GOLD Price Analysis – Aug 21, 2024
Daily Price Outlook
Gold (XAU/USD) struggled to sustain its upward momentum, falling to around $2,507 after an intraday low of $2,504.55.
The price initially surged to a new all-time high on Tuesday, fueled by a dovish Federal Reserve stance and selling pressure on the US dollar. Additionally, geopolitical tensions enhanced gold’s appeal as a safe-haven asset.
However, optimism for a ceasefire in Gaza and a modest rebound in the US dollar from its lowest level since January pressured gold prices and limited further gains.
Traders are exercising caution ahead of today's release of the July FOMC meeting minutes and Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Symposium on Friday.
Both events are expected to provide crucial insights into future monetary policy directions and will be closely scrutinized by the market.
US Rate Cut Expectations and Overbought Conditions Impact Gold Prices
On the US front, expectations that the Federal Reserve (Fed) will start cutting interest rates in September have significantly boosted gold prices.
Many investors anticipate a 25 basis point (bps) rate reduction during the September meeting, which would pressure US Treasury bond yields and the US dollar. This sentiment led gold to reach a new record high on Tuesday.
Despite this dovish stance, gold has since started to lose ground. According to the CME Group's FedWatch Tool, markets are currently pricing in a 70% probability of the rate cut.
Additionally, a Reuters poll indicates that a slim majority of economists now anticipate the Federal Reserve will cut rates by 25 basis points at each of the remaining three meetings in 2024, surpassing previous predictions.
However, Fed Governor Michelle Bowman has warned that inflation remains above the Fed's 2% target, aiming to temper expectations for any immediate rate cuts.
Meanwhile, according to TD Securities, the gold market is extremely overbought, as shown by futures and options market positioning data.
Macro fund positioning is already consistent with 370 bps of cuts, and further returns might be limited by this frothy positioning. Shanghai trader positioning has also reverted to record highs, and Commodity Trading Advisors (CTAs) are holding onto their 'max long.'
This suggests that while gold has surged, the upside potential may be limited due to overbought conditions.
Geopolitical Tensions in the Middle East Boost Gold Demand
On the geopolitical front, ongoing tensions in the Middle East, especially between Israel and Hamas, are keeping investors cautious and bolstering gold prices.
The conflict has led to significant casualties, including at least 52 Palestinians killed in recent Israeli strikes.
These tragic incidents have occurred at a Gaza City school and a crowded market in Deir el-Balah, contributing to the heightened demand for gold as a safe-haven asset.
Meanwhile, U.S. Secretary of State Antony Blinken has called for a ceasefire in Gaza, but his Middle East tour concluded without an agreement between Israel and Hamas.
The ongoing conflict has resulted in heavy casualties, with over 40,000 people killed in Gaza and more than 1,100 in Israel since October 7. These severe geopolitical concerns are driving increased demand for gold as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,513.440, down slightly by 0.03%. The 4-hour chart shows that the precious metal is facing immediate resistance at $2,526.46, with additional resistance levels at $2,540.75 and $2,556.71.
On the downside, key support levels are found at $2,491.41, $2,480.08, and $2,461.80.
The Relative Strength Index (RSI) is holding at 60, which suggests that while gold is not yet overbought, it still has room for upward movement.
The 50-day Exponential Moving Average (EMA) is positioned at $2,471.9390, further supporting a bullish outlook as long as the price stays above this level.
Gold has recently been trading within a tight range, but with the pivot point set at $2,526.19, breaking above this level could signal a continuation of the bullish trend.
The recent small decline suggests some consolidation, but with the broader trend still intact, there’s a good chance that gold could resume its upward trajectory, especially if it holds above the $2,507 level.
Conclusion: Buy above $2,507 with a take profit target at $2,526 and a stop loss at $2,495.
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EUR/USD Price Analysis – Aug 21, 2024
EUR/USD Price Analysis – Aug 21, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has faced downward pressure, slipping from its earlier highs as the US dollar stages a rebound.
The pair, which had previously held above the 1.1133 support level, is now trading near 1.1109. This decline highlights a shift in market dynamics, with the US dollar strengthening against the Euro.
US Dollar Strengthens Despite Expected Fed Rate Cuts, Pressuring EUR/USD
On the US front, the recent strengthening of the US dollar comes despite anticipated rate cuts by the Federal Reserve.
Typically, rate cuts by the Fed lead to a weaker greenback; however, the current rebound is driven by broader market factors and speculation about future economic conditions.
The US Dollar Index (DXY) has climbed to approximately 101.50, reflecting heightened investor confidence in the US economy despite expected monetary easing.
Therefore, the US dollar's strength and rising US Dollar Index (DXY) pressure the EUR/USD pair, causing it to decline.
Increased investor confidence in the US economy, despite expected Fed rate cuts, boosts the dollar and weighs on the euro.
Euro Faces Pressure from Mixed Economic Data and Geopolitical Uncertainties
On the Euro side, the European Central Bank (ECB) has been cautious about committing to aggressive rate cuts, which has provided some support to the Euro. However, recent data from the Eurozone has painted a mixed picture.
The ECB's reluctance to cut rates aggressively stems from persistent inflationary pressures in the Eurozone and slower growth in key economies like Germany.
Although slower wage growth in Germany has eased some pressure on the ECB, overall Eurozone economic performance remains uneven.
The Euro has faced challenges from a combination of weaker-than-expected economic data and ongoing geopolitical uncertainties.
Market participants are also keeping an eye on upcoming Eurozone data, including the HCOB Purchasing Managers’ Index (PMI) and Q2 Negotiated Wage Rates, which will provide further insights into the economic outlook for the Eurozone.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.11205, showing a modest increase of 0.05% on the day. On the 4-hour chart, the pivot point is situated at $1.1132, a critical level that could dictate the pair's next move.
Immediate resistance is at $1.1164, followed by $1.1191 and $1.1224. On the downside, immediate support is seen at $1.1089, with further levels at $1.1063 and $1.1041.
The Relative Strength Index (RSI) stands at 76, indicating that the pair is firmly in overbought territory. This suggests that the upward momentum may be losing steam, potentially opening the door for a bearish correction.
The 50-day Exponential Moving Average (EMA) is positioned at $1.1000, providing a longer-term bullish signal, but the short-term outlook remains cautious due to the overbought conditions.
Given the overbought RSI and the strong resistance levels ahead, a pullback could be on the horizon. If the pair fails to sustain its upward momentum above the pivot point at $1.1132, a decline toward the next support levels could be expected.
Traders may consider selling below $1.11316, targeting a take profit at $1.10640 with a stop loss at $1.11651.
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GBP/USD Price Analysis – Aug 21, 2024
GBP/USD Price Analysis – Aug 21, 2024
Daily Price Outlook
Despite upbeat PMI data, the GBP/USD currency pair has managed to stay above the key 1.3000 level, reaching new highs near 1.3050.
This strength is attributed to growing expectations that the Federal Reserve (Fed) may cut interest rates in September.
However, the pair's upward momentum is tempered by concerns about UK wage growth and potential impacts of monetary policy changes.
US Dollar Weakens Amid Fed Rate-Cut Speculation and Upcoming FOMC Minutes
On the US front, the broad-based US dollar has found temporary support around 101.30, following its recent decline.
This weakness is largely due to market speculation that the Fed will initiate rate cuts in September.
Investors are eagerly awaiting the Federal Open Market Committee (FOMC) minutes from the July meeting, set for release at 18:00 GMT, to gain further insights into the Fed's policy direction.
The Fed had maintained its key rates at 5.25%-5.50% but highlighted economic uncertainties that could influence future decisions.
It should be noted that the CME Group's FedWatch Tool shows a 70% chance of a rate cut, with a Reuters poll suggesting the Fed might reduce rates by 25 basis points at each of the remaining three meetings in 2024. However, Fed Governor Michelle Bowman cautions that inflation remains above the 2% target.
Mixed Economic Signals in the UK Raise Questions on BoE Rate Cuts
On the UK side, recent economic data shows mixed signals. UK wage growth has declined to 4.5% in the three months ending July, down from the previous 5%.
This decrease reflects lower inflation pressures, adding to speculation that the Bank of England (BoE) may cut rates in September.
Additionally, the UK's Consumer Price Index (CPI) report for July revealed a core inflation rate of 3.3%, and service sector inflation fell to 5.2%.
Despite these factors, the BoE remains cautious about rate cuts due to persistent inflation in the service sector.
The upcoming S&P Global Purchasing Managers' Index (PMI) data for August, scheduled for release on Thursday, is expected to show a steady Manufacturing PMI at 52.1 and an improved Services PMI at 52.8.
Therefore, the mixed economic signals from the UK, including declining wage growth and inflation, create uncertainty for the GBP/USD pair.
While speculation about BoE rate cuts might support the pound, persistent inflation concerns could limit gains and keep the pair volatile.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.30261, down by 0.03% as the pair hovers around its immediate support levels.
The 4-hour chart indicates that the pivot point is set at $1.3040, which is critical for determining the next direction. Immediate resistance is at $1.3097, followed by $1.3133 and $1.3174.
On the downside, the immediate support lies at $1.2978, with additional support at $1.2933 and $1.2887.
The Relative Strength Index (RSI) is currently at 75, suggesting that GBP/USD is in overbought territory, which might trigger a pullback.
Meanwhile, the 50-day Exponential Moving Average (EMA) is at $1.2872, reinforcing the bearish outlook if the pair fails to break above its pivot point.
Given the overbought RSI and the resistance levels ahead, there’s a good chance we could see some selling pressure emerge.
If the pair fails to maintain its position above $1.3040, a bearish correction might ensue, driving the price towards the next support levels.
Conclusion: Selling below $1.30398 could be a strategic move, with a target profit at $1.29802 and a stop loss at $1.30911.
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EUR/USD Price Analysis – Aug 21, 2024
USD/CAD Price Analysis – Aug 20, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair staged a modest recovery from a one-month low, holding around the 1.3625 level.
The rebound can be attributed to a mix of factors including a decline in Crude Oil prices and a modest recovery in the US dollar.
Despite the bounce, the pair remains below the mid-1.3600s as traders adopt a cautious approach ahead of crucial Canadian inflation data.
Impact of Crude Oil Price Decline and Canadian Inflation Data on USD/CAD Pair
Crude Oil prices have been on a downward trend, largely due to optimism surrounding a potential ceasefire in Gaza, which has reduced the risk premium associated with oil prices.
As Crude Oil prices decline, the Canadian Dollar, which is closely tied to oil exports, has weakened.
This decline in oil prices, coupled with expectations of a lower headline Canadian Consumer Price Index (CPI), is influencing the USD/CAD pair.
The Canadian CPI is anticipated to show a decrease for the second consecutive month, signaling a slowdown in inflation.
This could lead the Bank of Canada (BoC) to adopt a more accommodative policy stance, potentially easing monetary policy in response to weak inflation and a slack labor market. Such a scenario would likely weigh on the CAD, bolstering the USD/CAD pair.
Impact of US Dollar Strength and Fed Policy on USD/CAD Pair
On the US side, the dollar has shown a modest recovery from its lowest level since January. This recovery is partly due to a general rebound in the US dollar amid reduced risk aversion and market optimism.
However, the upside for the Greenback remains limited as markets anticipate the Federal Reserve (Fed) might start its rate-cutting cycle in September.
Federal Reserve Chair Jerome Powell's forthcoming speech at the Jackson Hole Symposium and the release of the July FOMC meeting minutes are expected to provide further guidance on the Fed's policy trajectory.
Market sentiment currently reflects an 85.7% probability of a 25-basis point rate cut in September, up from previous expectations. This outlook could cap gains for the USD, even as it provides support to the USD/CAD pair against a weakening CAD.
Therefore, the recent decline in Crude Oil prices and anticipated Canadian inflation data are likely to strengthen the USD/CAD pair.
Meanwhile, the US dollar's modest recovery and expectations of Fed rate cuts are also influencing the USD/CAD pair, although further gains may be capped by the Fed's anticipated policy adjustments.
USD/CAD - Technical Analysis
USD/CAD is trading at $1.36189, holding steady with no significant movement. The pair is currently hovering near the pivot point at $1.3643, a critical level that could determine the next direction.
Immediate resistance is at $1.3679, with further resistance at $1.3710 and $1.3739. On the downside, key support levels to watch are $1.3603, followed by $1.3572 and $1.3544.
The Relative Strength Index (RSI) is at 23, indicating that the pair is in oversold territory, which could suggest a potential bounce or limited downside movement.
The 50-day Exponential Moving Average (EMA) is positioned at $1.3712, suggesting that the overall trend is bearish.
Given the current technical setup, USD/CAD appears to be under selling pressure, especially if it breaks below the $1.3643 pivot point.
A move below this level could trigger further downside toward the $1.3603 support and potentially lower.
However, if the pair manages to break above $1.3643, we could see a test of the immediate resistance at $1.3679.
Conclusion: The recommended strategy is to sell below $1.36430, with a target of $1.35837 and a stop loss at $1.36789.
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GOLD Price Analysis – Aug 20, 2024
AUD/USD Price Analysis – Aug 20, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained a bullish stance and remained well bid around the 0.6732 level, reaching an intra-day high of 0.6739.
This upward momentum was driven by several factors, including hawkish sentiment surrounding the Reserve Bank of Australia (RBA).
Additionally, the US Dollar (USD) continues to face downward pressure following comments from Federal Reserve (Fed) officials, which have increased the likelihood of upcoming rate cuts by the US central bank.
Looking forward, traders are cautious ahead of the July FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell’s speech at Jackson Hole on Friday.
Meanwhile, dovish Fed expectations and ongoing geopolitical risks could provide some support for the AUD/USD pair, potentially limiting further declines.
RBA’s Steady Rates and PBoC’s Unchanged LPRs Impact on AUD/USD
On the AUD front, the AUD/USD pair could see some appreciation following the Reserve Bank of Australia's (RBA) August meeting minutes.
These minutes revealed that the RBA considered raising interest rates but ultimately decided that keeping the cash rate steady would better balance the economic risks.
RBA members agreed that a rate cut is unlikely in the near future, suggesting that the cash rate could remain unchanged for an extended period.
This decision reflects the RBA's cautious approach to managing inflation and economic growth, which may provide some support for the Australian dollar against the US dollar.
On the other side, the People's Bank of China (PBoC) kept its one-year and five-year Loan Prime Rates (LPRs) unchanged in August at 3.35% and 3.85%.
Since China is a key trade partner for Australia, any shifts in the Chinese economy could affect Australian markets.
Therefore, RBA's decision to keep rates steady could boost the AUD/USD pair, supporting the Australian dollar. However, China's unchanged LPRs mean any economic changes in China might also impact the pair.
Impact of US Economic Data and Fed Signals on AUD/USD Pair
On the US front, the US Dollar (USD) is under pressure following comments from Federal Reserve (Fed) officials hinting at possible rate cuts.
Minneapolis Fed President Neel Kashkari suggested discussing rate cuts in September due to concerns about a weakening job market.
San Francisco Fed President Mary Daly advocated for a gradual approach to lowering borrowing costs. Chicago Fed President Austan Goolsbee warned against keeping restrictive policies too long.
On the data front, US Housing Starts fell by 6.8% to 1.238 million units in July after a slight increase in June.
However, the University of Michigan’s Consumer Sentiment Index rose to 67.8 in August, marking its first gain in five months. US Retail Sales surged 1.0% in July, a sharp rebound from June’s decline, and Initial Jobless Claims for early August were lower than expected at 227,000.
Meanwhile, the Consumer Price Index (CPI) rose 2.9% year-over-year in July, slightly below June's rate, while Core CPI increased 3.2%, matching forecasts.
The USD's weakness from potential Fed rate cuts and mixed economic data could support the AUD/USD pair. Strong retail sales and consumer sentiment may bolster the Australian dollar against the USD.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.67258, showing a modest decline of 0.18%. The pivot point at $0.6738 is crucial for determining the short-term direction.
Immediate resistance is located at $0.6754, with further resistance levels at $0.6771 and $0.6792. On the downside, support levels are found at $0.6704, $0.6684, and $0.6666.
The Relative Strength Index (RSI) stands at 74, indicating that the pair is in overbought territory, which could suggest a potential pullback or correction.
The 50-day Exponential Moving Average (EMA) is positioned at $0.6621, providing a strong support level that reinforces the ongoing bullish trend.
Given the current technical setup, if AUD/USD remains above the $0.6704 support level, the bullish outlook is likely to continue.
A break above the immediate resistance at $0.6754 could push the pair higher towards $0.6771 and beyond.
However, if the pair falls below $0.6704, it could trigger a deeper correction towards the next support levels.
Conclusion: The strategy here is to buy above $0.67037, targeting a profit at $0.67652 with a stop loss at $0.66693.
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GOLD Price Analysis – Aug 20, 2024
GOLD Price Analysis – Aug 20, 2024
Daily Price Outlook
Gold prices (XAU/USD) halted their downward trend and gained bullish momentum, climbing to the 2,522.20 level and reaching an intra-day high of 2,525.23.
The rally was fueled by expectations of Federal Reserve rate cuts, which pushed the US Dollar (USD) to a multi-month low, benefiting XAU/USD.
Geopolitical risks also provided additional support as traders await further cues on the Fed's rate-cut trajectory.
The USD has experienced a sustained selling bias for the third consecutive day, driven by the growing belief that the Fed will initiate its rate-cutting cycle in September, a key factor attracting investors to the non-yielding yellow metal.
Weakening US Dollar and Fed Rate Cut Expectations Drive Gold Prices Higher
On the US front, the US Dollar continues to weaken as expectations grow that the Federal Reserve will start cutting interest rates in September.
This belief has fueled demand for gold, which benefits from lower interest rates. The CME Group’s FedWatch Tool indicates a higher likelihood of rate cuts beginning in September, with potential reductions totaling over 200 basis points by the end of 2025.
Fed officials, including Neel Kashkari and Austan Goolsbee, have suggested that discussions about rate cuts are warranted, as the US economy shows no signs of overheating.
However, recent positive Retail Sales data have alleviated recession fears, leading to some uncertainty about the pace of rate cuts.
Investors are now closely watching the July FOMC meeting minutes and Fed Chair Jerome Powell’s upcoming comments for clues on the Fed’s next move.
This news is likely to boost gold prices as the weakening US Dollar and anticipated Federal Reserve rate cuts increase demand for the non-yielding metal, which benefits from lower interest rates and serves as a safe haven during economic uncertainty.
Middle East Ceasefire Hopes Rise as Israel-Hamas Negotiations Resume Amid Escalating Tensions
On the geopolitical front, US Secretary of State Antony Blinken announced that Israeli Prime Minister Benjamin Netanyahu has accepted a proposal aimed at resolving disagreements hindering a hostage release deal with Hamas, raising hopes for a ceasefire that could ease Middle East tensions.
Negotiations are set to resume this week, increasing optimism for a ceasefire, which in turn has boosted investor interest in riskier assets.
Meanwhile, the Israeli army reported recovering the bodies of six hostages from Hamas, while Hezbollah launched rocket attacks on Israeli military targets following Israeli strikes deep into Lebanon’s Bekaa Valley.
Amid ongoing violence, Hamas accused the US of enabling Israel's actions, and protests erupted in Chicago against the Biden administration’s support for Israel.
The conflict has claimed over 40,000 lives in Gaza, with more than 200 people taken captive during Hamas's attacks on October 7.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2512.66, showing a minor decline of 0.09%. The key level to watch is the pivot point at $2523.98.
This level will likely determine the short-term direction of the market. Immediate resistance is found at $2524.11, with further resistance levels at $2540.75 and $2556.71.
On the downside, support is seen at $2491.41, with additional support at $2480.08 and $2461.80.
The Relative Strength Index (RSI) is currently at 66, indicating that gold is nearing overbought territory, which could signal a potential correction.
The 50-day Exponential Moving Average (EMA) is positioned at $2459.26, providing strong support for the current uptrend.
Given the technical setup, if gold breaks above the pivot point of $2523.98, it could lead to further bullish momentum. However, if the price falls below $2491.41, we could see a deeper correction.
Conclusion: Consider buying above $2508, targeting $2523, with a stop loss at $2490. A break below $2491.41 could trigger further downside.
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USD/CAD Price Analysis – Aug 20, 2024
GBP/USD Price Analysis – Aug 19, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward rally and surged to its year-to-date (YTD) highs, hovering around 1.1040.
This rise was fueled by a weakening US Dollar (USD) amid increasing expectations of a Federal Reserve rate cut in September.
Market participants are closely watching Fed Chair Jerome Powell's upcoming speech on Friday for additional insights into the potential interest rate cuts.
The dovish remarks from Fed officials have exerted selling pressure on the USD, further supporting the EUR/USD pair's upward momentum.
EUR/USD Gains Amidst Fed Rate Cut Speculations and ECB Policy Outlook
On the US front, the broad-based US dollar continues to face pressure as traders increasingly bet on a rate cut at the next Fed meeting.
San Francisco Fed President Mary Daly's recent comments highlighted her confidence that inflation is under control, suggesting it might be time to consider adjusting borrowing costs.
Meanwhile, Chicago Fed President Austan Goolsbee echoed similar sentiments, cautioning against maintaining restrictive policies longer than necessary.
These dovish signals have led investors to price in a 70% probability of a quarter-point rate cut in September, with some even expecting a half-point reduction. This environment has created a supportive backdrop for the EUR/USD pair.
Impact of ECB Rate Path Expectations on EUR/USD
Across the Atlantic, the Euro (EUR) is gaining ground as the European Central Bank (ECB) is expected to reduce interest rates gradually. ECB President Christine Lagarde emphasized the bank's data-dependent approach, indicating that policymakers are not committed to a specific rate path.
This cautious stance by the ECB, coupled with the weakening USD, is contributing to the EUR/USD pair's strength. Investors will continue to monitor developments in the Eurozone and any updates from ECB officials that could influence the pair's trend.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.29542, reflecting a modest increase of 0.07%. The pair is trading just below its pivot point of $1.2997, which is a crucial level to watch.
The Relative Strength Index (RSI) is at 78, indicating that the pair is in overbought territory, which could suggest that a short-term pullback might be on the horizon.
However, the overall trend remains bullish, supported by the 50-day Exponential Moving Average (EMA) at $1.2800.
Immediate resistance is found at $1.2978, followed by more substantial resistance levels at $1.3034 and $1.3082.
On the downside, the first level of support is at $1.2886, with further support at $1.2846 and $1.2803. If GBP/USD can break above the pivot point, it may trigger further gains towards the higher resistance levels.
For those looking to trade this pair, a buy entry above $1.29351 with a take profit target at $1.29965 could be a strategic move.
A stop loss at $1.28938 would help manage risk in case of an unexpected downturn.
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GOLD Price Analysis – Aug 19, 2024
EUR/USD Price Analysis – Aug 19, 2024
Daily Price Outlook
During the European trading session on Monday, the GBP/USD currency pair surged to a one-month high, trading around the mid-1.2900s.
This upward momentum was supported by diminishing expectations of a Bank of England (BoE) rate cut in September, alongside a weaker US dollar, which has been pressured by dovish Federal Reserve (Fed) expectations.
The pair’s strong performance follows a significant bounce from the 200-day Simple Moving Average (SMA), signaling renewed bullish sentiment among traders.
The British Pound (GBP) remains buoyed by last week’s robust UK economic data, which has dampened hopes for an imminent rate cut by the BoE.
Meanwhile, the US dollar (USD) struggles to gain traction as investors anticipate the Fed’s rate-cutting cycle to begin as early as September.
These factors collectively underpin the GBP/USD pair’s strength, with traders now looking ahead to key events later in the week for further guidance.
GBP/USD Volatility Expected Amidst BoE Rate Cut Speculations and Fed Dovishness
On the BoE front, the Pound Sterling has maintained its strength against major currencies, supported by expectations that the BoE may hold off on cutting rates in September.
This follows stronger-than-expected UK economic data, which suggests resilience in the economy.
However, the market remains cautious as investors await more data, particularly the FOMC meeting minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later this week, for clearer direction on the Fed’s policy stance.
Despite the market’s focus on the Fed, the absence of significant UK or US macroeconomic data early in the week has led traders to tread carefully, awaiting more substantial cues before committing to aggressive directional bets.
The GBP/USD pair could experience heightened volatility as the week progresses, particularly in response to global PMIs and any updates on the Fed’s rate-cut path.
Impact of Federal Reserve Rate Cut Expectations and Geopolitical Tensions on GBP/USD
On the US front, the US dollar continues to languish near its lowest levels since January, weighed down by dovish Fed expectations.
The market remains convinced that the Fed will begin cutting rates in September, following recent comments from San Francisco Fed President Mary Daly, who emphasized a gradual approach to easing monetary policy.
This sentiment has kept US Treasury bond yields depressed, further pressuring the USD and benefiting the GBP/USD pair.
Moreover, the prevalent risk-on sentiment in global markets has reduced demand for the safe-haven US dollar, contributing to the GBP’s recent strength.
Traders are now closely monitoring upcoming events, including the FOMC meeting minutes and Fed Chair Powell’s speech, for any signals that could alter the Fed’s policy trajectory and impact the GBP/USD pair’s outlook.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.10399, showing a slight uptick of 0.11% as the pair hovers near key technical levels.
The pivot point at $1.1073 is the critical level to watch. If the price breaks above this pivot, it could signal further gains.
The RSI is at 69, indicating that while the pair is approaching overbought territory, there is still room for upward movement before a potential pullback.
The 50-day Exponential Moving Average (EMA) at $1.0958 is trending upward, supporting the bullish outlook.
Immediate resistance is found at $1.1072, just below the pivot, followed by stronger resistance at $1.1105 and $1.1140.
On the downside, immediate support is at $1.0986, with additional support levels at $1.0956 and $1.0914. A break below these levels could signal a shift in momentum to the downside.
For traders, a buy entry above $1.10197 with a target of $1.10728 could be a strategic move, capturing potential gains as the pair approaches the pivot.
A stop loss at $1.09853 would help manage risk in case of an unexpected downturn.
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GBP/USD Price Analysis – Aug 19, 2024
GOLD Price Analysis – Aug 19, 2024
Daily Price Outlook
Gold prices (XAU/USD) began the week on a bearish note, moving away from Friday's record high, and trading defensively around the $2,500 level.
The retreat in gold's value comes despite dovish Federal Reserve (Fed) expectations and escalating geopolitical tensions in the Middle East, which continue to support the metal's appeal as a safe-haven asset.
The market's focus is now on upcoming Fed developments, with investors eyeing the release of the FOMC minutes and Fed Chair Jerome Powell's speech at the Jackson Hole Symposium for further cues on the rate-cut path.
Impact of Fed Rate Cut Expectations and Geopolitical Tensions on Gold Prices
On the US front, the broad-based US dollar remains under pressure, touching its lowest level since January, as markets fully price in a 25 basis point (bps) rate cut at the Fed’s September meeting.
This expectation has led to a decline in US Treasury bond yields, further weighing on the dollar.
Despite last week's upbeat US Retail Sales data and an improved US Consumer Sentiment Index, the Fed’s anticipated policy easing has overshadowed these positive indicators, supporting gold prices.
On the other side, geopolitical risks are also playing a crucial role in limiting gold's losses.
The ongoing Russia-Ukraine war and rising tensions in the Middle East, particularly following Hamas’s rejection of a ceasefire deal and Russia’s vow to retaliate against Ukraine’s recent cross-border attack, have fueled demand for the safe-haven asset.
Thus, while strong US economic data has exerted pressure on gold, the combination of a bearish US dollar, Fed rate cut expectations, and geopolitical uncertainties may continue to provide a supportive backdrop for gold prices in the near term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,500.205, reflecting a slight decline of 0.22%. The metal has been trading just above its pivot point at $2,480.00, which is a critical level to watch.
The RSI is sitting at 66, indicating that gold is approaching overbought territory, which may signal a potential for a short-term pullback.
The 50-day Exponential Moving Average (EMA) at $2,445.98 is providing strong support and maintaining the overall bullish sentiment.
Immediate resistance is found at $2,524.11, followed by $2,540.75 and $2,556.71. On the downside, the first level of support is at $2,491.41, with stronger support at $2,480.08 and $2,461.80.
If gold breaks below $2,480, it could trigger further selling pressure.
Given the current setup, a sell entry below $2,510 with a target of $2,480 could be a strategic move.
A stop loss at $2,525 would help manage risk if the price reverses and breaks above resistance.
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EUR/USD Price Analysis – Aug 19, 2024
EUR/USD Price Analysis – Aug 16, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward momentum, hovering around the $1.0993 mark and reaching an intra-day high of 1.0993.
This upward movement was primarily driven by a weaker US dollar, which lost ground amid growing expectations that the Federal Reserve (Fed) might start cutting interest rates beginning with its September meeting.
Additionally, risk-on market sentiment, fueled by strong US economic data, was another key factor pressuring the US dollar and contributing to gains in the EUR/USD pair.
However, increasing bets on more ECB rate cuts could undermine the EUR currency and cap gains in the EUR/USD pair.
Impact of Federal Reserve's Dovish Signals on EUR/USD Amid Strong US Data
Despite Thursday's upbeat US macro data, the broad-based US dollar failed to halt its downward trend and edged lower on the day as markets anticipate a Federal Reserve interest rate cut in September.
Federal Reserve officials, including Atlanta Fed President Raphael Bostic and St. Louis Fed President James Bullard, have hinted that a rate cut might be needed soon due to easing inflation pressures and changing economic risks.
This situation has created uncertainty about the dollar's future performance. These developments are likely to influence the EUR/USD pair, potentially weakening the dollar against the euro if the Fed signals a dovish monetary policy stance in response to economic conditions.
On the data front, the US Census Bureau reported a 1% increase in retail sales for July, surpassing expectations of a 0.3% rise.
Excluding autos, sales were up 0.4%, exceeding the anticipated 0.1% gain. Additionally, the US Department of Labor (DOL) disclosed that initial jobless claims for the week ending August 10 totaled 227,000, better than the expected 235,000 and the previous week’s 234,000.
These stronger-than-expected figures underscore the resilience of the US economy and reinforce the view that the labor market remains robust.
ECB Rate Cut Expectations and EUR/USD Short-Term Outlook
On the EUR front, expectations that the European Central Bank (ECB) will cut rates further due to declining inflation in the Eurozone are limiting gains for the EUR/USD pair.
Despite this, the pair remains on track for modest weekly gains, with some buying support near the 1.0990 level on Thursday suggesting caution before expecting deeper losses.
Traders are now focusing on upcoming US macro data, including Building Starts, Housing Permits, and the Preliminary Michigan Consumer Sentiment Index, for short-term trading opportunities.
EUR/USD - Technical Analysis
EUR/USD is showing signs of a potential bullish breakout, currently trading at $1.09842, up 0.04% for the day.
The pair is hovering just above its pivot point at $1.0972, which is a key level to watch for further upside.
Immediate resistance is seen at $1.1043, and if the pair can close above this level, it could target the next resistance levels at $1.1073 and $1.1105.
The Relative Strength Index (RSI) is moderately positioned at 55, indicating there's room for further upward movement before entering overbought territory.
The 50-day Exponential Moving Average (EMA) at $1.0947 is providing solid support, reinforcing the bullish outlook.
Immediate support levels are at $1.0883 and $1.0845, with an additional safety net at $1.0922. These levels are crucial to maintain the current bullish momentum.
If the price dips below $1.0972, a short-term pullback could be in the cards, but the overall outlook remains positive as long as it holds above the 50-day EMA.
For those considering entering the market, buying above $1.0972 could be a strategic move, targeting a take-profit at $1.10339.
A stop-loss should be placed at $1.09376 to manage potential downside risks. The key area to watch is the $1.1043 resistance, which could determine the sustainability of this bullish trend.
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