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Gold in Record Zone as Dow Breaks Out; EUR/USD, USD/JPY Eye NFP

Volatility spiked across many assets last week, producing notable breakouts and breakdowns in the process. First off, U.S. Treasury yields plummeted across the board, with the 2-year yield sinking below its 200-day simple moving average and reaching its lowest level since early June at 4.54%.

Falling U.S. bond yields, coupled with bullish sentiment on Wall Street, boosted stocks, pushing the Dow Jones 30 above its July peak and close to its all-time high. The Nasdaq 100 also advanced, but failed to take out overhead resistance near 16,100.

The market dynamics also benefited precious metals, triggering a strong rally among many of them. Gold spot prices, for example, rose by 3.5% and came within striking distance from overtaking its record near $2,075. Silver, meanwhile, gained 4.7%, closing at its best level since May.

In the FX space, USD/JPY plummeted 1.77% on the week, breaking below its 100-day simple moving average – a bearish technical signal that could portend further losses for the pair. EUR/USD, for its part, was largely flat, with lower-than-expected Eurozone inflation reducing the single currency’s appeal.

Looking ahead, if U.S. interest rate expectations continue to shift lower, U.S. yields are likely to come under further downward pressure, setting the stage for a weaker dollar. Against this backdrop, risk assets and precious metals could remain supported moving into 2024.

Upcoming U.S. data, including ISM services PMI and non-farm payrolls (NFP), will give us the opportunity to better assess the Fed’s monetary policy outlook. Soft economic figures could reinforce dovish expectations, while strong numbers could result in the unwinding of rate-cut bets. The latter scenario might induce a reversal in recent trends across key assets.

For a deeper dive into the catalysts that could guide financial markets and drive volatility in the coming trading sessions, explore the DailyFX’s carefully curated week-ahead forecasts.

UPCOMING US ECONOMIC DATA

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Source: DailyFX Economic Calendar

FUNDAMENTAL AND TECHNICAL FORECASTS

British Pound Weekly Forecast: US Rate Views Will Drive, Uptrend Under Threat

The British Pound has risen consistently against the United States Dollar since late September, but most of the rally has been a ‘Dollar weakness’ story rather than a vote of confidence in Sterling.

Japanese Yen Weekly Forecast: The Yen Remains at the Mercy of External Factors

The Japanese Yen has made significant gains against the Euro and Greenback in the past week. The move was driven largely by Euro and USD fundamentals and I expect that to continue.

Oil Weekly Forecast: Crude Oil Markets Dissatisfied by OPEC+

Crude oil prices slumped last week after OPEC+ announced voluntary cuts into 2024 as US factors play an important role in short-term guidance this week.

Euro (EUR) Forecast: EUR/USD, EUR/GBP Crumble as Rate Cut Talk Gets Louder

The Euro has sold off against a range of other currencies this week as expectations of an ECB rate cut grow and bond yields slump.

Gold Weekly Forecast: XAU Eyes NFP After Powell

Gold prices rallied to end the week well above the $2000 mark as XAU/USD heads into the overbought zone.

US Dollar’s Trend Hinges on US Jobs Data, Setups on EUR/USD, USD/JPY, GBP/USD

This article focuses on the technical outlook for major U.S. dollar pairs such as EUR/USD, USD/JPY and GBP/USD. The piece also examines key price levels that could come into play ahead of the November U.S. jobs report.

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