pair may see mixed signals with inflation supporting the Aussie and spending data dampening sentiment.
Impact of US Economic Data and Fed Signals on the AUD/USD Pair
On the US front, the Federal Reserve (Fed) is signaling that lower interest rates might be on the way, putting pressure on the US dollar (USD). Fed Chair Jerome Powell mentioned at Jackson Hole that it’s time for policy adjustments, influenced partly by weakness in the job market.
The upcoming US Nonfarm Payrolls report for August will be crucial, as it could provide insights into the labor market's health and impact the Fed's decision on interest rates.
The upcoming data is crucial for the AUD/USD pair. If the jobs report reveals further weakness or if GDP growth disappoints, it could lead to a weaker USD.
Additionally, the core Personal Consumption Expenditures (PCE) Price Index will be released on Friday, and if it rises to 2.7% as expected, it might lead the Fed to keep interest rates higher for longer, potentially strengthening the USD.
Conversely, lower-than-expected inflation could weaken the USD, supporting the Australian dollar. The AUD/USD pair is likely to react to these developments, with USD weakness providing potential support to the Aussie.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.68066, reflecting a 0.26% increase as the Australian Dollar gains traction against the U.S. Dollar.
The pair is showing a bullish bias, comfortably trading above the 50-day Exponential Moving Average (EMA) positioned at $0.6780. This moving average serves as a key support level, indicating that buyers have control in the short term.
The pivot point for the day is set at $0.6831, which also aligns with the first level of immediate resistance. A break above this resistance could open the door for further gains, with the next resistance targets at $0.6849 and $0.6869.
The Relative Strength Index (RSI) is currently at 60, suggesting a strong but not overextended momentum.
This indicates that there’s room for the AUD/USD pair to climb higher before reaching overbought conditions.
On the downside, immediate support is seen at $0.6773, just below the 50-day EMA. Should the pair drop below this level, additional support is found at $0.6752 and $0.6728. A break below these levels would likely shift the momentum to bearish, potentially inviting further declines.
For traders considering entering the market, an entry above $0.67955 looks favorable, with a take-profit target at $0.68312.
A stop-loss at $0.67732 is recommended to limit downside risk. Overall, while the short-term outlook remains bullish, traders should keep an eye on key resistance levels and the RSI for any signs of a reversal.
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GBP/USD Price Analysis – Aug 28, 2024
Daily Price Outlook
Despite expectations that the Bank of England (BoE) will cut interest rates more slowly than other central banks, the GBP/USD currency pair continued its losing streak, trading around 1.3218 and hitting an intra-day low of 1.3214.
This decline is largely due to the US Dollar recovering some ground, with investors focusing on the upcoming US core Personal Consumption Expenditure (PCE) Price Index data for July, scheduled for release on Friday.
Although the US Dollar has recently gained, its near-term outlook remains bearish as investors anticipate the Federal Reserve will reduce interest rates in its September meeting.
Conversely, the GBP/USD pair might trade sideways as investors await more clarity on the Bank of England’s future rate decisions.
The recent 25 basis points rate cut to 5% indicates a shift from a restrictive policy stance, reflecting confidence in achieving the 2% inflation target.
Impact of US Economic Data and Federal Reserve Expectations on GBP/USD
On the US front, the GBP/USD pair has fallen as the US Dollar regains strength. Investors are awaiting the core Personal Consumption Expenditure (PCE) data for July, due for release on Friday, which could have a notable impact on the pair.
The US Dollar Index (DXY) has attracted buying interest after reaching a new year-to-date low of 100.50.
Despite this recovery, the short-term outlook for the US Dollar remains uncertain as investors are anticipating a Federal Reserve rate cut in September, but opinions differ on the magnitude.
However, the CME FedWatch tool indicates a 34.5% chance of a 50-basis point cut, while most expect a 25-basis point reduction.
Economists forecast a slight increase in core PCE inflation to 2.7%, which could impact the Fed's decision and influence market speculation regarding future rate cuts.
Impact of BoE's Rate Decisions and Economic Outlook on GBP/USD
On the BoE front, the Pound Sterling is showing mixed performance against major currencies as investors await new information about interest rates.
The BoE recently cut rates by 25 basis points to 5%, ending a long period of high rates, and is confident it can bring inflation down to its 2% target.
The expectation is that the BoE will reduce rates more slowly than other central banks because the UK economy remains strong, supported by recent positive economic data.
Investors are looking for more guidance from BoE policymaker Catherine Mann’s upcoming speech at 12:15 GMT.
Mann had previously voted to keep rates steady at 5.25%, and her comments may provide insights into future rate cuts and inflation expectations.
Additionally, UK Prime Minister Keir Starmer’s remarks about a tighter fiscal budget, aiming for long-term benefits despite short-term tax increases, have bolstered the Pound’s appeal.
Therefore, the mixed performance of the GBP/USD pair reflects uncertainty as investors await further guidance on interest rates.
The BoE’s slower rate cuts and positive economic data may support the Pound, while upcoming comments from BoE policymaker Mann and fiscal budget details will also influence GBP/USD.
GBP/USD - Technical Analysis
The British Pound (GBP/USD) is currently trading at $1.32197, down 0.11% as the pair consolidates within a tight range on the 4-hour chart.
The pair is exhibiting some signs of resilience despite the modest pullback, with the price hovering near the immediate support level at $1.3149.
This level has proven to be a key short-term support and could be crucial in determining the next directional move.
On the upside, immediate resistance is seen at $1.3265, closely aligned with the pivot point at $1.3263. A break above this resistance could open the door for further gains towards the next resistance levels at $1.3299 and $1.3333.
These levels have acted as barriers in recent sessions, and overcoming them could signify a stronger bullish trend.
The Relative Strength Index (RSI) stands at 63, indicating that the market is still in a bullish phase but approaching overbought territory.
This suggests that while there is room for further upside, traders should be cautious of a potential pullback.
The 50-day Exponential Moving Average (EMA) at $1.3086 is currently providing strong support, reinforcing the overall uptrend.
Given the current setup, a buy limit order at $1.31920 could offer a favorable risk-reward ratio. The target would be the pivot point at $1.3263, with a stop loss at $1.31578 to protect against downside risks.
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EUR/USD Price Analysis – Aug 28, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to halt its downward trend, remaining under pressure around the 1.1126 level and hitting an intra-day low of 1.1122.
The decline can be attributed to the weaker Euro currency as investors anticipate that the European Central Bank (ECB) will cut interest rates again in September.
However, the ECB began reducing interest rates in June, with the expectation that inflation in the Eurozone will return to the bank's target of 2% by 2025.
Meanwhile, the ECB decided to keep its key borrowing rates unchanged in July, concerned that aggressive rate cuts could reignite inflationary pressures. Furthermore, a mild recovery in the US Dollar has further pressured the EUR/USD currency pair.
Euro Weakens on Rate Cut Expectations and Economic Uncertainty
On the EUR front, the Euro is underperforming against its major peers as investors expect the European Central Bank (ECB) to cut interest rates again in September.
The ECB began lowering rates in June, aiming for inflation in the Eurozone to hit 2% by 2025. Despite this, the ECB kept rates unchanged in July due to concerns that further cuts might reignite inflation.
Recent data, including the Eurozone flash HCOB PMI for August and Q2 Negotiated Wage Rates, show an uncertain economic outlook and easing wage pressures.
This has led to expectations that the ECB will reduce rates by 25 basis points in September, with possible additional cuts in the last quarter of the year.
Investors are waiting for the flash Harmonized Index of Consumer Prices (HICP) data for Germany and the Eurozone, set to be released on Thursday and Friday, to get more clues on future rate cuts.
Therefore, the anticipated ECB rate cut and uncertain economic outlook contribute to a weaker Euro, likely exerting downward pressure on the EUR/USD pair. Traders' focus on upcoming HICP data could further influence the pair's movement.
US Dollar Rebounds Amid Rate Cut Speculations and Upcoming Inflation Data
On the US front, the major currency pair drops as the US Dollar (USD) recovers from a recent year-to-date low.
The US Dollar Index (DXY) has risen to around 100.80 from a low of 100.50. This rebound may be short-lived, with market participants viewing it as a potential selling opportunity.
The outlook for the USD remains uncertain, largely due to expectations that the Federal Reserve (Fed) will cut interest rates in September.
Traders are divided on whether the Fed will implement a 25 basis points (bps) or a larger 50 bps rate cut. According to the CME FedWatch tool, there is a 34.5% chance of a 50-bps cut, while the rest expect a 25-bps reduction.
Investors are awaiting the US core Personal Consumption Expenditure (PCE) inflation data for July, due on Friday. If inflation shows signs of declining, it could lead to a more aggressive rate cut by the Fed; otherwise, expectations for a large cut may fade.
EUR/USD - Technical Analysis
The Euro (EUR/USD) is currently trading at $1.11369, down 0.17% on the day, as the pair struggles to maintain momentum above key support levels.
On the 4-hour chart, the immediate support lies at $1.1150, which aligns closely with the 50-day Exponential Moving Average (EMA) at $1.1117.
A decisive break below this support could accelerate the pair’s decline, potentially leading to a test of the next support levels at $1.1107 and $1.1072.
These levels have previously acted as strong support and are critical in determining the short-term direction of the EUR/USD.
On the upside, the pivot point at $1.1201 serves as the immediate resistance. The pair would need to clear this level to challenge the next resistance at $1.1232, followed by $1.1266.
These resistance levels represent significant barriers that the Euro must overcome to reverse the current bearish sentiment. The RSI indicator is currently at 46, suggesting that there is room for further downside before reaching oversold conditions.
The overall technical outlook remains bearish, with the Euro struggling to gain traction above $1.1150.
The 50-day EMA will be a crucial level to watch, as a break below it could signal further losses. Conversely, a sustained move above the $1.1201 pivot point could provide the necessary momentum for a recovery.
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GOLD Price Analysis – Aug 28, 2024
Daily Price Outlook
Gold prices (XAU/USD) are currently trading slightly above $2,500, facing a decline as the US Dollar (USD) rebounds. The modest recovery in the Greenback, evidenced by the US Dollar Index (DXY) rising over 0.3% to the 100.90s, is impacting the precious metal.
Investors are now turning their attention to upcoming US economic data, including the Personal Consumption Expenditures (PCE) Price Index on Friday, and the second estimate of the US Gross Domestic Product (GDP) for Q2 on Thursday, for further indications on the Federal Reserve's (Fed) interest rate trajectory.
Additionally, remarks from Atlanta Fed President Raphael Bostic on Wednesday may offer more clues on potential policy moves.
Impact of US Economic Data and Interest Rate Expectations on Gold Prices
On the economic front, the mixed data released this week has provided a nuanced outlook on the US economy.
While the Conference Board's US Consumer Confidence Index rose to 103.3 in August, beating expectations, the Richmond Fed Manufacturing Index for August disappointed, coming in at -19 compared to the forecasted -14.
Meanwhile, US housing data also showed mixed results, with a slight decline in house prices month-over-month but a year-over-year increase exceeding estimates.
Despite these mixed signals, the probability of the Fed enacting a significant 0.50% interest rate cut in September remains stable, as reflected by the CME FedWatch Tool.
The potential for such a rate cut could support gold prices by reducing the opportunity cost of holding non-interest-paying assets like gold.
However, the recent rise in short-term US Treasury yields suggests some market skepticism about the likelihood of a large rate cut, which could limit gold's upside.
Geopolitical Tensions and Investor Positioning Weigh on Gold Prices
In addition to economic factors, gold's price movements are also influenced by investor positions and geopolitical tensions.
According to Daniel Ghali from TD Securities, the current high level of investor interest in gold is worrisome because it’s similar to the extreme levels seen during the pandemic. This could put gold prices at risk of falling.
Meanwhile, the geopolitical tensions, which usually support gold prices, haven’t been strong enough to counterbalance the negative impact of a stronger USD and high investor positions.
As traders wait for more information on the Federal Reserve’s interest rate decisions and upcoming economic data, the short-term outlook for gold remains uncertain.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,506.82, down 0.34% for the day. The 4-hour chart reveals a cautious market sentiment, with the price struggling to find solid ground amid a broadly mixed trading session.
The immediate support level is situated at $2,486.73, which aligns closely with the lower boundary of a key support zone. Should gold breach this level, it could further decline toward $2,471.29, followed by the next support at $2,455.47.
On the upside, immediate resistance is observed at $2,526.45, a level that has previously acted as a pivot point in recent sessions.
A break above this could propel gold towards the next resistance levels at $2,544.34 and potentially $2,560.54.
However, with the Relative Strength Index (RSI) hovering around 47, the momentum is slightly bearish, suggesting limited upside potential unless new buying interest emerges.
The 50-day Exponential Moving Average (EMA) at $2,505.82 is currently offering a thin layer of support.
If gold can maintain a position above this moving average, there is potential for a rebound. However, a decisive break below the $2,505 mark could open the door to further downside risks.
Given the mixed technical signals, traders may consider buying above $2,505, targeting the $2,525 level, with a stop loss placed at $2,493. This setup allows for a calculated risk while capitalizing on a potential short-term bounce.
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EUR/USD Price Analysis – Aug 28, 2024