On Friday (July 19), the US dollar index rebounded and stabilized at 104.16, gold fell back to $2,439, and Bitcoin fell below $64,000. Federal Reserve officials sent hawkish signals, emphasizing that the central bank has not yet achieved price stability. The number of applications for unemployment benefits in the United States has risen, raising concerns about the health of the U.S. labor market. U.S. President Biden's withdrawal price hit 80%, and then-President Obama expressed concerns about his re-election prospects.
Biden's chance of withdrawing from the election rises to 80%, Obama worries about re-election prospects
According to The Washington Post, Obama, a key Democratic leader, has told allies in recent days that Biden's chances of victory have greatly diminished, according to multiple people familiar with his thinking.
He believes Biden needs to seriously consider his viability as a candidate.
Obama, who has spoken to Biden only once since the debate, stressed that he is concerned about protecting Biden and his legacy and pushed back on the idea that he alone could influence Biden's decision-making process.
At the same time, Polymarket tweeted that senior Democratic Party officials now believe Biden will drop out of the race within a few days. The probability of Biden dropping out has risen to 80%, a record high.
Fed official: Central bank has not yet achieved price stability
San Francisco Fed President Mary Daly said some recent inflation data have been “very good,” but the central bank has not yet achieved price stability.
“We’re not there yet,” Daly said during a talk he hosted in Dallas on Thursday. “We’re not there yet with price stability, and we need to be very confident that we’re on a sustainable path to get there.”
Daly, who has a vote on monetary policy this year, reiterated comments from last week that risks to the labor market and price stability are becoming better balanced but that the Fed remains committed to its 2% inflation target.
“We’re at that inflection point,” Daly said. “It’s possible that the labor market could slow further, not necessarily, but it could lead to further increases in the unemployment rate.”
“So we have to keep both missions in mind,” she said.
Fed officials have said in recent weeks they are increasingly confident that inflation is on track. Most have not said when they might lower two-decade-high borrowing costs, but economists and investors interpreted their comments as suggesting the Fed will act in September.
“We also have to weigh the cost of moving quickly versus moving wrong,” Daly said.
The Fed’s preferred measure of inflation has fallen to 2.6%, and a once-overheated labor market has cooled to pre-pandemic levels. While officials still describe the labor market as strong, they also say it may be approaching a turning point, with the number of job openings steadily falling and the unemployment rate gradually rising.
The San Francisco Fed president, speaking at a bank funding conference hosted by the Dallas and Atlanta Feds, was also asked about last year’s regional banking stresses and the failures of Silicon Valley and other lenders.
Daly said the 12 reserve banks and the Fed’s board of governors in Washington are working to standardize how the presidents of the regional entities convey information about financial institutions to the president of the board of governors, who are responsible for setting regulatory policy.
U.S. jobless claims rise, dollar index rebounds
The U.S. economic outlook shows signs of deflation, and financial markets are confident that a rate cut will be made in September, but Federal Reserve officials are still reluctant to cut interest rates hastily and still insist on being data-driven.
Data released by the U.S. Department of Labor showed that the number of initial unemployment claims surged by 243,000 in the week ending July 13, exceeding the initial forecast of 230,000 and lower than the previous forecast of 223,000, which was originally 239,000.
On the positive side, the Philadelphia Fed manufacturing survey index improved significantly in July, rising from 1.3 in June to 13.9, which was significantly better than expected.
Dovish bets on the Fed remained steady after the data.
A September rate cut appears to be priced in, according to the CME's Fed Watch tool, limiting the dollar's upside.
If the data continues to be weak, the market may consider a rate cut at the upcoming July meeting.
US Dollar Technical Analysis
FXStreet analyst Patricio Martín said the U.S. dollar index rebounded around the 104.00 area, but the outlook remains bearish with the index below its 20, 100 and 200-day simple moving averages (SMAs).
Daily technical indicators, such as the relative strength index (RSI) and the moving average convergence divergence (MACD), are still hovering below 50, suggesting that the weight of the bearish outlook has yet to fade.
However, the US Dollar Index might see a minor upside correction in the coming sessions.
Strong support remains at 103.50 and 103.00, however, the overall technical outlook remains in favor of the bears.
Gold Technical Analysis
Bruce Powers, an analyst at FXEmpire, said that gold hit a new high of $2,484 and is currently trying to give back some of its recent gains. Subsequently, gold fell further, breaking through Wednesday's low of $2,451 and falling to the day's low of $2,440. In addition, the current low is lower than the previous all-time high of $2,450. However, trading is still taking place near the day's low and a new day's low could be set on Friday's close.
There are several initial price levels worth watching to judge possible support levels. The first one is the April 12 swing high at $2,431. Slightly lower is the 38.2% Fibonacci retracement level at $2,411, followed by the 50% retracement level at $2,389. The $2,389 price level has a slightly higher weight as it also matches the previous medium-term swing high on June 7. A pullback to test this price area as support could provide a good base for bullish continuation. It is above the 20-day and 50-day MAs at $2,370 and $2,357, respectively. Furthermore, it is above all trendlines.
This week’s new high of $2484 completed the key long-term target of gold’s large ascending ABCD pattern from $2480. The AB leg of the pattern started from the $1160 swing low in August 2018. It led to a rally to the $2013 swing high in August 2020. A similar rise in prices started from the $1615 swing low in September 2022 and ended this week.
Once price symmetry emerges, it indicates the presence of a potential pivot level. This appears to be the case given the bearish reaction following Wednesday’s $2,484 high. Nonetheless, gold prices are expected to continue moving higher towards upside targets after the bearish retracement is complete.
The Fibonacci confluence zone has identified several price levels around $2,487, and slightly above that is the relatively near-term target of $2,495. This price level would complete a 127.2% extended retracement of the most recent decline from the May 20 high. A retracement of more than 100% or 127.2% would complete at the $2,495 price level.
Bitcoin Technical Analysis
Well-known analyst Trader Tardigrade said that according to popular technical charts, the price may be heading towards the $74,000 mark, or setting a new record high. The trader wrote: "The next target for Bitcoin is $74,000. Bitcoin has formed a tight bull flag on the daily chart, and the measuring target of the flagpole is $74,000."
A bull flag is a bullish technical chart pattern formed by two rallies separated by a short retracement period, signaling more upward momentum.
However, the all-time high price levels remain key support and resistance areas. First, according to Glassnode co-founder Yann Allemann, Bitcoin must recapture its all-time high of $69,000 to confirm a possible rally to its current all-time high of $74,000.
The co-founder wrote in the post: “Since the low on July 5, Bitcoin has risen by about 21%. Various technical levels have been broken in a bullish manner, and now we look forward to the next possible level of 69K, then 74K and above, we remain bullish.”
However, Bitcoin faces significant resistance at $65,000, a price level that has become a key line of attention for cryptocurrency analysts.
Bitcoin has seen inflows of more than $191 million into U.S. Bitcoin spot ETFs since July 5, but the price of Bitcoin has failed to stay above $65,000.
“Bitcoin is not yet ready to successfully retest the ~$65,000 level as new support,” analyst Rekt Capital wrote.
He said that Bitcoin price remains above key monthly support, confirming that its price is recovering. “Bitcoin has successfully retested the old all-time high major resistance area (red) as new support (green) for the fifth consecutive month.”
However, Bitcoin’s upside potential depends largely on inflows into U.S. Bitcoin spot ETFs.
According to Farside Investors data, the single-day inflows into U.S. Bitcoin spot ETFs hit the highest level since early June, with a total of $422 million worth of Bitcoin flowing into them on July 16.
ETF inflows are an important component of Bitcoin's 2024 price increase, and as of February 15, Bitcoin ETFs have accounted for approximately 75% of new investment in the world's largest cryptocurrency, with its value exceeding the $50,000 mark.
