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Daily Technical Insights 25th 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 Nears Crucial Levels Amidst Dollar’s Resurgence Ahead of Powell’s Jackson Hole Speech

The EUR/USD currency pair has edged back towards significant technical thresholds following a brief rebound that faltered near 1.0870. This pullback occurred as the US Dollar regained strength in anticipation of Federal Reserve Chair Jerome Powell’s imminent address at Jackson Hole on Friday. Despite mixed data from the US and no definitive cues from Fed officials, the Greenback managed to strengthen. US stocks saw declines, while US Treasury yields rebounded, contributing to the Dollar’s resurgence. US economic indicators revealed a notable 5.2% drop in Durable Goods Orders for July, exceeding the anticipated 4% decrease. Furthermore, Initial Jobless Claims declined to 230,000, surpassing the projected 240,000 figure.

European Central Bank (ECB) Governing Council member Mario Centeno delivered a cautionary stance on Thursday, expressing the need for prudence in upcoming meetings. He highlighted the realization of downside risks to the economy, aligning with the prevailing downtrend in expectations for additional monetary policy tightening from the ECB. These dovish remarks have potentially contributed to the EUR/USD’s weakness. As the week progresses, Germany is set to release updated data on Q2 GDP and the ZEW Survey, while the University of Michigan’s Consumer Sentiment Survey will be a focal point in the US. However, all eyes remain fixed on Jackson Hole, where ECB President Christine Lagarde will speak at 11:00 GMT, followed by Fed Chair Jerome Powell at 14:00 GMT. These speeches have the potential to trigger substantial market movements across various sectors.

Chart EURUSD by TradingView

In line with technical analysis, the EUR/USD declined on Thursday, reaching the lower boundary of the Bollinger Bands. At present, the price is hovering close to this lower boundary. The Relative Strength Index (RSI) is currently at 34, signaling a return to bearish sentiment for the EUR/USD.

Resistance: 1.0874, 1.0935

Support: 1.0789, 1.0740

XAU/USD (4 Hours)

XAU/USD Maintains Rally Near $1,923 Amid Dollar’s Volatile Performance

Spot Gold continued its weekly ascent, reaching $1,923.34 per troy ounce and sustaining modest intraday progress, just below this mark during the mid-American session. The US Dollar experienced selling pressure throughout the first half of the day, influenced by a decline in government bond yields and favorable stock market performance.

The USD briefly garnered demand following the release of mixed US data. Durable Goods Orders endured a substantial 5.2% plunge in July, significantly worse than anticipated. Conversely, Initial Jobless Claims for the week concluding on August 18 displayed improvement at 230K, surpassing the expected 240K. The July Chicago Fed National Activity Index also signaled a shift, rising to 0.12 from the previous month’s -0.33.

Macro figures triggered a decline in stock markets, causing Wall Street to further retreat after the opening bell. Despite optimistic remarks from Federal Reserve (Fed) officials, including Boston Federal Reserve President Susan Collins mentioning a possible steadying of the policy rate and Federal Reserve Bank of Philadelphia President Patrick Harker suggesting the Fed might have “done enough” with monetary policy, the market mood dampened. The USD found strength amid this sentiment, further supported by improved Treasury yields, which in turn curbed the extension of gains for XAU/USD (the Gold/US Dollar pair).

Chart XAUUSD by TradingView

Using technical analysis, the XAU/USD didn’t change much on Thursday and stayed between the higher and middle bands of the Bollinger Bands. Right now, the price is still in that same zone between the middle and upper bands. The Relative Strength Index (RSI) is at 61 currently, showing that the XAU/USD pair is still in a positive mode.

Resistance: $1,926, $1,945

Support: $1,910, $1,896

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