

Market Analysis
XAUUSD
Prediction: Increase
Fundamental Analysis:
Gold prices are rising, moving away from the one-week low reached on Monday. Expectations for a 50-basis point Federal Reserve rate cut in September and ongoing geopolitical risks are providing support. However, a shift in global risk sentiment and increasing US bond yields may limit these gains. Early in the week, risk aversion significantly impacted financial markets, causing volatile movements across various assets. XAU/USD dropped to $2,364.19 before Wall Street opened but subsequently rebounded to around $2,400, although still notably lower on the day. The US Dollar strengthened against gold due to concerns over the US economic outlook and escalating tensions in the Middle East, which rattled markets.
Technical Analysis:
On the daily chart, XAU/USD found buyers near the 61.8% Fibonacci retracement of its June/July rally, around $2,366, a crucial support level. Despite this, technical indicators are trending downward, indicating ongoing selling pressure. The pair is trading below the 38.2% retracement of the same rally and the still bullish 20 Simple Moving Average (SMA), both near $2,411.20. In the short term, the 4-hour chart suggests limited potential for further advances. Technical indicators have lost upward momentum below their midlines and are skewing towards the downside after correcting from oversold conditions. Additionally, the pair is below both the 20 and 100 SMAs, with the shorter SMA trending downward, supporting the possibility of another decline. Key support levels are at $2,388.70, $2,372.90, and $2,366.00, while resistance levels are at $2,411.20, $2,424.10, and $2,438.80.
EURUSD
Prediction: Increase
Fundamental Analysis:
The EUR/USD pair extended its strong recovery from Friday, momentarily crossing the key 1.1000 level at the start of the new trading week. This upward momentum was fueled by a notable decline in the US Dollar (USD), which dropped to levels not seen since January, around the 102.00 mark. Investors are weighing the disappointing US economic data from last week against the potential for the US economy to slide into recession this year, which could prompt the Federal Reserve to consider an inter-meeting rate cut and further interest rate reductions.
Technical Analysis:
On the upside, the EUR/USD faces its first hurdle at the August high of 1.1008 (August 5), followed by the December 2023 peak of 1.1139 (December 28). On the downside, support is seen at the 200-day SMA at 1.0827, followed by the weekly low of 1.0777 (August 1) and the June low of 1.0666 (June 26), before reaching the May low of 1.0649 (May 1). From a broader perspective, the pair is expected to maintain a positive outlook if it convincingly breaks above the 200-day SMA. The four-hour chart currently indicates renewed bullish momentum, with immediate resistance at 1.1008, followed by 1.1139. Conversely, initial support is at 1.0777, with further support at 1.0709. The relative strength index (RSI) has eased to around 68.
USDJPY
Prediction: Decrease
Fundamental Analysis:
The USD/JPY pair is rebounding slightly, trading near 145.40 after hitting a low of 141.68, the lowest since January 2, during early Asian trading on Tuesday. This decline in the Greenback is driven by concerns over a potential US recession and expectations of more significant rate cuts by the Federal Reserve (Fed). The latest US employment data, released on Friday, indicated an increase in the Unemployment Rate for July, heightening fears of an economic downturn. The market is anticipating a 50 basis points (bps) rate cut by the Fed in both September and November, with an additional 25 bps cut expected in December.
Technical Analysis:
Despite a downward bias, the USD/JPY has found support around the 141.69 level. Buyers stepped in at this bottom, pushing the exchange rate higher since the mid-North American session. This recent upward move has seen spot prices climb above 144.00, suggesting that the downtrend may be overextended, as indicated by the Relative Strength Index (RSI) being below 20. Should USD/JPY surpass 145.00, the next resistance levels would be the February 1 low at 145.89, followed by the March 11 high at 146.48, and eventually the 147.00 mark. Conversely, if the pair extends its losses below 144.00, the next support levels would be the January 9 pivot low at 143.42 and the August 5 bottom at 141.69.
AUDUSD
Prediction: Decreases
Fundamental Analysis:
The Australian Dollar (AUD) is recovering its recent losses ahead of the Reserve Bank of Australia's (RBA) monetary policy decision set for Tuesday. The RBA is expected to keep the Official Cash Rate (OCR) at 4.35% for the sixth consecutive meeting. Traders will be closely monitoring RBA Governor Michele Bullock's speech for any indications regarding the Board's future policy direction. The AUD has struggled against the US Dollar (USD) due to rapid policy adjustments by central banks and growing concerns about a hard landing for the US economy. Additionally, second-quarter inflation data has reduced expectations for another RBA rate hike. Markets are now predicting an RBA rate cut in November, much earlier than the previously forecasted April next year.
Technical Analysis:
On Tuesday, the Australian Dollar is trading around 0.6520. Daily chart analysis shows that the AUD/USD pair has broken above the descending channel, indicating a weakening bearish bias. The 14-day Relative Strength Index (RSI) is slightly above the oversold 30 level, suggesting potential for further upward correction. The AUD/USD pair could find immediate support around the throwback support level of 0.6470, followed by the lower boundary of the descending channel at 0.6450. On the upside, resistance is first encountered at the nine-day Exponential Moving Average (EMA) at 0.6540, followed by the "throwback support turned resistance" level at 0.6575. A breakout above this level could propel the AUD/USD pair towards a six-month high of 0.6798.
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