What's Happening Today?

GOLD -GOLD is weak ahead of the key economic data release this week. The price is consolidating between 2401.779 and 2365.443. We continue to wait to see how the price will move from current levels, but our expectations remain bullish. However, we will see how the data release turns out. If the Fed is dovish this week, bets could increase to three rate cuts before year-end, which should boost gold's prospects, says Fawad Razaqzada, market analyst at City Index and FOREX.com, in an email.

The rise comes ahead of the Wednesday end of the Federal Open Market Committee's two-day meeting. The committee is expected to leave interest rates unchanged at a 23-year high, but the group's dot plot, which is expected to show rate cuts coming as soon as September, will be closely watched. Other than this, fundamental factors also contribute to GOLD's strength (refer to previous market overviews discussing elections in the U.S. and geopolitical tensions in the Middle East).

SILVER - Clearly, we can see Silver on a downtrend. Our technical readings approve of this downward move, but fundamentals may read differently. The daily chart may also tell a different story, which we will look into come August 1. Other analysts interpret the pressure brought by geopolitical concerns in the Middle East differently and think that their safe-haven asset is the dollar—that the dollar will put pressure on GOLD prices and pull them lower. However, our reading is different and aligns with those analysts who view these pressures as an opportunity to increase the price of ‘real’ safe-haven assets like GOLD and Silver—which has already been proven by several central banks around the world increasing their holdings of said precious metals.

DXY - The dollar finds strength ahead of relevant data releases this week, showing that investors currently see a weaker dollar after the data release. How so？ The price being pushed upwards allows investors to sell at a higher price. Fundamental factors such as increased rate cut expectations, increased geopolitical tensions in the Middle East, and the upcoming elections contribute to the weakness of the dollar.

GBPUSD - The Pound continues to be supported at 1.28508, and we expect the previous low from yesterdays trading to be the lowest before the rise expected after FOMC meetings. However, it may also be possible for the price to move lower despite expectations coming into the market until the September rate cut is executed. It is also possible for the Pound's weakness to continue after the data release later this week as markets price in rate cuts by the BoE as they potentially open their doors to rate easing with the Fed.a

AUDUSD - The Aussie dollar continues to experience weakness in the market, and we expect the currency to find weakness across the board against its peers. We may continue to find the market to fall further ahead of the data release, and we are unsure how the price may turn up after markets confirm rate cut expectations for this September as others expect. With that said, we look into reacting rather than anticipating this market movement. Currently, the price is consolidated between 0.65618 and 0.65250.

NZDUSD - The Kiwi is priced lower and is finding a stronger bearish momentum after analysts continue to price in an earlier rate cut for the RBNZ. We may continue to find market prices lower, but we are unsure how the markets will react after September rate cuts by the Fed are confirmed. Similar to the Aussie dollar, we react to price action rather than anticipate further moves. Currently, the price is between 0.58856 and is moving toward 0.58528.

EURUSD - The market fell lower and reached 1.08048 ahead of data release today and tomorrow. The following days will determine how this market will move and progress. With that said, we watch how the price will react to the data. But we expect further Euro strength coming into the markets.

USDJPY - The markets bet heavily on the BoJ calling a rate hike after Wednesday's meetings. Technically, prices are also showing strong bearish momentum with higher chances of a drop than a rise. Currently, the price is consolidated between 154.430 and 153.239 ahead of the data release. Our expectations lie with the markets calling a stronger Yen. However, we do not discount the possibility of the BoJ failing to deliver and maintain the rates at current levels.

USDCHF - The CHF is seen to win consistently against the dollar, but during the end of the previous week and the start of this weeks trading session, the dollar has recovered from its losses. However, we continue to call this market bearish as we find evidence in the technicalities of price in this market along with the increased market expectations of a rate cut for the dollar.

USDCAD - The CAD continues to find weakness as further evidenced by the price breaking through 1.38402. We continue to watch the CAD alongside the Kiwi and the Aussie dollar as the weaker contenders on the board of currencies for this coming week.

COT Reports Analysis

CAD - Weak (5/5)

CHF - WEAK (3/5)

GBP - STRONG (5/5)

JPY - STRONG (3/5)

EUR - STRONG (5/5)

AUD - WEAK (5/5)

NZD - WEAK (4/5)

USD - STRONG (4/5)

SILVER - STRONG (2/5)

GOLD - STRONG (3/5)