Silver Price Analysis: XAG/USD seems poised to appreciate further and aim to reclaim $21.00

Silver oscillates in a narrow band and consolidates its recent gains to a multi-week high.

The overnight breakout through the 50-DMA/50$ Fibo. confluence favours bullish traders.

Any meaningful dips could now be seen as a buying opportunity and remain short-lived.

Silver consolidates the previous day's strong gains to a six-week high and remains confined in a range above mid-$20.00s heading into the North American session.

The overnight breakout through the $20.30-$20.35 confluence - comprising the 50-day SMA and the 50% Fibonacci retracement level of the $22.52-$18.15 downfall - favours bullish traders. Positive technical indicators on the daily chart add credence to the constructive set-up and support prospects for a further near-term appreciating move.

Hence, a subsequent move up towards the 61.8% Fibo. level, around the $20.85 area, now looks like a distinct possibility. Some follow-through buying beyond the $21.00 mark would be seen as a fresh trigger for bulls and lift the XAG/USD towards the $21.40-$21.50 intermediate resistance en-route the $22.00 round-figure mark.

The latter coincides with the 100-day SMA and should keep a lid on any further gains for the XAG/USD, at least for the time being. That said, a convincing break above should pave the way for an extension of the recent recovery move from a two-year low, around the $18.15 region touched on July 14.

On the flip side, the $20.35-$20.30 confluence resistance breakpoint now seems to protect the immediate downside ahead of the $20.00 psychological mark. This is closely followed by the $19.80-$19.75 region (38.2% Fibo. level), Friday's swing low around the $19.55 area, and the 23.6% Fibo. level support, around the $19.20 zone.

Failure to defend the aforementioned support levels would negate any near-term positive bias and shift the bias back in favour of bearisha traders. The XAG/USD would then turn vulnerable to weaken further below the $19.00 mark, towards the next relevant support near the $18.40 area en route to the YTD low, around the $18.15 region.

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GBP/USD on track to break below the July 29 low near 1.2065 – BBH

GBP/USD has stabilized after its post-BoE sell-off but remains heavy. With no obvious safety net in sight, economists at BBH expect the pair to drop under the July 29 low at around 1.2065.

BoE is set to continue tightening

“A move above 1.21 earlier today failed to trigger any follow-through buying. We believe GBP/USD is still on track to break below the July 29 low near 1.2065.”

“Despite the gloomy outlook, the Bank of England is set to continue tightening as inflation spirals ever higher.”

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Dollar firm ahead of jobs report – BBH

Win Thin, Global Head of Currency Strategy at BBH, offers a brief overview of the US dollar price action on Friday and the closely-watched US monthly jobs data. The popularly known NFP report would play a key role in influencing the near-term USD price dynamics amid the recent hawkish remarks by several Fed officials.

Key Quotes:

“DXY has risen 3 of the past 4 days and is trading near 106 currently. We maintain our strong dollar call as Fed officials are making it clear that markets misread the Fed’s commitment to lowering inflation.  The greenback is also getting more traction as data came in stronger than expected.  Today’s jobs data will likely be key for the medium-term dollar outlook.”

“Consensus sees 250k jobs added vs. 372k in June, while the unemployment rate is expected to remain steady at 3.6% and average hourly earnings are seen falling two ticks to 4.9% y/y.  Fed Chair Powell stressed labor market strength many times in his post-decision press conference, which supports our view that the Fed is not about to pivot while the economy remains at full employment.  June consumer credit will be also reported and is expected at $27.0 bln vs. $22.347 bln in May.”

“WIRP suggests a 50 bp hike September 21 is fully priced in, with around 40% odds of a larger 75 bp move.  The swaps market is pricing in 100 bp of tightening over the next 6 months that sees the policy rate peak near 3.5%, followed by the start of an easing cycle over the subsequent 6 months.  The Fed has made it clear that this is not its expected rate path and so we look for a hawkish shift in market pricing in the coming days and weeks if the U.S. data cooperate.”

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EUR/USD Price Analysis: Looks side-lined within 1.0100-1.0300

EUR/USD regains poise and approaches 1.0200 on Thursday.

Price action remains stuck with the 1.0100-1.0300 range.

EUR/USD reverses part of the weekly pullback and manages to retest the vicinity of the 1.0200 region on Thursday.

In light of key releases in the US docket on Friday, the pair is expected to keep the current 1.0100-1.0300 range broadly in place for the time being. The loss of the lower bound of the range could see a potential visit to the parity level return to the radar.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0934.

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Gold Price Forecast: XAU/USD retreats from 50-HMA with eyes on Taiwan, US macro

Gold price fades recovery moves as traders struggle for clear directions.

China Caixin Services PMI, mixed Fedspeak favor XAU/USD buyers.

US-China tensions over Taiwan, recession woes keep sellers hopeful.

US ISM Services PMI, Factory Orders may entertain traders but risk catalysts are more important.

Gold price (XAU/USD) fails to extend daily gains around $1,770 amid the early Wednesday morning in Europe. In doing so, the yellow metal buyers struggle for fresh clues to stretch the latest recovery moves inside a trend-widening chart pattern.

Mixed concerns over Taiwan and an absence of strongly hawkish Fed comments seem to restrict immediate XAU/USD moves. Also challenging the gold price is the upbeat prints of China Caixin Services PMI for July contrasting to the official activity numbers at home and abroad, as well as broad recession woes.

US House Speaker Nancy Pelosi vows to not abandon Taiwan amid Chinese pressure, per Bloomberg, while Taiwan President shows readiness to retaliate Beijing military moves, if any. On the other hand, the private services gauge from the dragon nation rose to 55.5 versus 48 expected and 54.5 prior.

Elsewhere, St. Louis Federal Reserve President James Bullard and Cleveland Fed President Loretta Mester talked down US recession concerns while supporting chatters about the 50 basis points (bps) rate hike in September. However, San Francisco Fed President Mary Daly said that she is looking for incoming data to decide if they can downshift the rate hikes or continues at the current pace, as reported by Reuters.

Amid these plays, S&P 500 Futures rise 0.25% intraday while the US 10-year Treasury yields drop 1.5 basis points (bps) to 2.726% at the latest.

Given the market’s indecision, gold traders should wait for the US Factory Orders for June and ISM Services PMI for July. Also important will be to the headlines surrounding China, Taiwan and Fed.

Technical analysis

Gold price pares daily gains inside a one-week-old megaphone trend widening technical chart formation on the hourly play.

That said, the XAU/USD’s latest pullback from the 50-HMA, at $1,770 by the press time, lacks support from the MACD, which in turn hints at the quote’s further advances towards the previous day’s high near $1,788.

However, upper line of the aforementioned megaphone pattern, near $1,790, could challenge the bullion’s further upside.

Meanwhile, pullback moves may initial aim for the stated formation’s support line, close to $1,755, before directing gold sellers towards the 50% Fibonacci retracement of July 27 to August 02 upside, near $1,749.

Also acting as the downside filter is the 61.8% Fibonacci retracement level around $1,740.

Overall, gold price grinds higher and may witness further volatility inside the megaphone.

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EUR/JPY Price Analysis: Outlook negative below the 200-day SMA

EUR/JPY drops further and challenges the key 200-day SMA.

Below the latter, the cross could risk a deeper retracement.

EUR/JPY extends the bearish move well south of the 134.00 mark on Tuesday.

In the meantime, price action in the cross remains entrenched in the negative territory, losing ground for the fourth consecutive session so far.

A break below the key 200-day SMA, today at 133.69, carries the potential to accelerate losses and shift the outlook to negative.

Immediately to the downside now emerges the May low at 132.65 (May 12).

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GBP/USD climbs to fresh daily high, further beyond 1.2200 amid sustained USD selling

GBP/USD regains positive traction on Monday amid the prevalent USD selling bias.

Diminishing odds for more aggressive Fed rate hikes continue to weigh on the USD.

A softer risk tone, rebounding US bond yields to limit the USD losses and cap the pair.

The GBP/USD pair jumps back above the 1.2200 mark during the early part of the European session, attracting fresh buying on the first day of a new week. Spot prices, however, still remain well below a one-month high at around the 1.2245 touched on Friday.

The US dollar languishes near its lowest level since July 5, which is turning out to be a key factor lending support to the GBP/USD pair. Market participants continue to scale back their expectations for more aggressive rate hikes by the Federal Reserve amid worries about an economic downturn. This, to a larger extent, overshadows Friday's stronger US Personal Consumption Expenditures (PCE) and continues to weigh on the greenback.

The British pound in contrast is underpinned by rising bets for a 50 bps rate hike by the Bank of England – though, that said, a combination of factors could cap gains for the GBP/USD pair. The recent optimistic move in the equity markets has run out of steam amid growing recession fears. This, along with a modest bounce in the US Treasury bond yields, should help limit the downside for the USD and act as a headwind for the major, at least for now.

Investors might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of confirmation from the Bank of England policy meeting on Thursday. Apart from this, important US macro data scheduled at the beginning of a new month would determine the next leg of a directional move for the GBP/USD pair. A rather busy week kicks off with the release of the ISM Manufacturing PMI, which could provide some trading impetus to the major.

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