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Market Analysis

EUR/USD Hits Seven-Month High Amid Mixed Economic Data
Dupoin · 168.2K Views

Market Analysis Dupoin

XAUUSD

Prediction: Decline

Fundamental Analysis: 

Despite the U.S. dollar maintaining a steady performance, spot XAU/USD saw a sharp decline of nearly $18, closing below $2,450. The recent U.S. Consumer Price Index (CPI) report has dampened hopes for a substantial rate cut by the Federal Reserve in the coming month, contributing to Wednesday's significant drop in gold prices. According to the U.S. Bureau of Labor Statistics, the CPI increased by 0.2% in July compared to the previous month and rose by 2.9% year-over-year. The CPI report revealed an unexpected acceleration in rent prices, causing some market disappointment. Notably, the "owner's equivalent rent" data, which had shown its lowest increase since 2021 in June, surged to 0.36% in July.

Technical Analysis: 

Technical indicators have lost some of their upward momentum but remain in positive territory. The Relative Strength Index (RSI) is beginning to turn downward, though it has not yet confirmed another wave of decline. XAU/USD prices are still trading above all their moving averages, with the 20-day Simple Moving Average (SMA) flattening around $2,417.5. Technical indicators have retreated sharply from near-overbought levels and are now hovering near the midline, indicating a reduction in bearish momentum but still trending downward. Additionally, gold has fallen below its 20-period SMA, situated around $2,455. The 100-period and 200-period SMAs remain below the current gold price, suggesting that a more significant drop may be unlikely at this stage.

USDJPY

Prediction: Expected Increase

Fundamental Analysis:

Japanese Prime Minister Fumio Kishida announced on Wednesday that he will not participate in the upcoming Liberal Democratic Party (LDP) leadership election, citing the necessity for a refreshed party image. Kishida has committed to fully backing the new leader, which has introduced a degree of short-term political uncertainty potentially affecting Japanese stocks. Meanwhile, the U.S. Bureau of Labor Statistics revealed a 0.2% rise in consumer prices for July, as anticipated, driven largely by increased energy costs. Following this data release, USD/JPY climbed 0.34% to 147.24, though it briefly came under pressure after Kishida's decision not to run for re-election.

Technical Analysis:

USD/JPY is currently trading around $146.80 as of Wednesday. The 14-day Relative Strength Index (RSI) is at 30, suggesting a possible correction. On the downside, the pair might test support at the seven-month low of $141.69, recorded on August 5, with additional support around $140.25. On the upside, the pair could encounter resistance near the nine-day EMA at $147.45. A break above this level could reduce bearish momentum, potentially allowing the pair to advance toward the 50-day EMA at $153.40, with a possibility of testing resistance at $154.50, where former support has now become resistance.

EURUSD

Prediction: Decline

Fundamental Analysis: 

The EUR/USD pair experienced a brief surge to a new seven-month high before pulling back toward the 1.1000 level on Wednesday. The pair advanced beyond $1.1000, reaching $1.1050, following pan-EU GDP growth that aligned with expectations. However, the continued weakness in EU industrial production, coupled with US CPI inflation figures meeting forecasts but still falling short of market expectations, tempered the rally. US headline CPI inflation for July registered at 2.9% year-over-year, slightly below the projected 3.0%, while core CPI inflation dipped to 3.2% annually from the previous 3.0%, as anticipated.

Technical Analysis: 

The EUR/USD pair has the potential to continue rising if it remains above the key 200-day SMA. It could target the 2024 high of $1.1047 and potentially advance toward the December 2023 peak of $1.1139. On the downside, the pair may aim for the 200-day SMA at $1.0837, followed by the weekly low of $1.0777, the June low of $1.0666, and the May low of $1.0649. The four-hour chart shows a strong uptick in positive momentum. The initial resistance level is at $1.1047, followed by $1.1132.

BTCUSD

Prediction: Increase

Fundamental Analysis: 

The U.S. government recently transferred 10,000 Bitcoin to Coinbase Prime, sparking panic in the crypto market and pushing Bitcoin's price down to approximately $59,000. On April 2, the government moved an additional 31,800 Bitcoin to another wallet, subsequently dispersing these funds across various addresses. According to Arkham Intelligence, the U.S. government still holds over $1 billion in Bitcoin linked to the Silk Road case. In November 2022, authorities arrested James Zhong and confiscated 50,000 Bitcoin tied to the Silk Road. The last known sale from these reserves occurred in March 2023, when 9,861.17 Bitcoin were sold by the U.S. government.

Technical Analysis:

Bitcoin is currently facing challenges in maintaining its position above the $60,000 threshold, indicating strong selling pressure at higher levels. Despite showing potential, Bitcoin's trend is lagging behind gold by approximately three months, suggesting it might take additional time to regain upward momentum. Presently, Bitcoin is in the second phase of a bull market cycle. If historical patterns hold, the upward trend could persist until the third quarter of 2025. Sellers may attempt to push Bitcoin down to the key support level at $55,724, a level likely to attract significant buying interest. Should Bitcoin rebound from $55,724, buyers could attempt to drive the price back above the moving averages. Conversely, a break and close below $55,724 might indicate the beginning of a deeper correction, with potential declines toward $49,000.

 

 

 

 

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