Outlook on XAUUSD & USDJPY

XAUUSD:

All eyes were on yesterday’s Consumer Price Index (CPI) ex Food & Energy monthly and yearly report. The result of the August report was below the expectation by 0.2%, this report shows a previous monthly statistic of 0.3% (July), a forecast of 0.3% and result of 0.1%. In addition, the yearly report shows that the actual result was 4% while the expectation was 4.2%. These negative results had its obvious impact on the market. Gold who was trading between $1793 and $1780 breaks its bearish movement. This pair price hiked by $20 and broke above its pivot level at $1800. After breaking this level what is next for gold?

Short-term technical outlook:

As we said that the yellow metal settled near daily tops and held steady through the Asian Session on Wednesday. If this pair continues its bull movement with the opening of European and American sessions, and have successfully broken above $1808 level, this pair will set the stage for additional gains. This break will accelerate the momentum back towards the supply zone at $1832. A break above the supply zone should push the metal towards the $1853 region in-route the $1868 resistance.

On the other side, the $1800-$1795 region now seems protecting the immediate downside ahead to the strong horizontal support at $1780. A break below this level will trigger the bearish momentum and set the stage for a sharp fall in the direction of the $1750 level. A break below 1750 will make this pair move towards the next relevant support near $1728 level.

USDJPY:

As we all know that XAUUSD and USDJPY have a negative correlation, and that has been shown lately in the market. A hike on the gold was followed by a drop on USDJPY by 80 base points and reached the level 109.30 by the middle of Wednesday’s European trading hours. As per the results mentioned above, this drop was caused by the release of the US Consumer Price Index on Tuesday at 12:30 GMT.

If the pair continues to trade below 109.30 its next support would be at 109.18. The last support level is at 109.00, which is below the August 16 and 17 low level, at this level this pair may reverse its downtrend movement and might recover. If it couldn’t recover its bearish movement will be directed to 108.73 level. However, on the upside a break above 109.60 would initiate the bullish movement and move to the following resistance level respectively to 109.99, then 110.15 and 110.20.

The important reports that may affect the major today are Japan Import Export data, and The Merchandise Trade Balance.  These data show a balance between import and export. A positive value in the Merchandise Trade Balance report shows a trade surplus while a negative value shows a trade deficit. Japan is so dependent on exports that the Japanese economy heavily relies on a trade surplus. Therefore, any variation in the figures influences the domestic economy. If a steady demand in exchange for Japanese exports is seen, that would turn into a positive.

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