KVB Today's Analysis: XAU/USD Prices Steady Above $2,350 Amid Mixed Economic Signals

Product: XAU/USD

Prediction: Decrease

Fundamental Analysis: 

Gold prices are holding above $2,350 in early Asian trading, despite a recent tumble to two-week lows. This came after stronger-than-expected Q2 2024 US GDP, raising doubts about the Federal Reserve's rate cut plans this year. The core PCE inflation rate moderated to 2.9% from 3.7% in the previous quarter, while jobless claims declined.

Markets still expect a Fed rate cut in September, as disinflation continues. Gold initially fell on the GDP data but recovered on the softer core PCE reading.  Investors await the June core PCE data for further direction on gold's near-term outlook.

Technical Analysis: 

Gold prices remain under pressure early Friday, with the 14-day Relative Strength Index below 50, indicating bearish sentiment. Sellers are targeting the key 50-day moving average at $2,360, which needs to be breached for a fresh downtrend toward the 100-day moving average at $2,324.

However, buyers may find support at the $2,350 psychological level. To the upside, the 21-day moving average at $2,387 and the $2,400 mark are immediate resistance levels. Further recovery could target $2,412 and $2,425 resistance zones. The market is currently in a tug-of-war between bulls and bears, with the overall outlook remaining uncertain in the short term. 

Product: EUR/USD

Prediction: Increase

Fundamental Analysis: 

The EUR/USD pair traded in a familiar range on Thursday, as markets grappled with mixed US economic data. Expectations for a September rate cut from the Federal Reserve remain high, though the outlook is uncertain as data continues to surprise. The euro regained some ground, aided by weak US and German bond yields. The US dollar traded without a clear direction, recouping losses against the Japanese yen. Upcoming policy divergence between the Fed and ECB, with both expected to cut rates, could lead to further weakness in the EUR/USD in the near term. Investors are also focused on the upcoming US political scene.

Technical Analysis: 

The crucial support for EUR/USD lies at the 200-day moving average of 1.0818, followed by the June low of 1.0666 and the May low of 1.0649. A breach of the May low could lead to a drop to the 2024 bottom of 1.0601.

On the upside, resistance is seen at the July high of 1.0948, the March top of 1.0981, and the key 1.1000 level. The positive bias will continue if the pair remains above the 200-day moving average.

In the short-term, the 55-SMA at 1.0886 is the initial resistance, with support at 1.0825, the 200-SMA at 1.0794, and 1.0709. The RSI has dropped to around 44. 

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis: 

USD/JPY is bouncing back towards 154.00, after a slide to near 153.40 following Tokyo CPI data. The pair remains volatile as the divergence in BoJ-Fed policies keeps markets repositioning ahead of the US PCE inflation data.

The Japanese Yen has extended its upward trend against the US Dollar for four straight sessions, nearing a 12-week high. This is likely due to traders unwinding carry trades before the BoJ's policy meeting, where a rate hike and bond purchase tapering are expected.

The US Dollar could gain ground, as recent US PMI data showed resilient private-sector activity, giving the Fed more leeway to maintain its restrictive policy. Investors will closely watch the upcoming US GDP and PCE data.

Technical Analysis: 

The USD/JPY pair is trading around 153.50, with the daily chart analysis showing a breach below a descending channel, indicating a strengthening of the dovish bias. The 14-day RSI is below 30, suggesting an oversold situation and a potential short-term rebound.

The pair may find significant support at May's low of 151.86, with further support at the psychological level of 151.00. On the upside, the pair may test the lower boundary of the descending channel around 154.00. A return to the channel could weaken the bearish bias and lead to resistance at the 9-day EMA of 155.90 and the upper channel boundary at 156.80.

Product: GBP/USD

Prediction: Decrease

Fundamental Analysis: 

GBP/USD maintains a bearish bias, trading below 1.2900 in the American session. The US Dollar is benefiting from a risk-averse market atmosphere and stronger-than-expected US GDP data, causing the pair to fall further.

The upcoming US GDP and Initial Jobless Claims data will be closely watched. A weaker-than-expected GDP reading could limit the US Dollar's upside, but GBP/USD's upside is likely to remain capped if Wall Street's main indexes continue to decline.

Technical Analysis: 

GBP/USD is holding slightly above 1.2850, where the Fibonacci 38.2% retracement level and the 100-period SMA provide support. If this level fails, the pair could target 1.2830 (Fibonacci 50% retracement) and the 1.2800-1.2790 area (psychological level, 200-period SMA).

On the upside, 1.2900 (20-period SMA, psychological level, static level) is the immediate resistance, followed by 1.2940-1.2950 (Fibonacci 23.6% retracement, 50-period SMA).

The current price action suggests a consolidation phase, with the pair finding support at the key technical levels and facing resistance at the moving averages and Fibonacci retracement levels.

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