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Daily Technical Insights 29th 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 Rises Amid Weaker US Dollar, Markets Anticipate Key Economic Data

The EUR/USD currency pair experienced a modest increase on Monday, benefitting from a softened US Dollar after recording its lowest close since mid-June following Jerome Powell’s Jackson Hole speech. As crucial economic reports loom, there’s potential for increased market volatility.

The US Dollar started the week on a weaker note, driven by an improved market sentiment supported by China’s additional measures. This led to gains in US and European stocks and a decline in government bond yields. This environment weighed on the US Dollar, causing the US Dollar Index to retreat towards 104.00.

In terms of economic data, the Dallas Fed Manufacturing Index exhibited improvement, albeit not overwhelmingly positive. Attention is now focused on forthcoming employment and inflation data. The week’s agenda includes the release of the JOLTS Job Openings report. Similarly, European markets are keenly awaiting inflation reports, with preliminary August Consumer Price Index (CPI) data set to be unveiled across Eurozone countries. Additionally, the German Gfk Consumer Confidence survey is due for release. The convergence of these data points suggests the potential for market-moving shifts.

Chart EURUSD by TradingView

In line with technical analysis, the EUR/USD moves slightly higher on Monday, reaching the middle band of the Bollinger Bands. Currently, the price is moving slightly above the middle band, showing that there’s potential for another higher movement to target the upper band. The Relative Strength Index (RSI) is currently at 49, signaling that EUR/USD is trying to move back to the neutral stance.

Resistance: 1.0874, 1.0935

Support: 1.0789, 1.0740

XAU/USD (4 Hours)

XAU/USD Surges to Three-Week High as China Initiates Measures, Market Eyes Economic Data

Spot Gold experienced a surge against the US Dollar, propelling the XAU/USD pair to a three-week high at $1,926.04 per troy ounce. The week commenced with financial markets closely observing China’s moves to bolster the Yuan. China’s economy, grappling with challenges since abandoning the zero-covid policy in December 2022, has struggled to regain pre-pandemic growth levels.

China’s reduction of the stamp duty on stock trading by 50% over the weekend, coupled with a higher-than-expected fixed rate for USD/CNY set by the People’s Bank of China (PBoC), exerted downward pressure on the USD, leading to minor losses against major counterparts. Despite this, the USD maintained its position near recent highs across currency markets. Gold experienced an uptick during the American session, partly influenced by rising government bond yields and a retreat in US indexes from their intraday highs.

However, Gold’s intraday gains were mostly reined in as market participants await key news for clearer market direction. The upcoming macroeconomic calendar features significant data releases, including Germany and the Euro Zone’s preliminary estimates of the Harmonized Index of Consumer Prices (HICP) for August. Likewise, the United States is set to publish the July Core Personal Consumption Expenditures (PCE) Price Index, a preferred inflation gauge by the Federal Reserve, along with multiple employment indicators leading up to the eagerly anticipated August Nonfarm Payrolls report on Friday.

Chart XAUUSD by TradingView

Using technical analysis, the XAU/USD moves slightly higher on Monday and trying to widen the bands for the Bollinger Bands. Currently, the price is trying to push the upper band higher showing there’s potential for Gold to move even higher. The Relative Strength Index (RSI) is at 65 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.