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19 August 2024,05:52
Daily Market Analysis
19 August 2024, 05:52
Gold prices soared above the $2,500 mark for the first time, driven by expectations of potential interest rate cuts, which have weakened the dollar to its recent low levels. Market participants are now focused on Wednesday’s FOMC meeting minutes for insights into the Fed’s next monetary policy moves. Additionally, Federal Reserve Chair Jerome Powell is scheduled to speak on Friday, which could provide further clarity on the Fed’s approach, potentially influencing gold’s trajectory.
In contrast, oil prices took a sharp downturn at the start of the week, with WTI crude falling more than 3%. The decline was triggered by the prospect of a ceasefire in the Middle East, easing geopolitical tensions that had previously supported prices. The resumption of production at Libya’s Waha oil field also contributed to the increased supply, further pressuring oil prices downward.
In the forex market, the euro is climbing toward its highest level of 2024 against the U.S. dollar. Euro traders are keenly awaiting tomorrow’s CPI reading to gauge the strength of the euro and its potential for further gains.
Meanwhile, the Japanese yen has been directionless in recent sessions after showing strength in early July. The focus is now on Bank of Japan (BoJ) Governor Kazuo Ueda, who is set to attend a special meeting with the Japanese Parliament to discuss recent monetary policy. The outcome of this meeting is expected to have a significant impact on the BoJ’s future policy decisions and the yen’s strength going forward.
Current rate hike bets on 19th September Fed interest rate decision:
Source: CME Fedwatch Tool
-50 bps (27.5%) VS -25 bps (72.5%)
DOLLAR_INDX, H4
The Dollar Index, which tracks the US dollar against a basket of six major currencies, extended its losses as dovish expectations for aggressive rate cuts from the Federal Reserve weighed on the currency. Recent downbeat US economic data has further diminished the dollar’s appeal, leading investors to closely watch Fed Chairman Jerome Powell’s upcoming speech at the Jackson Hole Symposium for further trading signals. While there is still some uncertainty among Fed members about whether a 25 or 50 basis point cut is more appropriate, market sentiment leans towards a 50-basis point cut. Investors are advised to monitor upcoming US economic reports for additional cues on the dollar’s direction.
The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 35, suggesting the index might extend its losses after breakout since the RSI stays below the midline.
Resistance level: 103.35, 104.05
Support level: 102.35, 100.90
Gold prices have surged, breaking above record highs as a combination of downbeat US economic reports, expectations for Fed rate cuts, and rising tensions in the Middle East drive demand for safe-haven assets. Fears that Iran may retaliate against Israel for recent conflicts have kept geopolitical tensions high, with no significant progress in ceasefire talks. This uncertainty continues to bolster gold’s bullish momentum, making it a key focus for investors seeking refuge amid global instability.
Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 68, suggesting the commodity might experience technical correction since the RSI enters oversold territory.
Resistance level: 2500.00, 2535.00
Support level: 2465.00, 2445.00
The British pound traded in a subdued manner following the release of U.K. retail sales data, which fell short of market expectations. Despite this, the pound managed to gain over 0.7% in the last session, largely due to the weakening of the U.S. dollar. The ongoing expectation of a Federal Reserve rate cut in September continues to weigh on the dollar, providing upward momentum for the GBP/USD pair.
GBP/USD is trading with strong upward momentum and is heading toward its psychological resistance level at 1.3000, which suggests a bullish signal for the pair. The RSI has gotten into the overbought zone, while the MACD continues to edge higher, suggesting that the bullish momentum remains strong.
Resistance level: 1.2985, 1.3065
Support level: 1.2910, 1.2860
The EUR/USD pair has climbed to its recent high, nearing its 2024 peak after a technical retracement last week. The surge was primarily driven by a dovish speech from a Federal Reserve official, which heightened expectations for a potential rate cut in September. This prospect has weakened the U.S. dollar, giving the euro a boost. Meanwhile, recent inflation data from the Eurozone has shown signs of persistence, adding to market caution. Traders are now focusing on the Eurozone CPI release due tomorrow, which could significantly influence the pair’s price direction.
EUR/USD is trading in a higher-high price pattern suggesting a bullish signal for the pair. The RSI has been flowing close to the overbought zone while the MACD has a bullish cross at above the zero line suggesting the bullish momentum remains intact with the pair.
Resistance level: 1.1040, 1.1106
Support level: 1.0985, 1.0940
The USD/JPY pair declined by more than 1% in the last session as the U.S. dollar weakened following dovish comments from Federal Reserve officials. The pair is now approaching a key liquidity zone near the 146.75 level. A break below this level could signal a bearish outlook for the pair. Meanwhile, all eyes are on the upcoming special meeting in the Japanese Parliament on Friday, where Bank of Japan (BoJ) Governor Kazuo Ueda will discuss the recent monetary policy pivot. The outcome of this meeting is expected to significantly impact the yen’s strength and the future direction of the USD/JPY pair, potentially reinforcing or reversing the current bearish momentum.
The pair is heading back to its key liquidity zone, following a significant surge last week, suggesting a lack of bullish momentum. The RSI is approaching the oversold zone, while the MACD has dropped below the zero line, suggesting bearish momentum is forming.
Resistance level: 148.45, 149.55
Support level: 146.20, 144.70
Bitcoin (BTC) faced another rejection at its key resistance level around $60,600, struggling to break through this critical barrier. In a move that could have significant implications for the crypto market, the International Monetary Fund (IMF) has proposed an 85% tax on energy used for mining to address environmental concerns associated with cryptocurrency mining. A surge in mining costs could impact BTC supply, potentially providing buoyancy for the cryptocurrency as scarcity increases. Adding to the market dynamics, reports suggest that a Korean pension fund is increasing its exposure to the crypto market by purchasing more shares of MicroStrategy, a company heavily invested in Bitcoin. This move by a major institutional player could bolster optimism for BTC, reflecting growing confidence in the long-term prospects of the cryptocurrency.
BTC is poised at its key resistance level at near $60600. A break above this level suggests a bullish signal for BTC. The RSI eases, while the MACD flow, along with the zero line, suggests BTC lacks bullish momentum.
Resistance level: 61210.00, 64860.00
Support level: 57060.00, 52530.00
The US equity market extended its gains, supported by falling US Treasury yields and expectations of rate cuts from the Federal Reserve. Typically, lower interest rates and declining Treasury yields provide a boost to high-growth sectors, helping the equity market to climb higher. However, the bullish momentum remains cautious as investors stay wary of potential Middle East tensions, which could negatively impact market sentiment.
Nasdaq is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 64, suggesting the index might extend its gains since the RSI stays above the midline.
Resistance level: 20015.00, 20705.00
Support level: 19035.00, 17865.00
Crude oil prices continued their decline, pressured by rising economic uncertainties that have dampened the global oil demand outlook. Disappointing economic performance in both the United States and China, two of the world’s largest oil consumers, has contributed to a slowdown in global economic growth, further weighing on oil demand. However, the losses in the oil market may be tempered by ongoing tensions in the Middle East, with ceasefire talks still unresolved. Investors are encouraged to keep a close eye on these developments for potential impacts on oil prices.
Oil prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 34, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline. .
Resistance level: 78.55, 80.90
Support level: 75.20, 72.45
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22 November 2024, 05:55 Dollar Strengthen on Robust Job Data
21 November 2024, 05:27 Gold Extends its Gain as Geopolitical Tension Heighten
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