Articles
Solana price poised for a 10% rally
398545 June 27, 2024 12:09 FXStreet Market News
- Solana price breaks out of the descending channel pattern, signaling a bullish move.
- Sideline buyers can accumulate SOL at the trendline retest level of around $132.34.
- A daily candlestick close below $122.00 would invalidate the bullish thesis.
Solana’s price has broken out from the descending channel pattern on Tuesday and currently trades 3.5% above the breakout point. Investors on the sidelines seeking entry points can consider buying near the trendline retest level around $132.34 before the bulls follow through on SOL price in the upcoming days.
Solana price breaks above the descending channel
Solana price surged above the descending channel pattern on Tuesday and is now 3.5% higher from the breakout point on Thursday, reaching $137.31.This descending channel pattern is drawn from joining multiple swing lows and highs from June 6 to June 25.
If this upper band of the descending trendline around $132.34 holds as throwback support, SOL could rally 10% to retest its June 17 daily high of $151.79.
The Relative Strength Index (RSI) on the daily chart is rising from an oversold condition and looking to break above the mean value of 50. However, the Awesome Oscillator (AO) indicator is still below the mean zero level. If bulls are indeed making a comeback, then both momentum indicators must maintain their positions above their respective neutrality levels. This development would provide additional momentum to the ongoing recovery rally.
If the bulls are aggressive, and the overall crypto market outlook is positive, SOL could close above $151.79 and even extend an additional 14% rally to retest its weekly resistance level at $172.93.
SOL/USDT daily chart
However, if SolanaÂ’s price makes a daily candlestick close below $122.00, the bullish thesis would be invalidated by creating a lower low on the daily chart. This development could see SOL’s price decline by 5% to retest the weekly support level at $115.83.
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Risk sentiment pretty mixed as Asia-Pac comes to a close
398544 June 27, 2024 12:06 Forexlive Latest News Market News
Risk sentiment trades fairly mixed as we close out the Asia-Pac session.
FX: In the FX space, the AUD has moved into the top spot (earlier the JPY was the strongest), while the USD has moved into the bottom spot. Probably not that surprising to see the USD softer after the gains we’ve seen in recent sessions.
Equities: Lower across North American, EMEA and Asia-Pac futures. Very little additional catalysts in play right now though.
Bonds: Lower across 2’s, 5’s and 10’s as yields continue their march higher from yesterday. Possible triggers are the recent upside we’ve seen in oil (which has pushed inflation breakevens higher), or some spill over following the CPI surprises in Australia and Canada this week. However, with the economic picture still looking uncertain for the US the main focus should shift to next week’s labour data.
Commodities: Mixed as well with oil lower and natgas higher, while silver and gold is up but platinum is down.
It’s a pretty messy week with everything going on right now, so personally I wouldn’t put too much weight on the very short-term fluctuations in risk sentiment, not in a week like this/
Risk snapshot
GBP/USD Price Analysis: Edges higher amid modest USD downtick, not out of the woods yet
398542 June 27, 2024 12:05 FXStreet Market News
- GBP/USD bounces off its lowest level since mid-May, albeit lacks any follow-through buying.
- The fundamental backdrop warrants some caution for bulls ahead of the key US macro data.Â
- The technical setup suggests that the path of least resistance for the pair is to the downside.
The GBP/USD pair attracts some buyers near the 1.2615-1.2610 area, or its lowest level since mid-May touched during the Asian session on Thursday and reverses a part of the previous day’s steep decline. Spot prices currently trade around the 1.2630 area, up less than 0.10% for the day, as traders now look to the key US macro data before positioning for the next leg of directional bets.
In the meantime, the US Dollar (USD) is seen retreating from a nearly two-month high touched on Wednesday and acting as a tailwind for the GBP/USD pair. That said, elevated US Treasury bond yields, bolstered by expectations that the Federal Reserve (Fed) is in no rush to start its rate-cutting cycle, should help limit losses for the buck. Apart from this, rising bets for a rate cut by the Bank of England (BoE) in August could undermine the British Pound (GBP) and further contribute to capping the GBP/USD pair ahead of the UK general election on July 4.
From a technical perspective, the overnight breakdown and close below the 1.2650-1.2645 confluence – comprising 50-day and 100-day Simple Moving Averages (SMAs) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and suggest that the path of least resistance for the GBP/USD pair is to the downside. Hence, a subsequent slide below the 1.2600 round-figure mark, towards testing the next relevant support near the 1.2560-1.2555 horizontal zone, looks like a distinct possibility.
On the flip side, any positive move back above the 1.2645-1.2650 confluence support breakpoint might continue to attract fresh sellers ahead of the 1.2700 mark and remain capped. A sustained strength beyond the said handle, however, will suggest that the recent corrective decline has run its course and lift the GBP/USD pair beyond the 1.2720-1.2725 supply zone, towards the 1.2800 mark. Bulls might eventually aim to challenge the multi-month top, around the 1.2860 region touched on June 12, and lift spot prices further towards the 1.2900 round figure.
Gold Price Forecast: XAU/USD struggles with $2,300, not out of the woods yet
398540 June 27, 2024 11:40 FXStreet Market News
- Gold price attempts a bounce from two-week lows below $2,300 early Thursday.Â
- The US Dollar tracks the USD/JPY retreat, despite firmer Treasury bond yields and softer risk tone. Â
- Gold price appears ‘sell the bounce’ trade amid bearish daily RSI, having breached $2,300 on Wednesday.
Gold price is languishing in two-week lows just shy of the $2,300 level early Thursday, with buyers lacking conviction due to the sustained strength in the US Treasury bond yields.
Gold price looks to top-tier US economic data Â
The US Dollar (USD), however, fails to hold near two-month highs against its major currency rivals, despite a dour market mood and firmer US Treasury bond yields higher, as it follows a moderate pullback in the USD/JPY pair from near multi-decade highs of 160.87.
The renewed selling seen around the US Dollar is helping Gold price stall the downtrend. Further, a broader market risk-off sentiment ahead of FridayÂ’s US PCE inflation data and SundayÂ’s French election could also cushion the downside in Gold price.
However, all eyes turn to the US first-quarter final Gross Domestic Product (GDP) revision, Pending Home Sales and Durable Goods Orders data for fresh hints on the health of the economy, which could offer fresh cues on the timing of the US Federal Reserve (Fed) first interest rate-cut this year.
Data on Wednesday showed that “sales of new US single-family homes dropped to a six-month low in May as a jump in mortgage rates weighed on demand,” per Reuters. The reading failed to derail the ongoing US Dollar upswing, as US Treasury bond yields continued to capitalize on the recent hawkish commentaries from Fed officials.
in the second half of TuesdayÂ’s trading, in the face of US Federal Reserve (Fed) Governor Michelle BowmanÂ’s hawkish comments.
Fed Governor Michelle Bowman said earlier this week that “we are still not yet at the point where it is appropriate to lower the policy rate.” Meanwhile, Governor Lisa Cook argued that the timing of the rate cut is unclear even though “Inflation has slowed, and the labor market tightness has eased.”
Markets are now pricing in about a 62% chance of a Fed rate cut in September, a tad lower than the 68% seen on Monday, according to CME FedWatch Tool.
Additionally, the Greenback gathered strength on a cautious market mood after US tech companies fell in late trading in the last American session. US tech giants took a hit in late US hours after Micron Technology Inc.’s outlook failed to meet the lofty industry expectations.
Gold price technical analysis: Daily chart
 
Despite the pause in the recent decline, Gold price remains exposed to downside risks, as the 14-day Relative Strength Index (RSI) remains below the 50 level.
Therefore, any rebound in Gold price could be seen as a dead cat bounce, suggesting that the bright metal remains a good selling opportunity. Â Â
Adding credence to the bearish potential, the previous weekÂ’s 21-day Simple Moving Average (SMA) and the 50-day SMA bearish crossover continue acting as a headwind.
If sellers gather strength, a test of the June low at $2,287 will be inevitable, below which the May 3 low at $2,277 will be in the spotlight.
The last line of defense for Gold buyers is seen at the upward-sloping 100-day SMA at $2,252.
Conversely, Gold price needs to take out the 21-day SMA at $2,327 on a daily closing basis to revive the recovery from the monthly low of $2,287. Â Before that upside hurdle, Gold buyers must regain the $2,300 threshold.
Further up, the 50-day SMA at $2,338 will be eyed, followed by the two-week high of $2,366.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safeÂ’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Thursday 27th June 2024: Technical Outlook and Review
398539 June 27, 2024 11:17 ICMarkets Market News
DXY (US Dollar Index):
Potential Direction: Bullish
Overall momentum of the chart: Bullish
Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards 1st resistance.
Pivot: 105.92
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up for price to resume the uptrend.
1st support: 105.72
Supporting reasons: Identified as a pullback support, suggesting a significant area where price could find strong support to halt any further downward movements.
1st resistance: 106.48
Supporting reasons: Identified as a multi-swing-high resistance, indicating a historical point where previous rallies have faced selling pressure or reversed.
EUR/USD:
Potential Direction: Bullish
Overall momentum of the chart: Bearish
Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 1.0671
Supporting reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up.
1st support: 1.0634
Supporting reasons: Identified as a pullback support, suggesting a significant area that could halt any further downward movements.
1st resistance: 1.0715
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement level, indicating a historical point where previous rallies have faced selling pressure or reversed.
EUR/JPY:
Potential Direction: Bearish
Overall momentum of the chart: Bearish
Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards 1st resistance
Pivot: 170.87
Supporting reasons: Identified as an overlap support that aligns with a 23.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up for price to resume the uptrend.
1st support: 169.57
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement level, suggesting a significant area where previous declines have found strong support.
1st resistance: 172.97
Supporting reasons: Identified as a resistance that aligns with a 161.80% Fibonacci extension level, indicating a potential zone where selling pressures could intensify.
EUR/GBP:
Potential Direction: Bearish
Overall momentum of the chart: Neutral
Price could rise towards the pivot and potentially make a bearish reaction off this level to drop towards the 1st support.
Pivot: 0.8490
Supporting reasons: Identified as a pullback resistance that aligns with a 38.2% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.
1st support: 0.8435
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement level, suggesting a significant area where previous declines have found strong support.
1st resistance: 0.8536
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement level, indicating a historical point where previous rallies have faced selling pressure or reversed.
GBP/USD:
Potential Direction: Bullish
Overall momentum of the chart: Neutral
Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 1.2606
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.
1st support: 1.2511
Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, suggesting a significant area where previous declines have found strong support.
1st resistance: 1.2702
Supporting reasons: Identified as a pullback resistance that aligns with a 38.2% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.
GBP/JPY:
Potential Direction: Bearish
Overall momentum of the chart: Bullish
Price is trading close to the pivot and could potentially make a bearish reaction off this level to drop towards the 1st support.
Pivot: 203.04
Supporting reasons: Identified as a pullback resistance that aligns with a confluence of Fibonacci levels i.e. the 61.8% projection and the 161.8% extension, indicating a significant area where selling pressures could intensify.
1st support: 201.37
Supporting reasons: Identified as an overlap support, suggesting a potential area where buying interests could pick up to resume the uptrend.
1st resistance: 204.60
Supporting reasons: Identified as a resistance that aligns with a 78.6% Fibonacci projection level, indicating a potential area that could halt further upward movement.
USD/CHF:
Potential Direction: Bearish
Overall momentum of the chart: Neutral
Price could rise towards the pivot and potentially make a bearish reaction off this level to drop towards the 1st support.
Pivot: 0.8989
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.
1st support: 0.8918
Supporting reasons: Identified as a pullback support, suggesting a significant area where previous declines have found strong support.
1st resistance: 0.9060
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt further upward movement.
USD/JPY:
Potential Direction: Bullish
Overall momentum of the chart: Bullish
Price is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 159.39
Supporting reasons: Identified as a pullback resistance that aligns with a 23.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up for price to resume the uptrend.
1st support: 158.33
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement level, suggesting a significant area where price could find strong support.
1st resistance: 162.51
Supporting reasons: Identified as a resistance that aligns with a 127.2% Fibonacci extension level, indicating a potential area that could halt further upward movement.
USD/CAD:
Potential Direction: Bullish
Overall momentum of the chart: Bullish
Price is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 1.3677
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement level, indicating a potential area where buying interests could pick up.
1st support: 1.3645
Supporting reasons: Identified as a swing-low support that aligns close to a 78.6% Fibonacci retracement level, suggesting a potential area where previous declines have found strong support.
1st resistance: 1.3722
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.
AUD/USD:
Potential Direction: Bearish
Overall momentum of the chart: Neutral
Price is rising towards the pivot and could potentially make a bearish reaction off this level to drop towards the 1st support.
Pivot: 0.6679
Supporting reasons: Identified as a pullback resistance that aligns with a 78.6% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.
1st support: 0.6634
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement level, suggesting a significant area where price has found support recently.
1st resistance: 0.6706
Supporting reasons: Identified as a multi-swing-high resistance, indicating a significant area where previous rallies have faced strong selling pressures.
NZD/USD
Potential Direction: Bearish
Overall momentum of the chart: Bearish
Price could rise towards the pivot and potentially make a bearish reaction off this level to drop towards the 1st support.
Pivot: 0.6100
Supporting reasons: Identified as a pullback resistance that aligns with a 23.6% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.
1st support: 0.6037
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement level, indicating a potential area that could halt further downward movement.
1st resistance: 0.6144
Supporting reasons: Identified as a pullback resistance that aligns with a 50% Fibonacci retracement level, suggesting a significant area where selling pressures could intensify.
US30 (DJIA):
Potential Direction: Bullish
Overall Momentum of the Chart: Neutral
Price could fall towards the pivot and potentially make a bullish reaction off this level to rise towards the 1st resistance.
Pivot: 39,945.31
Supporting Reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement level, indicating a potential area where buying interests could pick up for price to resume the uptrend.
1st Support: 38,793.10
Supporting Reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, suggesting a significant area where price has found support recently.
1st Resistance: 39,622.34
Supporting Reasons: Identified as an overlap resistance that aligns close to 78.6% Fibonacci retracement level, indicating a significant area where previous rallies have faced strong selling pressures.
DE40 (DAX):
Potential Direction: Bullish
Overall Momentum of the Chart: Neutral
Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 18,059.47
Supporting Reasons: Identified as a pullback support that aligns close to a 78.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up.
1st Support: 17,980.50
Supporting Reasons: Identified as a swing-low support, indicating a significant area where price has found strong support recently.
1st Resistance: 18,272.20
Supporting Reasons: Identified as a pullback resistance, indicating a significant area where selling pressures could intensify.
US500 (S&P 500):Â
Potential Direction: Bullish
Overall momentum of the chart: Bullish
Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 5,448.66
Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up to resume the uptrend.
1st support: 5,404.64
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, indicating a significant area where price has found strong support recently.
1st resistance: 5,514.06
Supporting reasons: Identified as a pullback resistance that aligns close to a 78.6% Fibonacci projection level, suggesting a critical area where selling pressures may intensify and potentially halt further upward movement.
BTC/USD (Bitcoin):
Potential Direction: Bullish
Overall momentum of the chart: Bearish
Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 59,267.78
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.
1st support: 56,802.43
Supporting reasons: Identified as a swing-low support, indicating a significant area where price has found strong support previously.
1st resistance: 61,967.65
Supporting reasons: Identified as a pullback resistance, indicating a potential barrier where selling pressures could intensify.
ETH/USD (Ethereum):
Potential Direction: Bullish
Overall Momentum of the Chart: Bearish
Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 3,276.36
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.
1st Support: 3,064.03
Supporting Reasons: Identified as a pullback support that aligns close to a 78.6% Fibonacci retracement level, indicating a significant area where price has found support recently.
1st Resistance: 3,422.86
Supporting Reasons: Identified as a pullback resistance that aligns with a 50% Fibonacci retracement level, indicating a historical barrier where selling pressures may be encountered.
WTI/USD (Oil):
Potential Direction: Bullish
Overall Momentum of the Chart: Neutral
Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.
Pivot: 80.91
Supporting Reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up.
1st Support: 79.43
Supporting Reasons: Identified as a pullback support, indicating a significant area where price could find strong support.
1st Resistance: 82.42
Supporting Reasons: Identified as a pullback resistance, indicating a potential barrier where selling pressures may be encountered.
XAU/USD (GOLD):
Potential Direction: Bullish
Overall momentum of the chart: Neutral
Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards 1st resistance.
Pivot: 2,286.33
Supporting reasons: Identified as a multi-swing-low support, indicating a potential area where buying interests could pick up to stage a minor rebound.
1st support: 2,265.71
Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement level, suggesting a significant area where price could find support.
1st resistance: 2,334.42
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.
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Ethereum ETFs may launch on July 4, could see 40% rally afterwards
398537 June 27, 2024 11:17 FXStreet Market News
- Ethereum ETFs could launch on July 4, reports Reuters.
- Ethereum could see a 40% rally two months after spot ETH ETF goes live, says StoneX.
- Ethereum may need to shed 4% of its value before staging a comeback.
Ethereum (ETH) is down 1% on Wednesday following reports that the Securities & Exchange Commission (SEC) could approve spot ETH ETFs on July 4. Meanwhile, brokerage and financial services firm, StoneX, predicted ETH to see a 40% gain in two months after ETH ETFs go live.
Daily Digest Market Movers: July 4 launch, 40% ETH price growth
According to a recent Reuters report on Wednesday, the SEC could approve spot ETH ETFs by July 4, citing sources from industry insiders.
The report stated that the SEC could give the greenlight on July 4 “as talks between asset managers and regulators enter the final stages, industry executives and other participants told Reuters.” The July 4 prediction aligns with earlier speculations from Bloomberg analyst Eric Balchunas, who speculated that ETH ETFs might launch around July 2.
Prospective spot ETH ETF issuers filed their amended S-1 registration statements with the SEC last week following comments from the agency. The SEC approved issuers’ 19b-4 applications on May 23 but also needs to greenlight their S-1s before ETH can begin trading.
A recent analysis by StoneX predicts that the launch of spot Ethereum ETFs could trigger a 40% growth in ETH’s price two months after they go live. In a wider time frame, StoneX’s model predicts that ETH’s price will be between $2,142 and $12,621 over the next two years.
The company mentioned that its “conservative” predictions are due to the belief that NFTs won’t see more mainstream attention as they did in 2021. The analysis also suggested that video games and real-world assets (RWA) — which many believe will boost TVL and user adoption — may not see tangible growth.
The StoneX analysis follows Bloomberg analyst Eric Balchunas’s suggestion that ETH ETFs will capture lower net flows than Bitwise CIO Matt Hougan predicted because “ETH futures ETF were a borderline flop.”
Hougan predicted that spot Ethereum ETFs will attract up to $15 billion in net flows by the end of 2025. He arrived at the $15 billion figure by analyzing Ethereum’s relative market cap compared to Bitcoin, international crypto ETFs volume, Grayscale Ethereum Trust conversion, and the Bitcoin “carry trade.”
Yeah, I thought about that. It’s a fair question.
The largest ETH futures ETF (EETH) is only ~5% the size of the largest BTC futures ETF (BITO). I didn’t adjust things downwards for two primary reasons:
1) My gut just says futures products are different;
2) At Bitwise, ourÂ…
— Matt Hougan (@Matt_Hougan) June 26, 2024
Meanwhile, SEC Chair Gary Gensler commented in a Bloomberg event on Tuesday that the process of launching spot Ethereum ETFs is “going smoothly.” He stated that the products going live depend on asset managers making full disclosures in their registration statements.
ETH technical analysis: Could Ethereum shed 4% of its valueÂ
Ethereum is trading around $3,350 on Wednesday, down nearly 1.2% in the past 24 hours. ETH’s total liquidations in the past 24 hours have reached $21.82 million, with long positions accounting for 61% of liquidations and shorts 39%.
ETH open interest (OI) has been declining — although at a slow pace — sitting at $15.09 billion today. This indicates that traders are more cautious, especially as wider bearish sentiment seems to be overshadowing bullish sentiment around the potential launch of spot ETH ETFs.
Ethereum’s 30-day Market Value to Realized Value (MVRV) ratio is at -7%, indicating all addresses that purchased ETH within the last 30 days are at an average loss of 7%. Historically, ETH often rebounds when the 30-day MVRV reaches -15% to -17%.
ETH/USDT 4-hour chart
As a result, ETH may need to shed 4% of its value to collect liquidity around the fair value gap of May 20, extending from $3,110 to $3,457 before a fresh rise. The $3,203 key support level could prove crucial in the potential decline to help ETH bounce back up.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
Full Article
WTI moves below $80.00 due to a surprise build on US crude stockpiles
398536 June 27, 2024 11:12 FXStreet Market News
- WTI price loses ground as a surprise build on US crude stockpiles raised concerns about weakening demand.
- US EIA Crude Oil Stocks Change increased by 3.591 million barrels in the previous week, against an expected decline of 3.000 million barrels.
- US crude Oil imports reached 3.1 million barrels per day in May, the highest since July 2022.
West Texas Intermediate (WTI) crude Oil price edges lower to near $80.30 during the Asian session on Thursday, retreating further from a two-month high of $81.65. Crude Oil prices received pressure after a surprise build on US crude stockpiles raised concerns about weakening demand in the worldÂ’s top Oil consumer.
On Wednesday, US Energy Information Administration data showed that US Crude Oil Stocks Change increased by 3.591 million barrels in the week ending June 21, defying market expectations for a 3.000 million-barrel decline.
Ongoing geopolitical tensions in the Middle East and Ukraine could further fuel the prices of the Oil prices. Israeli Prime Minister Benjamin Netanyahu has stated that the most “intense” phase of the attack against Hamas in Gaza is nearing its end, according to CNN. Meanwhile, Russia has condemned the US for a “barbaric” strike in Crimea, which utilized US-provided missiles, resulting in the deaths of at least four people, including children, and injuring 151 others, per NBC News.
However, last month, US crude Oil imports surged to their highest level in nearly two years, driven by refiners acquiring heavy crudes from Canada and Latin America to produce fuels for the summer driving season. In May, US crude Oil imports reached 3.1 million barrels per day (bpd), the highest since July 2022, according to ship tracking service Kpler. So far this month, imports have remained robust, averaging around 2.9 million bpd, as reported by Reuters.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. APIÂ’s report is published every Tuesday and EIAÂ’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
IC Markets Asia Fundamental Forecast | 27 June 2024
398535 June 27, 2024 11:05 ICMarkets Market News
IC Markets Asia Fundamental Forecast | 27 June 2024
What happened in the U.S. session?
New home sales have been mixed over the past 12 months with sales swinging between growth and decline as high home prices and elevated mortgage rates pushed many potential home buyers onto the sidelines. MayÂ’s reading showed sales falling lower from 698K in the previous month to 619K, missing the estimate of 636K. However, sales figures for April were revised notably higher from 634K to 698K.
The median sales price of new houses sold in May 2024 was $417.4K while the average sales price was $520K and the estimated inventory of new houses for sale at the end of May was 481K, representing just 9.3 months of supply at the current sales rate. To sum up, it was a mixed sales report as the dip in the number of new homes sold in May was offset by the higher revision for the month of April. Prior to the release of this data point, the dollar index (DXY) had hit an overnight high of 106.13 but it pulled back slightly towards 106 by the end of this. session.
What does it mean for the Asia Session?
The DXY remained elevated above the 106-level while spot prices for gold hovered above $2,290/oz. Overhead pressures for this precious metal have been building since last Friday and have driven prices lower. Meanwhile, the significant rise in crude oil prices have stalled in recent days with WTI oil ranging between $80.90 and $82.40 per barrel – this commodity looks set to extend its sideways price action as the day progresses.
The Dollar Index (DXY)
Key news events today
GDP (12:30 pm GMT)
Unemployment Claims (12:30 pm GMT)
What can we expect from DXY today?
The final GDP result for the first quarter of 2024 will be released today and it is expected to show a marginal improvement over the second estimate of 1.3%. Economic output is now anticipated to rise 1.4% QoQ which is still significantly lower than the previous quarterÂ’s print of 3.4%.
Meanwhile, unemployment claims have climbed higher over the past four weeks with each reading coming higher than its respective forecast, highlighting a worryingly increasing trend. Higher-than-expected claims are typically signs of a softening of the U.S. labour market and should claims continue to climb higher once again, it could place the dollar under heavy selling pressures, especially if the final GDP result also misses its estimate.
Central Bank Notes:
- The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
- The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year.
- The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the CommitteeÂ’s 2% inflation objective.
- Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
- In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
- In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the CommitteeÂ’s goals.
- In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
- The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
- Next meeting runs from 30 to 31 July 2024.
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
GDP (12:30 pm GMT)
Unemployment Claims (12:30 pm GMT)
What can we expect from Gold today?
The final GDP result for the first quarter of 2024 will be released today and it is expected to show a marginal improvement over the second estimate of 1.3%. Economic output is now anticipated to rise 1.4% QoQ which is still significantly lower than the previous quarterÂ’s print of 3.4%.
Meanwhile, unemployment claims have climbed higher over the past four weeks with each reading coming higher than its respective forecast, highlighting a worryingly increasing trend. Higher-than-expected claims are typically signs of a softening of the U.S. labour market and should claims continue to climb higher once again, it could place the dollar under heavy selling pressures, especially if the final GDP result also misses its estimate – such results could potentially boost gold prices during the U.S. session.
Next 24 Hours Bias
Weak Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The Aussie hit an overnight low of 0.6640 and remains under pressure despite the higher-than-anticipated monthly CPI reading which triggered a brief surge during yesterday’s Asia session. This currency pair was trading around 0.6645 as Asian markets came online – these are the support and resistance levels for today.
Support: 0.6630
Resistance: 0.6685
Central Bank Notes:
- The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
- Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
- The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
- Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
- The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
- Next meeting is on 6 August 2024.
Next 24 Hours Bias
Weak Bullish
The Kiwi Dollar (NZD)
Key news events today
Matariki (Bank Holiday)
What can we expect from NZD today?
As it is a bank holiday in New Zealand, lower trading activity for the Kiwi can be expected during the Asia session but trading activity could pick up in the latter part of the day. This currency pair was trading around 0.6080 at the beginning of the Asia session – these are the support and resistance levels for today.
Support: 0.6040
Resistance: 0.6150
Central Bank Notes:
- The Monetary Policy Committee kept the OCR unchanged at 5.50% for the seventh meeting in a row and agreed that interest rates need to remain at a restrictive level for a sustained period to ensure annual headline CPI inflation returns to the 1 to 3% target range.
- Restrictive monetary policy is contributing to an easing in capacity pressures while headline inflation, core inflation, and most measures of inflation expectations are continuing to decline. However, domestic inflation has fallen more slowly than expected and headline CPI inflation remains above the CommitteeÂ’s target band.
- Higher dwelling rents, insurance costs, council rates, and other domestic services price inflation have resulted in a slow decline in domestic inflation, posing a risk to inflation expectations.
- GDP declined by 0.1% in the December 2023 quarter with economic growth having now been negative for four of the past five quarters. High interest rates have reduced household spending, as well as residential and business investment, despite very strong population growth. Recent indicators of economic activity have been weak, as expected.
- Next meeting is on 10 July 2024.
Next 24 Hours Bias
Weak Bullish
The Japanese Yen (JPY)
Key news events today
Tokyo Core CPI (11:30 pm GMT)
What can we expect from JPY today?
Core CPI in Tokyo is expected to edge higher from 1.9% to 2.0% YoY in June, which would mark the second consecutive month of higher prices. Although core inflation continues to remain under the BoJ’s target of 2%, a higher-than-anticipated reading for the Tokyo’s core CPI could raise concerns for the BoJ as higher inflationary pressures could force the BoJ to raise interest rates at its next policy meeting – a move that could strengthened the yen.
Central Bank Notes:
- The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
- The Bank of Japan decided on the following measures:
- The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
- The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
- Underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
- In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
- The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
- JapanÂ’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
- Next meeting is on 31 July 2024.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
Stronger demand for the dollar drove the Euro to an overnight low of 1.0666. This currency pair was trading around 1.0680 as Asian markets came online – these are the support and resistance levels for today.
Support: 1.0680
Resistance: 1.0750
Central Bank Notes:
- The Governing Council today decided to lower the three key ECB interest rates by 25 basis points after nine months of holding rates steady.
- Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 4.25%, 4.50% and 3.75% respectively, with effect from 12 June 2024.
- Since September 2023, inflation has fallen by more than 2.5% and the inflation outlook has improved markedly while underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons.
- At the same time, despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year – the latest Eurosystem staff projections for both headline and core inflation have been revised up for 2024 and 2025 compared with the March projections.
- Projections now show headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026 while economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.
- The Council also confirmed that it will reduce the Eurosystem’s holdings of securities under the pandemic emergency purchase programme (PEPP) by €7.5 billion per month on average over the second half of the year.
- The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
- Next meeting is on 18 July 2024.
Next 24 Hours Bias
Weak Bullish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
Higher demand for the greenback lifted USD/CHF to as high as 0.8983 overnight. This currency pair hovered above 0.8960 at the beginning of the Asia session – these are the support and resistance levels for today.
Support: 0.8835
Resistance: 0.9000
Central Bank Notes:
- The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
- The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
- The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
- Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
- Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
- Next meeting is on 26 September 2024.
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
BoE Gov Bailey Speaks (9:30 am GMT)
What can we expect from GBP today?
BoE Governor Andrew Bailey will be holding a press conference on financial stability in London where he could shed more light on the outlook for future monetary policy in the U.K. following last weekÂ’s central bank announcement. Cable dropped to an overnight low of 1.2615 as overhead pressures grew strongly.
Central Bank Notes:
- The Bank of EnglandÂ’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
- Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
- Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
- Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two yearsÂ’ time and 1.6% in three years.
- UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
- UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
- The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
- Next meeting is on 1 August 2024.
Next 24 Hours Bias
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
Stronger demand for the greenback lifted USD/CAD to an overnight high of 1.3708. This currency pair was edging higher towards 1.3720 as Asian markets came online – these are the support and resistance levels for today.
Support: 1.3645
Resistance: 1.3725
Central Bank Notes:
- The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.75% while continuing its policy of balance sheet normalization.
- CanadaÂ’s economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR but consumption growth was solid at about 3%, and business investment and housing activity also increased.
- Inflation remains above the 2% target and shelter price inflation is high but total CPI inflation has declined consistently over the course of this year, and indicators of underlying inflation increasingly point to a sustained easing.
- CPI inflation has eased from 3.4% in December to 2.7% in April while the preferred measures of core inflation have come down from about 3.5% last December to about 2.75% in April and the 3-month rate of core inflation slowed from about 3.5% in December to under 2% in March and April.
- In the labour market, businesses are continuing to hire workers as employment has been growing, but at a slower pace than the working-age population while elevated wage pressures look to be moderating gradually.
- The Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour.
- Recent data has increased the councilÂ’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
- Next meeting is on 24 July 2024.
Next 24 Hours Bias
Medium Bullish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Following in the footsteps of the API stockpiles, the EIA crude oil inventories also unexpectedly experienced an inventory build of 3.6M barrels of crude versus the estimate of a 2.6M-drawdown. Despite inventories growing this week – which reflect weaker demand for crude in the U.S. – oil prices remain elevated with WTI oil trading above $80.90 per barrel and are likely to range between this lower bound and the upper bound of $82.40 as the day progresses.
Next 24 Hours Bias
Weak Bearish
The post IC Markets Asia Fundamental Forecast | 27 June 2024 first appeared on IC Markets | Official Blog.
USD/CAD flat lines around 1.3700, looks to US macro data for fresh impetus
398534 June 27, 2024 11:05 FXStreet Market News
- USD/CAD struggles to capitalize on a two-day-old recovery trend from a three-week through.
- The Fed rate-cut uncertainty caps the upside for the USD and acts as a headwind for the pair
- A downtick in Crude Oil prices undermines the Loonie and lends some support to the major.
The USD/CAD pair seesaws between tepid gains/minor losses during the Asian session on Thursday and for now, seems to have stalled its goodish rebound from the 1.3620-1.3615 region, or a three-week low touched on Tuesday. Spot prices currently trade near the 1.3700 mark, nearly unchanged for the day as traders now await the release of US macro data before placing fresh directional bets.
The market focus will remain squarely on the US Personal Consumption Expenditures (PCE) Price Index on Friday, which is seen as the Federal Reserve’s (Fed) preferred inflation gauge. This will play a key role in influencing market expectations about the Fed’s future policy decisions, which, in turn, will drive the US Dollar (USD) demand and provide some meaningful impetus to the USD/CAD pair. In the meantime, Thursday’s US economic docket – featuring the final Q1 GDP print, Durable Goods Orders, the usual Initial Weekly Jobless Claims and Pending Home Sales – will be looked upon for short-term trading opportunities.Â
Ahead of the key releases, the uncertainty about the likely timing of when the Fed will start its rate-cutting cycle fails to assist the USD to capitalize on the previous day’s rally to the highest level since early May. The Canadian Dollar (CAD), on the other hand, continues to draw support from reduced bets for a July rate cut by the Bank of Canada (BoC), especially after data released on Tuesday showed an upward surge in the domestic consumer inflation in May. This, in turn, is seen capping the upside for the USD/CAD pair, though a downtick in Crude Oil prices undermines the commodity-linked Loonie and acts as a tailwind.
The Energy Information Administration (EIA) reported a surprise jump in US inventories on Wednesday, which fuels concerns about sluggish demand from the world’s top Oil consumer and weighs on the black liquid. That said, worries about potential supply disruptions in Russia and the Middle East should help limit deeper losses for Crude Oil prices. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further near-term appreciating move for the USD/CAD pair.
Economic Indicator
Personal Consumption Expenditures – Price Index (YoY)
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Gold price languishes near two-week low, seems vulnerable below $2,300 mark
398532 June 27, 2024 10:40 FXStreet Market News
- Gold price struggles to register any meaningful recovery from a two-week low set on Wednesday.
- The FedÂ’s hawkish stance, higher US bond yields, and recent USD strength have acted as a headwind.
- Geopolitical tensions and political uncertainty help limit the downside for the safe-haven metal.
Gold price (XAU/USD) oscillates in a range just below the $2,300 mark during the Asian session on Thursday and consolidates its recent losses to a nearly two-week low touched the previous day. The Federal Reserve (Fed) adopted a more hawkish stance and projected only one interest rate cut in 2024 at the end of the June policy meeting. Adding to this, the recent comments from a slew of influential FOMC members suggested that the central bank is unlikely to kickstart its rate-cutting cycle anytime soon. The hawkish outlook lifts the US Treasury bond yields to over a two-week high and the US Dollar (USD) to its highest level since early May, which, in turn, is seen acting as a headwind for the non-yielding yellow metal.
Apart from this, the underlying bullish tone across the global equity markets suggests that the path of least resistance for the safe-haven Gold price is to the downside. That said, the markets are still pricing in the possibility of two rate cuts by the Fed this year in the wake of signs that inflation in the US is subsiding. This, along with persistent geopolitical tensions and political uncertainty, lends some support to the XAU/USD. Bears also seem reluctant to place aggressive bets and prefer to wait for the release of the crucial US Personal Consumption Expenditures (PCE) Price Index on Friday. In the meantime, Thursday’s US economic docket might produce short-term opportunities later during the North American session.Â
Daily Digest Market Movers: Gold price is undermined by higher US bond yields and a stronger USD
- The Federal Reserve’s higher-for-longer interest rates narrative remains supportive of elevated US Treasury bond yields and a bullish US Dollar, which undermines the non-yielding Gold price.
- A government report published on Wednesday showed that New Home Sales registered the steepest decline since September 2022 and plunged 11.3% in May to 619K, or the lowest level since November.
- The USD bulls, however, seem rather unaffected by the data, which added to the evidence that the world’s largest economy is slowing down amid the recent signs of easing inflationary pressures.Â
- The Fed projected only one rate cut in 2024, though the markets are still pricing in a greater chance of the first rate cut by the Fed in September and about two 25 basis points cuts by the year-end.Â
- The uncertainty over the likely timing and the number of Fed rate cuts this year keeps a lid on any further USD appreciation and lends support to the XAU/USD amid persistent geopolitical tensions.
- Traders also seem reluctant ahead of the US presidential debate and the release of the US Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge – on Friday.
- Heading into the key data risk, Thursday’s US macro data – the final Q1 GDP print, Durable Goods Orders, Initial Weekly Jobless Claims, and Pending Home Sales – might provide some impetus.
Technical Analysis: Gold price could accelerate the fall once the $2,285 horizontal support is broken
From a technical perspective, the recent failure to build on the momentum beyond the 50-day Simple Moving Average (SMA) and the subsequent downfall favors bearish traders. Moreover, the overnight breakdown through a short-term ascending trend-line support near the $2,314 area validates the near-term negative outlook. Given that oscillators on the daily chart have been gaining negative traction, some follow-through selling below the $2,285 horizontal support has the potential to drag the Gold price to the 100-day SMA support near the $2,250 area. The downward trajectory could extend further towards the $2,225-2,220 region before the XAU/USD eventually drops to the $2,200 round-figure mark.
On the flip side, any attempted recovery now seems to face resistance near the $2,314-2,315 support breakpoint. A sustained strength beyond might trigger a short-covering rally, though is likely to remain capped near the 50-day SMA, currently pegged near the $2,338-2,340 region. The subsequent move-up could lift the Gold price back to the $2,360-2,365 supply zone, which, if cleared decisively, will negate any near-term negative bias. Bullish traders might then aim to reclaim the $2,400 round-figure mark and challenge the all-time peak, around the $2,450 area touched in May.
Gold FAQs
Gold has played a key role in humanÂ’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesnÂ’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a countryÂ’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.