Market Analysis

XAUUSD

Forecast: Potential Decline

Fundamental Analysis: 

Gold prices rose by nearly $15 in response to weaker-than-expected manufacturing data from New York state, which caused the 10-year U.S. Treasury yield to drop. Lower bond yields tend to boost the appeal of non-yielding assets like gold. Spot gold ended Tuesday up by $14.10, or 0.53%, closing at $2662.60/oz, after hitting a high of $2668.95/oz. The decline in U.S. bond yields supported gold prices and curbed the dollar’s strength. After bouncing back from a low of $2638/oz, gold maintained its upward momentum. The U.S. dollar index, which measures the greenback against six other currencies, held steady at 103.25. The easing bond yields provided some stability for gold's performance.

Technical Analysis: 

Gold’s upward momentum remains strong after surpassing the $2660/oz mark. The Relative Strength Index (RSI) continues to climb, indicating buyer dominance. A breakout above the October 4 high of $2670/oz could push gold toward testing this year’s peak at $2685/oz, followed by the $2700/oz level. However, if gold drops below $2650/oz, it could trigger further declines, with the next significant support at $2600/oz. If that level is breached, gold may target the 50-day Simple Moving Average (SMA) at $2555/oz.

USDJPY

Prediction: Potential Upside Movement

Fundamental Analysis: 

On Tuesday, the Japanese Yen (JPY) strengthened against the US Dollar (USD), recovering much of its earlier losses. This was largely driven by a significant decline in US stock markets and elevated geopolitical tensions, which increased demand for the safe-haven JPY. However, uncertainty surrounding the Bank of Japan’s (BoJ) potential interest rate hikes limited further gains for the yen. Additionally, weaker-than-expected Core Machinery Orders data from Japan for August weighed on the currency on Wednesday. Meanwhile, the USD remains strong, hovering near a two-month high, bolstered by expectations that the Federal Reserve (Fed) will gradually ease interest rates next year. This has kept USD/JPY relatively stable around the 149.00 level.

Technical Analysis:

From a technical perspective, USD/JPY could find solid support in the $148.60-$148.55 range if it experiences further declines. If sellers drive the price lower, the pair may fall below $148.00 and approach last week’s low of around $147.35. A break beneath the $147.00 level could signal the end of the recent upward trend, opening the door for additional losses. On the upside, $150.00 remains a key resistance level. A break above this could propel the pair toward the $150.85-$150.90 zone (the August high). If momentum continues, a move beyond $151.00 could trigger more buying pressure, targeting the $152.00 level and possibly the $152.65-$152.70 range.

EURUSD

Prediction: Potential for Increase

Fundamental Analysis: 

The EUR/USD pair extended its downward trend on Tuesday, hitting fresh two-month lows around 1.0880, nearing the crucial 200-day Simple Moving Average (SMA). Concurrently, the US Dollar (USD) strengthened, driving the US Dollar Index (DXY) above 103.00, hovering near multi-week peaks. The recent USD rally has been bolstered by the Federal Open Market Committee (FOMC) minutes from their September 18 meeting, revealing that while most policymakers supported a 50-basis-point rate cut, no clear timeline for further reductions was provided.

Technical Analysis: 

EUR/USD remains vulnerable to further declines, potentially testing the October low of $1.0883 and nearing the weekly bottom of $1.0881 from August 8. On the upside, the 55-day Simple Moving Average (SMA) at $1.1039 could serve as a near-term resistance, followed by the 2024 high of $1.1214 and the 2023 peak of $1.1275. A break below the pivotal 200-day SMA at $1.0873 could signal a more bearish outlook. On the four-hour chart, the pair exhibits a weakening trend, with support around $1.0883 and resistance near the 55-SMA at $1.0960. The relative strength index (RSI) has dipped to approximately 33, indicating bearish momentum.

BTCUSD

Prediction: Decrease

Fundamental Analysis:

Bitcoin encountered significant volatility after failing to breach the crucial resistance level at $68,000. This resulted in a flurry of liquidations for both long and short positions within the crypto market. Following this turbulence, Bitcoin experienced a brief recovery to $67,300. The situation intensified when Tesla, led by billionaire Elon Musk, moved $770 million worth of Bitcoin to various new addresses, sparking panic among sellers. In a related development, World Liberty Financial (WLFI), a token associated with Donald Trump’s family, launched for sale, which has bolstered his odds of winning the November election to 57.5%. Notably, Musk's SpaceX reportedly holds 8,285 Bitcoins, according to BitcoinTreasuries. As Trump's prospects improve, Vice President Kamala Harris's chances have decreased to 42.1%.

Technical Analysis:

Historically, Bitcoin has experienced a surge in demand prior to significant price hikes, particularly since 2016. Current demand levels are reminiscent of those observed in February 2024, shortly before Bitcoin reached an all-time high of $73,800 in March. On-chain analyst Axel Adler Jr. highlighted a notable uptick in new investors seeking to acquire tokens, which has increased by 3% over the past ten days—a promising indicator for the market. Although Bitcoin's spot demand has seen recent improvements, the latest price surge was primarily driven by the derivatives market. Over the past weekend, Bitcoin's open interest climbed by $800 million, leading to a price spike to $64,500. However, this upward momentum quickly reversed as the week progressed, with prices dipping below $60,000.

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