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16 October 2024,05:52
Daily Market Analysis
16 October 2024, 05:52
* Wall Street retreated as the tech industry bellwether AMSL failed to meet earning performance.
* Gold prices rose as the Middle East conflict remained.
* Eye on today’s UK CPI reading to gauge the Pound Sterling’s strength.
Market Summary
Wall Street saw a retracement in the last session, with a similar sentiment spreading to the Asian markets during the Tokyo session, where the Chinese equity market led the decline. This sell-off is believed to have been triggered by ASML, the world’s most advanced chip making machines manufacturer, missing its earnings target, indicating a potential slowdown in the global tech sector. Despite this, the U.S. equity market remains near its all-time highs, and traders are eagerly awaiting mega cap’s earnings reports to gauge future market direction.
Meanwhile, ongoing crossfire in the Middle East has fueled commodity prices, with gold rising steadily to near the $2,670 mark on heightened geopolitical risks. Oil prices, which had shown signs of bearish momentum, are stabilising as traders closely monitor developments in the region.
In the forex market, while the U.S. dollar held steady, attention has shifted to the Pound Sterling, with the UK CPI reading due today. Additionally, tomorrow’s ECB interest rate decision is anticipated to have a direct impact on the euro. In the crypto market, both BTC and ETH have surged sharply following news that both U.S. presidential candidates explicitly support the crypto sector, driving BTC to its highest level since July.
Current rate hike bets on 7th November Fed interest rate decision:
Source: CME Fedwatch Tool
-50 bps (7%) VS -25 bps (93%)
Market Movements
DOLLAR_INDX, H4
The Dollar Index, which measures the dollar against a basket of six major currencies, extended its gains. This movement is driven by investor expectations that recent strong U.S. economic data might prompt the Federal Reserve to implement smaller-than-expected rate cuts. The U.S. economy has shown resilience, with inflation rising slightly more than anticipated in September. While the Fed initiated an easing cycle with a 50-basis-point rate cut in September, market expectations have shifted toward a slower pace of cuts, further strengthening the dollar.
The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the index might enter overbought territory.
Resistance level: 103.25, 103.95
Support level: 102.55, 101.65
Gold prices remained in a consolidation phase near record highs, as investors adopted a cautious stance amid several impending events. Market volatility may stay elevated as the U.S. elections approach, alongside ongoing Middle East tensions. Despite the geopolitical backdrop, the U.S. dollar’s strength has capped gold’s gains, with recent strong economic reports tempering demand for the safe-haven asset. Investors should continue to watch these developments for potential trading signals.
Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 57, suggesting the commodity might extend its losses since the RSI retreated sharply from overbought territory.
Resistance level: 2670.00, 2690.00
Support level: 2645.00, 2630.00
The GBP/USD pair has been trading sideways recently as both the U.S. dollar and Pound Sterling have lacked significant catalysts. However, the release of the UK’s CPI reading today is expected to directly impact Sterling’s strength and may provide the momentum needed for a breakout. At the same time, the bearish momentum appears to be easing. If the pair breaks above its current price consolidation range, it could signal a potential bullish trend reversal for the pair. Traders will be closely monitoring the data release to gauge the direction of the next move.
GBP/USD remains trading in a sideways manner, awaiting catalyst to pick a direction. S. If the pair is able to break above the 1.3105 mark, it may be a trend reversal signal because the RSI has risen to above 50 the level while the MACD is on the brink of breaking above the zero line, suggesting bearish momentum is vanishing.
Resistance level: 1.3140, 1.3220
Support level: 1.2990, 1.2910
The EUR/USD pair continues to trade within its bearish trajectory as the euro remains under pressure from expectations of a dovish stance by the ECB due to recent lacklustre economic performance in the eurozone. With the ECB’s monetary policy decision due tomorrow, traders are anticipating significant movement in the pair. If the central bank decides to cut interest rates further, it could negatively impact the euro, leading to a potential decline in the EUR/USD pair. Market participants are closely watching the ECB’s decision, as it will likely shape the near-term direction of the pair.
EUR/USD has formed a lower-low price pattern, suggesting the pair remains bearish. The RSI remains below the 50 level, while the MACD hovers below the zero line, suggesting the pair remains trading with bearish momentum.
Resistance level: 1.0950, 1.1020
Support level: 1.08050, 1.0740
The AUD/USD pair has been weighed down by a strengthened U.S. dollar and the lacklustre Chinese economic performance, driving the pair to its lowest level in a month. As China is Australia’s largest trading partner, any slowdown in Chinese growth tends to impact the Australian dollar negatively. Aussie traders are now focusing on the upcoming Australian job data, particularly employment change and the unemployment rate, to assess the strength of the currency. Should the pair manage to break above its resistance level at 0.6730, it could signal a trend reversal and potentially lead to a recovery in the pair.
AUD/USD remains trading in a bearish manner, but the MACD has formed a bullish divergence, suggesting a potential trend reversal for the pair. The RSI, on the other hand, remains below the 50 level, suggesting the pair’s bearish momentum remains intact.
Resistance level: 0.6780, 0.6850
Support level: 0.6670, 0.6610
Bitcoin (BTC) continues to surge, breaking above its downtrend resistance level and reaching the $67,000 mark for the first time since July. The crypto market has been widely encouraged by a more favourable stance from the U.S. government, as both presidential candidates, Kamala Harris and Donald Trump, have explicitly shown support for the crypto market ecosystem. This political backing has fueled increased buying pressure across the crypto market, boosting investor confidence and driving the price of BTC higher.
BTC has reached its highest level since July, suggesting a bullish bias. The RSI has broken into the overbought zone, while the MACD continues to edge higher, suggesting BTC is currently trading with strong bullish momentum.
Resistance level: 70880.00, 73660.00
Support level: 64700.00, 61200.00
U.S. equities faced a selloff as concerns over tightening U.S. restrictions on chip sales and a disappointing forecast from Europe’s most valuable tech company dampened sentiment. Dow Jones declined 0.75% while the Nasdaq 100 fell 1.4%. Semiconductor stocks took a hit, with ASML Holding NV’s U.S.-traded shares plunging 16% after cutting its guidance for 2025. Nvidia Corp. also saw a 4.5% decline following reports that U.S. officials are considering capping sales of advanced AI chips to certain countries.
The Dow is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 60, suggesting the index might extend its losses since the RSI retreated sharply from overbought territory.
Resistance level: 43440.00, 44900.00
Support level: 42420.00, 41400.00
Crude oil prices dropped amid reports that Israel is unlikely to target Iranian oil sites, reducing fears of supply disruptions in the Middle East. Additionally, China reported its fifth consecutive monthly decline in oil imports, heightening concerns over weak demand. These concerns were compounded by OPEC’s downward revision of its oil demand forecast for the third consecutive month.
Oil prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 37, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.
Resistance level: 73.30, 75.35
Support level: 70.80, 68.55
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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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