GOLD Price Analysis – March 26, 2024
Daily Price Outlook
Despite geopolitical tensions such as the Russia-Ukraine conflict and concerns over a Gaza Strip ceasefire, the price of the precious metal gold has failed to gain traction and remains sluggish near the 2,172 level. However, this sluggish performance can be attributed to uncertainty surrounding global economic conditions. Gold often rise during times of economic instability, but other factors have been offsetting these influences. These include the renewed strength of the US dollar, rising bond yields, and expectations of tightening monetary policy by central banks, all of which reduce the appeal of non-interest-bearing assets like gold in the short term.
Fed's Projected Rate Cuts Boost Gold Amidst USD Weakness
On the US front, the Federal Reserve's projection of three rate cuts in 2024 has been a key driver in supporting gold prices. These rate cut expectations undermine the strength of the US dollar, making gold more attractive to investors. However, the weaker dollar tends to make gold cheaper for holders of other currencies, thereby increasing its demand and price. Additionally, the anticipation of a more accommodative monetary policy by the Fed enhances the appeal of non-yielding assets like gold, as it reduces the opportunity cost of holding them compared to interest-bearing investments.
Hence, the dovish stance is bolstered by weaker US data, which suggests that the economy may need additional support through lower interest rates to stimulate growth and inflation. This could further boost gold prices as lower interest rates make gold more attractive to investors seeking safe-haven assets amid economic uncertainties.
Impact of Upcoming US Macro Data on Gold Price
Moving ahead, investors are closely monitoring upcoming US macroeconomic data releases for their impact on gold prices. These include the release of Durable Goods Orders, the Conference Board's Consumer Confidence Index, and the Richmond Manufacturing Index. Any signs of economic strength or higher-than-expected inflation could reignite concerns about the Fed's stance on monetary policy, leading to a shift in market sentiment towards gold. However, if the data indicates weakness in the economy or lower inflation than anticipated, it could further bolster expectations for Fed rate cuts and support gold prices.
GOLD (XAU/USD) - Technical Analysis
In today’s market, Gold has shown a slight increase, trading at $2172.125, marking a 0.07% uptick. This movement positions Gold just above a pivotal juncture, with an eye towards a potential rise, given the current market dynamics and geopolitical uncertainties that traditionally favor safe-haven assets.
Technical analysis reveals a pivot point set at $2190, with the asset facing immediate resistance at $2200 and subsequent levels near $2199 and $2223. On the downside, support is found at $2150, followed by $2138 and $2124, indicating a strong foundation preventing significant drops. The technical indicators, including a Relative Strength Index (RSI) of 50, suggest a balanced market sentiment. Moreover, the 50-Day Exponential Moving Average (EMA) at $2168, slightly below the current price, alongside a higher 200-Day EMA, underscores a cautiously bullish outlook for Gold.
Considering these factors, the technical outlook recommends a strategic entry for buying at $2166, aiming for a take profit at $2190, with a stop loss set at $2150. This strategy is predicated on Gold’s resilience and its traditional role as a hedge against inflation and currency devaluation, offering a tactical advantage in the current financial landscape.
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GOLD Price Analysis – March 25, 2024
Daily Price Outlook
Gold price has maintained its winning streak and surged recently, reaching nearly $2,170. The upward trend in gold can be attributed to several factors, including a weakening US Dollar. The dovish sentiment surrounding the Federal Reserve's stance on interest rates has put downward pressure on the US dollar, making gold more attractive to investors. Federal Reserve Chair Jerome Powell suggested potential interest rate cuts starting in June if unemployment unexpectedly rises. Despite high inflation, Powell assured no rush for rate hikes, boosting gold's attractiveness as a hedge against inflation and economic uncertainty.
US Dollar Downward Pressure and Its Impact on Gold Price:
On the US front, the US Dollar is under pressure due to speculation that the Federal Reserve will start cutting interest rates from June onwards. This expectation of lower rates has weakened the USD, making gold more appealing as an investment choice. The potential rate cuts are driven by concerns about economic growth and inflation. Powell's comments hint at the Fed's readiness to act if unemployment unexpectedly rises, signaling a cautious monetary policy stance. This uncertainty about future interest rates has led to a drop in the US dollar, which in turn has boosted gold prices.
Despite the dovish sentiment from the Federal Reserve on interest rates, which is typically seen as positive for market sentiment, the market failed to maintain its upward trend and turned red for the day. This was seen as another key factor lending support to the safe-haven gold price.
Impact of Upcoming US Inflation Readings on Gold Price:
Looking forward, the upcoming US inflation data will influence gold prices. This is why, traders are watching closely GDP and the PCE price index for insights into the economy's health and inflation. However, the high inflation might worry investors, driving them towards gold as a safe bet. If inflation exceeds expectations, it could mean less purchasing power, pushing investors towards gold.
Conversely, if inflation is lower than expected, it could signal a healthier economy, reducing demand for gold. Thus, traders will keenly watch upcoming data to predict inflation's direction and its effect on gold prices.
GOLD (XAU/USD) - Technical Analysis
In the latest session, GOLD experienced a subtle increase, finishing at $2170.655, which reflects a growth of 0.24%. This minor yet significant rise places GOLD at a crucial juncture, inviting investors to discern the intricate signals emanating from its price behavior. The established pivot point at $2167 serves as a foundational marker, indicating potential shifts in the asset's momentum.
When we delve into the dynamics of resistance and support, GOLD confronts its initial resistance at $2186. This is succeeded by more formidable barriers at $2199 and $2223, delineating thresholds that must be surpassed for GOLD to sustain its upward trajectory, thus presenting strategic points for profit realization. On the flip side, support levels at $2150, followed closely by $2138 and then $2124, act as critical zones where GOLD might find a rebound, thereby offering a cushion against potential declines.
The Relative Strength Index (RSI) hovers at 49, striking a balance between bullish and bearish domains and suggesting a market that is evenly poised yet verging on a decisive move. Moreover, the 50-Day Exponential Moving Average (EMA), mirroring the pivot point at $2167, underscores this level's central role in future price directions, highlighting a market that is cautiously optimistic yet ready for action.
Given this backdrop, a judicious approach would entail setting a Buy Limit at $2166, targeting a Take Profit at $2190 to leverage the anticipated upswing.
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GBP/USD Price Analysis – March 25, 2024
Daily Price Outlook
The GBP/USD currency pair managed to stop its previous bearish rally and gained some bullish traction around above the 1.2600 level. However, this upward trend can be attributed to several factors including the rising speculation that the Federal Reserve (Fed) would start cutting interest rates as early as June. This speculation has undermined the strength of the US dollar, contributing the GBP/USD currency pair gains. On the other hand, the UK Retail Sales data beating expectations suggests resilience in consumer spending, buoying confidence in the British pound and positively impacting the GBP/USD pair.
Fed Rate Cut Speculation and Its Impact on GBP/USD Pair
On the US front, Federal Reserve Chairman Jerome Powell's remarks about potential interest rate cuts have excited investors. However, the lowering rates could stimulate borrowing and spending, providing a boost to the economy, which impacts the GBP/USD pair.
Investors are closely monitoring indicators such as economic growth to anticipate potential rate cuts. Powell's comments indicate the Fed's readiness to support the economy as needed. This has investors eagerly awaiting further clues on timing and magnitude of rate adjustments, influencing the GBP/USD pair's performance.
According to market indicators like CME Group's FedWatch tool, there's a high chance the Fed will lower interest rates during the June meeting. This expectation has put pressure on the US dollar, making it weaker compared to other currencies like the British pound. As a result, the GBP/USD pair is likely to continue moving upward.
Positive UK Retail Sales Data Bolsters GBP/USD Pair
Another factor impacting the GBP/USD pair's performance is the UK Retail Sales data, which defied expectations by remaining flat in February. This figure was better than the estimated decline of 0.3%, signaling resilience in consumer spending despite economic challenges.
It is worth noting that the Office for National Statistics reported the positive outcome, which provided a boost to market sentiment regarding the UK economy. Given that the UK recently experienced a technical recession, with two consecutive quarters of economic contraction in the second half of the previous year, any positive economic data is welcomed by investors.
Therefore, the stronger-than-expected Retail Sales figures suggest that consumer confidence and spending may be more robust than previously anticipated. This positive sentiment surrounding the UK economy has contributed to the GBP's strength against the USD, further supporting the upward trend of the GBP/USD pair.
Anticipated Economic Releases and Central Bank Speeches Influencing GBP/USD Pair
Looking ahead, market participants are awaiting key economic releases that could provide further direction for the GBP/USD pair. However, the focus will be on the release of Gross Domestic Product (GDP) data from both the UK and the US, offering insights into the respective economies' performance.
Additionally, speeches from central bank officials, including the Fed's Raphael Bostic and the Bank of England's Catherine Mann, will be closely monitored for any hints regarding monetary policy decisions.
GBP/USD - Technical Analysis
The GBP/USD currency pair saw a slight uptick on March 25, closing at 1.26051, marking a 0.04% increase from the previous session. This modest gain reflects a cautious optimism in the market, with the pair navigating close to the pivot point of 1.2598. This level is pivotal for determining the pair's short-term direction, signaling potential shifts in market sentiment and investor behavior.
Key resistance and support levels outline the immediate landscape for GBP/USD. Resistance is encountered first at 1.2675, with subsequent barriers at 1.2732 and 1.2802, each representing potential targets for bullish movements. Conversely, support levels are clearly defined at 1.2542, 1.2501, and 1.2454, offering a safety net against downward pressures. These thresholds are crucial for traders to gauge the pair's resilience or vulnerability to market fluctuations.
Technical indicators provide further insight into the pair's dynamics. The Relative Strength Index (RSI) stands at 34, indicating a lean towards oversold conditions, which could suggest an impending reversal if the pair manages to garner bullish momentum. Additionally, the 50-Day Exponential Moving Average (EMA) at 1.2725 sits above current levels, underscoring a potential area of resistance but also highlighting the upward potential if the GBP/USD manages to break through the immediate ceiling.
Considering the technical outlook, adopting a strategic approach would involve setting a Buy Limit at 1.25953, with a Take Profit target at 1.26748 to capitalize on anticipated upward moves. A Stop Loss at 1.25432 is advisable to mitigate potential losses, providing a balanced risk-reward ratio. This tactical positioning reflects a readiness to exploit the GBP/USD pair's potential shifts, rooted in careful analysis of its technical landscape.
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EUR/USD Price Analysis – March 25, 2024
Daily Price Outlook
The EUR/USD currency pair has started the new week on a positive note, trading above the 1.0800 mark and gaining ground to reach around 1.0816. This upward trend can be attributed to several factors including the bearish US dollar, which was being pressured by the dovish Fed's stance on interest rates. In contrast to this, the suggestion of a potential interest rate cut by the ECB is generally negative for the EUR/USD pair, as it tends to weaken the Euro against the US Dollar.
FOMC’s Chair Powell Maintains View on Lower Inflation, Impact on EUR/USD
Despite the recent increase in the Consumer Price Index (CPI) indicating higher inflation, Powell suggests that the committee's outlook on inflation hasn't changed. They still perceive inflation as trending lower, meaning they anticipate a decrease in inflationary pressures over time. Powell stressed that if the job market unexpectedly worsens, the central bank is ready to lower interest rates.
This dovish stance from the FOMC, signaling a willingness to consider rate cuts in response to economic conditions, has put downward pressure on the US Dollar. Consequently, this has supported the upward momentum of the EUR/USD currency pair, as any hints of monetary policy accommodation tend to weigh on the value of the USD.
ECB’s Scicluna Suggests Rate Cut in April, Impact on EUR/USD
On the Euro front, a member of the European Central Bank (ECB) Governing Council, Edward Scicluna, hinted at the possibility of lowering interest rates in April. This suggests that the ECB might join other central banks in reducing rates to tackle economic issues, particularly stubbornly low inflation. The commentary reflects increasing speculation about the ECB's monetary policy direction, aiming to stimulate economic activity amidst challenges. If implemented, an interest rate cut could influence borrowing costs, encouraging spending and investment to boost economic growth in the Eurozone.
Moreover, Bundesbank President Joachim Nagel's remarks indicating a possible rate cut before the summer, possibly in June, have also contributed to expectations of monetary policy easing by the ECB. Therefore, these anticipations have weighed on the Euro against the US Dollar, as the possibility of lower interest rates tends to weaken the currency.
Investor Focus on Key Economic Indicators and Fed Speech, Impact on EUR/USD
Investors will closely monitor key economic indicators and speeches from Federal Reserve officials, including the Chicago Fed National Activity Index, US New Home Sales, and the Fed's Bostic speech scheduled for Monday.
EUR/USD - Technical Analysis
The EUR/USD pair experienced a marginal increase of 0.04%, closing at 1.0812. This movement highlights the currency's tentative steps towards recovery amidst fluctuating market sentiments. The day's trading centered around the pivot point of 1.0844, which, despite being slightly above the closing price, suggests a battleground for the pair's next direction.
Immediate resistance and support levels frame the short-term trajectory for the EUR/USD. Resistance levels are set at 1.0843, 1.0894, and 1.0944, providing clear targets for potential bullish momentum. Conversely, the pair finds robust support at 1.0762, with further cushions at 1.0733 and 1.0695. These levels will be critical in determining the EUR/USD's resilience or vulnerability to bearish pressures.
The technical landscape is further illuminated by indicators such as the Relative Strength Index (RSI) at 38, signaling the pair is nearing oversold territory. This suggests potential for an upward correction should buyers regain control. Moreover, the 50-Day Exponential Moving Average (EMA) at 1.0881 hovers above the current price, indicating that overcoming this barrier could solidify a bullish stance.
Given the technical analysis, a prudent strategy would involve placing a Buy Limit at 1.08008, aiming for a Take Profit at 1.08435 to capitalize on anticipated upward movements. A Stop Loss at 1.07666 would mitigate potential downside risk, aligning with a cautious yet opportunistic approach to the current market dynamics of EUR/USD.
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S&P500 (SPX) Price Analysis – March 22, 2024
Daily Price Outlook
The S&P 500 index maintained its upward rally and remained in the green on Friday. The index rose by 0.3%, holding its position above the key level of 5,200. While the tech-heavy Nasdaq and the broader market S&P 500 weakened slightly, the Dow Jones Industrial Average led the gains, buoyed by strong performances from blue-chip stocks like Goldman Sachs (GS).
However, the market's positive momentum was mainly driven by Federal Reserve Chairman Jerome Powell's comments hinting at three potential quarter-point rate cuts in 2024. This indication from the Fed chairman sparked optimism among investors, driving the markets higher. Furthermore, upbeat economic projections from the Federal Reserve, including an upgraded GDP forecast and expectations of lower unemployment and higher inflation, contributed to the positive sentiment.
Fed's Projected Rate Cuts and Labor Market Data Impact
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. Lower rates mean borrowing money becomes cheaper for businesses and individuals, encouraging more spending and investment. This positive outlook lifted stock prices, signaling optimism in the market.
In addition to the Fed's monetary policy outlook, the latest data from the US Department of Labor (DOL) provided further support to the market. The report indicated a decline in Initial Jobless Claims to 210,000, signaling a strong labor market. This positive development eased concerns about the economy and contributed to the overall optimism driving the S&P 500 higher.
US S&P Global Composite PMI Impact
On the data front, the US S&P Global Composite Purchasing Managers' Index (PMI) for March came in slightly lower at 52.2, down from 52.5 in February. While the reading remained above the neutral 50-mark, indicating expansion in economic activity, the slight decline raised some concerns among investors. However, the Manufacturing PMI improved to 52.5, surpassing market expectations, which provided a counterbalance to the softer Composite PMI figure.
Hence, the mixed PMI data had a muted impact on the S&P 500 index. Investors remained focused on the broader economic outlook and monetary policy signals from the Federal Reserve, which continued to drive market sentiment.
Antony Blinken's Comments Boost Investor Confidence
On the geopolitical front, US Secretary of State Antony Blinken's remarks regarding the ongoing talks aimed at reaching a ceasefire in Gaza and the release of hostages boosted investor confidence. The news of progress in negotiations made investors feel better, so they reacted positively in the stock market, including the S&P 500 index. This reassurance helped boost confidence among market participants, leading to a favorable response in stock prices.
Investors were happy about possible peace talks in the area, as it could reduce tensions and make the world more stable. Blinken's positive remarks boosted confidence, leading to a hopeful mood in the market. This helped push the S&P 500 index upward.
S&P 500 - Technical Analysis
On March 22, the S&P 500 slightly receded, marking a 0.32% decrease to close at 5241.54. This movement reflects a nuanced interplay of market forces, as investors weigh various economic signals. The index currently rests just below its pivot point at 5252.68, suggesting a finely balanced market sentiment. Resistance levels are poised at 5272.40, 5296.35, and 5325.23, indicating potential hurdles for upward movements. Conversely, support levels at 5224.51, 5199.15, and 5178.02 delineate key zones where the index might find footing should it face further downward pressure.
The Relative Strength Index (RSI) at 66 edges towards the overbought territory, hinting at possible market retraction. Additionally, the presence of a Doji candle in the 4-hour timeframe, followed by robust upward momentum, suggests that a bearish correction may be imminent, particularly as the index has surged beyond its 50-Day Exponential Moving Average (EMA) of 5108.19, indicating a significant upward trend in recent times.
Given these observations, a cautious approach is advised for traders. A sell limit order at 5255 presents a strategic entry point, targeting a take profit at 5220 and setting a stop loss at 5270 to mitigate potential risks. This outlook underscores the current market's sensitivity to short-term fluctuations, urging investors to remain vigilant.
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EUR/USD Price Analysis – March 22, 2024
Daily Price Outlook
During early European trading session on Friday, the EUR/USD currency pair has been experiencing a downward trend and hit the intra-day low around the 1.0816 mark. However, this decline is driven by the renewed strength of the US Dollar and higher US Treasury bond yields. Furthermore, the disappointing Eurozone Manufacturing Purchasing Managers' Index (PMI) data was seen as another key factor that put bearish pressure on the EUR/USD currency pair. Investors are closely monitoring the performance of the pair as they await key economic indicators and central bank statements.
Federal Reserve Signals Potential Rate Cuts, US S&P Global Composite PMI Moderates
On the US front, Federal Reserve Chair Jerome Powell suggested three possible interest rate cuts in 2024, lifting investor confidence and boosting market activity. However, the S&P Global Composite Purchasing Managers' Index (PMI) showed a slight decrease to 52.2 in March from the previous 52.5. Despite this, the Manufacturing PMI increased to 52.5, surpassing expectations, while the Services PMI fell to 51.7, lower than predicted.
Jerome Powell's rate cut hints boosted the USD, pressuring the EUR/USD pair downward. While the US PMI showed mixed results, any signs of US economic strength tend to strengthen the dollar against the euro.
Eurozone Manufacturing PMI Slips, Impacting EUR/USD Pair
In contrast to the US data, the Eurozone's Manufacturing PMI declined to 45.7 in March from the previous reading of 46.5, marking a three-month low. This disappointing figure fell short of the consensus forecast of 47.0. However, the Services PMI improved to 51.1 in March, beating expectations and indicating resilience in the services sector. Despite this mixed performance, the Eurozone PMI Composite rose to 49.9 in March, slightly surpassing expectations and signaling overall economic expansion.
Therefore, the Eurozone's weak Manufacturing PMI weighed on the EUR/USD pair, as it highlighted economic struggles. However, the improved Services PMI and Composite PMI have provided some support, indicating a mixed impact.
Upcoming Data Releases Could Impact EUR/USD Direction
Traders are closely monitoring upcoming data releases and central bank speeches for further insights into the direction of the EUR/USD pair. Specifically, attention will be focused on the German IFO Business Climate index, which could provide clues about the health of the Eurozone's largest economy. Additionally, speeches from Fed Chair Powell and other officials will be scrutinized for any hints regarding future monetary policy decisions.
EUR/USD - Technical Analysis
On March 22, the EUR/USD pair registered a decrease, falling by 0.26% to a rate of 1.08318. This movement indicates a bearish sentiment in the market, as the pair trades below the pivotal 1.0869 mark. Resistance levels are observed at 1.0898, 1.0936, and 1.0964, suggesting potential ceilings the pair might face in its upward trajectory. Conversely, support levels are positioned at 1.0799, 1.0764, and 1.0733, marking critical zones where the price could find a floor in the event of further declines.
The Relative Strength Index (RSI) stands at 38, pointing towards a bearish momentum, while the 50-Day Exponential Moving Average (EMA) at 1.0895 currently lies just above the day's closing price, underscoring the downward pressure. A bearish engulfing candle formation on the 4-hour timeframe near the 1.0830 level reinforces the expectation of continued downtrend for the EUR/USD pair.
Considering the technical landscape, the market outlook for the EUR/USD is bearish, prompting a recommended trading strategy with a sell limit order at 1.0869. This strategy targets a take profit at 1.0799 and sets a stop loss at 1.0898 to safeguard against potential upward movements.
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GOLD Price Analysis – March 22, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its downward rally and remained well offered around the 2,175 level. However, the reason for its downward trend can be attributed to the renewed strength of the US dollar, which gained traction despite the Fed’s projected three rate cuts in 2024. However, the optimistic outlook for the US economy was seen as one of the key factors that helped the US dollar to regain traction. Hence, the US dollar's strength has played a major role in underpinning the Gold prices. Another factor undermining the precious metal gold was the risk-on market sentiment, which tends to undermine safe-haven assets like gold.
Federal Reserve Policy Outlook and Economic Data Influence Gold and US Dollar Dynamics
On the US front, the Federal Reserve plans to be less strict with its policies, which might prevent the US Dollar from gaining too much strength. They might decrease interest rates by 75 basis points this year. Despite this, the Dollar bounced back strongly after hitting a low following a recent Federal Open Market Committee (FOMC) decision. The Fed is more optimistic about economic growth, predicting a 2.1% increase in real GDP by year-end, up from 1.4% in December. Furthermore, core inflation is projected to rise to 2.6%, and the unemployment rate for 2024 is forecasted to be 4%, slightly lower than previously thought. These developments support higher US Treasury bond yields, which boost the Dollar, but the Fed's less restrictive policy outlook could temper its upward momentum.
Therefore, the Federal Reserve's less restrictive policy stance undermine the Gold price as the potential for lower interest rates and a stronger Dollar could diminish the appeal of the precious metal.
On the data front, the US Department of Labor reported a drop in Initial Jobless Claims to 210K for the week ending March 16, down from the previous 212K. Additionally, US Secretary of State Antony Blinken mentioned progress in talks for a Gaza ceasefire and hostage release, which bolstered investor confidence.
Therefore, the decrease in Initial Jobless Claims and progress in Gaza ceasefire talks may strengthen the US Dollar as it indicates economic resilience. However, improved investor sentiment could reduce demand for safe-haven assets like Gold.
Moving ahead, investors will await Fed Chair Jerome Powell's speech for insights into future policy decisions, which could impact the XAU/USD. Powell's remarks are anticipated to provide fresh direction and momentum for gold trading.
Optimistic Outlook for US Economy Dampens Safe-Haven Appeal of Gold
Apart from this, the upbeat mood in the market, fueled by confidence in the US economy, is pushing investors towards riskier assets and away from safe-haven options like gold. This sentiment is often driven by optimism about economic conditions. As a result, they are less interested in buying gold, which is typically seen as a safe investment during uncertain times.
Hence, the optimistic outlook for the US economy and the ongoing risk-on sentiment reduce demand for safe-haven assets like gold, leading to downward pressure on its price.
GOLD (XAU/USD) - Technical Analysis
On March 22, gold experienced a slight decline, shedding 0.33% to settle at $2174.68. This movement occurs against a backdrop of oscillating market sentiments, with key technical levels providing insight into potential future movements. The pivot point for the day is set at $2190, with gold currently trading below this threshold, indicating short-term pressure. However, immediate resistance levels at $2186, $2199, and $2223 hint at possible upward movements should the market find sufficient momentum.
Support levels are established at $2150, $2138, and $2124, delineating critical zones where buyers might step in to curb further declines. The Relative Strength Index (RSI) hovers around 50, suggesting a market in balance between buyers and sellers. Meanwhile, the 50-Day Exponential Moving Average (EMA) at $2168 supports the notion that gold prices may find a foundation around the $2167 mark, a level closely watched by traders for potential buying opportunities.
The technical outlook suggests a cautious optimism for gold, proposing a strategic entry price for buy limit orders at $2166. This approach is complemented by a take profit level at $2190 and a stop loss at $2150, aiming to capitalize on the precious metal’s resilience and its tendency to rebound from key support levels.
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AUD/USD Price Analysis – March 21, 2024
Daily Price Outlook
The AUD/USD currency pair maintained its upward rally and remained well bid around the 0.6631 level. The reason for its upward trend can be attributed to the risk-on market sentiment, which tends to underpin the Australian dollar and contribute to the gains of the AUD/USD currency pair. Apart from this, positive employment data from Australia was seen as another key factor that kept the AUD/USD pair higher, as it indicates a strong economy, boosting investor confidence in the Australian dollar (AUD), leading to increased demand and a higher value against the US dollar (USD).
Moreover, the bearish US dollar, driven by the dovish Fed outlook, has played a major role in underpinning the AUD/USD currency pair. The Federal Reserve plans to reduce interest rates by 75 basis points throughout the year, signaling a commitment to accommodative monetary policy in response to economic conditions. This weakens the US dollar and potentially strengthens the AUD/USD pair.
Australian Economic Indicators Impact Currency Markets
On the data front, Australian Employment Change for February surged to 116.5K, exceeding expectations of 40.0K and the previous figure of 15.3K. However, the Unemployment Rate increased to 3.7%, lower than the expected 4.0% and the previous 4.1%. The preliminary Judo Bank Services PMI rose to 53.5 from the previous figure of 53.1, while the Composite PMI showed a slight uptick to 52.4 compared to the previous 52.1.
Hence, the positive employment data from Australia, including a surge in employment change and a lower-than-expected unemployment rate, likely strengthened the Australian Dollar (AUD) against other currencies, potentially leading to gains in the AUD/USD currency pair.
China's Monetary Policy Stability and Positive China-Australia Relations Boost AUD Confidence
On the China front, the People’s Bank of China (PBoC) maintaining its interest rate at 3.45% suggests stability in China's monetary policy, influencing investor sentiment towards the Australian Dollar (AUD). Additionally, the positive tone from the meeting between Chinese Foreign Minister Wang Yi and Australia's Foreign Affairs Minister Penny Wong, highlighting the strong potential and positive trajectory of China-Australia relations, could bolster confidence in the AUD.
US Interest Rate Expectations and Economic Data Impact AUD/USD Exchange Rate
On the US front, the value of the US dollar didn't continue its recent rise and fell on Thhursday. This drop happened because the Federal Reserve announced a plan to cut interest rates three times this year. This could lead to a relative strength in the Australian dollar (AUD) against the US dollar (USD), causing the AUD/USD pair to remain higher.
On the data front, US Building Permits for February increased to 1.518 million, surpassing the expected 1.495 million and the prior figure of 1.489 million. Meanwhile, the housing Starts also saw a rise to 1.521 million from the previous 1.374 million, beating the anticipated 1.425 million. However, the preliminary Michigan Consumer Sentiment Index for March dipped to 76.5 from 76.9, contrary to expectations of no change.
Hence, the positive data on building permits and housing starts might influence the Fed's interest rate decision by indicating strong economic activity.
AUD/USD - Technical Analysis
The AUD/USD pair experienced a notable uptick in the March 21 trading session, marking a 0.62% rise to settle at 0.66257. This movement signifies a resurgence in bullish sentiment, yet the currency pair encounters a pivotal juncture at the 0.6631 pivot point. Resistance levels at 0.6649, 0.6666, and 0.6686 delineate the potential ceilings for further gains, while support levels established at 0.6597, 0.6573, and 0.6552 provide floors to cushion any downward pressures.
Technical indicators suggest a nuanced picture; the Relative Strength Index (RSI) at 71 indicates a market that is veering into overbought territory, hinting at potential pullbacks. Moreover, the formation of a double-top pattern near the 0.6630 level suggests that the Australian dollar may struggle to sustain its upward momentum, with a close beneath this pivotal mark potentially ushering in a bearish correction phase.
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USD/JPY Price Analysis – March 21, 2024
Daily Price Outlook
The USD/JPY currency pair has been experiencing mixed performance lately, struggling to find a clear direction. This could be attributed to various factors, including uncertainty in global markets, geopolitical tensions, fluctuations in interest rates, or changes in monetary policies by central banks. It's worth noting that the potential for an early rate hike by the Bank of Japan, coupled with improved confidence among Japanese companies, especially in the manufacturing and service sectors, is positive for the Japanese Yen. This contributed to the mild losses in the USD/JPY currency pair.
Furthermore, the risk-on sentiment, backed by the U.S. Federal Reserve indicating it would stick with its plans to cut interest rates, undermined the safe-haven Japanese yen. This was seen as a key factor that kept the lid on any additional losses in the USD/JPY currency pair.
BoJ's Dovish Hike and the Risk-On Mood
It's worth noting that the recent dovish stance by the Bank of Japan (BoJ), along with a prevailing risk-on mood in the market, has exerted downward pressure on the USD/JPY currency pair. The BoJ's decision to maintain accommodative monetary conditions without offering clear guidance on future rate hikes has weakened the Japanese Yen.
Besides this, the risk-on sentiment among investors, driven by positive market sentiment and an improved economic outlook, has further diminished the safe-haven appeal of the Yen. This makes it harder for the USD/JPY pair to rise as traders stay careful due to uncertain monetary policies and global market changes.
Post-FOMC USD Selling Bias and its Impact on USD/JPY Pair
Following the Federal Reserve's announcement of its intention to implement three interest rate cuts by the end of the year, the US Dollar experienced a selling bias. Despite a modest uptick in US Treasury bond yields, the US dollar remained near a one-week low. Fed Chair Jerome Powell, in a press conference after the meeting, highlighted ongoing low inflation despite recent high readings, which pushed the USD down further. This means the USD weakened because the Fed plans to lower interest rates, and Powell's comments about inflation kept the pressure on the currency.
Therefore, the USD/JPY pair likely experienced downward pressure due to the Federal Reserve's rate cut plans and concerns over inflation, leading to a weakened US dollar against the Japanese yen.
USD/JPY - Technical Analysis
In the recent trading session on March 21, the USD/JPY pair experienced a modest downturn, decreasing by 0.24% to close at 150.941. This movement places the pair below its critical pivot point at 151.73, signaling a potential shift in market sentiment. Despite this slight retreat, the currency pair faces immediate resistance levels at 151.77, followed by 152.50 and 153.30, indicating potential barriers to upward movement. On the downside, support is found at 149.63, with subsequent levels at 148.95 and 148.20, which could provide some stability in case of further declines.
Technical analysis highlights a supportive backdrop for the USD/JPY, with an upward trendline near the 150.530 level suggesting an underlying strength. A doji candle closing above this trendline could catalyze a renewed buying interest, particularly if the pair sustains above the 150.530 threshold. Both the 50-Day Exponential Moving Average (EMA) at 149.59 and the Relative Strength Index (RSI) at 62 reinforce the potential for a bullish trajectory. Traders should closely monitor these key technical markers and market dynamics, which will likely dictate the short-term direction of the USD/JPY pair in the forex market.
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GOLD Price Analysis – March 21, 2024
Daily Price Outlook
Gold price (XAU/USD) managed to stop its previous losing streak and hit a fresh all-time high, gaining traction around the 2,220 level. The reason for its upward rally could be attributed to the weaker US dollar, which lost its momentum on the back of the Fed's dovish outlook. The Federal Reserve indicated that it remains on track to cut interest rates by 75 basis points this year, easing market jitters that the central bank will lower its projection for the number of rate cuts to two amid sticky inflation.
Hence, the indication of a 75 basis point interest rate cut by the Federal Reserve eased market concerns, likely weakening the dollar and bolstering gold prices.
In contrast to this, the upward trend in global stocks has limited gold's gains as investors prioritize riskier assets over safe havens like gold.
Fed’s Projected Three Rate Cuts Benefit Gold Amid Weakening USD
On the US front, the Federal Reserve's plan to cut interest rates three times this year has affected gold prices. When the Fed adopts a "dovish" stance, meaning they're less concerned about inflation and more focused on boosting economic growth, it tends to lower interest rates. This makes the US dollar less attractive to investors because they can earn less return on their investments. As a result, the value of the dollar decreases supporting gold prices.
Traders are closely monitoring the Fed's policy decisions and economic projections for signals of future rate cuts, with market sentiment largely favoring a dovish outlook. As a result, gold continues to benefit from the prospect of lower interest rates and a weaker dollar, driving its upward trajectory.
Prevalent Risk-On Mood and its Impact on Gold Price
Despite the bullish performance of gold, an ongoing risk-on mood in the markets has capped some of the metal's gains in recent sessions. However, the extension of the recent bullish run across global equity markets has diverted investor attention away from safe-haven assets like gold, as risk appetite increases and confidence in riskier assets grows. This has led to some profit-taking in gold, particularly as the metal reached slightly overbought conditions on the daily chart.
Despite temporary setbacks from risk-on sentiment, the fundamental factors favoring gold's rise persist. The overall direction for gold remains upward due to ongoing supportive conditions. Although short-term fluctuations may occur, the underlying drivers of gold's bullish performance are expected to endure in the medium to long term.
GOLD (XAU/USD) - Technical Analysis
Gold's price edged higher, gaining 0.81% to settle at $2204.155 on March 21, highlighting investors' continued interest in the safe-haven asset amid economic uncertainties. With the market hovering near the pivot point at $2205, gold faces significant resistance levels at $2215, $2225, and $2235, which are crucial barriers to its upward trajectory. Conversely, support levels at $2195, $2186, and $2177 offer a foundation should the price retrace.
Technical indicators suggest a cautious outlook; the Relative Strength Index (RSI) at 77 points towards overbought conditions, indicating potential for a pullback. Moreover, with the 50-Day Exponential Moving Average (EMA) at $2160, gold's price action has notably distanced itself from recent averages, suggesting a potential reevaluation of its current valuation.
Investors should watch the $2215 resistance level closely, as a failure to breach this mark could lead to a sell-off towards the $2194 support level, with a stop-loss advised at $2225 to mitigate risk.
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