Fundamental & Technical Analysis by Coach Mark RoboAcademy during 16 – 20 September 2024

Hello everyone, welcome to the weekly analysis of currency pairs EUR/USD, GBP/USD, and XAU/USD for the third week of September, from 16 – 20 September 2024.

EUR/USD, “Euro vs US Dollar”

Fundamental Analysis

Significant Economic Events Impacting EUR/USD This Week:

European Economic Data:

• Consumer Price Index (CPI): This report provides insights into inflationary pressures in the Eurozone. If inflation remains low, it may support the European Central Bank (ECB) in maintaining its monetary policy. A CPI reading below expectations could indicate the need for continued accommodative monetary policy and put downward pressure on the euro.
• Germany’s ZEW Economic Sentiment Index: Measures institutional investors’ confidence in the future economic outlook. A high index value reflects confidence in the economy, while a lower value indicates pessimism. Given Germany’s role as the largest economy in the Eurozone, weak sentiment could negatively affect the euro.
• Eurozone Trade Balance: This data reflects the comparison between the Eurozone’s exports and imports. A trade surplus supports the euro, while a deficit may weaken it. Global economic conditions and trade tensions could influence this data.

U.S. Economic Data:

• Retail Sales: Retail Sales Indicate consumer spending, which is a key measure of economic strength. Strong retail sales may raise expectations of a tighter monetary policy from the Federal Reserve (Fed) and strengthen the U.S. dollar. Weak retail sales could lead to a more accommodative stance from the Fed.
• Federal Reserve Interest Rate Decision: An interest rate hike to combat inflation may boost the U.S. dollar. However, if the Fed signals a more dovish stance, it could support the euro in the EUR/USD pair.

Technical Analysis

The price has formed a short-term downtrend channel, and the latest daily candle closed in red near the trendline, signaling that the price may continue to decline.  

You may wait for a sell price action and monitor if the price will drop to test the 1.10080 zone (Daily Timeframe Support). You can use 1.11000 as a stop-loss level if the price moves up to this point.

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

Fundamental Analysis

Significant Economic Events Impacting GBP/USD This Week:

U.K. Economic Data:

• Consumer Price Index (CPI): This week, the release of the CPI will provide key insights into inflationary pressures. If inflation is higher than expected, the Bank of England (BoE) may consider tightening monetary policy, which could support the pound. Conversely, if inflation decreases, it may add pressure to the pound.
• Producer Price Index (PPI): PPI measures the cost of goods and services from the producer’s perspective. An increase in PPI indicates inflationary pressures that could affect consumers and influence BoE’s decisions. If PPI rises, the pound may be supported, while lower-than-expected figures could pressure the pound.
• Bank of England (BoE) Interest Rate Decision: This announcement will be a key event for GBP/USD. If the BoE adopts a hawkish stance to control inflation by raising interest rates further, it could support the pound. Conversely, if the BoE adopts a more dovish tone or expresses concerns about an economic slowdown, it could weaken the pound.
• Retail Sales Data: Retail sales will provide insights into consumer spending in the UK. Strong retail sales growth may indicate a robust economy and support the pound, while weak retail sales could signal economic weakness and put downward pressure on the pound.

U.S. Economic Data:

Key U.S. Economic data, such as retail sales and the Federal Reserve’s interest rate decision, will play a crucial role in determining the direction of GBP/USD. If data comes out strong and the Fed takes a hawkish stance, the dollar may strengthen against the pound.

Technical Analysis

The price is moving similarly to EURUSD, with the current candle closing in red near the trendline, possibly forming a downtrend. Wait for a sell price action in the smaller timeframe to find an entry point and look for the price to test the support zone at 1.30400 (using 1.31600 as the stop loss).

XAU/USD, “Gold vs US Dollar”

Fundamental Analysis

Significant Economic Events Impacting XAU/USD This Week:

Economic Data Related to Gold:

• Federal Reserve (Fed) Interest Rate Decision: This announcement will be a key factor in determining the direction of XAU/USD. If the Fed adopts a hawkish stance to control inflation by raising interest rates further, the U.S. dollar may strengthen, putting pressure on gold prices. Conversely, if the Fed signals a more dovish tone, gold prices may find support.
• U.S. Retail Sales Data: This data provides insight into consumer spending, a key driver of the U.S. economy. Strong retail sales could support the Fed’s hawkish stance, strengthening the dollar and weakening gold prices. On the other hand, weak retail sales may indicate an economic slowdown, increasing demand for gold as a safe-haven asset.
• Eurozone Consumer Price Index (CPI): The Eurozone CPI will reflect the inflation situation in the region. If inflation remains low, the European Central Bank (ECB) may maintain its accommodative monetary policy, which could impact XAU/USD through changes in the euro’s value relative to the dollar.
• U.S. Consumer Confidence Index: This data reflects the outlook on consumer spending and is closely monitored by investors. Strong consumer confidence could support the dollar and put downward pressure on gold prices, while weak confidence might increase demand for gold as a safe-haven asset.

Technical Analysis

The current ATH closed at 2580, and it is recommended to avoid entering any Sell or Buy positions at this point. Wait and observe the price action first. It might be better to allow the price to pull back slightly and then look for an opportunity to follow a Buy around the 2560 zone (using round numbers based on psychological levels).  

Additionally, the price may retest the 2600 level, which is likely another psychological resistance zone. It is advisable to take a break from trading this pair for now and focus on other currency pairs. Wait for the price to form clear support and resistance zones before taking action. Buying at this price level is not recommended as there could be a strong drop, and selling is also not advised since the extent of the price’s upward movement is uncertain.

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.