XAU/USD: Gold Remains Bullish as It Tests Key Levels after US CPI Data
XAU/USD
Prediction: Increase
Gold prices remain in a strong uptrend with higher highs and higher lows. After reaching an all-time high of $2,942.70 on Tuesday, prices underwent a correction due to higher-than-expected U.S. inflation data, which pressured expectations for Fed rate cuts.
However, trade tensions stemming from the Trump administration's new tariff plans are supporting gold's safe-haven demand. Currently, gold is retesting the $2,908 level after bouncing from the $2,881 support. The bullish trend remains intact as long as this level holds.
FUNDAMENTAL ANALYSIS
Monetary Policy & Fed Impact:
The U.S. Consumer Price Index (CPI) for January increased by 0.5%, exceeding forecasts, indicating that inflation remains uncontained. This may prompt the Fed to delay rate cuts. Fed Chair Jerome Powell emphasized that the central bank would wait for further evidence of declining inflation before adjusting monetary policy. Rate-cut expectations have been pushed to July, causing U.S. Treasury yields to rise, putting pressure on gold prices.
Inflation & Market Drivers:
The 10-year U.S. Treasury yield has increased, making non-yielding assets like gold less attractive due to higher opportunity costs.
U.S. Producer Price Index (PPI) data will be released today, potentially influencing rate expectations and impacting gold prices.
Trump announced tariffs on all countries that impose duties on U.S. imports, raising concerns of a new trade war, which could increase global economic risks and support gold prices.
Geopolitical & Market Sentiment:
U.S.-China trade tensions continue to escalate as Trump pushes aggressive tariff policies, potentially impacting the global economic outlook.
Investors continue to view gold as a safe-haven asset, especially amid uncertain monetary and economic policies.
TECHNICAL ANALYSIS
Key Resistance Levels
● $2,942 – Recent high; a breakout could lead to $2,960 - $2,980.
● $2,908 – Immediate resistance; if surpassed, the uptrend may continue.
Key Support Levels
● $2,881 – Nearest support, aligned with the 34-EMA; if prices hold above this level, the bullish trend remains strong.
● $2,850 – Stronger support; a break below could trigger a deeper correction towards the 89-EMA at $2,831.
● $2,823 - $2,800 – Major support zone, near the 200-EMA ($2,769), where buyers may step in aggressively.
RSI: 61.31 – Still in bullish territory but not overbought. Previously touched 80 before correcting, suggesting profit-taking pressure but no strong reversal signs.
EMA: 34-EMA at $2,881 – Prices are holding above this level, confirming the uptrend. 89-EMA at $2,831 – A strong support zone for deeper corrections. 200-EMA at $2,769 – Long-term critical support.
Trading Volume: Trading volume remains high, indicating strong investor interest in gold.
Price Action:
● Watch price reactions at $2,882 to determine buy/sell decisions.
● If gold rebounds from this level, buying opportunities may arise with targets at $2,908 - $2,942.
● If support breaks, monitor lower levels for safe entry points.
Traders should closely watch U.S. PPI data and Fed interest rate developments to adjust their trading strategies accordingly.
EUR/USD
Prediction: Increase
The EUR/USD pair experienced significant volatility, dropping sharply after the U.S. CPI data release but recovering notably, now trading around 1.04037. The short-term trend leans towards the upside, but key resistance levels must be monitored to confirm further bullish momentum.
FUNDAMENTAL ANALYSIS
Monetary Policy & Fed Impact
U.S. CPI data exceeded expectations, indicating persistent inflationary pressure, which may prompt the Federal Reserve (Fed) to keep interest rates higher for longer.
U.S. Treasury yields surged, with the 10-year yield reaching 4.66%, putting pressure on the USD while reducing 2025 rate cut expectations to just 28 basis points (equivalent to one rate cut).
Fed Chair Jerome Powell reiterated that the central bank is in no hurry to cut rates, reinforcing the strength of the USD in the near term.
Market Sentiment & Geopolitics
Reports of potential peace talks between Russia and Ukraine have supported the EUR. News of a phone call involving U.S. President Donald Trump, Russian President Vladimir Putin, and Ukrainian President Volodymyr Zelensky has sparked hopes for an end to the prolonged conflict.
Trump is expected to meet with Putin in Russia to initiate peace negotiations. If progress is made, this could provide further support for the EUR.
However, market caution remains, as peace terms may require significant concessions from Ukraine, potentially undermining investor confidence.
Commodity Market & Euro Impact
Oil prices have dropped over 2% amid hopes for peace in Ukraine, easing global inflationary pressures and potentially benefiting the Eurozone economy.
Gold prices continue to hover near record highs at $2,908, indicating that market sentiment remains uncertain.
TECHNICAL ANALYSIS
Key Resistance Levels
● 1.04294 – Immediate resistance; a breakout could extend gains toward 1.05001.
● 1.05001 – Strongest resistance within the current range; a break above this level could confirm a more sustainable bullish trend.
Key Support Levels
● 1.03749 – Nearest support; holding above this level could allow the uptrend to continue.
● 1.03398 – More significant support; a breakdown below this level could signal a return to a bearish trend.
● 1.02896 – Major support; losing this level would reinforce a stronger bearish move.
RSI: 58.53 – Trending upwards but not yet overbought (>70), suggesting bullish momentum remains intact.
EMA levels:
● Above EMA 34 & EMA 89 – Confirms ongoing bullish momentum.
● Testing EMA 200 – Market reaction at this level will determine whether the trend sustains.
Price Action:
● The price is currently reacting to the 1.04294 resistance level. A strong rejection herecould lead to a retest of 1.03749 support.
● If trading volume increases and the price breaks above 1.04294, the next target would be 1.05001.
EUR/USD has short-term bullish momentum but must break above 1.04294 to confirm further upside. Key market drivers include Fed policy, U.S. Treasury yields, and peace negotiations between Russia and Ukraine. Investors should monitor tomorrow’s U.S. PPI data, as a higher-than-expected reading could pressure EUR/USD lower due to expectations of prolonged high Fed interest rates. Developments in Russia-Ukraine peace talks will also have a direct impact on market sentiment and the currency pair’s direction.
BTC/USD
Prediction: Sideways
Bitcoin (BTC/USD) is currently in a consolidation phase around $95,000 - $99,200, with an unclear trend. To confirm a new rally, BTC needs to break above $100,000. However, pressure from the Fed's monetary policy could pose challenges for BTC's recovery in the near term.
FUNDAMENTAL ANALYSIS
Monetary Policy & Fed Impact
Powell rejects QE: Fed Chair Jerome Powell reaffirmed that quantitative easing (QE) will only be used when interest rates return to zero, meaning there will be no major liquidity injection from the Fed in the short term. This could limit expectations of large capital inflows into Bitcoin via monetary policy.
Rate cut expectations: While the Fed is not ready for QE, the market is closely watching U.S. PPI data this week. If inflation continues to decline, pressure on the Fed to cut interest rates may increase, supporting BTC in the medium term.
Crypto Market Developments
Wyoming considers Bitcoin in reserves: The Wyoming Highway Patrol Association is exploring adding Bitcoin to its financial reserves. If approved, this would be the first U.S. law enforcement agency to hold BTC, setting a significant precedent and boosting long-term market confidence.
U.S. states push for Bitcoin legislation: Over 20 U.S. states are reviewing Bitcoin-related bills. If passed, these regulations could drive demand, with estimates suggesting a potential $23 billion market impact.
Regulatory Policies & SEC Influence
New York proposes crypto task force: If approved, New York will conduct an in-depth study on crypto’s impact on the economy and financial system. While this could lead to clearer regulations, it also carries risks of tighter restrictions.
SEC remains silent on new Bitcoin ETFs: The lack of updates from the SEC regarding new ETFs, such as a Litecoin ETF, could temporarily dampen market sentiment.
TECHNICAL ANALYSIS
Key Resistance Levels
● $97,766 - $99,200: Immediate resistance zone.
● $102,000: A daily close above this level could confirm a new uptrend.
Key Support Levels
● $95,000: Short-term support that must hold to prevent further downside pressure.
● $92,000: Stronger support; a break below could trigger a deeper correction.
● $89,000: Major support level; losing this could accelerate BTC’s decline.
EMA: BTC faces resistance from EMA 200 ($99,200), indicating strong selling pressure. EMA 34 and EMA 89 are converging, signaling indecision in trend direction.
RSI: 54.22 – Neutral, providing no clear trend signals yet.
Bitcoin is currently in accumulation mode and needs to break above $100,000 to confirm a new bullish trend. Fed policy and monetary decisions remain a key risk factor, but positive regulatory moves in the U.S. could provide medium-term support. Investors should closely monitor price action and trading volume before making trading decisions.
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