Monthly Forex Forecast: September 2024 - EUR/USD,XAU,NASDAQ 100,S&P 500

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EUR/USD

EUR/USD Overview As September unfolds, the EUR/USD currency pair continues to show remarkable resilience and upward momentum, trading near the 1.10930 mark after a robust rally throughout August. This rise has been particularly notable since late July, with the pair achieving substantial gains that have caught the attention of both traders and financial institutions alike. The upward trend, characterized by a strong push towards higher levels, is supported by growing expectations of a U.S. Federal Reserve rate cut in September. These expectations have spurred bullish sentiment, especially after the EUR/USD flirted with the 1.12000 level on August 26th, only to pull back slightly. Despite this minor retreat, the pair has maintained its upward trajectory, with significant support forming around the 1.09500 level. This support, established in mid-August, has not been tested since, indicating the strength of the bullish trend.

As we enter September, the EUR/USD's price action will likely remain volatile, influenced by key economic events and central bank decisions. The European Central Bank (ECB) is set to hold its monthly meeting one week before the U.S. Federal Reserve, and there is speculation that the ECB may consider cutting interest rates, especially in light of the anticipated Fed cut. Should both central banks move to reduce rates, the EUR/USD could see sustained higher levels, potentially pushing towards the 1.12400 mark. However, traders should remain cautious, as the currency pair's movements may be choppy leading up to these key announcements. Financial institutions may view any dips as buying opportunities, particularly if the EUR/USD continues to hold above the critical 1.10000 level.

XAU

Gold has been a standout performer in the financial markets, showing significant strength throughout August and setting the stage for further gains in September. The precious metal has broken above the $2500 level, a milestone that reflects the ongoing global economic uncertainties and the growing demand for safe-haven assets. Several factors are driving gold's bullish trend, including expectations of additional interest rate cuts by the U.S. Federal Reserve and increased gold purchases by central banks in India, Russia, and China. These central banks have become "buyers of last resort," providing strong support to the market, particularly as geopolitical tensions show no signs of abating.

As we move into September, gold's upward trajectory is expected to continue, with the potential to reach $2600 or higher. The market is likely to experience volatility, given the numerous economic and geopolitical risks that continue to loom large. Investors are advised to adopt a "buy on dips" strategy, taking advantage of any short-term corrections to accumulate positions in gold. This approach is underpinned by the belief that gold will continue to attract inflows as long as uncertainties persist, making it a key asset in a diversified investment portfolio. The ongoing conflicts in the Middle East and Ukraine, coupled with the potential for further Federal Reserve rate cuts, are likely to keep gold in high demand throughout September.

NASDAQ 100 

The NASDAQ 100 has experienced a rollercoaster of volatility during August, yet it has managed to maintain its overall bullish trend. The index, which is heavily influenced by the performance of the technology sector, has found strong support around the 50-Week Exponential Moving Average (EMA). This support level has provided a floor for the index, allowing it to recover from recent sell-offs and continue its march higher. The NASDAQ 100's performance is closely tied to monetary policy, particularly the Federal Reserve's stance on interest rates. With Wall Street pressuring the Fed to cut rates, the index has remained buoyant, as lower interest rates make borrowing cheaper and more attractive for tech companies reliant on venture capital.

As September begins, the NASDAQ 100 is likely to continue attracting buyers, particularly if the Federal Reserve signals further rate cuts. The index's ability to shrug off bad news and continue rising suggests that investors remain confident in its long-term prospects. However, there is a growing concern that the market may be setting up for a significant correction, potentially as deep as 40%. While this correction is not expected to occur immediately, it is something that investors should keep in mind as they navigate the current market environment. For now, as long as the NASDAQ 100 remains above the critical 18,000 level, the path of least resistance appears to be upward. Traders should focus on key technical levels and be prepared to act quickly in response to any shifts in market sentiment. By the end of September, it would not be surprising to see the NASDAQ 100 challenging or even surpassing previous all-time highs, driven by the continued flow of cheap money and investor optimism.

S&P 500 

The S&P 500 has made a strong comeback in August, recovering from the sharp sell-off it experienced in July. This resilience is notable, especially given the mixed signals coming from the broader economy. The S&P 500, much like the NASDAQ 100, has become less a reflection of economic fundamentals and more a gauge of liquidity in the financial system. This shift has led to a scenario where bad economic news often results in positive market reactions, as investors anticipate further intervention by the Federal Reserve. The market's current behavior underscores the disconnect between the stock market and the real economy, with the former continuing to rise despite underlying economic challenges.

Looking ahead to September, the S&P 500 is expected to maintain its upward momentum, driven by the expectation of further rate cuts by the Federal Reserve. While the Fed may not cut rates as aggressively as some market participants hope, the general trend towards easier monetary policy is likely to support higher stock prices. Technical analysis suggests that the 5000 level has now become a key support area for the S&P 500, providing a strong foundation for further gains. Investors are advised to "buy the dips," taking advantage of any short-term corrections to build positions in the index. The market's ability to remain resilient in the face of economic uncertainty suggests that the S&P 500 could continue to push higher throughout September, potentially reaching new record highs. However, caution is warranted, as the market's reliance on liquidity and low interest rates could lead to increased volatility if conditions change.

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