Market Movers: US GDP & Core PCE Could Fuel Silver and EUR/USD Rally

The EUR/USD pair hit the yearly top at 1.1215 before retreating around 80 pips amid stronger-than-expected US home sales data. XAG/USD also benefits from the weaker dollar, reaching the 5-month peak at $32.50.

Fundamental Analysis

As the month-end and quarter-end approaches, we may see some jerks in the markets. The US dollar and the yields may attempt to regain some ground. However, the Fed’s dovish outlook and plan to cut 50 bps further in 2024 may keep the dollar under pressure. The ECB-Fed difference will be narrowed, providing room for Euro buyers. Similarly, non-yielding silver may also benefit from lowering interest rates worldwide.

This week’s important events include the US GDP and the US Core PCE Index. The Fed Chair’s speech may also have a strong impact on the markets. Should the US GDP number exceed 3.0%, the dollar bulls may gain strength. Similarly, if the US Core PCE Index data comes above 0.2%, it can help the dollar trigger a rally against other currencies and commodities.

EUR/USD Chart Analysis

After briefly breaching the Aug 26 highs, the price reversed, printing a bearish pin-bar candle on the daily chart. However, the price is well above the 20-day SMA. So, the probability of a bearish reversal is still low. Both 50-day and 100-day SMAs are pointing north. Hence, sellers got no respite for now.

1.1065 is the first stiff support that sellers must break to relieve the buying pressure. As long as the price stays above this level, it may attempt to test the July 2023 top at 1.1275.

EUR/USD Key Resistance Levels

Resistance 1: 1.1065 (recent swing low)

Resistance 2: 1.1000 (psychological mark and swing low)

Resistance 3: 1.0945 (key horizontal level)

EUR/USD Key Support Levels

Support 1: 1.1153 (orderblock)

Support 2: 1.1200 (psychological mark)

Support 3: 1.1275 (2023 high)

XAG/USD Chart Analysis

Silver follows gold’s path due to its strong positive correlation. Though XAGUSD marked a monthly high above $32.00, it pulled back slightly. The uptrend remains intact as the price is well-bid above the key moving averages.

However, the 20, 50 and 100 SMAs on the daily chart have been in congestion, suggesting a potential consolidation around the current levels. The price may pull back further towards the $30.00 area, but this will still be a bullish trend due to the strong order block zone.

XAG/USD Key Resistance Levels

Resistance 1: 32.73 (potentially new top)

Resistance 2: 32.26 (recent swing high)

XAG/USD Key Support Levels

Support 1: 31.28 (orderblock)

Support 2: 31.31 (swing low)

Silver and EURUSD traders may try hunting for trading opportunities around key events like US GDP, Fed speech and US inflation. 

Conclusion

The US dollar’s downtrend amid the Fed’s rate cuts led the markets. Silver, EURUSD and other commodities and currencies continue to rally. However, the dollar has a breather ahead of US GDP, Fed speech and US Core PCE Index data. Depending on the data, the US dollar may trigger a meaningful recovery against the XAGUSD and EURUSD.

This article was brought to you by the FXGT.com team of Analysts.