XAUUSD Analysis for Today and the Week's End: Insights After Jerome Powell's Testimony and Today's Upcoming CPI Data

Will Today's CPI Data Trigger an Early Rate Cut?

Today, a significant piece of news is set to be released in the USA: the CPI (Consumer Price Index) data. The forecast for the CPI year-over-year is 3.1%, which is lower than the previous data of 3.2%. If the actual data aligns with the forecast, we could see strong selling pressure on the Dollar Index and robust buying pressure on XAUUSD (Gold).

Conversely, if today's CPI data is higher or equal to the previous figure, it could lead to significant selling in gold.

Powell's Testimony and Labor Market Concerns

Yesterday, US Federal Reserve Chair Jerome Powell testified again to discuss the Semiannual Monetary Policy Report. During his testimony, Powell stated that there is no specific inflation number in mind for rate cuts but expressed "some confidence" that inflation is heading lower. He also emphasized the need to be mindful of the labor market, which has shown considerable softening. A weaker labor market could impact the economy, potentially necessitating an earlier rate cut.

Rate Cut Expectations and Market Sentiment

Based on Powell's statements, I believe we are likely to see at least one rate cut this year. However, global trader sentiment suggests that there might be two rate cuts this year. If upcoming macroeconomic data, particularly labor market data, provides any indication, we could witness a strong decline in the DXY (US Dollar Index).

Gold 4-Hour Frame Analysis: Advanced Market Structure

As per the advanced market structure, gold is currently bullish on the 4-hour frame. In the diagram below, you can see the drawn market structure. According to this structure, we have two Points of Interest (POI) to join the current bullish trend:

1. First POI (2336-2340):

   • This zone includes a Fair Value Gap (FVG), making it a strong level.
   • If the price reaches this zone, we may initiate a buy after confirming evidence on a smaller timeframe.

2. Second POI (2318-2322):

   • This is the last lower low of the structure and serves as strong support.
   • Although this price level is quite far from the current price, if the price approaches this level with small candles and shows some rejection, we may consider buying from this zone as well.

These levels are crucial for identifying potential entry points in line with the prevailing bullish trend.

1-Hour Frame Market Structure Analysis

When analyzing the market structure on the 1-hour frame, we observe a short-term bearish trend. As shown in the diagram below, the structure indicates the potential for sell trades for intraday purposes.

Key Points:

1. Point of Interest (POI) for Sell Trade:

   • Price Level: 2375-2379
   • Until the market closes two consecutive candles above this level, we remain bearish on the 1-hour frame. If the market breaks above this zone, we will shift our bias to bullish.

2. Support Level:

   • Price Level: 2350-2355
   • This is a strong support level. However, it's important to note that the market has created relative equal lows here, indicating a liquidity zone just below this support.
   • The price may dip below this support to grab liquidity, potentially testing the 4-hour frame POI at 2336-2340. After this liquidity grab, the market may resume its bullish trend.

Possible Trading Strategy:

• Possible Sell Trade:

  • Look for selling opportunities from the 2375-2379 zone if the price shows bearish evidence in this area.

• Possible Buy Trade:

Consider buying opportunities if the price reaches the 2336-2340 POI after grabbing liquidity below the 2350-2355 support level.

This analysis provides a comprehensive outlook on XAUUSD, combining technical insights with upcoming economic data. It's essential to perform your own analysis and practice on a demo account before engaging in live trading. The market can be unpredictable, and proper preparation is crucial for success.

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