Market Analysis

XAUUSD

Forecast: Bullish Trend Expected

Fundamental Analysis:

XAU/USD continues its downward movement from Monday and is currently trading around the $2,380 mark as market anxiety subsides. Equity markets have improved following a sharp decline earlier in the week, with US indices showing gains after varied performances from international markets. This recovery in stocks has lessened the appeal of Gold. Additionally, government bond yields have risen, with the 10-year Treasury yield increasing by over 20 basis points from recent lows, which supports the US Dollar and adds pressure on Gold. Despite this, there are ongoing concerns about the US economy, with many investors anticipating substantial interest rate cuts by the end of the year.

Technical Analysis:

XAU/USD is hovering near the 50% Fibonacci retracement level of its June/July rally at $2,388.70, and the daily chart suggests a bearish bias. The pair found intraday buying support around the 38.2% retracement level of this rally at $2,411.20, with the 20 Simple Moving Average (SMA) aligning with this level, indicating reduced bullish momentum. On a shorter timeframe, the bearish outlook is more pronounced. The 4-hour chart shows technical indicators continuing to decline in negative territory after previously correcting oversold conditions. Additionally, the 20 SMA is gaining downward momentum well above the current price, while XAU/USD remains under pressure from the mildly bullish 200 SMA.

Support Levels: 2,372.90, 2,366.00, 2,352.40

Resistance Levels: 2,411.20, 2,424.10, 2,438.80

EURUSD

Prediction: Uptrend Expected

Fundamental Analysis:

On Tuesday, market panic that had characterized the start of the week eased, allowing the safe-haven US Dollar to recover some of its losses. As a result, the EUR/USD pair has pulled back from its recent multi-month peak of 1.1008 and is trading close to the 1.0900 mark as the US trading session begins. Despite this, market stability has not yet been fully achieved.

Technical Analysis:

Technically, the EUR/USD pair is trading around the previous Friday's close, erasing Monday’s gains. This corrective pullback could continue in the coming sessions as technical indicators signal a downward trend, though the Relative Strength Index (RSI) remains in positive territory, which may limit the extent of the decline. The pair remains above all key moving averages, with the 20-day Simple Moving Average (SMA) positioned above the longer-term SMAs, supporting the overall bullish trend. On the 4-hour chart, the current decline appears to be a correction. Technical indicators have sharply retreated from overbought levels but are still within positive ranges. The 20 SMA is trending upwards, though its momentum is slightly diminishing compared to the flatter 100 and 200 SMAs. A break below the 1.0890 support level could signal further declines, though buying opportunities may arise on dips.

Support Levels: 1.0890, 1.0845, 1.0800

Resistance Levels: 1.0950, 1.1005, 1.1045

USDJPY

Forecast: Expected Decline

Fundamental Analysis:

This week, Federal Reserve officials sought to reassure the market, acknowledging a cooling job market but urging caution not to overinterpret a single labor report. The Fed has recognized that maintaining a restrictive monetary policy poses balanced risks. Prolonged high interest rates could impair economic activity, hiring, and employment, potentially threatening the Fed’s employment objectives. There is anticipation for the Fed’s first rate cut since the tightening cycle began in 2022. The debate now centers on whether this cut will be 25 basis points or 50 basis points. With markets pricing in a 75% probability of a 50 basis point cut, USD/JPY has seen increased downward pressure.

Technical Analysis:

Despite the RSI being firmly in oversold territory, the market may continue to decline for an extended period. The unwinding of carry trades is likely to persist as long as the Fed and BoJ maintain their current policy stances. The immediate support level for USD/JPY is 140.25. However, a short-term correction might occur given the extent of the recent multi-week decline.

AUDUSD

Forecast: Anticipated Increase

Fundamental Analysis:

After hitting new lows for 2024 near 0.6350 on Monday, the AUD/USD pair rebounded and climbed above 0.6500 on Tuesday, returning to positive territory on the weekly chart. The Australian dollar's immediate focus is now on the key 200-day SMA at 0.6592. While trading below this level, the negative outlook for the pair may persist. The bounce in the Aussie was supported by a recovery in copper and iron ore prices, which had been in a multi-week decline. Additionally, the RBA's hawkish stance during its early Tuesday meeting contributed to the Australian currency's strength.

Technical Analysis:

If the bearish trend resumes, AUD/USD might test the 2024 low of 0.6347 (August 5) before approaching the 2023 low of 0.6270 (October 26). On the upside, initial resistance is at the 200-day SMA of 0.6592, followed by the 100-day SMA at 0.6601 and the 55-day SMA at 0.6643. Further resistance levels include the July high of 0.6798 (July 8) and the December peak of 0.6871. The four-hour chart indicates some consolidation, with immediate support at 0.6347, followed by 0.6338 and 0.6270. On the bullish side, initial resistance is at 0.6559, then 0.6610, and the 200-day SMA at 0.6649. The RSI has risen to around 54.

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