Market Analysis

XAUUSD

Prediction: Upward Trend Expected

Fundamental Analysis:

The US Dollar saw gains on Tuesday, driven by its status as a traditional safe-haven currency amid a broader sell-off in stocks and riskier assets. Traders are bracing for a busy week of key data releases, notably the US Non-Farm Payroll report on Friday, which could influence the Federal Reserve’s decisions regarding potential rate cuts. Geopolitical tensions are also providing support for gold prices. On September 3, Ukraine’s national railway company reported that Russian forces had carried out a significant attack on railway facilities, targeting infrastructure and locomotives in the Sumy and Dnipropetrovsk regions. Given these circumstances, gold remains our favored hedge against both geopolitical and financial uncertainties. Anticipated Federal Reserve rate cuts and continued gold purchases by central banks in emerging markets are likely to offer further support to gold.

Technical Analysis:

XAU/USD appears to be trending upward, although seller momentum has increased, potentially pushing the price down to $2,470. The Relative Strength Index (RSI) suggests that buyers still have control, but gold could face short-term weakness. If the price stays below $2,500, the next support level to watch is the August 22 low of $2,470. A break below this level could lead to a decline towards the $2,427-$2,431 range, where the August 15 low aligns with the 50-day Simple Moving Average (SMA). Conversely, if gold rebounds and breaks above $2,500, the next resistance level to monitor will be the all-time high of $2,532, followed by the $2,550 level.

USDJPY

Prediction: Likely Increase

Fundamental Analysis:

Kazuo Ueda emphasized in a document submitted to a government panel on Tuesday that the Bank of Japan is prepared to raise interest rates further if the economy and inflation align with expectations, as reported by Reuters. Inflation in Japan remains elevated, with the Tokyo Consumer Price Index (CPI), excluding fresh food, climbing to 2.4% in August. This figure not only surpasses the July reading but also exceeds the anticipated 2.2%. Despite the strengthening of the US Dollar, the USD/JPY pair continues to experience downward pressure.

Technical Analysis:

Technically, USD/JPY is exhibiting a downward trend, having formed a 'bearish engulfing' pattern, signaling potential further declines. This bearish outlook is reinforced by the Relative Strength Index (RSI), which indicates that selling momentum remains strong. The initial support level is at 145.33. A break below this level could see the pair targeting 145.00, with further declines potentially reaching 143.45, which was the daily low on August 26. This level serves as the final robust support for buyers before the August 5 low of 141.69. For the bulls to regain control, they need to push the price back above 148.45 and then clear 150.00, surpassing the recent high of 149.39.

EURUSD

Forecast: Upward Momentum Expected

Fundamental Analysis: 

On Tuesday, EUR/USD experienced a decline, reaching a two-week low before closing near 1.1050. Market activity remained subdued as traders braced for the upcoming US Nonfarm Payrolls (NFP) report later this week. Concerns about a potential recession were fueled by weak US ISM Purchasing Managers Index (PMI) data. The start of the week saw little significant data from Europe, but traders will shift their attention to Thursday's European Retail Sales report for July and key US labor data, ahead of Friday's crucial NFP release.

Technical Analysis: 

EUR/USD has retreated to short-term resistance levels, with buyers attempting to stabilize the price despite failing to initiate a robust recovery. Last week, the pair touched a 13-month high just above $1.1200, but the recent resurgence of US Dollar strength has hindered buyers from sustaining the bullish trend. Although EUR/USD remains comfortably above the 200-day Exponential Moving Average (EMA) at $1.0845, downward pressure is mounting as sellers aim for the area just above the 50-day EMA at $1.0956.

BTCUSD

Prediction: Decrease

Fundamental Analysis:

Over the past week, Bitcoin has experienced a 6.5% decline. On Tuesday, when the US stock market reopened, the Dow Jones dropped by 1.2%, while the S&P 500 and Nasdaq Composite Index fell by 1.3% and 1.8%, respectively. Some traders link this downturn to recent remarks from the Bank of Japan (BoJ), which have reignited worries about the global economy's stability. This situation is reminiscent of late July when the BoJ raised its benchmark borrowing costs, triggering the unwinding of yen carry trades and causing volatility in risk assets like Bitcoin. In early August, the unwinding of these trades further rattled global markets, contributing to Bitcoin's dip to $49,577 on August 5.

Technical Analysis:

Since hitting an all-time high on March 14, Bitcoin's performance has been mixed, yet it continues to trade within a $50,000 to $70,000 range. The recent decline in the cryptocurrency market is part of an ongoing correction within a downward parallel channel. For instance, the total cryptocurrency market value has decreased by 27% since its peak at $2.734 trillion in March. During this downtrend, the market lost key support levels, including the $2.2 trillion mark and the middle boundary of the descending channel at $2.108 trillion. Currently, Bitcoin's price is hovering near its fair value, suggesting that its current valuation aligns with its underlying economic fundamentals.

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