Key Points: Prior to the announcement of nonfarm employment statistics, gold (XAU) sets a new high above $2,770.
Before US employment data is released, the US dollar (DXY) consolidates at the high resistance.
The EUR/USD appears higher after recovering from a strong support level.
The US dollar (DXY), EUR/USD, and gold (XAU) are all significantly impacted by the impending US election and employment data. Ahead of important economic releases, the US dollar consolidates at resistance as prudence increases. The EUR/USD pair recovers from the support level of 1.0790. Investors anticipate that the forthcoming US presidential election and Friday's nonfarm employment data will have a big influence on market sentiment. Significant changes in policy could result from a potential triumph by former President Donald Trump. As markets contemplate the consequences of fiscal and monetary policy, this prospect propels the US dollar's upward velocity.
Concerns about trade imbalances and possible economic deceleration were raised after the goods trade balance reported a higher-than-expected deficit of $108.2 billion in September. There were fewer job vacancies in September, according to employment-related data from the Job vacancies and Labor Turnover Survey (JOLTS). This could indicate that the labor market is cooling. On Wednesday, the US labor market will be glimpsed through the ADP private employment report. The employment cost index and the core PCE price index will also be used as measures to evaluate employment conditions on Thursday. But Friday's nonfarm employment change report, which will offer a more thorough look at employment patterns, is what investors are most interested in. The dollar may strengthen in response to a good nonfarm employment change report, further straining the EUR/USD exchange rate.
Gold responds to these changes as well. Prior to the announcement of employment data, gold prices showed positive momentum, indicating that investors are protecting themselves from possible volatility. The dollar might appreciate even more if the employment data shows strong job growth. However, the gold market has not been greatly impacted by the US dollar's gain in October. This is due to the fact that both assets are regarded as safe havens in light of the current Middle East geopolitical turmoil. The demand for gold, however, can rise in response to any indications of a weakening economy and greater uncertainty.
Technical Analysis of Gold (XAU)
Gold Daily Chart: A Series of Positive Trends
On the daily chart, the price moves within an ascending broadening wedge and develops a number of bullish patterns. In July and August of 2024, the price made a double bottom, establishing a bottom within this wedge. The price rose after hitting this low.
Additional bullish activity is indicated when a descending broadening wedge formation appears inside the ascending broadening wedge pattern. A robust rally toward the red-dotted trend line followed the breakthrough from the descending expanding wedge. At $2,760, the price has broken the trend line and is about to rise in anticipation of the release of the job data.
Gold 4-Hour Double-Bottom Chart
The price of gold is moving in an ascending channel pattern on the 4-hour chart, which also displays good price movement. Along the middle of the channel, a double bottom has developed, indicating the possibility of additional upward movement. The resistance line of the ascending channel indicates $2780 as the beginning resistance for this trend.
Technical Analysis of the US Dollar
Correction to the US Dollar Daily Chart
October has seen no pullback in the strength of the US dollar. The unpredictability of the US elections was the cause of this strength. After the election results are announced, the real movement can become more noticeable. The daily chart's 103.90 barrier has been breached by the US dollar index, and a retest of this breakout has triggered another buy signal, driving the index higher. Based on the red trend line that extends from October 2023, 105.60 is the aim for this upward rise. The index, however, is displaying short-term weakness and is seeking a correction.
US Dollar 4-Hour Chart: Resistance-Related Correction
The index looks for the short-term resistance at 104.50, as the 4-hour chart demonstrates. Price strength is demonstrated by the US dollar index's steady increase throughout October with few corrections. For the last 30 days, the RSI has been above the mid-level, indicating that the US dollar index needs to correct.
Technical Analysis of EUR/USD
Price Rebounds from Support in the EUR/USD Daily Chart
Near the margin of a descending expanding wedge pattern, the price is consolidating. The EUR/USD exchange rate is rising as the US dollar consolidates ahead of the US employment report. The EUR/USD bearish impact will lessen if it rises above $1.0870. A daily closing below $1.0770, though, would probably keep the market moving lower. The black dotted line offers support at the $1.0680 and $1.0615 levels in the event of a collapse. But according to the RSI, the EUR/USD looks to be well oversold.
4-Hour EUR/USD Chart: Supporting Price Consolidation
The 4-hour chart indicates that the EUR/USD is under bearish pressure. The EUR/USD exchange rate is recovering from the support levels as the US dollar begins to adjust. The bearish impact on EUR/USD will subside if it breaks over $1.0870. On the 4-hour chart, the RSI indicator indicates more upside.
