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EUR/USD Plunges Amid USD Rally, Gold Recovers $1.970

The Euro’s Falls

The EUR/USD pair experienced a significant downfall, dipping below 1.0600 on Tuesday. This drop is primarily attributed to the strengthening of the US Dollar, which has been outperforming its rivals, thanks to the rise in the Manufacturing PMI and Services PMI in early October.

EURUSD Daily Chart

EURUSD Daily Chart

Despite flirting with the 1.0700 threshold earlier in the day, the pair witnessed a retreat towards the current 1.0620 price zone. This can be credited to a series of discouraging European data, including the November German Gfk Consumer Confidence Survey and the preliminary estimates of the October Producer Manager Indexes (PMIs) by S&P Global.

ECB Policymakers Weigh In

In the meantime, policymakers from the European Central Bank (ECB) made their voices heard. Gabriel Makhlouf, Governor of the Central Bank of Ireland, expressed concerns about the potential impact of the Middle East crisis on economies. Conversely, President Christine Lagarde conveyed that the fight against inflation is progressing well.

GBP/USD Drops Below 1.2200

The Sterling’s Slide

The GBP/USD pair also saw a downward trajectory, falling below 1.2200 on Tuesday.

GBPUSD Daily Chart

GBPUSD Daily Chart

The primary reason for this decline is the renewed strength of the US Dollar, which was bolstered by better-than-expected PMI data.

Despite losing its bullish momentum and turning flat near 1.2250, the technical outlook suggests that the bullish bias remains intact. The ILO Unemployment Rate in the UK showed a slight decrease, and the S&P/CIPS Composite PMI saw marginal improvement in early October.

The Future of GBP/USD

While mixed data releases have caused the Pound Sterling to lose some appeal, an improving risk mood could help GBP/USD maintain its position in the near term.

USD/JPY Finds Interim Support

US Dollar’s Recovery

The USD/JPY pair found interim support near 149.50, thanks to a recovery in the US Dollar.

USD/JPY Daily Chart

USD/JPY Daily Chart

The US economy is expected to have grown by 4.2% in the third quarter of 2023, and the Bank of Japan (BoJ) announced an unscheduled bond operation for Wednesday.

The US Dollar bounced back on expectations that upbeat Q3 Gross Domestic Product (GDP) data, due for publication on Thursday, would fuel hopes of further policy tightening by the Federal Reserve (Fed).

Awaiting Fed Chair’s Speech

Investors are eagerly awaiting a speech from Fed Chair Jerome Powell, scheduled for Wednesday. Powell is expected to reiterate the need to keep interest rates unchanged but will keep doors open for further policy tightening.

Gold Recovers $1.970

The Resurgence of Gold

Gold managed to rebound, climbing to the $1,970 area after falling below $1,960 earlier on Tuesday.

XAU/USD Daily Chart

XAU/USD Daily Chart

The resurgent demand for the US Dollar weighed on Gold price, sending XAU/USD to an intraday low during London trading hours.

However, global bonds recovered ground, and yields retreated, putting modest pressure on the USD throughout the first half of the day, allowing Gold to hold its ground.

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Author

  • Phyllis Wangui

    Phyllis Wangui is a Financial Analyst and News Editor with qualifications in accounting and economics. She has over 20 years of banking and accounting experience, during which she has gained extensive knowledge of the forex, stock news, stock market, forex analysis, cryptos and foreign exchange industries. Phyllis is an avid commentator on these topics and loves to share her insights with others through financial publications and social media platforms.

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