Market Analysis

XAUUSD

Prediction: Increase

Fundamental Analysis:

The gold price rose to $2,395 in early Asian trading, fueled by anticipation of a Federal Reserve interest rate cut in September following a decline in US inflation data. Despite strong US economic growth, markets are betting on a Fed rate cut due to ongoing disinflation. 

Initially, gold prices dropped after the release of US GDP figures but recovered on weaker US core PCE inflation.

Earlier in the day, gold fell by more than 1%, failing to break the $2,400 barrier due to profit-taking and concerns about China's economic slowdown. Nevertheless, the persistent weakness in the USD/JPY pair offered some relief to gold buyers. The upcoming US core PCE inflation data is anticipated to show a slight decline, which could further support gold prices. Overall, the gold market remains volatile as investors reposition themselves ahead of significant economic events.

Technical Analysis:

Gold sellers maintain control, as indicated by the 14-day RSI remaining below the 50 level. They are targeting the key 50-day SMA at $2,360, and a daily close below this level could trigger a new downtrend towards the 100-day SMA support at $2,324.

On the downside, buyers may find support at the $2,350 psychological level. On the upside, the immediate resistance is at the previous 21-day SMA support level of $2,387. A break above this could lead to a retest of the $2,400 mark. The next recovery targets are the $2,412 area and the $2,425 static resistance level. The current price action indicates a potential struggle between buyers and sellers around these key technical levels.

EURUSD

Prediction: Increase

Fundamental Analysis:

The EUR/USD pair is trading around 1.0860, showing a slight uptick as traders expect a Fed rate cut in September, which is putting pressure on the US dollar. After climbing to 1.0870 last Thursday, the pair lost steam and closed near 1.0850, buoyed by positive US data. The US Q2 GDP grew by 2.8%, surpassing market expectations, which helped the dollar remain strong. Upcoming monthly PCE Price Index data is not expected to significantly impact the pair, as the quarterly figures have already been factored into the GDP report. However, shifts in risk sentiment before the weekend could influence EUR/USD's movement, with a bullish opening on Wall Street potentially supporting the pair.

Technical Analysis:

EUR/USD has struggled to regain the 100-period SMA for the second day in a row, with the RSI indicator on the 4-hour chart dipping after reaching 50, indicating a lack of buyer interest. On the downside, strong support is found at the 100-day and 200-day SMAs around 1.0800-1.0790, followed by the psychological level of 1.0700. Resistance levels are seen at 1.0860 (100-period SMA) and 1.0900 (psychological level). Current price action suggests a battle for dominance between buyers and sellers, with key technical levels likely to determine the near-term direction of the EUR/USD pair.

USDJPY

Prediction: Decrease

Fundamental Analysis:

During the Asian session, the USD/JPY pair surged to 154.35, with the Japanese Yen continuing its upward trend against the US Dollar for the fourth consecutive session, nearing its 12-week high. This movement is largely attributed to traders unwinding carry trades in anticipation of the Bank of Japan's (BoJ) policy meeting next week, where an interest rate hike and plans to taper bond purchases are expected. The recent robust US PMI data provides the Federal Reserve with more flexibility to maintain its restrictive policy stance. Investors are also closely watching the upcoming US GDP and PCE inflation data for new economic insights. Given the current price action, potential volatility is likely ahead of these key central bank events.

Technical Analysis:

This morning, the USD/JPY pair is trading around 153.3, having breached below the descending channel, which indicates a strengthening dovish bias. The 14-day RSI is approximately 30, suggesting an oversold situation and a potential short-term rebound. Significant support may be found near May's low of 151.86 and the psychological level of 151.00. On the upside, the pair could test the lower boundary of the descending channel around 154.00. A return to the channel could weaken the bearish bias, potentially leading to a test of resistance at the 9-day EMA of 155.90 and the upper channel boundary around 156.80. The current technical analysis indicates potential volatility and consolidation for the USD/JPY pair.

GBPUSD

Prediction: Increase

Fundamental Analysis:

GBP/USD is maintaining its recovery momentum, trading above 1.2850 during the American session on Friday. This positive shift in market sentiment is preventing the US Dollar from retaining its strength. On Thursday, the pair had difficulty gaining traction, hovering just below 1.2900 as safe-haven flows prevailed due to concerns about a bleak economic outlook. The People's Bank of China's unexpected policy loosening last week contributed to the risk-averse market atmosphere. Investors are now closely monitoring the upcoming US GDP and Jobless Claims data, which could influence the USD's performance and the GBP/USD's upward potential in the near future.

Technical Analysis:

Currently, GBP/USD is holding slightly above 1.2880, where the Fibonacci 38.2% retracement level of the recent uptrend and the 100-period SMA are situated. If this support level fails, the pair could target 1.2830 (Fibonacci 50% retracement) and the 1.2800-1.2790 area (psychological level, 200-period SMA) as the next bearish targets.

On the upside, the immediate resistance is at 1.2900 (20-period SMA, psychological level, static level), followed by 1.2940-1.2950 (Fibonacci 23.6% retracement, 50-period SMA). The current technical analysis suggests a potential consolidation or reversal for the GBP/USD pair in the near term, contingent on its ability to hold these key support levels.

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