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Daily Technical Insights 1st August 2023

  

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

EUR/USD (4 Hours)

EUR/USD Pulls Back Below 1.1000 Despite Eurozone’s Return to Growth

On Monday, the EUR/USD currency pair failed to maintain its gains and retreated, falling below the key level of 1.1000. The Euro initially gained momentum after Eurozone economic data revealed growth in the second quarter, but it couldn’t reclaim the 20-day Simple Moving Average (SMA) and eventually weakened. Eurostat reported that the GDP grew by 0.3% in Q2, surpassing market consensus expectations of 0.2%, while headline inflation decreased from 5.5% to 5.3% YoY in line with predictions. However, the core inflation rate remained higher than expected at 5.5%. In contrast, German retail sales disappointed, showing a 0.8% drop in June against a forecasted 0.2% decline.

The mixed data released for the European Central Bank (ECB) implies no significant shifts in monetary policy, as inflation slowed while the core rate remained elevated, and GDP experienced marginal growth. Market pricing currently suggests that the likelihood of another rate hike during the September meeting is below 40%. In the US, the Dollar displayed a mixed performance on Monday, rising against the Euro, Pound, and Yen, but weakening against the Australian Dollar, Canadian Dollar, and New Zealand Dollar, possibly indicating some risk appetite and a rebound in commodity prices. This week, market participants await a series of labor market data releases, including JOLTS Job Openings, ADP, Jobless Claims, and Nonfarm Payrolls, which could influence the currency’s movements.

Chart EURUSD by TradingView

According to technical analysis, the EUR/USD falls on Monday and reached the middle band of the Bollinger Bands. Currently, the price is moving just below the middle band of the Bollinger Bands indicating there’s a potential lower movement to the lower band. The Relative Strength Index (RSI) currently stands at 39, indicating that the EUR/USD is starting to enter the bearish moment.

Resistance: 1.1038, 1.1121

Support: 1.0915, 1.0839

XAU/USD (4 Hours)

XAU/USD Gains Momentum as Optimism Weakens US Dollar Amid Easing Inflation Signs

At the beginning of the week, XAU/USD, the gold-to-dollar exchange rate, rose higher as investor optimism led to a shift away from the US Dollar. The precious metal traded around $1,972, recovering most of its losses inspired by the European Central Bank (ECB), and further gained momentum with Wall Street’s opening as stocks maintained a positive tone from the previous week, supported by signs of easing global inflation.

Following the release of German and US inflation-related data on Friday, the Eurozone reported a decline of 0.1% MoM in July’s Harmonized Index of Consumer Prices (HICP) according to preliminary estimates, with the annual figure easing to 5.3% from the previous 5.5%. The upbeat market sentiment exerted pressure on the US Dollar, causing it to lose ground unevenly against all major rivals, with commodity-linked currencies performing the best and European counterparts performing the worst. As market participants await American employment-related figures, the focus remains on upcoming reports such as June JOLTS Job Openings, the ADP survey on private job creation, and the July Nonfarm Payrolls report (NFP) expected to show 200K new jobs created in the month.

Chart XAUUSD by TradingView

According to technical analysis, the XAU/USD rises slightly on Monday and moves above the middle band of the Bollinger Bands. Currently, the price is slightly above the middle band, indicating that there is still potential for Gold to move even higher. The Relative Strength Index (RSI) currently stands at 50, which indicates that the XAU/USD pair is moving back to the neutral stance.

Resistance: $1,979, $1,999

Support: $1,953, $1,938

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

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