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26 September 2024,05:10
Daily Market Analysis
26 September 2024, 05:10
* The U.S. dollar recorded a technical rebound ahead of the U.S. GDP.
* Chinese equity markets remain robust due to the Chinese government’s economic stimulus package.
*Gold is Poised at all-time high levels as Middle-East tension escalates.
Market Summary
The U.S. dollar rebounded sharply towards the $101 mark ahead of key economic data releases, including GDP and the PCE reading due on Friday. The Dollar Index (DXY), however, faces resistance between $101.00 and $100.85 at its previous fair-value gap; a break above this range could shift the current bearish outlook. Meanwhile, Wall Street struggled for direction, with the Dow leading losses, closing nearly 300 points lower in the last session, as the market lacked fresh catalysts.
In contrast, Chinese equity markets remain robust, buoyed by the government’s economic stimulus packages. Both the China A50 and Hong Kong’s Hang Seng indexes opened higher today, reflecting optimism in Asia.
The release of the BoJ meeting minutes showed a divided board on the pace of future rate hikes. Out of the nine members, only two supported a faster pace, while the majority expressed concerns that aggressive hikes could harm the economy.
In the commodity market, gold prices remain elevated, hovering near all-time highs, with the precious metal eyeing the next psychological resistance level of $2700. The ongoing tension in the Middle East continues to drive safe-haven demand for gold.
Current rate hike bets on 7th November Fed interest rate decision:
Source: CME Fedwatch Tool
-50 bps (32%) VS -25 bps (68%)
Market Movements
DOLLAR_INDX, H4
The Dollar Index, which tracks the greenback against a basket of six major currencies, rebounded from a strong support level due to technical corrections and bargain buying. However, the long-term outlook for the Dollar remains bearish, with expectations of another aggressive rate cut by the Federal Reserve at its November meeting. According to the CME FedWatch Tool, the probability of a 50-basis point cut at the November 7th meeting has risen to 59%, up from 37% a week ago. Traders will be closely monitoring the US Personal Consumption Expenditures (PCE) index and Fed Chair Jerome Powell’s upcoming statements for further direction.
The Dollar Index is trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 56, suggesting the index might extend its gains since the RSI stays above the midline.
Resistance level: 101.80, 102.35
Support level: 100.45, 99.70
Gold prices are trading higher, currently testing a key resistance level. The weakening US Dollar, coupled with declining US Treasury yields, continues to support gold prices. Investors are advised to monitor the upcoming US Personal Consumption Expenditures (PCE) index and statements from Fed Chair Jerome Powell to gauge potential movements in gold.
Gold prices are trading flat while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 57, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 2665.00, 2780.00
Support level: 2640.00, 2620.00
The Pound Sterling faced significant pressure in the last session, declining by more than 0.7% as the dollar strengthened. The U.S. dollar recorded a technical rebound ahead of key economic data releases, including GDP today and the PCE reading on Friday, which contributed to the dollar’s resurgence. Despite this setback, the Pound Sterling has remained resilient and is still trading above its previous low levels, indicating that the pair may still be on a bullish trajectory. The broader sentiment suggests that the Pound is maintaining its recent strength, which could support further gains in the near term.
The GBP/USD pair recorded a technical correction yesterday but was supported at above its previous low level, suggesting a potential rebound followed by yesterday’s plummet. The RSI dropped out from the overbought zone, while the MACD had a deadly cross on the above, suggesting the bullish momentum for the pair has eased.
Resistance level: 1.3350, 1.3440
Support level:1.3285, 1.3220
The EUR/USD pair is maintaining its position within a bullish channel despite a notable decline in the previous session. However, the formation of a bearish divergence with the MACD indicates that the bullish momentum may be losing steam. This divergence could signal a potential shift in the pair’s upward trend. Traders are closely monitoring today’s U.S. GDP figure, which could serve as a significant catalyst for price movement in the pair, potentially influencing its trajectory depending on how the data impacts the dollar’s strength.
Despite a significant plummet, the EUR/USD pair remains above its previous low, suggesting the pair remains trading within its uptrend trajectory. The RSI is hovering close to the 50 level, while the MACD recorded a lower-low pattern, suggesting the bullish momentum is easing.
Resistance level: 1.1220, 1.1300
Support level: 1.1080, 1.1020
The USD/JPY pair has broken above its short-term resistance at 144.30, signalling a bullish breakout. The recently released BoJ monetary policy meeting minutes revealed a cautious stance on rate hikes, which has weakened the Yen’s strength. This dovish approach by the Bank of Japan has contributed to the upward momentum in the pair. Traders are now focusing on tomorrow’s Japanese CPI reading, as it may influence the BoJ’s upcoming interest rate decision and could have a direct impact on the Yen’s performance.
The strengthening of the dollar has pushed the pair to gain by more than 1% in the last session. The RSI has been at above the 50 level while the MACD remains hovering at above the zero line suggesting the pair remain trading with bullish momentum.
Resistance level: 146.00, 149.20
Support level: 141.40, 138.90
Artificial intelligence giant Nvidia (NASDAQ: NVDA) saw its stock rise by 2%, extending Tuesday’s gains after reports indicated that CEO Jensen Huang had completed selling over $700 million worth of shares under a trading plan. Meta Platforms Inc (NASDAQ: META) also climbed 0.9% after unveiling its first augmented reality glasses and announcing several AI feature updates at its annual Connect event. The broader positive trend in the equity market is largely driven by the decline in US Treasury yields.
NASDAQ is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 67, suggesting the index might enter overbought territory.
Resistance level: 20015.00, 20705.00
Support level: 18860.00, 18320.00
Bitcoin (BTC) is currently facing resistance near the $64,450 level, and a break above this point would form a higher high on the daily time frame, signalling a potential bullish continuation for the largest cryptocurrency. However, the recent strengthening of the U.S. dollar has posed a challenge for BTC’s upward momentum. On the positive side, BTC ETFs have recorded net inflows for the second consecutive week, indicating that demand in the broader financial market is growing, which could provide further support for BTC’s price if the dollar’s strength subsides.
BTC has been consolidating for the past few sessions as it lacks a clear direction. The RSI has been declining, while the MACD is edging toward the zero line from above, suggesting the bullish momentum is drastically easing.
Resistance level: 64786.00, 67540.00
Support level: 61210.00, 57060.00
Crude oil prices slumped over 2% on Wednesday as concerns over supply disruptions in Libya eased, and demand worries persisted despite China’s latest stimulus measures. Libya’s factions reached an agreement on appointing a central bank governor, an initial step toward resolving the dispute that has severely impacted the country’s oil output and exports. Additionally, a hurricane threatening the US Gulf Coast changed course toward Florida, reducing fears of disruptions in oil and gas production areas near Texas, Louisiana, and Mississippi. However, losses in oil prices were limited by a downbeat Energy Information Administration (EIA) report showing a 4.5 million barrel decline in crude oil inventories, exceeding market expectations of a 1.4 million barrel drop.
Oil prices are trading lower following the prior retracement from the resistance level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 38, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.
Resistance level: 70.30, 71.95
Support level: 68.60, 67.15
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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
20 November 2024, 05:29 Gold Gain on Russia-Ukraine Tension
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