US Crude Inventory Decline Meets Market Concerns Over Economic Slowdown
XAUUSD
Forecast: Expected Increase
Fundamental Analysis:
Gold prices (XAU/USD) surged nearly 2% on Thursday, ending a four-day losing streak amid growing expectations of significant interest rate cuts by the Federal Reserve (Fed) in September. Additionally, concerns about a potential escalation in the Middle East conflict have bolstered demand for the safe-haven metal. Despite some subsequent buying of the US Dollar (USD), which typically depresses gold prices, the strong intraday gains suggest a resilient bullish trend.
Technical Analysis:
Technically, the recent rebound from the 50-day Simple Moving Average (SMA) support and the upward movement thereafter favor bullish sentiment. Oscillators on the daily chart are gaining positive momentum, indicating that the most likely path for gold prices is upward. Consequently, there is potential for further strength towards the $2,448-2,450 range. Should this level be surpassed, gold could test the all-time high near $2,483-2,484 reached in July. The next target would be the $2,500 psychological level, which, if breached, could lead to additional near-term gains.
WTI
Prediction: Upward Trend
Fundamental Analysis:
US crude inventories have decreased for the sixth consecutive week, indicating strong demand. The latest report from the US Energy Information Administration (EIA) shows that crude oil stockpiles fell by 3.728 million barrels for the week ending August 2, compared to a decline of 3.436 million barrels the previous week. This drop exceeded market expectations, which had forecasted a reduction of 0.4 million barrels.
Technical Analysis:
Oil prices have experienced a significant drop amid concerns about a potential global economic slowdown. If tight monetary policies excessively impact economic activity, it could lead to reduced oil demand as industrial expansion slows. Furthermore, consumers might cut back on driving and travel, which would further diminish fuel consumption. Current data reveals that 87.40% of retail traders are holding long positions, with a long-to-short ratio of 6.94:1. Although long positions have decreased by 4.94% from yesterday, they have risen by 15.01% from the previous week. Conversely, short positions have increased by 9.72% since yesterday but have decreased by 26.85% from the previous week.
USDJPY
Forecast: Expected Increase
Fundamental Analysis:
The USD/JPY pair is currently influenced by several external factors, including the reversal of the Japanese yen carry trade. Despite a recent hawkish stance from the Bank of Japan, which suggested potential rate hikes in the coming months, the market's expectations have recently tempered. Current forecasts indicate a gradual rise in implied rates, with the policy rate anticipated to reach approximately 50 basis points within a year. This adjustment in market sentiment, moving away from more aggressive tightening by the BoJ, has helped stabilize the USD/JPY pair, which had previously dropped to 142 on Monday. On Tuesday, comments from Bank of Japan Deputy Governor Shinichi Uchida, moderating the more aggressive tone of Governor Ueda, also contributed to market stabilization.
Technical Analysis:
The USD/JPY pair tested the critical support level at 145.35 and rebounded positively, maintaining a bullish outlook for the near future. The pair is expected to aim for 148.53 as the next key target. Monitoring these levels is crucial for determining the short-term trend. A breach of the 148.53 level could extend the bullish trend, potentially reaching 151.10. Conversely, if the support level is broken, it could lead to further declines, with initial targets around 142.90. For today, the anticipated trading range is between 145.50 (support) and 147.50 (resistance).
AUDJPY
Forecast: Anticipated Increase
Fundamental Analysis:
During the Asian session on Thursday, the AUD/JPY cross saw some buying interest around the 94.70 level, halting its modest retracement from the previous day’s weekly high. Despite this, the pair has struggled to build on the momentum and is currently trading with only minor intraday gains near the 96.00 mark. The Australian Dollar (AUD) has strengthened following hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. Her remarks highlighted the importance of monitoring inflation risks and suggested that further rate hikes could be considered if necessary. Additionally, stability in the equity markets has provided further support to the risk-sensitive Aussie.
Technical Analysis:
The AUD/JPY pair has experienced a significant decline since its peak in July, falling sharply and breaking through both the 50 and 20-day SMAs with minimal resistance. The recent intra-day decline and subsequent recovery indicate a potential short-term correction, with the pair showing some upward movement. This recovery is bolstered by RBA Governor Michele Bullock’s statement that a rate cut is unlikely in the near term, allowing the Aussie to regain some strength. Her comments followed positive inflation data, shifting the focus away from previous rate hike discussions.
Resistance is anticipated at 95.75, with support found at the previous day’s low of 90.15.
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