Gold prices suffered a significant setback as tensions in the Middle East showed signs of easing. Israel’s decision to implement a humanitarian ceasefire provided a semblance of stability.
In a significant market shift, gold prices have seen a notable downturn as tensions in the Middle East showed signs of easing.
Israel’s decision to implement a humanitarian ceasefire, coupled with concerted efforts by world leaders to mediate the conflict, has provided a semblance of stability. In contrast, oil prices have found support above the $80 mark, largely due to proactive measures by major oil-producing nations. Saudi Arabia and Russia have voluntarily curtailed oil supplies in an effort to support oil price stability amid geopolitical uncertainties.
Investor focus has now shifted to China, where the much-anticipated release of the Consumer Price Index (CPI) and Producer Price Index (PPI) are in the spotlight. These indices are key barometers that provide insight into China’s economic resilience and potential impact on global oil demand.
Dollar Index
In the early hours of the Asian trading session, the U.S. dollar saw a modest rebound, primarily due to a technical correction. However, it’s important to note that the dollar’s overall long-term outlook has shifted to the negative side.
This shift is primarily due to investors coming to terms with discouraging economic indicators from the United States, which in turn have led to dovish expectations regarding the Federal Reserve’s policy stance. Last week’s lackluster Non-Farm Payrolls report, coupled with a notable increase in the unemployment rate, has cast a shadow of uncertainty over the direction of the U.S. economy.
The Dollar Index is trading higher, but is currently near resistance. The MACD is showing diminishing bearish momentum while the RSI is at 36, suggesting that the index may extend its gains as the RSI has bounced sharply from the oversold territory.
Resistance: 105.40, 106.10.
Support: 104.80, 104.10.
XAU/USD
Gold prices have experienced a retreat and are consolidating within a range defined by support and resistance levels as conflicting fundamental factors leave investors seeking a clearer market direction. Global efforts to defuse tensions in the Middle East have reduced gold’s safe-haven appeal. However, the decline in gold has been somewhat offset by the weakening of the US dollar following the decline in US Treasury yields.
Gold is trading lower following the previous retracement from the resistance level. The MACD is showing increasing bearish momentum while the RSI is at 38, suggesting that the commodity may extend its losses as the RSI remains below its mid-line.
Resistance level: 1980.00, 2005.00.
Support: 1960.00, 1940.00.
EUR/USD
The Dollar Index enjoyed a notable rally, supported by strong comments from Federal Reserve officials, who cautioned against excessive optimism and emphasized the ongoing fight against inflation.
Market participants are eagerly awaiting Federal Reserve Chairman Jerome Powell’s speech on Thursday, looking for valuable insights into the central bank‘s monetary policy trajectory.
At the same time, the Euro faces a pivotal moment as Wednesday’s release of German Consumer Price Index (CPI) data will influence the currency’s strength.
The EUR/USD continues to trade within its upward channel, held in place by the resistance line. The RSI has weakened from an upward trend and the MACD has crossed, indicating that the bullish momentum has waned.
Resistance level: 1.0775, 1.0866.
Support: 1.0700, 1.0630.
GBP/USD
The British Pound came under pressure and was suppressed below the formidable resistance level of 1.2420, resulting in a technical retracement. The Dollar’s resurgence was fueled by hawkish comments from Federal Reserve officials, who emphasized that the fight against inflation remains ongoing.
The market’s focus now shifts to Jerome Powell’s speech on Thursday, with traders eagerly awaiting insights into the Fed‘s monetary outlook. In addition, the upcoming release of the UK’s GDP data on Friday is likely to cause significant volatility in the Pound-Dollar pair, adding to the complexity of the currency market.
The Cable has run into strong resistance at 1.2420, but is still trading above 38.2% of its Fibonacci retracement level, suggesting that the bullish trend is still intact. The RSI is about to exit the overbought territory while the MACD has crossed, indicating that the bullish momentum is waning.
Resistance level: 1.2420, 1.2570.
Support: 1.2300, 1.2060.
Dow Jones
The US equity market remains on an upward trajectory, supported by falling US Treasury yields. Market sentiment is pointing to an expected shift in Federal Reserve policy from tightening to expansion as the US economic recovery shows signs of slowing.
In particular, positive earnings reports from major U.S. corporations are contributing to this positive market outlook.
The Dow is trading higher after breaking above resistance. The MACD is showing diminishing bullish momentum, while the RSI is at 69, indicating that the index may be entering overbought territory.
Resistance levels: 34560.00, 35465.00.
Support: 33780.00, 32705.00.
USD/JPY
The USD/JPY pair saw a slowdown as the greenback gained momentum, bolstered by hawkish comments from Fed officials, indicating the Fed’s continued commitment to fighting inflation. Meanwhile, the Japanese yen faced headwinds from the Bank of Japan‘s dovish stance, as highlighted in the BoJ’s meeting minutes. Market participants will need to be patient in anticipation of a potential change in the BoJ’s monetary policy, which is not expected until spring of next year.
The USD/JPY rebounded from its uptrend support level at 149.30, and was traded back into the liquidity zone, giving a neutral signal for the pair. The MACD crossed below the zero line and the RSI bounced before entering the overbought zone, indicating that the bearish momentum has disappeared.
Resistance level: 150.40, 151.55.
Support: 148.55, 144.54.
AUD/USD REVIEW
The AUD/USD retreated as the dollar regained its bullish momentum. The RBA‘s decision to raise interest rates by 25 basis points, in line with market expectations, took interest rates to their highest level in 12 years. While the move was expected, the full impact is yet to be assessed. Investors are closely monitoring the aftermath of the RBA’s latest rate hike, and how these developments may affect the future direction of the pair.
The AUD/USD has pulled back sharply at its strong resistance level of 0.6510, but remains above its short-term Fibonacci retracement level of 61.8% at the time of writing. The RSI has retreated from the overbought zone while the MACD has crossed, indicating that the bullish momentum has waned.
Resistance level: 0.6510, 0.6620.
Support: 0.6400, 0.6300.
CL Oil
Concerns over potential oil supply disruptions have eased after U.S. Secretary of State Antony Blinken claimed progress in efforts to de-escalate the Israel-Hamas conflict. Despite ongoing challenges, the crude oil market remains consolidated around support, supported by decisions by major suppliers to tighten oil supply. Reuters reports confirm that major suppliers, including Saudi Arabia and Russia, intend to maintain ongoing supply cuts through the end of the year, pointing to a tightening oil market in the near term.
Oil prices are trading lower and are currently testing the support level. The MACD is showing diminishing bullish momentum, while the RSI is at 43, suggesting that the commodity may extend its losses after the breakout, as the RSI remains below the mid-line.
