The U.S. dollar gained strength after unemployment claims dropped to 216K, beating expectations of 229K, signaling a resilient labor market. However, the Employment Cost Index rose only by 0.8%, slightly below forecast, suggesting wage growth may be softening.
This week’s upcoming Non-Farm Payrolls and Average Hourly Earnings data could influence Fed policy, potentially affecting both the dollar and gold.
A stronger dollar and stable interest rates often put pressure on gold prices, as investors seek higher-yielding assets. Should employment data disappoint, gold may find support as investors seek safe-haven assets amid economic uncertainty.
The Dollar Index (DXY) is trading at $104.98, up 0.09%, while GBP/USD is down slightly at $1.28961. The DXY is hovering near a pivot point of $104.05; staying below this level suggests a bearish bias, with immediate support at $103.85 and $103.73.
A break above $104.05 could shift momentum upward, targeting resistance at $104.19 and $104.33.
For GBP/USD, the pivot at $1.29026 is key. If it remains below this level, further declines are likely, with support at $1.28633 and $1.28433. However, a push above $1.29026 could target $1.29207 and $1.29391.
Both assets are in tight ranges, with the dollar’s upward potential capped by a downward channel and GBP/USD constrained by a double top near $1.3015.
Gold (XAU/USD) is trading at $2,752.67, up 0.33% for the session, and hovers near the key pivot of $2,759. A break above $2,760 could push prices to resistance levels at $2,774, $2,790, and $2,807.
However, if prices fall below $2,746, support may come in at $2,732 and $2,718. The 50-day EMA at $2,759 reinforces this pivot, making it a critical level to watch for directional cues.
The British pound (GBP) softened after Nationwide HPI data showed just a 0.1% increase, missing the 0.3% forecast. Final Manufacturing PMI remains steady at 50.3, offering limited support to Sterling.
GBP/USD is trading at $1.28961, slightly down by 0.02% as it hovers near a key pivot at $1.29026. This pivot point is crucial; staying below it keeps a bearish outlook, with immediate support at $1.28633 and further levels at $1.28433 and $1.28229.
However, if GBP/USD breaks above $1.29026, it could shift bullish, targeting resistance at $1.29207 and $1.29391.
The 50-day EMA at $1.29497 aligns with resistance, adding to its significance. Essentially, the pound’s direction hinges on the pivot — a move above signals potential gains, while staying below suggests continued downside.
The Euro saw mixed movement as German retail sales beat expectations at 1.2%, while Core CPI held steady at 2.7% y/y. Italy’s unemployment rate improved slightly to 6.1%, but the Eurozone unemployment rate remained flat at 6.3%.
With French and Italian bank holidays on Friday, European market activity is expected to be limited, shifting focus to U.S. data for further market cues.
EUR/USD is trading at $1.08746, down 0.08% for the session, hovering around a key pivot point at $1.08749. This level is crucial; if the euro holds above it, we could see bullish momentum with resistance targets at $1.08879 and $1.09010.
However, if it breaks below, immediate support is expected at $1.08455, followed by $1.08268. The 50-day EMA at $1.08454 aligns with support, reinforcing its importance.
A move above the pivot signals strength, while a drop could lead to sharp selling pressure. For now, EUR/USD’s outlook hinges on this critical pivot area.
Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.