Solid ECN—Oil prices dipped below the $75.1 support level, testing the $72.6 supply zone. The bearish pressure on the WTI Crude Oil price drove the stochastic oscillator into the oversold territory.
From a technical standpoint, we expected the price to consolidate before the downtrend resumed. That said, the price might bounce to fill the 'fair value gap' at approximately $75.1, which should be monitored for bearish candlestick patterns.
Solid ECN—The GBP/USD pair is in a bear market, trading below the 50 and 100-period simple moving averages. As of this writing, the price of the currency pair is stabilizing below the July 3 high of $1.277.
From a technical standpoint, the bear market is valid as long as the price is below the July 23 low at approximately $1.288. However, the price should dip below the immediate resistance at $1.271 for the downtrend to resume. If this scenario unfolds, the next bearish target will be the $1.261 mark.
Solid ECN—The USD/CAD pair recently declined from 1.394, testing the 100-period simple moving average (SMA) at 1.3786. As of this writing, the price is experiencing a pullback from the critical 1.378 support level. Meanwhile, the immediate resistance stands at 1.383, reinforced by the broken 50-period SMA.
From a technical standpoint, the uptrend will likely resume if the bulls close and stabilize the price above the 50-period SMA, approximately 1.383. Should this occur, the next target would likely be 1.388.
Conversely, if the bears push the price below the 100-period SMA, the downtrend could extend to the next key support at 1.375.
EUR/USD at $1.09: Key Factors Impacting the Market
Solid ECN—The Euro remained steady at $1.09 after reaching a seven-month high of $1.091. Traders are carefully analyzing the monetary and economic outlook. Poor economic data from the US has sparked fears of a significant slowdown or a potential recession in the world's largest economy, increasing the likelihood that the Fed may need to cut interest rates more sharply.
In Europe, traders expect more rate cuts from the ECB. They predict a total reduction of 90 basis points this year, with a 50 basis point cut expected in September. On a positive note, German factory orders unexpectedly rose by 3.9% in July, offering some hope for recovery in the struggling manufacturing sector.
BoE's Expected Rate Cuts Shake GBP/USD and Bond Yield
Solid ECN—The British pound has dropped to $1.27, nearing a one-month low, as investors predict quicker interest rate cuts by the Bank of England. This decrease coincides with growing fears of a US recession, leading to British government bond yields hitting new multi-month lows. Markets are expecting the BoE to implement two quarter-point rate cuts by December.
On Monday, interest rate futures predicted 56 basis points of cuts for this year, up from 47 basis points expected on Friday. Additionally, two-year gilt yields, sensitive to changes in borrowing costs, decreased by 8 basis points to 3.526%, the lowest since April 2023. Last week, the BoE reduced its benchmark interest rate from a 16-year high of 5.25% to 5.0%, marking the first cut since 2020.
AUD/USD Hits Near One-Week High Amid RBA and Fed Speculations
Solid ECN—The Australian dollar climbed to around $0.655, reaching a nearly one-week high as investors assessed the latest monetary policy decisions from the Reserve Bank of Australia. The currency also gained from expectations that the US Federal Reserve might lower interest rates more aggressively soon.
On Tuesday, the RBA kept the cash rate at 4.35% for the sixth consecutive meeting, which was widely anticipated. Despite this, the central bank highlighted that inflation is still too high, and there won't be any rate cuts in the near future.
The RBA noted a positive outlook for domestic demand, driven by increased public spending and a rebound in household consumption. Additionally, data revealed that Australia's industry index remained in contraction for the 27th straight month in July due to weak domestic and external demand.
Solid ECN—WTI crude oil futures climbed to around $77 per barrel on Monday, marking the fifth consecutive day of gains. The rise is mainly due to ongoing supply concerns amid rising tensions in the Middle East.
Over the weekend, reports surfaced that an Israeli airstrike on a school used as a shelter in Gaza led to the deaths of at least 80 people and injured nearly 50 others. In addition, Hamas expressed doubts about participating in upcoming ceasefire talks scheduled for Thursday.
Oil prices were supported by positive economic data from last week, particularly strong US job numbers, which eased fears of a potential recession. Moreover, expectations for a US interest rate cut grew after some Federal Reserve officials suggested on Friday that inflation might be slowing enough to consider lowering rates as soon as next month, potentially increasing oil demand.
Gold Holds Steady as Markets Await Key US Inflation Data
Solid ECN—Gold prices held steady around $2,440 per ounce on Monday as investors awaited key US inflation data later this week, which could provide insight into the Federal Reserve's next moves on interest rates.
Many still expect the Fed to lower rates in September, with some officials suggesting last week that inflation may be slowing enough to justify a rate cut next month. However, after substantial US job numbers, the previous week eased fears of a recession, there is now some disagreement in the market about how significant the rate cut might be.
Gold's appeal as a haven also remained strong, bolstered by ongoing geopolitical tensions, including reports of another Israeli airstrike on Gaza and Moscow's warning of a 'tough response' to Ukraine's actions in Russia.
Investors will closely watch US producer inflation data on Tuesday and consumer inflation figures on Wednesday.
Solid ECN—Silver prices rose above $27 per ounce, recovering from a drop that had pushed the price to a three-month low of $26.8 on August 6th. This increase was supported by a broader recovery in precious metals as market volatility eased, reducing the need to sell bullion to meet margin calls.
The softer stance expected from the Federal Reserve also helped boost silver prices. The central bank is anticipated to cut rates by 100 basis points this year.
Additionally, the PBoC and the BoE implemented looser monetary policies. However, concerns about weak global manufacturing activity limited silver's appeal as an industrial metal. The ISM PMI declined more than expected, highlighting sluggish factory activity in the US, while China's official and Caixin PMI figures also fell short of expectations.
Solid ECN—The gold price is overbought, testing the August 2 high at $2,477. The primary trend remains bullish, as the price is above the 50 and 100-period simple moving averages.
However, we expect the price to dip and test the July 17 low at $2,451 before the uptrend resumes. Moreover, if the price breaks below $2,451, the consolidation phase will likely resume near the July 24 high at $2,431.
Solid ECN—Bitcoin’s 1-hour chart formed a bat pattern, testing the ascending trendline at approximately $58,700. The bullish outlook should be invalidated if the price dips below the ascending trendline. In this scenario, the decline will likely extend to $56,657.
Conversely, the $61,896 could be targeted if the bulls (buyers) close and stabilize the price above the descending trendline and the $60,467 immediate resistance.
Solid ECN—Ethereum formed a butterfly pattern in the daily chart. As of writing, the ETH/USD pair is testing the 100-period simple moving average, while the stochastic oscillator is approaching the overbought territory on the 4-hour chart.
From a technical perspective, if the price remains above the ascending trendline and the 50-period SMA, Ethereum's outlook will likely involve testing the July 25 low at $3,083.
On the other hand, a dip below the August 12 low at $2,506 would cancel the bullish outlook. In this scenario, the next supply zone would be $2,303, followed by $2,111.
Solid ECN—Litecoin trades in the bullish channel, testing the 100-period SMA in today's trading session. Meanwhile, the stochastic oscillator signals an overbought market; however, the candlestick patterns do not give a sell signal.
The technical outlook for the LTCUSD pair will remain bullish. However, for the bull market to resume, the price must close above the 100 SMA. If this scenario unfolds, the next target will be the July 25 low at $66.7.
Moreover, the $58 level plays as the primary support for the bullish scenario. If this level is breached, the bullish outlook will be invalidated.
