Table of Contents
Forex Forecast – XAU/USD
Investors are taking notice of the recent rebound in Gold Price (XAU/USD), which had previously dipped due to a rise in the US dollar. With the current concerns surrounding economic growth in China, investing in gold is becoming an increasingly attractive option for those seeking stability in their portfolios.
Real yields are on the decline due to the anticipation that Fed Chair Jerome Powell may take a more accommodating approach. The Jackson Hole Economic Symposium is expected to offer strong backing for gold prices if this comes to fruition. There will likely be no significant data releases until then, which should keep the markets stable. Nonetheless, the BRICS summit and the China LPR release could lead to short-term volatility, but the primary focus will be on Jackson Hole.
Technical Analysis XAU/USD
The XAU/USD price has formed a falling wedge chart pattern (black) after several weeks. As prices approach the oversold region on RSI, there is a possibility of further downside. If a close above wedge resistance and the psychological handle of 1900.00 is achieved, it may trigger an upside rally. Conversely, a close below 1890.21 may lead to a larger selloff towards subsequent support zones.
Resistance Levels
- 200–day moving average
- 1900.00
- Wedge resistance
Support levels
- 1890.21
- 1858.33
- 1810.00
Forex Forecast – USD/JPY & GBP/JPY
Recent market trends have seen a decline in the Japanese Yen’s value in comparison to the US Dollar and British Pound. The USD/JPY has surpassed its June peak and has reached its highest point for the year. This can be attributed to the rise in long-term Treasury yields, which indicate a possible maintenance of higher rates by the Federal Reserve.
Unfortunately, this has had a negative impact on the Japanese currency. The Bank of Japan has maintained a relatively consistent approach, making the exchange rate susceptible to external factors. Could you kindly offer insight into the technical landscape of USD/JPY and GBP/JPY?
Technical Analysis USD/JPY
From last week’s analysis, the USDJPY was predicted to complete a triple cycle inside the bullish channel towards the resistance area. Last week closed at 145.405 which is a rejection of the support area.
As stated last week, should a buying pressure occur, it would reveal the 61.8% extension point of the Fibonacci sequence at 148.27 towards the highest price reached in October at 151.94. However, if the bulls cannot take control of the market and a rejection of the 148.00 resistance area occurs, there might be a massive sell-off within the bullish channel toward the support area of 141.818
Resistance Levels
- 148.373
- 140.261
- 151.943
Support levels
- 145.147
- 141.646
- 138.283
Technical Analysis GBP/JPY
The GBP/JPY currency pair has recently surpassed its June peak, reaching new yearly highs. This is in contrast to the USD/JPY pair, which has not reached the same heights.
Currently, the GBP/JPY pair is trading close to the 2015 peaks. The key resistance level for this pair lies at 188.81, with the midpoint and the 61.8% Fibonacci extension levels being at 190.65 and 194.03 respectively.
If the pair turns lower, the 50-day Moving Average may act as a vital support level, keeping the focus on the upside. Nevertheless, it’s crucial to clear the June high of 184.01 to ensure continued success.
Resistance Levels
- 188.81
- 190.65
- 190.03
Support levels
- 184.065
- 180.755
- 179.700
- 176.294
Forex Forecast – EUR/USD
The euro declined on Friday due to a slowdown in euro area inflation, despite core inflation remaining high, driven by increased prices in food, alcohol, tobacco, and services. Concerns about the eurozone economy were amplified by a contraction in construction output, and worries about Chinese economic growth could further pressure Europe and the euro.
On the other hand, the US dollar gained support from rising short-term US Treasury yields and risk-averse investors seeking safety amid Chinese uncertainties. The US dollar’s appeal as a safe haven has kept the Dollar Index strong. However, the future trajectory of the US dollar may depend on the outcome of the upcoming Jackson Hole Economic Symposium, where Federal Reserve Chair Jerome Powell might shift the narrative towards a more accommodative and dovish monetary policy outlook.
Technical Analysis EUR/USD
The strengthening US economic data has led bond markets to expect higher yields for longer-term treasuries, which is bolstering the US dollar. Consequently, the EUR/USD currency pair is in a vulnerable position. On the weekly chart, it’s evident that the pair has experienced five consecutive weeks of decline, despite being within a larger upward trend. While the recent trend has been decisively downward, the overall upward trend remains intact. If the pair closes below the level of 1.0929, it could signal a potential bearish continuation toward trendline support.
The EUR/USD currency pair has recently approached a crucial zone of 1.08522 and 1.08343. However, it was ultimately turned away and managed to close above that threshold. When we take a closer look at the daily chart, we can see a somewhat bearish price action. While not as forceful as we’ve seen in the past, the dollar is slowly gaining strength, and the pair is trading in a somewhat lackluster fashion without any significant driving force.
- Resistance Levels
- 1.09177
- 1.09328
- 1.09541
- 1.10050
- 1.10445
- Support Levels
- 1.08343
- 1.07428
- 1.06741
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