Market Analysis

GBP/USD Strengthens to Monthly High Amid Positive Market Sentiment

Dupoin · 19 Aug 2024173.2K Views

EURUSD

Prediction: Potential Upside Movement

Fundamental Analysis:

The Euro (EUR) is gaining ground against the US Dollar (USD) as market participants anticipate a potential interest rate cut by the US Federal Reserve in September. Initially, strong US economic indicators, such as lower unemployment claims and higher retail sales, bolstered the USD, driving the EUR/USD pair lower. However, improving investor sentiment and positive movements in US stock futures are now providing support for the Euro. The pair is currently trading near the 1.1000 mark. Upcoming US economic data, including housing starts and consumer sentiment, may influence the exchange rate in the short term. Should US stock markets continue their upward trend, the USD might weaken further, leading to additional gains for the EUR.

Technical Analysis:

The EUR/USD pair is exhibiting bullish signs, with the RSI indicator suggesting that selling pressure is waning. The pair is currently encountering resistance around the 1.1040 level, with additional resistance at 1.1050-1.1060 and 1.1100. Key support levels are identified at 1.0960, 1.0940, and 1.0900. This analysis suggests that the Euro may continue its upward trajectory, although it could face resistance around the 1.1000 level. A breakout above this resistance could pave the way for a move towards the 1.1050-1.1060 and 1.1100 levels. Conversely, if the Euro drops below the 1.0960 support level, it may see further declines towards the 1.0940 and 1.0900 levels.

GBPUSD

Prediction: Potential Upside

Fundamental Analysis:

The British Pound is gaining strength against the US Dollar, reaching its highest level in a month. This upward movement was initially sparked by a rebound off a crucial technical support and has been further bolstered by positive market sentiment. Although strong US economic indicators, such as lower unemployment claims and increased retail sales, provided an early boost to the USD, the prevailing risk-on mood and positive outlook for US stock futures are currently benefiting the GBP. With investors primarily focusing on broader market sentiment, upcoming US economic data releases are unlikely to significantly affect the GBP/USD pair. Continued gains in US stock markets could lead to further USD weakness, potentially pushing the GBP higher.

Technical Analysis:

The GBP/USD pair is encountering resistance at 1.2950, with an additional resistance level at 1.3000. On the downside, support levels are identified at 1.2850-1.2840, 1.2800, and 1.2760. This technical setup indicates that while the GBP may continue its upward trajectory, it could face resistance around the 1.2900 mark. A breakthrough above this resistance could pave the way for further gains toward the 1.2950 and 1.3000 levels. Conversely, a decline below the 1.2850-1.2840 support range could trigger further losses, pushing the pair down towards the 1.2800 and 1.2760 levels.

XAUUSD

Prediction: Increase

Fundamental Analysis:

Gold prices have experienced fluctuations recently, initially climbing on optimism regarding potential US interest rate cuts, but later retreating following robust US economic data. Strong retail sales figures and a resilient job market have reinforced confidence in the US economy, reducing recession concerns and bolstering the US Dollar. This strength in the Dollar is typically bearish for gold, as it is priced in USD and does not yield interest. While some experts advise caution in overinterpreting the data, others believe it indicates that the Federal Reserve may only reduce interest rates by 25 basis points in September. Gold traders will be closely monitoring the US Purchasing Managers Index and Fed Chair Powell's upcoming speech for further insights into the potential direction of gold prices.

Technical Analysis:

Gold is currently trading within a consolidation phase, potentially forming a triangle pattern. In the short term, the price action is expected to remain within this range, with a possible decline towards $2,400 or even $2,390. A break below $2,432 would confirm a bearish move. However, a strong breakout above the upper boundary of the range, especially with a significant bullish candle, could indicate a resumption of the long-term uptrend, potentially driving gold prices to a new record high of $2,550.

USDJPY

Forecast: Potential Decline

Fundamental Analysis:

The Japanese Yen is gaining strength against the US Dollar following Japan's GDP growth, which surpassed expectations and has led to speculation about a possible interest rate hike by the Bank of Japan in the near future. Initially, the USD/JPY pair benefited from a stronger US Dollar and rising Treasury yields. However, these gains were tempered by increasing market expectations of a US interest rate cut in September. Recent US inflation data has intensified discussions about the magnitude of the potential rate cut, with many traders anticipating a smaller 25 basis point reduction, while some still consider a 50 basis point cut. This ongoing uncertainty regarding the Federal Reserve’s policy is putting pressure on the USD, thereby supporting the Yen’s appreciation.

Technical Analysis:

The Japanese Yen is displaying strength against the US Dollar, with the USD/JPY pair trading just below its nine-day moving average, indicating a short-term bearish trend. The RSI indicator also points to a possible corrective movement. The pair has support levels at 142.00 and 141.70, suggesting that it could continue its downward trajectory. If the 141.70 support level is breached, the decline could extend towards the 140.25 level. On the other hand, if the pair manages to break above the 147.53 resistance level, it could potentially rise further towards the 153.40 and 154.50 levels.

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