Fundamental & Technical Analysis by Coach Mark RoboAcademy during 21 – 25 October 2024

Hello everyone, welcome to the weekly analysis of currency pairs EUR/USD, GBP/USD, and XAU/USD for the fourth week of October, from 21 – 25 October 2024.

EUR/USD, “Euro vs US Dollar”

Fundamental Analysis

Significant Economic Events Impacting EUR/USD This Week:

European Economic Data:

• Eurozone Consumer Confidence Index (October 21): This index reflects consumers’ confidence in the Eurozone. If consumer confidence is strong, it may support the euro as it indicates a positive economic outlook. However, if confidence declines, the euro may weaken.
• PMI for Germany and the Eurozone (October 22): PMI measures the health of the manufacturing and services sectors. A strong PMI reading reflects economic expansion, which may strengthen the euro. Conversely, if the PMI comes in lower than expected, the euro may weaken.
• European Central Bank (ECB) Officials’ Statement (October 23): If ECB officials provide a positive outlook on monetary policy, it could support the euro. However, if they signal economic risks, the euro may weaken.
• ECB Meeting (October 24): The results of the ECB meeting have significant impacts on monetary policy. If the ECB signals further monetary easing, it may lead to a weaker euro.
• ECB President’s Statement (October 25): Investors will closely watch the ECB President’s statement. If the outlook on the European economy is positive, it may support the euro. However, concerns about the economy could lead to a weaker euro.

U.S. Economic Data:

• US Manufacturing PMI (October 22): This index reflects the status of the manufacturing sector in the US. A strong PMI reading may strengthen the US dollar, which could put downward pressure on the EUR/USD pair.
• US New Home Sales (October 23): Strong new home sales indicate confidence in the housing market, which may support the US dollar and put pressure on the EUR/USD pair.
• US Initial Jobless Claims (October 24): If the number of jobless claims is lower than expected, it may support the US dollar and could cause the EUR/USD pair to decrease.
• US Core PCE Price Index (October 25): This is a key inflation indicator. If the data comes out strong, it could strengthen the US dollar and apply downward pressure on the EUR/USD pair.

Technical Analysis

The price has started to show signs of a downtrend, having tested the support level at 1.08400 and rebounded. However, from a technical perspective, there is still a chance for the price to drop further towards the base at 1.07775.

The current trading strategy should focus on a Sell bias, looking for opportunities to continue the downward movement. A potential Sell zone lies between the Fibonacci levels of 0.5 and 0.618, which can be considered for opening Sell positions. However, if the price moves back above the 0.382 Fibonacci level, this should be used as a Stop Loss point to mitigate risk on this order.

GBP/USD, “Great Britain Pound vs US Dollar”

Fundamental Analysis

Significant Economic Events Impacting GBP/USD This Week:

U.K. Economic Data:

• Bank of England (BoE) Officials’ Statement (October 23): If BoE officials signal changes in interest rates or future economic trends, it may directly impact the pound, particularly if there are indications of a monetary policy easing, which could weaken the currency.
• BoE Governor’s Statement (October 25): The statement from the BoE Governor has a direct effect on the pound. If concerns about the economy are expressed or signs of easing monetary policy are given, the pound may depreciate.

U.S. Economic Data:

• US Manufacturing PMI (October 22): If the PMI index is strong, the US dollar may strengthen, putting downward pressure on GBP/USD.
• US New Home Sales (October 23): New home sales in the US are an indicator of confidence in the US economy. If the numbers are positive, it reflects confidence in the economy and supports the dollar, leading to a decline in GBP/USD.
• US Initial Jobless Claims (October 24): If the figures are better than expected, the dollar will strengthen, causing GBP/USD to decrease.
• US Core PCE Price Index (October 25): This important inflation indicator, if reported higher than expected, could strengthen the US dollar and put further pressure on GBP/USD.

European Economic Data Affecting GBP/USD:

• Eurozone Consumer Confidence Index (October 21): If consumer confidence in the Eurozone is weak, it may put downward pressure on the pound due to the trade relationship between the Eurozone and the UK.
• PMI for Germany and the Eurozone (October 22): If the PMI in the Eurozone is weak, the euro may weaken, which could negatively impact the pound due to the economic ties between the Eurozone and the UK.
• European Central Bank (ECB) Meeting (October 24): If the ECB signals a relaxation of monetary policy, it may have a negative impact on the pound.

Technical Analysis

The GBP/USD chart has a similar pattern to EUR/USD, with the price starting to lose structure and showing a potential downtrend. The same trading strategy as EUR/USD applies, focusing on a Bias Sell. The key area to consider for opening a Sell order is around the Fibonacci levels between 0.5 and 0.618, which can be identified as a potential Sell zone as well.

XAU/USD, “Gold vs US Dollar”

Fundamental Analysis

Significant Economic Events Impacting XAU/USD This Week:

Economic Data Related to Gold:

• Eurozone Consumer Confidence Index (October 21): If confidence in the Eurozone is strong, it will increase demand for risk assets, potentially reducing demand for gold as a safe haven, leading to a decline in XAU/USD. Conversely, if confidence is weak, gold may become more sought after.
• PMI Index for Germany and the Eurozone (October 22): A weak PMI reading for the Eurozone could raise concerns about economic growth, increasing demand for gold as a safe haven and potentially pushing XAU/USD higher.
• US Manufacturing PMI (October 22): This data indicates the strength of the US economy. A strong result may lead to a stronger dollar, which typically pressures gold prices (XAU/USD) lower, as gold often moves inversely to the dollar.
• US New Home Sales (October 23): Strong new home sales typically indicate economic growth in the US, leading to a stronger dollar and putting downward pressure on gold (XAU/USD). Conversely, lower-than-expected sales may increase interest in gold as a safe haven.
• Fed Speech (October 23): If Federal Reserve officials signal a continuation of tight monetary policy, it may strengthen the dollar and apply downward pressure on gold prices.
• US Initial Jobless Claims (October 24): Jobless claims reflect the health of the US labor market. If claims are lower than expected, it will support the dollar and pressure gold prices. Conversely, higher-than-expected claims may boost gold due to expectations of a slowdown in the Fed’s tight monetary policy.
• European Central Bank Meeting (October 24): If the ECB signals a loosening of monetary policy, it may weaken the euro, putting upward pressure on gold as a risk hedge.
• US Core PCE Price Index (October 25): This is a key inflation measure for the Fed. A higher-than-expected reading may lead to speculation about interest rate hikes, strengthening the dollar and pressuring gold. Conversely, weak inflation data could support gold as expectations for steady or lower interest rates increase.
• Fed Chair Speech (October 25): Investors will closely watch the Fed Chair’s remarks. Signals of economic uncertainty or a slowdown in tightening policy may boost gold as a safe haven asset.

Technical Analysis

Currently, the price of gold is at an All-Time High (ATH), making it challenging to predict its future direction. During this period, trading gold requires heightened caution. Selling now poses the risk of prices continuing to rise, while an immediate buy could lead to a significant drop.

The recommendation is to wait for a slight pullback before entering a buy position. You might consider using psychological support and resistance levels (Round Numbers), such as every 1000 points (2710-2700-2690-2680) as potential buy points.

If you prefer to trade based on actual price zones, it’s advisable to wait for the price to test the 2685-2670 range. If you enter a buy order and the price holds in this zone, there’s a strong possibility it could rise even further.

Disclaimer: This article is solely an analysis from the coach at RoboAcademy and is not intended as investment advice in any way. Investing is risky. Investors should study the information before making investment decisions.