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25 July 2024,06:40
Daily Market Analysis
25 July 2024, 06:40
Biden’s withdrawal from the upcoming U.S. presidential election has thrown a stun grenade into the market, with most asset classes standing pat as investors digest the event. The dollar remains poised at its high from last Friday, with expectations of strengthening as Trump’s advocacy may favor the greenback. Meanwhile, the U.S. equity market continues to face strong selling pressure, particularly in the tech sector, dragged down by the plummet of CrowdStrike, a cybersecurity company that caused a global IT outage last Friday, triggering a massive sell-off in its stock. However, the equity market may find some encouragement from Biden’s withdrawal, as Trump’s increased winning odds could bring optimism to the market.
In the commodity market, gold slid last Friday, erasing its gains for the week, and the mitigation of U.S. geopolitical uncertainty may further pressure precious metal prices below $2400 in the short term. Oil prices also declined last Friday due to a pessimistic demand outlook. However, China’s rate cut today and the increased likelihood of a Fed rate cut in the near term may provide buoyancy for oil prices to remain above $78 per barrel.
In the crypto market, BTC prices have risen to $68,000, a level not seen in a month, with selling pressure easing as the Mt. Gox BTC repayment is about to conclude. Additionally, Trump’s nomination in the upcoming U.S. presidential election following Biden’s withdrawal has fueled the upward momentum for the biggest cryptocurrency in the market.
Current rate hike bets on 31st July Fed interest rate decision:
Source: CME Fedwatch Tool
0 bps (93.3%) VS -25 bps (6.7%)
(MT4 System Time)
N/A
Source: MQL5
The Dollar Index has shown a slight rebound, driven by optimism surrounding Donald Trump’s potential return to the presidency. Markets are hopeful that Trump’s economic policies could bolster the US economy, providing some support for the Dollar. Nonetheless, the Federal Reserve’s dovish tone and upcoming economic data releases, such as the inflation report and the US Core PCE Price Index, will be crucial in determining the Dollar’s future trajectory. Investors should pay close attention to these data points to gauge the Fed’s likely course of action on interest rates.
The dollar index is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 54, suggesting the index might experience technical correction since the RSI retreated sharply from overbought territory.
Resistance level: 104.45, 104.75
Support level: 104.05, 103.65
Gold prices have begun to rebound slightly as investors move toward safe-haven assets amid increased political uncertainty. While the immediate impact on gold is apparent, the longer-term effects of the US presidential election on gold prices remain unclear. Investors are advised to monitor further developments closely for additional trading signals.
Gold prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 37, suggesting the commodity might extend its gains since the RSI rebounded sharply from the oversold territory.
Resistance level: 2420.00, 2440.00
Support level: 2390.00, 2365.00
The GBP/USD pair has slid to its previous support level, suggesting a bearish bias. The Sterling lost momentum as the UK’s Retail Sales data released last Friday indicated a contracting economy. Meanwhile, the strengthening of the Dollar is putting additional pressure on the pair, and the mitigation of election uncertainty may further bolster the Dollar, exerting further downside pressure on the pair.
The GBP/USD pair has turned bearish after hitting its one-year high above 1.3000, and the bearish momentum is seemingly strong. The RSI is on the brink of breaking into the oversold zone, while the MACD is breaking below the zero line, which supports the view of gaining bearish momentum.
Resistance level: 1.2990, 1.3065
Support level: 1.2850, 1.2760
The euro is trading sideways after hitting its support level at 1.0895. The ECB’s decision to hold the interest rate at 4.25% has slightly hindered the euro’s strength. However, with the region’s inflation remaining sticky at 2.5%, market expectations for a more hawkish approach in upcoming ECB monetary policies could provide support for the euro’s strength.
EUR/USD has retracted from its recent high level and found support at 1.0895, suggesting a potential technical rebound from its recent bearish trend. The RSI slid to near 50, while the MACD is on the brink of breaking below zero, suggesting the pair’s bearish momentum remains intact.
Resistance level: 1.0940, 1.0995
Support level: 1.0875, 1.0795
The Nasdaq remained under strong selling pressure and closed with a loss of more than 1% in last Friday’s market. The global IT outage caused by CrowdStrike, a cybersecurity company, was a significant factor in dragging the tech-heavy index down, with CrowdStrike’s share price plummeting by about 20% after the incident. However, Biden’s withdrawal from the upcoming presidential election might lead to a rebound in the index as market uncertainty mitigates.
Nasdaq has slid to its crucial support level at 19500 and may perform a technical rebound from that level. The RSI flows sideways close to the oversold zone, while the MACD has a sign to cross at the bottom, suggesting the bearish momentum is easing.
Resistance level: 19720.00, 19880.00
Support level: 19470.00, 19230.00
Bitcoin and other cryptocurrencies have experienced a surge in response to Biden’s withdrawal. Market participants are betting that Trump’s pro-cryptocurrency stance could lead to more favorable regulatory conditions for the crypto market. This optimism has fueled a rally in Bitcoin, pushing it to new highs. Investors in the crypto space should continue to monitor political developments and potential regulatory changes, as these factors will play a critical role in shaping the market’s outlook.
BTC/USD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 67, suggesting the crypto might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 68430.00, 72325.00
Support level: 63615.00, 56800.00
The Australian dollar is facing headwinds and traded lower against the strengthening U.S. dollar in the recent session. The Australian unemployment rate surged to 4.1%, putting pressure on the Reserve Bank of Australia (RBA) regarding upcoming monetary policy. Meanwhile, the Aussie found some support as the Chinese central bank cut its borrowing rate today. Aussie traders will also be eyeing tomorrow’s Australian Retail Sales reading to gauge the strength of the currency.
The pair was trading with overwhelming selling pressure and has come to its crucial support level at 0.6670 and may have a chance to trigger a technical rebound from such a level. The RSI is about to drop into the oversold zone while the MACD continues to edge below the zero line, suggesting the pair remain trading with strong selling pressure.
Resistance level: 0.6730, 0.6780
Support level: 0.6610, 0.6550
Crude oil prices continue to tumble due to rising market volatility and uncertainties over China’s economic performance, which have weighed on oil demand. Despite a pessimistic short-term outlook for oil, investors should monitor potential OPEC+ supply cut decisions and upcoming oil inventory reports for further trading signals. Additionally, traders will focus on the wildfires in Canada to assess any potential threats to supply that could support oil prices.
Oil prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 34, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline.
Resistance level: 80.45, 81.85
Support level: 78.95, 76.95
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