Market Analysis

XAUUSD

Prediction: Increase

Fundamental Analysis:

During the North American session, gold prices dipped, hitting a daily low of $2,430 and a high of $2,462, as the US Dollar gained strength amid weak economic data. The manufacturing sector experienced contraction, and jobs data indicated a frail labor market, heightening risk aversion and market volatility. Asian shares took a hit, with the Nikkei dropping over 2% due to speculation that the Bank of Japan might continue raising rates. European markets also traded lower on softer-than-expected data, while the Bank of England's hawkish rate hike further impacted sentiment. Poor US economic data, including a decline in the ISM Manufacturing PMI, raised concerns about the American economy, strengthening the US Dollar and causing gold to enter a consolidative phase.

Technical Analysis:

The XAU/USD pair stays well above the 23.6% Fibonacci retracement level of the June/July rally at $2,438.75, with buyers emerging near the 61.8% retracement level. The daily chart shows the pair trading above all its moving averages, with the 20 SMA offering short-term support around $2,410. Technical indicators, while lacking strong directional signals, remain in positive territory, indicating bullish control. In the short term, the 4-hour chart shows a pause in the bullish momentum, but bulls still dominate. A bullish 20 SMA is crossing above the 100 SMA at around $2,410.80, near the 38.2% Fibonacci retracement level. Technical indicators have lost some momentum but remain close to overbought levels, suggesting a potential continuation of the uptrend.

EURUSD

Prediction: Decrease

Fundamental Analysis:

The EUR/USD pair declined, falling below the 1.0800 level after disappointing US Purchasing Managers Index figures heightened concerns about a deteriorating US economic outlook and the possibility of a hard landing. This led to a resurgence of the US Dollar, with the DXY index climbing to 104.40, as market sentiment turned risk-averse.
The Dollar's recovery was driven by the Federal Reserve's decision to maintain current interest rates and its assertion that inflation remains "somewhat" high. The divergence in monetary policies between the Fed and the ECB is expected to continue, with both central banks potentially considering rate cuts in the near future.

Nevertheless, weak economic data from the US and a slowdown in the Eurozone's recovery suggest further declines in EUR/USD and a stronger US Dollar.

Technical Analysis:

The next downside target for EUR/USD is the weekly low of 1.0777, followed by the June low of 1.0666 and the May low of 1.0649. On the upside, immediate resistance is found at the July high of 1.0948, followed by the March high of 1.0981, and the key 1.1000 level.

From a technical perspective, the pair's bearish bias is likely to persist as long as it remains below the 200-day SMA at 1.0823. The four-hour chart signals renewed weakness, with initial support at 1.0777 and 1.0709. The upside is constrained by the 200-SMA at 1.0806, the 55-SMA at 1.0842, and 1.0849, while the RSI hovers around 39.

USDJPY

Prediction: Decrease

Fundamental Analysis:

The Japanese Yen is strengthening against the US Dollar following unexpected hawkish policy moves by the Bank of Japan (BoJ). The BoJ raised the short-term interest rate target by 15 basis points and announced plans to scale back its purchases of Japanese government bonds. Additionally, Japan's Ministry of Finance reported spending ¥5.53 trillion ($36.8 billion) in July to stabilize the Yen, which had previously plummeted to a 38-year low.

In contrast, the US Dollar has been under pressure since the Federal Reserve decided to keep interest rates steady at 5.25%-5.50% during its July meeting. Traders are now focused on upcoming US economic indicators, such as the ISM Manufacturing PMI and weekly Initial Jobless Claims, to gauge the future direction of the Dollar.

Technical Analysis:

As of Thursday, the USD/JPY pair is trading around 149.30. Daily chart analysis indicates the pair has broken below a descending wedge pattern, pointing to a continued bearish trend. The 14-day Relative Strength Index is below 30, signaling an oversold condition and suggesting potential for a short-term rebound.

The pair may find support around the four-month low of 146.48, observed in March. On the upside, resistance is located at 151.60, the lower boundary of the descending wedge. Should the pair re-enter this wedge, the bearish trend might weaken, paving the way for a potential bullish reversal with resistance levels at 154.27 and 154.50.

GBPUSD

Forecast: Bearish

Fundamental Analysis:

The British pound is facing pressure amid a broader risk-off sentiment in the forex market, which is pushing GBP/USD towards four-week lows around 1.2750. After a brief uptick on Wednesday, GBP/USD fell back to a three-week low below 1.2800 on Thursday morning. Despite the US dollar's previous struggles to gain momentum, the pair saw some recovery as the Federal Reserve maintained its current policy and suggested a potential rate cut in September.

The upcoming Bank of England meeting is critical, with expectations set for a 25 basis point cut. While the market anticipates this move, maintaining the current rate could support the pound. Conversely, a rate cut might exacerbate GBP/USD weakness, despite already being factored into market expectations.

Technical Analysis:

Currently, GBP/USD is trading below 1.2750, where the 200-period Simple Moving Average on the 4-hour chart is acting as resistance. Should this level persist, the pair might experience further declines towards the 1.2710-1.2700 range, aligning with the 61.8% Fibonacci retracement of the latest uptrend and a psychological support level.

On the upside, initial resistance is at 1.2830, which intersects with the 50% Fibonacci retracement level and a descending trend line. Additional resistance levels to monitor include 1.2880 (38.2% Fibonacci retracement) and 1.2900 (100-period SMA).

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