Market Analysis

Gold Eyeing Higher Targets as USD Weakens and Fed's Jackson Hole Speech Looms

Dupoin · 26 Aug 2024242K Views

XAUUSD

Prediction: Uptrend Expected

Fundamental Analysis:

In the Asian trading session last Friday, market sentiment remained cautious as investors awaited insights from US Federal Reserve Chair Jerome Powell’s upcoming Jackson Hole speech. The focus is on potential signals regarding the Fed’s interest rate strategy, with traders currently anticipating aggressive rate cuts due to signs of a softening labor market. This risk-averse mood has increased demand for safe-haven assets like US government bonds, resulting in lower Treasury bond yields and a corresponding decline in the USD.

Technical Analysis:

Gold's short-term technical outlook favors buyers as long as the triangle support level at $2,470 holds. Last week, Gold prices broke out of a symmetrical triangle pattern, and the 14-day Relative Strength Index (RSI) remains above 50, indicating continued bullish momentum. If Gold prices surpass the recent high of $2,532, the next target could be around $2,550. A sustained move above this level might push prices towards $2,600 and potentially reach the triangle target of $2,660.

EURUSD

Prediction: Bearish

Fundamental Analysis:

EUR/USD has reversed its multi-day uptrend and faces renewed selling pressure after reaching yearly highs above 1.1170 on Wednesday. This shift comes as the US Dollar (USD) regains strength. The Greenback has bounced back from its 2024 lows, which were below the 101.00 level (August 21), driven by increased demand for USD and market reactions to the FOMC Minutes. These minutes hinted at the possibility of a Fed rate cut in September, contributing to the USD's rebound. Additionally, US yields have strengthened across different maturities, supporting the USD's recovery.

Technical Analysis:

The EUR/USD pair is projected to test its 2024 peak at 1.1174 (August 21) and may then approach the 1.1200 level and the 2023 high of 1.1275 (July 18). On the downside, the pair's initial target is the weekly low of 1.0881 (August 8), followed by the significant 200-day SMA at 1.0846 and the weekly low of 1.0777 (August 1). Further declines could see the pair reach the June low of 1.0666 (June 26), and eventually, the May low of 1.0649 (May 1).

USDJPY

Prediction: Decline Expected

Fundamental Analysis:

The Japanese Yen (JPY) is strengthening against the US Dollar (USD) as of Thursday. This movement follows Japan’s second-quarter Gross Domestic Product (GDP) growth exceeding forecasts, which bolsters the possibility of a near-term interest rate hike by the Bank of Japan (BoJ). Japanese Economy Minister Yoshitaka Shindo has indicated a gradual economic recovery, supported by rising wages and income levels. Shindo also mentioned that the government plans to work closely with the BoJ to implement adaptive macroeconomic policies.

Technical Analysis:

The USD/JPY is currently testing higher levels but has not surpassed the previous high of 146.90 reached on Wednesday, maintaining a range-bound pattern. Momentum appears to be shifting towards the sellers, with the Relative Strength Index (RSI) indicating bearish conditions. However, there is growing buyer interest, as the RSI shows an upward trajectory. For a bullish trend to continue, the USD/JPY must break through the Tenkan-Sen level at 146.92. A successful breach could lead to resistance at 147.00 and possibly the recent high of 149.39 from August 15. If these levels are surpassed, the price might approach the 150.00 mark. Conversely, if the downtrend persists, a decline below the August 21 low of 144.45 could see the USD/JPY drop towards the swing low of 141.69 from August 5.

BTCUSD

Forecast: Uptrend Expected

Fundamental Analysis:

Bitcoin (BTC) is trading above $60,000 as of Friday, marking a gain of over 4% this week. Despite this rise, it has been fluctuating within the $57,000 to $62,000 range for the past 15 days. On-chain metrics present mixed signals: while institutional investors are adding to their Bitcoin holdings, some large-scale investors (whales) are offloading their positions. Additionally, US spot Bitcoin ETFs have seen inflows this week. The ongoing movement of funds from Mt.Gox could introduce volatility to Bitcoin's price in the near term.

Technical Analysis:

Bitcoin has recently experienced a "minor breakout," reaching its highest point since August 1. This technical development is viewed positively, suggesting potential further gains over the next three to five days. Bitcoin might test the $69,500 level in the coming days, although surpassing the $72,000 level—which has been a strong resistance for the past five months—could prove challenging.

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