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Currencies Technical Analysis

US Dollar on Weak Footing as Markets Focus on Central Bank Speak

Forex Today: US Dollar on Weak Footing as Markets Focus on Central Bank Speak The US Dollar (USD) started the final trading day of the third quarter under pressure, struggling to find demand amid mixed economic data and growing anticipation of central bank commentary. As the markets gear up for speeches from key Federal Reserve (Fed) policymakers, including Chairman Jerome Powell, traders are paying close attention to economic indicators that could provide insight into future monetary policy decisions. Several key events across global markets, including Consumer Price Index (CPI) data from Germany and manufacturing reports from China, are also influencing currency movements. Additionally, the US stock futures point to a marginally lower opening, further highlighting the cautious mood among investors. US Dollar Struggles Amid Weak Economic Data and Fed Commentary The US Dollar Index (DXY), which tracks the USD against a basket of major currencies, turned bearish on Friday, hitting its lowest level in over a year at 100.15. This weakness was primarily driven by softer-than-expected inflation data from the US, specifically the core Personal Consumption Expenditures (PCE) Price Index, which rose by just 0.1% in August—below the market expectation of 0.2%. As a result, the US Dollar remained on the back foot, with the index staying below 100.50 early Monday. Federal Reserve’s Dovish Tone Weighs on the Dollar Several Federal Reserve policymakers are scheduled to speak on Monday, and their remarks are expected to influence the market’s perception of the Fed’s future rate hike trajectory. Fed Chairman Jerome Powell is set to participate in a moderated discussion at the National Association for Business Economics Annual Meeting, where investors will be closely monitoring his comments for any signs of a shift in the Fed’s outlook on inflation and interest rates. Earlier in the day, Fed Governor Michelle Bowman is also expected to deliver a speech, and her views on inflation and economic growth could provide additional insight into the Fed’s policy stance. Given the recent softer-than-expected inflation data, market participants are speculating that the Fed may adopt a more dovish tone, potentially delaying further interest rate hikes or even considering rate cuts shortly. Core PCE Data Highlights Softer Inflation The key inflation indicator that traders were watching last week was the core PCE Price Index, which rose by just 0.1% month-over-month in August, marking a slowdown in price pressures. This data reinforced the view that inflation may be cooling, reducing the urgency for the Fed to raise rates aggressively. As a result, the USD’s appeal has waned, with the currency struggling to recover from its recent losses. Global Economic Data: China, Australia, and the UK in Focus In addition to the US, several other major economies released important economic data on Monday, influencing the movement of their respective currencies. China, Australia, and the UK were particularly in focus, with each nation presenting unique challenges and opportunities for traders. China’s Economic Data Shows Continued Slowdown China’s manufacturing and services sectors continued to show signs of weakness, according to the latest data released on Monday. The Caixin Manufacturing PMI for September fell to 49.3, down from 50.4 in August, signaling a contraction in manufacturing activity. Similarly, the Caixin Services PMI edged lower to 50.3 from 51.6 in the previous month, indicating slower growth in the services sector. In an effort to combat the economic slowdown, the People’s Bank of China (PBoC) is reportedly planning to lower mortgage rates for existing home loans by October 31. This move is part of China’s broader strategy to support the struggling property sector and stimulate economic growth. Despite these efforts, the weak PMI data points to continued challenges for the Chinese economy, which could weigh on global risk sentiment in the coming weeks. Australia’s Business Confidence Improves In contrast to China, Australia’s economic outlook brightened on Monday, as the ANZ Business Confidence Index surged to 60.9 in September from 50.6 in August. This improvement reflects growing optimism among Australian businesses, buoyed by stronger domestic demand and a more stable global economic environment. The Australian Dollar (AUD) responded positively to the upbeat data, with the AUD/USD pair rising to its highest level since February 2023, trading above 0.6900. UK Revises GDP Growth Lower The UK’s Office for National Statistics revised its estimate for second-quarter GDP growth down to 0.7%, from the previously reported 0.9%. Despite the downward revision, the British Pound (GBP) managed to hold onto modest gains, with GBP/USD trading just below 1.3400. The revised GDP figure underscores the UK’s ongoing economic challenges, particularly as the country grapples with high inflation and weak consumer demand. Key Currency Movements As traders digest the latest economic data and central bank commentary, several major currency pairs are exhibiting notable movements, driven by both domestic factors and global risk sentiment. USD/JPY Continues to Decline After a sharp drop on Friday, where USD/JPY lost more than 1.5% on a daily basis, the pair continued to edge lower on Monday, nearing the 142.00 level. The Japanese Yen (JPY) has been gaining ground amid growing speculation of a snap election in Japan. Over the weekend, various Japanese media outlets reported that incoming Prime Minister Shigeru Ishiba is considering holding a snap election on October 27, which could lead to the dissolution of parliament by October 9. The political uncertainty is boosting demand for the safe-haven Yen, pushing USD/JPY lower. EUR/USD Trades in a Narrow Range The EUR/USD pair has been relatively quiet in early European trading, fluctuating in a narrow range above 1.1150. With Germany’s CPI data set to be released later in the day, traders are awaiting further clarity on the inflation outlook for the Eurozone’s largest economy. In the meantime, the Euro has managed to hold its ground against the weakened US Dollar, supported by expectations of continued hawkishness from the European Central Bank (ECB). Gold Holds Steady Amid Cautious Market Sentiment After reaching a new all-time high above $2,680 last Thursday, gold prices registered modest losses on Friday. However, XAU/USD has since stabilized and is trading in a tight

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Analysis Commodities Gold Market Forecasts

Gold Price Trends Down Amid Positive Risk Sentiment

Gold Price Trends Down Amid Positive Risk Sentiment; Geopolitical Risks and Fed Rate Cut Bets Limit Downside Gold price (XAU/USD) continues to face selling pressure for the second consecutive day, although its downside appears limited by ongoing geopolitical risks and expectations of a dovish Federal Reserve (Fed). Despite trading with a negative bias, the precious metal remains within close range of its all-time peak, which was reached just last week. A modest uptick in the US Dollar (USD), along with a prevailing risk-on sentiment driven by China’s stimulus measures, is currently exerting downward pressure on gold. However, several factors are keeping losses for the safe-haven commodity in check, including bets on further Fed rate cuts and ongoing geopolitical risks in the Middle East. Traders are now looking to Fed Chair Jerome Powell’s speech for further clues on market direction. Gold Faces Selling Pressure but Downside is Limited For the second day in a row, gold prices are seeing some selling pressure, but follow-through selling is lacking. The optimism surrounding China’s stimulus package, aimed at boosting its slowing economy, has dampened demand for gold as a safe-haven asset. Despite this, the XAU/USD remains within striking distance of its record high, showcasing strong underlying support amid volatile global conditions. China’s Stimulus Measures Drive Risk-On Sentiment China’s central bank, the People’s Bank of China (PBoC), announced fresh stimulus measures, including a reduction in mortgage rates for existing home loans, effective by October 31. This follows last week’s comprehensive fiscal, monetary, and liquidity support measures, which collectively represent China’s most significant stimulus package since the pandemic. As a result, global market sentiment has turned optimistic, with risk-on assets gaining traction and safe-haven flows into gold reducing. Modest US Dollar Recovery Adds to Gold’s Pressure A modest recovery in the US Dollar is also contributing to the downward pressure on gold. However, this upside in the USD is tempered by expectations of further rate cuts by the Federal Reserve, limiting any significant downside movement for the non-yielding yellow metal. Currently, market pricing indicates a strong likelihood of the Fed cutting borrowing costs by 50 basis points during its next meeting in November, following a half-point reduction in September. Geopolitical Tensions Provide Support for Gold While the global risk tone has improved, geopolitical tensions continue to provide a safety net for gold prices. Ongoing conflicts in the Middle East, particularly between Israel and Iran-backed militant groups, are keeping traders cautious and preventing any substantial downside movement for gold. Escalating Conflict in the Middle East Israel has expanded its military operations, launching airstrikes against targets in Lebanon and Yemen, which has heightened fears of a broader regional conflict. Israel’s confrontations with Hezbollah and the Houthis have escalated, with the Israeli military killing several key leaders, including Nabil Kaouk, the deputy head of Hezbollah’s Central Council. The possibility of further escalation and the risk of drawing in other global powers like Iran and the United States adds to the uncertainty, fueling demand for gold as a safe-haven asset. Fed’s Dovish Stance Keeps a Lid on Dollar Gains The Federal Reserve’s dovish tone is another key factor limiting any meaningful recovery in the US Dollar, which in turn supports gold prices. St. Louis Fed President Alberto Musalem’s recent remarks suggest that the central bank may continue with gradual rate cuts after its aggressive policy easing in September. This expectation of further monetary policy loosening is preventing the USD from gaining significant strength, which in turn reduces the pressure on gold prices. XAU/USD Daily Price Chart Source: TradingView, prepared by Richard Miles Market Movers: Daily Digest Technical Outlook: Gold’s Bullish Potential Remains Intact From a technical standpoint, gold prices remain in a long-term uptrend, with an ascending trend channel breakout still in play. Despite recent selling pressure, the downside seems limited, and several key support levels are likely to prevent any significant decline. Key Support Levels to Watch The first major support level is seen around the $2,625 region, a former resistance point now acting as a crucial line of defense for the bulls. If this level is breached, the next significant support zone lies around $2,600, followed by an intermediate level near $2,560. A decisive break below these levels could accelerate the slide toward $2,535-$2,530. Immediate Resistance Levels On the flip side, the gold price is facing immediate resistance at the $2,670-$2,671 range, followed by the recent all-time high at $2,685-$2,686, which was touched last Thursday. A breakout above this zone could open the door for further gains, with the next psychological barrier at the $2,700 mark. A sustained move above this level would likely trigger a fresh wave of buying, pushing gold into a new multi-month rally. Gold Awaits Key Catalysts While gold faces some selling pressure due to the risk-on sentiment and a modest USD recovery, its downside remains limited by geopolitical tensions and expectations of further Fed rate cuts. As traders look ahead to Fed Chair Jerome Powell’s speech, the precious metal will likely remain range-bound, with key support and resistance levels providing a framework for near-term price action. Geopolitical risks and dovish Fed expectations are expected to act as tailwinds for gold, while China’s stimulus measures and the broader risk-on environment could limit any significant upside. Gold bulls remain on the sidelines for now, but the precious metal’s bullish potential remains intact with plenty of potential catalysts on the horizon.

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Commodities Gold

Gold Hits New High After Fall in US Consumer Confidence

Gold Hits New High After Fall in US Consumer Confidence Overview: Gold Soars as US Consumer Confidence Declines Gold (XAU/USD) surged to a new all-time high of $2,670 per troy ounce on Wednesday, following a significant drop in US Consumer Confidence. The unexpected economic data has heightened speculation that the Federal Reserve (Fed) may implement more drastic easing measures, including deeper interest rate cuts. This has proven favorable for Gold, which benefits from a lower interest rate environment. Additionally, geopolitical tensions and China’s aggressive economic stimulus further contributed to Gold’s rally, solidifying its status as a safe-haven asset. Impact of US Consumer Confidence Data on Gold The Conference Board Consumer Confidence Index, which measures the confidence of US consumers in the economy, fell sharply in September to 98.7 from 105.6 in August. This figure was well below the consensus estimate of 103.9, signaling growing pessimism about the economy. Lower consumer confidence often foreshadows economic slowdown, prompting investors to seek safer investments, such as Gold. The disappointing data has increased the probability that the Fed will take more aggressive action to support the economy, including further interest rate cuts. According to the CME FedWatch tool, the market-based probability of a 50 basis point (bps) interest rate cut has risen to 60%, up from 50% before the release of the Consumer Confidence data. Such expectations are positive for Gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like the yellow metal, making it more attractive to investors. XAU/USD Daily Price Chart Source: TradingView, prepared by Richard Miles China’s Economic Stimulus and Its Effect on Gold China’s Massive Stimulus Push China’s recent announcement of the largest economic stimulus package since the COVID-19 pandemic has also played a significant role in boosting Gold prices. The People’s Bank of China (PBOC) introduced measures aimed at reviving the flagging Chinese economy, including aggressive cuts to borrowing costs. Lower borrowing costs in China can lead to increased liquidity in global financial markets, benefiting assets like Gold, which thrives in an environment of monetary easing. Geopolitical Tensions Add to Safe-Haven Demand Beyond economic data, escalating geopolitical tensions in the Middle East have further supported the rise in Gold prices. On Tuesday, Israel carried out additional airstrikes targeting Hezbollah in Lebanon, heightening fears of broader regional conflict. In times of geopolitical uncertainty, investors tend to flock to safe-haven assets like Gold to hedge against potential risks. This added demand has contributed to Gold’s rally, reinforcing its upward momentum. Federal Reserve’s Outlook and Its Influence on Gold Fed’s Easing Prospects and Gold’s Performance The decline in US consumer confidence has reinforced market expectations that the Fed will take more drastic steps to ease monetary policy. In particular, the probability of a 50 bps rate cut shortly has increased substantially, supporting Gold’s upward trajectory. Lower interest rates are generally favorable for Gold, as they reduce the appeal of interest-bearing assets, encouraging investors to turn to the non-interest-paying precious metal. However, commentary from Federal Reserve Governor Michelle Bowman on Tuesday did introduce some caution. Bowman, known for her hawkish stance, suggested that a smaller rate cut, starting with a 25 bps reduction, might better reflect the underlying strength of the US economy. Her comments may have tempered some of the optimism surrounding a more aggressive rate-cutting cycle, but the overall outlook remains supportive for Gold. Technical Analysis: Gold Extends Strong Uptrend The Trend is Your Friend: Gold’s Continued Rally Gold’s breakout to new highs on Wednesday continues to align with the long-standing principle in technical analysis that “the trend is your friend.” Gold has been rallying across all timeframes—short, medium, and long-term—reinforcing the likelihood of further upside. The next key targets for Gold are the psychological round numbers of $2,700 and $2,750. A decisive break above the $2,670 peak will confirm the continuation of the uptrend, with these levels serving as potential price objectives for the coming sessions. Overbought Conditions and Potential for a Correction Despite Gold’s strong rally, technical indicators suggest caution. The Relative Strength Index (RSI) on the daily chart has entered overbought territory, indicating that the asset may be due for a correction. Overbought conditions typically advise traders against adding to long positions, as the probability of a pullback increases. If Gold exits overbought territory, it could signal that a deeper correction is unfolding. In such a scenario, traders may consider closing their long positions and initiating short positions, as a correction could bring prices down to key support levels. Key Support Levels for Gold In the event of a pullback, Gold is likely to find firm support at several important levels. The first support zone is around $2,600, which corresponds to the September 18 high. If Gold falls further, additional support lies at $2,550, followed by $2,544, which is the 0.382 Fibonacci retracement level of the September rally. These support levels are likely to attract buyers, providing a floor for the price during a potential correction. Conclusion: Gold’s Path Forward Gold’s recent surge to a new record high of $2,670 has been driven by a combination of factors, including weaker US consumer confidence, expectations of more aggressive Fed rate cuts, China’s economic stimulus, and escalating geopolitical tensions in the Middle East. The yellow metal has benefited from its status as a safe-haven asset in times of economic uncertainty, and its outlook remains bullish as long as interest rate expectations and geopolitical risks persist. From a technical standpoint, Gold is showing strong upward momentum across all timeframes, with potential targets at $2,700 and $2,750 in the near term. However, traders should be cautious of overbought conditions, as a correction could lead to a pullback toward key support levels at $2,600, $2,550, and $2,544. Ultimately, Gold’s rally appears set to continue, with both fundamental and technical factors aligning to support further gains. As long as the broader macroeconomic environment remains favorable for safe-haven assets, Gold is likely to remain in demand among investors seeking stability in uncertain times.

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Currencies EUR/USD

EUR/USD Aims to Claim 1.1200 as US Dollar Remains Under Pressure

EUR/USD Aims to Claim 1.1200 as US Dollar Remains Under Pressure Overview: EUR/USD Approaching 1.1200 Despite Eurozone Growth Concerns EUR/USD has gained momentum, reaching the 1.1200 level during European trading hours. Despite growing concerns about the economic outlook in the Eurozone, particularly in the manufacturing sector, the Euro has performed strongly against major peers. Meanwhile, the US Dollar remains on the back foot as expectations for a US Federal Reserve (Fed) rate cut and China’s economic stimulus efforts have weakened demand for the Greenback. Euro Resilience Amid Eurozone Economic Woes The Euro’s resilience comes as investors weigh disappointing economic data from the Eurozone. On Monday, the flash HCOB Composite Purchasing Managers Index (PMI), compiled by S&P Global and Hamburg Commercial Bank (HCOB), revealed a contraction, with the index falling to 48.9 in September, the lowest level since January. A reading below 50 indicates a contraction in economic activity, signaling worsening conditions. The primary driver of the Eurozone’s slowdown has been the deeper contraction in the manufacturing sector of its major economies. Notably, Germany’s HCOB Manufacturing PMI slumped to 40.3 in September, marking its lowest level since September 2023 and extending its contraction for 27 consecutive months. In France, the HCOB Composite PMI also returned to a contraction phase following a temporary boost from the one-off Olympic event in August. Despite these concerning data points, the Euro remains buoyed by broader market sentiment. EUR/USD Daily Price Chart Source: TradingView, prepared by Richard Miles ECB Rate Cut Expectations Weigh on the Euro Outlook Looking ahead, the Euro will be closely influenced by the market’s expectations surrounding the European Central Bank’s (ECB) monetary policy. With only two ECB policy meetings remaining in 2024, there is widespread speculation that the central bank will implement at least one interest rate cut. The ECB’s dovish outlook reflects concerns over the Eurozone’s economic prospects, with investors expecting the bank to take action to support growth. Although the expectation of an interest rate cut would typically weaken the Euro, the broader weakness of the US Dollar has offset these concerns, enabling EUR/USD to rise. US Dollar Under Pressure: Key Market Drivers China’s Economic Stimulus and Risk Appetite The US Dollar has faced selling pressure amid rising investor risk appetite, triggered in part by China’s recent economic stimulus announcement. On Tuesday, China revealed a massive stimulus package aimed at reviving its economy, which has been struggling with a prolonged slowdown. This positive news has bolstered global market sentiment, drawing investment away from safe-haven assets like the US Dollar. Typically, when investors feel confident and willing to take on more risk, demand for the US Dollar declines, as the Greenback is often viewed as a safe-haven currency during times of uncertainty. This shift in sentiment has further supported EUR/USD’s upward trajectory. Fed Rate Cut Bets Keep USD on the Back Foot In addition to China’s stimulus, growing expectations of a Federal Reserve rate cut have contributed to the US Dollar’s weakness. The CME FedWatch tool, which tracks market expectations for future Fed policy, indicates that the probability of a 50 basis point (bps) rate cut at the Fed’s November meeting has risen significantly. A week ago, the likelihood of such a cut was 37%, but it has now jumped to 60%. The Fed’s move to ease policy is rooted in concerns over weakening labor demand and inflation dynamics. The central bank already initiated its policy-easing cycle on September 18 with a larger-than-expected 50 bps rate cut. This dovish pivot has created downward pressure on the US Dollar, supporting the EUR/USD’s gains. Upcoming US Data to Provide Direction for the US Dollar Core PCE Inflation Data in Focus The next major event for the US Dollar will be the release of the US core Personal Consumption Expenditures (PCE) Price Index data for August, scheduled for Friday. The PCE data is the Fed’s preferred gauge of inflation and is closely watched by market participants. Expectations are that core PCE inflation will have increased to 2.7% in August, up from 2.6% in July. Any surprises in the PCE data could sway market expectations for future Fed actions, influencing the US Dollar’s direction. US Durable Goods Orders Before the PCE data is released, traders will also monitor the US Durable Goods Orders data for August, due on Thursday. Durable Goods Orders are expected to have declined by 2.6% in August, following a strong 9.8% growth in July. Weaker-than-expected results could further weigh on the US Dollar, reinforcing the likelihood of a Fed rate cut and potentially driving EUR/USD higher. Technical Analysis: EUR/USD Poised for More Upside Above 1.1200 Key Levels to Watch From a technical perspective, EUR/USD is nearing a key resistance level at 1.1200, which it is attempting to break decisively. The pair has shown a robust recovery, bouncing off support near the 20-day Exponential Moving Average (EMA) around 1.1100. As long as EUR/USD holds above the breakout level of its Rising Channel chart pattern, which sits near the psychological support of 1.1000, the outlook remains bullish. However, momentum indicators suggest caution. The 14-day Relative Strength Index (RSI) has dropped to 55.00, indicating that bullish momentum is weakening. Despite this, a successful break above 1.1200 could open the door for further gains, with the next resistance level at the July 2023 high of 1.1276. Support Levels to Watch On the downside, key support zones lie at the psychological level of 1.1000 and the July 17 high near 1.0950. These levels are likely to attract buying interest if EUR/USD experiences a pullback, providing a floor for the pair in the short term. Conclusion: EUR/USD Eyes Further Upside Amid Favorable Conditions As EUR/USD approaches 1.1200, a mix of favorable global market conditions and US Dollar weakness continues to support the pair’s rise. China’s stimulus efforts, growing bets on a Fed rate cut, and the Eurozone’s evolving economic situation are all shaping the currency pair’s trajectory. Key US data releases, particularly the core PCE inflation data, will provide further direction. Technically, a break above 1.1200

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Currencies Forex News News

US Dollar Retreats After Hawkish Comments from Bowman Amid China Stimulu

US Dollar Retreats After Hawkish Comments from Bowman Amid China Stimulus The US Dollar (USD) eased on Tuesday after Federal Reserve Governor Michelle Bowman delivered hawkish remarks, creating uncertainty about the anticipated rate cut in November. Meanwhile, Asian equity markets surged, driven by China’s announcement of a large-scale stimulus plan. The US Dollar Index (DXY) remained in a tight range, unable to break significantly in either direction. China Stimulus Boosts Market Sentiment China’s stimulus measures, announced during early Tuesday’s Asian trading hours, played a significant role in calming markets. The Chinese government introduced a liquidity injection amounting to 500 billion Yuan (CNY), aimed at revitalizing its slowing economy. The stimulus plan includes a key component: a liquidity line from the People’s Bank of China (PBoC), which will allow funds and brokers to access cash for stock purchases. This move has been welcomed by equity markets, with both the Hang Seng and the Shanghai Shenzhen Index closing over 4% higher on Tuesday. The liquidity injection is expected to boost market confidence in China’s economic recovery efforts, which had been faltering due to a series of disappointing economic data releases in recent months. The cash infusion is expected to have far-reaching impacts on global markets, as China is a key player in the world economy. Fed’s Rate Cut Uncertainty Grows After Hawkish Bowman Comments While the Chinese stimulus injected optimism into global markets, traders in the US Dollar market were left uncertain after hawkish comments from Federal Reserve Governor Michelle Bowman. Despite widespread expectations of a rate cut in November, Bowman warned that the Federal Reserve should remain vigilant about inflation risks. She noted that there are still more jobs than people seeking employment, signaling a strong labor market, which could complicate the Fed’s efforts to bring inflation down to its target. Bowman’s comments created some unease among traders, as the market had been expecting a more dovish stance from the Fed. The Fedwatch Tool from the CME Group now shows a 51.5% chance of a more aggressive 50-basis-point rate cut at the November 7 meeting, while the likelihood of a 25-basis-point cut sits at 48.5%. This divergence in expectations is causing uncertainty in the market, with traders hesitant to take strong positions on the USD ahead of more data releases. US Economic Data: Richmond Fed Manufacturing Index and Consumer Confidence On the economic data front, Tuesday saw the release of a relatively light calendar of US indicators. The Richmond Fed Manufacturing Index for September is expected to show a slight improvement, forecasted to rise to -17 from -19 in August. This will be closely watched as a key indicator of the health of the US manufacturing sector, which has been under pressure in recent months due to rising input costs and weakening demand. Additionally, the Housing Price Index for July came in slightly softer than expected at 0.1%, compared to the forecasted 0.2%. The US consumer confidence reading for September, expected at 104.0, will also be a critical indicator to watch. A higher reading would suggest that American consumers remain optimistic about the economy, which could give the USD some support. Geopolitical Tensions: UN Emergency Meeting on Lebanon Adding to the uncertainty in global markets is the escalating geopolitical tension in the Middle East. An emergency United Nations meeting has been called to address the situation in Lebanon, following an intense bombing by Israel over the weekend and on Monday. The conflict has seen casualties rise, with many of the victims being civilians, including women and children. These developments have pushed investors toward safe-haven assets like gold, which surged to new highs on Tuesday. The increased geopolitical risk could also influence the USD as traders assess the potential for further instability in the region and its impact on global markets. US Dollar Index Technical Analysis: Stuck in a Range The US Dollar Index (DXY), which measures the value of the USD against a basket of other major currencies, remained stuck in a narrow range on Tuesday, struggling to break out of September’s bandwidth. The DXY has been trading near yearly lows, and traders are awaiting more data to determine the USD’s next move. From a technical analysis perspective, the upper level of the September range remains at 101.90, with a further upside target at 103.18. Along the way, the 55-day Simple Moving Average (SMA) at 102.51 will provide intermediate resistance. If the DXY continues to rise, it could face resistance at the 100-day SMA at 103.66 and the 200-day SMA at 103.77, just ahead of the key 104.00 round number. On the downside, support is seen at 100.62, the low from December 28, 2023. A break below this level could open the door to further weakness, with the next support level being the July 14, 2023, low at 99.58. If that level fails to hold, the DXY could test early 2023 lows near 97.73. US Treasury Yields: A Mixed Picture US Treasury yields, which are a key driver of the US Dollar’s value, remained relatively stable on Tuesday. The 10-year benchmark rate was trading at 3.79%, flirting with a fresh September high. The direction of Treasury yields will be closely watched in the coming weeks, as they reflect market expectations for future Fed rate cuts. A significant move higher in yields could support the USD, while a decline could weigh on the currency. The US Dollar retreated slightly on Tuesday as traders weighed hawkish comments from Federal Reserve Governor Michelle Bowman against expectations of a significant rate cut in November. Meanwhile, China’s stimulus plan provided a boost to global equity markets, while the DXY remained stuck in a narrow range near yearly lows. With key economic data, including the Richmond Fed Manufacturing Index and consumer confidence readings on the horizon, traders are likely to remain cautious as they assess the USD’s next move. Additionally, geopolitical tensions in the Middle East add another layer of uncertainty, driving safe-haven flows and impacting market sentiment.

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Commodities Gold

Gold Extends to New High Amid China Stimulus and Fed Rate Cut Expectations

Gold Extends to New High Amid China Stimulus and Fed Rate Cut Expectations Gold has surged to a new record high, driven by a combination of factors, including China’s significant economic stimulus measures, expectations of further interest rate cuts by the Federal Reserve, and escalating geopolitical tensions in the Middle East. On Tuesday, gold (XAU/USD) broke through its previous all-time high, reaching an unprecedented $2,640 per troy ounce. Fed Rate Cut Expectations Drive Gold’s Rally One of the primary factors fueling gold’s rally is the market’s anticipation of more aggressive interest rate cuts by the Federal Reserve (Fed). The possibility of a substantial 50 basis points (bps) rate cut by the Fed has gained traction, with the probability of such a cut in November currently standing at 50.2%, according to the CME FedWatch tool. This expectation is driving investors to seek safety in gold, a non-interest-bearing asset, as lower interest rates reduce the opportunity cost of holding it. Comments from various Federal Reserve officials have further influenced market sentiment. For instance, on Monday, Fed Bank of Atlanta President Raphael Bostic, a voting member, adopted a neutral stance on monetary policy, offering little guidance on the Fed’s future actions. In contrast, Fed Bank of Chicago President Austan Goolsbee, a non-voting member, struck a decidedly dovish tone, noting that inflation had “come way down” and suggesting that there would be “many more” rate cuts on the horizon. Similarly, Fed Bank of Minneapolis President Neel Kashkari, another non-voting member, remained neutral in his comments. The market will closely watch Federal Reserve Governor Michelle Bowman’s upcoming speech on Tuesday for further insights into the Fed’s stance on the U.S. economic outlook and monetary policy. China’s Stimulus Boosts Gold’s Appeal Gold’s rally was also bolstered by China’s announcement of its largest economic stimulus package since the COVID-19 pandemic. The People’s Bank of China (PBoC) unveiled a comprehensive set of measures designed to combat deflation and support the economy in achieving its annual growth target of approximately 5.0%. The stimulus package includes a series of interest rate cuts, with the PBoC reducing its seven-day reverse repo rate, now the new benchmark, by 20 basis points to 1.5%. Additionally, the medium-term lending facility rate was lowered by 30 bps to 2.30%, and the one-year and five-year prime rates were cut by 25-30 bps. These measures are aimed at restoring confidence in the world’s second-largest economy, which has been struggling with a series of disappointing economic data points that raised concerns about a prolonged structural slowdown. Furthermore, PBoC Governor Pan Gongsheng announced plans to reduce the reserve requirement ratio (RRR) by 50 bps, potentially freeing up about 1 trillion yuan ($142 billion) for new lending. Pan also hinted that the RRR might be further lowered by an additional 25 to 50 bps later this year, depending on market liquidity conditions. As China is the largest gold market globally, these measures are expected to significantly boost demand for the yellow metal, further supporting its price. Geopolitical Tensions in the Middle East Fuel Safe-Haven Flows The escalating conflict in the Middle East is another critical factor driving safe-haven flows into gold. Israel has intensified its bombing of Hezbollah targets in Lebanon, leading to over 492 deaths, many of whom were women and children, according to the BBC. In retaliation, Hezbollah has launched attacks on military targets in Northern Israel. The situation is becoming increasingly volatile, and experts warn that it could escalate into a full-scale conflict. BBC International Editor Jeremy Bowen suggested that the problem might involve Israel sending tanks and troops into Lebanon, which would mark a significant escalation and potentially draw in other regional powers. If this scenario unfolds, it could trigger further safe-haven flows into gold, pushing its price even higher. Technical Analysis: Gold Surges to $2,640 From a technical perspective, gold’s breakout to new highs on Tuesday signals the continuation of its strong uptrend across long, medium, and short-term timeframes. The “the trend is your friend” principle suggests that the odds favor further upside for gold. The next key resistance levels to watch are the round numbers at $2,650 and $2,700. However, traders should be cautious, as gold has entered overbought territory according to the Relative Strength Index (RSI) on Friday. This overbought condition advises against adding to long positions, as it indicates that a potential correction may be on the horizon. If gold exits the overbought zone, it could signal the start of a deeper correction, with traders likely to close long positions and initiate short positions. In the event of a correction, gold may find firm support at $2,600, which corresponds to the high reached on September 18, followed by additional support at $2,550 and $2,544, the latter being the 0.382 Fibonacci retracement level of the September rally. Gold’s new record high of $2,640 per troy ounce results from a confluence of factors, including China’s significant stimulus measures, expectations of aggressive interest rate cuts by the Fed, and escalating geopolitical tensions in the Middle East. While the technical outlook suggests that gold could continue to rise, traders should be mindful of the potential for a correction, particularly given the metal’s overbought condition. As global economic and political uncertainties persist, gold is likely to remain a favored safe-haven asset for investors.

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Commodities Gold

Gold Supported by Bets on Fed Cuts and Rising Middle East Tensions

Gold Supported by Bets on Fed Cuts and Rising Middle East Tensions Introduction Gold has been on an impressive uptrend, driven by expectations of more interest rate cuts from the Federal Reserve (Fed) and increasing geopolitical tensions in the Middle East. These factors have combined to push gold to new all-time highs, making it an attractive investment amid global uncertainty. Gold’s All-Time High and Market Dynamics Fed Rate Cuts Bolster Gold Gold (XAU/USD) hit a new all-time high (ATH) of $2,631 earlier on Monday before slightly retracing. The precious metal’s rise is largely due to markets anticipating aggressive interest rate cuts by the Federal Reserve. The potential for such cuts makes gold, a non-yielding asset, more appealing to investors, as lower interest rates reduce the opportunity cost of holding it. As markets price in these cuts, the attractiveness of gold increases, driving its value upward. Notably, the People’s Bank of China (PboC) contributed to this trend by lowering its 14-day reverse repo rate by 10 basis points (bps) to 1.85% and injecting additional liquidity into the financial system. This move likely added to gold’s allure, as it signaled a broader trend of easing monetary policies that could support higher gold prices. Middle East Tensions Increase Safe-Haven Demand Adding to the momentum, rising geopolitical tensions between Israel and Lebanon have heightened demand for gold as a safe-haven asset. Over the weekend, Israel launched strikes on targets in Lebanon, prompting retaliatory rocket strikes from Hezbollah. The situation has escalated, with the possibility of a full-scale ground invasion by Israel. Such a scenario would likely push gold prices even higher as investors seek refuge in safe-haven assets amidst global instability. Gold’s Rally: The Role of Fed Policy Expectations Market Pricing of Fed Rate Cuts Gold’s rally to new ATHs is also fueled by market expectations of further rate cuts by the Federal Reserve. The CME FedWatch tool currently suggests a 51.6% chance of a 50 bps (0.50%) cut at the Fed’s next meeting in November, compared to a 48.4% probability of a smaller 25 bps cut. This indicates that investors are leaning towards the likelihood of more aggressive easing measures, which would continue to support gold’s uptrend. Recent comments from Federal Reserve Bank of Philadelphia President Patrick Harker hinted at a potential softening in the labor market. However, Harker also warned that the decline in inflation could stall, leaving room for more rate cuts. These mixed signals have kept the market on edge, with gold benefiting as investors seek to hedge against economic uncertainties. Upcoming Fed Member Speeches and Their Impact on Gold The week ahead is crucial for shaping market expectations around Fed policy and, by extension, the price of gold. Several Fed members are scheduled to speak, and their comments could sway market sentiment: These speeches are expected to provide further insights into the Fed’s policy direction, which will likely influence gold prices. UN Warning and Escalating Middle East Tensions Potential Catastrophe in the Middle East The United Nations (UN) has issued a warning that the Middle East is on the brink of a catastrophe as Israel and Lebanon inch closer to an all-out war. Israel’s recent strikes on Lebanon and Hezbollah’s retaliatory actions have escalated tensions, with the possibility of Israel launching a ground invasion of Lebanon. Such developments would likely drive gold prices higher, as investors flock to safe-haven assets amid growing geopolitical risks. BBC International Editor Jeremy Bowan noted that Israel might be preparing for a more extensive ground operation involving tanks and troops in Lebanon, which could lead to a dangerous escalation of the conflict. This situation could further increase the demand for gold as a protective investment. Technical Analysis: Gold’s Uptrend and Potential Corrections Gold’s Uptrend Extends From a technical perspective, gold’s uptrend shows no signs of slowing down, with the precious metal pushing to new record highs. The principle of “the trend is your friend” suggests that the odds favor further upside for gold, in line with the long, medium, and short-term uptrends. Key Resistance Levels and Overbought Conditions The round numbers at $2,650 and $2,700 are the next significant resistance levels for gold. However, it is important to note that gold entered overbought territory on Friday, as indicated by the Relative Strength Index (RSI). This condition suggests that traders should be cautious about adding to long positions at current levels. If gold exits overbought territory, it could signal the start of a deeper correction, prompting traders to close long positions and consider short positions. Support Levels for Potential Corrections If a correction does occur, gold has firm support at $2,600 (the high from September 18), followed by $2,550 and $2,544 (the 0.382 Fibonacci retracement level of the September rally). These levels could act as potential buy zones for traders looking to enter the market after a pullback. Gold continues to be supported by a combination of factors, including expectations of further Fed rate cuts and rising geopolitical tensions in the Middle East. As these dynamics evolve, gold’s uptrend is likely to persist, with technical analysis suggesting further upside potential. However, traders should be mindful of overbought conditions and the possibility of a correction in the near term.

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Commodities Gold

Gold Price Struggles for Firm Intraday Direction Ahead of Fed Decision

Gold Price Struggles for Firm Intraday Direction Ahead of Fed Decision The gold price (XAU/USD) consolidated within a tight range around the $2,570 mark on Wednesday as the financial markets await significant central bank event risks. Traders have been cautious, opting to remain on the sidelines until the outcome of the Federal Reserve’s (Fed) pivotal two-day Federal Open Market Committee (FOMC) meeting is announced. This hesitation comes amid speculation about potential monetary easing, as well as geopolitical concerns that are influencing market sentiment. Consolidation Ahead of Key Fed Decision The consolidation phase around $2,570 reflects the broader market’s apprehension as traders await the FOMC decision. The Fed is expected to announce its interest rate policy, which will significantly impact market direction. With rising expectations of a policy easing from the Fed, the US Dollar’s (USD) recovery from a multi-month low has been limited, which is providing some support for gold, a non-yielding asset. Impact of Policy-Easing Bets on Gold There is growing speculation that the Fed may adopt a more aggressive policy easing stance, possibly announcing a 50-basis point cut in interest rates. According to the CME Group’s FedWatch Tool, markets are pricing in a 65% probability of such a cut, which is helping to underpin gold prices. A policy easing would generally weaken the USD, making gold more attractive to investors. Traders’ Reluctance to Make Aggressive Moves Despite these factors, traders hesitate to place aggressive bets ahead of the FOMC decision. This reluctance is also being driven by geopolitical uncertainties, including potential escalations in the Middle East and political instability in the United States ahead of the upcoming presidential election. As a result, many traders prefer to wait for clear signals before positioning for a more pronounced move in the gold price. Geopolitical and Economic Factors Supporting Gold While the gold price faces immediate resistance at the all-time high of $2,589-$2,590, other factors are providing a tailwind for the yellow metal. Geopolitical Risks in the Middle East Rising geopolitical tensions in the Middle East, notably in Lebanon and North Korea, have contributed to gold’s safe-haven appeal. A recent incident involving simultaneous explosions in Lebanon, reportedly involving Hezbollah members, has increased the risk of broader regional conflict. Such geopolitical risks typically drive investors toward safe-haven assets like gold. US Political Uncertainty Adding to this, uncertainty around the upcoming US presidential election is also lending support to the gold price. As political uncertainty increases, investors tend to move away from riskier assets, boosting demand for gold. Key Central Bank Decisions This Week In addition to the Fed’s decision, investors are closely watching the upcoming monetary policy decisions from the Bank of England (BoE) and the Bank of Japan (BoJ). Both announcements, scheduled for later this week, will be important in shaping market sentiment toward gold. Daily Digest Market Movers: Awaiting the Fed Decision The market is now finely balanced, awaiting key developments that could shift sentiment. Let’s take a closer look at the major market movers influencing gold price action: Fed Policy Easing Speculation The growing expectation that the Fed will announce a 50-basis point cut has kept the gold price supported. While the gold price experienced a modest pullback overnight, this dip could attract fresh buying interest, especially if the Fed signals a dovish outlook. US Retail Sales Data and Its Limited Impact The US Census Bureau’s release of retail sales data for August revealed a modest increase of 0.1%, which was better than the expected decline. This data helped the USD recover slightly, though the positive move was short-lived due to ongoing expectations of Fed easing. Global Geopolitical Tensions Rising tensions in the Middle East, particularly the recent explosions in Lebanon and North Korea’s missile tests, have contributed to market jitters. These risks are helping to sustain demand for safe-haven assets like gold. Technical Outlook: Path of Least Resistance Remains Upward From a technical analysis perspective, the gold price remains in an uptrend, but bulls are awaiting a decisive move above the $2,589-$2,590 resistance zone to trigger fresh buying. Key Resistance Levels A break above this zone would clear the path for gold to test the $2,600 mark, with the next resistance level located near the top boundary of a short-term ascending channel. This channel extends from the sub-$2,400 levels seen in late June, with the top boundary pegged around the $2,609-$2,610 region. A decisive break above this zone could signal a continuation of the uptrend, possibly targeting new highs. Downside Risks and Support Levels On the downside, the $2,561-$2,560 area represents a key near-term support zone. A breach of this level could open the door to deeper losses, with the next major support found around the $2,530-$2,525 level, which coincides with a strong horizontal resistance zone. Further declines below this level could attract fresh buyers around the psychological $2,500 mark, which is a critical pivot point. If this support level is breached decisively, it could signal a more significant correction, with the next support zone located around the $2,475-$2,470 confluence, comprising the 50-day Simple Moving Average (SMA) and the lower boundary of the current trend channel. Outlook: What’s Next for Gold? The gold market is poised for a breakout in either direction, with the FOMC decision expected to provide the catalyst. A dovish Fed would likely support the gold price, pushing it higher toward new record levels. On the other hand, any signs of a more hawkish stance from the Fed could trigger a pullback. Other Influences to Watch Beyond the Fed, other central bank decisions, such as those from the BoE and BoJ, could also influence gold’s trajectory. Additionally, continued geopolitical tensions and US political uncertainty will likely sustain demand for gold as a safe-haven asset. In the meantime, traders are likely to continue exercising caution, waiting for a clearer picture before making more aggressive moves. The technical setup, however, suggests that the path of least resistance remains to the upside.

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Currencies EUR/USD

EUR/USD Extends Gains to Near 1.1150 as Fed Rate Cut Expectations Surge

EUR/USD Extends Gains to Near 1.1150 as Fed Rate Cut Expectations Surge EUR/USD Strengthens on Fed Rate Cut Expectations The EUR/USD currency pair has continued its upward trajectory, rising to approach the significant resistance level of 1.1150 during Tuesday’s European trading session. This extension of Monday’s gains highlights the Euro’s strength as it capitalizes on a weakening US Dollar (USD). The USD’s decline is largely attributed to increasing speculation that the Federal Reserve (Fed) will implement a substantial interest rate cut during its upcoming meeting on Wednesday. Fed Rate Cut Prospects Weigh on the US Dollar The US Dollar is trading near its lowest level of the year, driven by growing market expectations for a major rate cut by the Fed. Recent softer-than-expected Producer Price Index (PPI) data for August has bolstered these expectations, alongside media reports suggesting that Fed officials are keeping the possibility of a large rate cut on the table. As a result, the US Dollar Index (DXY), which measures the USD against a basket of six major currencies, is hovering around 100.50. The CME FedWatch tool indicates a sharp increase in the probability of the Fed reducing interest rates by 50 basis points (bps) to a range of 4.75%-5.00%. This probability has surged to 69%, up from 34% a week prior. Furthermore, traders are anticipating that the Fed will cut rates by a cumulative 100 bps by the end of the year, bringing the federal funds rate down to a range of 4.25%-4.50% by the end of 2024. This expectation reflects a belief that the Fed may opt for a significant rate cut in one of its remaining three meetings this year. Focus on US Retail Sales Data Investors are also keenly awaiting the release of the US Retail Sales data for August, scheduled for publication at 12:30 GMT. Economists forecast a modest growth of 0.2%, a slowdown compared to July’s 1.0% increase. A weaker-than-expected Retail Sales figure could signal a softer inflation outlook, further influencing expectations for Fed policy and impacting the USD. EUR/USD Daily Price Chart Source: TradingView, prepared by Richard Miles ECB’s Stance Provides Support for the Euro The Euro has also been bolstered by less dovish guidance from the European Central Bank (ECB). ECB policymakers have pushed back against market expectations for an October rate cut. On Monday, ECB Governing Council member Peter Kazimir stated in a blog post that the ECB will likely need to wait until December for a clearer picture before making further rate adjustments. Kazimir emphasized the importance of confirming inflation trends before making any hasty decisions to cut borrowing costs. His comments have contributed to the Euro’s strength as the market adjusts its expectations accordingly. Additionally, ECB Governing Council member Gediminas Šimkus echoed this sentiment, suggesting that the probability of an October rate cut is very low. This cautious approach from the ECB contrasts with the more aggressive rate cut expectations for the Fed, providing further support for the EUR/USD pair. Eurozone Economic Sentiment and Inflation Trends Despite the positive outlook for the Euro, there are concerns about economic growth in the Eurozone. The ZEW Survey, which gauges sentiment from institutional investors, showed a significant decline in Economic Sentiment to 9.3 in September, marking the lowest level since November 2023. This decline reflects concerns about the Eurozone’s economic prospects, even as inflation rates in the region have eased. Eurozone inflation fell to 2.2% in August, the lowest rate in three years. This decrease in inflation could impact the ECB’s policy decisions, but the current focus remains on the Fed’s upcoming meeting and its potential impact on currency markets. Technical Analysis: EUR/USD’s Path Forward Technically, the EUR/USD pair has strengthened further, approaching the key resistance level of 1.1150. The pair recently tested and broke out of the Rising Channel chart pattern on a daily time frame, finding support near the psychological level of 1.1000. The short-term outlook for the EUR/USD pair appears bullish as it trades above the 20-day Exponential Moving Average (EMA), which is currently around 1.1060. The 14-day Relative Strength Index (RSI) is moving higher towards 60.00, indicating potential bullish momentum. If the RSI remains above this level, it could signal further upward movement for the Euro. Looking ahead, the EUR/USD pair faces resistance at the September 6 high of 1.1155 and the round-level resistance of 1.1200. On the downside, support levels include the psychological mark of 1.1000 and the July 17 high near 1.0950. These levels will be crucial for determining the pair’s near-term direction and potential for further gains. Conclusion: EUR/USD Poised for Further Gains with Fed Rate Cut Expectations In summary, the EUR/USD pair has extended its gains as the market anticipates a significant rate cut by the Federal Reserve. The USD’s weakness, driven by expectations of a 100 bps cut by year-end, has provided support for the Euro. Meanwhile, the ECB’s cautious stance on interest rates and recent economic data add to the complex backdrop influencing the EUR/USD pair. As the market awaits the Fed’s decision and the US Retail Sales data, the EUR/USD pair’s near-term outlook remains bullish, with key resistance and support levels providing crucial guidance for future price action.

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AUD/USD Currencies

AUD/USD Climbs Higher Ahead of US Retail Sales Data

AUD/USD Climbs Higher Ahead of US Retail Sales Data AUD/USD Gains Momentum The AUD/USD pair has continued to attract buyers for the second consecutive day, pushing higher and reaching a nearly two-week high during early European trading on Tuesday. This marks the fourth day in a row of gains, with spot prices now trading above the mid-0.6700s, up around 0.15% for the day. As traders await the Federal Open Market Committee (FOMC) meeting on Wednesday, the pair seems poised for further upward momentum, fueled by a combination of factors, including market sentiment and economic expectations. USD Weakness Amid Fed Rate Cut Expectations One of the key drivers behind the recent rally in the AUD/USD pair is the US Dollar’s continued decline. The greenback is consolidating its recent heavy losses, which have dragged it down to its lowest levels since July 2023. This weakness stems from growing market bets on an oversized 50 basis point rate cut by the Federal Reserve (Fed). Expectations for a sharp rate cut have dampened the USD’s appeal, with investors positioning themselves for a potential policy shift. In contrast, the Reserve Bank of Australia (RBA) maintains a more hawkish outlook, supporting the Australian Dollar (AUD). A generally positive tone in global equity markets has also contributed to the risk-sensitive Aussie’s gains. This combination of a weakening USD and a resilient AUD has been a major factor propelling the AUD/USD pair higher. Technical Outlook: AUD/USD Breaks Key Levels Technically, the AUD/USD pair has now rallied nearly 150 pips from the vicinity of its key 200-day Simple Moving Average (SMA) support around the 0.6620 region. Last week, the pair touched a four-week low near this level, but it has since rebounded sharply. The 200-day SMA is often seen as a critical support level, and the recent price action suggests that buyers are defending this level, adding to the bullish sentiment. This latest surge in the AUD/USD pair aligns with a broader fundamental backdrop that appears tilted toward USD bears. With the Fed’s potential rate cut and the positive risk tone, the path of least resistance for the AUD/USD pair appears to be upward. However, certain external factors, such as China’s economic challenges, could temper the optimism. China’s Economic Slowdown: A Potential Headwind Despite the favorable conditions for the AUD/USD pair, concerns about a slowdown in China loom over the market. The Australian Dollar is often considered a proxy for China’s economic performance due to the close trade relationship between the two countries. Weakness in China’s economy can therefore negatively impact the AUD. Over the weekend, a series of downbeat economic reports from China highlighted ongoing challenges. These reports suggest that China may struggle to achieve its official 2024 GDP growth target of around 5%. Economic weakness in China, Australia’s largest trading partner, could weigh on the AUD and act as a headwind to further gains in the AUD/USD pair. US Retail Sales Data and Market Sentiment Looking ahead, traders are closely watching the upcoming US Retail Sales report, which could provide further insights into the health of the US economy. This data, along with US bond yields and broader market sentiment, will likely influence USD demand and impact the AUD/USD pair’s price action. However, given the market’s focus on the FOMC meeting and the potential for a significant rate cut, the reaction to the US macroeconomic data may be muted. The retail sales figures, while important, are likely to take a back seat to the Fed’s policy decision on Wednesday. Caution Ahead of the FOMC Meeting While the current environment supports further gains in the AUD/USD pair, traders remain cautious ahead of the Fed’s rate decision. The FOMC meeting represents a significant event risk, and the outcome could shape the direction of the currency pair in the near term. With the market pricing in a 50 basis point rate cut, any deviation from this expectation could trigger volatility in the USD. If the Fed signals a more aggressive approach to rate cuts or adopts a dovish tone, it could further weaken the USD and support the AUD/USD pair. On the other hand, a more conservative stance could lead to a reversal of the recent AUD gains. Conclusion: AUD/USD Poised for Further Gains but Faces Risks In summary, the AUD/USD pair is benefiting from a combination of factors, including Fed rate cut expectations, a positive risk tone, and the RBA’s hawkish stance. Technical indicators also support further upside, as the pair has bounced from a key support level. However, risks remain, particularly concerning China’s economic performance and the upcoming FOMC meeting. Traders should keep a close eye on US Retail Sales data and the broader market sentiment, but the primary focus will be on the Fed’s policy decision. The outcome of this meeting will likely provide the next major directional impetus for the AUD/USD pair, with the potential for both further gains or a pullback depending on the Fed’s actions. While the path of least resistance currently appears to be to the upside, caution is warranted as the market navigates these key events.

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