KVB Market Analysis | 25 September: BOJ Governor Signals Caution on Rate Hikes Amid Global Slowdown

Product:XAU/USD

Prediction: Increase

Fundamental Analysis:

Due to rising tensions in the Middle East and weakening consumer confidence in the U.S., gold's appeal as a safe haven has strengthened. Gold prices surged by nearly $30, reaching a record high. On Tuesday, North American markets saw gold hit this all-time high, driven by falling U.S. Treasury yields and a weaker dollar. The geopolitical tensions in the Middle East further boosted demand for gold as a safe investment. Israels airstrikes on Hezbollah positions in southern Lebanon, along with its vow to keep up the pressure, have increased fears of a full-scale war in the region. As a result, gold prices have risen 28% in 2024 so far.

Technical Analysis:

The outlook for gold remains bullish, with prices likely to keep hitting new record highs, although the rally seems a bit overdone. Traders are eyeing the $2,700 level. The momentum favours buyers, but the Relative Strength Index (RSI) is now in the overbought zone, so buyers should be cautious of a possible pullback. If the price continues to rise, traders might test $2,675, followed by $2,700. The next targets would be $2,750 and $2,800. However, if the price drops below $2,650, it could test the September 18 high of $2,600. The key support to watch after that would be the September 18 low of $2,546.

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis:

Kazuo Ueda, the Governor of the Bank of Japan, said on Tuesday (September 24) that the central bank has the ability to take its time observing financial markets and overseas economic developments when making monetary policy decisions. This suggests that the Bank of Japan is not in a hurry to raise interest rates further. He wants to carefully review the October service price data (most of which will be released in November) to determine if underlying inflation is moving closer to the Bank of Japan's 2% inflation target, which the market currently sees as a key condition for a rate hike. His comments highlight that the Bank of Japan is shifting its focus from inflation risks to the potential pressure on Japan's export-dependent economy caused by global growth slowdown and the strengthening yen. As Japan begins its rate hike cycle, many other central banks are easing monetary policies after raising rates to combat high inflation.

Technical Analysis:

The USD/JPY pair has been in a downtrend, testing the $144.00 level for three days but failing to break above it. On Tuesday, the pair dropped further as momentum shifted towards sellers, according to the Relative Strength Index (RSI). Staying below the 200-day moving average suggests more downside risk, with the next key support at $141.73 (the low from September 20) and potentially $139.58 (the low from September 16). On the upside, if USD/JPY moves past $143.44, it may target $144.00 again, with further gains possible if it surpasses the recent high of $144.68.

Product: BTC/USD

Prediction: Increase

Fundamental Analysis:

Traders are trying to push the price above the current resistance, aiming for a two-month high of over $66,000. To achieve this, the market needs to see an increase in spot trading volume or open futures contracts, with more leveraged buyers coming in to break through the strong $65,000 sell wall. Additionally, Bank of New York Mellon is moving towards offering Bitcoin and Ethereum custody services for ETF clients, as a review allowed them to avoid treating these assets as liabilities on their balance sheet. This service may launch soon, making it easier for investors to access Bitcoin. BlackRock has approved the Bitcoin ETF plan, with clearer regulations expected after the U.S. presidential election. These factors are boosting institutional adoption and increasing investor confidence in Bitcoin's future growth.

Technical Analysis:

The price is currently moving within a tight consolidation range, with $63,875 being a key level buyers are focused on. The 50-period EMA at $63,072 provides strong dynamic support, reinforcing Bitcoin's upward trend. On the upside, the immediate resistance is at $64,400. If buyers break through this level, the next key resistance is $65,300 and $66,060. Bitcoin's recent steady rise above the upward trendline suggests the market is preparing for further gains to break these resistance levels. On the downside, immediate support is at $63,072, followed by $62,600 and $62,379. The RSI is at 52, indicating neutral momentum with a slight bullish bias. If it crosses 60, it would signal stronger upward momentum. The 50-period EMA holding at $63,072 provides key support as long as the price stays above this level, maintaining a bullish outlook.