CB Decisions and Geopolitical Tensions Drive Market Movements
The EUR/USD continues its decline as the US dollar strengthens ahead of the ECB’s anticipated rate cut, trading near 1.0850.
Meanwhile, USD/JPY hovers around 149.3, reflecting a stronger dollar and cautious remarks from the Bank of Japan on rate normalization. Gold rallies to $2,680 as dovish central bank outlooks and geopolitical tensions in the Middle East support demand for safe-haven assets. GBP/USD remains bearish, trading below 1.3000, as UK inflation data fuels speculation of a BoE rate cut. Silver holds steady at $31.60, supported by declining US Treasury yields and Fed rate cut expectations.
EUR/USD Pressured by US Dollar Strength, ECB Rate Cut in Focus
The EUR/USD pair continued its decline, approaching 1.0850 during the early Asian session on Thursday. The strengthening of the US dollar is applying selling pressure on this major currency pair. Investors are particularly focused on the European Central Bank (ECB) monetary policy meeting, where another interest rate cut is anticipated. At its September meeting, the Federal Open Market Committee (FOMC) took the rare step of reducing its benchmark interest rate by half a percentage point, setting it in the range of 4.75% to 5.00%. However, investors now expect the Federal Reserve (Fed) to implement modest rate cuts over the next year, which supports the dollar’s strength. Fed Governor Christopher Waller stated on Monday that future rate cuts are likely to be less aggressive than the significant reduction seen in September, expressing concern that the economy might still be operating at a higher level. Later on Thursday, market participants will look for insights from US Retail Sales data, which is projected to increase from 0.1% in August to 0.3% in September. Meanwhile, the ECB is expected to announce its third interest rate cut of the year during its October meeting, with money markets nearly fully pricing in three additional rate reductions through March 2025. ECB President Christine Lagarde mentioned last month that recent developments have bolstered the ECB’s confidence in achieving its inflation target in a timely manner, which will be considered during the October meeting. The dovish remarks from ECB policymakers, along with lower inflation data from the Eurozone, could put additional pressure on the euro against the US dollar.
In the pair, the first support level is at 1.0830. If this level is breached, the next supports to watch will be 1.0795 and 1.0755. On the upside, the first resistance is at 1.0875; if this level is surpassed, the next targets will be 1.0920 and 1.0950.
GBP/USD Remains Bearish as UK CPI Decline Fuels BoE Rate Cut Concerns
The GBP/USD pair remains below the 1.3000 psychological level during the Asian session on Thursday, sitting close to its lowest point since August 20, which was reached the previous day. The current fundamental landscape appears to favor bearish traders, indicating that the most likely movement for spot prices is downward. On Wednesday, data revealed that the annual UK Consumer Price Index (CPI) slowed from 2.2% in August to 1.7% last month, marking the lowest rate since April 2021. This has fueled speculation about a possible interest rate cut by the Bank of England (BoE) in November, further weighing on the British Pound (GBP). Additionally, the recent rally of the US Dollar (USD) to its highest level since early August supports the short-term negative outlook for the GBP/USD pair.
For GBP/USD, the initial support lies at 1.2965, followed by 1.2900 and 1.2830 below. On the upside, the first resistance is at 1.3000, with subsequent levels at 1.3040 and 1.3100 if the pair breaks above this resistance.
The US economy showed mixed signals in the latest data.
Retail sales beat expectations, while initial jobless claims fell but didn’t meet the target. The ECB cut interest rates for the third time this year, and the euro faced downward pressure. The Japanese yen traded lower as inflation rates declined. Gold prices surged to a new record high amid rising geopolitical tensions and market uncertainties. Silver prices also increased, reflecting the broader rally in precious metals. The GBP/USD pair gained ground after the UK’s inflation data surprised to the downside, suggesting potential interest rate cuts.
US Jobless Claims Fall, but Retail Sales Beat Expectations
The EUR/USD ended its 4-day losing streak, trading around 1.0840. The USD gained strength, reaching a 2-month high of 103.87 on a strong US Retail Sales report. The CME FedWatch Tool suggests a 90.8% chance of a 25 basis point rate cut in November and a 74.0% chance of another in December. US Retail Sales increased by 0.4% MoM in September, exceeding market expectations of a 0.3% rise. US Initial Jobless Claims fell by 19,000 for the week ending October 11, dropping to 241,000, failing to meet the expected 260,000 target.
The euro faced downward pressure following the ECB’s policy decision on Thursday. The ECB cut its Main Refinancing Operations Rate and the Deposit Facility Rate by 25 basis points to 3.40% and 3.25%, respectively. This marks the first consecutive rate cut by the ECB in 13 years. This decision follows a notable decline in inflation, which peaked at 10.6% in October 2022 and fell to 1.7% in September. During the post-meeting press conference, ECB President Christine Lagarde left the markets uncertain about the timing of future rate cuts but indicated that the Eurozone economy is on course for a soft landing.
In the pair, the first support level is at 1.0810. If this level is breached, the next supports to watch will be 1.0760 and 1.0740. On the upside, the first resistance is at 1.0875; if this level is surpassed, the next targets will be 1.0920 and 1.0950.
Gold Prices Top $2,700 as Investors Seek Safe Haven
Gold prices surged past $2,700 per ounce on Friday, reaching a new record high. This increase was fueled by global demand for safe-haven assets and expectations for further interest rate cuts from major central banks. The European Central Bank cut rates for the third time this year, lowering the deposit rate to 3.25% as anticipated, while noting that the disinflationary process is “well on track.”
Gold also benefited from rising tensions in the Middle East, particularly following the Israeli military’s confirmation that Yahya Sinwar, a prominent Hamas leader, was killed in combat, raising concerns about regional escalation. Additionally, bullion prices rose as investors moved away from riskier assets due to disappointing fiscal measures in China related to its ongoing property crisis and uncertainties surrounding the US presidential election. Strong economic data from the US limited gold’s upward momentum by supporting a less dovish outlook from the Federal Reserve.
The first support level is at 2,685 for gold, and if this level is breached, the next supports to watch will be 2,640 and 2,605. On the upside, the initial resistance is at 2,730; if this level is surpassed, the next targets will be 2,760 and 2,800.
Fed Policy and Global Tensions Drive Market Sentiment Across Key Pairs
The EUR/USD stabilizes near 1.0860 as traders await key Fed and ECB policy decisions, with a focus on potential rate cuts.
USD/JPY strengthens toward 149 following warnings of possible intervention by Japan’s government amid the yen’s slide. Gold surges to record highs at $2,730, driven by escalating Middle East conflicts and expectations of looser global monetary policies. GBP/USD fluctuates around 1.3050, pressured by UK inflation data that fuels expectations of BoE rate cuts. Silver surges to $34.10, supported by China’s positive news and a PBoC rate cut.
Yen Strengthens Toward 149 as Japan Warns of Potential Intervention
The Japanese yen strengthened towards 149 per dollar on Monday, marking a second consecutive day of gains. This followed a drop to the 150 level last week, which elicited new verbal warnings from the government and raised concerns about potential currency intervention. Last week, the yen fell to an 11-week low of 150.32 as the dollar strengthened due to strong US economic data and increasing speculation about another Trump presidency. Additionally, data released on Friday indicated that Japan’s headline and core inflation rates slowed to five-month lows of 2.5% and 2.4%, respectively, in September. In response to the yen’s decline, Japan’s chief currency diplomat, Atsushi Mimura, reiterated that the government is closely monitoring currency fluctuations and considers excessive volatility undesirable. Earlier this year, authorities intervened when the yen fell below 160 per dollar, and the 150 level is now seen as a critical threshold.
From a technical perspective, the first resistance level is at 150.00. If this level is surpassed, the next targets will be 151.00 and 151.30. On the downside, the initial support is at 148.65; if this level is breached, the next supports to watch will be 148.00 and 147.20.
Gold Climbs Higher as Middle East Conflicts Escalade
Gold climbed around $2,730 per ounce on Monday, setting new record highs due to rising demand for safe-haven assets. The focus is now on the escalating tensions in the Middle East, particularly after Hezbollah announced a more intense phase in its conflict with Israel and reports emerged of Israeli strikes in Beirut’s southern suburbs and other regional locations over the weekend. The uncertainty surrounding the upcoming US presidential elections is also making safe-haven investments a strong investment choice. Furthermore, expectations of looser monetary policies from major central banks are supporting gold prices. The People’s Bank of China recently cut key rates as part of its stimulus efforts, while the European Central Bank lowered rates for the third time this year. However, strong US economic data has raised expectations for a less dovish approach from the Federal Reserve.
Technically the first support level is at 2,685. If this level is breached, the next supports to watch will be 2,640 and 2,605. On the upside, the initial resistance is at 2,750; if this level is surpassed, the next targets will be 2,770 and 2,800.
Euro Falls on German Deflation, Yen Nears Intervention Trigger
The Euro, Yen, and silver all experienced significant movements on Tuesday.
The Euro weakened against the US dollar due to German deflation and expectations of further monetary easing by the ECB. The Japanese Yen fell to a three-month low against the dollar, raising concerns about intervention by Japanese authorities. Silver prices surged to a 12-year high on the back of safe-haven demand and rising industrial demand.
The EUR/USD pair entered a bearish consolidation phase during the Asian session on Tuesday, fluctuating around the 1.0820 level, just above its lowest point since early August reached the previous day. The near-term sentiment appears firmly bearish, indicating that the path of least resistance for spot prices is likely downward. Data released on Monday revealed that producer prices in Germany, the Eurozone’s largest economy, declined for the first time in seven months in September, with the annual rate of deflation accelerating. This development has increased expectations for further monetary easing by the European Central Bank (ECB). Additionally, ECB policymaker Gediminas Simkus suggested that the ECB may need to lower its key interest rate further below the “natural” level if inflation continues to decline. This outlook could further weaken the euro, particularly in the context of a strong U.S. dollar, reinforcing the negative sentiment for the EUR/USD pair.
In the pair, the first support level is at 1.0810. If this level is breached, the next supports to watch will be 1.0770 and 1.0740. On the upside, the first resistance is at 1.0830; if this level is surpassed, the next targets will be 1.0875 and 1.0920.
The GBP/USD pair dipped on Monday, starting the trading week with a new test below the 1.3000 mark, as traders showed caution ahead of a busy week filled with central bank appearances and updates on global Purchasing Managers Index (PMI) figures. Pound Sterling traders will be eyeing Bank of England (BoE) Governor Andrew Bailey’s speech on Tuesday. His comments will be delivered later in the day at the Bloomberg Global Regulatory Forum in New York during the early US market session. On Thursday, the global PMI figures will be released, beginning with the UK data. Market forecasts suggest a slight decrease in UK activity, with October’s Services PMI expected to drop to 52.2 from 52.4 in the previous month.
For GBP/USD, the initial support lies at 1.2965, followed by 1.2900 and 1.2830 below. On the upside, the first resistance is at 1.3050, with subsequent levels at 1.3100 and 1.3160 if the pair breaks above this resistance.
Global Uncertainty and Central Bank Actions Drive Markets
The EUR/USD declines toward 16-week lows as ECB President Christine Lagarde’s comments fail to halt the euro’s slide.
The USD/JPY pair weakens to near 151.5 amid rising U.S. Treasury yields and concerns over Japan’s upcoming general election. Gold surges to $2,750 per ounce, driven by geopolitical tensions and safe-haven demand. GBP/USD remains near 1.3000 as the Bank of England signals a focus on financial sector surveillance while speculation of rate cuts grows. Silver rallies to $34.50, fueled by rising demand for clean energy and concerns over supply shortages.
On Wednesday, gold surged towards $2,750 per ounce, reaching a new record high, fueled by its appeal as a safe-haven asset amid heightened geopolitical tensions and broader macroeconomic uncertainties. Investors continued to keep a close eye on diplomatic efforts in the Middle East, concerned about the potential for an escalated conflict as Israel intensifies its actions in Gaza and Lebanon. The upcoming US election also increased demand for safe-haven assets, with both presidential candidates locked in a tight race. Additionally, demand was further supported by monetary easing measures from major central banks, following recent cuts to key lending rates by the PBoC and ECB. At the same time, expectations for aggressive rate hikes by the Federal Reserve have softened in light of a series of positive economic indicators.
Technically, the first support level is at 2,730. If this level is breached, the next supports to watch will be 2,685 and 2,660. On the upside, the initial resistance is at 2,795; if this level is surpassed, the next targets will be 2,820 and 2,850.
On Wednesday, silver remained above $34.50 per ounce, reaching its highest level in 12 years, driven by global uncertainties and signs of physical shortages. Market participants are concerned about the upcoming US election and ongoing conflicts in the Middle East, alongside expectations of further monetary easing from major central banks. Additionally, the global shift toward cleaner energy has significantly strengthened demand for silver, particularly for its use in solar panels, raising concerns about potential supply shortages. Meanwhile, China, the world’s largest consumer of metals, has introduced various stimulus measures to stimulate economic growth, including reducing key lending rates and injecting liquidity into capital markets.
From a technical perspective, the first resistance level to watch is at 34.90. If silver breaks above this level, the next resistance levels to watch will be 35.20 and 36.50, respectively. On the downside, the initial support level is at 34.00, with subsequent support levels at 33.50 and 33.00.
Market Tensions Lift Gold, Silver as Currencies Stabilize (10.24.2024)
The EUR/USD rebounded from a recent losing streak, supported by a dip in US Treasury yields, with key resistance levels ahead.The Japanese yen weakened, impacted by political uncertainty and weaker economic data, while facing further downside pressure. Gold prices climbed, benefiting from its safe-haven appeal amid geopolitical tensions, and continue to show strength despite a stronger dollar. The GBP/USD remained close to its recent low, with traders focusing on economic reports that could influence its direction. Meanwhile, silver stabilized after testing its highest level since 2012, attracting buyers in the market.
The EUR/USD pair gained during the Asian session on Thursday, rebounding from a three-day losing streak that hit a low of 1.0760, its lowest since early July. Spot prices have since risen near 1.0800, helped by a slight dip in the US dollar. A pullback in US Treasury yields from a three-month high led to some profit-taking on the dollar after its strong rally. However, the likelihood of modest Fed cuts and investor caution before the November 5 US presidential election may support the dollar, while dovish ECB expectations could cap gains for the EUR/USD.
The Eurozone’s annual inflation rate dropped to 1.7% in September, falling below the ECB’s 2% target for the first time since June 2021. This supports the central bank’s view of a disinflationary trend and the potential for further policy easing. ECB official Mario Centeno highlighted growth and inflation risks, suggesting a possible 50 basis point rate cut in December. Similarly, Bostjan Vasle noted recent data may delay expected growth improvements. Market attention now shifts to upcoming flash PMI reports from the Eurozone and the US, which could provide insights into the global economy and influence market sentiment, along with US bond yields impacting the dollar.
The first support level for the pair is at 1.0760. If this level is breached, the next supports to watch will be 1.0725 and 1.0660. On the upside, the first resistance is at 1.0830; if this level is surpassed, the next targets will be 1.0875 and 1.0920.
The Japanese yen traded around 152.4 per dollar, down over 1% from the previous session, marking its lowest in nearly three months. This drop comes before Japan’s general election, where the ruling coalition may lose its majority, raising uncertainty about future Bank of Japan rate hikes. Investors also reacted to data showing a contraction in private sector activity in October, the first in four months, with declines in manufacturing and services. Deputy Chief Cabinet Secretary Kazuhiko Aoki noted the government is keeping an eye on currency fluctuations, as the yen has lost over half of its gains since the July intervention. Globally, the yen remains pressured by a strengthening dollar, driven by expectations of cautious Fed rate cuts and speculation about Trump’s potential November victory.
From a technical perspective, the first resistance level is at 153.20, with further targets at 154.40 and 155.20 if surpassed. On the downside, initial support is at 151.30; if breached, the next support levels are 150.20 and 148.60.
Markets Shift Focus to Fed and Geopolitical Risks Amid Dollar Strength
The EUR/USD holds above 1.0800 as it faces downside risk from expectations of smaller Fed rate cuts and subdued Eurozone growth.
USD/JPY stabilizes near 152 ahead of Japan’s general election, with the yen under pressure due to dollar strength and Japan’s weak inflation data. Gold dips below $2,730 as a strong dollar offsets safe-haven demand, while the GBP/USD recovers to 1.2960 on potential borrowing plans by the UK Finance Minister. Silver trades near $33.50, pressured by dollar gains but supported by ongoing geopolitical tensions and safe-haven demand.
Gold Eases as Strong Dollar Offsets Safe-Haven Demand
Gold dipped below $2,730 per ounce on Friday after a rise in the previous session, as the ongoing strength of the US dollar and Treasury yields overshadowed the metal’s safe-haven appeal. This change followed robust US economic data that intensified expectations that the Federal Reserve’s rate-cutting approach will be less aggressive than anticipated. Recent figures revealed a significant drop in US unemployment claims in late October, indicating a resilient labor market, while an increase in the S&P PMI suggested strong momentum in the private sector. Despite this, geopolitical tensions in the Middle East and worries about a wider conflict, along with uncertainties surrounding the US election and easing from major central banks, continued to provide some support for gold. Overall, gold is on track to post slight gains for the week.
Technically the first support level is at 2,725. If this level is breached, the next supports to watch will be 2,714 and 2,685. On the upside, the initial resistance is at 2,735; if this level is surpassed, the next targets will be 2,757 and 2,800.
