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25 October 2024,05:33
Daily Market Analysis
25 October 2024, 05:33
* The Japanese Yen is expected to weaken in the near term as BoJ hinted there was no intention of a rate hike next week.
* U.S. treasury yield slid, leading to a softening U.S. dollar and buoying Wall Street in the last session.
* BTC gained over 3%, suggesting a bullish trend reversal.
Market Summary
The Japanese Yen is likely to weaken further as BoJ Governor Kazuo Ueda signalled no intention to raise rates in the upcoming central bank meeting, even with the yen trading near a 3-month low. Ueda expressed concern about potential economic impacts tied to the upcoming U.S. presidential election, which could also weigh on Japan’s economy.
Meanwhile, a marginal decline in U.S. Treasury yields softened the dollar, preventing the USD/JPY pair from moving higher. The easing yields provided support to Wall Street, with the Nasdaq and S&P 500 closing higher. The tech sector, in particular, found a boost from Tesla’s better-than-expected earnings.
In the crypto market, Bitcoin (BTC) gained over 3%, breaking out of its bearish trend, suggesting optimism around the upcoming U.S. election as both candidates are seen as crypto-friendly.
Current rate hike bets on 7th November Fed interest rate decision:
Source: CME Fedwatch Tool
-50 bps (7%) VS -25 bps (97%)
Market Movements
DOLLAR_INDX, H4
The Dollar Index, which measures the greenback against a basket of six major currencies, retreated slightly as the 10-year Treasury yields experienced a mild pullback, marking its first decline this week due to technical correction. Despite this, US economic data continues to show resilience, with stronger-than-expected new home sales and initial jobless claims falling, while business activity remains solid. Investors are now pricing in an 97% chance that the Federal Reserve will implement a 25-basis-point rate cut next month, rather than the previously expected 50 basis points.
The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 52, suggesting the index might extend its losses after breakout since the RSI retreated sharply from overbought territory.
Resistance level: 104.95, 105.55
Support level: 103.95, 103.25
In the short term, better-than-expected US economic data has shifted market sentiment, prompting a selloff in gold as risk appetite strengthened. However, gold’s long-term outlook remains positive. Ongoing geopolitical tensions in the Middle East and the upcoming US Presidential Election are expected to fuel demand for safe-haven assets like gold. Furthermore, China’s ongoing economic slowdown, despite recent stimulus efforts, adds an additional layer of uncertainty, which could continue to support gold prices.
Gold prices are trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 54, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 2735.00, 2770.00
Support level: 2705.00, 2685.00
The GBP/USD pair posted modest gains in the last session as the U.S. dollar eased amid a decline in U.S. Treasury yields. However, due to recent economic data, the pair is expected to remain under bearish pressure. UK PMI readings fell short of expectations, while U.S. job data outperformed, reinforcing the view of a robust U.S. dollar against a weaker Pound Sterling. These fundamentals suggest the dollar’s strength will likely continue to weigh on the pair’s upside potential.
GBP/USD edged higher in the last session but failed to form a higher high, suggesting the pair remains trading within its bearish trajectory. The RSI remains below the 50 level, while the MACD remains below the zero line, suggesting the pair remains trading with bearish momentum.
Resistance level: 1.2980, 1.3065
Support level: 1.2910, 1.2850
The EUR/USD pair rebounded by approximately 50 pips from recent lows following stronger-than-expected eurozone economic data. German and eurozone PMI readings came in slightly above market expectations, providing support for the euro. The gains were further aided by a softening U.S. dollar in the last session, allowing the pair to record modest upward movement. However, given prevailing dollar strength and recent dovish signals from the ECB, the pair’s upside may face resistance in the near term.
EUR/USD recorded a marginal gain in the last session from its recent low level with easing bearish momentum. The RSI rose to above the 50 level, while the MACD edged higher from the bottom. If the pair is able to sustain itself above the 1.0830 mark, it may be a trend reversal signal.
Resistance level:1.0890, 1.0950
Support level: 1.0735, 1.0675
The USD/JPY pair fell around 90 pips in the last session, primarily due to a retracement in the U.S. dollar. Additionally, the Tokyo Core CPI reading, which exceeded market expectations, lent further support to the yen. However, with the Bank of Japan maintaining a dovish stance and indicating no rate hike in the upcoming policy meeting, the yen’s strength may be capped. Should the BoJ’s stance persist, it could limit the yen’s upward momentum, keeping the pair’s overall outlook biassed toward dollar strength.
The USD/JPY recorded a slip in the last session, but the pair remains trading within its uptrend trajectory. The RSI has dropped out from the overbought zone, while the MACD has a deadly cross, which suggests that the bullish momentum is easing.
Resistance level: 152.25, 153,85
Support level: 150.90, 149.40
US equities saw a strong rebound, driven by lower Treasury yields and better-than-expected corporate earnings. Tesla’s stock surged by over 22% as investors responded positively to mixed third-quarter results, with beats on adjusted earnings per share and higher gross margins. Notably, Tesla’s announcement of the upcoming production of a more affordable electric vehicle next year added further optimism. Around 29% of S&P 500 companies have reported so far this quarter, with 81% surpassing earnings estimates, indicating continued strength in corporate performance.
Nasdaq is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 53, suggesting the index might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 20415.00, 21075.00
Support level: 19705.00, 19120.00
The BTC/USD pair found solid support near the $65,500 level, gaining over 3% in the last session, which signals a potential trend reversal for Bitcoin. Notably, BTC whales are accumulating positions ahead of the U.S. presidential election, reflecting historical trends where Bitcoin tends to rally in the post-election period. This ongoing accumulation activity by large holders is strengthening BTC’s bullish outlook as optimism grows in the lead-up to the election.
BTC recorded a gain and almost erased its previous losses, suggesting a trend reversal signal for BTC. The RSI is hovering close to the 50 level, while the MACD sign to rebound from the zero line suggests a bullish momentum is forming.
Resistance level: 70880.00, 73660.00
Support level: 64800.00, 61210.00
Crude oil prices experienced a retreat, primarily due to concerns over a pessimistic global economic outlook and rising demand for electric vehicles. In China, recent fiscal measures have been deemed insufficient by the IMF to address deflationary risks in the world’s second-largest economy. Meanwhile, economic activity in the Eurozone remains in contraction territory, with demand falling both domestically and internationally. Similarly, the UK is facing a dip in business optimism, as firms anticipate challenging economic conditions ahead of the new government’s budget announcement.
Oil prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 48, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline.
Resistance level: 72.60, 74.75
Support level: 70.95, 69.90
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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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