EURUSD, Gold Analysis: Stable Dollar and Growing Haven Demand
EURUSD, Gold Analysis: Despite weaker PMI results across the Eurozone, the EURUSD is maintaining its bullish momentum just below the 1.12 mark. Meanwhile, gold is holding firm at its record highs, driven by a stable dollar and escalating geopolitical tensions.
Share this:
- EUR PMI results fall below expectations
- US Flash Services PMI results remain strong, manufacturing PMIs weaken
- FOMC members are open to more significant rate cuts
- Middle East tensions fortify grounds for haven investments
- Technical Analysis: DXY, EURUSD, Gold
PMI Results
On Monday, flash manufacturing and services PMI across France, Germany, the Eurozone, the UK, and the US showed disappointing results. German business activity fell at the fastest rate in seven months, while French economic activity also slowed following the Olympics. With this cooling trend, dovish monetary policies are likely in the next ECB meeting. ECB President Lagarde’s speech on Thursday could provide further insights.
FOMC Member Insights
With labor market worries in the headlines, alongside the rate cut magnitude that reflected more than anticipated weakness in the US economy, FOMC members are open to further easing given the contractionary impact of the current rates.
This Friday’s US Core PCE alongside next Friday’s US Non-farm payrolls can alter the views and expectations for the next policy. FOMC member Goolsbee noted that labor market deterioration can happen faster than central banks can respond, increasing the likelihood of large-scale rate cuts unless economic data improves significantly.
EURUSD, DXY Analysis: 3 Day Time Frame – Log Scale
Source: Tradingview
Both the EURUSD and the DXY are consolidating ahead of a potential breakout or reversal. The DXY is torn between haven demand and a dovish Fed, while the EURUSD is trading near its highs despite weak PMI data and a stable Dollar (for now). With the US elections looming, market uncertainty is high, and gold continues to rise as a safe-haven investment.
EURUSD Analysis: Weekly Time Frame – Log Scale
Source: Tradingview
The EURUSD remains stable near 1.12, needing additional momentum to continue its upward trend. Since the 2022 lows, the pair has been showing a bullish bias, but a breakout above 1.12 and 1.13 is needed to confirm the continuation of this trend.
Bullish Scenario: A break above 1.12 and 1.13 could push the pair towards the 1.15 zone.
Bearish Scenario: Support lies between 1.10 and 1.09. A drop back into the consolidation range could signal a bearish move towards 1.0780 and 1.0680.
Gold Analysis: 3 Day Time Frame – Log Scale
Source: Tradingview
Gold has been in a strong uptrend, respecting the boundaries of its ascending parallel channel since the Israel-Hamas conflict began in October 2023. As we near the one-year mark of the war, gold continues to be viewed as a safe-haven asset, bolstered by the uncertainty surrounding the dollar, upcoming US elections, and developing geo-political conflicts.
Bullish Scenario: Gold has upside potential towards $3,000, with potential key resistance levels above 2660 at 2,710, 2,760, and 2,890.
Bearish Scenario: A pullback from current highs could find support at 2,580, 2,540, and 2,500. In a more extreme case, a break below 2,470 could see gold testing the June 2024 lows near 2,300.
--- Written by Razan Hilal, CMT - on X: @Rh_waves
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold outlook: XAU/USD hammered, stretched and vulnerable to a sharp rebound
Gold is getting hammered for solid fundamental reasons, but history suggests extreme four-hourly oversold conditions can produce violent countertrend rallies.
EUR/USD, USD/JPY Outlook: Oil, yields and an FX identity crisis
Crude oil is setting the tone across rates and FX, leaving EUR/USD vulnerable and USD/JPY caught between higher Treasury yields and the growing threat of intervention
Gold forecast: Rising yields become too hot for gold, but the outlook is far from bearish
Gold and silver prices took a plunge today, with the former down 3% and the latter falling some 5% by mid European session, before bouncing off their lows. The losses come after the metals remained largely supported until last week, despite the big dollar rally and surging bond yields as we have seen in recent weeks. But it simply got too much, and the metals succumbed to pressure today.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.