GOLD Price Analysis – July 02, 2024
Daily Price Outlook
Gold prices (XAU/USD) continue to face downward pressure, hovering around $2,328.65 per ounce with an intraday low touching $2,324.98. This decline can be attributed to several factors, including the renewed strength of the US dollar, which has gained traction despite growing speculation about a potential Federal Reserve rate cut in September.
Meanwhile, the ongoing risk-on sentiment in the market, bolstered by increasing expectations of Donald Trump's re-election later this year, has further weighed on gold, traditionally considered a safe-haven asset.
Looking forward, traders seem cautious to place any strong position ahead of Federal Reserve Chair Jerome Powell's upcoming speech on Tuesday and the release of the FOMC meeting minutes scheduled for Wednesday.
However, the highly anticipated US monthly employment report, Nonfarm Payrolls (NFP), set for release on Friday, is poised to have a impact on market sentiment and expectations regarding future monetary policy decisions by the Fed.
Economic Data and Strong US Dollar Pressure Gold Prices Amid Fed Rate Cut Speculations
Despite the upbeat market sentiment and increasing expectations of a September rate cut by the Federal Reserve, the US dollar continues to strengthen as investors await clearer signals regarding the Fed's monetary policy stance. However, these gains in the dollar could be temporary amid growing consensus that the Fed will start rate cuts in September.
Market expectations were bolstered following Monday's release of the US ISM PMI data, which showed that the manufacturing sector contracted for the third consecutive month in June, coupled with a decline in factory input prices to a six-month low.
On the economic data front, the Institute for Supply Management reported that its Manufacturing PMI remained in contraction for the second consecutive month, slipping from 48.7 to 48.5 in June, which was below expectations.
The Employment Index also declined to 49.3 from May's 51.1, indicating a slowdown in hiring within the sector. Additionally, the Prices Paid Index, a gauge of inflation, dropped to 52.1 from 57, reflecting easing price pressures.
These figures followed the US PCE Price Index report, which revealed that May's inflation rate hit its lowest level in over three years, reinforcing expectations for potential Fed interest rate cuts.
Therefore, the economic data and strengthening US dollar continue to pressure gold prices, with expectations of potential Fed rate cuts providing limited support amid the ongoing market uncertainty.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,330.695, down 0.06% for the day. On the 4-hour chart, the pivot point is set at $2,344.00, serving as a crucial level for traders to monitor.
Immediate resistance is found at $2,347.54, followed by higher resistance levels at $2,355.68 and $2,368.78. On the downside, immediate support is located at $2,318.85, with further support at $2,307.01 and $2,294.45.
Technical indicators show a mixed outlook. The Relative Strength Index (RSI) stands at 55, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) is positioned at $2,325.67, suggesting a potential support level just below the current price level.
The market sentiment for gold appears cautious, with traders awaiting further economic data and market cues. The recent price movement suggests that the precious metal is struggling to find a clear direction.
A break above the immediate resistance of $2,347.54 could signal a short-term bullish trend, while a fall below the immediate support of $2,318.85 may lead to further declines.
In conclusion, traders might consider buying gold above $2,318 with a take profit target at $2,344 and a stop loss at $2,306.
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EUR/USD Price Analysis – July 01, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair extended its winning streak and gained further traction around the 1.0751 level, hitting an intraday high of 1.0776.
The upward rally can be attributed to a combination of factors, including a weaker US dollar, which lost traction following the release of softer United States (US) core Personal Consumption Expenditures Price Index (PCE) data for May.
This fueled expectations of early rate cuts by the Federal Reserve (Fed) and put pressure on the US dollar, contributing to gains in the EUR/USD pair.
Additionally, the stronger-than-expected performance of Marine Le Pen's RN in France's parliamentary elections was seen as another key factor that added upward pressure on the EUR/USD pair.
EUR Strengthens Amid Reduced Political Uncertainty in France
On the EUR front, the major currency pair is strengthening following the first round of France's parliamentary elections, where Marine Le Pen's far-right National Rally (RN) performed well, albeit with a narrower lead than expected.
The uncertainty surrounding RN's chances of securing an outright majority has boosted the euro's attractiveness.
According to Carol Kong from the Commonwealth Bank of Australia, a less dominant showing by the far-right party could reduce fears of unsustainable fiscal measures, thereby boosting euro sentiment.
Meanwhile, investors are watching for signals from the European Central Bank (ECB) regarding further interest rate cuts. The ECB began easing rates in early June after maintaining a tight policy to counter pandemic-driven inflation pressures.
Looking ahead, investors eyes on the preliminary German Harmonized Index of Consumer Prices (HICP) data for June, releasing at 12:00 GMT.
Meanwhile, the economists anticipate a slower annual rise in HICP at 2.6% in the Eurozone's largest economy, down from 2.8% previously. The monthly Consumer Price Index (CPI) is expected to accelerate to 0.2% from May's 0.1%.
Therefore, the EUR/USD pair is likely strengthening due to reduced uncertainty from France's elections, where Marine Le Pen's RN performed strongly but with a narrower lead. This has boosted Euro sentiment amid expectations of potential ECB interest rate cuts.
Impact on EUR/USD Pair Amid US Dollar Correction and Rate Cut Expectations
On the US front, the broad-based US dollar edged lower following the expected decline in the US core Personal Consumption Expenditures Price Index (PCE) for May.
This reinforced expectations of early Federal Reserve (Fed) rate cuts and put pressure on USD. It should be noted that the core PCE inflation, a key Fed metric, eased to 2.6% from 2.8% previously.
Meanwhile, CME FedWatch indicates a 63.4% probability of rate cuts in September, with expectations now leaning towards two cuts this year, contrary to the Fed's initial projection of one.
However, the US Dollar Index (DXY) dipped near 105.40 as markets anticipate volatility from upcoming economic releases, starting with the ISM Manufacturing Purchasing Managers’ Index (PMI) for June, expected to show marginal improvement but continued contraction in factory activity below the 50.0 level.
Therefore, the EUR/USD pair is likely to strengthen as the US Dollar edged lower on expectations of early Fed rate cuts following softer core PCE inflation data, pushing the US Dollar Index (DXY) down to around 105.40 amid anticipated market volatility from upcoming economic releases.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.07662, reflecting a robust increase of 0.42% on the 4-hour chart, indicating positive momentum. The pivot point for today stands at $1.0753, serving as a crucial benchmark for market direction.
Immediate resistance is observed at $1.0794, with subsequent resistance levels at $1.0817 and $1.0845, marking potential targets for continued bullish activity. On the downside, immediate support is positioned at $1.0726, followed by deeper support levels at $1.0693 and $1.0668, providing potential stops for a bearish reversal.
The Relative Strength Index (RSI) is currently at 68, suggesting that the currency pair is nearing overbought conditions, yet still supports a bullish sentiment. The 50-day Exponential Moving Average (EMA) at $1.0714 further supports the current price action, indicating that the short-term trend remains upward.
Traders should consider entering long positions above the pivot point of $1.07529, targeting a take profit level at $1.07927. A stop loss at $1.07266 is advisable to manage downside risks effectively.
The alignment of technical indicators, including the elevated RSI and the supportive 50-day EMA, points to a bullish outlook for EUR/USD, provided it stays above the pivot point.
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GBP/USD Price Analysis – July 01, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend, remaining well bid around the 1.2673 level and hitting an intraday high of 1.2689. The reason for this upward movement could be attributed to the bearish US dollar, which lost ground following the release of softer US PCE inflation data.
This has prompted speculation that the Fed may cut rates later this year. Additionally, expectations that the UK's Opposition Labor Party may win over the Conservative Party led by Prime Minister Rishi Sunak could potentially boost the GBP due to perceived political stability and policy expectations.
This was seen as another key factor supporting the currency pair higher. Traders are now awaiting the US June ISM Purchasing Managers Index (PMI) for further market direction, scheduled for release on Monday.
Impact of US PCE Price Index Data on GBP/USD Pair and Potential Fed Rate Cuts
On the US front, the broad-based US dollar edged lower following the release of softer US Personal Consumption Expenditures (PCE) Price Index data for May, marking its lowest annual rate in over three years.
This data provided some support to major currency pairs, fueling speculation that the Fed could cut interest rates later this year. Consequently, this has put downward pressure on the US dollar and contributed to gains in the GBP/USD pair.
On the data front, the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index eased to 2.6% annually in May from 2.7% in April. The core PCE Price Index, excluding food and energy prices, also slowed from 2.8% in April to 2.6% in May, marking its lowest annual rate since March 2021.
On the other hand, recent statements from Fed officials, including New York Fed President John Williams and Fed Governor Michelle Bowman, indicate a cautious approach, highlighting the central bank’s readiness to act if inflation remains elevated.
Therefore, the softer US PCE Price Index data, showing lower inflation rates, has contributed to upward pressure on the GBP/USD pair amid speculation of potential Fed rate cuts later in the year, weakening the US dollar.
Impact of UK General Election on GBP/USD Exchange Rate and Market Volatility
On the BOE front, the upcoming UK general election scheduled for Thursday is set to have a substantial impact on currency markets, especially the GBP/USD pair. Exit polls currently indicate a potential leadership change, with the Labor Party expected to overtake Prime Minister Rishi Sunak's Conservative Party.
This anticipated shift is likely to increase market volatility as investors react to potential new economic policies and leadership transitions. Traders and investors will closely monitor developments, as political shifts often influence market sentiment and the direction of currency pairs, including the GBP/USD exchange rate in the coming days.
Therefore, the GBP/USD pair is expected to experience increased volatility due to the potential change in UK leadership, impacting market sentiment and influencing exchange rate movements.
GBP/USD - Technical Analysis
GBP/USD is trading at $1.26738, reflecting a modest increase of 0.11% as it continues to show resilience on the 4-hour chart. The pivot point is identified at $1.2667, which serves as a crucial level for today's trading.
Immediate resistance is noted at $1.2702, with subsequent resistance levels at $1.2722 and $1.2748, providing key targets for potential bullish movement. On the downside, immediate support is situated at $1.2633, followed by deeper support levels at $1.2613 and $1.2594, marking potential floors that could prevent further declines.
The Relative Strength Index (RSI) is currently at 58, suggesting that the currency pair is approaching overbought territory but still maintains a bullish bias.
The 50-day Exponential Moving Average (EMA) is closely aligned with the pivot point at $1.2666, indicating this level as pivotal for determining short-term direction. If GBP/USD maintains its position above the pivot point, it is likely to attract further buying interest, reinforcing the bullish trend.
Traders should consider entering long positions above the pivot point of $1.26659, targeting a take profit level at $1.27019. A stop loss at $1.26457 is recommended to manage downside risk effectively.
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- GOLD Price Analysis – July 01, 2024
GOLD Price Analysis – July 01, 2024
Daily Price Outlook
Gold prices (XAU/USD) kicked off the new week with strong bullish momentum, soaring to notable heights around $2,327 per ounce and peaking at an intraday high of $2,329.
This upward surge is driven by mounting expectations of upcoming rate cuts by the Fed in September and December, which have led to a depreciation of the US dollar and bolstered gains in gold prices.
In the meantime, a risk-averse market sentiment, fueled by ongoing geopolitical tensions and uncertainty stemming from France's sudden snap election, has further heightened the safe-haven allure of gold.
Impact of US Economic Data and Monetary Policy Expectations on Gold Prices
In the US, the broad-based US dollar has notably declined, reversing sharply from a nearly two-month high following the release of inflation data as it strengthened market confidence in interest rate cuts, anticipated in September and December.
The expectation of these rate cuts diminishes the appeal of the US dollar, prompting investors to seek gold as a hedge against inflation and currency devaluation, thereby bolstering gold prices.
Regarding economic data, the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index moderated to an annual rate of 2.6% in May, down from 2.7% in April.
Meanwhile, the core PCE Price Index, which excludes food and energy prices, also decelerated from 2.8% in April to 2.6% in May. This marks the lowest annual rate for the core index since March 2021.
Looking ahead, market participants will closely monitor the upcoming release of the US ISM Manufacturing PMI. This data, alongside broader risk sentiment, is anticipated to have a significant impact on commodities throughout the week.
Therefore, the easing inflationary pressures indicated by the PCE Price Index could continue to weigh on the US dollar, providing further support to gold prices as investors seek inflation-hedging assets amidst expectations of Fed rate cuts.
Impact on Gold Prices: Political Instability and Economic Challenges
On the political front, uncertainty surrounding the outcome of France's election and issues raised in Biden's debates are contributing to heightened political instability, bolstering gold (XAU/USD) as a safe-haven asset.
Meanwhile, China's weakening manufacturing and services sectors indicate economic challenges that could potentially dampen industrial demand for gold.
However, the slight uptick observed in the Caixin Manufacturing PMI suggests resilience in Chinese manufacturing, which might exert some upward pressure on gold prices.
In economic data, China's manufacturing activity recorded its second consecutive monthly decline in June, while services activity hit a five-month low. Despite these trends, Monday's release of China's Caixin Manufacturing PMI for June unexpectedly rose from 51.7 to 51.8, surpassing expectations of 51.2.
Therefore, the heightened political instability in France and economic challenges in China increase demand for gold as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold prices have edged slightly higher today, with the metal currently trading at $2,325.745 on the 4-hour chart. The pivot point for today is established at $2,321.81, providing a crucial reference level for traders.
Immediate resistance levels are identified at $2,328.77, $2,337.48, and $2,344.92, suggesting potential price ceilings that could test the bullish momentum. On the downside, immediate support is noted at $2,317.38, with further support levels at $2,312.31 and $2,306.29, indicating floors that could halt a bearish trend.
Technical indicators are showing mixed signals. The Relative Strength Index (RSI) stands at 52, which indicates neutral momentum, neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) is positioned at $2,319.18, closely aligning with the pivot point, suggesting this level as a critical area for short-term direction.
A price movement above this pivot point can potentially shift the market sentiment towards a bullish outlook, while a decline below it may trigger bearish trends.
In conclusion, the technical outlook for Gold (XAU/USD) today leans towards a cautious bullish sentiment, provided prices remain above the pivot point of $2,321.81. Traders are advised to consider entering long positions above this level, with a target take profit at $2,336 and a stop loss at $2,315 to mitigate potential downside risks.
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S&P500 (SPX) Price Analysis – June 28, 2024
Daily Price Outlook
The S&P 500 has been performing strongly, staying around the 4,482 level and reaching an intraday high of 4,490. Investors are keeping a close eye on the Federal Reserve's stance on monetary policy, especially regarding potential interest rate cuts.
Fed officials, including Governor Michelle Bowman, have indicated a cautious approach due to ongoing inflation concerns. This has boosted investor confidence, as lower interest rates generally drive economic activity and corporate earnings, which in turn supports stock market values.
US Economic Indicators and Fed Signals Impact on S&P 500
On the US front, softer macroeconomic data published on Thursday has increased expectations for the Federal Reserve to begin cutting rates soon, sparking an upward rally in the S&P 500. Key data releases, including the US real GDP growth, Durable Goods Orders, Initial Jobless Claims, and Pending Home Sales, have highlighted the mixed nature of the economic recovery.
Although GDP growth for the first quarter was revised upwards, it remains modest. Meanwhile, Durable Goods Orders slightly exceeded expectations, indicating resilience in certain sectors.
However, there are worries about job numbers because the average number of people filing for unemployment benefits over the past four weeks has gone up. Investors are watching closely to see what the Federal Reserve will do next.
The Fed's careful approach, along with these economic reports, has influenced how investors feel and how the stock market is performing, with the S&P 500 showing cautious but steady growth.
Upcoming Data and Its Impact on S&P 500
Looking ahead, investors are waiting for important economic data, especially the US Personal Consumption Expenditures (PCE) Price Index. This report is crucial because it's the Federal Reserve's preferred measure of inflation.
People will watch it closely to understand if prices are going up and what that might mean for Fed policies on interest rates. Economists predict a small rise in the core PCE, which shows that inflation pressures are under control.
Hence, the favorable outcome could ease concerns about overheating and support the case for a gradual easing of monetary policy, thereby bolstering equities.
Conversely, any surprises indicating stronger inflationary trends could prompt renewed volatility, as investors recalibrate their expectations regarding the pace and timing of future Fed actions.
S&P 500 - Technical Analysis
The S&P 500 is trading at $5482.88, up 0.09%. The 4-hour chart highlights critical price levels, with the pivot point set at $5468.10. Immediate resistance is positioned at $5505.65, followed by $5522.02 and $5536.94. On the downside, immediate support is identified at $5447.72, with further support levels at $5427.20 and $5408.64.
The Relative Strength Index (RSI) is currently at 59, indicating neutral momentum and suggesting that the index is neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) is at $5447.29, acting as a key support level. Maintaining above this EMA could suggest continued upward momentum for the S&P 500.
Traders should consider entering positions above the pivot point of $5468.10, with an eye on the first resistance level at $5505.65. A break above this resistance could pave the way for gains towards $5522.02 and $5536.94. Conversely, a drop below the immediate support at $5447.72 could signal a decline towards $5427.20 and potentially down to $5408.64.
In conclusion, while the S&P 500 shows slight gains, the overall outlook remains cautiously optimistic above the pivot point of $5468.10.
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- GOLD Price Analysis – June 28, 2024
GOLD Price Analysis – June 28, 2024
Daily Price Outlook
Gold (XAU/USD) failed to stop its losing streak and remain under pressure around $2,326 and hitting an intraday low of $2,319 level. However, the downward trend can be attributed to renewed strength of the US dollar and risk-on market sentiment,
The US dollar gained ground despite the recently released mixed US economic data, which included a slower-than-expected increase in US real GDP growth for the first quarter, marking the slowest rise since spring 2022.
Additionally, Durable Goods Orders in May showed minimal growth, and Pending Home Sales unexpectedly dropped by 2.1% in May, signaling challenges in the economy. Although, the Federal Reserve's (Fed) hawkish outlook was the main reason behind the US dollar spike.
Mixed Signals from US Economic Data and Fed Comments
On the US front, the broad-based US dollar gained positive traction and hit to a fresh two-month high, thanks to the comments by Fed Governor Michelle Bowman, indicating a cautious stance on rate cuts due to upside risks to inflation. However, the upticks in the US dollar could fade, as softer economic data released increased expectations for potential Federal Reserve interventions.
Therefore, the US dollar's recent strength, buoyed by Fed Governor Michelle Bowman's cautious stance on rate cuts amidst inflation risks, has pressured gold prices lower amid heightened uncertainty over Federal Reserve actions.
Looking ahead, traders are cautious, awaiting clarity from the Federal Reserve. The upcoming US Personal Consumption Expenditures (PCE) Price Index release will be key, offering insights into inflation trends that could sway market sentiment.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2326.89, down 0.30%. The 4-hour chart indicates key levels to watch, with the pivot point at $2321.81. Immediate resistance is at $2328.77, followed by $2337.48 and $2344.92. On the downside, immediate support is found at $2317.38, with further support levels at $2312.31 and $2306.29.
The Relative Strength Index (RSI) is currently at 59, suggesting that the market is neither overbought nor oversold, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) stands at $2319.50, acting as a crucial support level. If the price remains above this EMA, it could signal further bullish momentum.
Traders are advised to consider entry positions above $2323, aiming for a take-profit level at $2336 and setting a stop loss at $2317. This strategy capitalizes on the immediate resistance at $2328.77 and aims for the next resistance at $2337.48. Conversely, a break below the immediate support at $2317.38 could trigger a more pronounced sell-off towards $2312.31 and $2306.29.
In summary, while gold is currently experiencing a slight downturn, the overall outlook remains cautiously bullish above the $2321.81 pivot point.
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- EUR/USD Price Analysis – June 28, 2024
EUR/USD Price Analysis – June 28, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its mild bullish trend and remained well bid around the 1.0707 level, hitting an intraday high of 1.0711. The mild upward trend was attributed to renewed selling pressure in the US dollar, which lost some of its gains on the back of softer macroeconomic data published on Thursday.
This has increased expectations for the Federal Reserve to begin cutting rates soon. On the flip side, the downbeat European data released on Thursday tends to undermine the shared currency and could cap further gains in the EUR/USD pair.
Impact of Eurozone Economic Data on the EUR/USD Pair
On the EUR front, recent data showed a slight softening as the pan-EU Economic Sentiment Indicator fell to 95.9 from 96.0, missing expectations of a rise to 96.2. Looking ahead, Friday’s German unemployment figures are anticipated to reveal a decrease in new jobless benefit seekers to 15,000 in June, down from 25,000 previously.
The seasonally-adjusted unemployment rate for June is expected to remain unchanged at 5.9%. These indicators suggest a cautious economic outlook in the Eurozone, influenced by ongoing challenges and cautious labor market conditions in Germany specifically.
Therefore, the softer economic data from the Eurozone, particularly in Germany, could weigh on the EUR/USD pair, reflecting cautious sentiment and potential concerns about economic recovery and stability in the region.
Impact on EUR/USD Pair Amid US Economic Developments and Fed Commentary
On the US front, the US dollar has been showing signs of weakness and continues to be under pressure following the release of recent disappointing economic data. This has heightened expectations that the Federal Reserve will start the Federal Reserve's rate-cutting cycle this year.
Meanwhile, comments by Fed Governor Michelle Bowman indicate a cautious stance on rate cuts due to upside risks to inflation.
On the data front, US economic indicators showed mixed results with Initial Jobless Claims for the week ending June 21 coming in better than expected at 233,000 new claims, below the forecast of 236,000 and down from the previous week’s 238,000.
However, the four-week average edged up to 236,000, although the latest week’s figure remained below this average.
Meanwhile, US Gross Domestic Product (GDP) for Q1 met expectations, revised slightly higher to 1.4% from the initial 1.3%. Core Personal Consumption Expenditures in Q1 also saw a slight increase, rising to 3.7% quarter-on-quarter compared to the expected 3.6%.
Therefore, the US dollar's weakness, fueled by disappointing economic data and expectations of Federal Reserve policy easing, could bolster the EUR/USD pair. However, cautious Fed comments on inflation risks may temper any significant euro gains against the dollar.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.06972, down 0.16% on the day. The 4-hour chart highlights critical price levels, with the pivot point set at $1.0700. Immediate resistance is located at $1.0713, followed by $1.0727 and $1.0745. On the downside, immediate support is found at $1.0686, with further support levels at $1.0671 and $1.0655.
The Relative Strength Index (RSI) is currently at 48, indicating neutral momentum and suggesting that the market is neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) is at $1.0707, acting as a key resistance level. The EUR/USD needs to break above this level to indicate further bullish momentum.
Traders should consider selling positions below the pivot point of $1.0700, with a target of the first support level at $1.06725. A break below this level could pave the way for further declines towards $1.0671 and $1.0655. Conversely, if the pair moves above the immediate resistance at $1.0713, it could target the next resistance levels at $1.0727 and $1.0745.
In summary, while EUR/USD is experiencing a slight downturn, the overall outlook remains bearish below the pivot point of $1.0700.
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USD/JPY Price Analysis – June 27, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair continued its downward trend, remaining under pressure around the 110.47 level and hitting an intraday low of 110.30. The decline in USD/JPY can be attributed to several factors.
Firstly, Japanese authorities, notably Finance Minister Shunichi Suzuki, have verbally intervened, expressing readiness to intervene in the foreign exchange market to address excessive movements. This statement signals Japan's concern over the yen's strength and its potential impact on export competitiveness and economic stability.
Secondly, market sentiment towards the US dollar has been cautious ahead of key economic data releases, particularly the Core PCE Price Index. However, the expectations of a slight decrease in the year-over-year inflation rate could imply a less aggressive stance from the Fed regarding interest rate hikes, thereby dampening demand for the dollar.
Japanese Finance Minister Suzuki's Statements and Impact on USD/JPY Pair
Finance Minister Suzuki's comments highlight Japan's determination to stabilize currency markets by addressing excessive fluctuations. While Suzuki did not specify intervention thresholds, his statement prompted market participants to reassess their positions, temporarily pushing USD/JPY lower.
Japan's proactive approach suggests potential interventions if the yen strengthens further, which typically pressures USD/JPY as traders anticipate government measures.
This aggressive stance underscores Japan's commitment to mitigating currency volatility and supporting export competitiveness, aiming to maintain economic stability amid fluctuating global conditions.
Hence, the Finance Minister Suzuki's proactive stance to stabilize currency markets may temporarily push USD/JPY lower as markets anticipate potential yen-strengthening interventions, reflecting Japan's commitment to curbing volatility and supporting export competitiveness.
US Dollar Weakens on Fed Rate Cut Speculation
On the US front, the broad-based US dollar lost some of its strength and turned bearish, likely due to uncertainty over the timing and number of Fed rate cuts expected this year.
The Fed's projection of only one rate cut in 2024 contrasts with market expectations, which are currently pricing in a higher likelihood of the first rate cut occurring in September, followed by two additional 25 basis point cuts by the year-end. This downward pressure on the dollar contributed to losses in the USD/JPY pair.
Federal Reserve officials, including Governor Michelle Bowman and Governor Lisa Cook, have hinted at a cautious approach towards monetary policy, suggesting that while inflation concerns persist, they may not rush into rate hikes.
This stance could limit the downside for the US dollar, particularly against the yen, which tends to strengthen during periods of risk aversion.
Therefore, the uncertain timing and number of anticipated Fed rate cuts have weakened the US dollar, influencing a decline in the USD/JPY pair. Fed officials' cautious stance on monetary policy, amid ongoing inflation concerns, may mitigate further downside pressure on the pair.
USD/JPY - Technical Analysis
The USD/JPY pair is currently trading at $160.571, down 0.16% in the latest session. This decline is occurring despite the broader strength seen in the U.S. dollar, reflecting mixed sentiment in the currency market.
The 4-hour chart shows a critical pivot point at $160.33, which is pivotal in determining the market's short-term direction. Immediate resistance levels are found at $160.85 and $161.21, marking potential hurdles for any bullish advance.
The Relative Strength Index (RSI) stands at 64, indicating that the market is nearing overbought territory but still has some room for further gains. The 50-day Exponential Moving Average (EMA) at $159.80 is currently providing a supportive layer, reinforcing the overall bullish trend.
Given the current technical setup, a buy order above $160.337 is recommended, with a take profit target set at $160.992 and a stop loss at $160.016. USD/JPY remains bullish above the pivot point of $160.33.
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- GOLD Price Analysis – June 27, 2024
GOLD Price Analysis – June 27, 2024
Daily Price Outlook
Gold (XAU/USD) managed to stop its downward rally and regain strength above the 2,314 level, hitting an intraday high of 2,315. The strength in gold prices can be attributed to the bearish US dollar, which lost ground due to uncertainty over the likely timing and number of Fed rate cuts this year.
Despite the Federal Reserve adopting a more hawkish stance at the end of the June meeting, the markets are still pricing in a greater chance of the first rate cut by the Fed in September and about two 25 basis point cuts by the year-end. This kept the US dollar lower and contributed to gold gains.
Meanwhile, the global market sentiment has been showing a positive bullish trend as evidenced by the upbeat performance of the S&P 500, which hit an intraday high of 5,483.14.
This was bolstered by market expectations of potential Federal Reserve rate cuts, with investors pricing in a higher likelihood of a first cut in September and possibly two cuts by year-end.
This sentiment has lifted equity markets, as lower interest rates typically support corporate earnings and economic growth, driving optimism despite lingering uncertainties in global trade and economic data. Hence, the positive sentiment was seen as a key factor that kept a lid on any additional gains in the gold price.
Impact of US Dollar Weakness and Fed Rate Cut Uncertainty on Gold Prices Amid Key Economic Data and Upcoming US Presidential Debate
On the US front, the broad-based US dollar lost some of its traction and turned bearish, possibly due to the uncertainty over the likely timing and number of Fed rate cuts this year.
The Fed projected only one rate cut in 2024, though the markets are still pricing in a greater chance of the first rate cut by the Fed in September and about two 25 basis point cuts by the year-end. This keeps the US dollar lower and contributed to the gold gains.
Moving ahead, traders are cautious before the US presidential debate and the release of the PCE Price Index on Friday. Key data on Thursday, including Q1 GDP, Durable Goods Orders, Jobless Claims, and Pending Home Sales, may offer some direction ahead of these events.
Therefore, the uncertainty over Fed rate cuts and a weaker US dollar have boosted gold prices. Meanwhile, the economic data and the upcoming US presidential debate add to market caution, influencing gold's near-term direction as traders await the PCE Price Index release.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) has shown a modest rise to $2303.75, marking a 0.21% increase. The market continues to navigate within a constrained range, reflecting cautious sentiment amid various global economic influences.
Immediate resistance levels are noted at $2296.33, $2312.08, and $2322.30. On the downside, immediate support levels are positioned at $2328.90, $2286.75, and $2279.51. These levels are critical as they could signal potential shifts in market direction.
The Relative Strength Index (RSI) stands at 38, indicating a neutral to slightly oversold condition, which might suggest a potential for upward movement if the buying momentum increases.
The 50-day Exponential Moving Average (EMA) is currently at $2322.37, serving as a significant resistance level. A breach above this EMA could further strengthen the bullish outlook.
Given the current technical setup, a buy entry above $2297 is recommended, with a target take profit at $2312 and a stop loss set at $2286. This strategy leverages the current support and resistance levels to maximize potential gains while mitigating risks. Gold remains slightly bullish above the pivot point of $2297.
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- AUD/USD Price Analysis – June 27, 2024
AUD/USD Price Analysis – June 27, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6655 level, hitting an intraday high of 0.6673. However, the reason for its upward trend can be attributed to the risk-on market sentiment, which tends to underpin risky assets like the Australian dollar, contributing to gains in the AUD/USD pair.
Meanwhile, renewed selling pressure in the US dollar was seen as another key factor that kept the AUD/USD pair higher. The US Dollar (USD) edged lower with the focus on the US core Personal Consumption Expenditure (PCE) Price Index data for May, scheduled for release on Friday.
Impact of Weakening US Dollar and Inflation Data on AUD/USD Trading Sentiment
On the US front, the broad-based US dollar lost its strength and turned bearish amid expectations of a slowdown in inflation. Investors are closely watching the US core PCE inflation data, estimated to have softened to 2.6% annually and 0.1% monthly.
Softer inflation numbers could boost hopes for early rate cuts by the Federal Reserve, while higher figures might allow the Fed to maintain current interest rates longer, supporting the US Dollar. As of now, the US Dollar Index (DXY) is near 105.90, as traders expect two rate cuts this year, potentially starting as early as September.
Therefore, the weakening US Dollar could strengthen the AUD/USD pair, as softer inflation data may increase expectations for US rate cuts, potentially benefiting the Australian Dollar against the Greenback.
Impact of Positive Global Market Sentiment on Equities and Gold Prices
Meanwhile, the global market sentiment has been showing a positive bullish trend as evidenced by the upbeat performance of the S&P 500, which hit an intraday high of 5,483.14. This was bolstered by market expectations of potential Federal Reserve rate cuts, with investors pricing in a higher likelihood of a first cut in September and possibly two cuts by year-end.
This sentiment has lifted equity markets, as lower interest rates typically support corporate earnings and economic growth, driving optimism despite lingering uncertainties in global trade and economic data. Hence, the positive sentiment was seen as a key factor that kept a AUD/USD pair higher.
Impact of Higher-than-Expected Inflation on AUD/USD and RBA Policy
On the AUD front, higher-than-expected inflation growth has raised expectations of further rate hikes by the Reserve Bank of Australia (RBA). In May, the monthly Consumer Price Index (CPI) report revealed inflation accelerating to 4.0%, driven by increased costs for fuel, food, electricity, and rentals, surpassing forecasts of 3.8% and the previous 4.0% figure.
This strong inflationary pressure suggests the RBA may lean towards tightening monetary policy to curb price increases, potentially strengthening the Australian Dollar against other currencies.
Therefore, the prospect of additional rate hikes by the RBA, fueled by higher inflation, could strengthen the AUD/USD pair as investors anticipate a more robust Australian Dollar against the US Dollar.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.66661, reflecting a 0.23% increase in the latest session. This upward movement comes amid a generally positive sentiment for the Australian dollar, supported by improved risk appetite and favorable economic indicators.
The 4-hour chart highlights a crucial pivot point at $0.6661, which serves as a key level for determining the pair's short-term direction.
The Relative Strength Index (RSI) is currently at 56, indicating a moderately bullish sentiment without reaching overbought conditions. This suggests there is room for further gains. The 50-day Exponential Moving Average (EMA) is positioned at $0.6653, providing a supportive level that reinforces the ongoing upward trend.
Immediate resistance levels are identified at $0.6690 and $0.6704, which could pose challenges to further upward movement. Conversely, immediate support is seen at $0.6640, followed by $0.6626.
Given the current technical setup, a buy limit order at $0.66541 is recommended, with a take profit target at $0.66823 and a stop loss at $0.66371.
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