EURUSD
- EUR/USD Price: The EUR/USD pair continues to trade near the downside on Tuesday, testing a key technical support level. A break below this support could lead to fresh 16- week lows for the Euro, as the pair struggles to maintain bullish momentum.
- Fed Policymakers Cautious on Rate Cuts: While many Federal Reserve officials lean toward a 25-basis-point rate cut at the upcoming meeting, some policymakers, like FOMC Governor Michelle Bowman and Atlanta Fed President Raphael Bostic, have expressed caution. Bostic hinted that the Fed might skip the November rate cut, adding uncertainty to the Fed's rate path.
- Lagarde’s Statement: ECB President Christine Lagarde expressed confidence that inflation in the Eurozone will reach the target of 2% by 2025, or possibly even sooner. This optimism suggests that the ECB may not need to make further aggressive rate cuts, which could provide some support for the Euro in the medium term.
- Mixed Views from ECB Policymakers: ECB policymaker Robert Holzmann echoed Lagarde's optimism, indicating that inflation could fall faster than expected. However, he did not provide a clear timeframe for this. On the other hand, Mario Centeno, another ECB official, expressed caution, warning that while inflation is moving closer to the target, there is a growing risk of undershooting it, which could hinder economic growth.
- Outlook Hinges on Economic Growth: The EUR/USD outlook remains tied to both Fed and ECB policy directions. While the Fed’s potential rate cuts support the US Dollar, the Euro could be affected by slower economic growth if inflation undershoots the ECB's target.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD is hovering near key technical levels, and a break below could lead to further downside for the Euro. The market remains cautious as mixed signals from both the Federal Reserve and the European Central Bank create uncertainty. The contrasting views among ECB policymakers regarding inflation and economic growth add to the volatility. Looking ahead, traders will be closely monitoring central bank statements and economic data for clearer indications on the EUR/USD trajectory.
GBPUSD
- GBP/USD Price: The GBP/USD pair is moving upward toward the 1.3000 level during European trading on Wednesday. Despite recent bearish trends, the Pound Sterling is gaining some traction against the US Dollar as market sentiment improves.
- Bailey's Remarks: On Tuesday, Bank of England (BoE) Governor Andrew Bailey emphasized the importance of enhancing the UK's ability to monitor the non-banking financial system, which is often less transparent. His comments suggest the BoE may focus on tightening regulatory oversight in these areas, which could impact broader market dynamics in the UK.
- Upcoming BoE and PMI Events: Traders will keep a close eye on BoE Governor Bailey's appearance scheduled for late Wednesday. This event could provide more insights into the BoE's policy direction, especially concerning financial stability and monetary tightening. Additionally, UK Purchasing Managers Index (PMI) data, set to be released on Thursday, will be a key driver for the GBP/USD pair, as it reflects the health of the UK's manufacturing and services sectors.
- Breeden’s Appearance: BoE Deputy Governor Sarah Breeden is also set to speak at a panel discussion on financial regulation in Washington on Wednesday. Her comments could offer further clarity on the BoE's regulatory stance, particularly considering evolving global financial conditions.
- US Fed's Positive Economic Outlook: Federal Reserve Bank of San Francisco President Mary Daly noted on X that the US economy is in a better position, with inflation significantly lower and the labour market stabilizing. This reinforces market expectations of less aggressive rate cuts by the Federal Reserve, supporting the US Dollar.
| SMA (20) | Slightly Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The GBP/USD is showing signs of recovery as it approaches the 1.3000 level, supported by upcoming events involving key BoE officials and UK economic data. The BoE's stance on financial regulation and transparency will be of particular interest, alongside the crucial PMI figures on Thursday. In the US, continued positive signals from the Federal Reserve about inflation and the labour market could counteract some of the gains in GBP/USD, making the Fed and BoE policies critical drivers of the pair's movement in the near term. Traders should stay alert to these key events for short-term direction.
GOLD
- Gold New All-Time Highs: Gold has surged to new all-time highs, trading above $2,750. The metal’s continued rally underscores its role as a premier safe-haven asset, especially in times of economic and geopolitical uncertainty. The rising demand for gold reflects investor confidence in the precious metal amid broader market volatility.
- Fed Easing Expectations: Recent comments by San Francisco Federal Reserve President Mary Daly have reinforced expectations of a gradual monetary policy easing. Daly's remarks suggest that the Fed may continue reducing interest rates cautiously, which is seen as supportive of gold prices.
- FedWatch: The market has already priced in a 91% probability of a 25-basis point rate cut in November, according to the CME Group’s FedWatch Tool. Lower interest rates generally weaken the US Dollar and reduce the opportunity cost of holding non-yielding assets like gold, making the metal more attractive to investors.
- BRICS Summit: The ongoing BRICS Summit has sparked fresh speculation about the potential development of a gold-backed currency to rival the US Dollar. As BRICS nations push for de-dollarization, the potential for a currency supported by gold has drawn significant attention. BRICS countries, which collectively account for approximately 20% of global gold reserves, could use gold as part of their strategy to reduce reliance on the dollar in global trade and finance.
- US Data and Fedspeak: Gold traders will be monitoring the release of mid-tier US housing data as well as comments from various Federal Reserve officials for fresh trading signals. Housing data could offer insights into the health of the US economy, while further guidance from Fed policymakers may influence expectations on the future trajectory of interest rates.
Closing statement: The XAU/USD pair continues its bullish trend, with gold reaching new all-time highs above $2,750. Key drivers include heightened expectations of a Fed rate cut in November, which supports demand for the precious metal, and ongoing speculation around a gold-backed BRICS currency. With markets focused on US housing data and upcoming Fedspeak, gold traders should stay alert to potential catalysts that could drive the price higher or signal a short-term pullback. Given the current environment, gold remains well-positioned as a hedge against economic uncertainty and currency fluctuations.
CRUDE OIL
- WTI Crude Oil Price: West Texas Intermediate (WTI) Crude Oil continues its upward momentum, trading with a positive bias for the third consecutive day, hovering around the mid-$71.00 range during the European session on Wednesday.
- Hopes for China’s Economic Recovery: Investor sentiment remains optimistic about China's recently announced massive stimulus measures, which are expected to stimulate economic recovery in the world’s second-largest economy. A stronger recovery in China, the largest importer of crude, is anticipated to boost global fuel consumption, supporting oil demand.
- US Crude Stock: According to API data released on Tuesday, US crude stocks rose by 1.64 million barrels last week, surpassing market expectations.
- Oil Inventories: Attention now shifts to the official US government oil inventory data for further direction later Wednesday.
- Geopolitical Conflicts: Market participants are also concerned about the potential for further escalation in the Middle East conflict, which could disrupt oil supplies from key oil-producing regions, tightening market balances in the months ahead.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI Crude Oil remains supported by optimism over China’s recovery and concerns about potential supply disruptions. Traders will look to US inventory data and geopolitical developments for further cues.
DAX
- DAX Declines: On Tuesday, the DAX slipped by 0.20%, adding to the previous session's 1% loss. Concerns about the US Presidential Election and slowing demand from China weighed on the index.
- Market Movers: On Wednesday, investor sentiment remained impacted by Jefferies' downgrade of Munich Re Group, which dropped 2.75%, while Hannover Re fell 1.50%. Rising government bond yields negatively affected tech stocks, including Infineon Technologies, which declined by 1.00%.
- IMF Economic Projections: On Tuesday, the IMF released its latest economic growth projections, focusing on China. The IMF forecasted zero growth for Germany in 2024 (down from +0.2% in July) and revised Euro Area growth to 0.8%, slightly lower than the 0.9% projected in July.
- ECB Rate Cut Speculations: Concerns about weak growth and inflation undershooting the ECB's target increased speculation of more aggressive ECB rate cuts in the near term.
- Key Data: On Wednesday, the focus will shift to Eurozone consumer confidence data. Economists expect a slight improvement from -12.9 in September to -12.5 in October.
