

Market Analysis
EURUSD
Prediction: Decrease
Fundamental Analysis:
The Euro is on track to close Wednesday with minor losses against the U.S. Dollar, down 0.04% following the U.S. inflation report, which showed the core Consumer Price Index (CPI) held steady in August. The EUR/USD pair is currently trading near 1.1014, having peaked at 1.1055 earlier in the session.
Despite a weekly low of 1.1001, the pair saw a slight rebound but remains bearish, heading into the Asian trading session around 1.1020. The release of the CPI data spurred a shift to risk aversion, dampening expectations of a 50 basis point rate cut by the Federal Reserve in the upcoming meeting. U.S. CPI increased 2.5% year-over-year in August, down from the prior 2.9%.
Attention has now shifted to the European Central Bank (ECB), which is expected to reduce interest rates by 25 basis points due to softening inflation and concerns about an economic downturn.
Technical Analysis:
The daily chart for EUR/USD signals further downside risk. The pair has been trending below a flat 20 Simple Moving Average (SMA), with the 100 SMA losing strength, positioned above a flat 200 SMA, though both remain well below the current price level. Technical indicators, though moderating their declines, remain in negative territory and show no signs of an imminent reversal.
In the 4-hour chart, further declines seem likely. The 20 SMA is gaining downward momentum below a flat 100 SMA, and after a brief recovery from the 200 SMA, the indicators remain weak. A break below the 1.1000 support level could trigger more selling pressure, with the next target being a potential retest of the 1.0900 zone.
XAUUSD
Prediction: Uptrend Expected
Fundamental Analysis:
Gold prices are currently trading above $2,500 on Thursday, as persistent U.S. inflation dampens expectations of aggressive Federal Reserve policy easing. This has bolstered the USD near its monthly peak, limiting gains for XAU/USD. During the mid-European session, gold reached a high of $2,528.95 before retreating toward $2,500 after U.S. economic data revealed the August Consumer Price Index rose 2.5% year-over-year, down from 2.9% in July and slightly below the 2.6% forecast. Core inflation met expectations at 3.2%, while the monthly increase of 0.3% marginally exceeded projections.
These developments have led to a more cautious approach from the Federal Reserve, with a 25 basis point rate cut anticipated next week. Additionally, the European Central Bank is set to meet on Thursday, where a 25 basis point rate reduction is also expected.
Technical Analysis:
From a technical standpoint, XAU/USD maintains a bullish trend on the daily chart, despite showing limited upward momentum. The pair continues to trade above the positively sloped 20-day Simple Moving Average (SMA), supported by buying interest. Additionally, both the 100 and 200 SMAs reflect a bullish outlook, well below the current price. Although technical indicators are positioned in positive territory, they lack strong directional momentum, leaving the bias skewed to the upside.
In the short term, the 4-hour chart reveals a neutral-to-bullish perspective. XAU/USD is trading above the converging 20 and 100 SMAs near $2,507, with indicators rising from their midlines, signaling an ongoing upward trend.
GBPUSD
Prediction: Decrease
Fundamental Analysis:
The GBP/USD pair is facing downward pressure, currently trading around 1.3045, driven by recent U.S. inflation data. Reports from the European session have further weighed on the pound. While headline inflation showed a decline, the core CPI, which excludes volatile food and energy prices, remained steady at 3.2% annually for August, aligning with expectations. However, both CPI and core CPI saw monthly increases of 0.2% and 0.3%, respectively, exceeding forecasts. As a result, traders have reduced the likelihood of a 50-basis-point rate cut by the Federal Reserve, now anticipating an 85% chance of a 25-basis-point cut instead.
In the UK, weak GDP figures have added to the pound’s struggles. However, leading indicators suggest a potential improvement in UK economic activity, hinting that the Bank of England may limit its rate cuts to the expected 50 basis points by year-end, offering some support to the GBP.
Technical Analysis:
The GBP/USD pair’s decline to 1.3045 reflects growing bearish momentum. Key technical indicators like the Relative Strength Index (RSI) are near 50, while the Moving Average Convergence Divergence (MACD) remains in negative territory, pointing to further downside risk. If the RSI dips below 50, this could confirm increased selling pressure.
Despite the broader uptrend being intact, the pair's move below the 20-day moving average favors sellers in the short term. A break below 1.3035 would expose the first support at 1.3028, with additional declines potentially targeting the 50-day moving average (50-DMA) at 1.2995. A breach of that level could open the door to the March 8 high of 1.2894.
Conversely, if buyers manage to hold the price above 1.3150, the pair may see a recovery, with resistance levels at 1.3111, followed by 1.3150, and a psychological target of 1.3200.
USDJPY
Prediction: Downward Trend Expected
Fundamental Analysis:
The USD/JPY pair has faced difficulty maintaining gains around the 143.00 level and appears to be stalling after recovering from a nine-month low. Currently trading in the mid-143.00s, the pair remains vulnerable to continuing the downtrend observed over the past two months.
While U.S. consumer prices show signs of cooling, core inflation remains persistent, lowering expectations for a substantial 50 basis point rate cut by the Federal Reserve next week. This provides support for the U.S. Dollar, weakening the Japanese Yen, which traditionally serves as a safe-haven asset.
Furthermore, Japan's Producer Price Index (PPI) unexpectedly dropped by 0.2% in August, adding pressure on the JPY. Traders are now looking ahead to the U.S. PPI report for further direction, though the outlook for USD/JPY remains tilted towards a potential decline.
Technical Analysis:
Despite expectations for further USD weakness, the likelihood of a break below the critical support level at 140.80 remains slim. Yesterday's range of 142.18 to 143.71 ended with the USD closing at 142.43, a decline of 0.53%. While downward momentum is growing, it is not yet strong enough to suggest a sustained decline. As long as the USD remains below 143.30 (with minor resistance at 142.70), it could continue to trend lower and may test July’s low of 141.66. However, the key support at 140.80 is likely to hold firm in the near term.
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