In recent trading, the euro remains pressured as the European Central Bank maintains a cautious stance, while the British pound also struggles amid economic uncertainty. The Japanese yen continues to face challenges due to dovish signals from the Bank of Japan. The Canadian dollar weakens with expectations of further rate cuts by the Bank of Canada. Oil prices rise due to Chinese rate cuts and Middle East tensions, while gold remains supported by safe-haven demand despite overbought conditions and fluctuating US Treasury yields.
EUR/USD
The EUR/USD pair is trading in a period of relative uncertainty driven by mixed signals from the Eurozone and the U.S. economies. Factors such as persistent inflation, geopolitical risks, and upcoming U.S. elections are affecting risk sentiment.
Key Drivers:
- ECB Policy: The European Central Bank (ECB) has maintained a cautious stance due to inflation easing somewhat in recent months, and there are no immediate signals for significant changes in rates.
- U.S. Dollar Strength: The USD remains strong due to high U.S. Treasury yields and a higher-for-longer Fed narrative.
- Geopolitical Tensions: Ongoing tensions in the Middle East and concerns over the U.S. elections add to the risk-off sentiment, providing support to the USD.
Technical Levels:
- Support: 1.0530, 1.0500
- Resistance: 1.0670, 1.0705
Forecast: The EUR/USD is expected to remain under pressure in the near term, as USD strength continues to weigh on the pair. However, the Euro may find support around 1.0500 if global sentiment shifts or if the ECB signals further easing in its policy.
GBP/USD
The GBP/USD remains volatile as the British economy faces a challenging environment, marked by rising interest rates and inflationary pressures. Additionally, uncertainty around fiscal policies and the Bank of England’s future decisions adds to market hesitation.
Key Drivers:
- BoE Outlook: While inflation remains a concern, the Bank of England (BoE) is considering a pause in its rate hikes as growth is expected to stagnate.
- Political Risk: Domestic political issues and post-Brexit economic adjustments continue to affect GBP sentiment.
- US Dollar Strength: Similar to the EUR, the strong USD adds downward pressure on the GBP.
Technical Levels:
- Support: 1.2050, 1.2000
- Resistance: 1.2200, 1.2300
Forecast: GBP/USD is likely to face downside pressure in the near term with a potential test of 1.2000. The pair may see modest relief if the BoE surprises with a more hawkish stance or if global risk sentiment improves.
USD/JPY
The USD/JPY has been steadily rising as the Japanese yen continues to weaken due to the Bank of Japan’s ultra-loose monetary policy and divergence with U.S. yields.
Key Drivers:
- BoJ Policy: The Bank of Japan has maintained its accommodative stance, which continues to weaken the JPY.
- U.S. Treasury Yields: Rising U.S. Treasury yields have supported the USD, driving the pair higher.
- Geopolitical Risks: Safe-haven demand for the yen has been limited, as U.S. assets have attracted flows due to higher yields.
Technical Levels:
- Support: 149.00, 148.50
- Resistance: 151.50, 152.00
Forecast: USD/JPY is expected to continue its upward momentum in the near term as long as U.S. yields remain elevated. A break above 151.50 could push the pair toward 152.00. However, interventions by the Bank of Japan could trigger sudden corrections.
USD/CAD
The USD/CAD pair has surged recently, trading at multi-month highs, driven by a weakening Canadian dollar amid dovish expectations from the Bank of Canada (BoC).
Key Drivers:
- BoC Rate Cuts: The market is anticipating a 50 bps rate cut, which is already priced in, but further cuts will be key to the CAD’s direction.
- Oil Prices: Oil prices, although slightly up, remain volatile and tied to geopolitical risks, impacting the Canadian dollar’s performance.
- U.S. Dollar Strength: The USD continues to appreciate against most major currencies, supported by high U.S. yields.
Technical Levels:
- Support: 1.3827, 1.3805
- Resistance: 1.3855, 1.3910
Forecast: USD/CAD may remain elevated, potentially testing 1.3910 if the BoC delivers a dovish message. However, any signs of resilience in oil prices or a less aggressive BoC could prompt a correction toward the 1.3800 level.
Oil (Brent Crude)
Oil prices have been on the rise, supported by Chinese rate cuts and the ongoing conflict in the Middle East. However, concerns over Chinese demand and global economic growth continue to cap significant gains.
Key Drivers:
- Geopolitical Risks: The situation in the Middle East remains a key factor driving volatility in oil prices.
- Chinese Demand: China’s economic performance is a crucial determinant, and recent rate cuts offer some support to oil demand.
- Global Growth: The IMF’s downgrade of global growth expectations adds a layer of uncertainty to long-term oil demand.
Technical Levels:
- Support: 72.38, 70.00
- Resistance: 76.00, 78.90
Forecast: Oil prices may continue to trend higher if geopolitical risks intensify or if Chinese demand stabilizes. A break above 76.00 could see Brent crude heading toward the 78.90 resistance level, while a downside break of 72.38 could lead to further losses.
Gold (XAU/USD)
Gold remains well-supported by its status as a safe-haven asset amid geopolitical tensions and global economic uncertainty. However, overbought technical conditions and high U.S. Treasury yields are limiting significant gains.
Key Drivers:
- Geopolitical Risks: Tensions in the Middle East and uncertainty ahead of the U.S. elections are key factors driving safe-haven demand for gold.
- Monetary Policy: Expectations for gradual easing by major central banks, including the Federal Reserve, have provided some support to gold prices.
- Overbought Conditions: Gold’s RSI levels indicate overbought conditions, signaling the possibility of a near-term correction.
Technical Levels:
- Support: 2,720, 2,700, 2,685
- Resistance: 2,740, 2,753
Forecast: Gold is expected to remain supported in the near term, but the overbought conditions suggest a potential correction. A break below 2,720 could push the price toward 2,700, while a sustained move above 2,740 could lead to a test of 2,753.
Summary Outlook
Gold (XAU/USD): Safe-haven demand supports gold, but overbought conditions could lead to a correction.
EUR/USD: Bearish near-term bias due to USD strength.
GBP/USD: Likely to remain under pressure but may stabilize around 1.2000.
USD/JPY: Bullish trend intact, with potential interventions from the BoJ as a risk factor.
USD/CAD: Bullish bias driven by dovish BoC expectations, targeting 1.3910.
Oil (Brent): Geopolitical risks drive oil prices upward; 76.00 is a key resistance level.
