Market Analysis

XAUUSD

Prediction: Bullish Momentum

Fundamental Analysis: 

XAU/USD has recently surged to a record high, surpassing $2,600, fueled by the Federal Reserve’s interest rate cuts and geopolitical tensions in the Middle East. Last week, the Fed implemented a 50 basis point rate cut, initiating a cycle of monetary easing, which has strengthened gold’s appeal as a non-yielding safe haven. Investors are increasingly turning to gold as a hedge against ongoing global uncertainties, especially prolonged conflicts in the Middle East. Gold’s upward movement also reflects market concerns over potential economic downturns, such as a recession, a debt crisis, or a crash in other asset classes like cryptocurrencies. Some analysts caution that a recession may already be underway.

Technical Analysis: 

In the short term, the 60-minute chart suggests gold is trading within an ascending channel. The 14-hour Relative Strength Index (RSI) is near overbought levels, supporting a short-term bullish outlook. Buyers are likely to push the price toward the next resistance levels at $2,654, and possibly $2,691. However, profit-taking by sellers could trigger a pullback to support levels around $2,587 or as low as $2,551. On the daily chart, the trend remains upward, with the 14-day RSI signaling continued bullish momentum near overbought territory.

USDJPY

Prediction: Potential Decline

Fundamental Analysis:

The upcoming economic indicators will be key for USD/JPY movements this week. On Tuesday, the preliminary Purchasing Managers' Index (PMI) data will be released, followed by Tokyo’s CPI figures on Friday. Uncertainty surrounds whether the Bank of Japan will implement further rate hikes this year, given the mixed economic signals and easing inflation pressures. If the PMI points to continued economic recovery in Japan, and Tokyo’s CPI shows another increase, the yen may regain strength. Strong expectations for future rate hikes remain, bolstered by Japan’s National Consumer Price Index (CPI) rising to 3% in August, up from 2.8% in July. The core CPI (excluding fresh food) also met expectations at 2.8%, slightly higher than July's 2.7%.

Technical Analysis:

Although USD/JPY may end the week on a positive note, the overall downtrend persists. The pair has struggled to decisively break above the $144.46 level. The downtrend could accelerate, especially as the 50-day moving average (DMA) is on the verge of crossing below both the 100- and 200-DMAs. In the near term, USD/JPY might see temporary gains, with resistance initially at $144.40. A break above this level could push the pair toward $145.00, followed by the September 3 high of $147.21. However, if the pair falls below $143.00, the next support level is likely to be around $142.04.

EURUSD

Forecast: Expected Decline

Fundamental Analysis: 

The European Central Bank (ECB) implemented its second interest rate cut in September but did not provide clear guidance on future policy easing. Despite a brief rebound earlier this year, the eurozone economy is showing signs of slowing again. Germany, the eurozone’s largest economy, remains the primary source of weakness, though other member states are not experiencing the same level of downturn. A positive aspect is that inflation is nearing manageable levels, giving the ECB flexibility to address any further economic downturn. In August, the composite PMI showed a modest increase, driven mainly by a recovery in the services sector, while manufacturing remains in contraction. In the UK, all three PMI indices rose for the second consecutive month, signaling a more optimistic economic outlook for 2024. Should the UK’s economic conditions continue to improve into September, the Bank of England may have less urgency to reduce rates, potentially bolstering the pound.

Technical Analysis: 

On the 4-hour chart, the Relative Strength Index (RSI) is approaching 70, reflecting strong bullish momentum in EUR/USD. However, a short-term pullback is possible. The first resistance level is at $1.1200, a significant level and the 2024 high, followed by $1.1275 (the July 18, 2023 high) and the psychological barrier of $1.1300. On the downside, immediate support can be found at $1.1135, near the 20-period Simple Moving Average, with further support at $1.1100 (the 23.6% Fibonacci retracement level) and $1.1080 (the 100-period Simple Moving Average).

BTCUSD

Prediction: Bullish Outlook

Fundamental Analysis:

Bitcoin has been consolidating, setting the stage for a potential upward move. Historically, Bitcoin has shown strong buy signals when the Relative Strength Index (RSI) reached oversold levels, as seen in 2015, 2018, and 2020. These periods of overselling triggered significant rallies. The most recent buy signal emerged between the final quarter of 2022 and the first quarter of 2023, when Bitcoin formed a clear inverse head-and-shoulders pattern. This led to a notable price rebound after breaking through the pattern's neckline. Following this breakout, Bitcoin's price surged to overbought levels, according to the RSI, by early 2024.

Technical Analysis:

On the technical front, Bitcoin's price action continues to demonstrate high volatility. A prominent double-top pattern in 2021 preceded a sharp decline, which is clearly visible on the price chart. After this drop, Bitcoin formed a symmetrical expanding wedge, driving the price higher. Currently, the price is shaping a descending expanding pattern, with a potential breakout above $72,000 signaling further bullish momentum. However, until this resistance level is breached, there remains a significant level of caution in the market. Bitcoin's price is closely correlated with Federal Reserve interest rate decisions. Lower interest rates typically drive investors toward alternative assets like Bitcoin, as they seek to hedge against inflation and currency devaluation. Nonetheless, Bitcoin’s volatility remains high, and sharp declines could occur if macroeconomic conditions shift.

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