Fed’s Surprise Rate Cut Mixes Economic Data in Global Markets
The Federal Reserve’s unexpected 50 basis point rate cut continues to reverberate across global markets. EUR/USD initially surged to monthly highs before pulling back to around 1.1120 as the Fed’s less dovish forward guidance limited losses for the US Dollar. The Japanese yen weakened as investors weighed the Fed’s cautious approach and anticipated rate hikes from the Bank of Japan. Meanwhile, gold climbed above $2,570 per ounce, supported by expectations of further rate cuts and its appeal as a safe-haven asset. GBP/USD struggled to gain momentum, hovering around 1.3150, as expectations of a slower rate-cutting cycle by the Bank of England provided support. Silver rebounded to $31 as traders focused on upcoming economic data, including US unemployment figures and China’s loan prime rate.
EUR/USD Eases After Fed Rate Cut, Focus Shifts to US and ECB Data
The EUR/USD pair is trading flat in the early European session on Thursday, having initially risen to monthly highs of 1.1189 following a significant rate cut by the Federal Reserve (Fed). The pair has since eased back to around 1.1120. On Wednesday, the Federal Open Market Committee (FOMC) initiated its easing cycle by lowering the Fed funds target range by 50 basis points (bps) to 4.75%-5.00%. However, the Fed’s forward guidance was less dovish than anticipated, which helped limit losses for the US Dollar (USD). Fed Chair Jerome Powell noted, “it feels to me that the neutral rate is probably significantly higher than it was pre-pandemic.” The median long-term interest rate forecast was adjusted to 2.9% from 2.8%, with seven participants now projecting the long-term rate at or above 3.25%. The median unemployment projection for the end of 2024 was revised to 4.4%, up from 4.0% in June. Powell emphasized that the labor market has normalized, and a further slowdown is not desired by policymakers. Data from Eurostat revealed that the Eurozone Harmonized Index of Consumer Prices (HICP) rose by 2.2% year-over-year in August, matching expectations and the previous reading. Core HICP inflation held steady at 2.8% compared to the same period last year, matching forecasts. ECB policymaker Joachim Nagel stated that Eurozone inflation is still higher than desired, indicating that interest rates need to remain sufficiently elevated to address price pressures. Looking ahead, ECB Executive Board Member Isabel Schnabel is scheduled to speak later in the day. On the US economic front, weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales data will be released.
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 Prices Climb After Fed’s Surprise 50 bps Rate Cut
Gold prices climbed above $2,570 per ounce on Thursday after pulling back from record highs in the previous session. This rise comes as markets digest the Federal Reserve’s recent decision. On Wednesday, the Fed announced its first interest rate cut since early 2020, implementing a surprising 50 basis point reduction to combat softening inflation and a potential slowdown in the labor market. Fed officials indicated that the benchmark rate could drop by another half percentage point by year-end. This move is expected to boost demand for gold by lowering the opportunity cost of holding non-yielding assets. However, during a press conference, Chair Jerome Powell emphasized that the Fed is not rushing to ease monetary policy and noted that the dot plot projections for the federal funds rate should not be interpreted as a definitive policy plan.
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 targets will be 2,600 and 2,620.
Market Reactions Intensify as Fed, BOJ, and ECB Shape Economic Outlook
The EUR/USD trades positively around 1.1165, supported by a weakening US Dollar after the Federal Reserve’s unexpected 50 basis point rate cut. Focus now shifts to ECB President Lagarde’s speech for further guidance. The Japanese yen strengthens toward 142 per dollar following the BOJ’s decision to maintain its policy rate, as markets anticipate further hikes amid rising inflation. Gold remains near record highs around $2,590, benefiting from safe-haven demand fueled by geopolitical risks in the Middle East and the Fed’s rate cut. GBP/USD holds near 1.3300, supported by the Bank of England’s decision to maintain its rates while continuing to reduce its government bond holdings. Silver rises to $31.10 per ounce as the Fed’s rate cut boosts demand for non-yielding assets, with growing expectations for further rate cuts by the end of 2024.
EUR/USD Trades Positively Ahead of ECB President Lagarde’s Speech
The EUR/USD pair is trading positively for the third consecutive day, hovering around 1.1165 during the Asian trading hours on Friday. The decline in the US Dollar (USD), following the Federal Reserve’s unexpected 50 basis point (bps) rate cut at its September meeting, supports the major pair. Later today, ECB President Lagarde’s speech will be critical for the EUR/USD outlook.
In the pair, the first support level is at 1.1150. 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 1.1175; if this level is surpassed, the next targets will be 1.1200 and 1.1250.
GBP/USD Holds Near 1.3300 as BoE Decision Boosts Pound
The GBP/USD pair maintains a positive trajectory for the third consecutive day on Friday, trading around the 1.3300 level during the Asian session, just below its peak since March 2022 reached the previous day. The British Pound (GBP) continues to receive support from the Bank of England’s (BoE) decision on Thursday to keep interest rates steady while reducing its stock of government bonds by an additional £100 billion over the next 12 months. In contrast, the US Dollar (USD) remains near its lowest point since July 2023 due to expectations of further interest rate cuts by the Federal Reserve (Fed), which has contributed to the upward momentum for the GBP/USD pair.
For GBP/USD, the initial support lies at 1.3300, followed by 1.3250 and 1.3200 below. On the upside, the first resistance is at 1.3350, with subsequent levels at 1.3400 and 1.3450 if the pair breaks above this resistance.
Global Markets React to Fed Rate Cut, Yen Weakens, and Gold Holds Steady
The markets experienced significant movement this week across multiple assets. The dollar index stabilized around 100.8 after the Federal Reserve’s 50 basis point rate cut, the first in four years. Fed Chair Powell emphasized that further cuts would not be the norm, leaving investors eager for upcoming economic data such as US PMI, PCE prices, and speeches from Fed officials. Meanwhile, the yen weakened past 144 per dollar due to the Bank of Japan’s continued dovish stance, and the pound held steady at 1.33, awaiting key PMI data that could shape the central bank’s policy direction. In commodities, gold prices remained stable above $2,600 with geopolitical tensions and expectations of further rate cuts, while silver pulled back slightly to $30.90 after a strong recent performance.
The Japanese yen weakened past 144 per dollar in thin holiday trading on Monday, continuing its decline from last week on concerns that the Bank of Japan (BoJ) is in no rush to raise interest rates. Last week, the yen dropped over 2% after the BoJ unanimously decided to maintain its policy rate at 0.25%, in line with expectations. BoJ Governor Kazuo Ueda noted “some weakness” in the economy during his post-meeting press conference, adopting a slightly more dovish tone than in previous statements. His comments diminished the likelihood of a rate hike in October, though a move in December remains anticipated. Ueda also highlighted that the economy is progressing steadily towards a modest recovery, asserting that the central bank will continue to adjust its easing measures if economic and price forecasts are met. Additionally, the yen faced external pressure from a rally in risk assets, spurred by the Federal Reserve’s significant rate cut, which improved the global economic outlook.
In USDJPY, the first support is at 143.60, with subsequent levels at 142.00 and 140.45 below that. On the upside, the initial resistance is at 144.60, followed by 145.90 and 146.50 if this level is breached.
Gold prices were steady at around $2,620 per ounce on Monday, maintaining fresh record highs after surpassing the $2,600 mark last week. This stability was supported by expectations of further interest rate cuts and rising geopolitical tensions, which increased the appeal of bullion. Last Wednesday, the Federal Reserve announced its first interest rate cut in four years, reducing the rate by 50 basis points and indicating that an additional half percentage point cut could occur by year-end. Market participants are now focused on upcoming economic data, including PCE prices, personal income, and spending reports, as well as speeches from several Fed officials, for insights into the interest rate outlook. Meanwhile, gold’s safe-haven status was maintained by escalating tensions in the Middle East, with Israel and Hezbollah intensifying their cross-border attacks on Sunday and exchanging hostile threats amid a rapidly worsening situation.
The first support is at 2600 for gold, with the next levels at 2550 and 2530 below. Above, the initial resistance is at 2630, followed by 2650 and 2700 if this level is surpassed.
The dollar index remained strong, supported by a sharp decline in the euro due to disappointing PMI reports from the Eurozone, while US private sector data highlighted substantial services activity. Similarly, the Japanese yen stabilized around 143.6 per dollar, pausing its decline ahead of comments from Bank of Japan Governor Kazuo Ueda, who adopted a more dovish tone than expected. Gold prices surged to $2,630 per ounce, benefiting from expectations of further Federal Reserve rate cuts and heightened geopolitical tensions. Meanwhile, the pound continued its upward momentum, trading at 1.3360, with upcoming US economic data set to influence the GBP/USD pair. Silver, trading at $30.80, was impacted by recession concerns, with US data expected to shape its future trajectory.
The dollar index held onto its recent gains, trading around 101 on Tuesday, buoyed by a sharp decline in the euro after disappointing September PMI reports from the Eurozone, Germany, and France. In contrast, data released on Monday showed that the US private sector remained strong, with services activity offsetting a deeper contraction in manufacturing. Atlanta Fed President Bostic remarked that progress on inflation and the cooling labor market had occurred “much more quickly” than expected, supporting the argument for “normalizing monetary policy sooner.” Similarly, Minneapolis Fed President Kashkari suggested that future policy adjustments would likely involve smaller steps unless the data showed significant changes. Markets are now awaiting the release of the PCE report later this week for further insight into the interest rate outlook.
In the currency pair, initial resistance is expected at 1.1150, followed by 1.1200 and 1.1250 if breached. On the downside, the first support is at 1.1150, with additional support levels at 1.1070 and 1.1015.
Gold Prices Surge as Fed Signals Further Rate Cuts
Gold was trading around $2,630 per ounce on Tuesday, remaining at record highs as expectations for less Gold traded around $2,630 per ounce on Tuesday, holding at record highs as expectations for a less restrictive monetary policy and increasing geopolitical tensions fueled demand for safe-haven assets. The recent notable rate cut by the Federal Reserve has made gold more attractive, with signs pointing to another potential 50 basis point cut by year-end.
Atlanta Fed President Bostic commented that inflation and the cooling labor market have improved faster than foreseen, raising the possibility of an imminent monetary policy normalization. Traders are now closely watching the upcoming PCE report and speeches from Fed officials to estimate the central bank’s next moves. Gold’s appeal as a safe-haven asset has been reinforced by escalating tensions in the Middle East, especially following Israeli airstrikes on Lebanon, marking the most intense conflict since the 2006 Israel-Hezbollah war.
For gold, the first support level is at $2,600, with further support at $2,550 and $2,530. On the upside, the initial resistance is at $2,635, followed by $2,650 and $2,700 if breached.
Precious Metals Surge, Dollar Slips as Fed Signals Monetary Easing
Global markets are reacting to rising expectations of further interest rate cuts from the Federal Reserve, as the dollar continues to weaken and precious metals surge. Gold reached record highs, driven by monetary easing prospects and escalating geopolitical risks, while silver remains near recent peaks. The EUR/USD pair is trading positively, buoyed by Fed easing bets and anticipation of Eurozone inflation data. The yen held steady as the Bank of Japan signaled caution on rate hikes. Meanwhile, the GBP/USD remains stable as traders await key US economic data, which could shape upcoming Fed decisions.
EUR/USD Eyes Resistance Levels as Dollar Declines on Fed Outlook
The dollar index continued its recent decline, trading around 100.3 on Wednesday, hovering near its lowest levels since July 2023 as traders increased their bets on Federal Reserve interest rate cuts following weak consumer sentiment data. Markets are anticipating that the Fed will cut rates by an additional 200 basis points before reaching its terminal rate next year, which loosely aligns with the Fed’s dot plot. Investors are now focused on new home sales data on Wednesday, weekly jobless claims on Thursday, and the highly anticipated PCE report on Friday for further guidance on the economic outlook.
In the EUR/USD pair, the initial resistance will be at 1.1220 followed by 1.1250 and 1.1300 if this level is surpassed. On the downside, the first support is at 1.1150, with subsequent supports at 1.1100 and 1.1050 below that.
The pound started Wednesday trading at 1.3400. While the news flow from the UK has been relatively quiet this week, important data releases are scheduled for today and tomorrow from the US. These figures will provide clues about the timing and magnitude of the Federal Reserve’s upcoming interest rate cuts, which are likely to introduce volatility into the GBP/USD pair.
In GBP/USD, the first support is at 1.3360, with subsequent levels at 1.3300 and 1.3250 below that. On the upside, the initial resistance is at 1.3430, followed by 1.3470 and 1.3500 if this level is surpassed.
The financial markets faced mixed movements on Thursday as key indicators and events shaped trading. The dollar index held steady around 100.9 after rebounding on Wednesday, with investors awaiting US economic data and potential impacts on Federal Reserve rate cuts. The yen dipped to a three-week low at 144.8, reflecting caution from the Bank of Japan over inflation risks and the yen’s effect on the economy. Gold remained strong near $2,660 per ounce, supported by expectations of further Fed rate cuts and Middle East tensions enhancing its appeal. GBP/USD opened at 1.3350, with expected volatility before US data release potentially influencing the rate cut cycle. Silver, trading around 32.20, faced downward pressure amid global tensions and anticipated US economic reports, highlighting its sensitivity to recession concerns. Across these assets, various support and resistance levels indicate potential trading shifts.
The dollar index remained around 100.9 on Thursday after rebounding in the previous session, as investors awaited the latest weekly jobless claims report for insights into the labor market’s condition. Additionally, data on August durable goods orders and the final reading of second-quarter GDP are scheduled for release later today. On Wednesday, the index gained 0.6% as Treasury yields increased amid renewed inflation concerns and uncertainty over potential Federal Reserve interest rate cuts. This development aligns with Fed Governor Bowman’s comments about the need for a cautious approach to policy changes, considering the inflation risks following the recent 50 basis point cut. The market’s perspective on inflation will be further clarified on Friday with the release of the PCE price indices.
For the EUR/USD currency pair, initial resistance is expected at 1.1220, followed by 1.1250 and 1.1300 if that level is breached. On the downside, the first support is at 1.1150, with additional supports at 1.1100 and 1.1050.
The GBP/USD opened at 1.3350 on Thursday morning. Volatility is expected to rise throughout the day before the US growth and unemployment data, which could potentially slow down the rate cut cycle compared to the Federal Reserve.
For GBP/USD, the first support level is at 1.3330, followed by 1.3300 and 1.3250. On the upside, the initial resistance is at 1.3370, with additional levels at 1.3400 and 1.3470 if this resistance is surpassed.
Safe-Haven Assets Surge Amid Fed Outlook and Geopolitical Risks
Global markets are preparing for the upcoming U.S. PCE report, with the dollar stabilizing ahead of this key inflation measure. The EUR/USD pair is gaining momentum as risk currencies strengthen, while the yen has weakened following Tokyo’s easing inflation data and the Bank of Japan’s cautious approach. Gold remains near record highs, supported by safe-haven demand amid economic uncertainties and geopolitical tensions, while silver edges closer to its 2023 peak as China’s rate cuts improve market sentiment. The pound holds steady, with traders eyeing the impact of U.S. inflation data on the dollar index, which could influence GBP/USD movements.
Gold Holds Near Record Highs as Markets Await Key US PCE Report
Gold hovered around $2,670 per ounce on Friday, maintaining record levels as markets awaited the crucial U.S. PCE report for insights into the Federal Reserve’s monetary policy outlook. The Fed’s preferred measure of inflation will be closely watched later today, especially after strong economic data on Thursday raised doubts about a rapid rate-cutting cycle. U.S. GDP growth was confirmed at an annualized 3% for the second quarter, with jobless claims unexpectedly falling and durable goods orders remaining stable. Nevertheless, fed funds futures suggest a 49% likelihood of another 50 basis point cut in November. Meanwhile, China’s new fiscal stimulus and rising tensions in the Middle East are further enhancing gold’s appeal. For the week, bullion is set to record its third consecutive gain.
In gold, the first support is at 2630, with subsequent levels at 2600 and 2550 below that. Above, the initial resistance is at 2685, followed by 2700 and 2730 if this level is surpassed.
