Today's analysis: XAU/USD Drops as U.S. Bond Yields Rise and Hawkish Fed Comments Emerge

Product: XAU/USD

Prediction: Decrease

Fundamental Analysis:

U.S. government bond yields rose on Tuesday, and the dollar started to recover after Federal Reserve Board member Bowman made some hawkish comments. Gold prices dropped sharply after hitting a weekly high of $2,334. The Federal Reserve expects U.S. inflation to remain high for some time and sees a risk of inflation rising further, so it's not a good time to cut interest rates. Gold traders are now waiting for the PCE Price Index, the Fed's preferred inflation measure. If this data comes in lower than expected, it could rekindle hopes for interest rate cuts next year.

Technical Analysis:

The next support level for gold prices is $2,300. If it falls below this level, the price is expected to drop to the May 3 low of $2,277, and then to the March 21 high of $2,222. On the other hand, if gold prices recover to $2,350, they will aim for key resistance levels, such as the June 7 cycle high of $2,387 and then challenge $2,400. As long as gold stays below $2,340.10 the bearish trend remains unchanged. The main target for gold is $2,272.06.

Product: EUR/USD

Prediction: Increase 

Fundamental Analysis:

On Wednesday, the EUR/USD stayed around familiar levels, hovering just above $1.0700 as traders waited for important data releases. Market activity was low, with traders expecting new data to drive movements starting on Thursday. The economic calendar for Wednesday was light, but traders noted that the latest German GfK Consumer Confidence Survey for July is expected to slightly improve from -20.9 to -18.9.

Technical Analysis:

If the EUR/USD rebound gathers pace, the next target is the 200-day SMA at 1.0789, seconded by the weekly top of 1.0852 (June 12) and the June peak of 1.0916 (June 4). The breakout of this level exposes the March high of 1.0981 (March 8), prior to the weekly high of 1.0998 (January 11) and the important 1.1000 yardstick.

If bears gain control, the pair may initially revisit the June low of 1.0667 (June 14), ahead of the May low of 1.0649 (May 1), and lastly the 2024 bottom of 1.0601 (April 16).

So far, the 4-hour chart has shown some hints of renewed deterioration. The initial resistance occurs at 1.0761, followed by 1.0805 and 1.0852. The first support emerges at 1.0667, followed by 1.0649 and 1.0601. The Relative Strength Index (RSI) has stabilised at approximately 43.

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis:

The USD/JPY pair remains strong at $159.73 but hasn't successfully broken through the $160 mark. Several high-ranking Japanese officials have threatened to intervene. There is increasing speculation about a surprise interest rate hike in Japan in July. This has made the market closely watch Japan's economic indicators, which has put pressure on further USD/JPY buying. After a poor performance in the first quarter of 2024 and disappointing economic indicators in the second quarter, the impact of the yen's devaluation on the economy will become a key focus.

Technical Analysis:

The USD/JPY is hovering above the 50-day and 200-day EMAs, confirming a bullish price signal. If USD/JPY returns to $160 and reaches the April 29 high of $160.209, it might push higher to $161. On the other hand, if USD/JPY falls below $158, it could lead to a bearish move near the 50-day moving average. Dropping below the 50-day moving average might signal a decline towards the support level of $151.685. The 14-day RSI is at 68.46, indicating that USD/JPY might reach the April 29 high of $160.209 before entering the overbought zone.

Product: BTC/USD

Prediction:Increase  

Fundamental Analysis:

Bitcoin fell below $60,000 for the first time since early May, leading to a widespread sell-off in crypto assets. On Tuesday, cryptocurrencies generally went up. Bitcoin rose over 3% to $61,916.60 on June 25. This happened as Nvidia and the Nasdaq Composite Index rebounded after having their worst day since April in the previous trading session. When the stock market turns down, we might also see a panic sell-off in cryptocurrencies. There is no fundamental reason for this, other than market sentiment and possibly needing to raise cash for margin calls.

Technical Analysis:

This view is supported by market analyses, which say that Bitcoin's price staying around key levels like $60,000 is important for keeping positive market sentiment. The support zone is between $55,000 and $58,000, highlighting the importance of the 200-day moving average, now at $57,500. Watching these levels is crucial for investors to understand potential risk areas and prepare for major price changes.

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