S&P500 (SPX) Price Analysis – July 19, 2024
Daily Price Outlook
The S&P 500 index continues its bearish trend, settling around 5,544.59 after a significant decline in recent sessions. This downward movement is primarily due to a shift away from high-growth technology stocks.
Investors are capitalizing on profits from technology shares that have recently surged, reallocating their funds into sectors expected to benefit from anticipated reductions in borrowing costs.
Despite a positive shift towards small-cap and cyclical stocks, broader market sentiment has turned negative. The trend of profit-taking has extended beyond technology, affecting nearly all sectors within the S&P 500.
This widespread sell-off has contributed to a further decline in the index, reflecting a broad-based market retreat.
Economic Data and Fed Rate Cut Speculation Impact on S&P 500
On the US front, the previously released economic data and speculation about Federal Reserve rate cuts have significantly influenced market sentiment.
Recent inflation data, including a slowdown in both annual headline and core Consumer Price Index (CPI) figures, has fueled expectations for interest rate cuts starting in September.
Meanwhile, the rise in the Unemployment Rate and more people filing for unemployment benefits has added to the negative mood in the market.
The S&P 500 is reflecting this uncertainty, as investors are unsure whether lower borrowing costs will benefit them, given that economic data might not match what the Federal Reserve hopes for.
The recent drop in the index shows that investors are being careful due to conflicting economic signals and uncertainty about possible future rate cuts.
Geopolitical Uncertainty and Humanitarian Crisis Impact on S&P 500 Index
Geopolitical tensions and humanitarian crises have added more pressure in the S&P 500's performance. Recent escalations in the Middle East, particularly Israel’s intensified strikes on Gaza, have exacerbated regional instability and raised concerns about broader conflicts.
Additionally, doubts about the US's commitment to Taiwan and ongoing geopolitical strife contribute to market uncertainties. The humanitarian crisis in Gaza, coupled with criticism from international actors and the potential for further conflict, has created a volatile environment.
These geopolitical concerns, combined with uncertainties about the US Presidential elections and a strong US Dollar, have pressured the S&P 500. Investors seeking safe-haven assets may shift their focus, influencing market sentiment and contributing to the index's downward trend.
S&P 500 - Technical Analysis
The S&P 500 is currently trading at $5,544.58, marking a decline of 0.78%. The 4-hour chart highlights critical levels for investors to monitor. The pivot point is set at $5,522.66, serving as a key indicator of potential price movements.
Immediate resistance is noted at $5,576.48, with further resistance levels at $5,607.64 and $5,643.05. On the downside, immediate support is identified at $5,490.08, followed by $5,446.88 and $5,405.81.
Technical indicators suggest a cautious market sentiment. The Relative Strength Index (RSI) stands at 45, indicating neither overbought nor oversold conditions, suggesting room for movement in either direction.
The 50-day Exponential Moving Average (EMA) is positioned at $5,517.33, providing a potential support level that could be crucial in the near term.
Given the technical setup, traders might consider placing a buy limit order at $5,520, just below the pivot point, to capitalize on potential upward momentum.
The suggested trade setup includes an entry price at $5,520, a take profit target at $5,575, and a stop loss at $5,490. This strategy aims to leverage a rebound while maintaining a controlled risk profile.
Related News
GOLD Price Analysis – July 19, 2024
EUR/USD Price Analysis – July 19, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair continued its downward trend, settling around 1.0884 and hitting an intraday low of 1.0876.
This decline was driven by a strengthening US dollar, bolstered by growing speculation that the Republican Party might win the upcoming US Presidential elections.
Additionally, the EUR/USD pair's losses were exacerbated by comments from ECB official Villeroy, who suggested that two more rate cuts this year might be appropriate. This outlook weighed on the euro, further contributing to the pair's decline.
US Dollar Strengthens Amid Fed Rate Cut Speculation and Rising Unemployment, Potentially Impacting EUR/USD
On the US front, the broad-based US dollar is gaining strength even though investors anticipate that the Federal Reserve (Fed) might start cutting interest rates in September, as they believe inflation is moving closer to the 2% target.
Policymakers, however, are seeking more conclusive data before making a decision. The speculation around Fed rate cuts increased following June’s Consumer Price Index (CPI) report, which revealed a return to disinflation.
Both annual headline and core CPI slowed more than expected, with monthly headline inflation declining for the first time in over four years. Additionally, easing conditions in the US labor market have further bolstered expectations for rate cuts.
On the data front, the Unemployment Rate increased to 4.1% in June, the highest level since November 2021. Initial Jobless Claims for the week ending July 12 reached 243,000, surpassing both the expected 230,000 and the previous week’s 223,000. This rise in claims suggests more people are seeking unemployment benefits than anticipated.
Therefore, the bullish US dollar amid rising unemployment and expectations of Fed rate cuts could weigh on the EUR/USD pair, potentially causing the euro to depreciate against the dollar.
ECB's Uncertain Rate Cut Outlook and Lower Growth Projections May Weaken Euro
On the EUR front, the ECB kept interest rates unchanged on Thursday, with President Christine Lagarde avoiding any firm commitment to future rate cuts.
However, ECB policymaker Francois Villeroy de Galhau indicated that markets expect two more rate cuts this year, with possible policy tightening starting in September and continuing in December.
The ECB’s Survey of Professional Forecasters revealed that price pressures are expected to remain around 2.4%, returning to 2.0% by 2025. The growth target for 2025 was revised down to 0.7% from the previous estimate of 0.5%.
Therefore, the ECB's uncertain stance on rate cuts and lower growth projections may weaken the euro, potentially leading to a decline in the EUR/USD pair as market expectations shift.
EUR/USD - Technical Analysis
The EUR/USD is currently trading at $1.08864, reflecting a modest decline of 0.07%. The 4-hour chart indicates critical levels that traders should monitor closely. The pivot point is set at $1.0920, serving as a key indicator for potential price movements.
Immediate resistance is identified at $1.0909, with subsequent resistance levels at $1.0928 and $1.0948. On the downside, immediate support is at $1.0861, followed by $1.0844 and $1.0825.
Technical indicators suggest a cautious sentiment in the market. The Relative Strength Index (RSI) stands at 42, indicating a slight bearish tilt but not yet in oversold territory. The 50-day Exponential Moving Average (EMA) is positioned at $1.0880, just below the current price, acting as a potential support level.
Given the technical setup, traders might consider placing a buy order above the 50-day EMA at $1.08805 to capitalize on potential upward momentum.
The suggested trade setup includes an entry price above $1.08805, a take profit target at $1.09199, and a stop loss at $1.08598. This strategy aims to leverage a rebound while maintaining a controlled risk profile.
Related News
GOLD Price Analysis – July 19, 2024
AUD/USD Price Analysis – July 18, 2024
Daily Price Outlook
Despite the renewed strength of the US dollar, the AUD/USD currency pair was able to maintain its upward trend and remained well-bid around the 0.6736 level, hitting an intra-day high of 0.6744.
The reason for this upward rally can be attributed to the previously released stronger domestic jobs report, which supports the case for another possible rate hike by the Reserve Bank of Australia (RBA).
This underpinned the Australian currency. Additionally, the risk-on sentiment in the market was seen as another key factor that underpinned the riskier Australian dollar and contributed to the AUD/USD pair's gains.
On the other hand, the US dollar managed to stop its early-day losses and gained positive traction, which was seen as a key factor that kept the lid on any additional gains in the AUD/USD pair. Meanwhile, the rising economic headwinds in China, along with falling copper prices, also capped gains in the AUD/USD pair.
AUD/USD Supported by Stronger Jobs Report Despite Higher Unemployment Rate
On the AUD front, its rise is backed by a stronger domestic jobs report, suggesting the potential for another rate hike by the Reserve Bank of Australia (RBA). Although the mixed data hasn't significantly changed expectations for the RBA's next policy move, it has modestly boosted the Australian Dollar and supported the AUD/USD pair.
On the data front, the Australian Bureau of Statistics (ABS) released figures this Thursday indicating that the Unemployment Rate increased to 4.1% in June, slightly higher than both expectations and the previous 4.0% figure.
However, this disappointment was mitigated by a surprise uptick in the number of employed individuals, rising from 39.7K in May to 50.2K in June, well surpassing the anticipated 20.0K increase according to consensus estimates.
Therefore, the AUD/USD pair was modestly supported by a stronger jobs report despite a higher unemployment rate. The unexpected increase in employed individuals helped offset concerns, influencing the pair's stability.
Impact of Fed's Inflation Optimism and Rate Cut Speculation on USD and AUD/USD Pair
On the US economic front, the Federal Reserve has expressed optimism regarding inflation reaching its targets, which has led to speculation about potential interest rate cuts.
Fed Governor Christopher Waller and Richmond Fed President Thomas Barkin have noted a moderation in inflationary pressures, prompting market expectations for a 25-basis point rate cut in September to rise sharply to 93.5%, up from 69.7% previously.
Recent economic data shows that US Retail Sales for June held steady at $704.3 billion, meeting market expectations after a revised 0.3% increase in May.
Looking forward, upcoming reports are expected to show a rise in weekly jobless claims, alongside a moderate improvement in the Philadelphia Fed manufacturing index.
As a result, the Federal Reserve's positive outlook on inflation and potential rate cuts has bolstered the US dollar, exerting downward pressure on AUD/USD.
Market attention is now keenly fixed on upcoming US economic data releases, which are expected to sway the pair's trajectory amidst heightened speculation over rate cuts.
AUD/USD - Technical Analysis
The AUD/USD pair is trading at $0.67391, up 0.13%, reflecting a modest uptick amidst a broader market stability. The 4-hour chart reveals critical levels that traders should monitor. The pivot point is set at $0.6745, indicating a pivotal area for potential price action shifts.
Immediate resistance stands at $0.6760, followed by stronger resistance at $0.6778 and $0.6799. Conversely, immediate support is located at $0.6716, with further support levels at $0.6702 and $0.6685.
The Relative Strength Index (RSI) is at 48, suggesting a neutral market sentiment with neither overbought nor oversold conditions. This positioning implies potential for either upward or downward movements depending on forthcoming economic data and market reactions.
Additionally, the 50-day Exponential Moving Average (EMA) is positioned at $0.6750, slightly above the current price, indicating a need for a sustained move above this level to confirm a bullish trend.
For traders, a strategic entry point would be above $0.67168, aiming for a take profit level at $0.67595. Setting a stop loss at $0.66953 is advisable to mitigate potential downside risks. This approach leverages the modest bullish momentum while ensuring protection against unexpected market shifts.
Related News
USD/JPY Price Analysis – July 18, 2024
GOLD Price Analysis – July 18, 2024
Daily Price Outlook
Gold price (XAU/USD) extended its upward rally and remained well-bid around the 2,466 level, hitting an intraday high of 2,474. However, the reason for this upward rally can be attributed to the growing optimism that the Federal Reserve (Fed) will reduce rates in September.
Markets now indicate a 93.5% probability of a 25-basis point rate cut at the September Fed meeting, up from 69.7% a week earlier. This makes non-yielding assets like gold more attractive to investors.
On the other hand, the US dollar gained bullish traction after falling to its lowest level since March during the previous session. Economic data due later in the session is likely to show an increase in weekly initial jobless claims.
At the same time, the Philadelphia Fed manufacturing index is set to indicate a slight improvement in conditions. Hence, the bullish US dollar could cap gains in the gold price.
Mixed Impact on Gold Prices Amid Fed Rate Cut Speculations and Stronger US Dollar
On the US front, the Federal Reserve is optimistic about inflation meeting its targets, hinting at potential interest rate cuts. Fed Governor Christopher Waller and Richmond Fed President Thomas Barkin see easing inflation, leading markets to predict a 93.5% chance of a 25-basis point rate cut in September, up from 69.7% before.
However, the US Dollar has strengthened due to improved Treasury yields, limiting gold prices' rise. Fed member Dr. Adriana Kugler stressed the need for more data to support rate cuts, while Chair Jerome Powell hinted that future rate cuts could be delayed despite nearing inflation targets.
On the data front, US Retail Sales for June were stable at $704.3 billion, matching market expectations, following a revised 0.3% increase in May. Later, reports are expected to show a rise in weekly jobless claims and a slight improvement in the Philadelphia Fed manufacturing index.
Therefore, the potential Fed rate cuts and stable retail sales support gold prices, but the stronger US Dollar and improved Treasury yields limit gains, resulting in a mixed impact on gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2472.710, up 0.27%, as it continues to attract investors amid global economic uncertainties. The 4-hour chart shows gold hovering near key levels, with a pivot point set at $2490.00.
Immediate resistance is found at $2485.91, with subsequent resistance levels at $2510.78 and $2529.15. On the downside, immediate support is at $2430.33, followed by $2406.52 and $2381.37.
The Relative Strength Index (RSI) stands at 70, indicating overbought conditions that may prompt a short-term pullback. However, the 50-day Exponential Moving Average (EMA) at $2408.46 suggests a bullish trend, with prices consistently trading above this level.
Given the current technical setup, traders might consider entering long positions above $2455, targeting a take profit level of $2490. A stop loss should be placed at $2440 to manage risk. This strategy capitalizes on the prevailing bullish momentum while guarding against potential downside risks.
Related News
USD/JPY Price Analysis – July 18, 2024
USD/JPY Price Analysis – July 18, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair maintained its upward trend and remained well-bid around 156.45, hitting the intra-day high of 156.59 level. This is mainly because the US Dollar is performing well compared to the Japanese Yen.
US Treasury bond yields have also slightly risen, making them more attractive to investors looking for higher returns despite uncertain global economic conditions. These factors together are boosting the USD/JPY pair, indicating more confidence in the US Dollar's strength against the Yen in the market.
Moreover, the US economy has demonstrated resilience across various economic indicators, including steady retail sales figures and optimistic sentiments from Federal Reserve officials regarding inflation trends.
Federal Reserve Chairman Jerome Powell's recent remarks have underscored confidence that inflation is progressing towards the Fed's target, further bolstering support for the US Dollar.
Expectations of Further Intervention by Japanese Authorities and Its Impact on USD/JPY Pair
Traders and analysts are closely monitoring the actions of Japanese authorities, who have hinted at potential interventions in the currency market to prevent excessive volatility in the Japanese Yen. Recent statements by Japan's top currency diplomat, Masato Kanda, underscore the authorities' readiness to intervene if speculators drive "excessive" movements in the Yen.
The anticipation of intervention has created a cautious atmosphere among traders dealing with the USD/JPY pair. The intervention actions, if implemented, could potentially limit the Yen's appreciation against the US Dollar, thereby supporting the pair's upward momentum.
Market participants are keenly observing any developments from Japanese policymakers, as these interventions could significantly influence short-term movements in the currency markets.
Fed's Inflation Optimism and Rate Cut Speculation and Its Impact on USD/JPY Pair
On the US front, the Federal Reserve's stance on monetary policy and inflation expectations play a crucial role in shaping the trend of the USD/JPY pair.
Recently, Fed officials, including Governor Christopher Waller and Richmond Fed President Thomas Barkin, have hinted at the possibility of an interest rate cut in the upcoming September meeting. This speculation has been fueled by easing inflationary pressures and a desire to sustain economic momentum amidst global uncertainties.
Market expectations for a rate cut have increased substantially, with the CME Group's FedWatch Tool indicating a high probability of a 25-basis point rate reduction. Such expectations tend to weigh on the US Dollar's strength, as lower interest rates make the currency less attractive to investors seeking higher yields.
Consequently, the USD/JPY pair may face downward pressure if the Fed moves forward with rate cuts, as it would diminish the Dollar's appeal relative to the Yen.
USD/JPY - Technical Analysis
The USD/JPY is trading at $156.079, up 0.09%, indicating slight upward movement in a cautiously optimistic market. The 4-hour chart highlights significant levels for traders to consider.
The pivot point is marked at $156.7620, a crucial level that could determine near-term price action. Immediate resistance is identified at $157.7310, with further resistance levels at $158.6180 and $159.4250. On the downside, immediate support lies at $155.3700, followed by $154.5630 and $153.6750.
The Relative Strength Index (RSI) is at 31, suggesting that the pair is approaching oversold territory.
This indicator implies potential for a rebound or at least a temporary stabilization. The 50-day Exponential Moving Average (EMA) stands at $159.2220, well above the current price, indicating a bearish trend as long as prices remain below this level.
For traders, a strategic approach would be to set a sell limit at the pivot point of $156.762. Aiming for a take profit level at $154.987 ensures capturing gains from anticipated downward movement. To manage risk, a stop loss at $157.650 is recommended.
Related News
AUD/USD Price Analysis – July 18, 2024
EUR/USD Price Analysis – July 17, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend, remaining well-bid around the 1.0937 level and hitting an intraday high of 1.0945.
The upward movement can be attributed to the weakening US dollar, which lost its bullish traction despite better-than-expected Retail Sales data reported by the US Census Bureau for June on Tuesday.
The decline in the US dollar was largely driven by heightened expectations of Fed rate cuts in September.
On the other side, the ECB's stance on interest rates and weakening economic sentiment in Germany are likely to pressure the EUR/USD pair. Expectations of further rate cuts and economic concerns could lead to euro depreciation against the US dollar as investors seek safer assets.
Impact of Fed Rate Cut Expectations and US Retail Sales on EUR/USD
On the US front, the broad-based US dollar has been under pressure recently as market participants expect potential rate cuts by the Federal Reserve starting in September. This sentiment has led US Treasury bond yields to hover around multi-month lows.
Meanwhile, Federal Reserve officials, Chair Jerome Powell and San Francisco Fed President Mary Daly, have suggested that inflation is nearing their target levels, bolstering expectations for forthcoming rate reductions. As a result, traders are factoring in the likelihood of multiple rate cuts before year-end.
In recent economic data, monthly Retail Sales held steady, meeting expectations, as increased sales in core goods offset sluggish demand for automobiles. Moreover, May's sales were upwardly revised to 0.3% from 0.1%.
These figures indicate a resilient consumer sector, supporting the overall economic outlook. However, despite these positive indicators, market expectations for Federal Reserve rate cuts commencing in September remain unchanged.
Therefore, the expectation of Fed rate cuts has weakened the US dollar, benefiting the EUR/USD pair, which has shown resilience amid steady US retail sales and revised upward figures.
ECB Policy and German Economic Sentiment Impact on EUR/USD
On the other side, the European Central Bank (ECB) is anticipated to maintain unchanged interest rates, with investors closely monitoring for hints regarding future rate adjustments.
In June, the ECB shifted away from its previously tight monetary policy stance due to easing inflation concerns stemming from pandemic-related stimulus measures.
Officials foresee inflation stabilizing near 2% by next year, though current pressures may persist into 2023. Market sentiment leans towards two additional rate cuts in 2024.
Meanwhile, Germany's economic sentiment, as gauged by the ZEW Survey, sharply declined to 41.8 in July, reflecting anxieties over weak domestic and international demand, affecting the Eurozone's largest economy.
Therefore, the expected ECB stance and economic sentiment in Germany could pressure the EUR/USD pair, weakening the euro against the US dollar as markets anticipate further rate cuts and economic uncertainties in the Eurozone.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.0904, showing modest upward momentum. The 4-hour chart reveals critical price levels that could influence market direction. The pivot point is set at $1.0932, serving as a key level for potential trend shifts.
Immediate resistance is identified at $1.0923, followed by $1.0940 and $1.0964. These resistance levels indicate potential targets if the price breaks above the pivot point, suggesting a continuation of the bullish trend.
On the downside, immediate support is found at $1.0861, with subsequent support levels at $1.0838 and $1.0817. These levels are crucial for maintaining the current trend and could act as buffers against any sharp declines.
The Relative Strength Index (RSI) is at 61, indicating that the market is in neutral territory but showing signs of upward momentum.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0858, which aligns with the immediate support level, providing additional strength to the current price trend. This EMA acts as a significant indicator of the underlying trend and helps identify potential reversal points.
In conclusion, the outlook for EUR/USD remains bullish above the pivot point of $1.0932. Traders are advised to buy above $1.08940, with an entry price at this level, aiming for a take profit at $1.09323 and setting a stop loss at $1.08722.
EUR/USD is currently trading at $1.0904, showing modest upward momentum. The 4-hour chart reveals critical price levels that could influence market direction. The pivot point is set at $1.0932, serving as a key level for potential trend shifts. Immediate resistance is identified at $1.0923, followed by $1.0940 and $1.0964.
These resistance levels indicate potential targets if the price breaks above the pivot point, suggesting a continuation of the bullish trend.
On the downside, immediate support is found at $1.0861, with subsequent support levels at $1.0838 and $1.0817. These levels are crucial for maintaining the current trend and could act as buffers against any sharp declines.
The Relative Strength Index (RSI) is at 61, indicating that the market is in neutral territory but showing signs of upward momentum.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0858, which aligns with the immediate support level, providing additional strength to the current price trend. This EMA acts as a significant indicator of the underlying trend and helps identify potential reversal points.
In conclusion, the outlook for EUR/USD remains bullish above the pivot point of $1.0932. Traders are advised to buy above $1.08940, with an entry price at this level, aiming for a take profit at $1.09323 and setting a stop loss at $1.08722.
Related News
GBP/USD Price Analysis – July 17, 2024
GOLD Price Analysis – July 17, 2024
Daily Price Outlook
Gold price (XAU/USD) regained its upward trend and drew strong bids around the 2,475.99 level, hitting an intraday high of 2,482.41. The upward rally can be attributed to growing expectations that the Federal Reserve will begin cutting interest rates as early as September.
This put downward pressure on the US dollar and contributed to the gains in the gold price
Impact of Fed Rate Cut Expectations on Gold Prices
On the US front, the broad-based US dollar has lost momentum as investors anticipate rate cuts by the Federal Reserve starting in September.
This belief has kept US Treasury bond yields near multi-month lows, preventing the dollar from rebounding from its recent three-month low. Federal Reserve officials, including Chair Jerome Powell and San Francisco Fed President Mary Daly, have signaled that inflation is nearing their target, reinforcing expectations of rate cuts.
This outlook has led traders to price in multiple rate cuts by year-end, boosting non-yielding assets like gold, which benefits from lower interest rates. US Retail Sales data for June showed no change, with upward revisions in May indicating consumer resilience, supporting economic growth prospects for the second quarter.
Therefore, the anticipation of Fed rate cuts, reinforced by near-record low Treasury yields and Federal Reserve officials' inflation outlook, has boosted gold prices as investors seek safe-haven assets amid lower interest rates.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,465.89, showing slight market adjustments as it approaches significant resistance levels. The 4-hour chart reveals pivotal price points that are essential for traders to watch closely.
The pivot point is positioned at $2,478.20, indicating a critical level for potential market shifts. Immediate resistance is identified at $2,495.71, followed by $2,511.63 and $2,529.15. These resistance levels represent potential upward targets if the price manages to break above the pivot point, signaling a continuation of the bullish trend.
On the downside, immediate support is noted at $2,443.97, with further support levels at $2,419.30 and $2,397.41. These levels are crucial for maintaining the current trend and could serve as buffers against any sharp declines.
The Relative Strength Index (RSI) is currently at 75, indicating that the market is in an overbought condition. This suggests that there might be limited room for further upward movement before a potential correction.
The 50-day Exponential Moving Average (EMA) is at $2,397.94, which provides additional support and aligns with the lower support levels. This EMA acts as a significant indicator of the underlying trend and helps identify potential reversal points.
In conclusion, Gold remains bearish below the pivot point of $2,478.20. A break above this level could boost bullish sentiment, targeting the resistance levels of $2,495.71 and beyond.
Conversely, maintaining below the pivot point suggests continued downside risk. Traders are advised to sell below $2,478, with an entry price at this level, aiming for a take profit at $2,449 and setting a stop loss at $2,495.
Related News
EUR/USD Price Analysis – July 17, 2024
GBP/USD Price Analysis – July 17, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend, remaining well bid around the 1.3034 level and hitting an intraday high of 1.3045.
The upward movement can be attributed to the weakening US dollar, which lost its bullish traction despite better-than-expected Retail Sales data reported by the US Census Bureau for June on Tuesday.
The decline in the US dollar was largely driven by heightened expectations of Fed rate cuts in September. Another supportive factor for the GBP/USD pair was the resilient Consumer Price Index (CPI) data reported by the UK Office for National Statistics (ONS) for June, indicating ongoing inflationary pressures in the UK that could bolster the pound against the dollar.
UK CPI Data and BoE Policy Outlook Impact on GBP/USD Pair
On the BoE front, the UK Office for National Statistics reported that June's Consumer Price Index (CPI) showed steady annual increases, with headline inflation at 2.0% and core inflation at 3.5%, excluding volatile food and energy items.
Service sector inflation remained high at 5.7%, which is concerning for BoE policymakers who are cautious about normalizing policy. Month-on-month, inflation saw a slower rise of 0.1%, in line with expectations.
This persistent CPI data suggests that the BoE may delay monetary policy tightening, reducing speculation of rate hikes starting in August. The next focal point for Pound Sterling will be the upcoming employment data, crucial for assessing trends in wage growth.
Therefore, the stubborn CPI data and potential BoE hesitation to cut rates strengthen the GBP/USD pair, as the pound gains support from anticipated continued restrictive monetary policy.
Anticipated Fed Rate Cuts and Steady US Retail Sales Likely to Boost GBP/USD Pair
On the US front, the broad-based US dollar has weakened as investors anticipate rate cuts by the Federal Reserve beginning in September. This expectation has kept US Treasury bond yields near multi-month lows, preventing the dollar from recovering from its recent three-month low.
Federal Reserve officials, including Chair Jerome Powell and San Francisco Fed President Mary Daly, have indicated that inflation is approaching their target, strengthening expectations of imminent rate cuts. This outlook has prompted traders to price in multiple rate cuts by the end of the year.
On the data front, monthly Retail Sales remained steady, matching expectations, with higher core goods sales balancing weak auto demand. May's sales were revised up to 0.3% from 0.1%. This improvement in retail sales supports the economic outlook but doesn't change firm market expectations of Fed rate cuts starting in September.
Therefore, the anticipation of Fed rate cuts and steady US retail sales, coupled with a weakened US dollar, could boost the GBP/USD pair as the pound gains strength against a softer dollar.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.2992, displaying a slight upward bias. The 4-hour chart highlights significant price levels that traders should monitor closely. The pivot point is set at $1.3019, serving as a critical level for potential trend direction.
Immediate resistance is identified at $1.3019, followed by $1.3058 and $1.3095. These resistance levels represent potential targets if the price breaks above the pivot point, indicating a continuation of the bullish trend.
On the downside, immediate support is observed at $1.2932, with subsequent support levels at $1.2898 and $1.2858.
These levels are crucial for maintaining the current trend and could act as buffers against any sharp declines. The Relative Strength Index (RSI) is at 69, indicating that the market is nearing overbought territory but still showing signs of strong buying interest.
The 50-day Exponential Moving Average (EMA) is positioned at $1.2883, which aligns with the immediate support level, providing additional strength to the current price trend. This EMA acts as a significant indicator of the underlying trend and helps identify potential reversal points.
In conclusion, the outlook for GBP/USD remains bullish above the pivot point of $1.3019. Traders are advised to buy above $1.29678, with an entry price at this level, aiming for a take profit at $1.30193 and setting a stop loss at $1.29416.
Related News
GOLD Price Analysis – July 17, 2024
GOLD Price Analysis – July 16, 2024
Daily Price Outlook
Gold price (XAU/USD) extended its upward trend, remaining well bid around the 2,440 level and hitting an intraday high of 2,443.
This upward movement is attributed to dovish comments from Federal Reserve Chair Jerome Powell regarding monetary policy, which have increased the appeal of precious metals. Lower borrowing costs make non-yielding assets like gold more attractive to investors.
Investors appear convinced that the US central bank will begin a rate-cutting cycle in September, a sentiment reaffirmed by Powell's recent remarks. This outlook has kept US Treasury bond yields depressed, benefiting the non-yielding yellow metal.
However, the pace of gold price gains could slow following Monday's economic data, which revealed weaker-than-expected second-quarter economic growth in China, reflecting sluggish domestic demand.
Impact of Fed Chair Jerome Powell's Dovish Comments on Gold Prices
On the US front, Federal Reserve Chair Jerome Powell's dovish comments on Monday bolstered precious metals like gold, as lower borrowing costs make them more attractive to investors. Powell indicated confidence in inflation nearing the Fed's target sustainably, suggesting potential interest rate cuts ahead.
Meanwhile, Fed Bank of San Francisco President Mary Daly noted a cooling inflation trend, supporting the view that inflation is heading towards 2%, though she emphasized the need for more data before deciding on rates.
Market expectations, reflected in CME Group’s FedWatch Tool, now show an 85.7% likelihood of a 25-basis point rate cut in September, up from 71.0% last week. Eyes are now on the upcoming US Retail Sales data for June for further economic insights.
Thus, the Federal Reserve Chair Jerome Powell's dovish stance and expectations of interest rate cuts have boosted gold prices, with lower borrowing costs enhancing the metal's attractiveness to investors seeking non-yielding assets.
Impact of China's Economic Slowdown and Trade Tensions on Gold Prices
On the other hand, gold prices face some challenges due to recent economic data indicating slower-than-expected growth in China's GDP for the second quarter, driven by weak domestic demand.
Meanwhile, the ongoing third plenum of the Chinese Communist Party's 20th National Congress, scheduled from July 15 to 18, underscores ongoing economic policy discussions amidst this economic slowdown.
Standard Chartered forecasts potential rate cuts by the People's Bank of China and adjustments to the reserve requirement ratio in response to the GDP deceleration. China's economic growth remains uneven, further complicated by escalating trade tensions; the US and EU recently imposed new tariffs on Chinese electric vehicles, impacting global trade dynamics.
Therefore, the potential economic slowdown in China, coupled with ongoing policy adjustments and trade tensions, may weigh on gold prices, as investors monitor developments that could affect global economic stability and demand for safe-haven assets.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently priced at $2,437.32, showing an increase of 0.19%. The 4-hour chart reveals critical price levels, with the pivot point at $2,445. Immediate resistance is found at $2,442.50, with further resistance at $2,453.71 and $2,466.69.
On the downside, immediate support is situated at $2,419.84, followed by $2,403.30 and $2,391.59.
The Relative Strength Index (RSI) is currently at 69, indicating that gold is nearing overbought territory, suggesting that traders should monitor for potential signs of a pullback. The 50-day Exponential Moving Average (EMA) is at $2,403.58, supporting the ongoing bullish trend.
Gold's recent performance has been buoyed by market expectations of a potential interest rate cut by the Federal Reserve in September. These expectations have kept U.S. Treasury yields depressed, making non-yielding assets like gold more attractive.
The metal's current bullish trend is further reinforced by global economic uncertainties and geopolitical tensions, which typically drive investors towards safe-haven assets.
Traders looking to enter the market should consider buying above $2,430, targeting a take-profit level at $2,445, while setting a stop-loss at $2,422 to manage potential downside risks. Maintaining these strategic levels is crucial as it allows traders to capitalize on the prevailing bullish momentum while mitigating potential losses.
Related News
USD/CAD Price Analysis – July 16, 2024
USD/CAD Price Analysis – July 16, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair maintained its upward trend, holding strong around the 1.3685 level and reaching an intraday high of 1.3695.
The rally can be attributed to a bullish US dollar, bolstered by recent developments including an unsuccessful attempt on Donald Trump's life, which has bolstered his prospects for the 2024 presidential election, raising expectations of reduced regulations under his potential leadership.
Additionally, declining oil prices have weighed on the commodity-linked Canadian Dollar (CAD), further contributing to gains in the USD/CAD pair.
Impact of WTI Oil Price Decline and Chinese Economic Slowdown on USD/CAD Pair
On the other hand, West Texas Intermediate (WTI) oil prices have been declining for three consecutive sessions, currently trading around $80.30 per barrel. This drop is linked to a slowdown in the Chinese economy, reducing demand from the world's largest oil importer.
China's GDP grew 4.7% year-over-year in the second quarter, down from 5.3% in the first quarter and below expectations of 5.1%. The National Bureau of Statistics (NBS) noted stable economic operation in the first half of the year with a 5.0% growth rate.
Traders are now focused on Canada's upcoming Consumer Price Index (CPI) inflation data, crucial for the Bank of Canada's (BoC) decision on potential further rate cuts post a recent quarter-point reduction in June.
Therefore, the decline in WTI oil prices, driven by China's economic slowdown, may strengthen the USD/CAD pair due to reduced demand for the Canadian Dollar and expectations around the Bank of Canada's policy response to inflation data.
Impact of US Dollar Strength and Fed's Policy on USD/CAD Pair
On the US front, the US dollar gained strength due to recent events, including an unsuccessful attempt on Donald Trump's life, boosting his prospects for the 2024 presidential election and sparking hopes of reduced regulations under his potential leadership.
Additionally, expectations of higher government debt and inflation under Trump's policies further bolstered the dollar. This bullish sentiment strengthened the US dollar against the Australian dollar (AUD/USD), driving the pair lower amid increased risk aversion and dollar demand.
Meanwhile, Federal Reserve Chair Jerome Powell's dovish comments on inflation, indicating confidence in reaching the Fed's target sustainably, raised expectations of potential interest rate cuts, which initially capped gains in the US dollar against the CAD.
Meanwhile, Fed Bank of San Francisco President Mary Daly noted a cooling inflation trend, suggesting the Fed is on track toward its 2% target and emphasizing the need for more data before deciding on interest rates. Market sentiment now indicates an 85.7% probability of a 25-basis point rate cut in September, up from 71.0% last week.
Therefore, the US dollar's strength, fueled by events boosting Trump's election prospects and expectations of higher debt and inflation, likely strengthens against the Canadian dollar (USD/CAD) amid increased risk aversion and anticipations of Fed interest rate cuts.
USD/CAD - Technical Analysis
The USD/CAD pair is currently trading at $1.36888, showing negligible movement from the previous session. The 4-hour chart delineates significant price levels, with the pivot point situated at $1.3692. Immediate resistance is noted at $1.3720, followed by $1.3756 and $1.3782. On the downside, immediate support lies at $1.3672, with further support levels at $1.3653 and $1.3629.
The Relative Strength Index (RSI) is positioned at 65, indicating the pair is approaching overbought conditions.
This suggests potential caution for traders as the pair nears resistance levels. The 50-day Exponential Moving Average (EMA) is recorded at $1.3634, which acts as a critical support level, indicating the overall bullish trend remains intact if the price stays above this mark.
The recent stability in the USD/CAD can be attributed to mixed economic signals from both the U.S. and Canada. While the U.S. economy shows robust performance, bolstered by positive economic indicators and speculation about future rate hikes, the Canadian dollar is supported by strong commodity prices, particularly oil, which is a significant export for Canada.
Traders considering positions in the USD/CAD pair should look to buy above $1.36783, with a take-profit target at $1.37133 and a stop-loss set at $1.36591. This strategy leverages the current bullish sentiment while protecting against potential downside risks.
Related News
AUD/USD Price Analysis – July 16, 2024