KVB Today's Analysis: Gold Bullion Gains Strength Amid Fed's Dovish Stance on Interest Rates

Product: XAU/USD

Prediction: Increase

Fundamental Analysis: 

In the subsequent commentary some Fed officials stated that they are ready to start cutting interest rates if needed but emphasised that there is no urgency in it for the time being. Despite still persistent inflationary risks, the markets have seen this as a positive sign resulting in the larger buying pressure for the bullion. At the moment the markets are implying a 66.3% (+3% since PCE release) chance of a rate cut in June. Lower interest rates may benefit zero-yielding gold.

Technical Analysis: 

Gold is trading above key simple moving averages (21, 50 & 100-period SMAs), underscoring the current strong bullish momentum. An immediate resistance – target level is set at $2050 round number (yesterdays high), while to the downside the 50-period SMA (~2033.069) is set to provide an immediate support. Relative strength index indicator is positioned well below (60.03) the upper boundary (>70 – overbought, <30 – oversold), indicating a potential for further upward movement.

Product: EUR/USD

Prediction: Decrease

Fundamental Analysis: 

The euro is having a relatively good July when measured against the U.S. dollar, but BCA Research sees tough times ahead for the eurozone, and advises investors to sell the single currency. At 08:50 ET (12:50 GMT), EUR/USD traded at 1.0818, down 0.4% on the day, but up around 1% over the last month .Despite these gains for the EUR/USD pair, BCA Research suggests investors should adopt a defensive posture regarding European assets as it sees the likelihood of a recession ahead. The European Central Bank cut its benchmark interest rates in early June, ahead of the U.S. Federal Reserve and the Bank of England, and is expected to further relax monetary policy twice more this year. However, the two additional cuts this year priced in will be too little too late, said analysts at the Canadian investment research company, in a note dated July 29.

Technical Analysis: 

EUR/USD is back at the 200 and 50-day moving averages. You can see below, they are very tightly wound up and are providing the market near term support ahead of the key FOMC meeting and Non-Farm Payroll report this week. Although the Fed is expected to keep rates unchanged, there is a good chance they could lean dovish based on some recent economic data points. Also, many feel that the jobs report could show some weakness in the economy as well on Friday. With both of these factors in play, being long the EURUSD near the 1.0800 level may be the play, especially with the bullish pennant developing. Above the 1.0880 level would confirm the bullish setup. Below the 1.0773 would negate this setup.

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis: 

The Japanese yen appreciated against a basket of major currencies on Wednesday, one week ahead of the much-anticipated Bank of Japan (BoJ) meeting. The BoJ mentioned in their June meeting that details around reducing their balance sheet will be made available at the end of this month after disappointing market hopefuls last month. Japan is in the slow process of policy normalisation whereby it is expected to hike rates to a neutral that is neither stimulatory nor restrictive – said to be anywhere between 0.5% and 1.5% - but is weighing up encouraging inflation data against less than stellar consumption data. It is hoped that reduced taxes and higher wages would stimulate a rise in local consumption and household sentiment to such a degree that the inflation target of 2% is likely to be breached consistently.

Technical Analysis: 

The weekly USD/JPY chart reveals the anticipated Q3 trading range, highlighting both the upward drift at the start of the quarter, followed by the much-anticipated move lower as the yen claws back significant losses. The next level of significance is the 151.90 level of support which marked the moment Tokyo decided to intervene in the FX market back in 2022.

Product:BTC/USD

Prediction: Increase

Fundamental Analysis: 

Bitcoin declined earlier in the week but eventually staged a recovery. This recovery reflects the optimism building ahead of Trump's appearance at the Bitcoin conference. The crypto will look to get as close as possible to the all-time highs. bitcoin experienced a volatile week, initially dipping to support levels before staging a strong recovery. The cryptocurrency bounced back from a low of $63,450 to reach a high of $67,000, representing a 5% move. The upcoming Bitcoin Conference, featuring a speech by Donald Trump, has contributed to the recent upward momentum. The market has a history of pricing in positive developments related to the former US president.

Technical Analysis: 

Over the past week, Bitcoin has established $65,000 as a key support area. A secondary support level has formed around $63,500, aligning with short-term EMA values. Maintaining a price above $65,000 is crucial for Bitcoin to attract new buyers and sustain its uptrend. On the upside, Bitcoin encountered intermediate resistance at $68,000 this week, corresponding to the Fib 0.786 level from the June retracement. Key levels to watch are $65,300 and $67,850, which will influence the trend's direction. If Bitcoin closes the week around $68,000, it could aim for a new record high next week. Should Bitcoin break its previous record level, the short-term target price zone remains between $75,000 and $80,000.

Market Analysis Disclaimer: 

The market analysis provided by KVB Prime Limited is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any financial instrument. Trading forex and other financial markets involves significant risk, and past performance is not indicative of future results. 

KVB Prime Limited does not guarantee the accuracy, completeness, or timeliness of the information provided in the market analysis. The content is subject to change without notice and may not always reflect the most current market developments or conditions.

Clients and readers are solely responsible for their own investment decisions and should seek independent financial advice from qualified professionals before making any trading or investment decisions. KVB Prime Limited shall not be liable for any losses, damages, or other liabilities arising from the use of or reliance on the market analysis provided.

By accessing or using the market analysis provided by KVB Prime Limited, clients and readers acknowledge and agree to the terms of this disclaimer.

RISK WARNING IN TRADING

Transactions via margin involve products that use leverage mechanisms, carry high risks, and are certainly not suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be wary of those who guarantee profits in trading. You are advised not to use funds if you are not prepared to incur losses. Before deciding to trade, ensure that you understand the risks involved and also consider your experience.