Daily Analysis

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"FED may pause next meeting. Mixed European markets ahead of ECB decision"
Global markets had a mixed performance on Thursday as investors assessed the recent interest rate hike by the Federal Reserve and looked ahead to the European Central Bank's policy decision later in the day.
US futures and Asian stocks edged higher, indicating a positive start for the day, while European contracts were negative, suggesting a cautious sentiment among investors. The Fed raised the federal funds rate by 25 basis points on Wednesday, bringing it to a range of 5%-5.25%, the highest level since August 2007. However, investors largely brushed aside the central bank's commentary against interest rate cuts and instead looked ahead to an eventual pivot to easing.
In its post-meeting statement, the Fed hinted at a possible pause in future rate hikes by omitting a sentence present in the previous statement saying that "the Committee anticipates that some additional policy firming may be appropriate" for the Fed to achieve its 2% inflation goal. The central bank did, however, note that it will take into account various factors, including the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments when determining the extent to which additional policy firming may be appropriate.

EURUSD
EUR/USD gathered bullish momentum and registered its highest daily close in over a year above 1.1050 on Wednesday. The pair continued to stretch higher toward 1.1100 early Thursday before going into a consolidation phase. The European Central Bank (ECB) will announce its policy decisions later in the day and the pair could extend its rally in case the ECB's outlook highlights a widening policy divergence with the US Federal Reserve (Fed).

On Wednesday, the Fed announced that it raised the policy rate by 25 basis points (bps) to the range of 5-5.25% as expected. In the policy statement, the Fed scrapped the language saying that it "anticipates" further rate increases would be needed. During the post-meeting press conference, FOMC Chairman Jerome Powell refrained from committing to a pause in rate hikes in June and said that they were not planning to cut rates this year. Powell's comments, however, failed to convince markets and the CME Group FedWatch Tool shows that the probability of another rate hike in June is virtually 0.
The ECB is forecast to raise its key rates by 25 bps. During the month of April, several ECB policymakers noted that they could opt for another 50-bps hike in May but developments since then caused markets to lean toward a smaller rate increase. Earlier this week, the ECB's Bank Lending Survey revealed the negative impact of high rates on credit demand.
Support: 1.1060– 1.1040 – 1.1000
Resistance: 1.0450 – 1.1100 – 1.1200

GBPUSD

GBP/USD bulls take a breather around 1.2580, after rising to the highest levels since June 2021 early Thursday. he pair is actually on the hunt for a eight consecutive weekly gain. That said, the Cable pair initially cheered the US Federal Reserve’s (Fed) dovish hike before retreating from an upward-sloping resistance line from April 14. The resistance from the May highs last year around 1.2660-66 will also offer up some challenge for buyers before thinking about the 100-week moving average (Yellow line) at 1.2722.

Cable is aiming higher as the Federal Reserve (Fed) is following the language of other central banks. Fed chair Jerome Powell has confirmed that further monetary policy decisions will be data-dependent, which indicates that the central bank has reached an intermediate terminal rate for now.

The Services and Composite PMI data being released today may provide additional insights into the health of the UK economy and a potential recovery from the slowdown experienced last month. This could potentially prevent the UK from entering a recessionary period, which was previously projected by the Bank of England.

Support: 1.2440– 1.2400 – 1.2350
Resistance: 1.2470 – 1.2500 – 1.2550

USDJPY


The Japanese yen has gained ground against some of its peers following the Fed's widely expected 25 basis points rate hike, with the yen finding strong support. The Fed's comments suggest a pause in its hiking cycle, while retaining a hawkish bias towards further policy firming. The focus will now shift to incoming data, such as the jobs report and CPI data, ahead of the June meeting, to determine the extent of credit tightening spillover. The Bank of Japan's ultra-loose policy settings remain unchanged, and if risk sentiment remains subdued, USD/JPY may move towards the lower end of its established range.

Meanwhile, US banking woes have renewed as another commercial bank has come under pressure. Bloomberg reported that PacWest Bancorp is considering strategic options, including a potential sale. PacWest's shares fell by more than 50% in the post-market, indicating significant investor concern about the bank's situation


Support: 135.50 – 135.00 – 134.50
Resistance: 137.7 – 140.00 – 141.00

XAUUSD

During Thursday's Asian session, the price of gold experienced an intraday bullish spike, reaching a fresh record high of $2,078-$2,079 before retreating to the lower end of its daily range. The pullback can be attributed to some profit-taking but is expected to remain limited as economic conditions worsen. Federal Reserve Chair Jerome Powell warned on Wednesday that economic growth was cooling, and credit conditions were likely to tighten further due to growing pressure on banks. This, along with stress at PacWest Bancorp, sparks fear of a full-blown banking crisis in the US, benefiting the safe-haven precious metal. Additionally, the prevalent selling bias of the US dollar could further support the gold price, as the USD Index drifts lower for the third successive day. The US central bank hiked interest rates by 25 bps, as expected, and signaled a possible pause in June. The US inflation is still trending well above the Fed's target rate, which could result in further policy tightening. However, the prospects for more interest rate hikes by the European Central Bank and the Bank of England could act as a headwind for the non-yielding yellow metal. Traders are awaiting the Nonfarm Payrolls report on Friday, which could provide meaningful impetus to the US Dollar-denominated commodity.

Support: 2030 –2020 – 2011
Resistance: 2011 – 2020 – 2032
UKOIL

Oil prices experience a slight recovery after reaching a 16-month low on Wednesday, but investors remain cautious about the outlook for crude due to continued volatility. Brent rose by 1.2% to $73.16 a barrel following a 4% decline in the previous session. Ole Hansen, head of commodity strategy at Saxo Bank, explains that Russian oil exports have remained robust, while China's demand for crude has not recovered as quickly as expected. West Texas Intermediate futures initially plummeted by up to 7.2% at the beginning of trading due to concerns that a possible US recession would harm demand. However, the significant decline was reduced and eventually reversed by mid-morning in Asia. In the US, a recent government report showed a contraction in gasoline demand, an increase in fuel supplies, and a decrease in jet fuel demand, which remains slightly above last year's levels.

Support:74.00 – 73.00 – 71.00
Resistance: 75.60 – 77.00 – 78.50
 
EURUSD

EUR/USD has been consolidating above the 1.1000 level on Friday after a recovery in the Asian session. The upcoming catalyst for the pair will be the April Nonfarm Payrolls data from the US, with investors also monitoring news related to the banking crisis.

The long-term outlook appears uncertain as the price action around 1.1100 shows hesitation, with multiple attempts to break the level without a significant move. The upcoming data releases in the coming weeks will provide more clarity regarding the state of the US economy and potential market direction.


Support 1.1030 - 1.1000- 1.0970

Resistance 1.1045 - 1.1080 - 1.1100


1683282079258.png
 
EURUSD

EUR/USD recovered during the Asian session but stopped at the 1.1050 level. The price action on the EUR/USD pair has entered a two-week range, waiting for data developments to determine a breakout in either direction. The 1.0900 level is providing resistance within the current range, while 1.0940 is the support level.

The long-term outlook is uncertain as the price action around 1.1100 shows hesitation, with multiple attempts to break the level resulting in no significant moves. The economic data developments from last week have added more uncertainty, especially in the labor market.

The current resistance levels to watch are 1.1050, 1.1090, and 1.1100, while the support levels are 1.1000, 1.0970, and 1.0950.

Support 1.1050, 1.1090, and 1.1100

Resistance 1.1000, 1.0970, and 1.0950

1683540131578.png



XAUUSD

The price action on gold is currently showing divergence with the RSI, and a possible reversal may occur as the current price has touched the high level of 2080. Gold is waiting for the market to form a consensus on sentiment and a clear direction to find a way to make a new historical high or a more probable reversal.

Although the price has touched a historical high, there is uncertainty about whether there will be more bullish momentum at this level until there are strong data or event developments. Historically, gold has retreated from these levels and has not held for a long time at this resistance level.

The current resistance levels to watch are 2030, 2060, and 2070, while the support levels are 2011, 2000, and 1990.

Support 2030, 2060, and 2070

Resistance2011. 2000, and 1990

1683540152691.png
 
EURUSD

The EURUSD currency pair has rebounded after experiencing a sell-off yesterday, bringing it closer to the critical support level of 1.0943. Analyzing the 4-hour chart, we observe that the 200-day moving average (200MA) and the previous historical support level of 1.0943 are significant levels that could potentially act as a selling zone, potentially marking the end of the bullish trend that began in March.
The price action of the U.S. Dollar Index (DXY) indicates a noticeable uncertainty regarding the future direction of the Dollar. However, the release of today's Consumer Price Index (CPI) data may provide insights to break out of this price range and provide further clarity.
Key resistance levels to monitor for potential upward movements in the EURUSD pair are located at 1.1000, 1.1050, and 1.1090. Conversely, important support levels to keep an eye on for potential downward movements are situated at 1.0970, 1.0947, and 1.0937
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XAUUSD

The upward trend of gold prices over the past three weeks is facing challenges as US inflation data looms on the horizon. Mixed concerns regarding the US default and potential banking issues, coupled with skepticism towards hawkish Fed talks and recent US data, are also weighing on XAU/USD buyers.

The failure to surpass the $2,050 hurdle and the first daily loss in three days have justified the struggles faced by gold prices. Currently, the price action of gold is exhibiting a divergence with the RSI, indicating a possible reversal. Furthermore, the price has reached a high level of 2080, and a consensus on market sentiment, particularly influenced by tomorrow's CPI numbers, may determine the next move for gold in relation to the Fed's actions.

While the price has reached a historical high, there remains uncertainty regarding the sustainability of bullish momentum at this level without significant data or event-driven developments. Historically, gold has retreated from such levels and has not maintained a long-term presence at this resistance level.

Traders should keep an eye on the resistance levels at 2030, 2060, and 2070, while the support levels to watch are 2020, 2011, and 2000.

The current resistance levels to watch are 2030, 2060, and 2070, while the support levels are 2020, 2011, and 2000.
1683712378363.png
 
Asian stock markets retreated on Monday as investors awaited the release of important Chinese economic data and monitored upcoming monetary policy signals from the Federal Reserve. The Shanghai Composite index had its worst week since March, while the blue-chip index experienced its biggest weekly decline in two months.

China maintained its medium-term lending facility at 2.75% as expected but injected additional long-term liquidity into the financial system to support growth amid signs of a faltering recovery. Japanese shares, on the other hand, recorded gains, with the Topix index nearing its highest level since 1990. Benchmark indices in China, South Korea, and Australia also saw stronger gains during the Asian afternoon.
European equity markets were poised for a positive start as investors turned their attention to Turkey's presidential election, which seemed headed for a runoff. The absence of an outright majority for President Tayyip Erdogan and his main challenger Kemal Kilicdaroglu led to another round of voting on May 28. Investors were also anticipating eurozone industrial production data and earnings reports from major European companies.

Regional markets took a weak lead from Wall Street, influenced by softer-than-expected consumer sentiment data suggesting slowing growth in the US economy amidst high- interest rates and persistent inflation concerns.

US inflation worries heightened as a preliminary survey showed five-year expectations for consumer-price gains reaching a 12-year high.

Despite progress in US debt-ceiling talks, the risk of a failure to reach a compromise remains. Treasury Secretary Janet Yellen warned of a potential shortfall in funding by June 1 or in subsequent weeks. President Joe Biden and House Speaker Kevin McCarthy plan to meet on Tuesday to address the issue.
EURUSD


EUR/USD rebounds from one-month low, benefiting from a technical correction and improved market sentiment in the European morning. The pair manages to minimize its losses, with risk perception likely to influence trading dynamics leading up to the weekend.

The recent University of Michigan Sentiment report attracts significant attention, revealing higher-than-anticipated consumer expectations for inflation over the next one year and 5-10 years. This surprising trend persists despite the sentiment gauges falling short of expectations. The persistent concern among most Americans regarding rising prices may have potential economic implications in the future.

Key resistance levels to monitor for potential upward movements in the EURUSD pair are located at 1.0900, 1.0935, and 1.0950. Conversely, significant support levels to keep an eye on for potential downward movements are situated at 1.0850, 1.0800, and 1.0750. The 100MA on the Daily chart AT 1.0800is the most anticipated level to watch for EURUSD

Support 1.0910, 1.0850, and 1.0800

Resistance 1.0940, 1.0980, and 1.1000

GBPUSD:

GBP/USD is showing signs of a recovery near the 1.2450 support, as the US DXY loses momentum following its earlier high of 102.75 in the European session. The Cable is expected to strengthen further once it surpasses the immediate resistance level at 1.2480.

The Pound Sterling is anticipated to remain active in anticipation of the United Kingdom's upcoming Employment data, scheduled for release on Tuesday. The tight labor market conditions in the UK, driven by a shortage of labor, have been a significant factor.

Following the delay of Friday's US debt-ceiling negotiations, US President Joe Biden and Republican House of Representatives Joseph McCarthy are scheduled to meet again on Tuesday.

The current resistance levels to watch are 1.2500, 1.2550, and 1.2580, while the support levels are 1.2450, 1.2400, and 1.2380.

Support 1.2450, 1.2400, and 1.2380

Resistance 1.2500, 1.2550, and 1.2580

USDJPY:

The USD/JPY pair continues its upward momentum, extending gains for the third consecutive day after a rally from the 133.75 level. However, prices retreat slightly from a recent high, dipping below 136.00.

The US Dollar pulls back from its April high, creating headwinds for the USD/JPY pair. Despite this, the USD's downside is currently limited due to expectations that the Federal Reserve will maintain a hawkish stance in response to rising long-term inflation expectations in the US.

On the other hand, the Japanese Yen (JPY) remains under pressure due to the dovish outlook of the Bank of Japan (BoJ). BoJ Governor Kazuo Ueda recently stated that it is too early to discuss specific plans for an exit from the massive stimulus program. Additionally, a positive tone in US equity futures contributes to the supportive sentiment for the USD/JPY pair.

Traders are now closely watching the US economic docket, particularly the release of the Empire State Manufacturing Index and a scheduled speech by Minneapolis Fed President Neel Kashkari. These events will drive USD demand and potentially provide further momentum for the USD/JPY pair.

The USD/JPY pair is correcting from the lower parallel of the bullish channel after finding support at 133.00. The current resistance levels to watch are 134.00, 135.50, and 136.40, while the support levels are 134.00, 133.50, and 133.00.

Support 134.00, 133.50, and 133.00

Resistance 134.00, 135.50, and 136.40

XAUUSD:

Gold price is recovering after a three-day decline, experiencing its largest weekly loss since late September 2022. The XAU/USD pair is benefiting from the consolidation of the US Dollar, driven by hopes of avoiding a US default and mixed comments from Federal Reserve officials. Furthermore, the US Dollar is under pressure due to concerning news regarding inflation and consumer confidence data.

Despite these factors, the Gold price remains vulnerable as investors remain cautious about the US debt ceiling extension, potential banking issues, and deposit concerns.

In the short term, the movements of the Gold price will depend on the outcome of US policymakers' negotiations on the debt ceiling extension, as well as important economic indicators such as US inflation data, US Retail Sales for April, and a speech by Fed Chair Jerome Powell.

Technically the 200MA on the 4H chart worked as support holding the price from breaking the 2000 level. any breakout will take the price toward the 1995 target.

The current resistance levels to watch are 2020, 2037, and 2050, while the support levels are 2000, 1995, and 1980.

Support 2000, 1995, and 1980

Resistance 2020, 2037, and 2050


DAX 40:

European stocks climbed on Monday as investors evaluated the ongoing U.S. debt ceiling negotiations and a runoff election in Turkey, while keeping an eye on upcoming data releases for insights into the global economy.

Peter Kazimir, a policymaker at the European Central Bank (ECB), suggested that the ECB might need to maintain higher interest rates for a longer period to address inflationary pressures.

AXA, Europe's second-largest insurance company, reported a 2% increase in first-quarter sales, driven by growth in property and casualty policies, despite a decline in revenue from savings products in France and Italy. As a result, AXA's shares rose by 1.7%.

Siemens Energy AG saw a slight increase of 0.9% as the energy group raised its sales outlook and achieved a record order backlog of 102 billion euros ($112.28 billion).

In economic news, Germany's wholesale price index recorded a small decline in April, marking the first year-on-year drop since December 2020. Additionally, consumer prices in Sweden showed a greater-than-expected easing in April, according to another report.

DAX is recovering for the second day from the 15800 level representing the down parallel of the bullish Channel it touched the last Thursday. The next support levels for the DAX could be around 15900 and 15850, respectively. If the strong support at 15600-15500 is broken, which acted as a support line for the past six corrections observed since mid-April, a new reversal may start on the DAX. On the resistance side, the 16000-16100 and 16270 levels are the next resistance levels to watch fora the Dax to reach its historically high level.

Support 15900, 15850 15600/15500

Resistance 16000, 16100 and 16270
 
EURUSD

The positive sentiment in equity markets led to the selling of the safe-haven US Dollar (USD), supporting the major currency pair. The USD was further weakened by the disappointing Empire State Manufacturing Index, which dropped significantly to -31.8 in May from April's reading of 10.8. Additionally, the decline in the Michigan Consumer Sentiment Index contributed to the USD's weakness.

The USD was also affected by declining US Treasury bond yields due to the government's borrowing limit standoff. US President Joe Biden expressed optimism about reaching a deal on the borrowing limit

From a technical standpoint, the recovery after the 1.0850 level may take the pair more toward the last support of 1.0900, and after it the 1.0940. The 100MA on the Daily chart held as expected and played a strong support level as is the case for the DXY.

Key resistance levels to monitor for potential upward movements in the EURUSD pair are located at 1.0900, 1.0940, and 1.0960. Conversely, significant support levels to keep an eye on for potential downward movements are situated at 1.0850, 1.0800, and 1.0770.

Support 1.0850, 1.0800, and 1.0770..

Resistance 1.0900, 1.0940, and 1.0960

GBPUSD

During Tuesday's European morning, GBP/USD dropped below 1.2500. UK data revealed that the ILO Unemployment Rate rose to 3.9% in March, while wage inflation including bonus remained unchanged at 5.8%.

GBP/USD faced continued bearish pressure last week as the USD benefited from safe-haven demand. The cautious approach of the Bank of England (BoE) towards raising interest rates and optimistic remarks from Governor Andrew Bailey regarding inflation added to the downward pressure on the British Pound. The BoE's recent upward revisions to growth and inflation forecasts suggest a potential risk of sustained inflation, which could lead to further tightening of monetary policy.

The current resistance levels to watch are 1.2550, 1.2580, and 1.2620, while the support levels are 1.2500 1.2470 1.2400.

Support 1.2500 1.2470 1.2400.

Resistance 1.2550, 1.2580, and 1.2620

XAUUSD

The price of gold (XAU/USD) has declined, reaching an intraday low around

$2005.00. This drop is due to the cautious market sentiment ahead of the US Retail Sales data for April and the US debt ceiling talks scheduled for 19:00 GMT. The US Dollar Index (DXY) has gained ground, reaching an intraday high near 102.50, as investors are concerned about the possibility of a US default and are anxious about the upcoming key US data.

The comments from US House Speaker McCarthy, expressing concerns about the deadlock on the US debt ceiling extension, have provided support to the US Dollar. Additionally, weak data from China, one of the major consumers of gold, is also weighing on XAU/USD. The Federal Reserve's reluctance to abandon its hawkish stance, combined with fears of a recession and banking issues, is further pressuring the gold price. S&P 500 Futures have declined slightly, reflecting market indecision and the anticipation of important data/events for clearer direction.

In the near term, gold price is expected to remain under pressure due to the risk- off sentiment in the market ahead of the US Retail Sales data for April. The outcome of talks between US President Biden and House Speaker McCarthy to avoid debt expiration will also be crucial as the deadline for a US default looms, which has been recently brought forward to the first week of June.

Technically the 100MA on the 4H chart is playing support holding the price from breaking the 2000 level. any breakout will take the price toward the 1995 target. A formation of a descending triangle is confirmed on Gold signaling a possible bearish movement is coming and may declare a new selling off on the yellow metal.The current resistance levels to watch are 2020, 2037, and 2050, while the support levels are 2000, 1995, and 1980.

Support 2000, 1995, and 1980

Resistance 2020, 2037, and 2050
 
EURUSD

President Joe Biden and top congressional Republican Kevin McCarthy have made progress in their negotiations to raise the U.S. debt ceiling, although a final agreement has not been reached yet. Biden emphasized the severe consequences of a potential default, warning that it could lead the economy into a recession. As a result, investors view the U.S. dollar as a safe haven,considering the negative global impact such a scenario could have.

The prospects of imminent interest rate cuts in the United States were diminished by the strong growth in consumer spending observed in April, along with hawkish statements from Federal Reserve officials. Austan Goolsbee, the President of the Chicago Federal Reserve, expressed that it was premature to discuss rate cuts at this stage. Similarly, Loretta Mester, the President of the Cleveland Federal Reserve, stated that the central bank could not maintain interest rates at current levels given persistent inflationary pressures.

From a technical perspective, the currency pair initially corrected towards 1.09000 but subsequently resumed its bearish downtrend, finding support at 1.0850. There is a higher likelihood of a breakout below this level, which is further reinforced by a similar inverted pattern observed on the DXY (Dollar Index).Key resistance levels to monitor for potential upward movements in the EURUSD pair are located at 1.0900, 1.0940, and 1.0960. Conversely, significant support levels to keep an eye on for potential downward movements are situated at

1.0850, 1.0800, and 1.0770.
Support 1.0850, 1.0800, and 1.0770..

GBPUSD

The British Pound remains under pressure due to disappointing monthly employment figures in the UK, leading to speculations that the Bank of England (BoE) may not need to implement as many interest rate hikes in the coming months to curb inflation. The UK Office for National Statistics (ONS) reported an increase of 46.7K in the number of individuals claiming unemployment-related benefits in April, surpassing the 26.5K recorded in March and significantly higher than the estimated decline of 10.8K. Additionally, the unemployment rate edged up from 3.8% to 3.9%, indicating the negative impact of the stagnating economy on the labor market. Further analysis of the report revealed that UK Average Earnings, excluding bonuses, rose by 6.7% in the quarter leading up to March, slightly lower than the anticipated 6.8% but marginally higher than the 6.6% in February.

Conversely, the US Dollar (USD) experienced a rebound and reached a five- week high, driven by the hawkish comments made by Cleveland Fed President Loretta Mester. These remarks added to the factors weighing on the GBP/USD pair. Mester expressed the view that current interest rates are not restrictive enough and suggested that the central bank has not yet reached a point where holding rates steady is appropriate.

The current resistance levels to watch are 1.2500. 1.2550, and 1.2580 while the support levels are 1.2450 and 1.2400. 1.2350.

Support 1.2450 and 1.2400. 1.2350..

Resistance 1.2500. 1.2550, and 1.2580

XAUUSD

Gold prices remained relatively stable at $1,988 per ounce. The strength of the safe-haven U.S. dollar throughout the day diminished the attractiveness of gold for international buyers.Despite occasional fluctuations, gold has found solid support whenever its price dipped below the 2,000 mark. The ongoing delays in the debt ceiling process have generated frustration in the market, negatively impacting sentiment. This frustration could potentially lead to increased safe-haven flows into gold. This was influenced also by a combination of factors, including stronger-than- expected U.S. retail sales data and hawkish remarks from Federal Reserve officials. These developments have led to speculation that any potential interest rate cuts may be delayed, which has affected market sentiment toward gold.

U.S. President Joe Biden and top congressional Republican Kevin McCarthy have made significant progress in their efforts to prevent an impending U.S. debt default. The potential economic repercussions of default have prompted Biden to curtail his Asia trip this week.

From a technical perspective, Gold has recently broken a significant support level that had been holding for a considerable period. This breakage confirms the bearish stance that was observed, indicated by the presence of a bearish descending triangle pattern and a consolidation of the price. Additionally, there is a divergence with the Relative Strength Index (RSI), further supporting the bearish outlook.The current resistance levels to watch are 1993, 2003, and 2012, while the support levels are 1980, 1973, and 1950.

Support 1980, 1973, and 1950

Resistance 1993, 2003, and 2012


Resistance 1.0900, 1.0940, and 1.0960​
 
EURUSD
President Joe Biden expressed confidence that the United States will not default on its debt, while House Speaker Kevin McCarthy statd that reaching an agreement this week is achievable. Following a meeting in Washington to discuss the debt limit, JPMorgan Chase & Co. CEO Jamie Dimon remarked that it is highly unlikely for the US government to default on its debt.

European Central Bank Vice President Luis de Guindos acknowledged that the ECB has largely completed its tightening measures, but there is still progress to be made. The euro showed minimal movement in response to this statement.

In terms of the economic calendar, it is worth noting that there is an upcoming speech by Lagard, which could hold significance for the markets. Additionally, ECB Vice President De Guindos will also be speaking.

From a technical standpoint, the currency pair has retraced to validate 1.0850 as a newfound resistance level, indicating a continuation of the downward movement, which suggests a healthy bearish trend. Similarly, the DXY (Dollar Index) reflects an inverse pattern, with increased buying pressure on the Dollar. Looking ahead, a significant target for EURUSD lies at 1.0750 on the 4-hourly chart, as well as the 100-day moving average (MA) on the Daily chart.


Res Level 3Res Level 2Res Level 1Sup level 1Sup level 2Sup level 3
1.90001.08701.08501.08001.07501.07000


GBPUSD
The US Dollar benefited from risk aversion on Tuesday and forced GBP/USD to stay on the back foot. Although latest headlines surrounding the US debt limit negotiations suggest that there could be a deal to raise the debt ceiling by the end of this week, markets remain cautious on Wednesday.

In a recently published report, the Wall Street Journal said that House Democrats were planning to start collecting signatures for a "discharge petition to raise the debt ceiling."

Meanwhile, UK Finance Minister Jeremy Hunt said on Wednesday that they fully support the Bank of England's policy decision and noted that there is nothing that can bring inflation down automatically. These comments, however, failed to help Pound Sterling find demand.

From a technical perspective, the currency pair is exhibiting a similar pattern to other major pairs, with the Dollar gaining strength and a bearish trend taking shape. This trend is pushing the pair to establish new lows, potentially reaching the next support level around 1.2400.

Resi Level 3Resi Level 2Resi Level 1Suppo level 1Suppo level 2Suppo level 3
1.27501.26501.25501.24001.23501.2300

XAU/USD
The price of gold (XAU/USD) experienced significant selling pressure after pulling back from $1,985.00 earlier in the European session. The precious metal is anticipated to face further weakness if it slips below the immediate support level of $1,970.00. This decline is primarily attributed to the growing optimism surrounding the approval of a US debt-ceiling raise, which is weighing heavily on the demand for gold.

The US Dollar Index (DXY) is poised to reclaim the critical resistance level of 103.00 due to expectations that the proposal to raise the US debt ceiling will receive approval by compromising the President's spending initiatives.

House of Representatives Speaker Joseph McCarthy has prepared to raise the US borrowing limit, taking into account the compromise on further budget deficits, as a failure to do so could potentially have disastrous consequences for the US economy.

Despite the anticipation of the Federal Reserve (Fed) pausing its policy-tightening measures. A Reuters poll suggests that the current interest rate of 5.00-5.25% is expected to remain unchanged by the end of 2023.

Numerous economic indicators, including declining US inflation, easing labor market conditions, reduced retail demand, and growing concerns of an economic recession, support the case for pausing interest rate hikes.

From a technical standpoint, gold is currently undergoing a significant reversal, breaking through successive levels, which aligns with our previous analysis. The patterns we observed earlier clearly indicated a bearish outlook, and the price consolidation near the previous historical high suggested an impending decline in price.

Resi Level 3Resi Level 2Resi Level 1Suppo level 1Suppo level 2Suppo level 3
202020001982197319501937
 
Market participants will closely analyze Powell's statements in search of fresh indications regarding the future actions of the US central bank. These remarks, combined with US bond yields, ongoing US debt-limit negotiations, and the overall risk sentiment, will influence the dynamics of the USD price and provide momentum to the EUR/USD pair on the final day of the week. However, spot prices are currently on course for substantial losses for the second consecutive week, and the fundamental factors mentioned earlier support the likelihood of further declines. Consequently, any attempted recovery may still be viewed as an opportunity to sell.

Earlier this month, the European Central Bank (ECB) raised interest rates, and there is a possibility of additional rate hikes in the future. ECB Vice President Luis de Guindos expressed particular concern about the rising inflation in the service industries during his statement on Thursday. Today, Lagarde, the President of the ECB, is scheduled to deliver a speech.According to data released on Friday, German producer prices increased by 0.3% in April, representing an annual rise of 4.1%, which is more than twice the ECB's targeted inflation level.From a technical perspective, EURUSD has experienced a significant movement and reached the strong support level of 1.0760. Currently, attempting to prepare for a correction. The Daily chart indicates a break of the 100MA, but the downward parallel of the bearish channel is still intact. In terms of the long-term perspective, we have not yet entered the selling territory as we need to surpass the current levels. Additionally, the DXY, which is the inverse image of EURUSD, is showing a temporary holding pattern at the 103.60 level and the upper parallel of the long-term bearish channel.


GBP/USD is rebounding above 1.2400 after showing signs of exhaustion in its downward momentum. The British Pound, also known as Cable, is attempting a recovery as the US Dollar corrects lower in correlation with declining US Treasury bond yields. Market participants are eagerly anticipating Powell's speech today, as well as the ongoing Debt ceiling talks, which could potentially trigger a correction in the Dollar.

The value of the British Pound (GBP) remains undermined due to expectations that the Bank of England (BoE) will require fewer interest rate hikes in the upcoming months to address inflation concerns. These expectations were reinforced by underwhelming UK jobs data released on Tuesday and less hawkish remarks made by BoE Governor Andrew Bailey on Wednesday. Speaking at the annual British Chamber of Commerce Conference, Bailey mentioned that there were signs of inflation cooling down and a slight loosening in the labor market.From a technical standpoint, the GBP/USD currency pair has reached a significant support level, which aligns with the lower parallel of the bullish channel. This support level has the potential to initiate a corrective movement in GBP/USD, but further development is awaited. If this support level is broken, it could lead to a decline towards 1.2350, confirming a new bearish trend and exerting additional pressure on the pair.
 
Asia-Pacific markets experienced mostly positive movements on Monday, with Tokyo's stocks continuing their rally and talks on the U.S. debt ceiling set to resume. The Nikkei 225 rose 0.9% and closed at 31,086.92, while the Topix increased by 0.66% and ended at 2,175.9. This marked the seventh consecutive winning streak for Japan's stocks, reaching their highest levels since 1990.

In Europe, the macroeconomic calendar is relatively light for the day. However, ECB officials may keep an eye on euro-area consumer confidence figures, especially after the central bank's recent aggressive monetary tightening campaign. ECB President Christine Lagarde sent a clear hawkish signal on Friday, urging policymakers to be prepared.

President Joe Biden is scheduled to meet with House Republican Speaker Kevin McCarthy later in the day. However, the ongoing brinkmanship highlights the potential for a disastrous U.S. default as long as a deal is not reached. Time is running out, with less than two weeks before the Treasury is expected to run out of money in early June.

U.S. Treasury Secretary Janet Yellen reiterated over the weekend that June 1 remains a "hard deadline" for raising the federal debt limit. If Congress fails to raise the $31.4 trillion debt ceiling before this date, difficult decisions will have to be made.

During a Group-of-Seven summit in Japan, President Biden expressed optimism about improving relations between the U.S. and China, stating that ties would likely thaw soon. He also mentioned that his administration is considering lifting sanctions on Chinese Defense Minister Li Shangfu.

Today, ECB officials Luis de Guindos and Philip Lane are among those scheduled to speak. In the U.S., Fed speakers for Monday include James Bullard, Raphael Bostic, and Tom Barkin, although their comments may be overshadowed by Chair Jay Powell's recent statement expressing a preference for a pause in interest rate hikes next month. Minneapolis Fed President Neel Kashkari also indicated that he may support a pause, as reported by Dow Jones.



During the Group of Seven (G7) summit in Japan, US President Joe Biden expressed optimism for improved ties with China, anticipating a resolution to the recent tensions that arose from a dispute over an alleged spy balloon. However, concerns persist as China's ban on Micron Technology products indicates ongoing US-China conflicts, as reported by the Wall Street Journal (WSJ).

President Biden also indicated positive progress in his discussions with Republican House Speaker Kevin McCarthy, with plans to continue the dialogue on Monday.

Meanwhile, European Central Bank (ECB) President Christine Lagarde mentioned in a recent TV interview that significant strides have been made in curbing inflation and returning it to the target level.

In contrast, Federal Reserve Chairman Jerome Powell raised concerns about inflation but acknowledged that the banking crisis had eased pressure to raise interest rates. Nonetheless, market expectations of a 0.25% rate hike in June increased due to positive US economic data and hawkish comments from Fed officials, leading to a decrease in calls for a rate cut in 2023.

From a technical standpoint, the EURUSD pair reached a significant support level at 1.0750 on Friday, facing selling pressure. Traders are now anticipating a potential correction from that level towards the 1.0825 level. Analyzing the daily chart, we can observe that the price halted its decline at the lower parallel of the bullish channel, indicating that the current uptrend remains intact.



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AXU
The recent decline in gold prices to a six-week low suggests that the upward trend may be facing some challenges. However, this doesn't necessarily mean that gold will only move downwards. It indicates that the upper price range has become more defined.

The recent bounce in gold prices could be attributed to mixed concerns surrounding the expiration of the US debt ceiling. While President Joe Biden remains hopeful of avoiding a default, Republicans seem less inclined to compromise on their demands, which has hindered previous negotiations. Additionally, a shift in Federal Reserve Chair Jerome Powell's tone, citing banking concerns as a reason to ease pressure for higher interest rates, has provided support for gold to move higher. Positive expectations from China also contribute to the strength of gold buyers as they contend with bearish sentiment.

On the other hand, stronger US economic data and expectations of a more hawkish stance from the Federal Reserve put downward pressure on the price of gold. This week, US Purchasing Managers' Index (PMI) data and the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation indicator, will be crucial in determining the near-term direction of gold.

Overall, the outlook for gold is influenced by a combination of factors, including geopolitical concerns, central bank policies, and economic indicators.

From a technical analysis standpoint, gold underwent a correction after reaching the level of 1951, and it has encountered resistance around the 1983 level. The possibility of additional selling pressure remains, and the next support level to monitor is around the 100-day Moving Average (MA) and the downward parallel of the bullish trend line, which is approximately in 1935.

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