DXY near lowest level since July 2023

DXY Near Lowest Level Since July 2023- We start the new week with a lot of anticipation, as we await several key central bank decisions, including those from the Federal Reserve, the Bank of Japan, and the Bank of England. Alongside these decisions, there will be multiple economic releases expected this week. However, the main event is the Federal Reserve decision, which is expected to have the biggest impact on the markets. It seems that the markets are already pricing in the decision in advance, possibly as early as today.

The probability of a 50-basis-point rate cut at the September meeting, as indicated by the Fed Fund Futures, fell to below 10% at one point last week. However, by the end of Friday’s session, the odds rose to 60%, potentially explaining the earlier weakness in the US Dollar today.

DXY near 100.60 support

During the Asian session, the US Dollar Index dropped to 100.70, approaching its lowest level since July of last year. The main support is at 100.60, and it should be closely monitored. A breakthrough of this support level would pave the way for further declines towards the next support at 100.0 psychological level, followed by 99.60.

The Federal Reserve’s decision could be the turning point for the bearish trend of the US Dollar. You can observe the shift by looking back at historical data. The market has been anticipating a rate cut by the Federal Reserve since the beginning of the year. Cutting rates might not be as bearish as many think. However, the outcome will depend on the path and the size of the rate cut by the Federal Reserve.

Gold at new record high

Gold has recently broken out of its range, reaching a new record high of 2589.70. However, it is anticipated that there may be short-term selling pressure in the range between $2590 and $2600. It is cautioned that traders should avoid speculating on when Gold will peak, especially as the US Dollar is approaching a significant support level. If this support level is breached, Gold may continue to advance beyond $2600.

The technical indicators have just entered overbought territory, suggesting that Gold may not have much room to grow. However, traders should also wait for the upside momentum to ease before considering a short position.

Silver above $31.0

Silver has finally shown some volatility at the end of last week’s trading, breaking through multiple resistance areas and closing the week strongly bullish above $30. This marks its highest level since mid-July. Earlier this morning, Silver also reached $31.09 before easing back below $31.00.

The technical indicators remain bullish on most timeframes. Closing last week’s trading above $30 improved the bullish outlook even more, with a possibility of a continuation later this week. The next resistance area stands at $31.30, followed by $31.80. A break above those levels would pave the way for another leg higher toward the highest level of this year at $32.50.

USDJPY below 140.0

USDJPY started the week lower, dropping below 140.0 for the first time since July 2023 and reaching as low as 139.58. The technical indicators remain bearish on most timeframes. However, there is a possibility of a short-term bounce, especially if it continues to hold above 140.0. Additionally, the RSI is now below 30, indicating that the pair may have a little more room to go down.

Currently, the immediate resistance is at 140.90. If the resistance is broken, it might lead to another increase towards the 141.60 level. On the downside, if the price stabilizes below 140.0, it could indicate further declines towards 139.0 for now.

EURUSD may retest 1.12

EURUSD managed to rally despite the ECB’s rate cut last week. The rally was driven by two main factors: the weakness of the US Dollar and the ECB’s statement that it won’t commit to any specific rate path or timing for the next rate cut. This eased market expectations of another rate cut in the ECB’s next meeting.

Earlier this morning, EURUSD broke above 1.11, confirming the continuation of the upward trend. The currency pair is expected to stabilize above 1.11 as indicated by technical analysis. Most timeframes show bullish indicators that are not yet overbought, suggesting potential for further gains. There is a possibility for the exchange rate to surpass the 1.12 resistance area in the coming days, with the next immediate resistance level at 1.1275.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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