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EUR/GBP Drops Near 0.8400 Ahead of Eurozone Retail Sales

EUR/GBP Drops Near 0.8400 Ahead of Eurozone Retail Sales

EUR/GBP Drops Near 0.8400 Ahead of Eurozone Retail Sales

EUR/GBP surrenders its recent gains from the previous session, trading around 0.8420 during Thursday’s Asian session. Traders are closely watching the Eurozone Retail Sales data set to be released later in the day.

The decline in the EUR/GBP pair is driven by growing speculation that the European Central Bank (ECB) might cut interest rates in September. If the ECB follows through, it would be the second rate cut since the bank shifted towards policy normalization in June.

In the Euro Area, the Producer Price Index (PPI) increased by 0.8% month-over-month in July, marking the largest rise since December 2022. This follows a revised 0.6% increase in June, significantly surpassing market expectations of 0.3%.

However, the Eurozone Services PMI dropped to 52.9 in August, down from 53.3 in the prior month, while the Composite PMI slipped to 51.0, missing forecasts and falling short of the previous reading of 51.2.

On the other hand, the British Pound (GBP) is gaining strength due to rising expectations that the Bank of England’s (BoE) rate-cutting cycle will proceed more slowly than that of the ECB. These expectations were fueled by Tuesday’s BRC Like-for-Like Retail Sales report, which showed a 0.8% year-on-year increase in August, up from 0.3% in July, marking the fastest growth in five months.

Additionally, positive UK macroeconomic data is boosting sentiment. A Purchasing Managers Index (PMI) survey revealed that business activity in August accelerated at its fastest pace since April.

On Wednesday, the S&P Global UK Composite PMI rose to 53.8 in August, up from 53.4 the previous month, and was revised higher from the preliminary estimate of 53.4. The Services PMI increased to 53.7, compared to 53.3 in July. Meanwhile, the Manufacturing PMI held steady at 52.5 in August, aligning with earlier estimates.

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WTI Breaks Below $69.50 Amid Potential Libyan Dispute Resolution

WTI Breaks Below $69.50 Amid Potential Libyan Dispute Resolution

WTI Breaks Below $69.50 Amid Potential Libyan Dispute Resolution

West Texas Intermediate (WTI) oil prices extended their losses for the second consecutive day, trading around $69.40 per barrel during the Asian session on Wednesday. This decline is attributed to the potential resolution of a political dispute that had halted Libyan oil exports, alongside concerns over slowing global demand growth.

According to Reuters, Libya’s two legislative bodies reached an agreement on Tuesday to jointly appoint a central bank governor, a move that could ease the conflict over control of the country’s oil revenue, which had fueled the recent dispute. If the agreement holds, it could lead to the return of over 500,000 barrels per day to the market.

Market sentiment was further dampened by data from the Institute for Supply Management (ISM), which indicated that U.S. manufacturing activity remains sluggish. Although there was a slight improvement in August from an eight-month low in July, the ISM Manufacturing PMI rose only to 47.2 from 46.8, falling short of market expectations of 47.5. This marks the 21st contraction in U.S. factory activity in the past 22 months.

China, the world’s largest crude importer, reported that its manufacturing activity fell to a six-month low in August, with factory gate prices dropping significantly. This has prompted Chinese policymakers to accelerate plans for additional stimulus aimed at supporting households.

Additionally, oil prices are facing pressure from the Organization of the Petroleum Exporting Countries and their allies (OPEC+) as they plan to increase production in the upcoming quarter. Starting in October, eight OPEC+ members are set to raise production by a combined 180,000 barrels per day (bpd), adding further supply to the market.

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Gold Price Declines as Traders Await US PMI Data

Gold Price Declines as Traders Await US PMI Data

Gold Price Declines as Traders Await US PMI Data

The price of gold (XAU/USD) is under pressure, falling on Tuesday due to a stronger US Dollar (USD) and rising US Treasury bond yields. Despite this, expectations of a potential interest rate cut by the US Federal Reserve (Fed) in September may provide some support for gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. Additionally, ongoing geopolitical tensions in the Middle East could increase demand for safe-haven assets such as gold.

Looking ahead, traders will focus on the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) set to be released on Tuesday. The highlight of the week will be the US Nonfarm Payrolls (NFP) report for August, which could influence the Fed’s decision on the pace of interest rate cuts and, consequently, impact gold prices in the short term.

Daily Market Overview: Gold Faces Selling Pressure Amid USD Strength

Gold prices are facing selling pressure as the USD rebounds. Protests erupted across Israel on Monday over the government’s inability to secure a ceasefire-for-hostages deal with Hamas, following the retrieval of six hostages’ bodies by Israeli soldiers in Gaza over the weekend, as reported by CNN.

In other economic data, China’s Caixin Manufacturing PMI rose to 50.4 in August from 49.8 in July, surpassing the market consensus of 50.0. The US ISM Manufacturing PMI for August is expected to improve to 47.5, up from 46.8 in July, while the Services PMI is projected to dip slightly to 51.1 from 51.4. The US economy is anticipated to add 163,000 jobs in August, with the unemployment rate expected to decrease slightly to 4.2%.

According to the CME FedWatch Tool, markets are now pricing in a nearly 69% probability of a 25 basis point (bps) rate cut by the Fed in September, with a 31% chance of a 50 bps reduction.

Technical Analysis: Long-Term Outlook for Gold Remains Positive

While gold prices are drifting lower on the day, the longer-term outlook remains positive. On the daily chart, gold is trading well above the key 100-day Exponential Moving Average (EMA), suggesting a constructive outlook. The 14-day Relative Strength Index (RSI) is also above the midline at around 55.70, indicating that the upward momentum is more likely to continue than reverse.

The key resistance for XAU/USD is in the $2,530-$2,540 range, which marks the upper boundary of a five-month ascending channel and aligns with the all-time high. A decisive break above this level could trigger a rally towards the $2,600 psychological mark.

On the downside, initial support lies at the August 22 low of $2,470. A break below this level could lead to further declines, with additional support at the August 15 low of $2,432 and the 100-day EMA at $2,372.

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Japanese Yen Pares Intraday Gains Despite Hawkish BoJ Stance

Japanese Yen Pares Intraday Gains Despite Hawkish BoJ Stance

Japanese Yen Pares Intraday Gains Despite Hawkish BoJ Stance

The Japanese Yen (JPY) has lost momentum against the US Dollar (USD), reversing some intraday gains after the release of the US Personal Consumption Expenditures (PCE) Index data for July. This data dampened expectations for a significant interest rate cut by the Federal Reserve (Fed) in September. The CME FedWatch Tool now shows that markets are fully pricing in at least a 25 basis point rate cut at the Fed’s upcoming meeting, though traders will be closely monitoring upcoming US employment data, including August’s Nonfarm Payrolls (NFP), for further clues on the Fed’s policy trajectory.

On Monday, data showed Japanese companies increased Capital Spending by 7.4% in the second quarter. Additionally, Japan’s Manufacturing PMI for August was revised upwards to 49.8 from an initial estimate of 49.5, suggesting a move towards stabilization in the sector. Recent Tokyo inflation data, which showed an increase, has bolstered the Bank of Japan’s (BoJ) hawkish stance, providing some support to the JPY and limiting gains in the USD/JPY pair.

Daily Market Movers: JPY Declines Despite Hawkish BoJ

The US Bureau of Economic Analysis reported that the headline PCE Price Index rose by 2.5% year-over-year in July, consistent with the previous month’s reading but below the expected 2.6%. The core PCE, excluding food and energy prices, also increased by 2.6% year-over-year, in line with the prior month’s data but slightly under the forecast of 2.7%. Meanwhile, Tokyo’s Consumer Price Index (CPI) climbed to 2.6% year-over-year in August, up from 2.2% in July, and the core CPI rose to 1.6% from 1.5%. However, Japan’s unemployment rate unexpectedly increased to 2.7% in July, the highest since August 2023, from 2.5% in June.

Atlanta Fed President Raphael Bostic, a notable hawk, recently suggested that it might be time for the Fed to consider rate cuts due to cooling inflation and a higher-than-expected unemployment rate. According to FXStreet’s FedTracker, which rates the tone of Fed officials’ speeches on a scale from 0 to 10, Kashkari’s recent remarks were rated as neutral, with a score of 5.6.

In the US, second-quarter GDP growth was reported at an annualized rate of 3.0%, surpassing expectations and the previous rate of 2.8%. Initial Jobless Claims dropped to 231,000 for the week ending August 23, slightly below expectations, signaling a robust labor market.

Japan’s Finance Minister, Shunichi Suzuki, noted that foreign exchange rates are influenced by a variety of factors, including monetary policies, interest rate differentials, geopolitical risks, and overall market sentiment. He emphasized the unpredictability of these factors’ impact on FX rates.

Technical Analysis: USD/JPY Holds Ground Around 146.00

USD/JPY is trading near the 146.00 mark. Technical analysis on the daily chart shows the pair remains above the downtrend line, indicating a reduced bearish outlook. However, the 14-day Relative Strength Index (RSI) is still below 50, suggesting that the bearish trend is not fully out of play.

For support, USD/JPY could test the nine-day Exponential Moving Average (EMA) around 145.53, followed by the downtrend line near 144.00. If it falls below this level, the pair might aim for the seven-month low of 141.69, set on August 5, with further support at 140.25. On the upside, breaking above the psychological level of 150.00 could lead the pair to test resistance around the 154.50 level.

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Gold Price

Gold Price Gains Momentum as Traders Await US GDP Data

Gold Price Gains Momentum as Traders Await US GDP Data

Gold prices (XAU/USD) are recovering on Thursday, bouncing back from weekly lows in the sub-$2,500 region per troy ounce. The potential for US interest rate cuts is boosting gold demand, as lower interest rates decrease the opportunity cost of holding non-yielding gold. Political uncertainty in the US, geopolitical tensions in the Middle East, and global economic concerns further support the precious metal’s upward movement.

However, renewed demand for the US Dollar (USD) could weigh on gold prices, as a stronger USD makes gold more expensive for international buyers. Investors are closely watching the second estimate of US Gross Domestic Product (GDP) for the second quarter (Q2) on Thursday for clues on the size and pace of potential Federal Reserve (Fed) rate cuts. Additionally, the US Personal Consumption Expenditures (PCE) Price Index data for July, due on Friday, will be a key focus.

Daily Digest Market Movers: Gold Price Holds Strong Amid Rising Rate Cut Expectations

Emerging markets, particularly China, India, and Turkey, are expected to continue driving demand for gold, according to John Reade, Chief Market Strategist at the World Gold Council. “US data has failed to give gold any further lift, so the temptation for traders to book some profit after a long run has been rising,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.

The second estimate for US Q2 GDP growth is expected to show a 2.8% increase. Meanwhile, the headline PCE Price Index is anticipated to rise by 2.6% year-over-year in July, up from 2.5% in June, with core PCE inflation projected to increase from 2.6% to 2.7% year-over-year. The rate futures markets have fully priced in a 25 basis point (bps) rate cut in September, with a 36.5% chance of a deeper cut, according to the CME FedWatch Tool. Traders are expecting a total of 100 bps in Fed easing this year.

Technical Analysis: Gold Price Shows Bullish Outlook Long-Term

Gold prices are trading positively on the day, remaining just below the five-month-old ascending channel’s upper boundary and the all-time high. The overall outlook remains bullish, with prices staying well above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) is above the midline near 61.00, suggesting potential for further upside.

The confluence of the all-time high and the upper boundary of the trend channel in the $2,530-$2,535 range serves as a critical resistance level for gold. A break above this zone could lead to a rally toward the psychological $2,600 mark.

On the downside, immediate support for XAU/USD is at the $2,500 level. A decisive break below this support could trigger a significant sell-off toward $2,432, the low from August 15. The next major support is at $2,367, the 100-day EMA.

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Choppy Market Action Persists as Investors Await Next Catalyst

Forex Today: Choppy Market Action Persists as Investors Await Next Catalyst

Forex Today: Choppy Market Action Persists as Investors Await Next Catalyst

After hitting its lowest level in over a year near 100.50, the US Dollar Index (DXY) rebounded toward 101.00 during the European session on Wednesday. With no high-impact economic data releases scheduled for midweek, investors remain focused on central bank commentary and geopolitical developments.

A slight improvement in market risk sentiment made it challenging for the USD to maintain its strength against major currencies on Tuesday. As of early Wednesday, US stock index futures are trading virtually flat. Meanwhile, the yield on the 10-year US Treasury bond hovers slightly above 3.8%, fluctuating within a narrow range.

In early trading on Wednesday, data from Australia showed that the Consumer Price Index (CPI) rose 3.5% year-over-year in July, down from June’s 3.8% but slightly above market expectations of 3.4%. Following this release, AUD/USD initially surged to a new high for 2024 above 0.6810 but lost momentum, retreating below 0.6800.
Bank of Japan (BoJ) Deputy Governor Ryozo Himino commented on Wednesday that financial and capital markets remain unstable, emphasizing the need for careful monitoring by the Japanese central bank. Despite these comments, there was little immediate impact on the USD/JPY pair, which was trading positively around 144.50 at the time of writing.

EUR/USD saw gains on Tuesday, nearing the 1.1200 mark, but lost its upward momentum and traded lower near 1.1150 early Wednesday.

GBP/USD extended its rally, reaching its highest level since March 2022, climbing above 1.3260 on Tuesday. The pair entered a consolidation phase on Wednesday and was last seen trading just below 1.3240.

Gold registered modest gains for the second consecutive day on Tuesday. However, XAU/USD lost traction early Wednesday, pulling back below $2,510.

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EUR/USD Rises Above 1.1150 Amid Market Optimism

EUR/USD Rises Above 1.1150 Amid Market Optimism

EUR/USD Rises Above 1.1150 Amid Market Optimism

The EUR/USD pair has rebounded from its recent losses, trading around 1.1170 during Tuesday’s Asian session. This recovery is fueled by growing market optimism following comments from U.S. Air Force General C.Q. Brown, chairman of the Joint Chiefs of Staff, who told Reuters that fears of a wider conflict in the Middle East have eased after his three-day visit to the region.

While there was an exchange of fire between Israel and Lebanon’s Hezbollah, it did not lead to further escalation. However, Hamas has rejected new ceasefire conditions proposed by Israel in negotiations held in Egypt, insisting on adherence to terms set by U.S. President Joe Biden and the UN Security Council.

On the monetary policy front, San Francisco Federal Reserve President Mary Daly indicated in a Bloomberg TV interview that it might soon be time to cut interest rates, potentially starting with a quarter-point reduction. Daly mentioned that if inflation continues to decrease gradually and the job market maintains steady growth, a more regular policy adjustment would be appropriate.

For the euro, market participants are considering how expectations of future rate cuts by the Federal Reserve could affect European Central Bank (ECB) policies. Traders will closely watch the GfK Consumer Confidence Survey and GDP data due later in the day for further direction.

Last week, ECB Governing Council member Olli Rehn noted that the slowing inflation and the weak Eurozone economy make a case for reducing borrowing costs next month. According to Bloomberg, the sluggish growth outlook in Europe, especially in the manufacturing sector, supports the argument for a potential rate cut in September.

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Hopes of Interest Rate Peak Propel European Stocks Higher

Hopes of Interest Rate Peak Propel European Stocks Higher

Optimism over a possible peak in interest rates has given European stocks a slight boost. On Tuesday, minor gains were noted across the European stock market due to traders’ anticipation that central banks would avoid triggering a recession by excessively hiking interest rates in their effort to combat inflation. In particular, Europe’s Stoxx 600 saw an increase of 0.2%, while France’s Cac 40 and Germany’s Dax each rose by 0.1%. It’s worth noting that these gains occurred amidst relatively low trading volumes, given that US markets were closed for the Independence Day holiday.

The Asian markets followed a similar trend. Stocks in this region rose after the Reserve Bank of Australia decided to maintain its interest rates at 4.1%. The bank is currently monitoring the effects of its previous rate increases on the economy. This decision was driven by a quicker-than-anticipated drop in the country’s annual inflation rate, which fell from 6.8 per cent to a 13-month low of 5.6% in May. This news provided some relief to investors who feared central banks might tighten their monetary policy too much in an attempt to curb ongoing price pressures.

Reacting to this news, Australia’s S&P/ASX 200 stock index rose by 0.5%, China’s CSI 300 grew by 0.2%, and Hong Kong’s Hang Seng increased by 0.6%. Japan’s Topix, however, bucked the regional trend and declined by 0.6%.

In other developments, oil prices experienced a surge on Tuesday after Saudi Arabia and Russia, two of the world’s largest producers, announced plans to cut supply in August. Consequently, Brent crude, the international benchmark, rose by 0.8% to trade at $75.27 per barrel, while the US marker West Texas Intermediate climbed by 0.9% to $70.42.

The German economy has also been in the spotlight recently. Germany’s Dax suffered significant losses in the energy and basic materials sectors, resulting in a 0.5% dip in the Stoxx 600 Basic Resources index. Additionally, new data released on Tuesday showed a 0.1% reduction in German exports in May, as high-interest rates continue to impact the country’s main trading partners. This decrease fell significantly short of the expected 0.3% rise projected by analysts.

As we move forward, investors will be keeping a close eye on upcoming economic data. The US employment report due on Friday is particularly anticipated, as it may offer insight into the Federal Reserve’s next policy move.

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Gold Prices Under Pressure as Stronger USD Weighs Ahead of Fed Decision

Nikkei Paces Asia in Market Gains, China Trails

Nikkei Paces Asia in Market Gains, China Trails

Asian stock markets kicked off the week on a positive note, with Japan’s Nikkei Index spearheading the gains while China trailed. The surge in demand for tech stocks fuelled Japan’s market, as investors prepared for a week filled with data that will offer vital insights into the health of the Chinese economy and the direction of U.S. interest rates.

China experienced a dip in factory activity in June, as reflected by the Caixin manufacturing survey, which fell to 50.5 from 50.9 in May. Although this was slightly better than the anticipated market figure of 50.2, it underscored the ongoing weakening trend reflected in other surveys.

In light of this, China’s central bank, the People’s Bank of China, has promised more “forceful” actions to strengthen the economy. This decision comes at a crucial juncture when the country is expected to introduce a new central bank leader and its blue-chip index (.CSI300) lost 5% in the last quarter, even as most of the developed world witnessed a rally.

ANZ analysts caution that efforts to stimulate an economy amidst a significant property downturn, high sector debt, and a dwindling population could be challenging, citing Japan’s struggles in the 1990s as an example.

On the other hand, Japan’s Nikkei (.N225) index recorded nearly 20% growth in the previous quarter, buoyed by expectations that Japanese firms could step in to fill gaps created by the Sino-US decoupling, and a weakened yen. The index registered another 1.7% rise on Monday, inching towards 30-year highs.

According to a Bank of Japan survey, business sentiment improved in Q2, driven by easing supply restrictions and the lifting of pandemic-related measures, leading to enhanced factory output and demand.

However, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose by just 1.2%, still lagging behind Japan’s performance. EUROSTOXX 50 futures and FTSE futures each rose by 0.4%. S&P 500 futures and Nasdaq futures remained steady, ahead of the July 4 holiday, after recording over 6% growth in June.

The tech sector, already riding high, could receive an additional boost from Tesla’s (TSLA.O) record delivery of 466,000 vehicles in Q2, exceeding market estimates of around 445,000. This follows Apple’s (AAPL.O) achievement of crossing a $3 trillion valuation for the first time, contributing to Nasdaq’s best quarter in four decades.

BofA analysts noted that the market value of the seven largest tech companies has soared by $4.1 trillion this year, with Apple, Microsoft (MSFT.O), and Alphabet (GOOGL.O) now worth more than all emerging markets combined.

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WTI Slips to $71.00 Amid Trade Tariff Concerns and Weak China Data

Dow futures are indicating a downward trend

Dow futures are indicating a downward trend

During the evening trading session on Thursday, U.S. stock futures exhibited a varied performance, following a predominantly positive session for major benchmark averages. This optimistic sentiment was spurred by GDP data that outstripped expectations, thereby bolstering investor confidence. Furthermore, banks saw an upswing after the Federal Reserve announced that all 23 institutions featured in its annual stress test were sufficiently capitalized to endure a severe recession.

By 18:45 ET (22:45 GMT), Dow Jones futures were showing signs of a downward shift, marking a slight dip of 0.1%. In contrast, S&P 500 futures and Nasdaq 100 futures remained stable, indicating no significant changes in these indices’ projected opening levels.

In the wake of extended trading hours, shares of Nike (NYSE:NKE) experienced a 4.3% drop. This decline was triggered by the company’s Q4 earnings per share (EPS) of $0.66, which fell $0.02 short of the analyst estimate of $0.68. Despite this, the company’s revenue reached $12.8 billion, surpassing the anticipated figure of $12.58 billion.

Conversely, Accolade (NASDAQ:ACCD) witnessed a notable surge of 15.4% during after-hours trading. This increase followed their Q1 report, which revealed losses of $0.52 per share, outperforming the expected losses of $0.62 per share. The company also reported revenue of $93.2 million, exceeding the forecasted figure of $90.27 million.

As we look forward to Friday’s trading session, market participants will be keenly observing new data on the PCE price index, personal income and spending, as well as the Michigan consumer sentiment and expectation surveys. These indicators will offer crucial insights into the health of the U.S. economy and could steer the direction of the stock market.

During regular trading on Thursday, the Dow Jones Industrial Average rose by 269.8 points or 0.8%, closing at 34,122.4. Similarly, the S&P 500 climbed by 19.6 points or 0.5% to 4,396.4. However, the Nasdaq Composite wrapped up the day virtually unchanged at 13,591.3.

From a fixed income standpoint, the yield on the United States 10-Year Treasury note was pegged at 3.848%. Given that bond yields move inversely to prices, this level of yield suggests that investors are bracing for a rise in interest rates, which could exert further pressure on the stock market.

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Dow Jones Versus the Nasdaq 100 Amid Rising Government Bond Yields

Dow Jones Versus the Nasdaq 100 Amid Rising Government Bond Yields

The blue-chip-oriented Dow Jones gained cautiously on Wednesday while the tech-heavy Nasdaq 100 sank 1.75% in the worst single-day drop since April 25th. In fact, the Nasdaq/Dow ratio plunged 2.02%, marking the worst 24-hour period since October 27th, which was over 7 months ago. What explains this divergent dynamic and is it a concern for sentiment going forward?

Tech’s underperformance coincided with a strong day for developed countries’ 10-year government bond yields. An average of key nations (such as the United States, Canada, and Australia) soared 3.78% on Wednesday. That was the best single-day gain since December 20th. As we were reminded last year, growth-oriented companies face increasingly difficult challenges in a rising rate climate.

The surge in government bond yields follows two key events that are related: unexpected interest rate hikes from the Reserve Bank of Australia and Bank of Canada. The former was earlier this week while the latter occurred over the past 24 hours. These events served as not just a reminder that the fight against inflation is not done, but that other major central banks, such as the Fed, could yet follow.

With that in mind, the mostly pessimistic sentiment tone set by Wall Street leaves the door open to follow-through during Thursday’s Asia-Pacific trading session. That could place regional indices, such as Australia’s ASX 200 and Hong Kong’s Hang Seng Index vulnerable. Sentiment may thus remain in the driver’s seat given a light economic docket over the remaining 24 hours.

Nasdaq 100 Technical Analysis

On the daily chart, the Nasdaq 100 has fallen back to the 100% Fibonacci extension level at 14271. The index remains in a clear uptrend, with the 20-day Simple Moving Average and January trendline guiding prices higher. Reversing the uptrend would thus require meaningful follow-through lower from here. Key resistance is the 123.6% level at 14852 before 15768 comes into focus.

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FOMO Regime Change for US Stock Market

FOMO Regime Change for US Stock Market

The laggards, Dow Jones Industrial Average & Russell 2000 have recorded stellar single-day outperformances on Friday, 2 June against the Nasdaq 100; at least a three-month high.

Market breadth has improved but fundamental structure remains weak due to stagflation risk.

Positive FOMO (“fear of missing out”) flows may persist at least in the short to medium term due to relatively low levels of positioning, exposure, and sentiment.

On Friday, 2 June, we witnessed a significant flow of rotation among the benchmark US stock indices ahead of the key 16 June “Triple Witching” US options expiration; prior laggards, the Dow Jones Industrial Average and Russell 2000 have recorded one of the best single day outperformance in at least three months against the leading mega-cap tech & AI concentrated Nasdaq 100.

The ongoing medium-term uptrend of the Nasdaq 100 started on 13 October 2022, outperforming the Dow Jones Industrial Average and Russell 2000 in the past seven months. Interestingly, the Dow Jones Industrial Average / Nasdaq 1000 ratio recorded its strongest single-day performance on Friday since 3 Feb 2023 (1.38) while the Russell 2000 / Nasdaq 1000 ratio notched its strongest single-day performance since 26 October 2022 (2.81) supported by strong rallies seen in cyclical, industrial and banking stocks such as 3M (+8.7%), Caterpillar (+8.4%) and US regional banks (KRE ETF +6.2%) on Friday.

On the surface, these positive observations can be considered as an improvement in market breadth as rotation is being spread from the high-flying eight mega-cap tech stocks (FAANG plus MNT; Facebook/Meta, Apple, Amazon, Netflix, Google/Alphabet, Microsoft, Nvidia, and Tesla) that are leading the rally since late October 2022 towards the cyclical laggards.

A higher cost of funding environment cannot be ruled out

However, a higher cost of funding environment amid a lingering risk of stagflation may put a damper on earnings growth. The 10-year US Treasury yield has recovered above its 200-day moving ex-post US debt ceiling deal and is looking for a test on a key resistance at 3.90% with positive momentum.

The leading inverted US Treasury yield curve is pointing to a potential imminent global recession

In addition, we cannot rule out an impending global recession as the leading US Treasury yield curve, the difference between the 10-year and 2-year is now at -0.81%; it’s the most inverted state in almost 42 years.

However, in a nutshell, the trend is always your friend until its ends so do not be surprised by such positive FOMO irrational behavior that can persist in the short to medium-term time horizons which in turn may take the US stock market higher due to a relatively low level of positioning, exposure, and sentiment since the start of the year.

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Dollar Index Looks Unstoppable now

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Dollar Index Looks Unstoppable now

On Friday afternoon the new highs rose to 107.6, on the start of European trading session it went 107.45. Since Oct 2002 this was the highest rate and the index added around 20% to its 2021 low.

This is a positive secondary effect for the US(strengthening of dollar), reducing inflationary pressures through imports to ending the talk of dollar weakness that has been prevalent since late 2020.

Central bankers are not welcome too sharp fluctuations in any direction, however they are ignoring the exchange rate against any other currency.

Dollar got a little attention of appreciation by Fed, but it good to be prepared for the change in coming days and weeks to avoid the cause of any uncontrolled rise in dollar, which be devastating.

Fed has begun selling assets off its balance sheet, reducing it by $42.5B. The ECB stopped net buying in July, but active Fed like selling in the matter of uncertainty.

The strengthening of dollar looks controlled so far. But still, after the substantial rise to multi-year highs, markets could start a wave of movement from Europe and Asia, underpinned by the news and current exchange movements. The current market reached a point where it can move in one way. In such a case it is hard to talk about any levels could be the real turning point.[/vc_column_text][/vc_column][/vc_row]

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In the first half, US stocks fell by the most since more than 50 years

In the first half, US stocks fell by the most since more than 50 years

The first half of the year for US stocks was the worst in more than 50 years as a result of a collapse that was started by the Federal Reserve’s attempt to stop persistent inflation and accelerated by growing fears about global growth. The S&P 500 dropped 0.9% on Thursday, bringing the blue-chip index’s decline in the first half of 2022 to 20.6%. Since 1970, when stocks fell as a result of a recession that put a stop to the longest stretch of economic development in American history, Wall Street stocks have not had a year’s start as severe.

According to Bloomberg data on the S&P 1500 index, a larger measure that encompasses small, mid, and large-cap groups, the decline in US stocks has wiped out more than $9 trillion in market value since the end of 2021. The likelihood of recessions in the US and Europe is the dominant market concern, according to Bastien Drut, strategist at Paris-based asset manager CPR. The days of being able to rely on central banks loosening monetary policy to assist economic development are “gone,” he continued, describing the situation as “extremely gloomy.”

The NASDAQ Composite, which is heavily weighted toward technology, has also fallen this year; on Thursday, it lost 1.3%, bringing its losses for the year to roughly 30%.Except for energy stocks, which are up 29% over the past six months, every sector of the S&P 500 has declined. The equities in consumer discretionary companies have dropped the greatest, by 33%. Utility equities, which are viewed as inflation hedge since businesses are better able to pass on increasing costs to customers, have suffered the least this year, down just 2%.

Paul Leech, co-head of global equities at Barclays, claimed that “everything has been highly inflation-driven.” It has been the recurring theme of the year and has truly just gotten worse. Large stock indices have dropped significantly all throughout the world. The Stoxx 600 index for Europe fell 1.5% on Thursday, bringing its yearly loss to almost 17%. In terms of dollars, the MSCI index of the Asia-Pacific markets has fallen 18% in 2022.

Leading policymakers cautioned that the period of low interest rates and moderate inflation had ended following the inflation shock brought on by Russia’s invasion of Ukraine and the coronavirus epidemic on Wednesday at the European Central Bank’s annual conference. Fed Chair Jay Powell has cautioned that the US may experience substantial and frequent price increases that policymakers may find difficult to control if the central bank does not swiftly boost interest rates high enough to combat inflation. The most pain would come from neglecting to confront this high inflation and allowing it to become entrenched, he continued.

Interest rate increases from the Fed and Bank of England have alarmed the markets this month. The Fed increased the federal funds rate by 0.75 percentage points to a new target range of 1.5 to 1.75 percent, and officials have hinted at another significant rate increase for next month. For the first time since 2011, the ECB is also planning a July quarter-point increase.

According to Scott Chronert, US equities analyst at Citigroup, “stubborn inflation readings have provoked an increasingly hawkish Fed response, pushing the policy focus to battle inflation despite potential economic consequences.” Investors are understandably reluctant to purchase due to the Fed’s continuous rate hikes and their concern over resetting earnings expectations. On Wednesday, Citi decreased its S&P 500 year-end projection from 4,700 to 4,200 points. Although the new aim would represent an increase of about 11% above the benchmark’s current level, bank experts also put the likelihood of a worldwide recession at 50%.

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Gold Struggles Below $3,300 as Fed Rate Cut Hopes Dim Ahead of FOMC Minutes

Gold Struggles Below $3,300 as Fed Rate Cut Hopes Dim Ahead of FOMC Minutes

Gold (XAU/USD) dipped to a one-and-a-half-week low near $3,284 during the Asian trading session on Wednesday, weighed down by a stronger US Dollar and rising Treasury yields. Investors are increasingly convinced that recent US tariff hikes may fuel inflation, prompting the Federal Reserve to keep interest rates elevated for longer. 

The firmer Greenback, bolstered by expectations of prolonged Fed tightening and a robust June jobs report, has dulled the appeal of non-yielding assets like gold. Benchmark 10-year US bond yields also climbed, adding further pressure on the precious metal. 

Market participants remain cautious amid ongoing concerns about the economic fallout from Donald Trump’s aggressive tariff proposals. On Tuesday, the former US President threatened to impose duties of up to 50% on copper and 200% on foreign pharmaceuticals, unsettling global markets. However, gold’s traditional safe-haven demand has yet to see significant support in response. 

Traders are now eyeing the release of the FOMC meeting minutes later today, hoping for clues on the Fed’s rate path. Although a July rate cut appears off the table, markets are still pricing in up to 50 basis points of easing by year-end, likely beginning in October. 

Technically, a break below the $3,300 level, coupled with resistance at the 100-period SMA on the 4-hour chart, signals further downside. Momentum indicators suggest gold could slide towards the next support at $3,270, with a deeper drop towards $3,248–$3,247 not ruled out. 

On the upside, recovery attempts may face initial resistance near $3,310 and stronger barriers around $3,326 and $3,340. A decisive move above $3,360 could open the door to a short-term rebound toward the $3,400 mark. 

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Gold Price Climbs Steadily

Gold Price Climbs Steadily, Eyes Record High Amid Trade War Concerns

Gold (XAU/USD) extends its intraday rally, reaching the $2,880 region during the Asian session on Monday. The gains come in response to US President Donald Trump’s plan to impose new 25% tariffs on all steel and aluminum imports, reigniting fears of a global trade war and driving demand for the safe-haven precious metal. Additionally, concerns that Trump’s protectionist policies could fuel inflation further bolster gold’s appeal as a hedge against rising prices.

Gold Supported by Trade War Fears, But Fed Policy Remains a Concern

Despite strong upside momentum, gold’s gains may face limitations due to the resilient US Dollar (USD) and expectations that the Federal Reserve (Fed) might delay further rate cuts. The strong US employment data released on Friday, coupled with inflationary concerns, has reinforced speculation that the Fed will maintain a cautious stance.

Overbought conditions on the daily chart could also deter traders from initiating fresh bullish positions, especially in the absence of key US economic data early in the week.

Trump’s Tariff Announcement Sparks Market Uncertainty

On Sunday, Trump reaffirmed plans to impose 25% tariffs on all steel and aluminum imports into the US, adding that his administration would match tariff rates imposed by other countries. These announcements have further fueled uncertainty and strengthened gold’s safe-haven appeal.

Meanwhile, geopolitical tensions remain elevated. Russian Deputy Foreign Minister Galuzin stated there are no satisfactory proposals for Ukraine peace talks, dismissing Western statements as mere rhetoric. US Vice President JD Vance is reportedly heading to Germany this week to outline US policy proposals.

Fed Policymakers Express Caution Amid Economic Uncertainty

The latest US Nonfarm Payrolls (NFP) report showed 143K jobs were added in January, falling short of the 170K estimate but offset by an unexpected dip in the Unemployment Rate to 4.0%. While the report provides mixed signals, it has reinforced the belief that the Fed will remain cautious regarding further monetary easing.

Several Fed officials have weighed in on economic policy:

  • Minneapolis Fed President Neel Kashkari stated he would consider supporting further rate cuts if inflation data remains favorable and the labor market stays strong.
  • Chicago Fed President Austan Goolsbee noted that inconsistent US government policies create economic uncertainty, making it difficult to assess inflation trends.
  • Fed Governor Adriana Kugler acknowledged steady US economic growth but warned that progress toward the 2% inflation target remains uneven and slow.

What’s Next for Gold?

A stronger US Dollar could act as a headwind for gold prices, limiting aggressive bullish momentum. Traders will closely monitor Fed Chair Jerome Powell’s semi-annual congressional testimony and the upcoming US consumer inflation figures for further market direction.

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Gold Price Rally Holds Strong, But Overbought Conditions Raise Caution

Gold Price Bulls Hold Firm, But Overbought Conditions Suggest Caution

Gold (XAU/USD) continues its upward trajectory through the Asian session on Wednesday, reaching a fresh all-time high near $2,858. Concerns about the economic impact of US President Donald Trump’s trade tariffs continue to drive demand for the safe-haven metal. Furthermore, predictions that the Federal Reserve (Fed) would continue its easing cycle, backed by signs of deteriorating momentum in the US labor market, are fuelling demand for the non-yielding yellow metal.

 

Meanwhile, the US dollar (USD) remains under pressure near its weekly low, with rising expectations of further Fed policy easing, offering an extra lift to gold prices. However, Trump’s decision to suspend tariffs on Canada and Mexico has contributed to a risk-on mentality, which may restrict future gains for XAU/USD. Furthermore, gold is entering overbought territory on the daily chart, implying a short-term consolidation or minor retreat before the advance begins. Traders are now waiting for significant U.S. data releases, such as the ADP private-sector employment report and the ISM Services PMI, for new market signals.

Gold Bulls Retain Control Amid US-China Trade Tensions

Despite the positive risk tone, a further escalation in U.S.-China trade tensions continues to lend support to the upward momentum in gold. In response to President Trump’s latest tariffs, China has imposed targeted duties on US imports, and the threat of a trade war between the world’s two biggest economies has seen gold reach an all-time high on Wednesday.

On the macroeconomic front, the Job Openings and Labor Turnover Survey (JOLTS) released Tuesday revealed a decline in U.S. job openings, dropping to 7.6 million in December from a previous 8.09 million. The data signals a cooling labor market, increasing the likelihood of additional Fed rate cuts. This has kept USD bulls on the defensive and further strengthened XAU/USD.

Trump’s decision to postpone the application of a 25% tax on Canadian and Mexican imports by 30 days has revived hopes that a global trade war can be avoided. However, this has done little to undermine the positive enthusiasm toward gold.

Market players will be keenly monitoring Wednesday’s U.S. economic data, such as the ISM Services PMI and the ADP employment report, which may cause short-term changes in gold prices. However, Friday’s highly anticipated Nonfarm Payrolls (NFP) report continues to be the main focus. Furthermore, any fresh information about trade tariffs is probably going to cause financial markets to become more volatile.

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WTI Crude Oil Struggles Near $72.00, 100-Day SMA Holds as Key Support

WTI Crude Oil Struggles Near $72.00, 100-Day SMA Holds as Key Support

West Texas Intermediate (WTI) crude oil prices fell from a one-week high on Tuesday, attracting sellers for the second straight session. The commodity trades at $72.00, barely above last week’s one-month low and close to the important 100-day Simple Moving Average (SMA) support. 

US Tariff Delay Weighs on Oil Prices

US President Donald Trump has announced a one-month suspension on newly imposed tariffs on imports from Canada and Mexico, easing worries about potential supply disruptions from two of the country’s main oil suppliers. This development put downward pressure on crude oil prices. Furthermore, fears of lower gasoline demand—driven by the larger economic impact of Trump’s trade policies—are contributing to gloomy sentiment in the oil market.

OPEC+ Stands Firm on Production Policy

Despite Trump’s calls for higher output to combat rising oil prices, the Organization of Petroleum Exporting Countries and its allies (OPEC+) have chosen to keep current production levels. This decision may give some support for crude oil prices, avoiding further losses in the near term.

Key Technical Levels to Watch

Traders will closely monitor the 100-day SMA, currently positioned near the $71.00 mark, which serves as a crucial support level. A decisive break below this threshold could trigger an extended pullback from the recent multi-month highs. Conversely, a bounce from this level may reinforce buying interest and help WTI recover from its recent slump.

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Gold Holds Below $2,800 Despite Intraday Recovery

Gold Price Trims Intraday Losses but Remains Below $2,800 Amid Stronger USD

The gold price (XAU/USD) recovers some of its losses following the strong Asian session sell-off but remains in negative territory, hovering around $2,785, down about 0.60% for the day. The recent rise in the US Dollar (USD), fueled by President Donald Trump’s decision to impose tariffs on Canada, Mexico, and China, has pushed the greenback closer to a two-year high, weighing on gold and dragging it away from its all-time high of $2,817, hit on Friday.

However, projections that the Federal Reserve (Fed) would lower interest rates twice by the end of 2025, combined with indications about probable economic disruptions from Trump’s trade policies, contribute to gold’s safe-haven appeal. The current risk-off mentality further shields the downside, so bearish traders should exercise caution ahead of this week’s key US macroeconomic data, which begins with today’s ISM Manufacturing PMI release.

Technical Outlook: Gold’s Uptrend Intact Despite Intraday Pullback

From a technical perspective, the intraday decline found support near the $2,772 resistance-turned-support level, which now serves as a pivotal point. A decisive break below this zone could trigger further selling pressure, exposing gold to the next key support levels:

 

  • $2,755 – Initial downside target
  • $2,740 – Intermediate support
  • $2,725-$2,720 – Strong demand zone
  • $2,700 – Psychological level, a break below which could accelerate losses

Conversely, immediate resistance is seen in the $2,790-$2,800 region, followed by the record high of $2,817. Notably, momentum indicators on the daily chart remain comfortably positive, indicating that gold has not yet reached overbought levels. This provides room for additional upward momentum, confirming the broader bullish trend that began with the December swing bottom.

If gold manages to sustain a move above $2,817, it could pave the way for fresh record highs, with bulls eyeing further gains amid ongoing market uncertainty.

Market Drivers to Watch

US Dollar Strength: The impact of Trump’s tariffs on global trade could continue supporting the USD, potentially weighing on gold.

Federal Reserve Policy: Expectations of rate cuts in 2025 remain a crucial factor for gold’s long-term trajectory.

US Economic Data: The upcoming ISM Manufacturing PMI and Nonfarm Payrolls (NFP) report later this week could trigger volatility in gold prices.

Risk Sentiment: Any escalation in geopolitical or economic tensions could further boost gold’s safe-haven demand.

Overall, while gold has retreated from its highs, the larger bullish trend remains intact, with technical signals suggesting further upward movement as long as critical support levels hold.

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WTI Slips to $71.00 Amid Trade Tariff Concerns and Weak China Data

WTI Slips to $71.00 Amid Trade Tariff Concerns and Weak China Data

West Texas Intermediate (WTI) crude oil prices edge lower during Wednesday’s Asian session, erasing part of the previous day’s modest recovery from a nearly three-week low. The commodity trades near $71.00, down over 0.25% for the day, and remains vulnerable to further losses amid prevailing bearish sentiment.

Investor concerns persist over US President Donald Trump’s threat to impose trade tariffs on Canada, China, and Mexico by February 1, which could weigh on global fuel demand. Additionally, weak Chinese economic data adds to downward pressure. Official PMIs released on Monday highlighted continued weakness in the world’s second-largest economy and top crude importer, raising concerns over lower consumption.

Further pressure on oil prices comes from Trump’s energy policies, which include plans to ramp up US energy production and calls for the Organization of Petroleum Exporting Countries (OPEC) to increase output to drive prices lower.

With bearish fundamentals dominating, WTI remains susceptible to further downside risks in the near term.

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WTI Drops Toward

WTI Drops Toward $74.00 as Trump Pressures OPEC to Lower Oil Prices

West Texas Intermediate (WTI), the US crude oil benchmark, trades near $74.10 on Friday, continuing its downward trend after US President Donald Trump urged Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) to reduce oil prices.

Uncertainty surrounding Trump’s proposed tariffs and energy policies adds to the pressure on WTI. Speaking at the World Economic Forum in Davos on Thursday, Trump announced plans to request Saudi Arabia and OPEC to lower oil prices, saying, “I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil.”

Expectations of increased US production under Trump’s administration further weigh on oil prices. Earlier this week, Trump declared a national energy emergency, leveraging his authority to expedite the approval of oil, gas, and electricity projects that would typically require years of permitting.

Meanwhile, US crude inventories declined for the ninth consecutive week. The US Energy Information Administration (EIA) reported a drop of 1.017 million barrels in crude oil stockpiles for the week ending January 17, following a 1.962 million-barrel decline in the prior week. Market expectations had forecast a larger decrease of 2.1 million barrels.

Oil traders will closely monitor developments surrounding Trump’s energy policies and tariff announcements. Additionally, attention will shift to the preliminary US S&P Global Purchasing Managers Index (PMI) for January, set for release later on Friday. A weaker-than-expected reading could pressure the US Dollar (USD), potentially offering some support to the USD-denominated WTI price.

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EUR/USD Price Forecast

EUR/USD Price Forecast: Consolidating Below 1.0500 Amid Multi-Week High

The EUR/USD currency pair is having a hard time continuing its recent winning streak, trading in a tight range just below the 1.0500 psychological mark during the Asian session on Monday. In spite of the consolidation, the pair is still close to its three-week high of Friday, buoyed by a weaker US Dollar (USD).

Technically, the pair‘s location above the 38.2% Fibonacci retracement level of the November-January bear run, combined with upbeat oscillators on the daily chart, indicates that the bullish momentum is still intact. This leaves room for a potential rally towards the 1.0545-1.0555 resistance area, which coincides with the 50% Fibonacci retracement level and the 100-day Exponential Moving Average (EMA).

A successful breach above this crucial barrier may set the stage for additional gains, with EUR/USD potentially challenging the 1.0600 level. A break above this level may propel the pair towards the December 2024 swing high of 1.0630, close to the 61.8% Fibonacci retracement level. Further bullish momentum may continue to drive the rebound from its more than two-year low in January.

To the contrary, however, the 38.2% Fibonacci level of 1.0465 acts as an instant support level. A resolute breach through this area can drive selling momentum faster, pulling the pair towards the 1.0400 round number and down further into the mid-1.0300s (23.6% Fibonacci level). Failure to hold these levels could shift the bias in favor of bearish traders, potentially exposing the 1.0200 handle.

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EUR/USD Eases Near

EUR/USD Eases Near 1.0300 Ahead of Lagarde’s Speech

The EUR/USD pair edges lower to approximately 1.0310 during the Asian session on Monday, weighed down by a stronger US Dollar (USD). Market participants are focused on the upcoming Eurozone Sentix Investor Confidence data for February and a speech by European Central Bank (ECB) President Christine Lagarde later in the day.

On Friday, former US President Donald Trump announced plans to introduce reciprocal tariffs on multiple countries by Tuesday or Wednesday, though he did not specify which ones. This move has heightened concerns about a global trade war, fueling demand for the safe-haven USD.

“The immediate concern might not be inflation, as counter-effects like a demand slowdown could come into play. However, the bigger issue is uncertainty and the shift toward a more protectionist world,” said Charu Chanana, Chief Investment Strategist at Saxo.

Meanwhile, the Euro faces pressure from growing expectations of further ECB rate cuts amid sluggish economic growth. ECB Governing Council member Boris Vujcic stated that the market’s anticipation of three rate cuts this year is reasonable. However, he emphasized that greater clarity on monetary policy direction may not emerge until early in the second quarter.

Traders will keep a close eye on US trade policies, especially Trump’s repeated threats against Europe. JPMorgan economist Nora Szentivanyi noted that the objectives, timing, and tariff rates remain unclear. Nonetheless, the European Commission has stated it would retaliate firmly against any tariffs imposed by the US.

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EUR/USD Holds Below 1.0400 Ahead of Eurozone Retail Sales Data

EUR/USD Struggles Below 1.0400 Ahead of Eurozone Retail Sales Data

EUR/USD is trading lower around 1.0390 in the Asian session on Thursday, extending losses following a two-day recovery. Investors remain wary ahead of the release of Eurozone Retail Sales data later today.

Market predictions suggest that Eurozone retail sales scaled by 1.9% year on year in December, up from the previous 1.2% increase. However, the monthly number is expected to fall by 0.1%, erasing the 0.1% increase reported in November.

The euro remains under pressure as market sentiment points to further monetary easing by the European Central Bank (ECB). Policymakers feel optimistic that inflation will steadily return to the ECB’s 2% objective, lessening the need for additional tightening.

Meanwhile, the US Dollar Index (DXY), which tracks the dollar against six major currencies, has stabilized at 107.70, restricting EUR/USD’s upside potential. The dollar’s resiliency comes after a three-day losing skid, which puts pressure on the pair.

On Thursday, Federal Reserve Vice Chair Philip Jefferson reiterated his desire for keeping existing interest rates, underlining that the Fed’s policy remained restrictive despite the 100-basis-point drop. Meanwhile, San Francisco Federal Reserve President Mary Daly emphasized the central bank’s cautious attitude in the face of prolonged economic uncertainties.

The dollar weakened on Wednesday following a disappointing US Services PMI reading. The ISM Services PMI dropped to 52.8 in January from a revised 54.0 in December, falling short of the market consensus of 54.3. Looking ahead, traders are watching Friday’s US Nonfarm Payrolls (NFP) report, which might influence the Federal Reserve’s next policy actions.

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EUR/USD Stuck in Range Near 1.0375-1.0380 as Bulls Struggle for Direction

EUR/USD Struggles for Clear Direction, Stays Range-Bound Near 1.0375-1.0380

The EUR/USD pair continues in consolidation mode, failing to build on its recent recovery from the 1.0200 region—the lowest level since January 13. After reaching a weekly high earlier on Wednesday, the pair is fluctuating within a narrow range around 1.0375-1.0380, showing little change for the day amid mixed market signals.

Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) indicated a cooling U.S. labor market, reinforcing expectations of Federal Reserve (Fed) policy easing. Markets are now factoring in the likelihood of two rate cuts by the Fed this year. Risk-on sentiment also remains prevalent, but should continue to weigh on demand for the safe-haven USD, and thereby support EUR/USD.

Upside momentum, however remains constrained by issues on the introduction of U.S. tariffs over the goods to be imported in Europe under Trump’s administration, among others, and the ECB dovish direction which is being felt in restraining the Euro though HICP was reported higher to an annual rate of 2.5% in the last month, still, does not allow much upside in this pair.

Looking ahead, market participants will focus on the final Eurozone Services PMI release, while the U.S. economic calendar highlights the ADP private-sector employment report and the ISM Services PMI. Movements in the USD could also be influenced by key FOMC member speeches. Still, Friday’s NFP report will focus more attention on it as it will help deliver a better picture of the situation in the U.S. labor market and set the direction for future Fed policy.

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GBP/USD Holds Above 1.2400 as Markets Watch China Tariff Developments

GBP/USD Holds Above 1.2400 as Markets Watch China Tariff Developments

GBP/USD extends its gains for a second consecutive session, trading around 1.2430 during Asian market hours on Tuesday. With  the  decision   by   U.S. President Donald Trump   to pause tariffs on Mexico and Canada , the pair benefits from a risk-on sentiment .

Despite this, investors continue to pay close attention to ongoing trade negotiations, making market volatility a major concern. Trump declared that he would postpone imposing high tariffs on Canada and Mexico for at least 30 days following their agreements to send 10,000 troops to the U.S. border to fight drug trafficking.

This move follows Trump’s recent decision to impose 25% tariffs on Mexican and Canadian goods, along with a 10% tariff on Chinese imports. Additional tariffs on China are anticipated to go into effect Tuesday at 5:00 GMT. Trump managed to say that talks with Chinese officials might happen “probably over the next 24 hours,” and that tariffs on China would be “very, very substantial” if an agreement could not be made.

Meanwhile, the U.S. Dollar Index (DXY), which tracks the USD against six major currencies, hovers around 108.70 after erasing most of its gains from the previous session. Strong U.S. economic data could provide support for the greenback, as the ISM Manufacturing PMI climbed to 50.9 in January from 49.3 in December, surpassing the expected 49.8.

While GBP/USD may rise, the British Pound’s upside may be limited, given the expectation that the Bank of England (BoE) will cut interest rates once again. Despite rising wages in the UK, the BoE is expected to lower interest rates by 25 basis points to 4.5% on Thursday.

The BoE’s Monetary Policy Committee (MPC) is expected to vote 8-1 in favor of the rate cut, with one member likely advocating for maintaining rates at their current level for now.

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EUR/USD Drops to 1.0200 on Trump’s Trade Tariffs

EUR/USD Slumps to Multi-Week Low Near 1.0200 Amid Trump’s Trade Tariffs

The EUR/USD pair extends its decline on Monday, plunging to the 1.0200 region—a three-week low—during the early Asian session. This drop brings the pair closer to its lowest level in over two years, last seen in January, reinforcing the ongoing multi-month downtrend.

The US Dollar (USD) gains broad strength following President Donald Trump’s weekend announcement of new tariffs: 25% duties on imports from Canada and Mexico, along with an additional 10% tariff on Chinese goods. These measures escalate global trade tensions, dampening investor appetite for riskier assets and boosting demand for the safe-haven USD. As a result, the EUR/USD pair faces renewed selling pressure.

Adding to the bearish sentiment, Trump also declared on Friday evening that he would impose tariffs on goods from the European Union. This, coupled with the European Central Bank’s (ECB) dovish stance, further weighs on the euro. Last Thursday, the ECB cut borrowing costs by 25 basis points (bps) as expected and signaled the possibility of additional rate cuts before the year’s end, exacerbating the euro’s weakness.

The policy divergence between the ECB and the Federal Reserve (Fed) further tilts market sentiment in favor of the USD. While the Fed has opted for a hawkish pause, supporting the dollar’s strength, a recent pullback in US Treasury yields may limit further USD gains and offer some relief to the EUR/USD pair. However, the overall market outlook suggests that the pair’s downside momentum is likely to persist.

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EUR/USD Holds Above 1.0400 | Focus on Q4 GDP & ECB Policy Decision

EUR/USD Holds Above 1.0400 Ahead of Q4 GDP Data and ECB Policy Decision

The EUR/USD pair is edging higher after three consecutive losses, trading near 1.0420 during Thursday’s Asian session. The rebound is primarily driven by a technical pullback in the US Dollar (USD). Meanwhile, the US Dollar Index (DXY), which tracks the greenback against six major currencies, remains just below 108.00.

Despite the recent uptick, further gains for EUR/USD may be capped as the USD could regain strength following the Federal Reserve’s (Fed) cautious approach to monetary policy. The Fed reinforced its hawkish stance by removing language suggesting confidence in inflation reaching its 2% target.

During his press conference, Fed Chair Jerome Powell emphasized that any policy changes would require “real progress on inflation or some weakness in the labor market.” As expected, the Fed maintained its overnight borrowing rate at 4.25%-4.50% during its January meeting on Wednesday. This decision follows three consecutive rate cuts since September 2024, totaling a one-percentage-point reduction.

Meanwhile, the Euro faces downward pressure as the European Central Bank (ECB) is widely expected to cut interest rates by 25 basis points in its policy meeting on Thursday, lowering the Deposit Rate to 2.75%. Market sentiment suggests that further rate cuts from the ECB may follow in the coming months, potentially weighing on the Euro.

Investors will closely watch the release of fourth-quarter Gross Domestic Product (GDP) data from the Eurozone and Germany on Thursday. Later in the day, focus will shift to the US Annualized GDP report, which could influence market sentiment and currency movements.

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Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

The Gold price (XAU/USD) has rebounded from multi-day lows but remains under the $2,500 mark amid a renewed bid in the U.S. Dollar (USD) on Wednesday. Despite this, ongoing geopolitical risks and the potential for imminent Federal Reserve (Fed) rate cuts could support the yellow metal in the near term.

Later on Wednesday, the JOLTS Job Openings and the Fed Beige Book are scheduled for release. Investors are particularly focused on Friday’s U.S. August Nonfarm Payrolls (NFP) report, which could influence the size and pace of potential rate cuts at the Fed’s September policy meeting. A weaker-than-expected NFP reading might heighten concerns about a U.S. recession, potentially leading to faster Fed rate cuts and providing a boost to gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Daily Digest Market Movers: Gold Price Pressured by Stronger U.S. Dollar

  • China’s Caixin Services PMI fell to 51.6 in August, down from 52.1 in July and missing the market expectation of 52.2 by a significant margin.
  • Daniel Ghali, a commodity strategist at TD Securities, noted, “Speculative positioning in gold seems maxed out for now. The pressure from the stronger dollar reflects our view on positioning.”
  • The U.S. ISM Manufacturing PMI edged up to 47.2 in August from an eight-month low of 46.8 in July, but this was below the market consensus of 47.5.
  • Traders have increased the likelihood of a more aggressive half-point rate cut to 39%, up from 31% before the release of the ISM Manufacturing PMI report, according to CME Group’s FedWatch tool.
  • The U.S. JOLTS Job Openings are anticipated to decline slightly to 8.10 million, down from 8.184 million in June.
  • The U.S. ISM Services PMI is expected to rise marginally to 51.4 in August from 51.1 in July.

Technical Analysis: Gold Price Maintains Positive Long-Term Outlook

Despite trading in negative territory for the day, gold maintains a bullish trend on the daily chart. The price remains above the key 100-day Exponential Moving Average (EMA), supported by a 14-day Relative Strength Index (RSI) that stays above the midline.

The critical resistance for gold lies between $2,530 and $2,540, corresponding to the upper boundary of a five-month-old ascending channel and the all-time high. A sustained move above this level could open the door to the psychological $2,600 mark.

Conversely, immediate support is found at $2,470, the low from August 22. A breach of this level could lead to a decline towards $2,432, the low from August 15, with further losses potentially driving the price down to $2,377, the 100-day EMA.

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Pound Sterling Drops from Recent Highs as Attention Turns to US Core PCE Inflation

Pound Sterling Drops from Recent Highs as Attention Turns to US Core PCE Inflation

The Pound Sterling (GBP) has pulled back from a more-than-two-year high of 1.3266 against the US Dollar (USD) during Wednesday’s London session. The GBP/USD pair has dipped as the US Dollar regains some strength, with investors now focusing on the upcoming US core Personal Consumption Expenditure Price Index (PCE) data for July, which is due on Friday. This data release could be a key catalyst for the pair.

The US Dollar Index (DXY), which measures the Greenback’s performance against six major currencies, has found some buying interest, rebounding after reaching a new year-to-date low of 100.50.

Despite this recent recovery, the short-term outlook for the US Dollar remains bearish, as market participants are increasingly confident that the Federal Reserve (Fed) will reduce interest rates at its September meeting. The main debate among traders is whether the Fed will implement a significant rate cut or opt for a smaller reduction in borrowing costs.

According to the CME FedWatch tool, the 30-day Federal Funds Futures data indicates a 34.5% probability of a 50-basis point rate cut in September, with the remainder favoring a 25-basis point cut.

Regarding core PCE inflation, economists anticipate that the Fed’s preferred inflation measure rose at a year-on-year rate of 2.7% in July, up from 2.6% in June, with the monthly figures showing steady growth of 0.2%. Persistent inflation would likely reduce market expectations for a large Fed rate cut, while further easing in price pressures could increase the likelihood of more aggressive rate cuts.

Market Movers: Pound Sterling Guided by BoE Mann’s Speech

The Pound Sterling is showing mixed performance against its major counterparts during Wednesday’s European trading hours. The currency is expected to trade in a narrow range as investors seek new insights regarding the Bank of England’s (BoE) interest rate trajectory.

The BoE cut interest rates by 25 basis points to 5% in August, marking the end of its two-and-a-half-year-long restrictive monetary policy stance, as officials grew confident that inflation would sustainably return to the bank’s 2% target. Market participants anticipate that the BoE’s pace of rate cuts for the rest of the year will be slower compared to other central banks, given that the UK economy appears resilient, supported by the August flash S&P Global/CIPS PMI data and robust Q2 GDP growth.

For further direction on interest rates, investors are awaiting a speech from BoE policymaker Catherine Mann, scheduled for 12:15 GMT. Mann was among those who voted to keep interest rates steady at 5.25% during the August 1 policy meeting. Her remarks will be closely scrutinized for any indications of the BoE’s future rate cuts, along with perspectives on service inflation and wage pressures.

On the political front, comments from UK Prime Minister Keir Starmer about the upcoming financial budget, expected in October, have also bolstered the appeal of the Pound Sterling. Starmer suggested that the budget would involve “short-term pain for long-term gain,” with plans to increase taxes, particularly for higher-income households.

Technical Analysis: Pound Sterling Holds Key Support at 1.3200

The Pound Sterling has seen a mild correction after reaching a new two-and-a-half-year high of 1.3266 against the US Dollar. The near-term outlook for the GBP/USD pair remains positive, as it maintains the breakout from the Rising Channel chart pattern on the weekly time frame. If bullish momentum resumes, the pair could target the February 4, 2022, high of 1.3640.

The upward-sloping 20-week Exponential Moving Average (EMA), located near 1.3000, indicates a strong bullish trend. The 14-period Relative Strength Index (RSI) remains in the bullish range of 60.00-80.00, suggesting robust upward momentum, although it has reached overbought territory around 70.00, which could prompt a corrective pullback. On the downside, the psychological level of 1.3000 is expected to serve as crucial support for Pound Sterling bulls.

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Rate Cuts Could Facilitate a Soft Landing

Rate Cuts Could Facilitate a Soft Landing: UBS

Rate Cuts Could Facilitate a Soft Landing: UBS

In a note released on Monday, UBS Financial Services reiterated its forecast that the U.S. economy is on track for a soft landing, despite acknowledging significant risks of a potential downturn. Consumer spending will be a critical factor in determining whether the economy can achieve this outcome.

UBS expects the Federal Reserve to begin lowering interest rates soon, potentially as early as its next meeting in September. These rate cuts are seen as a way to support the economy during this period of uncertainty.
The U.S. labor market has undergone substantial changes since the start of the year. UBS highlighted that the unemployment rate has risen quickly, moving from 3.7% in January to 4.3% in July. Historically, such an increase has been linked with economic downturns. However, UBS suggests this situation might be different, pointing out that the labor market remains robust by historical standards, even though it is no longer as overheated as it was two years ago.

Weekly jobless claims, a leading indicator of labor market health, have shown a rising trend. However, UBS advises interpreting this data cautiously, as it is often volatile and difficult to seasonally adjust. Although claims appear to be increasing, they remain low compared to historical norms, indicating that the labor market, while cooling, is not yet showing signs of a significant downturn.

Consumer spending is expected to play a pivotal role in the U.S. economic recovery. UBS notes that excess savings accumulated during the pandemic have largely been exhausted, making continued income growth crucial for sustaining consumer spending. Despite concerns, recent retail sales data for June and July have been stronger than expected, suggesting that the economic recovery is still on track.

However, the outlook is not without uncertainty. The U.S. government recently revised down its estimate of job growth for the 12 months ending in March by 818,000 jobs. Moreover, the latest labor market report showed some weakness in key income determinants such as wages and hours worked. UBS has adjusted its base case to reflect a soft landing but has increased the probability of a hard landing from 20% to 25%.

Inflation remains a central concern for the Federal Reserve and financial markets. UBS points out that inflation trends have shown some positive signs recently. While inflation was relatively high at the start of the year, more recent data has been softer, with the headline inflation rate slowing to 2.9% year-over-year in July—the lowest since early 2021.

The decline in inflation has been driven by falling goods prices and moderating services inflation. However, UBS notes that shelter inflation, a significant component of the Consumer Price Index (CPI), reaccelerated in July, rising by 0.4% month-over-month, compared to 0.2% in June. Shelter inflation is critical as it constitutes the largest portion of the CPI basket. Excluding shelter, inflation was only 1.7% year-over-year in July, suggesting broader inflationary pressures are easing. UBS remains confident that shelter inflation will eventually decline, especially given the modest increases in new rental leases since early 2023.

The Federal Reserve has indicated its readiness to begin cutting interest rates, as reflected in the minutes from the July FOMC meeting and comments from Fed officials. These rate cuts could start at the September 18 meeting, although uncertainty remains regarding their pace and magnitude.

UBS argues that the sharp rise in the unemployment rate, which the Fed had not anticipated, provides a compelling reason for the central bank to act swiftly. With real interest rates significantly above neutral, there is a case for an initial, aggressive rate cut. UBS’s base scenario involves a total of 100 basis points in rate cuts by the end of the year, potentially requiring a 50-basis-point cut at one of the remaining three FOMC meetings.

Given the Fed’s data-dependent approach, UBS cautions that various outcomes are possible. The upcoming September FOMC meeting is highly anticipated, with the Fed expected to use the meeting’s dot plot to signal its interest rate projections for the rest of the year. This will provide investors with a clearer picture of the Fed’s monetary policy direction and its efforts to guide the economy toward a soft landing.

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Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

The Japanese Yen (JPY) traded sideways against the US Dollar (USD) on Thursday, even as a recent Reuters poll, conducted from August 13-19 and published on Wednesday, showed that 31 out of 54 economists expect the Bank of Japan (BoJ) to raise borrowing costs before the end of the year. The median forecast predicts a 25 basis point hike, which would bring the year-end rate to 0.50%.

Despite these hawkish expectations, the USD/JPY pair gained ground as the Yen weakened following the release of a record trade deficit report on Wednesday. Traders are now eagerly awaiting BoJ Governor Kazuo Ueda’s appearance in parliament on Friday, where he is expected to discuss the central bank’s recent decision to raise interest rates.

On Thursday, the US Dollar edged higher, supported by a modest recovery in Treasury yields. However, the Greenback’s gains could be limited as the Federal Reserve is expected to implement up to 100 basis points (bps) in rate cuts throughout 2024. Market analysts remain divided on whether the Fed will opt for a 25 or 50 bps cut at its September meeting.

According to the CME FedWatch Tool, the probability of a 25 basis point Fed rate cut at the September meeting has decreased to 65.5%, down from 71.0% the previous day. Conversely, the likelihood of a 50 basis point rate cut has risen to 34.5% from 29.0%.

Market Movers: Japanese Yen Holds Steady Ahead of BoJ Governor Ueda’s Speech

Traders are exercising caution ahead of Federal Reserve (Fed) Chair Jerome Powell’s keynote address at the Jackson Hole Symposium on Friday. Powell’s remarks could provide crucial insights into the Fed’s potential interest rate cuts in the United States.

The minutes from the Fed’s July policy meeting revealed that most officials anticipated a likely rate cut in September, provided inflation continues to cool.

Japan’s Merchandise Trade Balance showed a deficit of ¥621.84 billion in July, a sharp reversal from the ¥224.0 billion surplus reported in June, and fell short of market expectations of a ¥330.7 billion deficit. Imports surged by 16.6% year-on-year in July, reaching a 19-month high of ¥10,241.01 billion, up from a 3.2% increase in June. Meanwhile, exports grew by 10.3% YoY to a seven-month high of ¥9,619.17 billion, missing market forecasts of 11.4%.

Fed Governor Michelle Bowman expressed caution on Tuesday, highlighting ongoing upside risks to inflation and warning against overreacting to individual data points, which could undermine the progress already made, according to Reuters.

The Bank of Japan (BoJ) had forecasted that strong economic recovery would help inflation sustainably reach its 2% target, justifying further rate hikes following last month’s increase as part of the BoJ’s efforts to unwind years of extensive monetary stimulus, Reuters reported.

On Sunday, Federal Reserve Bank of San Francisco President Mary Daly emphasized the need for a gradual approach to reducing borrowing costs, while Federal Reserve Bank of Chicago President Austan Goolsbee warned against maintaining a restrictive policy longer than necessary, according to the Financial Times and CNBC, respectively.

On Thursday, Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, commented that recent economic reports are broadly positive, supporting the BoJ’s stance and signaling the potential for further rate hikes, though the central bank would remain cautious after the last rate increase caused a sharp spike in the Yen.

Technical Analysis: USD/JPY Holds Above 145.00

USD/JPY is trading around 145.20 on Thursday. A look at the daily chart shows the pair consolidating under a downtrend line, suggesting a bearish bias. The 14-day Relative Strength Index (RSI) is slightly above 30, indicating the potential for a correction.

On the downside, the USD/JPY pair could find support around the psychological level of 144.00. A break below this level could lead the pair toward the seven-month low of 141.69, recorded on August 5, with further declines potentially targeting the next significant support level at 140.25.

On the upside, immediate resistance could be found at the downtrend line near the nine-day Exponential Moving Average (EMA) at 146.45. A break above this level could weaken the bearish outlook, allowing the pair to test the resistance at 154.50, which has transitioned from previous support to current resistance.

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WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

West Texas Intermediate (WTI) crude oil prices are hovering around $75.30 per barrel during the Asian session on Monday, pressured by concerns over weakened demand from China, the world’s top oil importer.

Recent data from China revealed that Industrial Production increased by 5.1% year-on-year in July, slightly below the expected 5.2% and down from the 5.3% growth recorded in June. This marks the third consecutive month of slowing industrial output, fueling worries about reduced demand for crude oil.

However, geopolitical tensions in the Middle East could potentially support oil prices. The situation has been tense following Hamas’s rejection of a ceasefire deal on Sunday, which has raised concerns over the stability of the region. Israeli Prime Minister Benjamin Netanyahu is set to meet with US Secretary of State Antony Blinken on Monday to discuss the ongoing negotiations, with further talks scheduled in Cairo.
The potential downside for oil prices may be limited by rising expectations of a Federal Reserve interest rate cut as early as September. Recent US economic data has shown strong retail sales and easing inflationary pressures, which could lead to lower borrowing costs and potentially boost economic activity in the US.

San Francisco Fed President Mary Daly and Chicago Fed President Austan Goolsbee both emphasized a cautious approach to rate cuts, suggesting that the Fed should avoid keeping restrictive policies in place longer than necessary.

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Japanese Yen Holds Losses

Japanese Yen Holds Losses as US Dollar Stabilizes Ahead of Key Economic Data

Japanese Yen Holds Losses as US Dollar Stabilizes Ahead of Key Economic Data

The Japanese Yen (JPY) continued its decline against the US Dollar (USD) on Tuesday, with safe-haven flows offering some support amid rising geopolitical tensions in the Middle East.

Japan’s parliament is set to hold a special session on August 23 to discuss the Bank of Japan’s (BoJ) recent decision to raise interest rates. This session, organized by the lower house financial affairs committee, is expected to include an appearance by BoJ Governor Kazuo Ueda, as reported by Reuters.

The USD/JPY pair found support as pressure on the US Dollar eased, following a reduction in expectations for a 50 basis point interest rate cut by the US Federal Reserve (Fed) in September. According to the CME FedWatch Tool, the probability of a 50 basis point cut in September has decreased to 50%, down from 85% the previous week. However, markets still fully anticipate at least a 25 basis point cut at the upcoming meeting.

Investors are closely watching the release of US Producer Price Index (PPI) data on Tuesday and Consumer Price Index (CPI) figures on Wednesday for signs that inflation remains under control in the US.

Daily Digest Market Movers: Yen Weakens as Fed Rate Cut Odds Diminish

Federal Reserve Governor Michelle Bowman commented on Sunday that she sees continued upside risks to inflation and strength in the labor market. Bowman suggested that the Fed may not be ready to cut rates at its September meeting, according to Bloomberg.

A Bloomberg report last week indicated that JP Morgan Asset Management (JPAM) believes the BoJ is unlikely to raise interest rates in the near term. JPAM anticipates that the BoJ may only consider further rate hikes if the Fed cuts rates and the US economy stabilizes, with additional tightening possibly occurring in 2025, provided the global economic environment remains stable.

The BoJ’s Summary of Opinions from its July 30-31 Monetary Policy Meeting revealed that several members believe economic activity and prices are evolving as expected, targeting a neutral rate of “at least around 1%” in the medium term.

BoJ Deputy Governor Shinichi Uchida also highlighted that the BoJ’s interest rate strategy could adapt if market volatility alters economic forecasts, risk assessments, or projections. Given recent market volatility, he emphasized the importance of closely monitoring the economic and price impacts of their policies, stating the need to “maintain the current degree of monetary easing for the time being.”

Minutes from the BoJ’s June meeting indicated concerns among some members about rising import prices due to the recent decline in the JPY, which could pose an upside risk to inflation. One member noted that cost-push inflation might exacerbate underlying inflation if it leads to higher inflation expectations and wage growth.

Technical Analysis: USD/JPY Tests 147.50; Next Barrier at Nine-Day EMA

The USD/JPY pair trades around 147.40 on Tuesday, with the daily chart indicating the pair remains below the nine-day Exponential Moving Average (EMA), suggesting a short-term bearish trend. The 14-day Relative Strength Index (RSI) has breached the 30 level, indicating a potential for a corrective move. If the RSI approaches the 50 level, it could signal a possible improvement in the pair’s momentum.

For support, the USD/JPY pair may test the seven-month low at 141.69, recorded on August 5, followed by the next support level at 140.25.

On the upside, the USD/JPY pair could challenge the immediate barrier at the nine-day EMA around 147.72. A breakout above this level could reduce bearish momentum and allow the pair to approach the 5-day EMA at 153.68, followed by resistance at 154.50.

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Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

The Australian Dollar (AUD) rebounded against the US Dollar (USD) on Monday, driven by hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Positive inflation data from China, a key trading partner, also provided support for the Aussie Dollar.

RBA Governor Michele Bullock emphasized the importance of vigilance regarding inflation risks, stating that the central bank is prepared to raise rates again if necessary. This follows the RBA’s decision to keep rates steady at 4.35% for the sixth consecutive meeting.

On the USD front, market expectations for a potential interest rate cut by the Federal Reserve (Fed) in September have put pressure on the USD, potentially providing further support for the AUD/USD pair. Investors will be closely watching US producer inflation data on Tuesday and consumer inflation figures on Wednesday for signs of stable price growth.

Daily Market Movers: Australian Dollar Rises on Hawkish RBA

RBA Deputy Governor Andrew Hauser attributed persistent inflation to weaker supply and a tight labor market, noting significant uncertainty in economic forecasts. However, the AUD’s gains could be limited by safe-haven flows due to rising geopolitical tensions in the Middle East. Reports suggest Iran may be preparing for a significant strike on Israel, adding a layer of risk to global markets.

Federal Reserve Governor Michelle Bowman reiterated on Sunday her concerns about ongoing inflation risks and a strong labor market, indicating the Fed might not be ready to cut rates in September.

In China, the Consumer Price Index (CPI) rose by 0.5% year-on-year in July, surpassing expectations. Westpac updated its RBA forecast, now predicting the first rate cut will occur in February 2025, moving from the previously anticipated November 2024, and raising its terminal rate forecast to 3.35%.

Last week, Treasurer Jim Chalmers challenged the RBA’s view that the Australian economy is too robust, which he believes is contributing to prolonged inflation. RBA Chief Economist Sarah Hunter also noted that the Australian economy is performing better than previously expected.

Technical Analysis: Australian Dollar Nears Key Support Levels

The AUD/USD pair is trading around 0.6590 on Monday, within an ascending channel that suggests a bullish bias. The 14-day Relative Strength Index (RSI) is consolidating below the 50 level, and a move above this threshold could signal strengthening bullish momentum.

Resistance for the AUD/USD pair is likely around the 0.6630 level, with a breakout potentially pushing the pair toward its six-month high of 0.6798. On the downside, immediate support is seen at 0.6575, with a drop below this level possibly reinforcing a bearish bias, potentially driving the pair toward 0.6540 and further to 0.6470 if pressure persists.

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

The dollar strengthened on Tuesday, driven by rising U.S. yields, putting pressure on low-yielding currencies like China’s yuan and Japan’s yen, which fell to its lowest level since 1986.

Benchmark 10-year Treasury yields increased nearly 14 basis points to 4.479% overnight. Analysts attributed this rise to expectations of Donald Trump winning the U.S. presidency, which could lead to higher tariffs and increased government borrowing.

As the dollar gained, the euro reversed part of a small rally following the first round of France’s election, which aligned with polling predictions. The euro last traded at $1.0735.

The yen dropped to 161.72 per dollar on Monday, its weakest in nearly 38 years, primarily due to the significant interest rate gap between the U.S. and Japan. On Tuesday, the yen traded at 161.55 per dollar in Asia and was under pressure from yen bears wary of potential intervention by Japanese authorities. The yen also hit a lifetime low of 173.67 against the euro on Monday and remained near that level on Tuesday.

In the bond market, the 10-year yield gap between U.S. and Japanese rates stood at 340 basis points, and nearly 440 basis points at the two-year tenor. China’s yuan, which reached a seven-month low against the dollar last week, faced similar pressure, with U.S. 10-year yields more than 220 basis points higher than Chinese government bond yields.

Robust manufacturing data in China and an announcement from the central bank about borrowing bonds, likely to sell them and stabilize falling yields, provided only a brief boost to the currency on Monday. The yuan last traded at 7.3043 in offshore markets on Tuesday, close to its June low.

The New Zealand dollar slipped 0.3% in early trade and was testing support at its 200-day moving average at $0.6075. The British pound remained steady at $1.2641. The Australian dollar hovered within its recent range at $0.6650, with traders focused on central bank minutes to gauge the likelihood of future interest rate hikes. Swaps market pricing suggests a one-in-three chance of a rate hike as soon as next month.

The question remains about the trigger for such a move. ING economist Rob Carnell noted that discussions have taken place, but the specific trigger for a hike is still uncertain. There is a leaning towards forecasting a hike at the August meeting.

Overall, the strengthening dollar and rising U.S. yields continue to exert pressure on low-yielding currencies, with markets closely watching upcoming central bank decisions and geopolitical developments.

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Cryptocurrency Move Back to Support the Pack to Level

If we have a look at the bearish start to the day in the majors and the Bitcoin move back to the level by $18,500 to the support pack. The Bitcoin to USD was seemed down at the level by 1.16% on this Thursday that reversing a 1.25% gain to the Wednesday to the ended the day at the level $18,260.0. At the start of the day, the Bitcoin rose to the early morning intraday to the high at the level before hitting the reverse level.

The major resistance level goes at the level by $18,878 and the Bitcoin fell to the intraday low to the level by $17,935.0.

The close term bullish pattern stayed flawless, disregarding the most recent pullback to sub-$18,000 levels. For the bears, Bitcoin would have to slide through the 62% FIB of $10,095 to shape a close term bearish pattern.

The Bitcoin was somewhere near at the level by 1.03% to $18,072.0. A blended beginning to the day saw Bitcoin ascend to an early morning high of $18,299.0 prior to tumbling to a low of $18,070.0.

Bitcoin left the significant help and obstruction levels untested from the get-go.

Somewhere else, it was a bearish beginning to the day for the majors. The Ripple’s XRP was somewhere around at the level 2.69% to lead the route down.

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Bitcoin Slips Down Below at Level $13,000 Since the Last Rally

Bitcoin Slips Down Below at Level $13,000 Since the Last Rally

The Bitcoin seems to the low at the level of $9,813 in September that managed the bitcoin to reach at the level high at $13,868. The bitcoin price is rejected to the sequential indicators on the 3-day chart.

If we have a look at the current candlestick of the 3-day chart it will seem significantly bearish and the TD sequential indicators are presented a sell signal. The 50- SMA seems down at the level of $10,600 and the 100 SMA at the level of $9,47.

The In/Out of the Money Around Price chart shows the closest and most grounded help region to be somewhere in the range of the level at $12,687 and $13,073 with near 624,000 BTC in volume. A break below this point can drive the cost of Bitcoin down to $11,914.

Despite the fact that bears appear to have assumed responsibility for the present moment, the powerful day by day upswing stays unblemished for Bitcoin. The 50-SMA and the 100-SMA harmonize around $11,200 which will go about as a critical help level. The MACD keeps bullish and the most basic obstruction level is still at $13,863. A breakout over this point can without much of a range drive the lead digital currency towards the untouched high at the level of $20,000.

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Bitcoin Price Clear the Path and Rose to the Level $13,000

Bitcoin Price Clear the Path and Rose to the Level $13,000

Bitcoin Price of the bulls has been the full control of the market to the price at the level of $11,340 to $12,835. The cryptocurrency had the largest to the single day that put the gain. The MACD shows the increasing the bullish momentum to price the growth anticipated.

The position detector is a convenient little apparatus that causes us to imagine solid opposition and backing levels. According to the everyday conjunction detector, there is an absence of solid obstruction levels on the potential gain. This should be empowering news for the buyers as they plan to bring BTC into the $13,000-zone.

Santiment’s holder’s distribution charts show you the number of addresses having a place with a specific symbolic section. According to the chart, the number of addresses holding 10,000-100,000 tokens tumbled from 111 on October 8 to 104 on October 20. This is an intensely bearish sign as it shows that the whales are selling off their property.

Bitcoin buyers have the opportunity to bring the cost into the level at $13,000 and even the $14,000 interference. The everyday intersection finder shows a total absence of solid opposition barriers straightforward.

For the bears, the drawback is covered off at the $12,000-$12,100 uphold divider. A break below that zone will bring the value down to $11,000, which has both the 50-day and 100-day SMA

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

The BTC/USD traded at the level of $11,355 after the mild rejection of the top-level $11,720 that losing some of the bullish.

Ethereum USD had a similar fate at the higher risk that seeing the longer pullback than the Bitcoin. If we talk about the XRP/USD is the clear loser after breaking below the 50 SMA and the 100 SMA on the daily chart that currently trading at the level of $0.2482 after yet facing another rejection.

Bitcoin, BTC to USD, fell by 1.02% on Tuesday. Incompletely turning around a 1.55% increase from Monday, Bitcoin finished the day at the level of $11,442.0.

It was a quiet beginning to the day. Bitcoin rose to a late morning intraday high to the level of $11,574.9 before operating reverse.

Missing the mark concerning the primary significant obstruction level at $11,830, Bitcoin tumbled to an early evening intraday low of $11,333.0.

Avoiding the primary significant help level at $11,201 Bitcoin quickly returned to $11,470 levels before moving back.

The close term bullish pattern stayed perfect, upheld by the most recent move back through to $11,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to shape a close term bearish pattern.

Bitcoin was up by 0.22% to $11,467.0. A beginning to the day saw Bitcoin tumble to an early morning low of $11,427.0 before ascending to a high at the level of $11,467.0. Bitcoin left the support and Resistance levels untested at an early stage.

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Let’s have a look at the cryptocurrency that hovering near to the level at $10,600 mark. The Bitcoin price is consolidating to the 50-12 Hour SMA and the 200-12 Hours SMA. The strong resistance lies at the level 50-12 SMA that repeatedly rejected the price.

This repeated dismissal may drop the value down to the level at  $10,400 uphold level, which is by all accounts the main observable help level on the drawback. If case this level doesn’t hold firm, at that point you can anticipate that the cost should plunge below $10,000. For this situation, one can anticipate that BTC should tumble to the level of $9,700 before it experiences another solid help.

While this may not appear to be a huge number, remember that every one of these addresses holds a great many dollars worth of Bitcoin. The fishes using the stale value activity to merge their positions look good for the general market.

With respect to the top 50 digital forms of money, the greatest failures incorporate Compound, down 12% over the most recent 24 hours, UMA down 12%, OMG Network down at the level 13%, Yearn.finance down 16%, and Aave down 18%. The main bull among the sloths of bears is EOS, which broke out greatly as covered Tuesday.

Ethereum has since September 23, been holding inside a rising equal channel. Recuperation towards $400 flamed out marginally above $360 a week ago. On the drawback, the misfortunes that followed grasped uphold at the level of $335 throughout the end of the week, permitting the shrewd agreement sign to revitalize, making strides above $350.

The Ethereum selling pressure in the market halted the increase at the 50 SMA and 100 SMA. Ether fell below the climbing channel, confirming a bear banner.

The downside of a significant help zone shows that Ethereum is at grave risk of spiraling to the level at $300. Other than the various simple help zones, the most significant one lies somewhere in the range of $298 and $309. Previously, around 879,000 locations purchased almost 2 million ETH.

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

The Bitcoin moves back and shows the bearish to the start of the day with the support level at $10,900 to the broader market.

The Bitcoin BTC to USD is rose by the level at 1.33% this Tuesday and reversing the loss at the level of 0.83% on Monday.

It was a mixed start to the day. Bitcoin fell to an early morning low $10,674.2 before finding support.

Steering clear of the major support levels, Bitcoin struck a late morning high at the level of $10,815.4 before operating reverse.

Coming up short of the major resistance levels, Bitcoin slid to a late afternoon intraday low $10,654.0.

Steering clear of the first major support level at $10,585, Bitcoin rallied to a final hour intraday high at the level of $10,889.0.

Falling short of the first major resistance level at $10,915, Bitcoin eased back to end the day at sub-$10,860 levels.

The near-term bullish trend remained whole, in contempt of the latest pullback. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend. At the hour of composing, Bitcoin was somewhere around 0.28% to the level of $10,826.0. It was a blended beginning to the day. Bitcoin rose to an early morning high $10,866.0 before tumbling to a low $10,826.0.

Bitcoin started the significant help and obstruction levels untested from the get-go. Somewhere else, it was a blended beginning to the day.

Bitcoin Cash ABC (+0.54%), Bitcoin Cash SV to the level (+0.62%), and Crypto.com Coin (+0.65%) evaded the pattern right off the bat.

It was a bearish beginning to the day for the remainder of the majors, in any case. Binance Coin was somewhere around 1.18% to lead the way down.

https://xtreamforex.com/nasdaq-futures-shows-the-short/

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