Market Analysis
XAUUSD
Forecast: Expecting an Increase
Fundamental Analysis:
Gold prices made a modest recovery during Thursday's North American session, climbing approximately 0.67% following a stronger-than-anticipated US inflation report. However, this gain was moderated by weaker US employment data. Hawkish remarks from a Federal Reserve (Fed) official also limited gold’s upward movement. Currently, XAU/USD is trading at $2,624, after rebounding from an intraday low of $2,603. While inflation in the US for August came in slightly above forecasts, the impact was softened by higher-than-expected unemployment claims, which could prompt the Fed to adopt a more aggressive stance on lowering borrowing costs.
Technical Analysis:
Gold has resumed its upward trajectory after hitting a weekly low of $2,603. Despite six consecutive days of negative momentum, Thursday saw a shift, with the Relative Strength Index (RSI) pointing higher, signaling some renewed bullish sentiment. To sustain this recovery, XAU/USD must surpass the October 8 high of $2,653, which would provide buyers with hope of challenging the year-to-date peak at $2,685. Should XAU/USD break above $2,653, the next resistance level lies around $2,670, followed by $2,685. On the downside, if the price remains below $2,650, there’s a risk of a decline towards $2,600. A breach of this level could expose the 50-day Simple Moving Average (SMA) at $2,540.
GBPUSD
Prediction: Decrease
Fundamental Analysis:
The GBP/USD pair experienced volatility on Thursday, trading just above the 1.3000 level before retreating by 0.1% on the day. The US dollar gained strength following higher-than-expected US Consumer Price Index (CPI) inflation data, which came in hotter than market expectations. Looking ahead to Friday, a batch of UK and US economic reports is set to provide more direction, adding tension to the end of an otherwise quiet week for the pair. For September, US headline CPI inflation decreased slightly from 2.5% to 2.4% year-on-year (YoY), which was in line with forecasts. However, core US CPI inflation edged higher, rising from 3.2% to 3.3% YoY, further supporting the greenback.
Technical Analysis:
GBP/USD is currently trading around 1.3056, down by 0.11% on the day. The recent price movement indicates the emergence of a bearish trend, following a consolidation phase near the 50-day Exponential Moving Average (EMA) at 1.3108. The pair's break below this key level signals potential for further downside momentum. The 200-day EMA, situated at 1.2840, serves as a significant support area that could be tested if selling pressure intensifies. Recent bearish candlestick formations indicate that sellers are gaining control. Additionally, the Moving Average Convergence Divergence (MACD) indicator aligns with this bearish outlook. The MACD line has crossed below the signal line, and the histogram is showing increasing negative momentum, suggesting that selling pressure is building. In the short term, the pair may find it difficult to break back above the 50-day EMA, which has now become resistance. If the downward trend continues, key support levels to watch are the psychological 1.3000 mark, followed by the 1.2840 zone near the 200-day EMA.
USDJPY
Prediction: Decrease
Fundamental Analysis:
The Japanese Yen (JPY) continues to struggle for support during Friday’s Asian session, with the USD/JPY pair trading just below its highest level since early August, which it reached the day before. Weak data from Japan, including a drop in real wages for the first time in three months and lower household spending, along with easing price pressures from raw material costs, have cast doubt on the Bank of Japan’s (BoJ) ability to raise interest rates. This uncertainty surrounding BoJ’s monetary policy, especially ahead of Japan’s upcoming snap election on October 27, has weakened the JPY and supported the USD/JPY pair. Meanwhile, the initial boost in the US Dollar (USD) following stronger-than-expected US inflation data on Thursday was short-lived due to signs of a weakening labor market. A significant rise in US jobless claims suggests that the Federal Reserve (Fed) may maintain its focus on achieving maximum sustainable employment, signaling the potential for continued rate cuts. This has kept USD bulls cautious near the nearly two-month peak from the previous day, as traders await the US Producer Price Index (PPI) release.
Technical Analysis:
On the technical front, the USD/JPY pair’s recent move above the 50-day Simple Moving Average (SMA) for the first time since mid-July, along with its break through the 38.2% Fibonacci retracement level of the July-September decline, supports a bullish outlook. Additionally, momentum indicators on the daily chart are gaining positive traction without entering overbought territory, indicating that the pair could continue its upward trend. Any near-term pullbacks are likely to attract fresh buyers, with strong support expected around the 148.00 level.
US30
US30 Prediction: Uptrend Likely
Fundamental Analysis:
The Dow Jones Industrial Average (DJIA) gave back some of the week's earlier gains following the release of September's US Consumer Price Index (CPI) data, which fell short of market expectations. Additionally, US Initial Jobless Claims surged to their highest week-on-week figure in over a year, signaling potential softening in the labor market, despite its relative overall health. Headline US CPI inflation moderated to 2.4% year-over-year in September, down from 2.5% in the previous month but still above the expected 2.3%. Meanwhile, core CPI inflation increased to 3.3% annually, surprising analysts who had anticipated a steady figure of 3.2%. These persistently elevated inflation readings could dampen hopes for a quicker and more aggressive pace of interest rate cuts from the Federal Reserve (Fed).
Technical Analysis:
The DJIA is currently consolidating after recovering from its early October lows, trading just below recent highs above 42,600 with a slight 0.10% dip for the day. The 50-day exponential moving average (EMA) at 41,300 is acting as a robust support level, while the broader uptrend remains intact with the price still well above the 50-day and 200-day EMAs at 39,173. Momentum indicators offer mixed signals. The Moving Average Convergence Divergence (MACD) line is hovering slightly above the signal line, indicating a potential slowdown in bullish momentum. Traders are closely watching to see if the MACD line crosses below the signal line, which could hint at a short-term correction. However, as long as the index stays above key support levels, the overall upward trend is expected to continue.
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