In my daily Euro/British pound forecast today, I see more sideways action, but I also recognize that we are in major inflection point.
After all, there is massive support underneath near the 0.84 level that I think a lot of people will be paying attention to.
You can see this clearly on the monthly chart, so it’s definitely something that’s going to attract longer term money.
On the upside, we have the 0.85 level, which has been massive resistance. We gapped down from there when they announced that there was going to be a snap election in the European Union parliamentary race in France and the local parliament as well. So really just a huge mess. I think at this point, there is a lot of concern and just hesitation to put a lot of money into play.
Resolution to the Upside? Maybe.
However, once things resolve themselves, I suspect that we probably see a return to the upside, at least for a while, not necessarily for a huge move, but for a move, nonetheless. If we can break above the 0.85 to zero level, then we have the possibility of more momentum coming into the market, perhaps sending the market to the 0.86 level. On the other hand, if we turn around and break down below the 0.84 level, that would be a massive negative sign, and at that point,
I’m not exactly sure what happens next, but it won’t be good for the euro. EUR/GBP is a pair that’s typically choppy under the best of circumstances, so I think that’s essentially what’s going to happen over the longer term. Whether or not we do it here or in one of the other ranges above remains to be seen, but right now I think this is probably best used as a gauge as to how to trade the euro or the British pound against other currencies. Right now, they seem to be fairly equal over the last two weeks but clearly the pound is stronger than the euro over the longer term.
GBP/USD stays below 1.2650 following Thursday’s modest recovery.
May PCE inflation data from the US could drive the USD’s valuation on Friday.
Quarter-end flows could trigger irregular movements in markets heading into the weekend.
Following Wednesday’s sharp decline, GBP/USD registered modest gains on Thursday. The pair, however, failed to pull away from the key 1.2640 level, reflecting the buyers’ hesitancy.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the weakest against the Australian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.03%
0.05%
0.58%
0.08%
-0.12%
0.71%
0.65%
EUR
0.03%
0.10%
0.65%
0.15%
-0.06%
0.79%
0.76%
GBP
-0.05%
-0.10%
0.51%
0.06%
-0.16%
0.69%
0.66%
JPY
-0.58%
-0.65%
-0.51%
-0.48%
-0.66%
0.17%
0.08%
CAD
-0.08%
-0.15%
-0.06%
0.48%
-0.20%
0.63%
0.60%
AUD
0.12%
0.06%
0.16%
0.66%
0.20%
0.85%
0.82%
NZD
-0.71%
-0.79%
-0.69%
-0.17%
-0.63%
-0.85%
-0.04%
CHF
-0.65%
-0.76%
-0.66%
-0.08%
-0.60%
-0.82%
0.04%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Earlier in the day, the UK’s Office for National Statistics reported that the annualized Gross Domestic Product (GDP) growth for the first quarter got revised higher to 0.3% from the 0.2% announced in the flash estimate. This data failed to trigger a noticeable market reaction.
Early Friday, GBP/USD trades in a relatively tight range below 1.2650. In the second half of the day, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve’s (Fed) preferred gauge of inflation, for May.
On a monthly basis, the core PCE Price Index, which excludes volatile food and energy prices, is forecast to rise only 0.1% following the 0.2% increase recorded in April. A reading at or below the market expectation could feed into expectations for a Fed rate cut in September and hurt the USD. On the flip side, markets could turn reluctant to bet on a September policy pivot if the monthly core PCE Price Index rises 0.2% or more. In this scenario, GBP/USD could stay on the back foot.
Profit-taking and position adjustments on the last trading day of the second quarter could trigger sharp actions in currency pairs and distort the impact of the PCE inflation data on financial assets.
GBP/USD Technical Analysis
The 100-day and the 50-day Simple Moving Averages (SMA) form a key pivot level at 1.2640. If GBP/USD confirms this level as resistance, technical sellers could take action and open the door for an extended slide toward 1.2600 (psychological level, static level), 1.2580 (Fibonacci 50% retracement) and 1.2550 (200-day SMA).
On the upside, 1.2670 (50-period SMA on the 4-hour chart) aligns as interim resistance before 1.2710-1.2720 (200-period SMA, Fibonacci 23.6% retracement of the latest downtrend) in case GBP/USD starts using 1.2640 as support.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Gold price returns to the red early Friday, awaiting US PCE inflation data.
The US Dollar follows the USD/JPY and Treasury bond yields higher even as the mood improves.
The fate of Gold price hinges on the top-tier US data but downside risks remain intact.
Gold price has snapped its rebound from two-week lows early Friday, losing ground after running into offers near the $2,330 resistance again. The next direction for Gold price now remains in the hands of the US Personal Consumption Expenditure (PCE) inflation data.
All eyes remain on US PCE inflation data and Japan’s intervention risks
Gold price is back in negative territory in Asian trading on Friday, as the US Dollar extends Thursday’s late rebound and recovers lost ground on the back of the resumption of the USD/JPY uptrend and rising US Treasury bond yields.
Higher US Dollar and US Treasury bond yields trigger a fresh bout of selling in the non-yielding Gold price. Additionally, traders turn cautious and refrain from placing fresh bets on Gold price heading into the US inflation showdown.
The US annual PCE Price Index is seen rising 2.6% in May, compared to a 2.7% increase in April while the Federal Reserve (Fed) preferred inflation measure, the core PCE figure, is expected to accelerate by 2.6% YoY, slowing from a 2.8% growth in April.
If the inflation data points to slowing price pressures, Gold price is likely to regain its recovery momentum, as the US Dollar would come under strong selling pressure on increased bets for a September rate cut. On the contrary, the US Dollar could stretch its recent advance and weigh on Gold price should the data surprise to the upside.
Markets are now pricing in about a 64% chance of a Fed rate cut in September, a tad higher than the 62% seen Thursday, according to CME FedWatch Tool.
Meanwhile, the first US presidential election debate in the showdown to the November 5 polls had little to no impact on the value of the US Dollar and that of Gold price.
On Thursday, mixed US growth, Durable Goods Orders and housing data exerted downward pressure on the US Dollar. The Greenback already bore the brunt of the correction in the USD/JPY. This helped Gold price stage a decent comeback from two-week troughs under $2,300.
Further, Fed Governor Michele Bowman’s change of words exacerbated the buck’s pain. Bowman said, “I am still willing to raise rates again if inflation doesn’t ease.” Atlanta Fed President Raphael Bostic also delivered dovish remarks, suggesting that an interest rate cut in the fourth quarter was likely, with inflation moving in the right direction.
Gold price technical analysis: Daily chart
Gold price downside remains intact, despite the previous rebound, as the 14-day Relative Strength Index (RSI) remains below the 50 level.
Therefore, any rebound in Gold price continues to remain a good selling opportunity.
Adding credence to the bearish potential, the previous week’s 21-day Simple Moving Average (SMA) and the 50-day SMA bearish crossover continues to act as a headwind.
If sellers extend control, the $2,300 threshold will be put to test once again, below which the June low at $2,287 could come to the buyers’ rescue.
Further down, the May 3 low at $2,277 will come into play.
Alternatively, Gold price needs to take out the 21-day SMA at $2,328 on a daily closing basis to resume the recovery from the monthly low of $2,287.
Further up, the 50-day SMA at $2,338 will be eyed, followed by the two-week high of $2,366.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price returns to the red early Friday, awaiting US PCE inflation data.
The US Dollar follows the USD/JPY and Treasury bond yields higher even as the mood improves.
The fate of Gold price hinges on the top-tier US data but downside risks remain intact.
Gold price has snapped its rebound from two-week lows early Friday, losing ground after running into offers near the $2,330 resistance again. The next direction for Gold price now remains in the hands of the US Personal Consumption Expenditure (PCE) inflation data.
All eyes remain on US PCE inflation data and Japan’s intervention risks
Gold price is back in negative territory in Asian trading on Friday, as the US Dollar extends Thursday’s late rebound and recovers lost ground on the back of the resumption of the USD/JPY uptrend and rising US Treasury bond yields.
Higher US Dollar and US Treasury bond yields trigger a fresh bout of selling in the non-yielding Gold price. Additionally, traders turn cautious and refrain from placing fresh bets on Gold price heading into the US inflation showdown.
The US annual PCE Price Index is seen rising 2.6% in May, compared to a 2.7% increase in April while the Federal Reserve (Fed) preferred inflation measure, the core PCE figure, is expected to accelerate by 2.6% YoY, slowing from a 2.8% growth in April.
If the inflation data points to slowing price pressures, Gold price is likely to regain its recovery momentum, as the US Dollar would come under strong selling pressure on increased bets for a September rate cut. On the contrary, the US Dollar could stretch its recent advance and weigh on Gold price should the data surprise to the upside.
Markets are now pricing in about a 64% chance of a Fed rate cut in September, a tad higher than the 62% seen Thursday, according to CME FedWatch Tool.
Meanwhile, the first US presidential election debate in the showdown to the November 5 polls had little to no impact on the value of the US Dollar and that of Gold price.
On Thursday, mixed US growth, Durable Goods Orders and housing data exerted downward pressure on the US Dollar. The Greenback already bore the brunt of the correction in the USD/JPY. This helped Gold price stage a decent comeback from two-week troughs under $2,300.
Further, Fed Governor Michele Bowman’s change of words exacerbated the buck’s pain. Bowman said, “I am still willing to raise rates again if inflation doesn’t ease.” Atlanta Fed President Raphael Bostic also delivered dovish remarks, suggesting that an interest rate cut in the fourth quarter was likely, with inflation moving in the right direction.
Gold price technical analysis: Daily chart
Gold price downside remains intact, despite the previous rebound, as the 14-day Relative Strength Index (RSI) remains below the 50 level.
Therefore, any rebound in Gold price continues to remain a good selling opportunity.
Adding credence to the bearish potential, the previous week’s 21-day Simple Moving Average (SMA) and the 50-day SMA bearish crossover continues to act as a headwind.
If sellers extend control, the $2,300 threshold will be put to test once again, below which the June low at $2,287 could come to the buyers’ rescue.
Further down, the May 3 low at $2,277 will come into play.
Alternatively, Gold price needs to take out the 21-day SMA at $2,328 on a daily closing basis to resume the recovery from the monthly low of $2,287.
Further up, the 50-day SMA at $2,338 will be eyed, followed by the two-week high of $2,366.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
USDJPY Intervention ZoneHow will the US inflation numbers influence the Fed rate path?
US Personal Income and Outlays Report and the Fed in Focus
On Friday, the US Personal Income and Outlays report is crucial for September Fed rate cut prospects. Economists expect the Core PCE Price Index to rise 2.6% year-on-year, down from 2.8% in April.
Lower-than-expected figures could boost confidence in a rate cut, though higher personal income and spending trends could sustain demand-driven inflation, potentially requiring a prolonged high rate trajectory.
Forecasts suggest personal income and spending will climb by 0.4% and 0.3%, respectively. For context, April saw increases of 0.3% in personal income and 0.2% in spending.
With inflation taking center stage, investors should monitor FOMC member statements. Responses to the Personal Income and Outlays Report and perspectives on the timing of a Fed rate cut could sway market sentiment.
FOMC members Thomas Barkin and Michelle Bowman are on the calendar to speak, adding the potential for market-moving commentary.
Short-term Forecast: Bearish
USD/JPY trends hinge on intervention chatter, US inflation data, and Fed speeches. Higher US inflation could prompt a Japanese government intervention, with the BoJ possibly cutting JGB purchases more aggressively in July.
Considering the dynamics, the USD/JPY could face stern resistance to the upside. The USD/JPY could drop to 150 if the Japanese government intervenes and the BoJ signals plans to aggressively cut JGB purchases.
USD/JPY Price Action
Daily Chart
The USD/JPY hovered comfortably above the 50-day and 200-day EMAs, affirming the bullish price signals.
A break above the Wednesday, June 26, high of 160.872 could give the bulls a run at the 162 handle.
Interventions, Bank of Japan commentary, and US inflation numbers require investor attention on Friday.
Conversely, a USD/JPY break below the 160 handle could signal a drop to the 50-day EMA. A fall through the 50-day EMA could bring the $151.685 support level into play.
The 14-day RSI at 72.28 shows a USD/JPY in overbought territory. Selling pressure could intensify at the June 26 high of 160.872.
The irruption of selling interest in the US Dollar (USD) prompted the USD Index (DXY) to give away part of the recent advance beyond the 106.00 level and refocus on the downside instead, allowing EUR/USD to regain balance and reclaim levels above 1.0700 the figure on Thursday.
In fact, the euro (EUR) managed to set aside some of the recent negative sentiment amidst reduced political concerns in France ahead of the June 30 snap elections.
The macroeconomic situation on both sides of the Atlantic remained steady, with the European Central Bank (ECB) contemplating further rate cuts beyond summer. Market expectations suggest two more ECB rate cuts later in the year.
On this, ECB’s rate-setter Peter Kazimir said the bank might consider another interest rate cut later this year after the reduction implemented this month, although not during the summer.
On the other side of the road, market participants were still debating whether the Federal Reserve (Fed) would implement one or two rate cuts this year, despite the Fed forecasting just one cut, likely in December.
It is worth recalling that part of the recent uptick in the US Dollar came in response to hawkish comments from Fed officials, while the widening monetary policy gap between the Fed and other major central banks also contributed to the euro’s decline.
On Wednesday, FOMC Governor Michelle Bowman reiterated that her primary view is that inflation will fall further if the policy rate remains unchanged. She stated that rate cuts would be necessary if inflation stabilised around 2%. Her colleague Raphael Bostic, President of the Atlanta Fed, argued that inflation in the US “seems to be decreasing,” potentially paving the way for the Fed to reduce interest rates later this year.
The CME Group’s FedWatch Tool maintains a probability of around 65% of lower interest rates in September vs. a nearly 93% chance at the December 18 gathering.
In the short term, the recent ECB rate cut, compared to the Fed’s decision to maintain rates, has widened the policy gap between the two central banks. This could lead to further weakness in EUR/USD.
However, the Eurozone’s emerging economic recovery and perceived weakening of US fundamentals are expected to reduce this disparity, potentially providing occasional support for the pair in the near future.
EUR/USD daily chart
EUR/USD short-term technical outlook
If bears maintain control, EUR/USD may revisit the June low of 1.0666 (June 26), then the May low of 1.0649 (May 1), and lastly the 2024 bottom of 1.0601 (April 16).
Meanwhile, occasional bouts of strength may put the pair on track to revisit the 200-day SMA at 1.0789, prior to the weekly high of 1.0852 (June 12) and the June top of 1.0916 (June 4). The breakout of this level could put the March peak of 1.0981 (March 8) back on the radar ahead of the weekly high of 1.0998 (January 11) and the psychological 1.1000 yardstick.
So far, the 4-hour chart shows some evidence of ongoing recovery. The initial resistance is at 1.0746, then 1.0761, and finally 1.0800. The initial support is at 1.0666, ahead of 1.0649 and 1.0601. The Relative Strength Index (RSI) rebounded to around 50.
EUR/USD reclaimed the area beyond 1.0700.
The US Dollar faced renewed downside pressure.
Markets now look at the release of US PCE.
The irruption of selling interest in the US Dollar (USD) prompted the USD Index (DXY) to give away part of the recent advance beyond the 106.00 level and refocus on the downside instead, allowing EUR/USD to regain balance and reclaim levels above 1.0700 the figure on Thursday.
In fact, the euro (EUR) managed to set aside some of the recent negative sentiment amidst reduced political concerns in France ahead of the June 30 snap elections.
The macroeconomic situation on both sides of the Atlantic remained steady, with the European Central Bank (ECB) contemplating further rate cuts beyond summer. Market expectations suggest two more ECB rate cuts later in the year.
On this, ECB’s rate-setter Peter Kazimir said the bank might consider another interest rate cut later this year after the reduction implemented this month, although not during the summer.
On the other side of the road, market participants were still debating whether the Federal Reserve (Fed) would implement one or two rate cuts this year, despite the Fed forecasting just one cut, likely in December.
It is worth recalling that part of the recent uptick in the US Dollar came in response to hawkish comments from Fed officials, while the widening monetary policy gap between the Fed and other major central banks also contributed to the euro’s decline.
On Wednesday, FOMC Governor Michelle Bowman reiterated that her primary view is that inflation will fall further if the policy rate remains unchanged. She stated that rate cuts would be necessary if inflation stabilised around 2%. Her colleague Raphael Bostic, President of the Atlanta Fed, argued that inflation in the US “seems to be decreasing,” potentially paving the way for the Fed to reduce interest rates later this year.
The CME Group’s FedWatch Tool maintains a probability of around 65% of lower interest rates in September vs. a nearly 93% chance at the December 18 gathering.
In the short term, the recent ECB rate cut, compared to the Fed’s decision to maintain rates, has widened the policy gap between the two central banks. This could lead to further weakness in EUR/USD.
However, the Eurozone’s emerging economic recovery and perceived weakening of US fundamentals are expected to reduce this disparity, potentially providing occasional support for the pair in the near future.
EUR/USD daily chart
EUR/USD short-term technical outlook
If bears maintain control, EUR/USD may revisit the June low of 1.0666 (June 26), then the May low of 1.0649 (May 1), and lastly the 2024 bottom of 1.0601 (April 16).
Meanwhile, occasional bouts of strength may put the pair on track to revisit the 200-day SMA at 1.0789, prior to the weekly high of 1.0852 (June 12) and the June top of 1.0916 (June 4). The breakout of this level could put the March peak of 1.0981 (March 8) back on the radar ahead of the weekly high of 1.0998 (January 11) and the psychological 1.1000 yardstick.
So far, the 4-hour chart shows some evidence of ongoing recovery. The initial resistance is at 1.0746, then 1.0761, and finally 1.0800. The initial support is at 1.0666, ahead of 1.0649 and 1.0601. The Relative Strength Index (RSI) rebounded to around 50.
A bearish continuation would be indicated on a drop below this week’s low of 2.635 (C). The 200-Day MA would then become a target for support around 2.47. There is an interim price level at the 38.2% Fibonacci retracement at 2.55, followed by the swing low of 2.475 from May 28 (A). The May 28 swing low carries significance as it is part of the price structure for the uptrend. A drop below it would violate the higher swing low.
Bulls Watching for Rally Above 2.86
Nevertheless, if this week’s low continues to hold as support and leads to higher prices, natural gas will have completed a new higher swing low as part of the price structure of the uptrend. A decisive rally above 2.86 will trigger a bullish breakout that should lead to a test of resistance around the trend high at 3.16 and is likely to continue to rise and test higher price levels. The first higher target is the completion of a rising ABCD pattern at 3.32. That target is followed by the January 8 swing high at 3.39.
The first bull breakout above the trendline two weeks ago could not be sustained, leading to the current minor pullback. A second breakout may have a greater chance of success as it would represent an important change in the chart given that it has represented trend resistance for a while.
Weekly Close to Leave Clues
Earlier this week natural gas triggered a bearish weekly continuation on the drop to 2.635. Unless it strengthens some during Friday’s session it is on track to close weak, in the lower area of the week’s trading range. Further, it may end with a weekly bearish shooting star candlestick pattern, which can be seen today. Unless there is a new high or low triggered for the week in Friday’s trading session, the halfway point for the week’s range is at 2.75.
For a look at all of today’s economic events, check out our economic calendar.
The British pound has found itself dipping a bit during the course of the trading session on Thursday, but then turned around as we found buyers step into the market yet again. Keep in mind that the Bank of Japan continues to see the need to keep interest rates down, and therefore they have been printing yen and buying bonds every time they start to rise. Furthermore, the British pound has been one of the better performers around the world, so it all lines up for a market that should be bullish.
However, you should also keep an eye on the ¥165.50 level, where we had seen significant selling pressure previously, or we had formed a bit of a shooting star, not only on Tuesday, but several weeks back. In other words, I think that’s an area that is in general going to be difficult. However, if we were to break above that area then it opens up a potential move to the ¥169 level. On the other hand, if we turn around and break down below the bottom of the candlesticks for the last couple of days, then you have the 50-Day EMA and the 200-Day EMA indicators sitting just below. In that area, you would have quite a bit of technical support so it will be interesting to see how that plays out. Anything below that area would obviously attract a lot of attention, and traders would probably be aiming for the ¥160 level.
Regardless, this is a market that will continue to be very noisy, and I think that’s something that you will just have to come to terms with. That is typically the case with this pair, but we also have a lot of volatility in general around the Forex world. Ultimately, you will have to be very flexible and keep your position size reasonable, as we could find ourselves in trouble rather quickly. The yields in Japan will have to be paid close attention to, as it will continue to cause major volatility at times and this pair and all other yen related pairs going forward. The yield curve control game is by far the biggest game in town at the moment.
For a look at all of today’s economic events, check out our economic calendar.
Generally encouraging United States data put pressure on the US Dollar.
The US will release the Personal Consumption Expenditures Price Index on Friday.
XAU/USD returned to its comfort zone at around $2,330 but lacks bullish momentum.
Spot Gold rallied on Thursday, returning to its comfort zone at around $2,330, trading just below the level mid-American session. XAU/USD started grinding higher early in Europe, helped by decreased demand for the US Dollar and persistent risk aversion but added the most following the release of mostly encouraging United States (US) macroeconomic figures.
The country reported that Durable Goods Orders were up 0.1% MoM, better than the -0.1% expected, and confirmed the Gross Domestic Product (GDP) at 1.4% as expected, slightly above the previous estimate of 1.3%. Also, the country reported that Initial Jobless Claims for the week ended June 21 at 233K, better than the 236K expected, while the June Kansas Fed Manufacturing Activity Index printed at -11, deteriorating from the previous -1.
The improvement in the market sentiment reached Wall Street. Following sharp slides in Asian and European indexes, US ones pushed higher, with the Dow Jones Industrial Average and Nasdaq Composite currently trading in the green and the S&P500 hovering around its opening level. Meanwhile, US government bond yields retreated, with the 10-year note currently offering 4.28%, down 3 basis points (bps) in the day.
The focus now shifts to the most relevant US macroeconomic report, the Personal Consumption Expenditures (PCE) Price Index. The Federal Reserve’s (Fed) favorite inflation gauge will be released on Friday and is expected to show inflation was up 2.6% YoY in May, slightly below the previous 2.7%. Easing inflationary pressures should boost hopes for a soon-to-come rate cut in the US and lead to a USD decline. Still, as markets may become optimistic, the chance of an XAU/USD rally is limited.
XAU/USD short-term technical outlook
XAU/USD hovers around $2,325, and the daily chart shows a limited bullish potential. The pair is meeting sellers at around a mildly bearish 20 Simple Moving Average (SMA), now at around $2,327.60. Technical indicators, in the meantime, turned higher, but remain within neutral levels, with the Relative Strength Index (RSI) indicator battling to overcome its 50 level. The 100 and 200 SMAs, in the meantime, maintain their bullish slopes below the current level, with the shorter one providing dynamic support at around $2,252.40.
According to the 4-hour chart, XAU/USD is neutral in the near term. Technical indicators bounced from their recent lows but turned flat around their midlines, reflecting decreased buying interest. At the same time, the intraday advance stalled around a flat 100 SMA, although the bright metal recovered above a now flat 20 SMA. Gold may find some upward strength in higher-than-anticipated US inflation figures, spurring risk-aversion.
Support levels: 2,308.30 2,293.50 2,279.60
Resistance levels: 2,327.60 2,337.00 2,345.20
XAU/USD Current price: $2,326.08
Generally encouraging United States data put pressure on the US Dollar.
The US will release the Personal Consumption Expenditures Price Index on Friday.
XAU/USD returned to its comfort zone at around $2,330 but lacks bullish momentum.
Spot Gold rallied on Thursday, returning to its comfort zone at around $2,330, trading just below the level mid-American session. XAU/USD started grinding higher early in Europe, helped by decreased demand for the US Dollar and persistent risk aversion but added the most following the release of mostly encouraging United States (US) macroeconomic figures.
The country reported that Durable Goods Orders were up 0.1% MoM, better than the -0.1% expected, and confirmed the Gross Domestic Product (GDP) at 1.4% as expected, slightly above the previous estimate of 1.3%. Also, the country reported that Initial Jobless Claims for the week ended June 21 at 233K, better than the 236K expected, while the June Kansas Fed Manufacturing Activity Index printed at -11, deteriorating from the previous -1.
The improvement in the market sentiment reached Wall Street. Following sharp slides in Asian and European indexes, US ones pushed higher, with the Dow Jones Industrial Average and Nasdaq Composite currently trading in the green and the S&P500 hovering around its opening level. Meanwhile, US government bond yields retreated, with the 10-year note currently offering 4.28%, down 3 basis points (bps) in the day.
The focus now shifts to the most relevant US macroeconomic report, the Personal Consumption Expenditures (PCE) Price Index. The Federal Reserve’s (Fed) favorite inflation gauge will be released on Friday and is expected to show inflation was up 2.6% YoY in May, slightly below the previous 2.7%. Easing inflationary pressures should boost hopes for a soon-to-come rate cut in the US and lead to a USD decline. Still, as markets may become optimistic, the chance of an XAU/USD rally is limited.
XAU/USD short-term technical outlook
XAU/USD hovers around $2,325, and the daily chart shows a limited bullish potential. The pair is meeting sellers at around a mildly bearish 20 Simple Moving Average (SMA), now at around $2,327.60. Technical indicators, in the meantime, turned higher, but remain within neutral levels, with the Relative Strength Index (RSI) indicator battling to overcome its 50 level. The 100 and 200 SMAs, in the meantime, maintain their bullish slopes below the current level, with the shorter one providing dynamic support at around $2,252.40.
According to the 4-hour chart, XAU/USD is neutral in the near term. Technical indicators bounced from their recent lows but turned flat around their midlines, reflecting decreased buying interest. At the same time, the intraday advance stalled around a flat 100 SMA, although the bright metal recovered above a now flat 20 SMA. Gold may find some upward strength in higher-than-anticipated US inflation figures, spurring risk-aversion.
The euro initially fell again during the early hours on Wednesday but has since recovered against the British pound to continue the overall noisy consolidation that we have been in for some time.
With that being the case, I think you have to look at this through the prism of a market that is trying to sort itself out and figure where we are going next.
But there is a gap above that still needs to be filled, although we came very close to doing so.
We could find this pair going back to the 0.85 level for no other reason than that gap.
However, it’s also worth noting that this is a market that has seen a lot of downer pressure over the last several months. I think the snap elections in France have really put a chill down the spine of most traders that would be willing to hold on to this market. So, I think we have a situation where traders continue to look at this through the prism of potential value play based on longer term charts. But we need to be honest here.Top Forex Brokers
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The EUR/GBP market is clearly one that is going to remain volatile and choppy and perhaps even very difficult overall to deal with. Because of this, I think you’ve got a situation where traders continue to favor buying the dips as they occur and trying to defend 0.84 level. The 0.84 level, of course, is an area that has caused a bit of support in the longer term charts. So, I think right now we may be setting up sideways action between 0.84 and 0.85 above. Current Environment is All NoiseIn this current environment, I expect to see a lot of noisy trading in multiple markets, not just this one. However, as this market does tend to be choppy under normal conditions, I expect it to be even more aggressive here. If we can break above the 0.8550 level, that might bring in a certain amount of FOMO trading.Want to trade the daily Forex analysis? Begin by checking out the top Forex brokers for beginners here.MENAFN27062024000131011023ID1108379320
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Generally encouraging United States data put pressure on the US Dollar.
The US will release the Personal Consumption Expenditures Price Index on Friday.
XAU/USD returned to its comfort zone at around $2,330 but lacks bullish momentum.
Spot Gold rallied on Thursday, returning to its comfort zone at around $2,330, trading just below the level mid-American session. XAU/USD started grinding higher early in Europe, helped by decreased demand for the US Dollar and persistent risk aversion but added the most following the release of mostly encouraging United States (US) macroeconomic figures.
The country reported that Durable Goods Orders were up 0.1% MoM, better than the -0.1% expected, and confirmed the Gross Domestic Product (GDP) at 1.4% as expected, slightly above the previous estimate of 1.3%. Also, the country reported that Initial Jobless Claims for the week ended June 21 at 233K, better than the 236K expected, while the June Kansas Fed Manufacturing Activity Index printed at -11, deteriorating from the previous -1.
The improvement in the market sentiment reached Wall Street. Following sharp slides in Asian and European indexes, US ones pushed higher, with the Dow Jones Industrial Average and Nasdaq Composite currently trading in the green and the S&P500 hovering around its opening level. Meanwhile, US government bond yields retreated, with the 10-year note currently offering 4.28%, down 3 basis points (bps) in the day.
The focus now shifts to the most relevant US macroeconomic report, the Personal Consumption Expenditures (PCE) Price Index. The Federal Reserve’s (Fed) favorite inflation gauge will be released on Friday and is expected to show inflation was up 2.6% YoY in May, slightly below the previous 2.7%. Easing inflationary pressures should boost hopes for a soon-to-come rate cut in the US and lead to a USD decline. Still, as markets may become optimistic, the chance of an XAU/USD rally is limited.
XAU/USD short-term technical outlook
XAU/USD hovers around $2,325, and the daily chart shows a limited bullish potential. The pair is meeting sellers at around a mildly bearish 20 Simple Moving Average (SMA), now at around $2,327.60. Technical indicators, in the meantime, turned higher, but remain within neutral levels, with the Relative Strength Index (RSI) indicator battling to overcome its 50 level. The 100 and 200 SMAs, in the meantime, maintain their bullish slopes below the current level, with the shorter one providing dynamic support at around $2,252.40.
According to the 4-hour chart, XAU/USD is neutral in the near term. Technical indicators bounced from their recent lows but turned flat around their midlines, reflecting decreased buying interest. At the same time, the intraday advance stalled around a flat 100 SMA, although the bright metal recovered above a now flat 20 SMA. Gold may find some upward strength in higher-than-anticipated US inflation figures, spurring risk-aversion.
