Market Analysis

XAUUSD

Prediction: Uptrend Expected

Fundamental Analysis: 

Gold prices surged to a new all-time high on Monday, driven by increasing speculation that the Federal Reserve will implement further significant interest rate cuts, alongside rising geopolitical tensions in the Middle East. Spot gold closed up by nearly 0.3% at $2,628.38 per ounce, after touching an intraday peak of $2,634.88 per ounce, marking a new record. The market continues to digest the Fed’s recent 50 basis point rate cut, with the central bank signaling that it is more concerned with maintaining low unemployment than controlling inflation. Should there be a sharp decline in job numbers, investors may expect the Fed to adopt even more aggressive rate cuts, which could further bolster gold prices. Additionally, escalating unrest in the Middle East adds an additional layer of support to gold’s upward momentum.

Technical Analysis: 

The technical outlook for gold suggests a continued upward trend, although recent gains appear somewhat overextended. Prices remain fluctuating within a $20 range. The Relative Strength Index (RSI) indicates an overbought condition, signaling that while buyers still dominate the market, a potential pullback may occur. A drop below the September 18th high of $2,600 per ounce could lead to further declines, with the next key support level at the September 18th low of $2,546 per ounce, followed by the 50-day Simple Moving Average (SMA) at $2,481 per ounce. Conversely, if gold breaks through its record high of $2,634 per ounce, the next targets would be around the $2,650 mark, with a potential push towards $2,700.

USDJPY

Prediction: Decrease

Fundamental Analysis: 

The recent report revealed that the Composite PMI grew at a slower pace, easing to 54.4 from August’s 54.6. This decline was driven by a sharp contraction in manufacturing activity, which was somewhat offset by a stronger-than-expected performance in the services sector. The Manufacturing PMI unexpectedly fell to 47.0, contrary to forecasts of an increase to 48.5 from the previous 47.9. Meanwhile, the Services PMI, which gauges activity in the services sector—accounting for two-thirds of the U.S. economy—came in at 55.4, slightly higher than the 55.2 estimate but below the prior reading of 55.7.

Technical Analysis:

The Bank of Japan maintained its interest rate at 0.25% during its meeting last Friday. In the near term, both USD/JPY and EUR/JPY could test key resistance levels of 145-146 and 161.50-162, respectively. Monday's trading saw USD/JPY rise above 144.00 in the North American session following the release of mixed preliminary U.S. S&P Global PMI data for September. Whether the price will continue to rise from here warrants close monitoring over the next few sessions.

EURUSD

Prediction: Increase

Fundamental Analysis: 

Recent data from S&P Global reveals a sharp decline in business activity across the Eurozone this month. The services sector has stalled, and the downturn in manufacturing has intensified. These weak figures are fueling expectations that the European Central Bank (ECB) may cut interest rates further this year. The market is currently pricing in around a 77% likelihood of a 25 basis point rate cut during the ECB’s October meeting. In contrast, U.S. business activity has remained steady in September, though the rising cost of goods and services, which increased at the fastest pace in six months, hints at potential inflationary pressure. S&P Global's composite PMI for the U.S., which covers both the manufacturing and services sectors, stood at 54.4 in September, slightly down from August’s 54.6 but still indicating economic growth, as any reading above 50 signifies expansion.

Technical Analysis: 

On the 4-hour chart, EUR/USD shows a near-term bias to the downside. The pair has found temporary support around the 100 SMA, but sellers have prevented significant gains, particularly near the 20 SMA, which lacks clear directional movement. Technical indicators remain in negative territory, with the RSI indicating bearish momentum, suggesting a possible lower low for the week. Key support levels are located at 1.1090, followed by 1.1050, while resistance is seen at 1.1160 and 1.1200.

BTCUSD

Prediction: Decrease

Fundamental Analysis:

According to CoinTelegraph, Bitcoin's recent rejection near the $65,000 resistance level suggests that sellers aim to keep the price within the $54,000 to $73,777 range, though buyers are showing resilience. The latest report from 10x Research highlights Bitcoin's potential for a rebound, as it typically performs well from October to March. A significant positive for the crypto market is the U.S. Federal Reserve's decision to cut interest rates by 50 basis points on September 18. This move could have influenced the inflow of $321 million into digital asset investment products last week, as noted in CoinShares' weekly fund flow report.

Technical Analysis:

Bitcoin buyers are attempting to break above the $65,000 resistance level, but sellers remain strong. Should buyers manage to hold their positions, the likelihood of a rally beyond $65,000 increases, potentially driving the price up to $70,000, where heavier selling pressure is anticipated. However, if the price falls below the 20-day moving average of $60,621, this bullish sentiment will weaken in the short term. Bitcoin could then decline to the 50-day moving average of $59,382 and further to $57,500.

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