Gold and Japanese Yen rise ahead of FED Interest Rates Decision
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The Fed will announce its next monetary policy decision on Wednesday, driving Gold and the Japanese Yen to new long-term high prices.
Markets are split on whether the central bank will cut rates by 25 basis points to a range of 5% to 5.25% or by 50 basis points to a range of 4.75% to 5%.
This week will see the decision of many central banks around the world, if the general consensus is that inflation is falling, the decisions will give an indication on the views of the overall economic outlook.
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GOLD
Gold hit a new high as markets waited for the Federal Reserve to begin easing monetary policy for the first time in more than four years.
Gold touched nearly $2,590 per ounce and now trading around $2580 area.
Central-bank buying and strong haven demand due to conflicts in the Middle East and Ukraine have helped the advance.
The precious metal was also supported by a weaker US dollar, which fell after an apparent assassination attempt against former President Donald Trump.? The benchmark 10-year US Treasury bond yield holds above 3.6% making difficult for XAU/USD to find direction.
Technical Overview
Gold is trading bullish and could keep rising higher and higher.
Gold is in the overbought zone, according to the RSI, but in a strong uptrend on all timeframes. If the RSI drops back out of overbought might indicate a possible correction. In the event of a correction, the first support lies at $2,550, $2,544 (0.382 Fibonacci retracement of the September rally), and $2,530 which has been representing a significative resistance in the past.
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Japanese YEN
JPY net long positions are at their highest level since October 2016. The USD/JPY bounced and trading now just below ￥140.70 bottom which changed the short- and medium-term timeframes to bearish after the currency pair traded at a new 1-year low below the round number of ￥140, at ￥139.56. Trend and momentum traders will be interested in being long of the Yen.
Technical Overview
The MACD oscillator is standing beneath its trigger and zero lines, while the RSI is crossing below the 30 level.
Additional downward pressure with the significative break below the ￥140 level might push the bears to the July 2023 low of 137.25 before they collapse to the psychological level of 133.00, which was recorded in April 2023.
On the other hand, the break of the 140.70 area might drive the pair to the short-term descending trend line at 141.70 which may halt the upside rally.
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