KVB Market Analysis | 19 September: Ethereum Rises Above $2,330 Amid Fed Rate Cut and ETF Outflows

Product: XAU/USD

Prediction: Increase

Fundamental Analysis: 

Gold prices fluctuated within the $2,550-$2,600 range during the North American session after the Federal Reserve (Fed) cut rates by 50 bps. The Fed also projected that the fed funds rate would end 2024 around 4.4%, according to the median estimate. At the time of writing, XAU/USD had erased its previous gains and is down by over 0.20%. Fed policymakers decided to lower borrowing costs as they grew confident that inflation is moving sustainably toward the bank’s 2% goal. However, they acknowledged that the dual mandate on price stability and maximum employment are roughly balanced while noting that the economic outlook is uncertain.

Technical Analysis: 

Gold price remains volatile during the North American session, but it remains bullish after hitting a new all-time high of $2,600. However, buyers failed at the latter, which could pave the way for a pullback. Momentum favors buyers, though short-term sellers are in control, as the Relative Strength Index (RSI) aims lower. If XAU/USD drops below the September 13 low of $2,556, the next support would be $2,550. Once cleared, the next stop would be the August 20 high, which turned into support at $2,531, before aiming toward the September 6 low of $2,485. On the upside, if Gold continues to rally, the first resistance would be $2,600. A breach of the latter will expose the psychological levels $2,650 and $2,700.

Product: EUR/USD

Prediction: Increase

Fundamental Analysis: 

EUR/USD soared into a fresh high for September after the Federal Reserve (Fed) surprised markets with a full 50 bps rate cut on Wednesday, pushing risk appetite into the high side and sending traders scrambling for the buy button. This marks the first Fed rate cut in over four years. Following the Fed's first rate cut since 2020, markets eased back to where they began, with Fiber settling back into the 1.1100 handle. The Fed's dot plot of the Federal Open Market Committee's (FOMC) Summary of Economic Projections was also revised downward from the central bank's previous rate outlook. The median policy expectations from the Fed now see the Fed Funds rate at 4.4% by year-end 2024 and 3.4% by year-end 2025, down from 5.1% and 4.1%, respectively.

Technical Analysis: 

Further EUR/USD advances likely face early resistance around the September high of 1.1189 (September 18), before reaching the 2024 top of 1.1201 (August 26) and the 2023 peak of 1.1275 (July 18). Instead, the pair's next downward target is the September low of 1.1001 (September 11), ahead of the temporary 55-day SMA at 1.0975 and the weekly low of 1.0881 (August 8). The critical 200-day SMA comes next at 1.0867, prior to the weekly low of 1.0777 (August 1) and the June low of 1.0666. Meanwhile, the pair's upward trend is projected to continue as long as it remains above the key 200-day SMA. The four-hour chart reveals a potential for some consolidation in the short-term horizon. That said, the initial resistance level is at 1.1189, followed by 1.1201 and 1.1275. On the other hand, the 55-SMA at 1.1078 provides temporary support, followed by the 200-SMA at 1.1049, and finally 1.1001. The relative strength index (RSI) rose past 64.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis: 

The USD/JPY pair gains traction around 143.55 on Thursday during the early European session. The uptick of the major pair is bolstered by the recovery of the US Dollar (USD). Investors will shift their attention to the Bank of Japan (BoJ) interest rate decision on Friday. The Federal Reserve (Fed) cut its interest rates by 50 basis points (bps) to 4.75%- 5.00% at the September meeting on Wednesday. Fed Chairman Jerome Powell stated during the press conference that the move was "strong" but needed as price rises ease and job market concerns grow.

Technical Analysis: 

USD/JPY plumbed the depths of 140.80 on Wednesday after the Federal Reserve (Fed) dropped a 50 bps rate cut on markets. This marks the Fed's first rate cut in over four years as US central bank policymakers race to catch up to market expectations. Investors had initially hoped for a first rate cut from the Fed in March.

Product: ETH

Prediction: Increase

Fundamental Analysis: 

Ethereum (ETH) is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's (Fed) decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds (ETF) recorded $15.1 million in outflows. Ethereum and the general crypto market are seeing buying momentum after the Fed reduced interest rates by 50-basis-points to 4.75% - 5% on Wednesday. The move marks the first rate cut since March 2020, when the agency slashed interest rates to 0%.

Technical Analysis: 

Ethereum is trading around $2,330 on Wednesday after seeing a rejection near $2,395 on Tuesday. In the past 24 hours, ETH has seen over $22 million in liquidations, with long and short liquidations accounting for $17.69 million and $5.19 million, respectively.

Ethereum is trading within a key rectangle channel with resistance and support levels at $2,395 and $2,207, respectively. A descending trendline extending from May 27 and the 50-day and 200-day Simple Moving Averages (SMAs) also stand as potential resistance.

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