Today's analysis: AUDUSD Gains Momentum Amid Hawkish RBA and Technical Resistance.

Product:EUR/USD

Prediction:Decrease

Fundamental Analysis:

The EUR/USD exchange rate bounced back to around 1.0740 on Tuesday in New York. This was due to slower growth in US retail sales in May, which weighed on the US dollar. The US Census Bureau reported that retail sales grew by only 0.1%, lower than the expected 0.2%. This was expected to put pressure on the US dollar, as it suggests the disinflation process is continuing. The US dollar index fell to around 105.30, and market expectations are now for the Federal Reserve to cut interest rates twice this year.

Technical Analysis:

The EUR/USD is facing resistance at around 1.0740, where a downward-sloping line from a December high acts as a barrier. The pair may find support around 1.0670, near an upward trend line and a horizontal level. The long-term outlook has turned negative, with the price dropping below the 200-day moving average at 1.0800. The RSI has fallen below 40, suggesting potential bearish momentum if it remains there. This technical analysis indicates that the EUR/USD may face challenges in breaking above the immediate resistance level, and a potential support level could come into play if the downward pressure persists.

Product: XAU/USD

Prediction: Increase

Fundamental Analysis:

Gold (XAU/USD) price is slightly lower, trading around $2,310, as positive market sentiment weighs on the safe-haven asset. This comes despite a survey showing strong expected demand for gold from central banks in 2024. The decline is driven by risk-on sentiment, with stocks reaching new highs and expectations of a US interest rate cut, which is negative for non-yielding gold. However, the survey indicates central banks view gold as a long-term store of value and inflation hedge, suggesting robust future demand that could support the gold price.

Technical Analysis:

The gold price is forming a bearish head-and-shoulders pattern on the daily chart, which often signals a trend change. The pattern has left and right “shoulders” with a “head” in the middle, and the neckline support is at $2,279. Declining momentum shown by the Relative Strength Index supports the bearish outlook.

If the price breaks below the neckline, it would confirm the pattern and suggest further declines, with targets at $2,171 and $2,106. However, a rise above $2,345 would cast doubt on the head-and-shoulders and could signal a continuation of the uptrend, with an initial target at the $2,450 peak.

Product:GBP/USD

Prediction:Increase

Fundamental Analysis:

The British pound (GBP) gained against the weak US dollar (USD) on Monday, as positive market sentiment pressured the US currency. Investors await US retail sales data, which is expected to rise slightly. Traders are also closely watching for any hints of a potential Federal Reserve interest rate cut in September, which could further weigh on the USD and support the GBP/USD. Additionally, the upcoming UK inflation data may also influence the exchange rate. Overall, the market's risk appetite and central bank actions are likely to be the key drivers for the GBP/USD in the near future.

Technical Analysis:

The GBP/USD pair has struggled to maintain a bullish stance, with the price staying below the ascending regression channel's lower limit and the Relative Strength Index (RSI) on the 4-hour chart remaining below 50, indicating a bearish bias. On the downside, support is seen at 1.2640, 1.2600, and 1.2580, while resistances are found at 1.2700, 1.2720, and 1.2750. Despite a dip to a multi-week low of 1.2656, the GBP/USD has shown some resilience but still hovers below a broken support trendline, which could lead to further price drops. The RSI suggests that sellers remain in control, and a break below 1.2700 could trigger further declines toward 1.2656, 1.2643/34, and 1.2600. Conversely, a climb above 1.2720/30 could exacerbate a rally toward 1.2800.

Product: AUD/USD

Prediction: Increase

Fundamental Analysis:

The AUD/USD pair regained momentum, surpassing 0.6600, driven by improved risk sentiment, a softer US Dollar, and the hawkish Reserve Bank of Australia. The firm appetite for risky assets weighed on the US Dollar, sending the USD Index lower, while declining US yields also contributed. The RBA delivered a hawkish hold, keeping rates at 4.35% and stating they are not ruling out any options. Governor Bullock confirmed the RBA's concerns about persistent inflation, indicating the bar for easing remains high. While markets expect 50 bps of easing by 2025, a near-term hike is possible. Considering the potential for the Fed to ease and the RBA's restrictive stance, the AUD/USD could see gains, though China's sluggish economy may challenge a sustainable recovery.

Technical Analysis:

The AUD/USD pair is facing resistance from the 50, 100, and 200 SMAs on the 4-hour chart, limiting further upside. However, a close above 0.6640 could lead to a move up to the range ceiling. The pair has been oscillating within a range, and a decisive breakout would signal a trend change. An upside break is slightly more likely given the prior bullish trend. The breakout move is expected to be volatile, with a conservative upside target at 0.6770 and a downside target at 0.6521. A decisive break would be a longer-than-average candle closing near the range's high or low, or three successive candles breaking through the range.

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