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Fundamental Analysis

On Monday, the Mexican peso was the best-performing currency among the 20 global currencies we track, while the Russian rouble showed the weakest results. The U.S. dollar was the leader among majors, while the Japanese yen underperformed.

U.S. Dollar Index On Monday, the U.S. Dollar Index (DXY) increased by 0.47% after Lael Brainard, the Federal Reserve (Fed) Vice Chair, signalled that the Fed may slow the rate hikes.

Inflation in the U.S. is still very high, so interest rates need to keep growing. However, rate hikes will probably move at a slower pace. According to Reuters, the markets are currently pricing in an 89% chance that the Federal Open Market Committee will slow the rate hikes to a half point at the meeting on 14 December. Another 11% bets for a 75 basis point increase. 'Fed speakers have set the tone, reminding markets that there is still a lot of work to be done to bring inflation to heal,' wrote Rodrigo Catril, senior FX strategist at the National Australia Bank. Today's focus will be on the Producer Price Index (PPI), due at 1:30 p.m. GMT. If PPI comes out stronger than expected, DXY will likely rise above 107.00

XAUUSD The gold price dropped sharply on Monday but later recovered and finished the day essentially flat at 1,771.80

XAUUSD continued to rise during the Asian session, backed by the hopes that the Fed would adopt a less hawkish policy. 'Gold has had a very strong run from $1,618 per ounce and is now due for some consolidation short term. However, the overall dominant risk remains very much to the upside,' said Clifford Bennett, chief economist at ACY Securities. Bulls are now targeting 1,800–1,810, but a higher move requires more signals of slowing inflation in the U.S. According to the U.S. Commodity Futures Trading Commission, speculators cut their net-short positions by 78% during the first week of November.

EURUSD EURUSD slightly decreased and finished the day at 1.0325.

The euro rose sharply earlier today due to the general weakness of the U.S. dollar. Fabio Panetta, the European Central Bank (ECB) board member, said that the regulator should continue raising rates 'but needs to avoid overtightening, as it could deepen an economic downturn.' Also, the eurozone industrial production rose in September, providing additional support for the euro. Today, traders should pay attention to the release of eurozone GDP data at 10.00 a.m. GMT. A higher-than-expected number will likely push EURUSD above 1.04000.

GBPUSD The British pound lost 0.7% and closed at 1.1752.

GBPUSD surged during the Asian session as the U.S. dollar retreated. Despite disappointing employment figures, which came out earlier today, the British pound managed to rise above 1.18400. The National Institute of Economic Research said that 'The Bank of England (BoE) will probably need to raise the interest rate to 4.75% to bring inflation back to its 2% target, something only likely to be achieved in three years.'

XAU/USD Technical Outlook

Following this week’s indecisive price action, gold’s near-term technical outlook points to a neutral/bearish bias. The Relative Strength Index (RSI) indicator on the daily chart is yet to reach 50, suggesting that XAU/USD has more correction room on the upside despite struggling to gather bullish momentum.

On the upside, $1,740 (20-day SMA, 50-day SMA) aligns as key resistance. With a daily close above that level, additional gains toward $1,760 (Fibonacci 23.6% retracement of the latest downtrend) and $1,790 (100-period SMA) could be witnessed.

$1,700 (psychological level, end-point of the downtrend) stays intact as significant support. In case gold falls below that level and starts using it as resistance, bears could target $1,680 (July 21 low) and $1,675 (static support from March 2021).

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk.

Market Headlines Update – 13 Sep

  • Asia FX Tepid, Dollar Steadies Ahead of U.S. CPI Inflation
  • Oil prices fall as China demand concerns mount amid COVID curbs
  • Thai consumer confidence at 7-month high in August
  • Indonesia to review minimum wage rules after protests over fuel price hike
  • Bank of America CEO predicts income boost from higher rates
  • Asian Stocks Cautiously Optimistic Ahead of U.S. CPI Data
  • Dollar eases back from recent gains as focus on U.S. inflation data; euro jumps
  • EUR/JPY traces yields to retreat from multi-year high above 144.00, German/EU data eyed
  • USD/CAD steadies near 1.3000 amid sluggish oil prices, cautious mood ahead of US CPI
  • S&P 500 Futures stay mildly bid even as yields retreat from multi-day top, US inflation eyed
  • China’s Premier Li vows more policy support to shore up consumption
  • Steel price aims a rebound on soaring supply worries in China and Eurozone

Source: forexfactory.com

Week ahead in FX (12, Sep – 16, Sep)

Major News and Economic Events:

U.S. inflation reports (Sept. 13, 12:30 pm GMT) – Dollar traders must be pretty eager to set their sights on Uncle Sam’s latest CPI readings since these could seal the deal for another 0.75% Fed rate hike.

Analysts are expecting to see a slowdown in headline inflation, though, as the August figure likely fell 0.1% after staying flat in July. This would mark its first negative reading since May 2020, which might suggest that U.S. inflation has peaked.

U.K. CPI (Sept. 14, 9:30 pm GMT) – The U.K. economy will also be releasing its inflation figures for August this week, and many are hoping that price pressures steadied at 10.1% year-over-year.

Another uptick in CPI would up the pressure on the BOE to accelerate their interest rate hikes in order to keep stagflation from worsening. The core CPI likely ticked higher from 6.2% to 6.3% for the month.

New Zealand Q2 GDP (Sept. 14, 10:45 pm GMT) – After reporting a 0.2% contraction for the first three months of this year, New Zealand’s economy is expected to rebound with a 1.0% GDP figure for Q2.

Retail sales reports – We’ll get a round of consumer spending data towards the end of the week, with the U.S., China and the U.K. printing their retail sales figures for August.

Source: forexfactory.com

U.S. NFP Report Trading Guide

Nonfarm Payrolls measures the change in the number of people employed during the prior month, excluding workers in the farming industry. Given that full employment is one of the Federal Reserves mandates, it is very closely watched.

A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

Last NFP Data Summary?

  • U.S. added 528K jobs in July vs. 250K estimate
  • Unemployment rate improved from 3.6% to 3.5%
  • Average hourly earnings ticked higher from 0.4% to 0.5%
  • June NFP reading upgraded from 372K to 398K

The economy added 528K jobs in July, which is higher than the estimated 250K increase and also higher than the previous month’s figure.

Jobless rate down from 3.6% to 3.5% instead of holding steady as many expected. The labor force participation rate held steady at 62.1% during the month.

Wage growth was also observed, as the average hourly earnings figure accelerated to a 0.5% gain instead of slowing to 0.3%.


What’s expected this time?

  • August hiring to come in at 295K
  • Jobless rate to hold steady at 3.5%
  • Average hourly earnings to tick down to 0.4%

Number crunchers continue to predict a slowdown in U.S. hiring, with the August report expected to show a 295K increase in employment.

This might keep the jobless rate steady at 3.5% for the month, unless there are any major changes in labor force participation.

Wage growth might also slow down to just a 0.4% uptick, keeping inflation fears in check

Leading indicators are giving mixed signals so far. The ADP non-farm employment change figure came up short at 132K versus the 300K consensus for August while the JOLTS job openings report showed more positions available in the previous month.

Weaker than expected results could dampen hopes of another 0.75% interest rate hike from the Fed, especially since the latest round of inflation figures reflected easing price pressures.

Planning to trade on NFP but not sure which pairs to trades? Ask with our expert and get free analysis report.

XAU/USD Technical Outlook – 24 Aug


Gold price closed Tuesday above $1,744, the 50% Fibonacci Retracement (Fibo) level of the recovery from yearly lows of $1,681 to the August 10 high of $1,808.

However, bulls failed to find acceptance above the $1,750 psychological level, recalling bears this Wednesday. The 14-day Relative Strength Index (RSI) is turning south once again while below the midline, suggesting that the downside pressure could build up in the sessions ahead.

Adding credence to the bearish bias, the 50-Daily Moving Average (DMA) is fast approaching the 21 DMA from above.

The golden ratio – 61.8% Fibo of the same ascent at $1,729 is now on sellers’ radars. A sustained break below the 61.8% Fibo support will open up the downside towards $1,700 mark.

On the flip side, bulls need a daily closing above the $1,750 psychological level, above which the 38.2% Fibo resistance at $1,760 will be probed.

Further up, the meeting point of the 21 and 50 DMAs at $1,769 will be a tough nut to crack for XAU bulls.

Market News and Economic Events Update 04, Aug

  • Asia Central Banks Deploy Foreign Exchange Reserves to Lift Currencies - Bloomberg

Asia's emerging economies are drawing on their vast foreign exchange reserves to help prop up their ailing currencies against the US dollar rather than going all-out with interest-rate hikes. Meanwhile, the inversion of the Treasury yield curve deepened Wednesday as the market proved volatile once again.

  • Australia’s Trade Surplus Swells to Fresh Record in Boost to GDP

Australia’s trade surplus hit a fresh record high, driven by strong prices of key exports from grains to metals and gold, in a result that’s likely to boost second-quarter gross domestic product.

The surplus swelled to A$17.7 billion ($12.3 billion) in June, surpassing economists’ estimate of A$14 billion, Australian Bureau of Statistics data showed on Thursday. Exports jumped 5%, while imports rose 1% as more Australian holidaymakers traveled overseas. 

  • US Dollar climbs as Fed officials suggest more rate hikes to come

The dollar was on the front foot on Thursday, helped by several U.S. Federal Reserve officials pushing back against suggestions they will slow the pace of interest rate hikes, while the pound was flat ahead of a Bank of England meeting.

The dollar index, which measures the greenback against six peers, was steady in early trade at 106.39 having eked out small gains overnight. It is up around 0.5 per cent this week, reversing the trend of the previous two weeks.

  • Clarida Returns to Pimco After Fed Cleared Him in Trading Probe

Former Federal Reserve Vice Chair Richard Clarida will return to bond giant Pacific Investment Management Co. as global economic adviser following his exit from the central bank in January and the conclusion of an internal Fed probe into his personal trading, which found that he hadn’t broken any rules. 

At the Fed, Clarida -- who’s considered a pioneer in modern monetary economics -- worked closely with Chair Jerome Powell in devising the new framework for policy that was published in August 2020. 

Economic Events

IST TIME. | Source: forexfactory.com

Latest Market News Highlight

  • Fed's bullard: Better bet is it will take a while for inflation to come down to 2%
  • The OPEC plus ministers didn’t vote yet… but it’s almost certain the 100k increase will be approved
  • Saudi Arabia reportedly warms to production increase at OPEC+ meeting- FT
  • Japan’s used car exports to Russia rise threefold despite sanctions
  • Volume of retail trade down by 1.2% in the euro area and by 1.3% in the EU
  • Industrial producer prices up by 1.1% in the euro area and by 1.3% in the EU
  • UK: Weakest service sector performance since February 2021 as inflationary pressures continue to dampen demand
  • U.S. Treasury yields move higher ahead of new economic data

Source: forexfactory.com

XAU/USD Technical Outlook – Resume Uptrend

The XAUUSD pair is retreating from the mentioned high and after briefly surpassing a daily descendant trend line coming from a relevant high at $ 1,857.49 posted mid-June. Technically, the daily chart shows that indicators have lost their positive momentum and turned flat within positive levels while the metal continues advancing above the 20 SMA. Overall, the risk remains skewed to the upside, regardless of a potential setback.

The 4-hour chart shows that the XAUUSD remains above a mildly bearish 200 SMA, which provided intraday support, while the 20 SMA heads firmly higher just below it. Technical indicators, on the other hand, ease within positive levels, reflecting the latest slide but falling short of confirming another leg south.

Support levels: $1750 and $1735

Resistance levels: $1788 and $1800

XAU/USD Technical Outlook

On a four-hour scale, gold prices are establishing above the 38.2% Fibonacci retracement (which is placed from June 12 high at $1,879.26 to July 21 low at $1,680.91) at $1,756.21. An establishment above 38.6% Fibo retracement bolsters the upside potential.

The precious metal is facing hurdles in overstepping the 200-period Exponential Moving Average (EMA) at $1,763.19. Also, the 50-EMA at $1,738.51 is advancing higher, which adds to the upside filters.

The Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates a continuation of bullish momentum ahead.

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