EURUSD
- Current Trading: The EUR/USD pair is struggling to gain traction, trading in a narrow range during the European session on Tuesday after pulling back from the 14-month peak above the 1.1200 mark seen previously.
- Powell’s Comments: On Monday, Federal Reserve Chair Jerome Powell highlighted that the US economy is showing signs of a continued slowdown in inflation. He suggested that this development could enable the Fed to reduce interest rates and eventually reach a neutral stance that no longer constrains economic growth.
- ECB’s Outlook: Similarly, ECB President Christine Lagarde noted that the central bank is increasingly confident about inflation declining to the 2% target, signalling that the next policy move might be more accommodative.
- Eurozone Inflation Data: Traders are closely watching the release of the Eurozone inflation figures, with expectations that the Consumer Price Index (CPI) may fall below the ECB’s 2% target in September, which could further influence the ECB’s rate path.
- US Data: During the early North American session, traders will turn their attention to the US economic docket, including the ISM Manufacturing PMI and the JOLTS Job Openings report, which could provide fresh impetus for the US Dollar.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: EUR/USD remains in a consolidation phase, with a break above 1.1200 needed to extend the bullish momentum. On the downside, 1.1140 serves as key support. The Eurozone inflation data and US economic reports will be critical in determining the pair’s near-term direction.
GBPUSD
- Current Trading: The GBP/USD pair is struggling to gain traction around the 1.3370 level during early Tuesday trading, as market participants digest recent economic updates and central bank commentary.
- BoE’s Perspective: Bank of England (BoE) policymaker Megan Greene expressed concerns that a consumption-driven recovery in the UK could reignite inflation, even though prices are currently “moving in the right direction”. Nevertheless, she hinted that further rate cuts remain on the table, per Bloomberg.
- Support from Fed: The GBP/USD pair faces pressure amid less dovish remarks from Federal Reserve Chair Jerome Powell, which have bolstered the US Dollar (USD). Powell’s comments were perceived as supportive of the Greenback, keeping the pair under check.
- Atlanta Fed President’s Stance: Additionally, Atlanta Fed President Raphael Bostic stated on Monday that he would be open to another 50-basis point (bps) rate cut at the November meeting if US job growth shows signs of a sharper-than-expected decline.
- Upcoming US Data: Investors are now turning their attention to the US September ISM Manufacturing PMI and the speeches from Fed’s Raphael Bostic and Lisa Cook, due later Tuesday, for potential directional cues.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: GBP/USD remains in a consolidation phase, with 1.3400 acting as immediate resistance. A break above this level could target the recent high near 1.3435. On the downside, 1.3330 serves as a key support zone. Market participants will be closely watching the US data releases and Fed commentary for the next directional move.
GOLD
- Gold Price: The Gold price has returned to positive territory, trading higher early on Tuesday, recovering from a two-day pullback off the record highs of $2,686.
- Geopolitical Tensions: The rebound is partly attributed to heightened geopolitical tensions in the Middle East. Israel launched a “limited” ground operation against Hezbollah targets in southern Lebanon, increasing safe-haven demand for the yellow metal as concerns grow over a broader conflict involving Iran.
- Fed Commentary: Expectations for a 50 basis points (bps) rate cut by the Federal Reserve in November diminished after Fed Chair Jerome Powell downplayed the likelihood of an outsized rate reduction in his Monday speech. This initially added some downward pressure to Gold.
- Bostic’s Comments: However, Gold’s corrective phase stalled following remarks from Atlanta Fed President Raphael Bostic, who indicated that the Fed may still resort to further outsized rate moves if the US labor market deteriorates, thereby limiting the downside for XAU/USD.
- US Data: Traders will now focus on the upcoming US ISM Manufacturing PMI and JOLTS job openings data for additional insights into the US economic outlook and its potential impact on Fed policy.
Closing statement: The XAU/USD pair is supported by geopolitical risks and mixed Fed signals, with $2,670 acting as a key resistance. A sustained break above this level could target the record high of $2,686. On the downside, $2,640 remains a critical support, and a breach may expose $2,620. Upcoming US data will be crucial in setting the next directional tone.
CRUDE OIL
- Price Weakness: Crude Oil prices are trading lower at the start of the week, with traders dismissing recent geopolitical developments as not having a substantial impact on the global oil market.
- Rising Storage Data: According to a Bloomberg report, the amount of crude oil stored on tankers that have been stationary for at least seven days rose to 60.76 million barrels as of September 27, a 27% decrease from last year. This trend could indicate higher demand or improved supply chain logistics.
- Escalating Russia-Ukraine Conflict: Russia has intensified its attacks on Ukraine’s energy infrastructure, with the Zaporizhzhia nuclear power plant reportedly under threat. Continued disruptions in Ukraine could add upward pressure to energy prices, particularly in Europe, according to Reuters.
- China’s Economic Stimulus: On the demand side, the People's Bank of China (PBoC) and the National Financial Regulatory Administration introduced new measures on Sunday, including lower mortgage rates to support the housing sector. This is part of a broader effort to stabilize the Chinese economy, which may eventually lead to increased crude demand.
- Geopolitical Risks: Despite recent downward momentum, Crude Oil prices could rebound sharply if geopolitical tensions between Iran and Israel escalate, leading to concerns about a proxy war in the Middle East and potential supply disruptions.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Crude Oil is vulnerable to further declines if demand concerns persist, with immediate support at $68.00. However, the upside risk remains intact should geopolitical tensions in Eastern Europe and the Middle East escalate further, potentially pushing prices back above the $70.00 per barrel mark. Traders should remain alert to headline risks and geopolitical developments.
DAX
- Auto Sector: Auto stocks were under heavy selling pressure on Monday, as Volkswagen revised its 2024 outlook downward. This news, combined with Stellantis cutting its 2024 profit forecast, contributed to broader sector losses. Major auto manufacturers like Porsche, Mercedes Benz Group, and BMW saw declines of 2.86%, 2.44%, and 2.42%, respectively. Volkswagen ended the session with a drop of 2.02%.
- German Inflation Data: On Monday, inflation figures from Germany fueled speculation of an October ECB rate cut. The annual inflation rate dropped to 1.6% in September from 1.9% in August, marking the lowest level since February 2021.
- Eurozone Inflation: Investors are now eyeing the Eurozone inflation figures, expected on Tuesday. Consensus forecasts suggest a drop in the annual inflation rate from 2.2% in August to 1.9% in September, which could add weight to ECB rate cut expectations.
- Manufacturing PMI Data: Finalized manufacturing PMI numbers for Germany and the Eurozone are also due on Tuesday. While it is unlikely to alter the market outlook unless significantly revised, these figures will still be monitored closely for any further economic insights.
- Fed Commentary: In the US, Fed Chair Powell emphasized that the US labor market remains solid and reiterated a data-dependent approach to rate cuts, adding no urgency for aggressive monetary easing.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: DAX could face further pressure if Eurozone inflation prints below expectations, reinforcing ECB rate cut speculation. However, a stable PMI reading might help limit losses. For now, auto sector sentiment and ECB outlook will likely drive short-term direction. Key support levels sit around 19,100, while a break above 19,500 would signal a bullish turnaround.