Euro Gains Ground: How Fed Stance and Trade Tensions Are Shaping EUR/USD
XAU/USD
Prediction: Increase
Gold continues its recovery trend, currently heading towards an 11-week high, driven by a weaker USD and increased demand for safe-haven assets. Fundamental factors, including President Trump’s uncertain trade policies, inflation expectations, and the upcoming Federal Reserve (Fed) meeting, all support the bullish outlook for gold.
FUNDAMENTAL ANALYSIS
Spot Price: Currently at $2,743.38/ounce (as of 06:43 GMT), slightly up in the morning session and maintaining close to an 11-week high. U.S. Gold Futures: Trading around $2,763.40/ounce, up approximately 0.1%, reflecting market optimism for gold.
USD and Dollar Index (DXY): The weaker USD in recent sessions has boosted gold’s appeal for investors holding other currencies. The DXY has slightly declined, supporting higher gold prices.
President Trump’s Trade Policies:
● Trump has announced new tariffs on the European Union (EU) and plans to impose a 10% tariff on Chinese imports starting in February. This raises concerns about a trade war, increasing demand for gold as a safe-haven asset.
● These measures are expected to drive inflation in the U.S., pressuring the Fed to maintain higher interest rates for a longer period to control price pressures.
Federal Reserve Policy:
● The upcoming Fed policy meeting (January 28-29) is expected to keep interest rates within the 4.25%-4.50% range, after a 1% reduction since September 2024.
● If the Fed maintains high rates to control inflation, gold’s short-term upside potential may be limited due to the higher opportunity cost of a non-yielding asset. SPDR Gold Trust: Holdings in the world’s largest gold ETF slightly declined by 0.85% to 871.66 tons earlier this week, indicating cautious market sentiment.
Market Sentiment: Given the current situation, gold remains attractive as a safe-haven asset, supported by economic and political uncertainties, as well as a weaker USD.
TECHNICAL ANALYSIS
Key Resistance Levels:
● $2,750: The strongest current resistance. If breached, the next targets will be $2,770 and $2,790, near historical highs.
● $2,780-$2,790: A critical resistance zone if the uptrend strengthens further.
Key Support Levels:
● $2,710 (EMA 34): The nearest support level, acting as a short-term trendline.
● $2,688: A second major support level if a deeper correction occurs.
● $2,660 (EMA 89): A crucial medium-term support, reflecting strong buying interest from institutional investors.
RSI Indicator (H4): Currently at 73.9, indicating overbought conditions. However, if RSI surpasses 75, the uptrend may gain further momentum.
Price Pattern: Gold has broken out of a symmetrical triangle pattern formed since November and is now testing higher resistance zones.
EUR/USD
Prediction: Increase
The EUR/USD pair is showing short-term recovery signals in recent trading sessions. The price is fluctuating between 1.03749 and 1.04326, with upward momentum driven by expectations regarding the U.S. Federal Reserve (Fed) monetary policy and downward pressure on the USD.
FUNDAMENTAL ANALYSIS
Spot Price: EUR/USD is currently trading at 1.04180 (as of 8:30 GMT), up 0.15% on the day.
Key Influencing Factors:
● Fed Monetary Policy: The Fed is expected to keep interest rates unchanged in the upcoming meeting, as economic data suggests stable growth but not strong enough to warrant additional hikes. This decision puts pressure on the USD.
● Key Economic Data: Business confidence in the Eurozone exceeded forecasts last month, indicating a faster-than-expected economic recovery.
● Trade Tensions: The European Union’s decision to impose tariffs on certain U.S. imports is being closely monitored. If trade relations deteriorate, the USD could face further pressure.
● Eurozone Inflation: Inflation in the Eurozone has slightly declined, increasing the likelihood that the European Central Bank (ECB) will maintain low interest rates, which temporarily supports the EUR.
TECHNICAL ANALYSIS
Key Resistance Levels:
● 1.04326: The nearest resistance level; if not breached, the price may be rejected.
● 1.05001: A strong short-term resistance level that could act as the next price target if the uptrend continues.
Key Support Levels:
● 1.03749: A very short-term support level, near the EMA 34.
● 1.03398: A significant medium-term support level.
● 1.02896: A notable support zone in case of a trend reversal.
RSI Indicator: Currently at 63.07, indicating that the uptrend remains intact but is approaching the overbought zone (70).
With temporary bullish momentum and supportive fundamental factors, EUR/USD may continue recovering towards the next resistance at 1.05001. However, investors should closely monitor U.S. economic data and Fed decisions to determine a clearer trend.
BTC/USD
Prediction: Increase
Bitcoin is showing signs of maintaining its upward momentum after breaking key support levels, supported by positive fundamental factors and stable technical momentum. However, strong resistance levels still need to be breached to confirm the short-term uptrend.
FUNDAMENTAL ANALYSIS
Spot Price: Bitcoin is currently trading around $106,000, up approximately 0.5% on the day.
Key Market Drivers:
● U.S. Monetary Policy: With the Federal Reserve (Fed) likely to keep interest rates unchanged or slightly lower in the near future, a weaker USD could drive Bitcoin’s price higher as an alternative asset.
● Political Support for Crypto: Former U.S. President Donald Trump’s decision to pardon Ross Ulbricht has sparked renewed interest in Bitcoin, particularly among the financial freedom community.
● Traditional Market Volatility: The U.S. stock market has seen slight corrections over the past week, prompting investors to seek safe-haven assets like Bitcoin.
● Bitcoin Trading Volume: Up by 12% over the past 24 hours, indicating strong buying pressure returning after a consolidation phase.
Risk Factors:
● U.S. Economic Data: Upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) reports could impact market sentiment. A higher-than-expected CPI could strengthen the USD and pressure Bitcoin.
● Regulatory Developments: Any regulatory changes in U.S. crypto policies could negatively affect Bitcoin in the short term.
TECHNICAL ANALYSIS
Key Resistance Levels:
● $107,000: Aligns with the 76.4% Fibonacci retracement level, a key level to break for confirming an uptrend.
● $109,000 - $110,000: A strong resistance zone; breaking above this could open the door to testing higher levels at $112,500.
Key Support Levels:
● $104,500: Aligns with the EMA 100 (H1 chart), serving as an important support level for the uptrend.
● $103,500: A stronger support level; if broken, the price may drop further towards $102,800 and $100,500.
RSI (H4 Chart): Currently at 56, indicating that bullish momentum remains but is slightly weakening. If RSI surpasses 60, it could reinforce a stronger uptrend.
Bitcoin is currently supported by positive fundamental factors and stable technical trends. However, investors should closely monitor upcoming economic data reports and regulatory developments to adjust their strategies accordingly.
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