S&P500 (SPX) Price Analysis – March 29, 2024
Daily Price Outlook
The S&P 500 index maintained its upward rally and was still flashing green on Friday. This can be witnessed as the Dow Jones rose slightly to a new record, while the S&P 500 also hit a new high. The Dow and S&P 500 marked their best two-quarter performance since 2020, with gains of 18.8% and 22.5%, respectively, according to Dow Jones Market Data. However, the market's positive momentum was mainly driven by the prospect of interest rate cuts from the US Fed as a higher chance of a rate cut typically boosts the S&P 500 index.
Federal Reserve's Interest Rate Outlook and its Impact on the S&P 500 Index
On the US front, the Federal Reserve suggested they might lower interest rates three times in 2024, according to Chairman Jerome Powell. This news boosted the S&P 500 index as investors felt more confident in economic support. Investors are expecting three rate cuts from the Fed this year, as the central bank has kept its benchmark borrowing rate steady at 5.25%-5.50% for the fifth consecutive time. However, the central bank still predicts three quarter-point cuts by year-end. Traders are currently estimating a 63% chance of a rate cut in June.
However, the higher chance of a rate cut typically boosts the S&P 500 (SPX) index. as lowering interest rates can stimulate economic activity by making borrowing cheaper for businesses and consumers, which often leads to increased spending and investment. This optimism about future economic growth tends to lift stock prices, including those of companies listed in the S&P 500 index. So, a higher chance of a rate cut is generally seen as positive for the SPX.
In contrast to this, hawkish Fed comments and robust US economic data could cap gains in the SPX. On the data front, the US Gross Domestic Product for the fourth quarter of 2023 showed a surprising uptick, expanding by 3.4% annually, surpassing market expectations of a 3.2% increase. The GDP Price Index remained stable at a 1.7% rise, as predicted. However, Core Personal Consumption Expenditures slightly missed expectations, coming in at 2.0% quarter-on-quarter. Additionally, Initial Jobless Claims dropped to 210K, defying forecasts of a slight increase from the previous week's 212K.
Geopolitical Tensions in Israel and Impact on Global Markets
On the geopolitical front, the conflict between Israel and Gaza escalated with Israel's Prime Minister considering a ground invasion to secure the release of soldiers. Meanwhile, the International Court of Justice accused Israel of genocide in its military campaign in Gaza, demanding immediate aid provision. As of the latest report, the death toll includes over 32,000 Palestinians killed and 75,000 wounded, while there have been 1,139 Israeli casualties from Hamas attacks.
Therefore, the geopolitical tensions in Israel could introduce uncertainty into global markets, impacting the SPX index. Investors may react cautiously to the escalating conflict, which could lead to increased market volatility and downward pressure on the SPX.
S&P 500 - Technical Analysis
On March 29, the S&P 500 (SPX) posted a modest increase, closing at 5254.34, up by 0.11%. This slight uptick reflects a cautious optimism in the market, with the index hovering around key technical levels. The current pivot point is set at 5232.00, with immediate resistance observed at 5281.33, followed by higher thresholds at 5297.10 and 5316.01. These levels suggest potential ceilings where the index might face selling pressure.
Conversely, support is established at 5231.74, with subsequent levels at 5212.87 and 5198.29, which could provide buying opportunities if declines occur. The Relative Strength Index (RSI) stands at 64, indicating a somewhat overbought condition but not excessively so, suggesting that there is still room for upward movement. The 50-day Exponential Moving Average (EMA) at 5152.02 supports a bullish undertone, reinforcing the index’s resilience above this moving average.
Given these factors, the technical outlook for the S&P 500 is cautiously optimistic. A trading strategy could involve selling below 5265, with a take profit target at 5232 and a stop loss at 5280.
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EUR/USD Price Analysis – March 29, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has been experiencing a downward trend for the fourth consecutive day and remained well-offered around the 1.0775 level. However, this decline can be attributed to several factors, including the bullish US Dollar, which has strengthened, nearing 104.60, driven by hawkish statements from a Federal Reserve (Fed) official. Fed Governor Christopher Waller hinted at a potential delay in interest rate cuts, buoyed by strong inflation figures.
Moreover, recent robust economic indicators from the United States, including a better-than-expected expansion of 3.4% in the US Gross Domestic Product (GDP) annualized for the fourth quarter of 2023, have further bolstered the US dollar position.
Impact of Hawkish Sentiment Surrounding the US Fed:
On the US front, the hawkish sentiment surrounding the US Federal Reserve has underpinned the US dollar and has exerted further pressure on the EUR/USD pair. Waller's comments, suggesting a potential delay in interest rate cuts due to stronger inflation figures, have instilled confidence in the US dollar, leading to its appreciation against the euro.
Investors are awaiting the US Personal Consumption Expenditures (PCE) report, which serves as the Fed’s preferred inflation gauge, to gain further clarity on the monetary policy trajectory. This anticipation has fueled market expectations of higher interest rates in the US, boosting the dollar and contributing the losses in the EUR/USD pair.
Impact of Dovish Remarks from ECB Policymaker Francois Villeroy:
On the Euro front, the dovish remarks from European Central Bank (ECB) policymaker Francois Villeroy have put further downward pressure on the EUR/USD pair. Villeroy said core inflation dropped fast but is still high. He thinks the ECB can reach its 2% inflation goal but warns of risks if they don't cut rates. Moreover, Fabio Panetta from the ECB is worried that strict rules are making people spend less, which is making inflation drop fast.
These dovish remarks have underscored market expectations of potential monetary easing by the ECB, contrasting with the hawkish stance of the Fed, further weighing on the euro and contributing to the bearish performance of the EUR/USD pair.
EUR/USD - Technical Analysis
On March 29, the EUR/USD pair saw a slight decline, closing at 1.07752, down by 0.10%. This movement places the currency pair just below the pivotal mark of 1.08037, signaling potential shifts in market dynamics. Immediate resistance levels are identified at 1.08396, 1.08656, and 1.08937, indicating upper boundaries that may cap upward trends. On the downside, support is found at 1.07647, with further cushions at 1.07334 and 1.06948, suggesting areas where buying pressure could intensify.
The technical indicators portray a more nuanced picture. With an RSI of 32, the EUR/USD is nearing oversold territory, hinting at a potential rebound or stabilization. However, the 50-day Exponential Moving Average (EMA) at 1.08389 stands above the current price, reflecting a bearish sentiment over the medium term.
Considering these technical parameters, the outlook for EUR/USD seems tilted towards bearishness in the short term. Traders might consider selling below 1.07904, with a take-profit target set at 1.07368 and a stop-loss at 1.08254.
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USD/JPY Price Analysis – March 28, 2024
Daily Price Outlook
The USD/JPY currency pair maintained it upward trend and remained well bid around 151.50 level. However, the reason for its upward trend can be attributed to the hawkish stance of the Federal Reserve, particularly highlighted by comments made by Fed Governor Christopher Waller. Waller's remarks indicated a less dovish outlook on monetary policy, citing higher-than-expected inflation readings and the resilience of the US economy. This has led to increased expectations of a more aggressive stance on interest rates, which typically strengthens the US dollar and supports the USD/JPY pair.
Furthermore, the upcoming US macroeconomic data, including the final Q4 GDP print and the Weekly Initial Jobless Claims, are being closely monitored by traders for any signs of economic strength or weakness.
BoJ’s Dovish Outlook and Its Impact on USD/JPY Currency Pair:
Conversely, the Bank of Japan's dovish outlook has exerted downward pressure on the Japanese yen and contributed to the strength of the USD/JPY currency pair. Japanese monetary officials have expressed a cautious approach to monetary policy, signaling their readiness to maintain accommodative financial conditions for an extended period.
Therefore, the dovish stance of the Bank of Japan contrasts with the hawkish sentiment of the Federal Reserve, widening the interest rate differential between the US dollar and the Japanese yen. Furthermore, Japanese authorities have hinted at potential interventions to address disorderly movements in the currency market, which may further weaken the Japanese yen relative to the US dollar.
Impact of Federal Reserve's Stance on AUD/USD Pair
On the US front, Federal Reserve Board Governor Christopher Waller's stance favoring higher interest rates boosted the US dollar and impacted the AUD/USD pair. Despite steady inflation, Waller signaled a reluctance to lower rates hastily. This cautious approach hinted that the Fed might delay easing monetary policy, supporting the US dollar and causing the AUD/USD pair to fall.
Additionally, other Fed members like Bostic and Cook warned that cutting rates too soon could worsen inflation, while Goolsbee from the Chicago Fed leaned towards rate cuts but wanted proof of improving inflation first.
Therefore, the AUD/USD pair weakened as Federal Reserve officials, including Waller, signaled reluctance to lower rates promptly, boosting the US dollar amid concerns about inflation and delaying monetary easing.
USD/JPY - Technical Analysis
In the latest trading session, the USD/JPY pair inched slightly upwards by 0.03%, positioning itself at 151.354. This subtle movement underscores a cautious optimism among traders, hinting at potential bullish momentum for the pair. With the pivot point firmly established at 151.02, USD/JPY finds itself at a crossroads, where any shift above this level could pave the way for a further ascent.
Immediate resistance markers are set at 151.97, 152.59, and 153.17, delineating clear targets for bullish traders. Conversely, support levels at 150.30, 149.74, and 148.95 offer a safety net, should the pair experience a downturn. The alignment of the 50-day Exponential Moving Average (EMA) at 151.03 with the pivot point reinforces the bullish outlook, serving as a testament to the underlying buying pressure.
Moreover, the Relative Strength Index (RSI) hovering around 52 suggests a neutral to slightly bullish sentiment, providing additional confirmation of the potential for upward movement. This combination of technical indicators points towards a favorable environment for buyers, especially if the pair successfully breaches the pivot point.
In summary, the technical landscape for USD/JPY appears bullish above the pivotal 151.02 mark. Traders might consider entering a long position above this threshold, targeting a rise towards 152.283, while employing a stop loss at 150.423 to mitigate potential risks.
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AUD/USD Price Analysis – March 28, 2024
Daily Price Outlook
During the early European session, the AUD/USD currency pair experienced a downward trend and remained well offered around the 0.6500 level. However, the reason for its downward trend can be attributed to various factors, including downbeat Consumer Inflation Expectations and Retail Sales figures from Australia, which raised concerns about the country's economic outlook and the potential for interest rate cuts by the Reserve Bank of Australia. Furthermore, the cautious sentiments from members of the Federal Reserve regarding the timing of rate cuts contributed to the pressure on the Australian dollar against the US Dollar.
In addition to this, the risk-off market sentiment triggered by ongoing conflicts such as the Russia-Ukraine war and tensions in the Middle East, particularly between Israel and Palestine, was seen as another key factor that undermined the riskier asset Australian dollar and kept the AUD/USD currency pair down.
Softer Consumer Inflation Expectations and Retail Sales Figures
As mentioned, the AUD/USD currency pair has been declining amid expectations that the Reserve Bank of Australia might lower interest rates in 2024. This view was reinforced by weaker Consumer Inflation Expectations and Retail Sales in Australia. Moreover, the Australian Monthly Consumer Price Index for February fell short of expectations, sparking concerns about Australia's economy. These worries have contributed to pushing the AUD/USD pair lower.
On the data front, Australia's consumer expectations for future inflation dropped slightly to 4.3% in March, down from the previous 4.5% rise. In the meantime, February's Retail Sales increased by 0.3% from the previous month, but it fell short of the expected 0.4% and the earlier 1.1% jump. Plus, Australia's Monthly Consumer Price Index for February showed a 3.4% year-on-year increase, just below the anticipated 3.5%. Meanwhile, Westpac Consumer Confidence decreased to 84.4 in March from February's 86.0, after hitting a 20-month high.
On the positive side, the Westpac Leading Index rose by 0.1% in February. The government aims to raise the minimum wage in line with inflation this year to help low-income families cope with rising living costs. Therefore, the AUD/USD pair faced downward pressure as Australia's softer consumer inflation expectations, lower-than-expected retail sales, and slightly below-anticipated CPI figures heightened concerns about the country's economic outlook.
Federal Reserve's Cautious Stance on Interest Rates
On the US front, Federal Reserve Board Governor Christopher Waller's hawkish stance on interest rates also affected the performance of the AUD/USD currency pair by underpinning the US dollar. Despite sticky inflation data, Waller expressed a no-rush approach to cutting rates. This cautious stance suggested that the Federal Reserve might not be quick to implement monetary policy easing measures, which could support the US Dollar and contributes to the declines in the AUD/USD pair.
Moreover, Some Federal Reserve members, like Bostic and Cook, said cutting rates too soon could make inflation worse. Goolsbee, from Chicago Fed, leaned toward cutting rates but wants to see proof that inflation is getting better first.
Therefore, the AUD/USD pair faced pressure as Federal Reserve officials, including Christopher Waller, signaled a cautious approach to rate cuts despite inflation concerns, bolstering the US Dollar against the Australian Dollar.
AUD/USD - Technical Analysis
The AUD/USD pair has experienced a slight decrease, down by 0.12%, with its price settling at 0.6528. Amidst fluctuating market conditions, the Australian dollar struggles to maintain its foothold against the US dollar, as investors remain cautious ahead of potential shifts in monetary policy and economic indicators. The pivot point at 0.6541 signifies a critical juncture for AUD/USD, where its future trajectory could be decided. Resistance levels at 0.6572, 0.6598, and 0.6630 present hurdles for any bullish momentum, while support levels at 0.6504, 0.6478, and 0.6448 offer a cushion against further declines.
Technical indicators suggest a challenging environment for AUD/USD. The 50-day Exponential Moving Average (EMA) at 0.6543, just above the current price, acts as a barrier to upward movement. Furthermore, the Relative Strength Index (RSI) standing at 46, below the midpoint of 50, indicates a bearish sentiment within the market. This confluence of technical signals hints at potential weakness, suggesting that the pair might face downward pressure in the short term.
Considering these factors, the outlook for AUD/USD appears tilted towards bearishness below the pivot point of 0.6541. Traders might consider a sell strategy below the specified entry price of 0.65409, targeting a pullback to 0.65044 while setting a stop loss at 0.65611 to mitigate risk.
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- GOLD Price Analysis – March 28, 2024
GOLD Price Analysis – March 28, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its downward rally and remained well-offered around the $2,195 level. However, the reason for its downward trend can be attributed to the mild strength of the US dollar, which gained traction amid hawkish remarks by Fed's Waller. Another factor that has been weighing on the gold price was the risk-on market sentiment, which was supported by Federal Reserve Governor Christopher Waller's statement suggesting no rush to cut rates amid higher inflation readings. This boosted market sentiment by indicating confidence in economic strength.
In contrast to this, the geopolitical risks from the Russia-Ukraine war and conflicts in the Middle East can support the gold price by creating uncertainty and increasing demand for safe-haven assets, thereby helping to limit its losses.
Federal Reserve's Stance on Interest Rates and Gold Prices
On the US front, Federal Reserve Governor Christopher Waller stated that he is not rushing to lower interest rates despite recent inflation spikes, which strengthened the US dollar and limited gains for Gold. However, Waller also hinted that as inflation levels ease in the future, the Fed may consider implementing rate cuts later in the year. Hence, this prospect of rate cuts could increase demand for Gold.
Meanwhile, the Federal Reserve has projected that there might be three rate cuts throughout the year, which is in line with what the market expects. There's now a higher probability that the first-rate cut might happen during the June meeting of the Federal Open Market Committee (FOMC).
Moving ahead, traders are focusing on US economic calendar, which includes the final Q4 GDP figure, Weekly Initial Jobless Claims, Pending Home Sales, and the revised Michigan Consumer Sentiment Index. These indicators will be closely watched as it provide insights into the health of the US economy.
Geopolitical Tensions and Their Impact on Gold Prices
On the geopolitical front, ongoing conflicts such as the Russia-Ukraine war and tensions in the Middle East, particularly between Israel and Palestine, are expected to support the price of safe-haven assets like gold. As per the latest report, Israel's President Isaac Herzog's call for continued offensive actions against Hamas in Gaza, despite UN demands for a ceasefire, Meanwhile, statements from Israeli officials indicate a firm stance on national security issues, complicating relations with the Biden administration and raising concerns about further escalation.
Therefore, geopolitical tensions, including the Russia-Ukraine conflict and Israel-Palestine tensions, create uncertainty, prompting investors to seek safe-haven assets like gold, thus limiting potential losses in its price.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) holds its ground, trading at $2194.79, reflecting a market at a standstill, yet underlying currents suggest potential volatility. The precious metal's journey is navigated within a web of technical indicators and pivotal price levels that offer a roadmap for future price actions. At the heart of this analysis lies the pivot point of $2187, acting as a fulcrum around which Gold's immediate future oscillates. A breach above this level could signal strength and a continuation of the uptrend, with resistance markers at $2209, $2221, and $2234 delineating potential hurdles ahead. Conversely, the establishment of support at $2176, $2168, and $2157 forms a safety net, cushioning any downside movements and maintaining the bull's domain.
Technical indicators paint a bullish picture; the 50-day Exponential Moving Average (EMA) at $2178 suggests a supportive backdrop for bullish activity. Coupled with a Relative Strength Index (RSI) of 59, the conditions seem ripe for upward momentum. Notably, the presence of bullish candles above the $2187 level further solidifies the argument for an uptrend continuation. This technical confluence beckons traders to a market ripe with opportunities, yet warrants caution due to inherent market uncertainties.
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GBP/USD Price Analysis – March 27, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair failed to stop its downward trend and is showing sluggish performance on the day. However, the reasons for its downward trend can be attributed to several factors, including a renewed strength of US dollar and mixed economic data from both the UK and the US. It should be noted that the US Dollar Index, which measures the greenback against a basket of major currencies, is nearing a multi-week high. This strength is partly due to growing doubts about the Federal Reserve's commitment to cutting interest rates three times this year.
However, the previously released mixed economic data from the US includes a 1.4% increase in February's Durable Goods Orders, suggesting a healthy US economy, but downbeat indicators like US New Home Sales Change cause uncertainty in the market, which has supported the US dollar against major currencies like the British pound.
Bank of England's Stance and UK Economic Data Impact on GBP/USD
On the UK front, Catherine Mann from the Bank of England (BoE) believes that financial markets are expecting too many interest rate cuts this year. She thinks the BoE is unlikely to cut rates before the US Federal Reserve. Traders are watching for UK GDP growth numbers, expected to show a 0.3% quarter-on-quarter and 0.2% year-on-year contraction in the fourth quarter. If the GDP growth numbers are stronger than expected, the Pound Sterling (GBP) could gain strength. This could help the GBP/USD pair, acting as a positive force for the British pound against the US dollar.
Hence, Catherine Mann's comments dampening expectations for significant interest rate cuts by the Bank of England could lead to a stronger Pound Sterling (GBP) against the US dollar (USD). This could impact the GBP/USD currency pair positively, especially if UK economic data remains strong, supporting the British pound.
US Dollar Strength and Economic Data Impact on GBP/USD
On the US front, the broad-based US dollar has been gaining strength, mainly due to doubts about whether the Federal Reserve will cut interest rates as much as previously expected. This uncertainty stems from mixed economic data, including better-than-expected Durable Goods Orders but disappointing US New Home Sales Change figures. These mixed signals make investors unsure about the Fed's future actions, which supports the US dollar against other currencies like the British pound.
On the data front, the rise in Durable Goods Orders suggests a healthy economy, potentially prompting the Fed to consider raising interest rates instead of cutting them. Furthermore, the steady consumer confidence and slightly higher inflation expectations might encourage the Fed to maintain higher interest rates for longer. These factors could further strengthen dollar and contributes to the losses in the GBP/USD currency pair.
GBP/USD - Technical Analysis
The GBP/USD pair has shown a mild downturn in today's market, marking a 0.10% decline to settle at 1.26173. The minor retreat underlines a cautious market sentiment, with traders keenly observing pivotal price levels for directional cues. The current technical setup pinpoints the pivot point at 1.2630 as a critical threshold for defining short-term market trends. Resistance levels identified at 1.2662, 1.2716, and 1.2758 outline potential ceilings that could cap gains, signaling areas where sellers might regain control.
Conversely, immediate support at 1.2578, followed by further cushions at 1.2539 and 1.2503, delineates zones where buying interest could be reignited, potentially halting any further declines. The technical landscape is further nuanced by the RSI indicator at 38, suggesting a tilt towards oversold conditions, and the 50-day EMA at 1.2675, slightly above the current price, hinting at underlying pressure on the pound.
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EUR/USD Price Analysis – March 27, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair failed to stop its downward trend and remained well offered around the 1.0825 level. However, the downward trend in the EUR/USD pair was driven by renewed strength in the US Dollar. Furthermore, the growing expectations of a June rate cut by the ECB, and lackluster economic data from the Eurozone, were seen as other key factors that kept the EUR/USD currency pair under pressure.
The downward performance of the EUR/USD pair is due to growing speculation of a June rate cut by the European Central Bank (ECB). This sentiment has been fueled by statements from ECB policymakers indicating a willingness to consider rate cuts. Such remarks, particularly from officials like Madis Muller and Yannis Stournaras, have undermined confidence in the euro, leading investors to sell off the currency.
Moreover, the euro is facing more challenges as economic data from the Eurozone disappoints, making investors less confident in the currency. They are worried about the ECB possibly making monetary policy looser due to uncertain economic conditions. This uncertainty is causing the euro to lose value compared to the US dollar.
ECB Rate Cut Expectations Weaken Euro and Drive EUR/USD Downward
On the Euro front, the prospects of a June rate cut by the ECB have significantly undermined the euro, contributing the losses in the EUR/USD pair. However, the increasing likelihood of monetary policy easing by the ECB has led investors to favor the USD over the euro. Meanwhile, the statements from ECB policymakers suggesting a June rate cut have fueled expectations, leading investors to anticipate a narrower interest rate gap between the euro and the USD, contributing to euro weakness. Consequently, the prospects of a June rate cut by the ECB have undermined the euro, contributing to losses in the EUR/USD pair.
USD Index Strengthens on Positive Economic Data and Fed Expectations
On the US front, the broad-based US dollar has maintained its upward tone and climbed back closer to a multi-week high, buoyed by optimism surrounding the US economy. However, the positive economic data, such as the slightly better-than-expected US Durable Goods Orders release, has reinforced the view of a robust economic outlook. The expectation of the Federal Reserve (Fed) maintaining higher interest rates for a prolonged period to combat inflationary pressures has further bolstered the USD. Therefore, the strong US dollar, supported by optimism in the US economy and expectations of sustained high interest rates from the Fed, has exerted upward pressure on the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair exhibited a slight decrease today, shedding 0.04% to close at 1.08281. This subtle move reflects the market's ongoing consolidation phase, where investors gauge the strength of underlying economic signals from the Eurozone and the United States. The currency pair's journey is particularly influenced by its positioning relative to the pivot point at 1.0804, which acts as a critical juncture for determining its short-term trajectory.
Resistance markers identified at 1.0886, 1.0917, and 1.0964 serve as potential barriers to upward movements. These levels could provoke selling pressures, reinforcing the currency pair's cautious outlook. On the downside, support at 1.0803, followed by 1.0765 and 1.0733, suggests key areas where buyers could emerge, providing a buffer against further declines.
The trading scenario is compounded by technical indicators such as the RSI at 43, hinting at a leaning towards oversold conditions, and the 50-day EMA at 1.0855, currently acting as resistance. The presence of a bearish engulfing candlestick pattern below the 1.0850 level further substantiates the bearish sentiment.
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GOLD Price Analysis – March 27, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair failed to stop its downward trend and is showing sluggish performance on the day. However, the reasons for its downward trend can be attributed to several factors, including a renewed strength of US dollar and mixed economic data from both the UK and the US. It should be noted that the US Dollar Index, which measures the greenback against a basket of major currencies, is nearing a multi-week high. This strength is partly due to growing doubts about the Federal Reserve's commitment to cutting interest rates three times this year.
However, the previously released mixed economic data from the US includes a 1.4% increase in February's Durable Goods Orders, suggesting a healthy US economy, but downbeat indicators like US New Home Sales Change cause uncertainty in the market, which has supported the US dollar against major currencies like the British pound.
Bank of England's Stance and UK Economic Data Impact on GBP/USD
On the UK front, Catherine Mann from the Bank of England (BoE) believes that financial markets are expecting too many interest rate cuts this year. She thinks the BoE is unlikely to cut rates before the US Federal Reserve. Traders are watching for UK GDP growth numbers, expected to show a 0.3% quarter-on-quarter and 0.2% year-on-year contraction in the fourth quarter. If the GDP growth numbers are stronger than expected, the Pound Sterling (GBP) could gain strength. This could help the GBP/USD pair, acting as a positive force for the British pound against the US dollar.
Hence, Catherine Mann's comments dampening expectations for significant interest rate cuts by the Bank of England could lead to a stronger Pound Sterling (GBP) against the US dollar (USD). This could impact the GBP/USD currency pair positively, especially if UK economic data remains strong, supporting the British pound.
US Dollar Strength and Economic Data Impact on GBP/USD
On the US front, the broad-based US dollar has been gaining strength, mainly due to doubts about whether the Federal Reserve will cut interest rates as much as previously expected. This uncertainty stems from mixed economic data, including better-than-expected Durable Goods Orders but disappointing US New Home Sales Change figures. These mixed signals make investors unsure about the Fed's future actions, which supports the US dollar against other currencies like the British pound.
On the data front, the rise in Durable Goods Orders suggests a healthy economy, potentially prompting the Fed to consider raising interest rates instead of cutting them. Furthermore, the steady consumer confidence and slightly higher inflation expectations might encourage the Fed to maintain higher interest rates for longer. These factors could further strengthen dollar and contributes to the losses in the GBP/USD currency pair.
GOLD (XAU/USD) - Technical Analysis
In today's market, Gold (XAU/USD) presents a nuanced technical outlook, with a minor decline of 0.03%, situating the price at $2,178.72. Despite the slight drop, the metal's price action remains intriguing, notably hovering around significant technical markers. The pivot point at $2,193 sets a critical juncture, delineating a zone where bullish sentiments could be reinforced if sustained above this level.
The immediate resistance levels at $2,188, followed by $2,201 and $2,223, provide a clear roadmap for potential upward trajectories. Conversely, support levels established at $2,160, $2,147, and $2,128 frame the lower boundaries, safeguarding against extensive pullbacks.
The technical indicators, including an RSI of 53 and a 50-day EMA at $2,170, signal a predominantly bullish stance, underscored by an upward trendline that affirms gold's strength above the $2,193 benchmark. This technical configuration suggests an impending bullish phase, contingent on maintaining the pivotal support.
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USD/CAD Price Analysis – March 26, 2024
Daily Price Outlook
The USD/CAD currency pair experienced a decline and still showing bearish bias around 1.3590 level. This downward performance can be attributed to several factors influencing both the US Dollar and the Canadian Dollar. However, the lower US Treasury yields put pressure on the US dollar, which was seen as a key factor that kept the USDCAD pair under pressure. Market sentiment indicates expectations of the Federal Reserve (Fed) commencing an easing cycle, starting in June. This anticipation of monetary policy adjustments weighs on the Greenback's strength, impacting its performance against the Canadian Dollar.
Furthermore, the CAD faced downward pressure following indications from the Bank of Canada (BoC) regarding possible rate cuts in 2024. The BoC's latest meeting minutes revealed discussions around quantitative tightening and the sustainability of incremental interest rate decreases. This stance adds to the bearish sentiment surrounding the CAD, contributing to the USD/CAD pair's downward trajectory.
Apart from this, fluctuations in Crude oil prices play a crucial role in influencing the performance of the Canadian Dollar. As one of Canada's major exports, changes in oil prices directly impact the country's economy and currency. The recent decline in oil prices added pressure on the CAD, helping USD/CAD pair's to limit its losses.
Fed Projected Three Rate Cuts in 2024 Undermine the USD and Impact on USD/CAD
On the US front, Federal Reserve's projected three rate cuts in 2024, which undermine the USD's strength, consequently impacting the USD/CAD currency pair. However, the ongoing speculations surrounding the Fed's monetary policy decisions have contributed to market uncertainty and downward pressure on the dollar.
Atlanta Fed President Raphael Bostic's anticipation of only one rate cut contrasts with Chicago Fed President Austan Goolsbee's forecast of three cuts. This divergence in views reflects the uncertainty surrounding the timing and magnitude of potential rate adjustments. However, both perspectives emphasize the potential disruption and impact on market sentiment if rates are reduced prematurely.
Therefore, the anticipation of a more accommodative monetary policy stance from the Fed weakens the USD against other major currencies, including the CAD.
Bank of Canada's Possible Rate Cuts in 2024 Exert Downward Pressure on CAD and USD/CAD Pair
On the Canadian front, the Bank of Canada's indication of possible rate cuts in 2024, as revealed in its latest meeting minutes, has exerted downward pressure on the CAD and influenced the USD/CAD currency pair. Deputy Governor Toni Gravelle reaffirmed the bank's plan to gradually reduce the money supply, ensuring that interest rates decrease in a sustainable manner.
Investors closely monitor central bank meetings and announcements for insights into future monetary policy decisions. The BoC's discussion of potential rate cuts signals a dovish stance, impacting market sentiment and investor confidence in the CAD. As expectations of lower interest rates in Canada increase, the CAD weakens against other currencies, including the USD. This contributes to the downward trajectory of the USD/CAD pair as traders adjust their positions in response to shifting monetary policy expectations.
Decline in Crude Oil Prices Adds Pressure to CAD and USD/CAD Pair
On the other hand, the recent decline in Crude oil prices has added pressure to the CAD and reinforced the downward trend of the USD/CAD currency pair. Oil prices are a significant driver of the Canadian economy, given Canada's status as a major oil exporter. The drop in oil prices negatively impacts Canada's export revenues and economic outlook, leading to a depreciation of the CAD.
USD/CAD - Technical Analysis
The USD/CAD pair experienced a slight uptick in today’s market, registering a 0.01% increase to stand at 1.3586. This movement, albeit minimal, indicates a nuanced market environment where traders are gauging several factors before making significant commitments.
A closer inspection reveals that the pair is trading near a pivot point of 1.3615, suggesting a potential pivot in market direction. Resistance levels are delineated at 1.3615, 1.3661, and 1.3711, pointing towards key barriers that could cap upward movements. Conversely, the support framework is established at 1.3540, with further layers at 1.3506 and 1.3459, providing cushions that could arrest downward trends. The Relative Strength Index (RSI) sits at 56, indicating a slight lean towards a bullish sentiment but still far from the overbought threshold. Additionally, the 50-Day Exponential Moving Average (EMA) at 1.3549 reinforces the pair's underlying bullish inclination by positioning just below current price levels.
Based on this analysis, a strategic approach suggests setting a buy limit at 1.35733, with an aim to take profits at 1.36154, and a stop loss positioned at 1.35386.
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AUD/USD Price Analysis – March 26, 2024
Daily Price Outlook
The AUD/USD currency pair has maintained its upward trend and still showing bullish performance around 0.6550 level. However, the reason for its upward trend can be attributed to the decline in the US dollar, as evidenced by the struggles of the US Dollar Index (DXY) over consecutive days. This weakening of the Greenback has provided support to the AUD/USD pair, contributing to its upward momentum.
Furthermore, the Australian equity market's positive performance has also played a role in bolstering the Australian Dollar. Despite modest weakness in Wall Street, the ASX 200 Index has extended its winning streak, indicating investor confidence in the Australian economy. This optimism in the equity market has spilled over into the currency markets, providing strength to the Aussie Dollar.
Moreover, Australia's government has pledged to support a minimum wage increase aligned with inflation, addressing the concerns of low-income families amidst rising living costs. This commitment to supporting the economy has further boosted confidence in the Australian Dollar, contributing to its bullish performance against the US Dollar.
In contrast to this, Australian Dollar faced slight downward pressure following the release of Australia's Westpac Consumer Confidence data, which dipped 1.8% to 84.4 in March 2024 from February's 86.0, easing from 20-month highs. However, the overall bullish sentiment surrounding the AUD/USD pair persisted, supported by factors such as improved market sentiment and a positive outlook for the Australian equity market.
Australian Equity Market Gains and its Impact on AUD/USD Currency Pair
As mentioned earlier, the Australian equity market experienced gains, contributing to the strength of the Australian Dollar and impacting the AUD/USD currency pair. However, the expectations of a rate cut by the Reserve Bank of Australia (RBA), driven by a decline in Aussie consumer confidence, bolstered investor sentiment. Despite modest weakness on Wall Street overnight, the ASX 200 Index extended its winning streak, providing a favorable environment for the Australian Dollar.
Investors monitored the release of Australia's monthly Consumer Price Index (CPI) data, scheduled for Wednesday, for further insights into the economic landscape and potential monetary policy adjustments by the RBA. The government's commitment to supporting a minimum wage increase aligned with inflation also underscored efforts to address challenges faced by low-income families amid rising living costs, fostering positive sentiment towards the Australian economy and its currency.
Federal Reserve Rate Cut Expectations and Impact on AUD/USD Currency Pair
On the US front, the Federal Reserve's expectation of rate cut cycle, coupled with previously released downbeat US economic data, influenced the AUD/USD currency pair. On the data front, US New Home Sales Change declined by 0.3% month-over-month, falling short of expectations, while S&P Global Services PMI showed a slight decrease in March. These figures indicated challenges in the US economic recovery, adding pressure on the dollar and boosting the AUD/USD currency pair.
Atlanta Fed President Raphael Bostic expressed a conservative outlook, expecting just one rate cut this year to avoid premature disruptions. In contrast, Chicago Fed President Austan Goolsbee aligned with the majority of the board, anticipating three cuts but emphasizing the need for additional evidence of decreasing inflation. Hence, the divergence in views within the Fed contributed to market uncertainty but provided support for the AUD/USD pair amid expectations of accommodative monetary policy.
Bloomberg Survey on PBoC's RRR Cuts and Impact on AUD/USD Currency Pair
According to economists surveyed by Bloomberg, they predict that the People's Bank of China (PBoC) will make two more cuts to the Reserve Requirement Ratio (RRR) in 2024, totaling a 50 basis point reduction. This means the PBoC will require banks to hold less money in reserve, aiming to boost economic growth and increase available funds in China. This move could indirectly help Australia's economy because of its strong trade relationship with China, possibly leading to a stronger AUD/USD currency pair.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) holds steady in today's trading, showing a negligible decline to a rate of 0.65367. In the broader context, this movement reflects the nuanced interplay of economic indicators, market sentiment, and global financial dynamics influencing the currency pair.
A detailed technical analysis reveals that AUD/USD is operating just below the pivot point of 0.6555, indicating a potential inflection in market direction. Resistance levels are poised at 0.6593, 0.6626, and 0.6667, delineating clear barriers to upward momentum. Conversely, immediate support lies at 0.6512, with further floors at 0.6478 and 0.6448, which could offer rebound opportunities. The Relative Strength Index (RSI) standing at 46 suggests a slightly bearish sentiment, yet not deeply entrenched in oversold territory. The 50-Day Exponential Moving Average (EMA) closely mirrors the pivot point at 0.6554, suggesting a near equilibrium between buying and selling forces.
Given these observations, the recommended strategy involves placing a sell limit at 0.65552, with a target for taking profit at 0.65102, and a stop loss set at 0.65927. This tactical approach capitalizes on the AUD/USD's current stability, leveraging minor fluctuations for potential gains, whilst mindful of the currency pair's sensitivity to shifts in economic reports and geopolitical events.
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