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1 August 2024,01:18
Daily Market Analysis
1 August 2024, 01:18
Market Summary
The financial market remained relatively quiet in the last session ahead of crucial central bank interest rate decisions, including those from the Fed and BoJ, which are due tomorrow. The dollar index (DXY) managed to break above its near-term resistance level at 104.50, which has been a barrier for the past two weeks, suggesting a bullish bias for the dollar. Wall Street also took a breather from its bullish momentum as the market awaits the key Fed FOMC meeting minutes.
Meanwhile, attention is focused on tomorrow’s Australian CPI reading, which could act as a catalyst for the Aussie dollar to ease from its recent bearish trajectory if the reading beating the market consensus. In New Zealand, the Kiwi dollar continues to face pressure, trading lower against its peers amid expectations that the RBNZ will enact its first rate cut next month.
In the commodity market, heightened risk-on sentiment has hindered gold, keeping it below its liquidity zone at the $2400 mark. Oil prices are trading towards a two-month low due to ongoing concerns about demand, particularly in light of China’s lacklustre economic performance. The expectation that the Fed will maintain its interest rate level in July is also harming demand for oil and exerting further downward pressure on prices.
Current rate hike bets on 31st July Fed interest rate decision:
Source: CME Fedwatch Tool
0 bps (95.9%) VS -25 bps (4.1%)
(MT4 System Time)
Source: MQL5
Market Movements
DOLLAR_INDX, H4
The dollar has risen as global geopolitical tensions, particularly the recent rocket attack in the Israeli-occupied Golan Heights, heighten market uncertainty, pushing investors toward safe-haven assets. Market focus is on the US Federal Reserve’s upcoming meeting, where any hints about future interest rate paths will be closely watched. Although the Fed is expected to keep rates unchanged, recent positive US economic data has added to the uncertainty. This combination, along with potential rate cuts in 2024, will significantly influence the dollar. Investors should stay vigilant and monitor these developments for trading signals.
The Dollar Index is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 61, suggesting the index might extend its gains since the RSI stays above the midline.
Resistance level: 104.90, 105.70
Support level: 104.45, 103.75
Gold has trended upward as rising geopolitical tensions in the Middle East, following the deadly rocket attack in the Israeli-occupied Golan Heights, drive investors toward safe-haven assets. Uncertainty surrounding the US Federal Reserve’s upcoming meeting adds to gold’s appeal, with mixed expectations about future monetary policy decisions. Upcoming key economic data releases, such as US Nonfarm Payrolls and the unemployment rate, contribute to market nervousness. As investors adopt a cautious approach, gold’s safe-haven status makes it a favorable asset amid prevailing uncertainties.
Gold prices are trading higher while currently near the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 45, suggesting the commodity might experience technical correction since the RSI stays below the midline.
Resistance level: 2390.00, 2420.00
Support level: 2355.00, 2325.00
The GBP/USD pair continues to trade within its bearish trajectory as the pound sterling lacks a catalyst. The dollar index has strengthened slightly in the last session, trading above its near-term resistance level at 104.50. Maintaining above this level suggests a bullish signal for the dollar, potentially driving the GBP/USD pair lower. Ahead of the BoE’s interest rate decision, market expectations of a rate cut on Thursday are putting additional pressure on the sterling’s strength. This anticipation is further contributing to the bearish outlook for the GBP/USD pair.
GBP/USD continues to trade within its bearish trajectory, with a lower-high and lower-low price pattern suggesting a bearish bias for the pair. The RSI has been hovering in the lower region, while the MACD is flowing below the zero line, suggesting the pair remains trading with a strong bearish trend.
Resistance level: 1.2940, 1.2995
Support level: 1.2785, 1.2660
The EUR/USD pair has dropped below its recent consolidation range, indicating a strong downside risk. Last week’s eurozone PMI readings suggested lacklustre economic performance, weighing on the euro’s strength. The market is now awaiting today’s GDP reading to confirm the slowing economy in the region. A downbeat GDP reading could exert further downside pressure on the pair.
The euro has been lacklustre, and dropping out from the price consolidation range suggests a bearish bias for the pair. The RSI has edged lower toward the oversold zone while the MACD had a bearish cross, suggesting the pair remain trading with bearish momentum.
Resistance level: 1.0853, 1.0895
Support level: 1.0770, 1.0732
The AUD/USD pair has found support near the 0.6530 level after plunging by more than 3% in the past week. The strengthening of the Japanese yen has harmed the carry trade strategy, leading to a squeeze on the Aussie dollar. The market is now closely watching the Australian CPI reading due tomorrow. An upbeat CPI reading could be a pivotal factor, potentially driving the Aussie dollar and the pair to rebound from the current support level.
The AUD/USD pair has eased from its bearish momentum and found support at the 0.6350 level. A rebound that crosses above 0.6570 may be a bullish signal for the pair. The RSI has gotten out from the oversold zone, while the MACD has a bullish cross and has edged higher from below the zero line, suggesting the bearish momentum has eased.
Resistance level: 0.6611, 0.6673
Support level: 0.6500, 0.6420
In recent weeks, investors have eagerly bought the yen, anticipating an interest rate hike from the Bank of Japan (BOJ). The yen’s approximately 5% rise against the dollar since July 11 was boosted by suspected market intervention. However, the rally’s fragility was highlighted by a quick retracement after stronger-than-expected US economic data. With swaps markets suggesting a 45% chance of a BOJ rate hike and only 30% of surveyed BOJ watchers predicting it, yen bulls are vulnerable. The BOJ’s potential inaction or smaller-than-expected bond purchase cuts, alongside US Federal Reserve decisions, could weaken the yen.
USD/JPY is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 40, suggesting the pair might extend its losses since the RSI stays below the midline.
Resistance level: 154.35, 155.75
Support level: 152.25, 150.80
Bitcoin’s bullish trend was interrupted in the last session with significant movement observed yesterday. A U.S. government crypto wallet sent BTC worth approximately $2 billion, previously confiscated from the defunct dark web market, potentially causing selling pressure in the BTC market. Meanwhile, Ethereum saw a significant inflow following the launch of Ethereum ETFs, which may serve as a positive catalyst, providing buoyancy for the broader crypto market.
BTC hit the $70,000 mark before its quickly retracing, suggesting that the bullish momentum is insufficient for BTC. The RSI has declined to the mid-level, while the MACD edged lower, heading to the zero line, suggesting that the bullish momentum is vanishing.
Resistance level: 70880.00, 73660.00
Support level: 64860.00, 62200.00
Oil prices edged lower due to concerns over weakening global demand and increased non-OPEC supply. US crude output is expected to rise by 500,000 barrels per day this year. Persistent concerns over China’s slowing economic recovery have also weighed on oil prices. This comes ahead of the OPEC+ Joint Ministerial Monitoring Committee meeting on Thursday, where no changes to output policy are expected, though surprises could include delaying the easing of supply cuts set to start in October.
Oil prices are trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 36, suggesting the commodity might extend its losses since the RSI stays below the midline.
Resistance level: 76.15, 78.65
Support level: 74.35, 72.50
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