EURUSD rose for the second straight trading day as the shared currency continue to recover from its lowest level since the beginning of the year. The shared currency took advantage of the broad-based selling of the U.S. Greenback. Markets seem to have already priced in a supersized 75 basis point interest rate hike at the next FOMC policy meeting, which is set to happen on the 20th and 21st of September. The U.S. 10-year treasury yield also saw a decline during Monday’s trading as risk-on sentiment returns to equity markets. Market participants will now turn their attention to the U.S. CPI release, scheduled during today’s American trading session.
On the technical side, EURUSD has broken above our previously estimated resistance level of around 0.9902 and 1. We project the next level of resistance to sit around the 1.019 price region and the previous resistance level at 10055 would change in polarity and act as a near-term support level for the pair. RSI for the pair sits at 60, as of writing. On the four-hour chart, EURUSd currently trades above its 50, 100, and 200-day SMA.
Resistance: 0.9902, 1.0011, 1.0055
Support: 0.9902, 0.985
Cable extended its winning streak into the new trading week as broad-based selling surrounded the U.S. Greenback. An upbeat market sentiment surrounding equities also allowed the British Sterling to find a demand that has seemingly gone away for months. The short-term reversal of Cable should be taken with caution, as the U.K.’s National Statistics revealed GDP growth below market estimates. A weak British economy combined with an ongoing energy crisis could further hinder any monetary tools that the BoE could utilize in order to reign in inflation. Market participants should note that the BoE has postponed its interest rate announcement by a week to September 22nd. A better-than-expected CPI figure from the U.S. could send Cable back into a correction trajectory.
On the technical side, GBPUSD has broken above our previously estimated resistance level of 1.1561 but is still trading below our secondary resistance level of 1.1854. The support level for GBPUSD continues to sit at 1.1463. RSI for the pair sits at 65.43, as of writing. On the four-hour chart, GBPUSD currently trades above its 50 and 100-day SMA, but below its 200-day SMA.
Resistance: 1.1561, 1.1854
Gold prices continue to recover for the second straight trading day as the Dollar index dives to a monthly low of below 109. As markets have now seemingly priced in the 75 basis point interest rate hike by the FOMC, the Dollar has entered a cycle of exhausted demand; however, with U.S. CPI scheduled to be released during the American trading session, the U.S. Dollar could be met with a fresh demand. Risk on sentiment across equity markets has made the case for a weaker Dollar and thus room for the yellow metal to gain back some lost ground. Market participants should be aware while Gold was able to gain more than 1% in the past two days, Gold prices have mainly depended on the weakness of the Dollar to rise; however, with inflation still acting as an economic headwind around the world, the non-yielding Gold provides little to no upside for longer-term investing horizons.
On the technical side, XAUUSD has broken above our previously estimated resistance level of $1,724 per ounce and is heading toward the next level of resistance at $1740 per ounce. A fresh short-term support level for Gold has formed around the $1712 per ounce price level. RSI for the pair sits at 59, as of writing. On the four-hour chart, XAUUSD currently trades above its 50-day SMA, but below its 100, and 200-day SMA.
Resistance: 1740, 1800
Support: 1712, 1695