Amid escalating tensions in the Middle East conflict, gold surged past the key $2000 level, driven by the expansion of the ground war.
Amid rising tensions in the Middle East conflict, the market’s gaze remains fixed on the evolving dynamics. Gold surged past the key $2000 level, driven by the expansion of the ground war.
At the same time, oil prices found a foothold above $83, with investors wary of potential supply disruptions from the region, a cornerstone of global oil supply. This week, key interest rate decisions from major central banks – the Federal Reserve, the Bank of England (BoE) and the Bank of Japan (BoJ) – are expected to add a layer of market volatility.
Investors and analysts around the world are closely watching these global events as they shape the financial landscape.
Dollar Index, Daily
U.S. Core PCE prices surged, marking the largest increase in four months. This suggests that consumer spending in the United States is on the rise. However, the dollar’s reaction to the PCE data remained flat as the actual reading was in line with market expectations. According to Friday’s report from the Bureau of Economic Analysis, the core Personal Consumption Expenditures (PCE) price index, which excludes the volatile food and energy components, rose 0.30% in September, in line with market expectations.
The Dollar Index is trading higher and is currently testing resistance. The MACD is showing decreasing bearish momentum, while the RSI is at 57, indicating that the index may extend its gains after the breakout, as the RSI remains above its mid-line.
Resistance level: 106.70, 107.15.
Support: 105.60, 104.80.
XAU/USD, H4
Ongoing geopolitical tensions in the Middle East have increased demand for the safe-haven commodity of gold, pushing its price to the psychological level of $2000. According to Reuters, Israel signaled its intention to encircle Gaza’s main city on Sunday, just 48 hours after releasing images of battle tanks along the Palestinian enclave’s western coast. Market volatility is expected to continue this week, with several high-profile catalysts set to influence trading, including the release of the Federal Reserve meeting minutes and Non-Farm Payrolls data.
Gold prices are trading higher after breaking above the previous resistance level. However, the MACD is showing waning bullish momentum, while the RSI is at 70, suggesting that the commodity may be entering overbought territory.
Resistance level: 2025.00, 2080.00.
Support: 1980.00, 1895.00.
EUR/USD, H4
The euro remained flat following the European Central Bank‘s decision to keep interest rates on hold, marking the end of its monetary tightening cycle. Traders are advised to closely follow the German GDP and CPI data for potential trading signals.
The EUR/USD is trading lower as it tests the support level. The MACD shows an increasing bearish momentum, while the RSI is at 47, indicating that the pair may extend its losses, as the RSI remains below the mid-line.
Resistance level: 1.0675, 1.0795.
Support: 1.0530, 1.0335.
GBP/USD, H4
The British Pound (GBP/USD) found support above its critical liquidity zone near the 1.2090 level. Despite widespread market expectations that the Federal Reserve will keep interest rates on hold amid the escalating conflict in the Middle East, the US Dollar remains robust on geopolitical tensions. At the same time, concerns over the UK’s lackluster economic performance have led to speculation that the Bank of England will hold off on another round of interest rate hikes, adding to the cautious sentiment surrounding the Pound.
Both central bank decisions, with the Fed on Wednesday and the Bank of England in the following days, will have a significant impact on the Cable’s future direction.
The Cable has found support above its liquidity zone, suggesting that the bearish momentum is easing. The RSI and MACD are both floating sideways, giving a neutral signal for the Cable.
Resistance level: 1.2300, 1.2565.
Support level: 1.2060, 1.1830.
Nasdaq, H4
The Nasdaq experienced a slight rise, mainly due to a technical correction. However, the overall trend for the tech-heavy indices remains negative, weighed down by a series of pessimistic earnings reports.
Disappointments from major tech companies during the third quarter earnings season, such as Alphabet (Google) and Tesla, led to a slump in their respective stocks. The tech-heavy Nasdaq 100 index is down 11% from its recent high. Adding to the uncertainty, Apple will release its earnings report later this week.
The Nasdaq is trading lower after breaking below previous support. However, the MACD is showing diminishing bearish momentum, while the RSI is at 32, suggesting that the index may be entering oversold territory.
Resistance level: 14610.00, 15780.00.
Support: 13725.00, 12690.00.
USD/JPY, H4
The Japanese Yen (JPY/USD) has returned to a crucial liquidity zone after last week’s significant breakout. The focus is on the Bank of Japan’s (BoJ) upcoming interest rate decision this Tuesday. The BoJ faces a difficult dilemma: maintaining the status quo risks a multi-decade low for the Yen, while adjusting policy could impact Japan’s inflation targets. Yen pairs are expected to be volatile following the BoJ’s announcement.
The USD/JPY is trading flat within its previous range of liquidity after breaking above its key resistance level of 150.00 last Friday. The MACD and RSI have turned bearish, indicating that the bullish momentum has disappeared.
Resistance level: 150.40, 151.50.
Support: 148.55, 147.50.
AUD/USD, H4
The AUD/USD pair is challenging its long-term downtrend resistance as robust economic data and heightened tensions in the Middle East boost the US dollar. The market’s focus is shifting to China’s upcoming PMI reading, which is expected to beat expectations. A strong number could support the Aussie Dollar against the resilient Greenback this week.
The AUD/USD is trading along its long term downtrend resistance level, and a break above this level will signal a trend reversal for the pair. The RSI and MACD are both sloping, indicating that bullish momentum is building.
Resistance level: 0.6395, 0.6510.
Support level: 0.6300, 0.6205.
CL Oil, H4
Oil prices continue to stagnate near a key support level. Investors are closely monitoring tensions in the Middle East for potential trading signals. While recent developments in the Middle East haven’t directly affected oil supplies, concerns remain about potential disruptions to exports from major crude producing and Hamas-supporting countries such as Iran.
Oil prices are trading higher after the previous bounce from the support level. However, the MACD is showing diminishing bullish momentum while the RSI is at 49, suggesting that the commodity may experience a technical correction as the RSI remains below its mid-lines.
