EURUSD
- The EUR/USD currency pair began the week with early gains, albeit trading below the key level of 1.0700. This indicates a positive start to the week's trading activity.
- From a technical standpoint, a significant event occurred as the pair recently broke below the crucial 200-day Simple Moving Average (SMA). This break, the first of its kind in 2023, was seen as a notable trigger for bearish traders, suggesting a shift in market sentiment.
- The European Central Bank (ECB) decided to implement its 10th consecutive interest rate hike last week, raising rates by 25 basis points (bps). This move brought the main interest rate to an all-time high level of 4%. The primary goal of this rate hike was to combat persistently high inflation.
- In addition to the rate hike, the ECB's accompanying monetary policy statement delivered a clear message. It suggested that the 14-month-long policy tightening cycle might have already reached its peak. This statement hinted at a potential shift in the ECB's stance on further rate increases.
- Looking ahead, the focus is on the United States central bank. The Federal Reserve is widely anticipated to maintain its current policy stance in the upcoming week. However, the possibility of one more 25 bps interest rate hike by the end of this year remains open due to incoming strong U.S. macroeconomic data.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The EUR/USD pair started the week on a positive note but continues to trade below the 1.0700 level. The recent technical break below the 200-day SMA and the ECB's signalling of a potential peak in its rate-hiking cycle have brought new dynamics to the currency pair. Attention is now directed toward the Federal Reserve's upcoming actions and their potential impact on the pair.
GBPUSD
- The GBP/USD currency pair continues to face downward pressure and is currently hovering near a three-month low of approximately 1.2390. This suggests a sustained bearish sentiment in the market.
- From a technical standpoint, a significant event occurred as the pair experienced an overnight breakdown and closed below the crucial 200-day Simple Moving Average (SMA). This break, the first of its kind since March, is viewed as a fresh trigger for bearish traders, indicating a potential shift in market sentiment.
- The prevailing hawkish outlook favors the U.S. dollar bulls, contributing to the downward pressure on the GBP/USD pair. This, coupled with diminishing odds for more aggressive rate hikes by the Bank of England (BoE), is likely to constrain any potential upward movements.
- BoE Governor Andrew Bailey communicated to lawmakers last week that the central bank is now "much nearer" to concluding its series of interest rate increases. This statement reflects a potentially more cautious approach to future rate hikes.
- Recent economic data revealed that Britain's economy contracted at the fastest rate in seven months in July, recording a decline of 0.5%. This development has reignited concerns about the possibility of a recession.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The GBP/USD pair is experiencing sustained pressure, nearing a three-month low. The technical breakdown below the 200-day SMA signals a potential shift in market sentiment. The combination of a hawkish outlook favouring the USD and the BoE's more cautious stance on rate hikes is contributing to the pair's current bearish trajectory. Additionally, the contraction in the UK economy raises concerns about a potential recession. These factors collectively shape the current outlook for GBP/USD trading.
GOLD
- Gold prices are seeing a resurgence in demand for the third consecutive day on Monday, gradually approaching the critical $1,930 supply zone during the Asian trading session. This indicates renewed interest from buyers in the gold market.
- In the previous week, gold achieved a significant milestone by closing above the crucial 200-Daily Moving Average (DMA) at $1,922. This breakout above this key technical level has opened the door for further potential gains in the gold market.
- Investors are currently engaged in position readjustments as they prepare for important monetary policy decisions scheduled for announcement this week. These decisions will be made by prominent central banks, including the US Federal Reserve (Fed), the People's Bank of China (PBOC), the Bank of England (BoE), and the Bank of Japan (BoJ). Such events often lead to strategic positioning in the gold market.
- The Federal Reserve is widely anticipated to maintain its current interest rates during its two-day meeting, concluding on Wednesday.
- However, market participants remain cautious about the central bank's outlook. Recent indications of rising inflation and the resilience of the US economy suggest that the Fed may have more room to consider further interest rate increases.
Closing statement: Gold prices are experiencing a rebound, with buyers gradually pushing the price closer to the $1,930 resistance level. The breakthrough above the 200-Daily Moving Average in the previous week has bolstered the potential for further gains. Investor positioning is being adjusted ahead of key central bank decisions this week, including the Federal Reserve's meeting, which could impact the gold market. The uncertainty surrounding the Fed's future monetary policy actions, particularly in response to inflation and economic resilience, is a crucial factor influencing gold's trajectory.
CRUDE OIL
- Western Texas Intermediate (WTI), the US benchmark for crude oil, is currently trading around the $90.20 mark on Monday. This indicates a relatively stable high price level.
- WTI prices have been strongly influenced by concerns related to supply dynamics in recent weeks. These concerns have played a significant role in boosting WTI prices.
- Additional stimulus measures implemented in China, combined with positive economic data from the country, have contributed to the rise in WTI prices. China is the world's largest importer of oil, so its economic performance has a substantial impact on global oil demand.
- Oil traders are closely monitoring the upcoming Federal Reserve (Fed) Interest Rate Decision scheduled for Wednesday. The Fed's monetary policy decisions often have far-reaching implications for financial markets, including the oil market.
- On Friday, preliminary S&P Global PMI data for September from the US will be released. These data points are highly significant as they can potentially lead to substantial movements in the USD-denominated WTI price. Oil traders will be attentive to these releases for potential trading opportunities.
| 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: The current WTI price hovers around $90.20. Supply concerns continue to be a pivotal factor influencing WTI prices. Additionally, China's economic stimulus measures and positive economic data from the country have contributed to the upward trend. The forthcoming Federal Reserve Interest Rate Decision is a crucial event for oil traders to watch. Moreover, the release of preliminary S&P Global PMI data for September in the US could lead to significant movements in the USD-denominated WTI price, providing trading opportunities for oil market participants.
DAX
- The DAX, Germany's leading stock market index, closed out the week on a positive note with a 0.97% gain, settling at 15,894. This indicates a robust performance during the week.
- Positive economic indicators from China played a crucial role in easing concerns about slower global economic growth. Better-than-expected figures for industrial production and retail sales in China suggested a much-needed increase in demand and consumption, which positively affected market sentiment.
- In July, the Eurozone trade surplus narrowed significantly, dropping from €18.5 billion to €6.5 billion. This outcome contrasted with economists' forecasts of a surplus widening to €20.0 billion. The decline in imports from the rest of the world by 18.2% compared to July 2022, coupled with a 2.7% decrease in exports year-over-year, contributed to this narrowing surplus.
- European markets, including the DAX, demonstrated resilience even as negative sentiment prevailed in US equity markets on Friday. However, it's worth noting that investors remain cautious in anticipation of the Federal Reserve's interest rate decision and the release of FOMC (Federal Open Market Committee) economic projections.
- Two ECB (European Central Bank) Executive Board members, Luis de Guindos and Fabio Panetta, are scheduled to speak. Their remarks hold significance as they can impact investor sentiment, especially in the context of discussions about further rate hikes and the concept of "higher for longer" interest rates.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Neutral |
Closing statement: The DAX showed strength with a positive performance at the end of the week, driven in part by encouraging economic indicators from China. The narrowing Eurozone trade surplus raised some concerns, but overall, European markets remained resilient amid negative sentiment in the US. The impending Federal Reserve interest rate decision and comments from ECB Executive Board members will likely be closely monitored by investors for potential market-moving insights.