Market Analysis

XAUUSD

Forecast: Bullish Outlook

Fundamental Analysis:

Gold prices experienced a decline early in the Asian session, potentially due to profit-taking after gold futures hit a new intraday high on Friday. The US Non-Farm Payroll (NFP) report is projected to show an addition of 175K new jobs in July, down from the previous 206K. However, the actual figure fell short at 117K, which is expected to support a rise in XAU/USD. Wage growth on an annual basis is anticipated to slow to 3.7% from 3.9%, while the monthly increase is expected to be steady at 0.3%. Weaker-than-expected wage growth could alleviate concerns about persistent inflation, bolstering the prospects for Fed rate cuts. Conversely, stronger wage data might undermine these prospects. 

Additionally, escalating tensions between Iran and Israel, particularly following Israel’s airstrike on Tehran that killed Hamas leader Ismail Haniyeh, have enhanced gold’s appeal as a safe-haven asset.

Technical Analysis:

On the daily chart, gold prices are moving within a channel pattern that is trending slightly upwards but has generally shown a sideways movement for over three months. The 50-day Exponential Moving Average (EMA) around $2,370 continues to act as support for gold bulls. The 14-day Relative Strength Index (RSI) is rising towards 60.00; a move above this level could signal increased upward momentum. A significant rally may occur if gold breaks above its all-time high of $2,483.75, potentially leading to new highs. Conversely, a key support level lies at $2,225, defined by the upward-sloping trendline from the October 6 low near $1,810.50.

EURUSD

Forecast: Expected to Rise

Fundamental Analysis:

EUR/USD struggled to maintain its recovery gains from Wednesday and fell to a new multi-week low of 1.0777 on Thursday. Early Friday, the pair is trading just above 1.0800 as market participants await the US July jobs report. On Thursday, the US Dollar (USD) gained strength amid safe-haven flows, pushing EUR/USD lower. With US stock index futures down between 0.7% and 1.8% this morning, the market sentiment appears risk-averse. The Nonfarm Payrolls (NFP) report for July is projected to show an increase of 175,000, following June’s gain of 216,000. Should the NFP data fall short of expectations, with a figure below 150,000, the USD could face renewed bearish pressure, potentially allowing EUR/USD to rise. However, the upside for EUR/USD may be limited unless there is a significant shift in risk sentiment. Conversely, a positive NFP surprise could further push EUR/USD lower, extending its recent losses.

Technical Analysis:

EUR/USD encounters significant resistance in the 1.0810-1.0820 range, where the descending trend line intersects with the 200-day Simple Moving Average (SMA). If the pair can consolidate above this level and use it as support, the next resistance might be at 1.0850 (20-day SMA) before approaching 1.0880 (Fibonacci 23.6% retracement of the recent uptrend). On the downside, initial support is found at 1.0780 (Fibonacci 61.8% retracement), followed by 1.0740 (Fibonacci 78.6% retracement) and 1.0700 (psychological level, static level).

USDJPY

Prediction: Bearish Trend Expected

Fundamental Analysis:

The USD/JPY has experienced a notable decline from its peak of 161.96 on July 3. This drop can be attributed to Japanese foreign exchange interventions and significant shifts in U.S. Federal Reserve expectations. The market's ongoing short position on the yen suggests that further declines in USD/JPY are possible, with some analysts anticipating potential tests of 140.00 or even lower levels.

The interventions by Japan were well-timed; the first occurred around late April to early May to address yen weakness as USD/JPY exceeded a 1990 high. The second intervention, around July 11-12, was in response to a weak U.S. CPI report. Consequently, weak U.S. economic data has pushed USD/JPY down to as low as 144.76.

Technical Analysis:

In June, the yen was trading at approximately 157 per dollar, but it reached a 38-year low below 161 in July. This significant depreciation likely influenced the Bank of Japan's decision to raise short-term rates to 0.25% from the previous 0-0.1% range during the July 30-31 meeting. Since the peak of 161, USD/JPY has been declining sharply, recently approaching the 1.618 Fibonacci retracement level of 145.45. Should the decline continue, it could potentially reach the 1.000 Fibonacci level, translating to around 139.5.

BTCUSD

Forecast: Downtrend Expected

Fundamental Analysis:

Bitcoin has dropped to its lowest point since February, while ether fell below $2,400 late Sunday EST, as the cryptocurrency market experienced a significant selloff. This decline followed several key events, including updates on the macroeconomic landscape, asset movements by Jump Crypto, and growing speculation that Kamala Harris might win the upcoming U.S. election over the pro-crypto Donald Trump. At one point, Bitcoin fell below $54,000 before slightly rebounding to $54,698, marking its lowest level since February, as reported by The Block. Similarly, ether plummeted to its lowest level since February, falling 19.45% to $2,333 at the time of writing.

Technical Analysis:

The cryptocurrency market saw a sharp selloff over the weekend, which intensified during Sunday evening U.S. hours, driving Bitcoin to its lowest level since February and ether to its lowest since December. Bitcoin has decreased by 12% in the last 24 hours and 20% week-over-week. Ether has suffered a 21% decline over the past 24 hours and a 30% drop over the past week, erasing its year-to-date gains and falling about 3% since January 1. The broader CoinDesk 20 Index is down 12% in the past 24 hours. The recent substantial correction in both crypto and traditional markets may have been triggered by the Bank of Japan's decision last week to raise its benchmark interest rate.

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