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Spreads
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EUR/USD Declines as Euro Underperforms and US Dollar Posts Mixed Results
The EUR/USD currency pair declined on Thursday as the Euro underperformed against the US Dollar. The failure of the EUR/USD to hold above the 1.0900 level indicates a loss of bullish momentum for the pair. The next direction of the move is likely to depend on the outcome of the US Nonfarm Payrolls (NFP) report, which is due to be released on Friday.
The Euro weakened on Thursday after ECB policymaker Robert Holzmann said that interest rates are not yet at their highest level and that another one or two rate hikes are possible. However, market expectations regarding tightening from the ECB weakened, contributing to the Euro’s slide. Eurozone inflation data did not offer any surprises, but German retail sales showed an unexpected decline in July.
The US Dollar rose against its main European rivals, but the Dollar Index (DXY) lost ground. US consumer inflation figures did not have a significant impact on the US Dollar. Now, the focus turns to Friday’s NFP report, which is expected to show strong job growth. The ISM Manufacturing PMI is also due to be released on Friday.
Based on technical analysis, the EUR/USD moves lower on Thursday, reaching below the middle band of the Bollinger Bands. Currently, the price is moving just below the middle band, showing that there’s potential for another lower movement to reach the lower band. The Relative Strength Index (RSI) is currently at 45, signaling that the EUR/USD is moving lower and trying to start the bearish trend.
Resistance: 1.0865, 1.0935
Support: 1.0833, 1.0780
XAU/USD Ends August Lower as US Dollar Rebounds
Gold price ended August lower, as the US Dollar staged an impressive rebound, despite the persistent weakness in the US Treasury bond yields. Risk sentiment turned tepid in American trading, as traders resorted to the end-of-the-month settlement while repositioning ahead of Friday’s high-impact US labor market report.
Earlier in the day, the US Dollar maintained its corrective downside, as the mixed set of economic data from the United States bolstered expectations that the Fed could likely end its tightening cycle. However, the US Dollar rebounded in the afternoon, as traders turned risk-off ahead of the US jobs report.
Gold price initially jumped to challenge the monthly high of $1,949, but failed to sustain at higher levels on the US Dollar comeback. The next major support for gold is seen at $1,880, followed by $1,850.
The main event risk of the week is the US Nonfarm Payrolls and the Average Hourly Earnings data, which will likely hint at the Fed’s policy path for the rest of this year. The US economy is expected to add 170K jobs in August, compared with the 187K previous job gain. Average Hourly Earnings are seen steady at 4.4% YoY in August.
Based on technical analysis, the XAU/USD moves lower on Thursday and able to reach the middle band of the Bollinger Bands. Currently, the price is moving near the middle band showing there’s potential for Gold to move in consolidating mode. The Relative Strength Index (RSI) is at 58 currently, showing that the XAU/USD pair is still in a positive mode but might have some correction lower.
Resistance: $1,954, $1,965
Support: $1,936, $1,926
Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.
