Gold held steady around $2,500 per ounce on Monday as investors evaluated the Federal Reserve’s potential interest rate cut this month, following a mixed US jobs report. The report showed fewer job additions than expected and significant downward revisions for June and July. Despite this, the unemployment rate fell to 4.2%, as predicted, and wage growth rose to 0.4%, surpassing the 0.3% forecast. Federal Reserve Bank of New York President John Williams suggested that a rate cut is now suitable due to progress on inflation and a cooling labor market. The markets are split on whether the Fed will cut rates by 25 or a more significant 50 basis points in its next meeting but are generally anticipating a total of 125 basis points in cuts over the remaining meetings this year. A more accommodating monetary policy benefits gold by lowering the opportunity cost of holding non-interest-bearing assets.
Technically the first support level is at 2,470. If this level is breached, the next supports to watch will be 2,430 and 2,400. On the upside, the initial resistance is at 2,500; if this level is surpassed, the next targets will be 2,530 and 2,550.
GBP/USD extended its losing streak for the third consecutive day, trading around 1.3060 during the Asian session on Tuesday. The decline can be attributed to the strengthening US dollar, which has gained support following recent US labor data that has cast doubt on the likelihood of a more aggressive interest rate cut by the Federal Reserve at its September meeting. According to the CME FedWatch Tool, markets are currently pricing in at least a 25 basis point (bps) rate cut by the Federal Reserve in September. However, the chance of a 50 bps cut has slightly decreased to 29.0%, down from 30.0% a week ago.
Federal Reserve Bank of Chicago President Austan Goolsbee noted on Friday that Fed officials seem to be aligning with market sentiment that a policy rate adjustment by the Fed is imminent, as reported by CNBC. In the UK, investors are eagerly awaiting the release of employment data for the quarter ending in July, scheduled for Tuesday. This labor market report is expected to significantly influence market expectations regarding the Bank of England’s (BoE) interest rate decisions for the rest of the year.
For GBP/USD, the initial support lies at 1.3040, followed by 1.3000 and 1.2950 below. On the upside, the first resistance is at 1.3100, with subsequent levels at 1.3140 and 1.3190 if the pair breaks above this resistance.
The EUR/USD pair has slightly rebounded from a one-week low, trading around the 1.1030-1.1025 range during the Asian session on Tuesday, briefly ending a two-day losing streak. Any significant appreciation still appears limited due to the ongoing US Dollar (USD) strength. Following the release of a mixed US jobs report on Friday, investors have scaled back their expectations for a 50 basis point interest rate cut by the Federal Reserve in September. This shift has bolstered the Greenback for the third consecutive day, bringing it closer to the monthly peak reached last week, which acts as a headwind for the EUR/USD pair. The euro’s relative weakness is also attributed to rising market expectations that the European Central Bank (ECB) may cut interest rates again in September, given declining inflation in the Eurozone. This potential for additional ECB easing might further cap the EUR/USD pair, although the downside is expected to be limited ahead of key data and central bank events later this week. The latest US consumer inflation figures are set to be released on Wednesday, followed by the US Producer Price Index (PPI) on Thursday. These reports will be crucial in shaping market expectations for the Fed’s rate cut decision later this month and will influence USD demand. Additionally, the ECB’s policy decision on Thursday will provide a new direction for the EUR/USD pair.
The first support level is at 1.1030 for the EUR/USD pair. If this level is breached, the next supports to watch will be 1.1000 and 1.0950. On the upside, the first resistance is at 1.1060; if this level is surpassed, the next targets will be 1.1100 and 1.1150.
EUR/USD Rebounds as Dollar Weakens Ahead of US CPI Data
EUR/USD ended its losing streak for the last three days and traded around 1.1050 during Wednesday’s Asian session. This rebound is attributed to a weakening US Dollar (USD) ahead of the US Consumer Price Index (CPI) data, due to be released later in North American trading hours. The CPI report could provide new insights into the potential scale of the Federal Reserve’s (Fed) interest rate cut this September. The US Dollar is facing headwinds as US Treasury yields continue to decline. The US Dollar Index (DXY), which gauges the USD’s strength against six major currencies, paused its three-day winning streak, trading around 101.40. At the time of writing, the 2-year and 10-year US Treasury yields are at 3.57% and 3.62%, respectively. Last week’s labor market report increased uncertainty regarding the likelihood of a substantial rate cut by the Fed. According to the CME FedWatch Tool, markets are expecting at least a 25 basis point (bps) rate cut in September, though the probability of a 50 bps cut has slightly decreased to 31.0%, down from 38.0% the previous week. In contrast, the Euro has faced downward pressure following recent German inflation data. The Harmonized Index of Consumer Prices (HICP) reflected a 2.0% increase compared to the same period last year in August, aligning with expectations, while the monthly index fell by 0.2%, also in line with forecasts. Similarly, the Consumer Price Index (CPI) remained steady at 1.9% compared to the same month last year for August. Looking ahead, traders expect the European Central Bank (ECB) to lower interest rates to 4.0% by implementing a 25 basis point cut at its policy meeting on Thursday.
In the pair, the first support level is at 1.1015. If this level is breached, the next supports to watch will be 1.1000 and 1.0950. On the upside, the first resistance is at 1.1060; if this level is surpassed, the next targets will be 1.1100 and 1.1150.
Gold Prices Hold Firm Ahead of US Inflation Report
On Wednesday, gold prices held steady at around $2,520 per ounce as investors awaited the US inflation report later in the day for indications of the Federal Reserve’s potential rate cut. The previous week’s jobs report offered limited clarity, showing fewer job additions than expected while the unemployment rate edged lower. The annual inflation rate in the US is projected to decelerate for a fifth consecutive month to 2.6% in August, down from 2.9% in July, with the monthly inflation rate expected to hold steady at 0.2%. Market expectations now indicate a 67% probability of a 25 basis point rate cut at next week’s Fed meeting, with a 33% chance of a 50 basis point reduction, according to the CME FedWatch tool. A less restrictive monetary policy tends to benefit gold by lowering the opportunity cost of holding non-interest-bearing assets. Additionally, traders are keeping a close eye on the first debate between US presidential candidates Kamala Harris and Donald Trump in anticipation of the November election.
Technically the first support level is at 2,510. If this level is breached, the next supports to watch will be 2,495 and 2,470. On the upside, the initial resistance is at 2,530; if this level is surpassed, the next targets will be 2,550 and 2,585.
Inflation Concerns, Rate Cut Expectations, and Currency Movements
The EUR/USD struggled near the 1.1000 level on Thursday with inflation concerns and an expected 25 basis point ECB rate cut due to cooling inflation, with the German CPI hitting a three-year low. The US dollar gained modestly after the Fed’s mixed inflation report, supporting Treasury yields and the USD Index. In Japan, the yen weakened to 142.5 per dollar, though it remained strong following signals from the BoJ of gradual rate hikes. Gold held steady at $2,510 as markets now see an 85% chance of a Fed rate cut next week. GBP/USD traded around 1.3045, pressured by soft UK GDP data, while silver climbed toward $29 amid expectations of central bank rate cuts and strong demand in China and the renewable energy sector.
GBP/USD Falls on UK Economic Concerns
The GBP/USD pair is currently under pressure and is trading near 1.3045 as the markets react to the latest US inflation data. Economic reports released during the European session have further weighed on the pound. While headline inflation decreased, the annual core Consumer Price Index (CPI), excluding volatile food and energy prices, held steady at 3.2% in August, matching expectations. However, both the monthly CPI and core CPI increased by 0.2% and 0.3%, respectively, surpassing market forecasts. This has led traders to lower expectations for a 50-basis-point rate cut by the Federal Reserve, with the market now pricing in an 85% chance of a 25-basis-point cut. The GBP’s weakness was exacerbated by reports of soft Gross Domestic Product (GDP) figures during the European session. Nevertheless, leading indicators suggest a potential rebound in UK economic activity. This outlook implies that the Bank of England is unlikely to implement a rate cut larger than the anticipated 50 basis points by year-end, which could offer some support for the pound.
For GBP/USD, the initial support lies at 1.3040, followed by 1.3000 and 1.2950 below. On the upside, the first resistance is at 1.3100, with subsequent levels at 1.3140 and 1.3190 if the pair breaks above this resistance.
EUR/USD Struggles on Inflation Concerns
The EUR/USD pair struggled to gain momentum during the Asian session on Thursday, trading within a narrow range just above the 1.1000 psychological level, which is a four-week low reached the previous day. The ECB is widely expected to cut interest rates by 25 basis points, given signs of cooling inflation in the Eurozone. This expectation was reinforced by data showing that the German Consumer Price Index (CPI) fell to its lowest level in over three years in August, hitting the ECB’s 2% target. This cooling inflation has weakened the euro, contributing to headwinds for the EUR/USD pair on modest strength in the US dollar. The US CPI report released on Wednesday showed overall easing in consumer prices, but the core CPI indicated persistent underlying inflation, dampening hopes for a larger rate cut by the Federal Reserve next week. This has led to a rise in US Treasury bond yields and a boost in the USD Index (DXY), approaching its monthly peak. Despite this, markets have already factored in the likelihood of the Fed beginning its easing cycle with a 25 basis point rate cut at the September 17-18 FOMC meeting. This, combined with generally positive market sentiment, limits further gains for the safe-haven dollar and provides some support to the EUR/USD pair ahead of the key central bank event. Additionally, the upcoming release of the US Producer Price Index (PPI) could offer new trading opportunities for the EUR/USD pair later in the North American session.
In the pair, the first support level is at 1.1015. If this level is breached, the next supports to watch will be 1.1000 and 1.0950. On the upside, the first resistance is at 1.1030; if this level is surpassed, the next targets will be 1.1060 and 1.1100.
Fed Rate Cut Speculation Fuels Currency and Commodity Gains
The EUR/USD pair extended its recovery, driven by a weaker US Dollar following soft Producer Price Index (PPI) data and expectations of a Federal Reserve rate cut. Meanwhile, the Japanese yen approached year-to-date highs due to hawkish signals from the Bank of Japan (BoJ) regarding future rate hikes. Gold surged to an all-time high of $2,560 per ounce, supported by speculation of aggressive Fed action and softening US labor data. The GBP/USD pair also gained ground as dovish Fed expectations outweighed concerns over the Bank of England’s potential rate cuts. Lastly, silver approached the $30 mark, supported by Fed rate cut expectations and demand prospects from China and the renewable energy sector.
EUR/USD Extends Recovery with USD Weakness
The EUR/USD pair extended its recovery from the 1.1000 psychological level—a nearly four-week low—gaining traction for the second day on Friday. The momentum pushed the pair to the upper end of the weekly range, around the 1.1090 level during the Asian session, driven by broad-based weakness in the US Dollar (USD). The soft US Producer Price Index (PPI) report released on Thursday increased speculation that the Federal Reserve might implement a more significant interest rate cut next week. This, combined with a generally positive risk sentiment, has pushed the USD to a more than one-week low, providing support for the EUR/USD pair. The European Central Bank (ECB) also chose not to give specific interest rate guidance, which supports the euro and the currency pair.
In the pair, the first support level is at 1.1040. If this level is breached, the next supports to watch will be 1.1015 and 1.0990. On the upside, the first resistance is at 1.1090; if this level is surpassed, the next targets will be 1.1150 and 1.1200.
Gold Hits Record High at $2,560 on Rate Cut Expectations
Gold surged to approximately $2,560 per ounce on Friday, reaching a new all-time high amid a weaker dollar and declining bond yields. This rally was fueled by fresh economic data that heightened expectations for a more aggressive Federal Reserve response to upcoming interest rate cuts. Recent data showed an increase in initial jobless claims and a softening labor market, with weak payroll figures from August reinforcing this trend. Additionally, US producer prices rose slightly more than anticipated in August due to higher service costs, though the overall inflation trend still pointed toward easing. Markets are currently predicting a 59% chance of a 25 basis point rate cut and a 41% chance of a 50 basis point reduction, according to the CME FedWatch tool. In Europe, the European Central Bank followed through with a 25 basis point rate cut as expected, reflecting increasing confidence among policymakers that inflation is on a sustained downward trajectory.
Technically the first support level is at 2,545. If this level is breached, the next supports to watch will be 2,530 and 2,510. On the upside, the initial resistance is at 2,570; if this level is surpassed, the next targets will be 2,585 and 2,600.
2,510. If this level is breached, the next supports to watch will be 2,495 and 2,470. On the upside, the initial resistance is at 2,530; if this level is surpassed, the next targets will be 2,550 and 2,585.
Fed Rate Cut Bets Boost Markets, Euro Faces Headwinds (09.16.2024)
This week, the EUR/USD pair opened positively, trading around 1.1090 as markets focused on the upcoming Federal Reserve policy decision, with a 59% probability of a 50 basis point rate cut. The ECB’s cautious stance with weak Eurozone growth could limit the euro’s upside movement. The Japanese yen strengthened to 140.5, driven by the growing divergence between US and Japanese monetary policies, with the BoJ expected to hold rates but signal future hikes. Gold hit a record high near $2,590, supported by a weaker dollar and rising Fed rate cut expectations. The GBP/USD pair saw modest gains, benefiting from USD depreciation, but upcoming BoE and Fed decisions may influence its trajectory. Silver surged to a two-month high of $31, fueled by speculation of a larger Fed rate cut, while weak Chinese economic data tempered demand concerns for metals.
GBP/USD Sees Modest Gains with Low Trading Volumes
The GBP/USD pair saw some dip-buying, supported by lower trading volumes due to holidays in China and Japan. The pair is trading around 1.3135-1.3140, marking a modest gain of over 0.10% and nearing a one-week high from Friday, driven by ongoing USD devaluation.
The British Pound is benefiting from expectations that the Bank of England (BoE) will make fewer policy changes compared to the Federal Reserve in the coming year. However, market anticipation of further BoE rate cuts, following weak UK wage growth and stagnant GDP for July, may limit the pair’s bullish momentum.
Traders are cautious before key central bank meetings, with the Fed’s decision on Wednesday and the BoE’s on Thursday, both likely to shape the GBP/USD pair’s future. Despite this uncertainty, broader market conditions favor USD bears, suggesting potential for the pair to continue rebounding from last week’s low at the 1.3000 psychological level.
For GBP/USD, initial support is at 1.3100, followed by 1.3050 and 1.3000. On the upside, resistance begins at 1.3165, with further levels at 1.3215 and 1.3265.
On Monday, the Japanese yen strengthened to around 140.5 in light holiday trading, nearing its highest level since July 2023 due to a growing divergence in monetary policies between Japan and the US. The Bank of Japan (BoJ) is expected to keep interest rates unchanged this week but may signal a potential rate hike as early as October. BoJ board member Naoki Tamura recently suggested short-term rates should rise to 1% by fiscal 2026 to consistently reach the 2% inflation target. Similarly, BoJ board member Junko Nakagawa indicated that rates will continue to rise if economic and inflation trends align with projections.
Meanwhile, the US Federal Reserve is expected to cut rates this week for the first time in four years, with markets anticipating a larger 50 basis point reduction.
Technically, resistance for the yen stands at 140.50, with potential targets at 141.00 and 142.00. On the downside, support begins at 140.00, with further levels at 139.40 and 139.00.
Global Markets Brace for Fed Rate Decision, Dollar and Metals React
Markets are on edge ahead of the Federal Reserve’s highly anticipated interest rate decision. The EUR/USD dipped to 1.1125, reflecting a modest recovery in the US Dollar as traders await key US Retail Sales data and the possibility of a significant 50 basis point rate cut. In Japan, the Yen held steady near its strongest levels in 13 months, driven by diverging monetary policies between the US and Japan, with the Bank of Japan potentially signaling future rate hikes. Gold maintained its strength near $2,580 per ounce, supported by Fed rate cut expectations, while silver continued its upward trajectory, trading at $30.80 ahead of the Fed’s decision. The GBP/USD consolidated gains above 1.3200, with the British Pound benefiting from the dollar’s weakness and speculation of a slower rate-cutting pace by the Bank of England.
EUR/USD Dips as USD Recovers Ahead of Fed Rate Decision
The EUR/USD pair is trading lower around 1.1125 as the US dollar (USD) showed a modest recovery during Tuesday’s Asian session. Traders are preparing for US Retail Sales data later today, with the Federal Reserve’s interest rate decision on Wednesday being the main event. The Fed’s two-day meeting, starting Tuesday, will be closely watched to see if the central bank opts for a 50 basis points (bps) cut or a smaller 25 bps reduction. Markets are increasingly betting on a 50 bps cut, with a 67% probability priced in, up from 50% on Friday, according to CME FedWatch Tool. Such a significant rate cut could support the USD and impact the EUR/USD pair. Last week, the European Central Bank (ECB) cut interest rates for the second time this year. ECB Governing Council member Martins Kazaks indicated that further easing may be on the table but should be approached cautiously due to ongoing inflation risks. ECB policymaker Gabriel Makhlouf also emphasized a data-driven approach to future monetary decisions. Investors are awaiting Eurozone Harmonized Index of Consumer Prices (HICP) data for further direction. If inflation data exceeds expectations, it could strengthen the Euro (EUR) against the USD.
In the pair, the first support level is at 1.1120. If this level is breached, the next supports to watch will be 1.1100 and 1.1050. On the upside, the first resistance is at 1.1150; if this level is surpassed, the next targets will be 1.1200 and 1.1250.
During Tuesday’s Asian session, the GBP/USD pair traded slightly above 1.3200, consolidating its recent gains from its highest level in a week. Investors are holding off ahead of the Fed’s two-day FOMC meeting starting Tuesday and the BoE policy update on Thursday. The Fed is expected to cut rates by 50 basis points on Wednesday, with a 67% probability priced in, which has kept US Treasury yields low and the USD weak. This supports the GBP/USD pair. The GBP benefits from expectations that the BoE will cut rates more slowly than the Fed, though further BoE cuts are anticipated following weak UK wage growth and flat GDP data. With no major UK data on Tuesday, GBP/USD will be influenced by USD movements and US Retail Sales data later in the day. Caution is advised for traders.
For GBP/USD, the initial support lies at 1.3190, followed by 1.3110 and 1.3080 below. On the upside, the first resistance is at 1.3215, with subsequent levels at 1.3265 and 1.3300 if the pair breaks above this resistance.
Markets Await Fed Rate Decision, Driving Volatility in Currencies and Commodities
Global financial markets are bracing for key monetary policy decisions from the Federal Reserve, Bank of England, and Bank of Japan this week. The EUR/USD gained strength, trading around 1.1125 as investors anticipate a potential 50-basis-point rate cut by the Fed. The Japanese yen also strengthened, recovering to 141.6 per dollar amid expectations for both U.S. and Japanese monetary decisions. Gold held steady near record highs at $2,570 per ounce, while silver retreated slightly from its two-month peak, as traders await further clarity from the Fed’s rate cut decision. Meanwhile, the British pound edged higher ahead of UK inflation data and the BoE policy meeting, with expectations that the BoE will maintain rates at 5% for now.
EUR/USD Gains Ahead of Fed Decision and Eurozone Inflation Data
The EUR/USD pair is trading stronger around 1.1125 during the Asian session on Wednesday, supported by rising expectations of a deeper rate cut by the U.S. Federal Reserve. Key highlights for the day include the Eurozone’s Harmonized Index of Consumer Prices (HICP) data and the Fed’s monetary policy meeting. Market sentiment remains divided on whether the Fed will cut interest rates by 25 or 50 basis points (bps). Futures for the Fed funds rate now indicate nearly a 65% chance of a 50 bps cut at the September meeting, up from 45% last Friday, according to LSEG. Boris Kovacevic, a global macro strategist at Convera in Vienna, noted, "If they opt for a 50 bps cut, it may suggest the Fed has information that investors lack, indicating that recession risks could be greater than currently anticipated. "In economic data, U.S. retail sales unexpectedly rose by 0.1% month-over-month in August, following a revised 1.1% increase in July, and exceeding expectations of a 0.2% decline, according to the U.S. Census Bureau. Additionally, industrial production jumped by 0.8% in August, rebounding from a 0.6% decline in July and surpassing the consensus estimate of 0.2%. Meanwhile, less dovish guidance from European Central Bank (ECB) officials is bolstering the Euro against the dollar. ECB policymakers have emphasized that future monetary policy decisions will remain data-dependent. Investors are also awaiting the Eurozone HICP inflation data which is due later today. The headline HICP is expected to show a year-on-year increase of 2.2% for August, while the core HICP is estimated to rise by 2.8% in the same period.
In the pair, the first support level is at 1.1100. If this level is breached, the next supports to watch will be 1.1050 and 1.1000. On the upside, the first resistance is at 1.1150; if this level is surpassed, the next targets will be 1.1200 and 1.1250.
Gold held steady at around $2,570 per ounce on Wednesday, remaining close to record highs amid a weaker dollar ahead of the highly anticipated Federal Reserve interest rate decision. The FOMC’s policy meeting lasting for two days concludes later today, with the Fed expected to announce its first rate cut since 2020. Fed fund futures indicate a growing expectation for a 50-basis-point cut, with a 65% probability priced in, while the likelihood of a smaller 25-basis-point reduction stands at 35%. On Tuesday, gold saw a slight decline as U.S. retail sales rose by 0.1% in August, contrary to forecasts of a 0.2% drop, following a revised 1.1% increase in July. This suggests relatively strong consumer spending. Meanwhile, the Bank of England is anticipated to keep UK rates unchanged on Thursday, while the Bank of Japan is likely to maintain its rates on Friday but may signal a willingness to hike if economic forecasts are met.
Technically the first support level is at 2,550. If this level is breached, the next support levels to watch will be 2,525 and 2,500. On the upside, the initial resistance is at 2,585; if this level is surpassed, the next target levels will be 2,600 and 2,620.
