Dollar Steady Amid Uncertainty; Yen Pressured by Instability (10.29.2024)

The EUR/USD holds at 1.0810 as a cautious Fed outlook and upcoming US election boost the dollar’s safe-haven appeal. 

The yen trades near 153, weakened by Japan’s political shifts and potential BoJ policy delays. Gold reaches $2,750 per ounce on strong safe-haven demand, driven by Fed policy expectations and US data releases. The GBP/USD slides amid diverging Fed and BoE paths, while silver eyes $34.00, supported by Middle East tensions and the upcoming US election.

EUR/USD Holds as Dollar Gains on Fed, Election Uncertainty

The EUR/USD pair remains steady around 1.0810 early Tuesday, with the US dollar consolidating as investors await Germany's GfK Consumer Confidence data. Anticipation of a slower pace of Fed rate cuts is likely to support the dollar near-term, with key US economic releases ahead, including Q3 GDP, ISM Manufacturing PMI, and employment data.

The US election on November 5 adds uncertainty, as FiveThirtyEight polls show Trump with a 52% chance of winning versus 48% for Harris, potentially bolstering the dollar as a safe-haven. In the ECB, Belgian bank chief Wunsch sees no rush to cut rates further, while Portugal’s Centeno suggests a 50-basis-point cut may be on the table for December

Resistance levels to watch are 1.0840, then 1.0865–1.0880 (where the 200-day and 50-week SMAs converge), and 1.0930. On the downside, support stands at 1.0770, followed by 1.0750 and then 1.0700 if pressure continues.

Yen Dips on Political Instability, BoJ Policy Hurdles

The Japanese yen traded around 153 per dollar on Tuesday, near three-month lows, pressured by political uncertainty after Japan's ruling coalition lost its parliamentary majority. This instability complicates the Bank of Japan's plans for policy normalization. Finance Minister Katsunobu Kato emphasized close monitoring of exchange rates, as further declines could prompt currency intervention, especially if it nears 160

The yen is also weighed down by a strong dollar, driven by cautious Fed rate cut expectations and potential election outcomes.

Technically, key resistance levels for USD/JPY are at 153.20, 154.50, and 156.60. On the downside, support levels to watch are 152.40, 151.40, and 150.30.

Gold Hits $2,750 Amid Key US Data Focus

Gold surged past $2,750 per ounce on Tuesday, hitting record levels as markets focused on upcoming US data, including PCE inflation, Q3 GDP estimates, and payrolls. These reports come just before the presidential election and the Fed’s policy decision next week. Despite signs of economic resilience, a recent labor market slowdown, partly due to hurricanes, has strengthened expectations for a 25 basis point rate cut, now priced with a 98% probability, supporting gold’s appeal as a non-yielding asset. China’s gold consumption also fell by over 11% year-on-year.

On the technical side, gold broke out of a triangle pattern, with resistance at 2758. If this is cleared, the next levels to watch are 2770 and the 2795-2800 range. For support, levels to monitor are 2743, followed by 2726 and 2714.

Pound Weakens as Fed, BoE Rate Paths Diverge

The GBP/USD pair faces renewed selling pressure in Tuesday's Asian session, drifting toward the mid-1.2900s but still above last week's lows. The US dollar’s strength, supported by expectations of a cautious Fed approach to policy easing, has halted its recent decline, weighing on the GBP/USD pair. Speculation around potential BoE rate cuts in November and December further supports a bearish outlook.

Technically, initial support is at the daily trendline at 1.2930. A break could shift focus to 1.2865, followed by the 200-day moving average at 1.2800. Resistance levels to watch are at 1.2990, 1.3015, and the 20-day moving average at 1.3040.

Silver Eyes $34.00 on Safe-Haven Demand

Silver (XAG/USD) is climbing toward $33.90 on Tuesday, supported by Middle East tensions, global economic uncertainties, and the upcoming US presidential election. Iran's cautious response to Israeli strikes has kept market participants alert to potential escalation, which could further support safe-haven demand for silver.

Central banks globally are easing monetary policy, with the Fed expected to cut rates in November, though a less aggressive approach could limit silver's upside. Key reports later this week, including Q3 GDP, PCE Price Index, and NFP, may impact expectations for Fed rate cuts.

Technically, silver is testing the 34.00 resistance. If breached, the next levels to watch are 34.90 and 35.30. On the downside, key supports are at 33.05, 32.50, and 32.00.