Market Analysis

XAUUSD

Forecast: Upward Movement

Fundamental Analysis:

Gold prices are climbing toward a historic peak, approaching the $2,750 level, fueled by geopolitical uncertainties and growing expectations of additional rate cuts from the Federal Reserve. Despite the upward pressure from rising US Treasury yields, the demand for gold as a safe haven remains robust, particularly amid risk aversion and concerns over the potential return of a Trump presidency. Markets are factoring in a total of 42 basis points of Fed rate cuts by year-end, with an 89.6% probability of a 25 bps cut during the upcoming November meeting.

Technical Analysis:

Gold's rally to record highs, nearing $2,750, continued despite the appearance of a Gravestone Doji candlestick earlier in the week, which is typically a bearish indicator. Momentum remains firmly with the buyers, as reflected by the Relative Strength Index (RSI), which, although entering overbought territory, could reach an extreme reading of 80 following the recent sharp increase. Should XAU/USD surpass the $2,748 level, the next potential targets are $2,750 and $2,800.

EURUSD

Prediction: Decrease

Fundamental Analysis:

The EUR/USD hit a fresh 11-week low, trading around 1.0800 during Tuesday’s North American session. The Euro continues to weaken as traders increasingly anticipate another rate cut by the European Central Bank (ECB) in December. Expectations for a dovish ECB stance have risen due to growing concerns about economic growth in the Eurozone, which are likely to keep inflation near the ECB’s 2% target. If the rate cut happens, it would mark the ECB's fourth cut this year. On Monday, the German Producer Price Index (PPI) showed a 1.4% year-over-year (YoY) decline in September, accelerating from the 0.8% fall in August. This suggests that producers are struggling to raise prices due to weak consumer demand. Additionally, the International Monetary Fund (IMF) downgraded its economic forecasts for Germany, predicting stagnation in 2024 and only 0.8% growth in 2025.

Technical Analysis:

EUR/USD is struggling to maintain its immediate support at 1.0800. The pair's outlook remains bearish as it continues trading below the 200-day Exponential Moving Average (EMA) around 1.0900. The recent downtrend began after the currency broke below a Double Top formation on the daily chart, near the 1.1000 level, marking a bearish reversal. The 14-day Relative Strength Index (RSI) has dropped below 30, indicating strong bearish momentum, although the oversold conditions may trigger a short-term recovery.

USDJPY

Prediction: Bullish Outlook

Fundamental Analysis: 

USD/JPY continues to hover near the 151.00 level, bolstered by rising US Treasury yields, though it remains capped by key resistance at the upper boundary of the Ichimoku Cloud. The momentum is positive, with the RSI reaching a new peak, indicating potential for further gains towards the 200-day moving average at 151.36 and beyond. However, a dip below 151.00 could trigger support at 149.68, with a deeper pullback possibly targeting the October low of 149.09. Despite consecutive gains for the US Dollar against the Yen, the pair has been unable to break through the 151.00 barrier convincingly. Currently, USD/JPY is trading at 150.92, with US 10-year Treasury yields helping to keep the pair steady at this level.

Technical Analysis: 

The USD/JPY pair is trading near 0.6660 as of Tuesday. On the daily chart, the pair remains below the nine-day Exponential Moving Average (EMA), signaling a short-term bearish trend. The 14-day Relative Strength Index (RSI) is also below 50, reinforcing this negative outlook. On the downside, the pair could retest its eight-week low of 0.6622, last seen on September 11, with further support at the psychological level of 0.6600. Resistance stands at the nine-day EMA of 0.6700, followed by the 50-day EMA at 0.6734. A move above these levels could pave the way for a rise towards the psychological resistance at 0.6800.

BTCUSD

Prediction: Decrease

Fundamental Analysis:

The White House plays a crucial role in determining the future trajectory of cryptocurrencies, and the outcome of the US presidential election could influence Bitcoin and altcoin prices. According to crypto prediction platform Polymarket, Donald Trump currently has stronger odds of winning than Kamala Harris. Crypto regulation has become a key topic in the election campaign, with many experts suggesting that a Trump victory could benefit the crypto industry. Meanwhile, Ripple’s co-founder has expressed support for Harris, as the company continues its legal battle with the SEC over XRP’s regulatory status.

Technical Analysis:

BTCUSD’s near-term action has turned bearish after failing to break through the psychological 70K resistance level. However, the current pullback appears to be a limited correction before another potential upward move. The long tails on today’s and Monday’s daily candles indicate strong buying interest, suggesting that the dips are shallow and positioning for further gains. The technical picture remains bullish, with rising momentum and moving averages in a favorable configuration. Additionally, support from the rising weekly Ichimoku cloud points to potential further upside, keeping the focus on the key 70K level.

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