Market Analysis

EURUSD

Prediction: Potential for Increase

Fundamental Analysis: 

The EUR/USD is struggling to gain traction, hovering near 1.1150 as markets await a key EU inflation report on Tuesday. Investors are also focused on the upcoming Non-Farm Payrolls (NFP) data. The pair experienced a sharp drop after peaking above 1.1200 on Friday, retreating by nearly a cent to around 1.1110 by the close of Monday’s North American session. This decline coincided with a rebound in the U.S. Dollar, which recovered from a dip to 100.15, driven by rising U.S. yields.

Despite China’s recent stimulus measures, risk-sensitive assets remained subdued. Market participants anticipate further rate cuts from the Federal Reserve in November and December, while the European Central Bank continues to grapple with high inflation. If the Fed moves forward with additional rate cuts, it could bolster EUR/USD. However, expectations of stronger U.S. economic performance relative to Europe may limit any significant dollar weakness.

Technical Analysis: 

If EUR/USD pushes higher, it will face initial resistance at 1.1214, the 2024 high, followed by the 2023 peak of 1.1275. On the downside, the first target is the 55-day SMA at 1.1019, then the September low of 1.1001, with further support at the weekly low of 1.0881.

The overall uptrend is expected to remain intact as long as EUR/USD stays above the critical 200-day SMA at 1.0874. On the four-hour chart, bearish momentum has returned, with resistance levels at 1.1214 and 1.1275. Support levels are seen at 1.1113, the 200-SMA at 1.1101, and 1.1082, while the relative strength index (RSI) has dipped to around 45.

XAUUSD

Prediction: Bullish Outlook

Fundamental Analysis: 

Gold prices are holding steady around the $2,625-$2,624 range after easing from last week’s all-time high. Ongoing geopolitical tensions and uneven performances in Asian equity markets are driving safe-haven demand for gold. On Monday, gold briefly dipped into the $2,650s as traders locked in profits following a 1.4% rally to new highs. However, a strong performance in Chinese equities, with the CSI 300 rising 7.5%, and optimism surrounding the Chinese property sector due to lowered mortgage rates have shifted some focus away from gold. Investor sentiment on gold's future remains mixed. Darin Newsom from Barchart.com expects the uptrend to persist amid heightened global uncertainties, while Ole Hansen of Saxo Bank sees potential for a loss of momentum. Adrian Day predicts minimal short-term fluctuations but maintains a bullish long-term outlook, expecting increased demand from Western investors over the next six to twelve months.

Technical Analysis: 

Although gold is retreating from record highs, it remains within an established uptrend across short, medium, and long-term horizons. Following the "trend is your friend" principle, the potential for further upside remains intact. Currently, the Relative Strength Index (RSI) signals that gold is overbought, hovering just below the critical 70 level. Should the daily close move into neutral territory, traders might begin to unwind long positions and consider entering short trades. For now, the overbought signal advises caution on adding new long positions. In the event of a deeper pullback, key support levels lie at $2,600, $2,550, and $2,544. However, given gold’s strong overall momentum, any correction may be brief, with bulls likely pushing prices higher again. The next upside targets are $2,700 and $2,750.

GBPUSD

Prediction: Increase

Fundamental Analysis:

The GBP/USD pair kicked off the new trading week just below the 1.3400 mark but struggled to maintain this level, ending the session below this key threshold. Federal Reserve Chair Jerome Powell's cautious remarks diminished hopes for immediate rate cuts, providing strength to the U.S. Dollar. Despite minor losses on Friday, GBP/USD closed the week on a positive note, trading above 1.3400 early on Monday, as the weakening U.S. Dollar provided support for the pair.

On Friday, U.S. data revealed that the core Personal Consumption Expenditures (PCE) Price Index rose by only 0.1% in August, below the anticipated 0.2%. In the UK, the GDP growth figure for Q2 was revised down to 0.7% from the initial 0.9%, but this adjustment had a limited impact on the currency pair. Powell is expected to speak on the economic outlook soon, with the CME FedWatch Tool showing a nearly 50% probability of a 25 basis point rate cut at the next Federal Reserve meeting. These mixed signals could introduce risks for the U.S. Dollar—further cuts may weaken it, while a more cautious stance could temper GBP/USD’s potential gains.

Technical Analysis:

GBP/USD remains within the ascending regression channel established since September 12, with the Relative Strength Index (RSI) on the 4-hour chart hovering around 60, signaling a continued bullish sentiment.

On the upside, the next resistance is seen at 1.3440 (the midpoint of the ascending channel), followed by 1.3500 (a psychological level) and 1.3520 (the upper boundary of the channel). On the downside, support levels are located at 1.3375 (the lower boundary of the channel), 1.3330 (the 50-period Simple Moving Average), and 1.3300 (another psychological level).

USDJPY

Forecast: Expected Decrease

Fundamental Analysis: 

USD/JPY is retracing toward 143.50 during Tuesday's Asian session after hitting recent highs. Japan’s mixed economic data and the Bank of Japan's hawkish tone on potential rate hikes have bolstered the Yen, leading to a slight decline in the pair, despite a stable U.S. Dollar and varied market sentiment.

Shigeru Ishiba has highlighted that monetary policy should stay accommodative, reflecting Japan's current economic conditions. Investors are eagerly awaiting insights from the BoJ's Summary of Opinions from the September 20 meeting, seeking clues on future rate adjustments. The BoJ kept interest rates between 0.1% and 0.25%, reaffirming their data-dependent approach.

Meanwhile, the U.S. Dollar has experienced a mild recovery, with the U.S. Dollar Index climbing toward 100.50, ahead of a speech by Federal Reserve Chair Jerome Powell at 17:00 GMT. Market participants are looking for Powell’s insights on the Fed’s interest rate trajectory, with expectations for an additional 75 basis point reduction, including 50 basis points likely in November and December. The Fed initiated its rate-cut cycle on September 18, with an aggressive 50 basis point cut.

Technical Analysis: 

Despite recent gains pushing USD/JPY above the Tenkan-Sen (143.46) and Kijun-Sen (143.39) levels, the pair maintains a bearish outlook. The price is still trading below the 200-day moving average and the Ichimoku Cloud, suggesting that selling pressure remains dominant.

The Relative Strength Index indicates some buying momentum, but key resistance levels need to be broken for a sustained upward move. Should USD/JPY break above 144.00, the next target would be 145.00, followed by the 50-day moving average at 145.92, with a potential halt near the Kumo bottom at 148.00-148.20.

Conversely, if the pair fails to surpass 144.00, it could retreat to the Tenkan-Sen at 143.46, then the Kijun-Sen at 143.39, and possibly the 143.00 level.

Disclaimer

Derivative investments involve significant risks and may result in the loss of the capital you invest. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.

RISK WARNING IN TRADING

Transactions via margin involve products that use leverage mechanisms, carry high risks, and are certainly not suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be wary of those who guarantee profits in trading. You are advised not to use funds if you are not prepared to incur losses. Before deciding to trade, ensure that you understand the risks involved and also consider your experience.