Jump to content

Market update: US dollar strengthens - analysing EUR/USD, GBP/USD, gold price setups


Recommended Posts

Prepare for market shifts with the upcoming US core PCE data release. Understand its effects on FX markets, the US dollar, and major pairs through our in-depth analysis of EUR/USD, GBP/USD, and gold.

 

original-size.webpSource: Bloomberg

 

Written by: Diego Colman | Market Analyst, New York
 
Publication date: 

Market participants will be on tenterhooks in the coming days ahead of a high-impact item on the US calendar next week: the release of core PCE data – the Fed’s favourite inflation gauge. This crucial event on the agenda is likely to stir volatility within the FX space, so the retail crowd needs to be vigilant and ready for unpredictable price swings.

In terms of consensus estimates, core PCE is projected to have risen by 0.4% in January, bringing the annual rate down to 2.7% from 2.9% previously, a small but welcome step in the right direction. Traders, however, shouldn't be taken aback if the numbers surprise to the upside, echoing the patterns and trends seen in last week's CPI and PPI reports for the same period.

Interest rates and inflation: steering the course of the US dollar and commodities

Sticky price pressures in the economy, together with solid job creation and hot wage growth, could compel the Fed to delay the start of its easing cycle to the second half of the year, resulting in only modest adjustments once the process gets underway. Such a scenario could push interest rate expectations in a more hawkish direction compared to their current status.

Higher interest rates for longer could mean upward pressure on US Treasury yields over the coming weeks – an outcome poised to benefit the US dollar and reinforce its bullish momentum seen in 2024. With the greenback biased to the upside, pairs such as EUR/USD and GBP/USD will face difficulties in maintaining positive performance in the short term. Gold prices could also struggle.

Fundamentals aside now, the subsequent section of this article will revolve around examining the technical outlook for EUR/USD, GBP/USD, and gold prices. Here, we'll explore critical price thresholds that traders need to keep on their radar to prepare potential strategies in the upcoming sessions.

EUR/USD technical analysis

EUR/USD has regained lost ground this week but has yet to fully recover its 200-day simple moving average, currently at 1.0830. Traders should keep a close eye on this indicator in the coming days, bearing in mind that a push above it could give way to a rally towards 1.0890 and possibly even 1.0950.

On the flip side, if prices get rejected to the downside from current levels and begin a rapid descent, technical support emerges at 1.0725. followed by 1.0700. From this point onwards, additional weakness may prompt market focus to shift towards 1.0650.

EUR/USD daily chart

 

original-size.webpSource: TradingView

GBP/USD technical analysis

GBP/USD consolidated to the upside on Thursday but fell short of clearing its 50-day simple moving average at 1.2680. Bulls may find it challenging to surpass this technical hurdle; however, a breakout could result in a move toward trendline resistance at 1.2725.

Conversely, if sellers stage a comeback and trigger a market reversal, the first line of defense against a bearish attack lies around the 1.2600 mark. Additional losses beyond this point may create the right conditions for a slide toward trendline support and the 200-day simple moving average at 1.2560.

GBP/USD daily chart

 

original-size.webpSource: TradingView

Gold price technical analysis

Gold rose modestly on Thursday but hit a roadblock around $2,030, a key resistance zone where a downtrend line aligns with the 50-day simple moving average. Sellers need to defend this area vigorously to prevent bulls from reasserting dominance; failure to do so could result in a rally toward $2,065.

On the other hand, if sentiment reverses in favor of sellers and prices begin to retreat, support can be identified at $2,005, positioned near the 100-day simple moving average. Further downside pressure may then bring $1,990 into focus, followed by $1,995.

Gold (XAU/USD) daily chart

 

original-size.webpSource: TradingView

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • While Layer 2 scaling solutions have helped alleviate congestion on blockchains like Ethereum, Layer 3 rollups are emerging as the next frontier for achieving ultimate scalability and cost-effectiveness. Three prominent layer 3 rollup stand out; ZKlink, Immutable X, and dYdX, each having its distinct strengths. .ZKlink stands out as a prominent player in this space, offering unique advantages compared to other Layer 3 protocols. While Immutable X Built on StarkNet focuses primarily on NFT marketplaces and gaming applications. dYdX utilizes StarkNet for rollups, achieving high throughput for trading activities. With each of the above focusing on a particular user in crypto space, ZKlink take it a bit far by prioritizing interoperability, liquidity solutions, and developer customization. ZKlink also the ability to bridge the gap between different blockchain layers and optimize scalability which makes it a significant force in shaping the future of decentralized applications.   The recent Bitget  listing of ZKLink native token further created buzz around the project due to the anticipation of the round one airdrop. Considering the fact that only ZK link utilizes fast financial transactions throughput using the innovative Ts-Evm makes it more unique and position it as the frontrunner in layer 3 rollup race.
    • I've been exploring numerous methods of passive earning over the years aside from spot trading. These methods include staking, futures trading, OTC trading, bot trading, copy trading, and launchpool. I've achieved some successes along the way, and now I'm trying to streamline and focus on just a few passive income opportunities. Actually looked into a project I encountered on X while browsing for opportunities. Branded as UPLAND, I was kinda drawn due to its Gamefi (NFT, metaverse) affiliation on Bitget's launchpool. Let's see what exploring this token fetches me this time 😁🤞🏻 Would love your shared experience(s) using this feature if any and what it's really like?
    • Our intuitive platform is designed with user convenience in mind, ensuring that you can manage your digital assets effortlessly. Whether you’re a seasoned trader or new to the world of cryptocurrencies, NakitCoins provides a hassle-free solution for all your trading needs. Discover the benefits of a smooth, efficient trading experience with NakitCoins today.
×
×
  • Create New...
us