2024-01-25 18:00

GOLD PRICE OUTLOOK Gold prices haven’t gone anywhere in recent days, though they are down more than 2% this year U.S. Core PCE data on Friday will likely guide the precious metal’s near-term outlook This article looks at XAU/USD’s key technical levels worth watching over the coming days Most Read: US Dollar Mixed as GDP Data Smash Forecasts, Gloomy ECB Stands Pat Gold prices (XAU/USD) inched higher on Thursday, supported by falling yields, which ticked down across the curve despite stronger-than-expected U.S. gross domestic product data. Considering recent moves, bullion has lost more than 2% this year, but it has lacked directional conviction over the past few trading sessions. Volatility, however, could pick up heading into the weekend, with U.S. core PCE from December on tap Friday morning ahead of the FOMC announcement next week. In terms of estimates, the Fed’s favorite inflation gauge is seen rising 0.2% m-o-m, bringing the year-over-year rate to 3.0% from 3.2% previously - a welcome development for policymakers. UPCOMING US ECONOMIC DATA With the U.S. economy still firing on all cylinders, as reflected by recent GDP and labor market data, traders should pay close attention to the inflation path. If only immaterial progress is seen in the disinflation trend, markets are likely to unwind overly dovish bets on the Fed’s policy path, a situation that could push yields higher and hurt precious metals. On the other hand, if price pressures remain in a downward trajectory, the Fed will have fewer obstacles to begin removing policy restriction, placing a March rate cut fully back on the table even if economic activity continues to perform well. Any core PCI annual reading below the 3.0% threshold should have this effect on markets. GOLD PRICE TECHNICAL ANALYSIS After falling to multi-week lows last week, gold has stabilized in recent days, although it hasn't really gone anywhere, with prices wedged inside trendline resistance at $2,030 and horizontal support at $2,005. Breaking beyond these technical levels is crucial for large directional moves to unfold, otherwise consolidation becomes the most likely scenario. Focusing on possible outcomes, a bullish breakout could send XAU/USD towards $2,065. On further strength, all eyes will be on $2,080. In the event of a bearish breakdown, the next line of defense against a pullback appears at $1,990, followed by $1,975, around the 100-day simple moving average. Additional losses from this point onward could draw attention to the 200-day simple moving average. GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/xau-usd-gold-price-forecast-core-pce-data-to-guide-markets-ahead-of-fed-decision-20240125.html

2024-01-25 14:40

US Dollar (USD) Analysis and Charts The US economy grew by 3.3% in the last three months of 2024 That was hugely better than the 2% gain expected Does this economy need dramatic interest-rate cuts? The United States Dollar was remarkably steady through a fascinating session of economic data on Thursday, suggesting perhaps that all the market cares about at this point is what the Federal Reserve will make of it all. At any rate, the US economy ended the old year in robust form. At this first, advanced look, Gross Domestic Product growth for the last quarter of 2023 came storming in at 3.3%. Admittedly that was far weaker than the previous quarter’s 4.9%, but it was hugely better than the anemic 2% rise expected by the markets. However, durable goods orders for December were flat, according to data released at the same time. This was a clear disappointment and may have blunted some impact from the more historical GDP numbers. The world’s largest economy has remained resilient, overall, to a long period of much higher interest rates and it seems far from clear that it has slowed enough to warrant the cuts in borrowing costs expected by the markets later this year. Inflation, after all, remains above target, if not by much. However, investors must wait until January 31 before the Fed gives its first monetary dispensation of the year. It’s likely to be a nervous wait. The markets heard from the European Central Bank on Thursday. It opted to keep its key main refinancing rate at 4.5%. That’s a 22-year high in place since last September. A call to stick was widely expected beforehand, but the Euro ticked lower against the Dollar as ECB President Christine Lagarde spoke to the press. Her downbeat assessment of the Eurozone economic backdrop seemed to be behind this modest move. ECB Leaves Interest Rates Unchanged, EUR/USD Listless Ahead of Press Conference and US Q4 GDP The Dollar wilted a little against the Japanese Yen at the same time, but it remains above the 147 Yen handle. EUR/USD Technical Analysis Chart Compiled Using TradingView EUR/USD remains confined to a broad range defined at the upper bound by 1.09794. That’s the first, Fibonacci retracement of the rise to last December’s highs from the lows of early October. This has capped the market on a daily-closing basis since the sharp falls seen on January 2. The lower bound of this band comes in at 1.08231, the intraday low of January 23. The market hasn’t been below that level since December 13. This range seems to be entrenched, and the break below a long dominant uptrend line on January 16 has not presaged further, sharp falls. While the direction in which this range breaks is likely to be quite instructive in terms of medium-term direction a durable break seems unlikely at least until the markets have heard from the Fed. IG’s own data finds traders very undecided about the pair, with only a tiny majority putting the bullish camp just ahead, by a margin of 51/49. --By David Cottle for DailyFX https://www.dailyfx.com/news/us-dollar-mixed-as-gdp-data-smash-forecasts-gloomy-ecb-stands-pat-20240125.html

2024-01-25 13:35

EUR/USD Forecast - Prices, Charts, and Analysis The ECB leaves all policy levers untouched. EUR/USD is currently stuck in a 30-odd tick range. Most Read: Euro Q1 Technical Forecast: A Mixed Picture The European Central Bank left all policy settings untouched earlier, as widely forecast. The prepared statement with the announcement gave little away with ECB President Lagarde saying that ‘the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary.’ The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.50%, 4.75%, and 4.00% respectively. Financial markets now see 125 basis points of interest rate cuts this year, the same level seen before the announcement. ECB Implied Rates and Basis Points The Euro barely moved on the announcement and remained in a tight range against the US dollar. The pair has traded between 1.0870 and 1.0902 so far today and traders will hope that the upcoming ECB press conference (13:45 UK) may add some volatility to the, currently, lifeless pair. Support is seen off the 200-day simple moving average (black line on the chart) that sits just below 1.0850, while 1.0950 will be tough to break unless there is any strength in today’s US Q4 GDP figure. EUR/USD Daily Chart Charts Using TradingView IG retail trader data shows 49.86% of traders are net-long with the ratio of traders short to long at 1.01 to 1.The number of traders net-long is 6.55% lower than yesterday and 1.53% lower than last week, while the number of traders net-short is 6.42% higher than yesterday and 1.40% higher than last week. What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/ecb-leaves-interest-rates-unchanged-eur-usd-listless-ahead-of-press-conference-and-us-q4-gdp-20240125.html

2024-01-25 09:09

Canadian Dollar (USD/CAD) Analysis BoC adjusts wording to suggest a plateau in interest rates but highlights remaining core price pressures. USD/CAD bullish pennant appears to favour upside continuation ahead of high impact US data IG client sentiment favours trend continuation after traders pile into daily and weekly shorts The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Bank of Canada Signals Peak Rates but Underlying Price Pressure Remains Yesterday the Bank of Canada (BoC) kept rates unchanged in line with broad expectations. However, the bank did signal that interest rates have peaked via a change in the wording of the January 24th statement. The committee decided to move away from prior wording which alluded to whether monetary policy is restrictive enough, to wording around how long the current level of interest rates ought to remain to ensure a return to the price target. The statement also highlighted the persistent price pressures captured within the core measure of inflation, mainly the effects of elevated wages, shelter but also mentioned elevated food prices which is picked up in the headline measure of inflation. USD/CAD Bullish Pennant Hints at Trend Continuation USD/CAD appears to favor a bullish continuation after yesterday's CAD weakness in light of the dovish shift from the Bank of Canada. As long as price action holds above 1.3503, The bullish move remains constructive and is backed up via the MACD indicator which shows no clear signs of a reversal in momentum. For context, the usual negative relationship between USD/CAD and WTI oil prices has weakened (see correlation coefficient indicator in blue at the bottom of the chart) in the short to medium-term meaning any rise in oil prices is unlikely to contribute significantly to strengthen the Canadian Dollar. Trade is understandably light ahead of the New York session but could see momentum return around the release of Q4 GDP data for the US later today. Immediate support appears at 1.3503 with resistance coming in at the 61.8% Fibonacci level of the major 2021 to 2021 decline (1.351). US GDP data is expected to moderate to a more sustainable 2% level, down from the outstanding Q3 statistic of 4.9%. USD/CAD Daily Chart Source: TradingView, prepared by Richard Snow IG Client Sentiment Favours Trend Continuation as Traders Pile into Shorts Source: IG data, DailyFX, prepared by Richard Snow USD/CAD: Retail trader data shows 44.80% of traders are net-long with the ratio of traders short to long at 1.23 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CADprices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias. Read the full IG client sentiment breakdown for USD/CAD to understand the daily and weekly changes in positioning that helped arrive at the bullish bias. https://www.dailyfx.com/news/usd-cad-latest-after-boc-makes-dovish-shift-price-pressures-remain-20240125.html

2024-01-24 21:30

US DOLLAR OUTLOOK – EUR/USD, USD/JPY, GBP/USD The U.S. dollar lost ground on Wednesday despite better-than-expected U.S. economic data, but the tide may turn in its favor in the coming days Market attention now turns to the fourth-quarter U.S. GDP report This article examines the U.S. dollar technical outlook, with a focus on three major FX pairs: EUR/USD, USD/JPY and GBP/USD Most Read: US Dollar Struggles Despite Better-than-Expected US PMI Data; GDP, PCE Next The U.S. dollar retreated on Wednesday despite better-than-anticipated PMI results, but the tide could turn in its favor over the coming days, especially if key U.S. economic data continues to surprise to the upside. With that in mind, it is important to keep an eye on the fourth-quarter gross domestic product numbers set to be released on Thursday. In terms of estimates, economic activity is forecast to have expanded by 2% at an annualized rate during the fourth quarter, following a 4.9% increase in Q3. Although GDP is backward-looking, it can still offer valuable information on the health of the economy. For this reason, traders should follow the report closely, paying particular attention to household expenditures, the main engine of growth. Want to know more about the U.S. dollar's outlook? Find all the insights in our Q1 trading forecast. Request a free copy now! With consumer spending holding up better than expected thanks in part to a strong labor market and rising confidence levels, it would not be surprising to see another buoyant GDP report. This scenario could further reduce the odds of a Fed rate cut in March and push traders to scale back overly dovish expectations for the FOMC’s policy path, creating a more constructive backdrop for the U.S. dollar. EUR/USD TECHNICAL ANALYSIS After a subdued performance earlier in the week, EUR/USD rebounded on Wednesday, bouncing off the 200-day simple moving average and approaching the 1.0900 handle. If gains accelerate in the coming days, technical resistance appears at 1.0920/1.0935, and 1.0975 thereafter. On further strength, the crosshairs will be 1.1020. On the other hand, if sentiment shifts back in favor of sellers and the pair takes a turn to the downside, the 200-day SMA near 1.0840 will be the first line of defense against a bearish assault. Prices may find stability in this area on a pullback before mounting a comeback, but in the event of a breakdown, we could see a move towards 1.0770, followed by 1.0710 (trendline support). EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView Interested in learning how FX retail positioning can offer clues about GBP/USD’s near-term trend? Our sentiment guide has valuable insights about the subject. Request your free copy now! GBP/USD TECHNICAL ANALYSIS GBP/USD also climbed on Wednesday, but failed to clear resistance at 1.2770. Traders should keep a close eye on this technical ceiling in the trading sessions ahead to see if it contains the bulls. If it does and prices are ultimately rejected to the downside, we could be looking at a possible pullback towards 1.2680. Further losses from this point onward may shift focus towards 1.2600. On the contrary, if the cable prolongs its advance and decisively surpasses 1.2770, we will have before us a bullish signal derived from the confirmation of the symmetrical triangle in development since the middle of last month. In this scenario, GBP/USD could first rally towards 1.2830 before starting the next leg of the upward trend towards 1.3000. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView USD/JPY TECHNICAL ANALYSIS USD/JPY sold off on Wednesday, but managed to finish the day off its worst levels and above the 100-day simple moving average located at near 147.40. There's a potential for prices to find stability in this zone in the coming days before continuing their upward trend. Yet, if a breakdown occurs, the possibility of retracement towards the 146.00 handle cannot be dismissed. On the flip side, if the bulls regain control and propel USD/JPY higher, technical resistance can be spotted at 149.00. On further strength, all eyes will be on the psychological 150.00 mark. Although a retest of the area is within the realm of possibility, the pair may not be able to sustain these levels for an extended period of time, given the risk of Tokyo intervening in FX markets to support the yen. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-us-q4-gdp-in-focus-setups-on-eur-usd-usd-jpy-gbp-usd-20240124.html

2024-01-24 16:22

Japanese Yen (USD/JPY) Analysis Yen picks up late bid as markets digest Ueda’s comments Rising Japanese Government bonds spur on the yen one day after BoJ meeting USD/JPY turns away from the 150 mark as 146.50 emerges as immediate support For expert insight into considerations for the Japanese Yen in Q1, download the forecast below: Yen Picks up a Late Bid as Markets Digest Ueda’s Comments The main takeaway from yesterday’s Bank of Japan (BoJ) meeting was that Ueda still has his eye on an eventual exit from negative rates despite inflation showing signs of slowing down. Ueda described the likelihood of reaching the 2% target as “increasing” and even said an exit from negative rates is possible in the absence of addressing the current, sub-optimal output gap (difference between potential output and current output). Markets see April as a live meeting for the BoJ but currently price in a full 10 basis points (bps) by the June meeting. The BoJ is primarily looking for the continuation of what it refers to as the virtuous cycle between inflation and wages. The wage negotiation process is likely to roundup in March, which has led markets to naturally look to the April meeting for any movement in the interest rate. Implied Basis Points Priced in by Rate Markets Source: Refinitiv, prepared by Richard Snow Rising Japanese Bond Yields Spur on The Japanese Yen Japanese Government bond yields (10-year) continued to rise today, in the aftermath of the BoJ meeting. Yields are still a long way off the early November peak before inflation pressures revealed signs of slowing and markets cooled expectations around any imminent rate changes. The higher yield boosts the attractiveness of the yen and typically sees a rise in the local currency. Japanese Government Bond Yields (10-year) Source: TradingView, prepared by Richard Snow The Yen has broadly risen against a number of major FX currencies (GBP, AUD, EUR, USD) as can be seen below in an equal-weighted index comprising of the above-mentioned currencies: Source: TradingView, prepared by Richard Snow USD/JPY Turns Away from the 150 Mark as 146.50 Emerges as Immediate Support USD/JPY found resistance ahead of the 150 marker but failed to reach the psychological level after the BoJ head pointed towards an eventual exit from negative rates with increasing probability. The short to medium term uptrend has not broken down as of yet, with 146.50 the most immediate level of support, followed by 145.00 and the underside of the longer-term rising channel (highlighted in blue). However, the US dollar may pose a challenge to the yen tomorrow and Friday with US Q4 GDP and PCE data on tap. Strong PMI data earlier today points to an economy that is growing at a decent pace and this could keep USD supported if inflation concerns build in the upcoming data prints with the resilient December CPI print still fresh in the minds of traders. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow After the BoJ meeting, Japan specific data is rather scarce but US Q4 GD and PCE data on Thursday and Friday ought to provide a lift for intra-day volatility before the weekend. Better-than-expected PMI data for the month of January suggests the US economy is moving along at a decent canter but markets will be more focused on backward looking data in tomorrow’s Q4 growth print. USD/JPY will also maintain plenty of interest next week when the FOMC meet to discuss monetary policy. Before then, US PCE data for December is expected to reveal stubborn headline pressures remain, with another welcome drop in the core measure of inflation. https://www.dailyfx.com/news/usd-jpy-price-update-uptick-in-japanese-government-bonds-lifts-the-yen-20240124.html