Daily Market Analysis By Z Forex

[Z Forex]

Global Markets Tumble Amid Rate Hike and Inflation Concerns​

On Thursday, many Asian stock markets declined following Wall Street's negative performance. Traders remained cautious towards risk-driven assets due to concerns over slowing economic growth and increasing interest rates.

Similarly, the hawkish remarks made by Federal Reserve officials caused uncertainty in the markets regarding the central bank's plan to halt its rate hike cycle by June. Consequently, this led to a weak overnight closing on Wall Street.
Wednesday, Federal Reserve Bank of New York President John Williams stated that inflation is still a concern and that the central bank will take steps to reduce it. He also acknowledged that recent stress in the banking sector may have a negative impact on economic activity.

EURUSD
In March, Eurozone headline inflation was confirmed at 6.9% YoY, and the European Central Bank (ECB) officials continue to indicate the possibility of further rate hikes. ECB Chief Economist Philip Lane has stated that a rate hike in May is probable, and the size of the hike will be determined by the data. The upcoming S&P Global PMIs on Friday will provide new insights into economic activity. Isabel Schnabel noted that although inflation has started to decline, underlying inflation remains stubborn. The ECB will release the minutes of its latest meeting on Thursday, and the markets have fully priced in a 25 bps rate hike in May.

The EURUSD has maintained its adherence to the upper channel and is currently trading at the resistance level of 1.0980. If the price manages to break through this level, it may advance further towards the last resistance at 1.1075. However, if there is a sell-off, the pair may break the strong bullish trend channel and enter a new price action for a downturn. On the 4H chart, the 100 MA is likely to be the first support, followed by 1.0885.

The EURUSD has maintained its adherence to the upper channel and is currently trading at the resistance level of 1.0980. If the price manages to break through this level, it may advance further towards the last resistance at 1.1075. However, if there is a sell-off, the pair may break the strong bullish trend channel and enter a new price action for a downturn. On the 4H chart, the 100 MA is likely to be the first support, followed by 1.0885.

Support: 1.0920– 1.0885 – 1.0840
Resistance: 1.0965 – 1.1000 – 1.1045

GBPUSD

Despite the rally in U.K. government bond yields, which increased significantly and more than global counterparts after March's inflation data surpassed expectations, the British pound may not receive significant support from monetary policy. While double-digit inflation may prompt the Bank of England to raise rates again in May, further tightening could compromise the country's fundamentals and result in a stagnant economy, leading to a possible recession in the future.

According to futures markets, investors are currently pricing in a quarter-point interest rate hike to 4.25% at the Bank of England's next meeting on May 11. They also anticipate rates to reach a peak of 5% by September.

Technically, the formation of a Double Top pattern may lead to the formation of a Head and Shoulders pattern if a new consolidation happens next. However, the Bullish channel is still holding the price up after the lower parallel touch at 1.2350. The 1.2400 level could be a potential support that could hold the pair down or it could be the last point of support before a new selloff and a change in trend direction.
Support: 1.2440– 1.2400 – 1.2350 Resistance: 1.2470 – 1.2500 – 1.2550

USDJPY

The Japanese trade deficit unexpectedly contracted in March, as exports grew more than anticipated and imports increased at a slower pace. Reports also indicated that the Bank of Japan may consider tightening its ultra-loose monetary policy later this year if wage growth remains robust, although no policy changes are expected at next week's meeting. Meanwhile, the dollar continues to dominate the pair amid uncertainty over the Fed's rate hike trajectory due to persistent inflation concerns, recession fears, and restricted credit availability.

The USDJPY pair is being influenced by the recent rise in US 10-year Treasury yields, which hit 3.65% before retreating. The correlation between the USDJPY pair and Treasury yields suggests a possible correction towards the last support level, especially given the divergence in monetary policies between the US and Japan.

Support: 134.00 – 133.75 – 133.40 Resistance: 134.7 – 135.30 – 135.70

XAUUSD
The Gold price is under pressure due to concerns over an economic recession and hawkish signals from major central banks, despite a recent corrective bounce off the lower line of the channel. The rebound was supported by a pullback in yields and the US Dollar, as there are hopes for China's sustained economic recovery. However, upcoming US preliminary PMIs for April and speeches from Fed policymakers may reinforce hawkish bets and continue to weigh on Gold for a second consecutive week.

The current price action in gold indicates a strong formation of a bearish trend, with the key support level at 1976. If this level is broken, the bearish trend may gain further strength. While the long-term bullish trend is still in place, the 1995 support level on the daily chart is the key level that is keeping the price higher for now. However, the recent accumulation of price and divergence on RSI may indicate a solid correction may happen soon. The upcoming US preliminary PMIs for April and speeches from Fed policymakers may also influence the gold price movement.

Support: 1987 –1975 – 1950 Resistance: 2011 – 2020 – 2032

UKOIL

The prices of oil have weakened due to concerns about demand. Brent crude, which is the international oil benchmark, has fallen by 1.6% and is now at $81.77 a barrel,. The latest data from the U.S. Department of Energy, which was released on Wednesday, showed a mixed picture. While crude stocks fell by 4.6 million barrels last week, gasoline stocks jumped by 1.3 million barrels, which was unexpected as analysts were anticipating a fall of 1.2 million barrels in gasoline stocks.

Brent break the confluence point around 79 support level and now going forward to close the gap until 76.

Support:79.00 – 76.00 – 74.00 Resistance: 83.60 – 85.00 – 86.40

 

[Z Forex]

Mixed Open Expected for European Stocks Amid Global Market Struggles​

Asian stocks remained stagnant or declined as investors braced themselves ahead of a series of central bank meetings and economic data releases scheduled for the next two weeks. Attention is also shifting towards the U.S. earnings season. Last week, regional markets experienced significant losses due to a series of underwhelming earnings reports from major U.S. companies, which amplified concerns about a potential slowdown in business activity coupled with the prospect of rising interest rates.
The euro-area will publish GDP data and there will be a policy decision in Sweden. The ECB is expected to continue its tightening cycle despite flat growth, with a 25% chance that it will hike by 50 bp on May 4.
According to data from the Commodity Futures Trading Commission, leveraged investors have increased their net short positions on 10-year Treasury futures to a record 1.29 million contracts as of April 18, suggesting that they anticipate the Federal Reserve will continue to raise rates in order to combat inflation. Meanwhile, the swaps markets indicate that Fed rates will peak in the coming weeks before a series of cuts later in the year. Additionally, the upcoming US GDP data is expected to reveal a slowdown in growth, while the central bank's preferred inflation measure, the core PCE deflator, is predicted to show a cooling in price growth.
The looming U.S. debt ceiling presents yet another risk to the markets, as the House is scheduled to vote on the Republican plan that proposes an extension of the debt limit in exchange for spending cuts.

EURUSD
The dollar has strengthened as traders anticipate upcoming central bank policy meetings that could provide insight into when the current trend of rising global interest rates may end. The Federal Reserve is expected to implement a 25-basis points rate hike at next week's FOMC meeting, but the focus will be on the future rate path guidance. While some parts of the US economy have remained resilient, recent economic data points towards slowing growth, and inflation remains a concern, leading traders to debate the scale of potential rate cuts expected later in the year.

Data released on Friday showed that U.S. and euro zone business activity gathered pace in April, reducing concerns about an impending recession in major economies.

The EUR/USD pair has declined after reaching the 1.10 resistance level, and the price action has formed a descending triangle on DXY, suggesting that the market is waiting for news and data to provide clarity on direction. The 100MA is the key support level to monitor on the 4H chart for either a rejection or a breakout that could result in further selloff.
Support: 1.0920– 1.0885 – 1.0840 Resistance: 1.0965 – 1.1000 – 1.1045

GBPUSD

The UK retail sales data for March came in weaker than expected, with a decline of -0.9% MoM, down from the previous month's rise of 1.2%. The high inflation and interest rates have put pressure on households' income, leading to subdued sales. However, the consumer confidence survey showed a positive outlook, with consumer morale at its highest level since February last year. This indicates a possible recovery in the economy. The upcoming UK PMI data is expected to show growth in the dominant service sector at 52.9, which could lift the GBP if it is higher than expected.
In the US, the services PMI is predicted to grow at a slower pace of 51.6 in April from 52.6, while manufacturing PMI is forecasted to slow to 49 from 49.2, indicating a moderate growth outlook.
UK core inflation remained unchanged at 6.2% YoY, beating the predicted 6.0%, while wage growth in February surprised on the upside. Headline inflation exceeded expectations, rising to 10.1% YoY in February, close to the four-decade high of 11.1% set in October. As a result, investors are now fully pricing in a 25-basis point rate hike to 4.25% on May 11 and anticipate rates to reach their peak at 5% by September.

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

USDJPY
latest data showed that Japan’s core inflation remained well above the central bank’s target in March, supporting market expectations that the Bank of Japan could normalize monetary policy later this year. The country’s core consumer price index rose 3.1% year-on-year last month, while an index excluding fuel costs increased at the fastest annual pace in four decades.

Kazuo Ueda, the newly appointed Governor of the Bank of Japan, will preside over his first policy meeting. The central bank is reportedly set to conduct a review and evaluation of its policies implemented over the past several decades during the upcoming meeting

The USDJPY pair appears to be forming a head and shoulders pattern, with the neck level approximately at 133.6. If the pair breaks below this level, it could lead to further selloffs towards the confluence points at 133.00 and then 132.50. The larger channel is still respecting its levels, and the 135.00 level acted as resistance, prompting a retracement in the USDJPY.
Support: 134.00 – 133.60 – 133.00 Resistance: 134.7 – 135.30 – 135.70

XAUUSD

On Monday, gold prices declined for the second consecutive session, as investors turned their attention towards central bank meetings for clarity on their rate-hike strategies that may provide insight into whether inflation has been tamed. Rising interest rates, which increase the opportunity cost of holding non-interest-bearing bullion, have a significant impact on the value of gold. Gold prices fell by more than 1% on Friday after surveys showed that business activity in the US and euro zone had gathered pace in April. According to Fed Governor Lisa Cook, the outlook for the next stage of central bank monetary policy has become less clear, despite the aggressive steps taken over the last year to lower price pressures.

Technically, gold is still holding around $1,973, waiting for the next development in terms of economic data. Core inflation measures, including CPI, PCE, and PPI, suggest a gradual cooling in inflation. The US PCE price index data due Friday will provide more insight – the core PCE price index is expected to have eased to 4.5% on-year in March from 4.6% in February.
Support: 1987 –1975 – 1950
Resistance: 2011 – 2020 – 2032

UKOIL


On Monday, oil prices declined over 1% due to concerns regarding rising interest rates and the risk of recession that have weighed on the outlook for energy demand. The retreat from the boost they received at the start of the month when OPEC+ announced surprise output cuts, coupled with weak U.S. economic data and disappointing corporate earnings from the tech sector, has fanned recession jitters. Both contracts experienced their first weekly drop in five last week, as U.S. implied gasoline demand fell from a year ago, sparking worries of a recession. The outlook for energy demand has also been clouded by China's bumpy economic recovery from COVID-19, despite record-high imports from top suppliers Russia and Saudi Arabia in March.

Price action show a support level around the 80.4 is holding as a confluence point where the 200MA and the closing point of the gap are at work. Further development in price will be related to Economic Data and events this week as is the ecase for different market classes.
Support:80.80 – 79.00 – 77.00 Resistance: 83.60 – 85.00 – 86.40

 

[Z Forex]

Markets Roiled by Earnings Reports, AI Developments, and Chip Wars​

On Tuesday, earnings from U.S. tech giants Microsoft Corp (MSFT.O) and Google parent Alphabet Inc (GOOGL.O) topped the watchlist, backed by ChatGPT, ahead of numbers from Facebook-owner Meta (META.O) and Amazon Inc (AMZN.O) later this week. Despite estimates showing their cloud businesses could be a drag, their efforts around artificial intelligence will once again predominate earnings calls, as was the case in the last quarter

Investors are also keeping an eye on the Fed and ECB this week. The Fed is currently in a blackout period ahead of its meeting next week, while the European Central Bank is hinting that a half point rate hike is possible next week. The euro has risen and hit an eight-year high versus the yen as the Bank of Japan's new governor, Kazuo Ueda, has signaled he is not in a hurry to shift policy. This week's BOJ meeting, which concludes on Friday, is Ueda's first in charge. However, the news of plunging deposits at First Republic Bank (FRC.N) and the U.S. debt ceiling debates serve as a reminder that financial and fiscal stability risks could spur the Fed to shift quickly from hiking to cutting.
The small shifts in Fed projections underscore the lack of direction at the start of a busy week for economic data and corporate earnings. Data published Monday showed US manufacturing data was weaker than economists forecast, while uncertainty over the debt ceiling persisted. Later this week, US GDP data is forecast to reveal slower growth, and the so-called core PCE deflator, the Fed’s preferred inflation gauge, is expected to show price growth cooled.

EURUSD
The euro continued its upward momentum, rising above $1.10 overnight and reaching $1.1056 in Asia. However, trade was relatively thin due to holidays in Australia and New Zealand, as well as anticipation of central bank meetings in Japan, the US, and Europe. ECB board member Isabel Schnabel stated that a 50 bp rate hike was still on the table and would depend on data, especially inflation figures that were due two days before May's meeting. In contrast, French ECB policymaker Francois Villeroy de Galhau called for further rate hikes to be limited in number and size in an interview with Le Figaro. Despite this, markets have remained focused on the fact that more rate hikes are still expected. Commerzbank believes that the euro will trade steadily against the dollar ahead of the Federal Reserve and European Central Bank's interest rate decisions on May 3 and 4, respectively. Currently, the euro is perceived as the market's preferred currency due to the perception that the ECB is more restrictive, while the Fed may be nearing the end of its rate hike cycle. Additionally, the US debt ceiling and concerns about US banks are seen as headwinds for the dollar.The EUR/USD pair continued its bullish trend and remained close to touching the previous high point from April 14. The decline in the value of the dollar and US yields has provided support for the upward movement of the pair, and the price action suggests that the bullish trend remains strong and unstoppable.
Support: 1.0920– 1.0885 – 1.0840
Resistance: 1.0965 – 1.1000 – 1.1045

 

[Z Forex]

European markets head for negative open on economic jitters​

On Wednesday, most Asian stocks declined, reflecting continued concerns about an economic slowdown this year, but technology-heavy indexes were boosted by strong results from major U.S. firms. European markets are expected to open lower due to renewed worries about the health of the global banking sector. While Wall Street indexes closed lower on Tuesday, Microsoft Corporation and Alphabet Inc's first-quarter results, which exceeded market expectations, provided some relief.

First Republic Bank's shares dropped more than 49% on Tuesday after the regional bank announced that its deposits had fallen 40% to $104.5 billion in the first quarter, following the release of its latest quarterly results on Monday. Spain's Santander dragged European stocks down on Tuesday, while UBS Group's decision to set aside more funds to cover toxic mortgages related to its merger with fallen rival Credit Suisse has made investors wary of similar provisions at banks like HSBC, Lloyds, and NatWest Group, all of which are set to report their earnings in the coming week.

EURUSD
On Tuesday, the EUR/USD experienced a sharp decline due to risk aversion, failing to maintain a position above 1.1000 and eventually dropping to as low as 1.0963. The negative sentiment was influenced by renewed banking concerns, leading to a boost in the US Dollar and an increase in the US Dollar Index (DXY) by 0.55%, despite the sinking US yields. However, this move in Treasuries was counterbalanced by a rally in German bonds, causing the German 10-year yield to fall 6.5% to 2.34%.

Comments from ECB officials regarding further rate hikes were still prevalent, with Isabel Schnabel indicating that "data dependence means that a 50-basis points rate hike is not off the table." Meanwhile, Chief Economist Philip Lane commented that macroeconomic figures suggest a need to increase rates. However, market participants are currently viewing a 25-bps rate hike as the more likely scenario.

The long bullish trend is still holding above the 100SMA support level on the 4H chart. The European session is currently seeing a positive movement that may push the price towards the last resistance level at 1.1070. The US Dollar Index (DXY) also shows a bearish picture, and further selloff is expected to continue.

Support: 1.0920– 1.0885 – 1.0840
Resistance: 1.0965 – 1.1000 – 1.1045

GBPUSD

The increase in the UK's borrowing in March, which led to the British debt-to-GDP ratio reaching 100%, the highest since the 1960s, has put pressure on the prices of the GBP/USD pair. Additionally, comments from Bank of England (BoE) officials have not been reassuring, with BoE Deputy Governor Ben Broadbent stating on Tuesday that "had we seen inflation shocks coming, BoE would have tightened policy sooner." Furthermore, BoE Chief Economist Huw Pill's recent remarks suggest a moderation in calls for higher interest rates. Mixed US economic data also contributes to market uncertainty regarding the Federal Reserve's future moves, strengthening the bearish sentiment, despite the latest cautious optimism. The US Conference Board's Consumer Confidence Index for April came in at 101.3, down from the previous reading of 104.0.

The pair price action shows an uncertainty around the next movement. GBP/USD is recovering ground above 1.2450 after defending the 1.2400 level. Markets are witnessing an improvement in risk sentiment in the early European morning, weighing on the safe-haven US Dollar. The focus shifts to the US economic data.


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

USDJPY


The Japanese yen strengthened to its highest level in almost two weeks, surpassing 134 per dollar, driven by renewed concerns over the global economy and the financial sector. At the same time, recent data revealed that Japan's core inflation remained well above the central bank's target, supporting market expectations that the Bank of Japan may normalize its monetary policy later in the year. In March, the country's core consumer price index rose by 3.1% YoY, while the index, excluding fuel costs, increased at the fastest yearly rate in forty years. Investors are now closely monitoring the BOJ's upcoming policy decision, led by new central bank chief Kazuo Ueda, who had previously stated that the bank would maintain its ultra-easy monetary stance until price stability is achieved.

USDJPY has broken the important neck of the last head and shoulder bearish pattern at 133.75. The weakness of the DXY is supporting the Yen's rise, as well as the shift in sentiment towards risk aversion. The first support level at 133.00 is a confluence point, followed by the 132.50 level.

Support: 134.00 – 133.60 – 133.00
Resistance: 134.7 – 135.30 – 135.70

XAUUSD

Gold traded within a narrow range on Wednesday, with the subdued dollar and concerns about a possible recession providing some support to the safe-haven asset. Investors are looking for more clarity on the Federal Reserve's rate-hike trajectory, which is expected to come from upcoming U.S. economic data. Spot gold remained steady at $1,998.50 per ounce as of 0724 GMT, trading within a $9 range, while U.S. gold futures increased by 0.1% to $2,007.40 per ounce. The U.S. consumer confidence report released on Tuesday showed a drop to a nine-month low in April, raising concerns about the economy possibly falling into recession this year. Investors are closely monitoring U.S. quarterly gross domestic product data scheduled for Thursday, followed by the reading on the core PCE index on Friday, ahead of the Fed's May 2-3 meeting. Despite the weak U.S. economic data, investors seem hesitant to sell their gold holdings. Technically, Gold is trading within a tight bearish pennant range of $2000-1980.

Support: 1980 –1970 – 1950
Resistance: 2000– 2011– 2020

UKOIL
Oil prices have rebounded slightly after a sharp drop that erased most of the gains from Saudi-led production cuts. Brent crude oil has gained 0.5% to reach $81 per barrel, following a 2.4% fall on Tuesday. Although concerns about the health of the U.S. economy have weighed on oil prices, a stronger-than-expected drop in U.S. crude inventories, as reported by the API, has helped to prevent further declines. Crude oil stockpiles in the U.S. have been decreasing since mid-March as refineries have ramped up production ahead of the summer demand period. This has resulted in a backwardation in WTI futures prices, reflecting higher demand from refineries. However, economic concerns and expectations of further interest rate hikes that could limit fuel demand growth are still weighing on the market.

Corrected: From a technical standpoint, the double bottom pattern observed on the Brent crude oil price chart could suggest that the commodity has reached its bottom and is looking for a new trend to make a rebound. After filling the price gap, it may move towards new higher highs, potentially targeting the 83.00 level.

Support:80.80 – 79.00 – 77.00
Resistance: 83.60 – 85.00 – 86.40

 

[Z Forex]

Global markets cautious amid banking jitters and economic concerns
​

Deutsche Bank's pledge to increase cost savings after falling short on trading revenue forecasts helped DAX futures reduce earlier losses. Additionally, STMicroelectronics NV and Banco Bilbao Vizcaya Argenta SA reported better-than-expected revenue and net income respectively, while AstraZeneca Plc and Barclays Plc are set to report their earnings on Thursday. In Asia, shares in Samsung Electronics Co. rebounded after an initial dip due to a record quarterly loss in its chip division, with the company predicting a recovery later in the year. Meanwhile, Nomura Holdings Inc. shares fell after a slump in profits.
Investors reacted positively to the phone call between President Xi Jinping and his Ukrainian counterpart Volodymyr Zelenskiy but were concerned by the US announcement that Chinese cloud computing firms pose a threat to US security.
However, the market is concerned about First Republic Bank's potential curbs on borrowing from the Fed, which could lead to a tightening of credit conditions and prompt the Fed to adjust the pace of its interest-rate increases.

Nomura's quarterly net profit fell significantly due to the global banking crisis, which has hit its investment banking business.
The estimate for US first-quarter GDP growth is expected to be lower than analysts had initially predicted, with the Atlanta Federal Reserve's GDPNow now forecasting an annualized growth of 1.1%, down from 2.5% just a week ago. Fed funds futures are pricing in a chance of a 25-basis point interest rate hike at the May meeting. Samsung Electronics Co. reported a 96% drop in its first-quarter profit, but predicted a demand recovery later in the year.

EURUSD
The US Banking Crisis Revives Rate Cut Speculations and Weighs on USD, While Improving German Consumer Sentiment Boosts EUR/USD

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The recent report of significant customer withdrawals at First Republic Bank in the US has reignited concerns about banking contagion risks, alongside the ongoing debt ceiling standoff and fears of a US economic recession. These worries have led to renewed speculation about a rate cut by the Federal Reserve later this year, which has put pressure on the USD and supported the EUR/USD pair. In contrast, the Euro received support from Germany's improving consumer sentiment, with the Gfk Consumer Confidence index rising for the seventh consecutive month. Furthermore, the expectations of additional rate hikes by the European Central Bank added to the EUR/USD's upward momentum. Despite strong US Durable Goods Orders, which exceeded expectations, the USD failed to make gains against the Euro.


Support: 1.1030– 1.1100 – 1.1000
Resistance: 1.10850 – 1.1125 – 1.1150

GBPUSD

Today, there are no UK economic indicators for investors to consider, resulting in a quiet day for the GBP/USD. The lack of data leaves the currency pair vulnerable to market risk sentiment as it approaches the US session.

Despite the current course for both the Bank of England and the Federal Reserve to deliver 25-basis point interest rate hikes in May, the unclear economic indicators in the US and mixed signals from BoE Monetary Policy Committee members create uncertainty for investors.

The absence of any Monetary Policy Committee (MPC) members scheduled to speak today means investors will have to rely on media discussions to gauge the committee's stance. The hawks still hold the upper hand, backed by recent wage growth and inflation data. However, US economic indicators are creating uncertainty, which may affect the outlook for the GBP/USD pair. Additionally, both the Bank of England and the Federal Reserve are expected to raise interest rates by 25 basis points in May, adding further complexity to the situation.

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

USDJPY
The USD/JPY starts the day quietly with no economic indicators from Japan to impact trading. As a result, the market risk sentiment is expected to drive the pair's movement. Despite better-than-expected core durable goods orders in the US, investor fears of a US economic recession remain unresolved. Core durable goods orders rose by 0.3% in March, surpassing a forecasted 0.2% decline, after falling by 0.3% in February.

A decline in the likelihood of a 25-basis point Fed interest rate hike in May has reduced monetary policy divergence, favoring the Yen. However, the Bank of Japan's ultra-loose policy stance ahead of tomorrow's monetary policy decision leaves market risk sentiment as the primary support for the Yen.

USD/JPY remains steady around 133.70, failing to sustain a rebound from a two-week low during early Thursday trading in Europe. The pair is currently facing immediate resistance at an upward-sloping trend line from April 05 that was broken earlier this week. The 100-SMA level of 133.40 will need to be broken convincingly to sway sellers. However, the bottom line of the ascending trend channel formed over the past five weeks is currently at 132.40 and presents a challenge for USD/JPY bears.

Support: 134.00 – 133.60 – 133.00
Resistance: 134.7 – 135.30 – 135.70

XAUUSD

Gold prices rose by 0.6% to $2,002.09 per ounce on Thursday due to a softer dollar, which made bullion more appealing amid U.S. economic concerns. Investors are also waiting for data to further gauge the health of the economy ahead of a crucial Federal Reserve policy decision. US gold futures also climbed by 0.7% to $2,010.60. The weakening of the dollar by 0.1% for a second consecutive session made gold less expensive for other currency holders. This, coupled with investors keeping an eye on U.S. debt ceiling talks, has provided support for gold. Analysts are also closely monitoring the next Federal Reserve meeting for hints on what to expect for the rest of the year in terms of rate hikes. The US House of Representatives narrowly passed a bill to raise the government's $31.4 trillion debt ceiling.

technically gold price action keeps playing inside the bearish pennant waiting for more development for finding direction. 2005 as resistance and 1980 support levels will be key levels for determining possible direction.

Support: 1980 –1970 – 1950
Resistance: 2000– 2011– 2020

UKOIL
Oil prices slightly rebounded on Thursday after sharp losses in the previous sessions, driven by concerns of a potential US recession and an increase in Russian oil exports, which countered the effects of OPEC's production cuts. Brent crude rose by 0.4% to trade at $78.01 per barrel, while US West Texas Intermediate crude added 0.3% to trade at $74.51 per barrel. The drop in oil prices was driven by concerns over weak global economic growth and recession, as well as a bigger-than-expected fall in US crude inventories. The Organization of the Petroleum Exporting Countries' (OPEC) share of India's oil imports dropped to its lowest in at least 22 years, as Russia's Urals oil became cheaper.

From a technical standpoint, price has more room to continue down toward the 73.00 territory followed by the 71 and finally the last point 65.00 from the last 20 March.
Support:74.00 – 72.65 – 71.00
Resistance: 76.00 – 77.00 – 79.00

 

[Z Forex]

Asia Stocks Rise, China Manufacturing PMI shrinks.

​

Asian equities rose in thin trading due to most markets being closed for holidays, while US stock futures remained unchanged as investors awaited news of a bid for First Republic Bank. Japan’s Topix benchmark increased by 1%, reaching its highest level since September 2021, with all sectors advancing. Australian shares also rose, while trading was closed for Labor Day in other major markets including Hong Kong, mainland China, Singapore, and South Korea. Many European markets will also be closed for holidays.
South Korea’s exports fell for the seventh consecutive month in April, marking their longest losing streak in three years. This was driven by a prolonged slump in sales to China, indicating persistent pressure on the economy due to weak global demand. China’s manufacturing activity unexpectedly shrank in April, according to official data released on Sunday. This increases pressure on policymakers seeking to boost an economy struggling to recover post-COVID amid subdued global demand and persistent property weakness. The official manufacturing purchasing managers’ index (PMI) declined to 49.2 from 51.9 in March, according to data from the National Bureau of Statistics. This is below the 50-point mark that separates expansion from contraction in activity on a monthly basis.

Interest rate decisions will be in focus this week. The Federal Reserve is expected to raise borrowing costs by 25 basis points to a range of 5% to 5.25%, a level not seen since 2007. The European Central Bank is also predicted to increase its key lending rates by 25 basis points. The Reserve Bank of Australia is likely to keep interest rates unchanged when it meets on Tuesday.

EURUSD
It’s a quiet start to a busy week for the EUR/USD. With European markets closed for Labor Day, there are no euro area economic indicators for investors to consider today. As a result, the EUR/USD will respond to China’s private sector PMI numbers from Sunday and updates from First Republic Bank (FRC) in the US.

On Sunday, China’s private sector PMI numbers were disappointing. The NBS Manufacturing PMI fell from 51.9 to 49.2, while the Non-Manufacturing PMI declined from 58.2 to 56.4. This significant contraction in the manufacturing sector indicates that the post-COVID recovery is losing momentum.
However, progress towards saving First Republic Bank has cushioned the downside this morning. With no economic indicators to consider and the ECB set to deliver its monetary policy decision on Thursday, commentary from ECB members will be influential. However, no ECB members are scheduled to speak today, leaving media chatter to influence the market.
EURUSD accumulation of price continue respecting the 100MA on the 4H. A possible ascending triangle pattern forming right now indicating the market uncertainty about the next move. The central banks meeting this week from FED and ECB will define the next move toward a bullish breakout taking piece toward the NEXT 1.1170 resistance level or a reversal toward the 1.0900 support area.

GBPUSD
On the Pound Sterling front, the market is anticipating that the Bank of England (BoE) will continue its policy-tightening measures to address the United Kingdom’s double-digit inflation figure. Inflationary pressures in the UK are stubborn and show no signs of slowing down, due to a labor shortage and consistently rising food prices.

US ISM Manufacturing PMI data will be in focus, with investors expecting mild gains in PMI figures to 46.6, compared to the previous release of 46.3. The New Orders Index data, which indicates forward demand, is expected to increase to 45.5 from the previous release of 44.3.

The GBP/USD is correcting this morning after touching the 1.2580 level. The bullish momentum is waiting for this week’s events to define its direction. The 1.2600 level will act as resistance, while the next support levels are 1.2500 and 1.2400.
Support: 1.2440– 1.2400 – 1.2350 Resistance: 1.2470 – 1.2500 – 1.2550

USDJPY


USD/JPY bulls remain in control despite holidays in multiple markets challenging momentum. The Yen pair is approaching the 137.00 level, reaching its highest levels since early March. The key catalyst for the Yen pair's recent up-moves is the divergence between the monetary policy outlooks of the Federal Reserve (Fed) and the Bank of Japan (BoJ). Downbeat Japanese Government Bond (JGB) yields and the US Dollar's broad run-up are also factors.

Cautious optimism in the market, driven by hopes that the US Federal Deposit Insurance Corporation (FDIC) will defend First Republic Bank, is propelling the Yen pair. Upbeat US Core PCE Price Index data and early signals of US inflation have fueled hawkish Fed bets and supported the US Dollar's rebound. The US Dollar Index (DXY) has renewed its intraday high near 101.85 during a three-day uptrend.

Market sentiment remains cautiously optimistic as the Fed's 0.25% rate hike is already priced in and First Republic Bank-led concerns are likely to be resolved soon. The absence of traders from Europe, the UK, China, and India may also contribute to a slightly positive mood and support the USD/JPY upside by easing recession concerns.

The BoJ's inaction on Friday and newly appointed Governor Kazuo Ueda's defense of easy-money policy keep USD/JPY buyer’s hopeful. The BoJ dropped its forward guidance for interest rates and launched a review of its policies that will take more than a year. This move may have also fueled the USD/JPY prices recently.
Support: 134.00 – 133.60 – 133.00
Resistance: 134.7 – 135.30 – 135.70

XAUUSD

Gold prices remain steady ahead of a crucial week of US data releases and a Federal Open Market Committee (FOMC) meeting. While ISM and non-farm payrolls data will be closely monitored, the FOMC meeting will be the main focus for markets. The interest rate market has already priced in a 25-basis point increase in the Fed funds target rate on Wednesday.

The post-FOMC press conference may be influential, as forecasts for further rate hikes have been largely discounted by the market, and potential rate cuts towards the end of the year are anticipated by rates traders. The reaction to Wednesday’s decision further along the yield curve may have a greater impact on gold prices. After dipping lower last week, both nominal and real yields have recovered going into this week.

Gold price action appears to be confirming the bearish pattern we detected earlier. The breakout of the 200-day moving average on the 4-hour chart is happening, and the next support level will be around 1970, followed by 1950.


Support: 1987 –1975 – 1950
Resistance: 2011 – 2020 – 2032

UKOIL

 

[Z Forex]

"RBA's Surprise Hike Sparks Volatility in Global Markets, as Aussie Soars and Investors Keep a Close Eye on Fed, Eurozone CPI, and HSBC Earnings"​

Asian stocks fell due to weakness in financial shares in Tokyo, Sydney, and Hong Kong. This was caused by the seizure of First Republic Bank by regulators, which reignited concerns about the U.S. banking sector. The Reserve Bank of Australia surprised markets with a quarter-point rate hike, when most had expected a pause. This caused the Australian dollar to gain as much as 1.2%, while the yield on the policy-sensitive three-year government note jumped 21 basis points. The Reserve Bank of Australia raised its benchmark rate by 25 basis points to 3.85% and even signaled the possibility of further tightening.


European stock markets are expected to open mixed on Tuesday, ahead of the start of the crucial Federal Reserve policy meeting, as well as the release of the latest Eurozone inflation data and results from banking giant HSBC. Preliminary inflation data for the Eurozone in April is due later in the session and is likely to remain high, providing the European Central Bank with more reason to raise interest rates again on Thursday. The Eurozone CPI is forecast to rise 0.9% on the month in April, an annual gain of 7.0%, while the core figure, which excludes volatile food and energy prices, is expected to increase by 1.1% on the month and 5.7% annually. Manufacturing activity data for the region is also due for release on Tuesday, while German retail sales fell by 2.4% in March, a deterioration from the previous month's 1.3% decline.

The Federal Reserve’s policy meeting is scheduled for tomorrow, followed by the European Central Bank the next day. Meanwhile, the Bank of Japan’s decision on Friday to remain a dovish outlier continues to impact FX markets, causing the yen to fall to a new 15-year low against the euro.

EURUSD

The EUR/USD is facing a hectic day with several economic indicators on the calendar. The first noteworthy data point is German retail sales figures, which will be released before the European market opens. Although this will impact the EUR/USD, more attention is likely to be focused on the manufacturing sector PMI numbers for Italy and Spain, as well as the finalized PMIs for France, Germany, and the Eurozone.
Following the disappointing Q1 GDP numbers in the euro area, weak manufacturing PMI figures could raise doubts about the ECB's optimistic economic outlook and policy goals. Nevertheless, the primary concern remains inflation, and preliminary euro area inflation numbers for April will take center stage later in the day. If inflation figures are high, it could increase the likelihood of a 50-basis point interest rate hike on Thursday. Economists expect Eurozone core inflation to remain constant at 5.7%.
Investors should keep an eye on the comments from ECB members given the busy economic calendar. One of the members, Andrea Enria from the ECB Executive Board, is scheduled to speak today. Additionally, it is advisable to monitor the media for any statements or remarks from other ECB officials.

Support: 1.0920– 1.0885 – 1.0840
Resistance: 1.0965 – 1.1000 – 1.1045

GBPUSD

From a cable perspective, the British pound is largely subject to USD factors this week. However, today's economic calendar includes some UK-specific data points that will provide additional information for the Bank of England (BoE) ahead of their interest rate decision next week. The morning began with the pound recovering some of its losses from yesterday's strong US ISM Manufacturing PMI for April and the UK's bank holiday. The upside was supported by a better-than-expected Nationwide housing prices figure and a 5% terminal rate for the 2023 hiking cycle, as indicated in the BoE's interest rate probability table. Later today, the UK manufacturing PMI may cause some short-term volatility, but market movements are expected to remain range-bound ahead of tomorrow's Fed rate decision. Overall, the pound's movements this week will be closely influenced by USD factors, but UK-specific data points will also be significant for the BoE's upcoming decision.

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

USDJPY
The ISM Manufacturing PMI for April showed an increase from 46.3 to 47.1. The survey highlighted significant rises in employment and prices sub-components. The ISM Manufacturing Employment Index surged from 46.9 to 50.2, while the Prices Index increased from 49.2 to 53.2.

Despite these positive figures, the markets are still predicting a 25-basis point interest rate hike by the Fed. The US government is currently dealing with a banking crisis and the debt ceiling, which could have caught the Fed's attention.

However, the weaker macroeconomic environment supports the Bank of Japan's policy outlook, creating a monetary policy divergence that favors the dollar. During early Tuesday, USD/JPY bulls appear to be losing steam at the highest levels in two months, with the pair hovering around 137.70-60 heading into the European session.

Support: 134.00 – 133.60 – 133.00
Resistance: 137.7 – 140.00 – 141.00

XAUUSD

Gold prices are showing mild gains around $1,985 as traders exercise caution while awaiting key central bank events amidst full market activity on Tuesday. The US Dollar's retreat, prompted by concerns over a looming default, is contributing to gold s rebound. Moreover, the recent news that US regulators seized assets and sold them to JP Morgan has eased worries regarding the First Republic Bank fallout. The International Monetary Fund's positive economic report on the Asia-Pacific region, which is a significant consumer of gold, is also supporting gold prices.

However, hawkish Fed bets, US-China tensions, anxiety ahead of top-tier US data/events, and central bank events in other major economies are also pushing gold prices higher. From a technical standpoint, gold has formed a bearish pattern indicating a possible reversal. The 1980 level is currently acting as a support level, and if it is broken, the next target will be 1950, particularly given the important events and data due this week.
Support: 1987 –1975 – 1950
Resistance: 2011 – 2020 – 2032

UKOIL



Oil prices are on the rise as investors await a week packed with central bank meetings and economic data. Brent crude oil is up by 0.3% to $79.52 per barrel. Investors are keenly watching Wednesday's meeting of the Federal Reserve, which is widely expected to result in another quarter-point rate increase. The European Central Bank is also meeting on Thursday to determine the direction of interest rates. The Friday jobs report will also be closely.

monitored, following recent indications of loosening in the labor market.

Later in the session, data from the American Petroleum Institute, an industry body, is expected to show a third consecutive drop in U.S. crude inventories, lending support to the market.

On Monday, WTI dropped over 1% after official data revealed an unexpected decline in China's manufacturing activity for April, raising doubts about the strength of the economic recovery in the world's largest crude importer.

Support:80.80 – 79.00 – 77.00
Resistance: 83.60 – 85.00 – 86.40

 

[Z Forex]

"Global Markets Brace for Key U.S. Inflation Data Amid Asian Equities Retreat and European Earnings Reports​

Asian equities experienced a decline of around 0.6%, marking the largest loss in over two weeks. The selling of state-owned enterprises contributed to significant drops in Shanghai stocks following recent gains. On a positive note, Toyota Motor Corp.'s announcement of a share buyback helped mitigate some of the losses in the Japanese market.
In Europe, stock markets are expected to open slightly higher as investors await the release of crucial U.S. inflation data while remaining cautious. Corporate earnings reports continue to be in focus, with Credit Agricole surpassing earnings expectations thanks to record revenue in its corporate and investment bank. Continental also reported a notable 35% increase in earnings driven by strong sales in the automotive segment. However, Siemens Health faced a 30%. DAX futures in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.1%, and the FTSE 100 futures contract in the U.K. rose 0.1%.
The upcoming U.S. Consumer Price Index (CPI) data is expected to confirm the prevailing narrative of the U.S. being a "5% inflation economy." Core inflation, standing at 5.5%, exceeds headline inflation, underscoring its persistent nature. Troubling month-on-month rates are also anticipated at 0.4%, which, when annualized, aligns with the 5% range.
John Williams, the New York Fed chief, emphasized the central bank's reliance on data and kept the possibility of a Fed pause open. According to CME's FedWatch tool, futures imply a greater-than-even chance of rate cuts by the Fed in September. President Joe Biden and congressional Republicans made limited progress in averting a potential U.S. default, but they pledged to engage in negotiations on spending, potentially paving the way for a future agreement. Biden and House Speaker Kevin McCarthy are scheduled to meet on Friday.

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

 

[Z Forex]

Title: Investor Sentiment Shifts Amidst Trade Worries, Debt Ceiling Talks, and Yield Fluctuations"

In Asia, the Topix index reversed gains and halted its seven-day winning streak as semiconductor-related stocks declined due to Japan's upcoming tighter export controls. Concerns are also arising over China's sluggish post-pandemic recovery, which is negatively impacting key commodity prices like iron ore and copper, leading to recent declines.

European equity markets are expected to open with limited activity as investors cautiously await updates on the US debt ceiling negotiations. Treasury Secretary Janet Yellen has reiterated the risk of a debt default by June 1. Investors will closely monitor the preliminary purchasing managers' index (PMI) figures for May, which serve as crucial indicators for sentiment in both the manufacturing and services industries. Positive PMI surveys in April helped boost sentiment, and another optimistic view of the services sector is anticipated to compensate for lackluster manufacturing.

The discussions between President Joe Biden and House Speaker Kevin McCarthy regarding the US government's debt ceiling ended without an agreement. With less than two weeks remaining before a potential default, talks will continue.

Regarding the Federal Reserve's rate path, investors are paying attention. St. Louis Fed President James Bullard envisions two more rate hikes this year, while Minneapolis Fed President Neel Kashkari suggests that if the central bank pauses next month, it should signal that tightening measures are not yet complete.

Investors have increased the premium they require to hold US paper that carries higher risk. The cost of insuring the country's sovereign debt against default using derivatives has also risen. Yields on two-year Treasuries, which are sensitive to policy changes, saw a two basis point increase to 4.33% following a rise in short-term rates on Monday. Meanwhile, ten-year yields remained steady at 3.72%.



EUR USD

Investors closely watched the face-to-face negotiations between US President Joe Biden and House Speaker Kevin McCarthy on raising the US debt ceiling. Unfortunately, the two-hour meeting concluded without reaching an agreement. President Biden criticized Republicans for their reluctance to impose additional taxes on the wealthy, while Democrats are considering spending cuts. McCarthy proposed an 8% reduction in overall spending for the CY2024 budget and urged Democrats to return to the CY2022 budget plan to avoid further budget deficits.

US Treasury Secretary Janet Yellen continues to emphasize the looming risk of a default, stressing the urgency to address obligated payments before the June 1 deadline.

Fed Bank President Neel Kashkari expressed his support for keeping interest rates steady in June, highlighting the potential for ongoing challenges despite signs of improvement in the banking sector.

In contrast, St. Louis Fed Bank President James Bullard emphasized the Fed's commitment to combating inflation amidst a robust labor market. He suggested that the policy rate may need to increase by 50 basis points (bps) this year.

European Central Bank (ECB) President Christine Lagarde has previously cautioned that multiple interest rate hikes are necessary to address persistent inflationary pressures.

The EURUSD pair is once again showing downward momentum, retracing towards the previous support level of 1.0760. At the same time, the DXY (US Dollar Index) is steadily rising and approaching a significant confluence point at 103.60. Upon analyzing the daily chart, it is evident that the price found temporary support at the lower parallel of the bullish channel. However, there is continued pressure on the EUR, increasing the likelihood of a potential breakout.

GBPUSD

Inflation in the United Kingdom remains in double digits, with high food inflation and labor shortage due to early retirement being the main contributors. Bank of England Governor Andrew Bailey has admitted that they underestimated the strength and persistence of inflation. The UK Finance Minister Jeremy Hunt promised to reduce the tax burden on households, aiming to boost retail demand, but this move could potentially undermine UK Prime Minister Rishi Sunak's pledge to halve inflation pressures by the end of 2023. A recent survey by the UK Office for National Statistics revealed that 18% of UK firms intend to pass on the impact of higher input prices and expensive employment costs to end-consumers. The percentage is lower compared to the previous survey, which recorded 23% of firms planning to do so

Investors are awaiting the release of the United Kingdom’s Consumer Price Index (CPI) data. As per the preliminary report, the headline UK Consumer Price Index is seen at 8.3%, significantly lower than the prior release of 10.1% annually. Monthly headline CPI has shown a steady growth at 0.8%. Core CPI that excludes the impact of oil and food prices is expected to remain stable at 6.2%.

Going forward, the speech from BoE Andrew Bailey will remain in action. The speech from BoE’s Bailey is expected to provide the interest rate guidance for the monetary policy scheduled for June.

From a technical standpoint, the GBP/USD currency pair has reached a significant support level and preparing for a breakout down getting out of the bullish channel on the daily chart, 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.

USDJPY

The US Dollar (USD) is holding steady below a two-month high and is expected to continue hiking interest rates, which should benefit the USD/JPY pair.

A number of influential FOMC members reaffirmed market bets that the US central bank will keep interest rates higher for longer. This, along with hopes that US politicians can come together on a debt ceiling deal, keeps the US Treasury bond yields elevated and continues to benefit the Greenback. The resultant widening of the US-Japan rate differential, along with a more dovish stance adopted by the Bank of Japan (BoJ), undermine the Japanese Yen (JPY) and support prospects for the emergence of some dip-buying around the USD/JPY pair. The supportive fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is to the upside. The US economic docket features New Home Sales data and the Richmond Manufacturing Index, which, along with the US bond yields and the US debt ceiling talks, should influence the USD price dynamics and provide some impetus to the pair. Any subsequent downtick is more likely to get bought into and remain limited ahead of Tuesday's release of the flash US PMI prints, due later during the early North American session.

From a technical analysis standpoint, when looking at the 1-day chart, the currency pair has consistently respected the strong resistance level of 138.70 in the last four instances. If the pair successfully breaks above this level, it is expected to move towards the next resistance level at 142.2. However, if a correction occurs, the next support level is likely to be around 136.00. Given that the pair has experienced six consecutive days of gains, a correction appears probable in the near term.

AXUUSD

Risk sentiment remained weak as the critical debt-ceiling meeting between US President Joe Biden and House Speaker Kevin McCarthy on Monday ended without any conclusion. This lifted the safe-haven demand for the US Dollar and snapped the gold price's Friday turnaround, causing it to slip at the start of the week.

The US Dollar received a further boost from hawkish commentaries by regional Federal Reserve policymakers, reviving expectations that the Fed is likely to keep rates higher for longer. The Fedspeak helped the Greenback recover from Federal Reserve Chair Jerome Powell’s dovish speech-led decline.

On Tuesday, markets were hopeful of a potential debt-ceiling deal sooner rather than later after, yet another round of Biden-McCarthy meetings ended in productive talks but no deal. Both leaders were optimistic about progress toward a deal. The US economic docket features New Home Sales data and the Richmond Manufacturing Index, which, along with the US bond yields and the US debt ceiling talks, should influence the USD price dynamics and provide some impetus to the pair.

DAX40
European shares fell on Tuesday due to the lacklustre results of Swiss wealth manager Julius Baer. This impacted the cyclical sectors, causing a retreat in cyclicals. Furthermore, investors were awaiting the release of the European and British Purchasing Managers' Index (PMI) surveys for May to get signals on the path of interest rates. The release of these surveys was eagerly anticipated by investors. Simultaneously, market participants were keeping a close eye on the progress of the US debt ceiling negotiations. Treasury Secretary Janet Yellen reiterated concerns that the United States could potentially face a debt default by June 1, adding to the overall market apprehension.

The DAX index is maintaining its upward momentum, affirming the positive shift in sentiment observed in recent weeks. The key level to watch is 16290, which holds historical significance dating back to November. A successful breakthrough of this level could pave the way for new all-time highs for the index, presenting an exciting opportunity for further gains.

 

[Z Forex]

" "Global Markets Tumble as Geopolitical Concerns and Debt Ceiling Impasse Weigh on Investor Sentiment"​

The MSCI Asia Pacific Index is on track to close at its lowest level in a week, following losses in the S&P 500 and Nasdaq 100 on Tuesday. Concerns over geopolitics and economic growth are weighing on mainland China shares, which are close to erasing their gains for the year.

In a surprise move, the Reserve Bank of New Zealand raised interest rates by a quarter-percentage point but indicated that no further tightening would be necessary to control inflation. The Official Cash Rate was raised to 5.5% from 5.25%, and the central bank's forecasts suggest that the rate has peaked and cuts may begin in the third quarter of 2024.

European equity markets are expected to open significantly lower on Wednesday, extending the losses from the previous session. Uncertainty surrounding the debt ceiling negotiations in Washington is dampening investor sentiment. The upcoming Germany Ifo survey of current business conditions will provide further insights into the economy, following positive PMI data indicating growth in German business activity driven by the services sector. ECB President Christine Lagarde made opening remarks at a celebration marking the central bank's 25th anniversary. She has emphasized the need to combat inflation, a sentiment supported by the Bundesbank president and the head of Deutsche Bank.

In the UK, consumer price inflation dropped to 8.7% year-on-year in April 2023, the lowest since March 2022, primarily due to a slowdown in electricity and gas prices. However, the inflation rate exceeded market expectations and remained well above the Bank of England's target of 2.0%.

In the United States, investors will be closely analyzing the minutes of this month's meeting to gauge the level of support for the decision to soften guidance on future interest rate hikes, which will provide insights into the likelihood of a hike in June.



EURUSD
Investors' concerns about a potential US default are growing as negotiations on the debt limit show no signs of progress. US House Speaker Kevin McCarthy's comments indicate a lack of agreement between Republicans and the White House. The absence of fresh commentary from President Joe Biden is adding to market anxiety, with Treasury Secretary Janet Yellen warning of dire consequences if funds run out by June 1. Investors are eagerly awaiting the release of the Federal Open Market Committee (FOMC) minutes for insights into the recent interest rate hike and future guidance.

The Euro saw mixed results with manufacturing contracting and services showing improvement. Attention is now focused on European Central Bank President Christine Lagarde's upcoming speech, where she is expected to address June's monetary policy and the need for interest rate hikes to combat Eurozone inflation.

The EURUSD pair is potentially forming a double bottom pattern, indicating a potential reversal, with the 1.0760 support level being a key factor. The next resistance levels to watch are at 1.0830 and 1.0850, particularly the upper parallel of the bearish channel. A closer look at the daily chart reveals that the price has temporarily found support at the lower parallel of the bullish channel. Nevertheless, there is still ongoing downward pressure on the EUR.

 

[Z Forex]

Mixed Market Sentiment and AI Rally: European Stocks, UK Retail Sales, and Chip Stocks Gain Amid Recession Concerns and Debt Ceiling Negotiations"​

Asia-Pacific markets were mixed as Wall Street saw a tech rally led by Nvidia and U.S. negotiators made progress on the debt ceiling deal. The Nikkei 225 in Japan rose by 0.92%, while the Topix gained 0.15%. Tokyo's core-core inflation reached its fastest pace since 1982. However, mainland Chinese markets declined, with the Shanghai Composite down 0.32% and the Shenzhen Component down 0.51%. The Hong Kong Hang Seng index was closed for a holiday after hitting a yearly low.

European stock markets are expected to open with a mixed performance on Friday, as concerns over regional growth arise following Germany's GDP data indicating a technical recession in the largest economy in Europe. In contrast, UK retailers witnessed a stronger-than-expected increase in sales last month, with the volume of goods sold rising 0.5% compared to a revised weaker figure in March. This rebound suggests consumer resilience amid a cost-of-living squeeze, potentially increasing pressure on the Bank of England to raise interest rates in an effort to address high inflation.

Chip stocks in the region, including Screen Holdings Co., SK Hynix Inc., and Taiwan Semiconductor Manufacturing Co., experienced gains for the second consecutive day, driven by a bullish sales forecast from Nvidia Corp. The rally in the artificial intelligence sector continued in the US after-hours trading, with Marvell Technology Inc. projecting substantial revenue growth in 2024. Nvidia's shares also soared, nearing a $1 trillion market value.

The ongoing debt-ceiling negotiations in Washington contribute to the uncertainties evaluated by Federal Reserve officials as they consider potential interest rate pauses. Mixed data, including a higher revised first-quarter GDP and lower-than-expected jobless claims, have influenced expectations for another quarter-point interest rate hike within the next two policy meetings.

On the economic calendar, market participants will closely monitor the US PCE deflator, as it provides further insights into the potential next moves of the Federal Reserve, particularly for Federal Reserve Chair Powell.

EURUSD
The USD Index is finding support by its role of safe heaven and also due yesterday GDP and Labor market Data indicating more resilient Economy and tight Labor market. The market priced a 0.25% added hike by the FED as a result. Tight credit conditions from US regional banks are dampening inflationary pressures, leading to speculation of a potential pause in rate hikes during the upcoming June monetary policy meeting. Meanwhile, the German economy has officially entered a recession, with consecutive quarters of contraction, including a 0.3% decline in Q1 real Gross Domestic Product (GDP) and a 0.5% contraction in Q4 of the previous year. These developments may prompt the European Central Bank (ECB) to focus on the economic outlook before addressing inflationary pressures. ECB policymaker Klaas Knot has advocated for two more policy rate increases, followed by a significant period of rate stability.

The EURUSD pair has confirmed a breakout from the long bullish channel, which has opened the door for further selling pressure. Although the pair temporarily found support around 1.0700, recent German and US data, as well as potential developments today, suggest that the market may continue to exert downward pressure on the Euro. The next significant point of confluence can be observed on the Daily chart around the 200MA.

GBUSD

In terms of retail sales, there was positive news on the monthly front as sales expanded by 0.5%, surpassing the expected 0.3% growth and reversing the previously reported contraction of 1.2%. However, on an annual basis, retail sales fell short of estimates, experiencing a contraction of 3.0% compared to the consensus forecast of a 2.8% contraction. Monthly retail sales, excluding volatile fuel factors, saw a growth of 0.5%, surpassing street expectations of a 0.3% expansion.

The UK Finance Minister expressed confidence in achieving the promise made by UK Prime Minister Rishi Sunak to halve inflation by the end of the year. To provide relief to households affected by persistent inflation, the government aims to reduce taxes. Failing to bring down inflation could have severe consequences according to the finance minister.

Moving forward, it is important to keep an eye on two key factors. First, the US Durable Goods Orders for April, and second, the Core Personal Consumption Expenditure (PCE) Price Index for the same month. The latter is regarded as the Federal Reserve's preferred inflation gauge. Additionally, monitoring the progress of US debt ceiling negotiations will provide valuable insights for future direction.

From a technical perspective, the GBP/USD pair confirmed a breakout below the support level of 1.2350 yesterday, resulting in a similar scenario as the EUR/USD pair. Both pairs have entered a sell-off territory and have broken out of their long-standing bullish channels. The next significant point of convergence that we can identify is around the 1.2200 level.

JPYUSD
According to Bank of Japan (BoJ) Governor Kazuo Ueda, there is a possibility of adjusting the Yield Curve Control (YCC) strategy if the balance between the policy's benefits and costs were to change. As part of the YCC, the Bank of Japan has left room for potential changes such as shortening the duration of bond yield targets to a 5-year zone, compared to the current 10-year zone.

Meanwhile, the Japanese Yen has gained some strength following the release of Tokyo CPI (May) data, which showed a deceleration in inflation. Headline inflation decreased to 3.2% from the previous reading of 3.5%, in contrast to market expectations of an acceleration to 3.9%. Core CPI, which excludes oil and food prices, also dropped to 3.9% compared to estimates of 4.3%, but remained higher than the previous release of 3.8%.

From a technical standpoint, the USD/JPY price has experienced a confirmed breakout, suggesting an increased probability of additional buying pressure in the current market environment. The next important level to monitor is the resistance at 142.1. However, it is worth noting that there is currently a general correction in the USD, which is also causing the pair to retreat towards the last significant resistance/support level at 138.70.

 

[Z Forex]

EURUSD

The US President, Joe Biden, and the top congressional Republican, along with House Speaker Kevin McCarthy, have reached an agreement to raise the federal government's debt ceiling of $31.4 trillion until January 2025. Over the weekend, President Biden strongly urged both chambers to pass the agreement, and McCarthy seems to have no difficulties in getting it approved in the House. However, some policymakers have expressed their discomfort with the compromises made to avoid a default on debt payments, which challenges the positive outlook of the market on this crucial issue.

Furthermore, the release of optimistic data last week, including Durable Goods Orders and the Core Personal Consumption Expenditure (PCE) Price Index, which is the preferred inflation gauge of the Federal Reserve, has reinforced expectations of a more hawkish stance from the Fed. This has put downward pressure on the EUR/USD price. Additionally, concerns about a downward revision of Germany's Q1 2023 growth numbers have renewed fears of a recession in the region and have influenced the more hawkish members of the European Central Bank (ECB).

The EUR/USD pair found support at 1.0700, signaling a potential reversal in the making. The resolution of the debt ceiling issue may shift the sentiment from risk-off to risk-on, benefiting the Euro and weakening the Dollar's status as a safe haven. The key resistance levels to monitor are 1.0750 and 1.0800, while the support levels are at 1.0700 and 1.0600.

GBPUSD

The recnt initial agreement reached regarding the extension of the US debt ceiling has the potential to cause the US Dollar to decrease some of its recent gains, provided that policymakers approve the deal in the Congress vote. Led by Kevin McCarthy, the Republicans in the House of Representatives have agreed to raise the US borrowing cap of $31.4 trillion for two years, while the White House has agreed to reduce budget spending but has remained steadfast in not cutting health coverage or increasing poverty. However, with the holidays in the US and UK on Monday, and considering the dissatisfaction expressed by both Democrats and Republicans regarding the deal, it may stimulate buyers of the Cable pair (GBP/USD).

From a technical standpoint, the GBP/USD pair has indeed confirmed a breakout below the support level of 1.2350. However, the ongoing correction in the Dollar is currently pushing the pair higher. Nevertheless, this does not alter the bearish outlook for GBP/USD. The next levels to monitor are 1.2300, followed by strong support at 1.2200. On the upside, resistance levels can be found at 1.2380 and 1.2420.

JPYUSD



The US Dollar (USD) reversed a portion of its modest intraday decline after the US Bureau of Economic Analysis (BEA) released data indicating that the headline PCE Price Index increased by 0.4% in April, compared to 0.1% in the previous month. Moreover, the annual rate accelerated to 4.4%, surpassing expectations for a decline to 3.9% from March's 4.2%. Additional information revealed that the Core PCE Price Index, which is the preferred inflation gauge of the Federal Reserve, ticked up to 4.7% from 4.6%, surpassing consensus estimates.

These data reaffirmed market expectations that the Federal Reserve (Fed) will maintain higher interest rates for a longer period, providing some support to the US Dollar and acting as a tailwind for the USD/JPY pair.

Additionally, the Bank of Japan (BoJ) adopting a more dovish stance could continue to weaken the Japanese Yen (JPY), indicating that the path of least resistance for the USD/JPY pair is towards the upside.

From a technical standpoint, the USD/JPY price is continuing the bullish momentum leading the price to the next big target around 142.10. The possible support level is 140.20 followed by 139.5.

XAUUSD

Hawkish hopes from the US Federal Reserve (Fed), backed by upbeat US data and hawkish comments from the Fed policymakers, as well as from Monetary Fund Managing (IMF) Director Kristalina Georgieva, challenge the gold price upside.

Also, the agreement between McCarthy and Biden in Sunday to avert an economically destabilizing default by suspending the $31.4 trillion debt ceiling until 2025 helped the sentiment toward Gold instead of Dollar and yields.

From a technical perspective, Gold has found support at the expected confluence point of the 100-day moving average (100MA), also preparing for a possible reversal around this level. This support level could potentially pave the way for an anticipated reversal towards the 1980 level, followed by a strong resistance area around 2000. In the event that the breakout level of 1937 is breached, possible support levels to consider are 1870 and 1800.

 

[Z Forex]

"Market Jitters: Investors Cautious as US Debt Ceiling Deal Faces Congressional Vote"​

Asian equity markets experienced mostly negative movements on Tuesday as investors remained cautious ahead of the congressional vote on the tentative US debt ceiling deal and awaited the latest purchasing managers' index readings from China. The Hang Seng Index led the decline, reaching its lowest levels this year. Similar downward movements were seen in the S&P/ASX 200, Nikkei 225, and Shanghai Composite indexes.

In European stock markets, a slight opening dip is expected on Tuesday, as investors eagerly await the progress of the US debt ceiling agreement in Congress. The key economic data for the day is the Spanish inflation reading for May, which is anticipated to show a continued rise in prices with a 4.4% annual increase compared to 4.1% the previous month.

In Spain, Prime Minister Pedro Sanchez surprised observers by calling for a snap election next week following his party's defeat in a regional election over the weekend, in an effort to retain power for the Socialist party.

Further details and clarity are anticipated regarding the tentative agreement in Washington to suspend the $31.4 trillion federal debt ceiling until January 2025, coupled with spending caps and government program cuts. However, the agreement may face obstacles as a few hard-right Republican lawmakers have expressed opposition.

Assuming the debt deal is approved by Congress, the Treasury Department may soon replenish its cash balance and issue over $1 trillion worth of bills throughout the third quarter, according to some estimates.

EURUSD

On Monday, the Euro struggled against the US Dollar, continuing its negative trend. Tuesday will see the release of Spain's preliminary report on the Consumer Price Index (CPI) for May, providing insight into price behavior for the current month. This data holds significance for both European Central Bank (ECB) officials and market expectations.

The US Dollar showed mixed performance on Monday, influenced by an improvement in risk sentiment. The DXY index gained a modest 0.1%, allowing it to close at its highest level in two months, above 104.20. With expectations shifting from a potential pause at the next Federal Open Market Committee (FOMC) meeting to a 25-basis-point interest rate hike, any potential decline in the US Dollar is expected to be limited.

US markets remained closed on Monday for Memorial Day, resulting in a quieter trading session. Market participants analyzed the weekend's agreement in Washington to suspend the debt limit. However, the legislation still requires approval from Congress, so the situation demands continued attention.

The EUR/USD pair is currently testing the 1.0700 level, indicating a potential continuation towards the next significant level around 1.0500 on a daily chart. The DXY index continues to exhibit strong momentum, suggesting the possibility of further gains for the US Dollar toward its next target around the 105.60 which also represent the 200MA.

GBPUSD

GBP/USD started the new week on a subdued note due to the Spring Bank Holiday in the UK. Last week, hawkish bets on the Federal Reserve (Fed) boosted the US Dollar (USD) and led to a loss of nearly 100 pips for GBP/USD. Before the weekend, the US Bureau of Economic Analysis released data showing that the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, slightly increased to 4.7% year-on-year in April, surpassing market expectations of 4.6%. The report also indicated that consumer activity remained robust, with a monthly rise of 0.8% in Personal Spending. On Sunday, US President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement to suspend the debt ceiling.

From a technical perspective, the GBP/USD pair has indeed experienced a confirmed breakout below the support level of 1.2350. The strength of the dollar today may further drive the pair lower. It will be important to monitor the next levels, with 1.2300 as the immediate support level, followed by a strong support zone at 1.2200. On the upside, resistance levels to watch for are 1.2380 and 1.2420.

JPYUSD

The US Treasury yields have dropped sharply as investors are optimistic that a raise in the US debt-ceiling for two years will get passage from Congress. The 10-year US Treasury yields have dropped below 3.76%.

This week, US Employment data will be keenly watched. Initially, Tuesday’s JOLTS Job Openings data will be released on Wednesday, which is expected to decline to 9.35M vs. the prior release of 9.59M. Later on Thursday, US Automatic Data Processing (ADP) Employment Change (May) will be released. As per the estimates, the US labor market has added fresh 170K payrolls vs. the former addition of 296K. On late Friday, the Nonfarm Payrolls (NFP) would be the show-stopper event.

On the Japanese Yen front, BoJ Governor Kazuo Ueda said on Tuesday, “The BoJ will patiently maintain the easy monetary policy as there is still a distance to go to stable 2% inflation.” He further added inflation is likely to bounce back after the middle of 2023 led by wage growth, and other factors but there is uncertainty on that outlook. Meanwhile, the BoJ will continue with its bonds buying operations.From a technical perspective, the USD/JPY pair is currently experiencing a strong bullish momentum, pushing the price towards the next significant target at around 142.10. The recent strength in the US dollar further supports this upward movement. In terms of potential support levels, we can look at 140.20 as the initial level, followed by 139.5.

XAUUSD

Despite the market's optimism regarding the US debt-ceiling extension, the price of gold remains subdued. This could be attributed to the risk-averse signals from certain policymakers, particularly Republicans, who are expressing opposition to the compromises made in the deal and are prepared to challenge it in both the House and the Senate.Federal Reserve Chair Jerome Powell recently mentioned that US regional banks' tight credit conditions are effectively managing liquidity in the economy, leading to reduced liquidity disbursement. Companies are facing difficulties in obtaining the necessary working capital and are content with operating at lower capacity.However, new data indicates a surge in consumer spending in the US economy, while labor market conditions have not improved as expected. This has prompted the Fed to maintain its policy of tightening. The release of US employment data will provide further insight into interest rate guidance.

From a technical standpoint, Gold is currently testing the breakout of a critical support level that has held for the past week. The price is testing the 1937 level, which is significant as it represents both the 100-day moving average (100MA) and the lower parallel of a long-standing channel. A confirmed breakout below this level would indicate a potential shift in the long bullish trend and could lead to a further selloff towards the 1875 level. Traders will be closely monitoring this support zone for any decisive price action.

DAX40

European shares are poised to open with cautious gains on Tuesday as investors await approval from Congress for a deal to avert a U.S. default. However, concerns arise as some Republican lawmakers have expressed opposition to the deal, creating uncertainty ahead of the approaching June 5 deadline. Furthermore, the deal is expected to result in significant bond issuance, potentially impacting market liquidity.Investors are also closely monitoring a range of economic reports in the eurozone, including credit, inflation expectations, and various sentiment indicators. Of particular significance is the Spanish inflation reading for May, which is anticipated to reveal a continued rise in prices, with an expected increase of 4.4% on an annual basis compared to the previous month's 4.1%.Spanish Prime Minister Pedro Sanchez has taken personal responsibility for his party's defeat in a regional election and has called for a snap election next week, catching many by surprise, including members within his own government.

The DAX has shown an upward movement today, rebounding from the 15700-support level following the positive sentiment resulting from the debt ceiling relief deal but the sentiment still cautious toward a liquidity drain from the market. The presence of bullish momentum suggests the possibility for the price to rise further towards the next resistance levels at 16300 and then 16825. On the other hand if any shift in sentiment toward risk off we will find the support levels identified as 15700, followed by 15500.

 

[Z Forex]

" Asian Equity Markets Decline on Disappointing Chinese PMI Data; Global Markets Await US"​

Asian equity markets faced a significant decline following disappointing PMI data from China. The manufacturing activity PMI for May fell to 48.2, while services growth slowed to its lowest pace in four months. This led to a 1% drop in China's blue chip stocks (CSI300) to 2023 lows, accompanied by a rally in government bonds. Hong Kong's Hang Seng (HSI) fell by 2.5%, bringing the index more than 20% below its January peak when hopes of a reopening rally were high. Australian stocks (AXJO) are also experiencing their worst day since March, with a monthly drop of 2.7%. Even the Nikkei fell by 1.6%, although it still posted a monthly gain of 6.8% that pushed the index above 30,000 to its highest levels in over 30 years.

In Australia, unexpected rise in consumer prices was reported, along with a warning from the central bank chief about potential future challenges. This prompted traders to increase the likelihood of another rate hike next week.European equity markets are expected to open significantly lower on Wednesday, following the losses among global peers. Investors are cautiously awaiting progress on the debt ceiling debate in Washington, as some US lawmakers have expressed opposition to a deal to raise the debt limit. Economic releases in the euro zone, including inflation and GDP data in France and Italy, as well as employment data in Germany, will also be closely monitored by investors.

Legislation to raise the $31.4 trillion US debt ceiling and implement new federal spending cuts, brokered by President Joe Biden and House Speaker Kevin McCarthy, passed an important hurdle and will be debated and voted upon in the full House of Representatives on Wednesday. However, two committee Republicans, Representatives Chip Roy and Ralph Norman, opposed the bill, going against their party's leadership.If the bill passes in the House, it will then move to the Senate for further consideration. Congressional approval is necessary before June 5 to prevent the Treasury Department from running out of funds to pay its debts, which would be a historic event for the United States.

EURUSD

Consumer spending in April exceeded expectations and undermined the possibility of a neutral interest rate policy by the Federal Reserve. Despite Fed Chair Jerome Powell mentioning that further rate hikes are less appropriate due to tight credit conditions, the focus now shifts to the upcoming release of the United States Nonfarm Payrolls (NFP) data on Friday.

In France, consumer price inflation decreased to 5.1 percent year-on-year in May 2023, compared to 5.9 percent the previous month. This marks the lowest level since April 2022, indicating a potential slowdown in inflationary pressures in the second-largest economy in Europe. The release of German Unemployment CPI data today will provide further insights into the overall health of the largest economy in Europe and help confirm or contradict the slowing French inflation data.

Despite these developments, the European Central Bank (ECB) is expected to maintain a hawkish stance in June due to significant divergence from the desired inflation target of 2%. In addition to the Eurozone, other factors and events will likely impact the market especially President Lagarde Speaks.

The EUR/USD pair confirmed a breakout below the 1.0700 level at the start of the European session, indicating a downward movement towards the next target around the 1.0500 area. The DXY index also followed a similar path, confirming the bearish trend and advancing towards the significant resistance level of 105.6 on the Daily chart.

GBPUSD

Lloyds Bank released its monthly business sentiment gauge and inflation signals for May, indicating a decline in the Lloyds Bank Business Barometer from 33% in April to 28% in May. This decrease aligns with the survey's long-term average and reflects the challenging economic environment, driven by persistent inflation and higher wage pressures, according to Hann-Ju Ho, senior economist at Lloyds Bank.

It is important to note that the Pound Sterling pair is influenced by the market's relatively more hawkish view on the Federal Reserve (Fed) compared to the Bank of England (BoE), despite mixed data from the US recently. The US Conference Board's Consumer Confidence Index for May declined slightly to 102.30 from an upwardly revised 103.70 in April. The survey report also revealed a decrease in one-year consumer inflation expectations from 6.2% in April to 6.1% in May. Additionally, the Dallas Fed Manufacturing Business Index for May dropped to -29.1, below market expectations of -19.6.

From a technical standpoint, the GBP/USD pair experienced an initial advance yesterday as the Dollar displayed weakness and underwent a correction. However, this correction proved to be temporary as the Dollar resumed its upward movement, reaching new higher highs. As a result, the GBP/USD pair was pushed lower towards its next significant target level at 1.2300.

JPYUSD

The Japanese Yen (JPY) is receiving support from multiple factors, leading to downward pressure on the USD/JPY pair. The release of disappointing Chinese PMI data for May has raised concerns about a global economic slowdown and dampened investors' appetite for riskier assets. This, coupled with the potential for Japanese authorities to intervene in the markets, has increased demand for the safe-haven JPY and contributed to a bearish sentiment surrounding the major currency pair.

Japan's Vice Finance Minister for international affairs, Masato Kanda, hinted at possible intervention measures to address the weakening Yen, stating that they will closely monitor currency market movements and respond accordingly. He also mentioned that all available options would be considered. Additionally, the ongoing decline in US Treasury bond yields has resulted in a narrowing of the US-Japan interest rate differential, further bolstering the JPY. However, the Bank of Japan's (BoJ) more dovish stance may limit the strength of the JPY.Overnight, benchmark 10-year yields experienced a drop of 12.4 basis points, followed by a 3 basis point decline in Asian trade on Wednesday, bringing the yield to 3.6675%. Bond prices typically rise when yields fall. The correction in bond yields is impacting the USD/JPY pair, particularly considering the current correlation between these two assets.

From a technical standpoint, the USD/JPY pair has undergone an unexpected correction, deviating from its fundamental factors as previously explained. This correction is driving the price towards the next support level at 139.00. Despite this correction, the long-term bullish trend and momentum remain intact.

XAUUSD

In addition to positioning ahead of data releases and consolidation at the end of the month, the price of XAU/USD (gold) is also benefiting from a combination of factors. Mixed US data and China's readiness to implement additional stimulus measures in response to weak activity numbers are supporting the price of gold. Furthermore, there is hope that US policymakers will find a way to avoid a default and the possibility of a more hawkish stance from the Federal Reserve is presenting challenges to the gold price. Currently, the metal is hovering just above a key support level that was previously a resistance level, adding to its significance.Federal Reserve Chair Jerome Powell recently acknowledged that tight credit conditions at regional banks in the US are effectively managing liquidity in the economy, resulting in reduced liquidity distribution. This has made it more difficult for companies to access working capital, leading them to operate at lower capacities.

In gold futures markets, open interest continued its downward trend on Tuesday, declining by approximately 3.3K contracts according to preliminary data from CME Group. However, volume showed an increase of nearly 10K contracts, indicating a potential rebound in the near term.From a technical perspective, Gold experienced a correction yesterday after reaching the support level at 1937. This price movement on the Daily chart suggests a rejection of the support level, keeping Gold within its long-term bullish channel. The current price action may indicate a period of price accumulation, which could potentially lead to a reversal. However, to confirm this reversal, we need additional signals and a breakout above the next resistance level at 1970, which should be closely monitored.

DAX40

On Wednesday, European shares reached their lowest point in over two months, driven by weak economic data from China. The concerns about a global slowdown overshadowed the optimism generated by signs of easing inflation in some major euro zone economies.

Europe's automotive and industrial goods and services sectors experienced the most significant losses, influenced by data revealing a faster-than-expected contraction in factory activity in China during May. This decline in activity was attributed to weakening demand, which is of particular significance as China is Germany's primary trading partner.

Despite the overall gloomy sentiment, there were a few positive indicators. French inflation in May was lower than anticipated, demonstrating a cooling trend. Additionally, the German state of North Rhine-Westphalia also experienced easing price pressures during this month.

The DAX experienced a correction yesterday and opened with a negative tone today, potentially indicating further corrections on the index due to negative fundamentals. However, the presence of bullish momentum remains intact, leaving open the possibility for the price to continue rising towards the next resistance levels at 16,300 and then 16,825.

 

[Z Forex]

Chinese Shares Rise on Positive Manufacturing Data; European Markets Optimistic After Debt Ceiling Bill Passes"​

Chinese shares advanced following better-than-expected Caixin manufacturing data for May, indicating expansion in activity despite earlier contraction concerns. This contrasted with the previous day's official figures showing further contraction, which had weighed on Chinese equity markets.

European equity markets were poised for a positive open as risk sentiment improved after the US House of Representatives passed the bill to raise the debt ceiling with broad bipartisan support. The bill now moves to the Senate ahead of the June 5 deadline.

The European Central Bank's summary of its previous meeting, where interest rates were increased by a quarter point, will be released, and ECB President Christine Lagarde will provide fresh insights at a banking conference in Hanover.

European equity futures reacted ahead of a data-packed day, including Eurozone manufacturing and inflation figures. Additionally, Christine Lagarde, the President of the European Central Bank, is scheduled to speak at a conference on Thursday.

Fed Governor Philip Jefferson expressed a preference for keeping interest rates unchanged in June to assess the economic outlook. Philadelphia Fed President Patrick Harker echoed this sentiment, suggesting a potential pause in the next meeting. As a result, market expectations for a quarter-point rate increase on June 14 decreased from 70% to 38%.

EURUSD

Softer consumer inflation data from France and Germany dampened expectations for rate hikes by the European Central Bank (ECB), which could act as a headwind for the euro. However, several ECB officials still support the possibility of additional rate increases in the coming months. ECB Vice President Luis de Guindos emphasized that the battle against inflation is not over, while ECB policymaker Madis Muller indicated that core inflation remains strong, suggesting the likelihood of multiple rate hikes. These remarks align with comments from ECB Governing Council member Gediminas Šimkus, who expects rate increases in June and July. On the other hand, Federal Reserve Governor Philip Jefferson suggested a pause in rate hikes at the next FOMC meeting to allow for further data analysis, emphasizing that a pause does not imply that rates have peaked. Philadelphia Fed President Patrick Harker also favored a pause but noted that incoming data could alter his stance. Additionally, progress in avoiding a potential US debt default, with the US House of Representatives voting in favor of a bill to suspend the debt ceiling, has kept the US dollar below its recent highs.

The EUR/USD pair confirmed the 1.0700 as new resistance level after it was a strong support indicating a downward movement towards the next target around the 1.0500 area. The DXY index also followed a similar path, confirming the bearish trend and advancing towards the significant resistance level of 105.6 on the Daily chart.

GBPUSD

Persistent inflation in the United Kingdom is bolstering the case for further interest rate hikes by the Bank of England (BoE). Despite expectations of easing inflationary pressures, the UK continues to experience elevated inflation, driven by higher food prices and labor shortages. Although headline inflation dropped to 8.7% in April, it remained well above estimates, signaling ongoing challenges.

Economists at Nomura have adjusted their predictions in response to the latest inflation data, now anticipating three consecutive 25 basis point rate hikes by the BoE. They project the peak rates to reach 5.25%.

In contrast, Federal Reserve Governor Philip Jefferson suggested in a speech that pausing rate hikes at the next Federal Open Market Committee (FOMC) meeting would allow for thorough data analysis before deciding on further tightening measures. He emphasized that a pause does not indicate that rates have reached their peak.

From a technical perspective, the GBP/USD pair experienced a significant correction, dropping to the 1.2450 level. This led to the formation of a well-defined bearish long channel, with the price reversing from the upper parallel of the channel. The US Dollar remains strong compared to other major currencies, suggesting that there is potential for further advancement. In the long term, the GBP/USD price is expected to target the first level of 1.2350, followed by 1.2300.

 

[Z Forex]

Chinese Shares Rise on Positive Manufacturing Data; European Markets Optimistic After Debt Ceiling Bill Passes"
Chinese shares advanced following better-than-expected Caixin manufacturing data for May, indicating expansion in activity despite earlier contraction concerns. This contrasted with the previous day's official figures showing further contraction, which had weighed on Chinese equity markets.
European equity markets were poised for a positive open as risk sentiment improved after the US House of Representatives passed the bill to raise the debt ceiling with broad bipartisan support. The bill now moves to the Senate ahead of the June 5 deadline.
The European Central Bank's summary of its previous meeting, where interest rates were increased by a quarter point, will be released, and ECB President Christine Lagarde will provide fresh insights at a banking conference in Hanover.
European equity futures reacted ahead of a data-packed day, including Eurozone manufacturing and inflation figures. Additionally, Christine Lagarde, the President of the European Central Bank, is scheduled to speak at a conference on Thursday.
Fed Governor Philip Jefferson expressed a preference for keeping interest rates unchanged in June to assess the economic outlook. Philadelphia Fed President Patrick Harker echoed this sentiment, suggesting a potential pause in the next meeting. As a result, market expectations for a quarter-point rate increase on June 14 decreased from 70% to 38%.

EURUSD

Softer consumer inflation data from France and Germany dampened expectations for rate hikes by the European Central Bank (ECB), which could act as a headwind for the euro. However, several ECB officials still support the possibility of additional rate increases in the coming months. ECB Vice President Luis de Guindos emphasized that the battle against inflation is not over, while ECB policymaker Madis Muller indicated that core inflation remains strong, suggesting the likelihood of multiple rate hikes. These remarks align with comments from ECB Governing Council member Gediminas Šimkus, who expects rate increases in June and July. On the other hand, Federal Reserve Governor Philip Jefferson suggested a pause in rate hikes at the next FOMC meeting to allow for further data analysis, emphasizing that a pause does not imply that rates have peaked. Philadelphia Fed President Patrick Harker also favored a pause but noted that incoming data could alter his stance. Additionally, progress in avoiding a potential US debt default, with the US House of Representatives voting in favor of a bill to suspend the debt ceiling, has kept the US dollar below its recent highs.

The EUR/USD pair confirmed the 1.0700 as new resistance level after it was a strong support indicating a downward movement towards the next target around the 1.0500 area. The DXY index also followed a similar path, confirming the bearish trend and advancing towards the significant resistance level of 105.6 on the Daily chart.

GBPUSD

Persistent inflation in the United Kingdom is bolstering the case for further interest rate hikes by the Bank of England (BoE). Despite expectations of easing inflationary pressures, the UK continues to experience elevated inflation, driven by higher food prices and labor shortages. Although headline inflation dropped to 8.7% in April, it remained well above estimates, signaling ongoing challenges.

Economists at Nomura have adjusted their predictions in response to the latest inflation data, now anticipating three consecutive 25 basis point rate hikes by the BoE. They project the peak rates to reach 5.25%.

In contrast, Federal Reserve Governor Philip Jefferson suggested in a speech that pausing rate hikes at the next Federal Open Market Committee (FOMC) meeting would allow for thorough data analysis before deciding on further tightening measures. He emphasized that a pause does not indicate that rates have reached their peak.

From a technical perspective, the GBP/USD pair experienced a significant correction, dropping to the 1.2450 level. This led to the formation of a well-defined bearish long channel, with the price reversing from the upper parallel of the channel. The US Dollar remains strong compared to other major currencies, suggesting that there is potential for further advancement. In the long term, the GBP/USD price is expected to target the first level of 1.2350, followed by 1.2300.

 

[Z Forex]

Global Markets React to Positive Economic Signals and Monetary Policy Outlook​

Shares in Japan, Australia, and China experienced gains, while South Korea's Kospi index was on track to enter bull market territory with a rise of over 20% since its September low. Hong Kong's Hang Seng index also rose more than 3%, recovering from concerns about Chinese economic growth that had pushed it close to a bear market.

European stock markets were expected to open higher on Friday after U.S. lawmakers passed a bill to increase the debt ceiling and establish a cap on government spending for the next two years, just days before the default deadline. The Fiscal Responsibility Act was approved in the Senate on Thursday, following its passage in the House of Representatives on Wednesday.

Although the ongoing political developments had caused minimal disturbance in the markets recently, attention is now shifting back to the outlook for the U.S. economy, the risk of a recession, and the Federal Reserve's stance on interest rates. Dovish comments from Fed officials, including remarks from Philadelphia Federal Reserve President Patrick Harker on Thursday suggesting a pause in rate hikes, have boosted market sentiment.

While recent statements from officials have indicated that the central bank may refrain from raising rates at its June meeting, the situation is complicated by the continued strength of U.S. data, such as consumer spending and manufacturing orders. The release of an eagerly anticipated labor market report on Friday will provide further insights.

EURUSD

The US Dollar Index faced pressure as some Federal Reserve policymakers called for a pause in tightening policies. This was highlighted by Philadelphia Federal Reserve Bank President Patrick Harker, who reiterated the need to exercise prudence and hit the pause button on policy tightening. In the United States, economic indicators presented a mixed picture, with a contraction in domestic factory activities but a significant increase in jobs. The US ISM agency reported a decline in the Manufacturing Purchasing Managers' Index (PMI), indicating reduced factory activities. However, the US Automatic Data Processing (ADP) agency reported a robust increase in jobs. In the Eurozone, inflationary pressures softened, leading investors to expect a potential pause in actions by the European Central Bank. However, the ECB President is expected to raise interest rates due to persistent core inflation.

The EUR/USD pair experienced a shift in direction influenced by changing fundamental readings, particularly due to a speech by Lagarde and FED members’ comments. The pair underwent a correction, surpassing the 1.0750 level and approaching the 100MA on the 4-hour chart, located around the 1.0780 level. The upcoming Non-Farm Payrolls (NFP) report is expected to have a significant impact on the EUR/USD pair, as any deviations from the forecasted numbers could alter market expectations for the next Federal Reserve (FED) meeting.

GBPUSD

The dollar initially experienced a strong rally following unexpectedly positive JOLTS job opening data. However, it later faced a sell-off after comments made by Federal Reserve speakers Patrick Harker and Philip Jefferson. They indicated that the Fed might consider not raising rates at the upcoming June meeting but would keep the possibility of a hike in July open. This concept of "skipping" a rate hike was introduced by Christopher Waller last week, suggesting that the Fed is adopting a new communication approach to smoothly conclude its tightening cycle.

Meanwhile, the pound continues to demonstrate resilience in the market. Although there has been a slight reduction in expectations for aggressive tightening this year, the overall sentiment remains relatively unchanged. There were speculations that Catherine Mann, a hawkish member of the Bank of England (BoE), would use a recent speech to push back against these expectations, similar to the past when the market anticipated a Bank Rate of 5.50%.

From a technical perspective, the GBP/USD pair experienced a significant correction, dropping to the 1.2450 level. This led to the formation of a well-defined bearish long channel, with the price reversing from the upper parallel of the channel. The US Dollar remains strong compared to other major currencies, suggesting that there is potential for further advancement. In the long term, the GBP/USD price is expected to target the first level of 1.2350, followed by 1.2300.

JPYUSD

According to the Automatic Data Processing (ADP) report, US private sector employers added 278,000 jobs in May, which was slightly lower than the previous month's figure of 296,000 but significantly exceeded the consensus estimate of 170,000. Initially, this data led to a subdued market reaction, with reduced expectations for a 25-basis points rate hike by the Federal Reserve (Fed) in June.On the other hand, the Japanese Yen (JPY) is being supported by the possibility of intervention by Japanese authorities in the markets. Masato Kanda, Japan's Vice Finance Minister for international affairs, hinted on Wednesday that authorities may take action to prevent the Yen from depreciating further. He mentioned that they will closely monitor currency market movements and respond accordingly. Additionally, the JPY benefits from a weaker risk sentiment, contributing to pressure on the USD/JPY pair as investors seek safe-haven assets.

The upcoming Non-Farm Payrolls (NFP) data will be closely watched as it often influences the direction of the pair, given the high volatility typically experienced after its release.

From a technical standpoint, the USD/JPY pair has recently found support around the 139.00 area, which corresponds to a significant historical support level dating back to July of the previous year. Moving forward, key resistance levels to monitor are located at 141.00 and 142.10. However, in the event of a bearish breakout, the next support levels to consider would be at 138.00, followed by 137.6.

DAX40

The US Dollar Index reached a weekly low at 103.45 as Federal Reserve policymakers lean towards pausing in the June monetary policy meeting due to the ongoing contraction in US domestic factory activities.

The fate of the US Dollar Index heavily relies on the forthcoming United States Nonfarm Payrolls (NFP) data. Analysts at Commerzbank believe that if the May labor market report shows strength and exceeds expectations, the Dollar could experience a rise. They anticipate the creation of around 200,000 new jobs in May, following the 253,000 jobs added in April, which would likely maintain the unemployment rate at 3.4%. Achieving the desired significant weakening of the labor market, which could help curb inflation, would not be realized yet.In the gold market, futures prices continued their recovery and briefly surpassed the important $1980 per troy ounce level on Thursday. However, this upward movement was accompanied by declining open interest and volume, indicating a lack of strength for a potential continuation of the rebound.

From a technical analysis perspective, gold experienced a significant correction and retraced towards the 1980 level. It encountered resistance around the 1982 level, forming a bullish pattern that suggests a potential strong reversal if today's data supports it. If there is a breakout above the resistance level, the next notable target would be around the 2000 area. However, if gold's momentum reverses and it turns negative, the support level to watch for would be around 1954.

 

[Z Forex]

"Asia-Pacific Markets Slide as Wall Street Pauses, Japan's Nikkei 225 Extends Losses, and Bank of Canada Surprises with Rate Hike"
The Asia-Pacific markets experienced a decline as Wall Street's market rally paused, causing the broad market index to fluctuate near its highest closing levels since August 2022. Investors in the region carefully assessed economic data released this week. In Japan, the Nikkei 225 continued its slide from Wednesday in a volatile session, ultimately falling by 1.1%, leading the losses in the region. The Topix index also experienced a decline of 0.75%.
In terms of economic data, Japan's annualized GDP for the first quarter was revised to 2.7%, surpassing the 1.9% expectation of economists polled by Reuters and the 1.6% initially reported in preliminary figures.
European equity markets were poised for a lower opening on Thursday due to ongoing global economic uncertainties, which weighed on investor sentiment. Market participants also adopted a cautious approach ahead of the release of US inflation data and the Federal Reserve's upcoming interest rate decision next week. Additionally, investors awaited eurozone unemployment figures and revised gross domestic product data for the first quarter.
In a surprising move, the Bank of Canada followed the Reserve Bank of Australia's unexpected decision earlier in the week and raised interest rates by 25 basis points. This unexpected hike led traders to adjust their expectations regarding the U.S. Federal Reserve's stance, causing some concern over the future policy outlook.
The prevailing consensus suggests that the Federal Reserve will implement at least one more interest rate hike. However, the question remains whether it will occur next week or in July. According to the CME FedWatch tool, the probability of a 25 basis-point hike by the Fed next week stands at 36%, an increase from 22% reported a day earlier.

EURUSD
The upcoming meeting of the European Central Bank (ECB) is anticipated to include a rate hike, as reflected in market expectations. ECB's Schnabel mentioned that the decision on further rate increases will depend on data, while ECB's Knot expressed skepticism about the adequacy of the current level of tightening. This meeting, which also involves the release of new forecasts, holds significant importance for shaping expectations leading up to July.
In terms of economic data, Germany reported a 0.3% month-on-month increase in industrial production for April on Wednesday, which fell below the anticipated 0.6% growth. On Thursday, a fresh estimate of the Euro area's GDP for the first quarter will be published, along with employment change data.
Following the Bank of Canada's rate hike, the US dollar gained momentum on Wednesday, supported by a surge in US bond yields. The 10-year yield climbed by 3.50% to reach 3.79%, marking the highest level since May 29, while the 2-year yield rose to 4.60%. The consensus for the upcoming week still suggests that the Federal Reserve will maintain the Fed Fund rate within the range of 5.00% to 5.25%.
From atechnical standpoint, the EUR/USD has formed a symmetrical triangle pattern, suggesting a potential continuation of the downward trend. An important resistance level to watch for is approximately 1.0750, where the 100-day moving average and the downward parallel of the bearish channel intersect. On the other hand, there are support levels around 1.0640, followed by 1.0600.

GBPUSD
Several factors are likely to impact the trajectory of the British pound, including the actions of the Federal Reserve regarding interest rate hikes, global economic growth prospects, and economic concerns worldwide. In the past, uncertainties have driven investors towards the US dollar, so these factors will be closely monitored to assess the pound's future direction. The upcoming week could be pivotal in determining market sentiment. In the short term, sideways price movement is expected, but once the market breaks out of the current range, traders should adjust their positions accordingly.

On the other hand, there is a cautious sentiment prevailing as UK Prime Minister Rishi Sunak prepares to visit the US, along with concerns about the potential negative impact of high inflation and a slowdown in productivity growth on the British economy. These factors are exerting downward pressure on GBP/USD prices.

From a technical perspective, there has been little notable movement in price, similar to the situation with the DXY. However, there have been some upward movements in price action. The prevailing sentiment remains bearish, suggesting that the pair is likely to sustain its downward trend towards the next support level at approximately 1.2350. Subsequently, potential support levels can be anticipated around 1.2300 and then 1.2200.

JPYUSD

 

[Z Forex]

"Asia-Pacific Markets Mixed as Investors Anticipate Central Bank Meetings; European Equity Markets Set for Higher Open"​

The Asia-Pacific markets are experiencing mixed trading as investors return from a strong week and anticipate major central bank meetings ahead. The Shenzhen Component in China led the region's gains, rising by 0.85%, primarily driven by education stocks. The Shanghai Composite also saw a slight increase. Hong Kong's Hang Seng index initially faced losses but managed to gain 0.1%. In Japan, the Nikkei 225 rose by 0.52% and closed at 32,434, maintaining its proximity to a 33-year high. The Topix also saw a 0.65% increase, ending the day at 2,238.77.

Following unexpected interest rate hikes from the Reserve Bank of Australia and the Bank of Canada, investors are feeling somewhat apprehensive as they approach a week that includes three major central bank meetings.

European equity markets are expected to open higher on Monday as investors look forward to monetary policy decisions from significant central banks throughout the week. The Federal Reserve will announce its latest policy move on Wednesday, followed by the European Central Bank on Thursday and the Bank of Japan on Friday. There are no major economic releases or earnings reports scheduled for Europe on Monday.

There are no anticipated surprises from the European Central Bank or the Bank of Japan, as market expectations are that the ECB will increase rates and maintain a hawkish stance, while the BOJ will continue with its loose monetary policy.

The actions taken last week have created uncertainty among investors regarding whether the U.S. Federal Reserve will maintain its current stance or deliver a surprise on Wednesday. The CME Fedwatch tool indicates a probability of over 70% that the Fed will maintain its current position, but with inflation data set to be released on Tuesday, there may be some unexpected developments.

EURUSD

The upcoming release of US consumer inflation figures on Tuesday, followed by the highly anticipated FOMC monetary policy decision on Wednesday, will provide important insights into the Federal Reserve's short-term policy outlook. These events will play a crucial role in determining the future direction of the US Dollar (USD) and offer significant momentum to the EUR/USD pair.

Meanwhile, a slight increase in US Treasury bond yields is helping the USD recover from its recent lows since May 24. However, the uncertainty surrounding the Fed's rate-hike trajectory is limiting further appreciation of the USD. Additionally, the growing expectations of additional rate hikes by the European Central Bank (ECB) are supporting the EUR/USD pair.

From a technical standpoint, the EUR/USD has formed a double bottom at the 1.0700 support level, indicating more uncertainty rather than a clear signal of a potential reversal. It is important to monitor the resistance area around 1.0750/1.0760. Conversely, there are support levels present near 1.0700.

GBPUSD
The US Dollar Index (DXY) is anticipated to adopt a cautious stance prior to the release of the US Consumer Price Index (CPI) data, scheduled for Tuesday. Preliminary projections indicate that the monthly headline CPI is expected to rise by 0.3%, indicating a slower pace compared to the 0.4% recorded in April. Meanwhile, the monthly core inflation rate is predicted to remain steady at 0.4%. Concerns surrounding persistent core inflation have garnered the attention of Federal Reserve Chair Jerome Powell and his colleagues, given the robust demand for durable goods and services. It is important to note that the US service sector constitutes two-thirds of the nation's overall Gross Domestic Product (GDP).

On the Pound Sterling front, investors eagerly await the release of the United Kingdom's Employment data for May. Estimates suggest that the Claimant Count Change is projected to decline by 9.6K, contrasting with the significant increase of 46.7K reported in April. Furthermore, the Unemployment Rate for the three-month period is anticipated to rise to 4.0%, compared to the previous release of 3.9%. Alongside the UK Employment data, market focus will be directed towards the upcoming speech by Bank of England (BoE) Governor Andrew Bailey. Bailey's remarks are expected to provide valuable insights into the potential future actions of monetary policy.

From a technical standpoint, GBPUSD is encountering resistance at 1.2590, which corresponds to the upper boundary of the bullish channel. Like other major currency pairs, the pair is likely to experience volatility and uncertainty, particularly due to significant economic events taking place this week. The next potential support levels for the pair are around 1.2500, followed by 1.2460.

JPYUSD

The US Dollar Index (DXY) has shown a mild correction to near 103.60 after a decent rally. A sideways performance is widely anticipated from the USD Index as the release of the US CPI is going to provide further guidance. The US Treasury yields are also choppy ahead of the inflation data. The yields offered on 10-year US Treasury bonds have climbed above 3.76%.

Scrutiny of the US preliminary inflation report shows that households’ demand for durables and services is consistently rising, which would keep pressure on Fed policymakers for hawkish guidance.

Meanwhile, the Japanese Yen will also remain in the spotlight ahead of the interest rate decision by the Bank of Japan (BoJ). The interest rate policy by BoJ Governor Kazuo Ueda is expected to remain unaltered as more monetary stimulus is required to keep inflation steadily above 2%.

From a technical analysis perspective, the USD/JPY pair is currently forming a descending triangle pattern, with the support level identified at 138.70. Taking a broader view, the overall outlook remains positive, suggesting potential upward movement in the pair. However, it is important to note that upcoming events this week may impact the outlook and introduce changes.

XAUUSD
The United States (US) is set to release its latest consumer inflation figures on Tuesday, followed by the outcome of a two-day Federal Open Market Committee (FOMC) policy meeting on Wednesday. The uncertainty surrounding the Federal Reserve's (Fed) rate-hike trajectory is currently weighing on the US Dollar (USD). Additionally, concerns about a potential global economic downturn are expected to provide some support to the non-yielding gold price.

Recent dovish comments from several Fed officials have reinforced market expectations for a pause in the US central bank's rate-hiking cycle. However, unexpected rate hikes by the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) last week indicate that the fight against inflation is not over, thereby supporting the possibility of further policy tightening by the Fed. Consequently, hopes for another 25-basis point (bps) interest rate increase in July remain alive.

The price of gold is currently experiencing limited movement within a narrow range, lacking a clear direction, as market participants await the clarity provided by upcoming data and events this week. This uncertainty may lead to increased volatility in the market. The upper boundary of the bearish channel is serving as a resistance level, while the 100-day moving average (100MA) is acting as support on the daily chart. However, the focus of market participants is on significant events scheduled for the following week, as they are expected to have a notable impact on the future trajectory of the gold market.

 

[Z Forex]

EURUSD

Softer US consumer inflation figures reaffirm market expectations of a pause in the Federal Reserve's tightening cycle. The headline CPI rose modestly in May, with the annual rate slowing to its lowest level since March 2021. However, the year-on-year inflation rate of 4.0% remains twice the Fed's target, leaving the possibility open for a 25 basis points increase at the July FOMC meeting.These factors support elevated US Treasury bond yields and lend some strength to the US dollar. On the other hand, influential European Central Bank (ECB) officials' recent hawkish comments suggest that the Eurozone still has a way to go before raising borrowing costs, despite a decline in the headline Eurozone CPI to 6.1% in May.

ECB President Christine Lagarde indicated the likelihood of additional interest rate hikes due to the absence of clear evidence that underlying inflation has peaked. This could provide support for the euro and the EUR/USD pair. Traders are cautious and await the outcomes of the upcoming FOMC decision and ECB meeting.

Looking at the technical aspect, the EUR/USD pair did not behave as expected following the release of the CPI data, and there was low volatility in the market due to the focus shifting towards the upcoming Fed meeting. It is important to highlight that the next significant resistance level can be found around the 200-day Moving Average (MA) on the 4-hour chart, aligning with the upper Parallel of the descending long-term bearish trend. Additionally, the DXY (US Dollar Index) reached its 200MA and its lower parallel.

GBPUSD

In April, the UK's Gross Domestic Product (GDP) showed 0.2% growth compared to a previous contraction of -0.3%, but both Industrial Production and the Index of Services disappointed during the same period. Despite this, the GBP/USD pair remains attractive to bullish traders due to positive employment and inflation figures reported by Britain. Additionally, the Bank of England (BoE) has shown indications of potential rate hikes.

On the other hand, weak US inflation data, as reflected in the Consumer Price Index (CPI) and Core CPI figures for May, weighed down the US Dollar and supported buyers of the GBP/USD pair.

Although the initial reaction to the UK data did not significantly impact the Cable pair traders, the focus on the upcoming Federal Reserve (Fed) meeting limited the pair's hawkish sentiment. If Federal Chair Jerome Powell delivers an unexpectedly positive tone or if the economic forecasts are optimistic, it could prompt a reversal and bring back sellers.

GBP/USD is currently gaining bullish momentum in the short term, supported by favorable fundamentals. The pair has potential support levels at around 1.2590 and 1.2535, while resistance levels are located at around 1.2625 and 1.2670.

JPYUSD

The latest United States inflation data shows a slight increase of 0.1% compared to expectations of 0.2% and a previous rate of 0.4%. The annualized Consumer Price Index (CPI) has also softened to 4.0% instead of the anticipated decline to 4.1% from the previous release of 4.9%. The decline in gasoline prices is a significant factor behind the decrease in headline inflation.Furthermore, the core CPI, which excludes the impact of oil and food prices, maintained a monthly pace of 0.4% and an annualized rate of 5.3% as expected.

Given the easing labor market conditions and ongoing contraction in factory activities, the market closely watched the inflation data. The deceleration in inflationary pressures is expected to allow Federal Reserve Chair Jerome Powell to maintain a neutral interest rate policy this time.JP Morgan Asset Management analysts anticipate that the Fed will keep the federal funds rate unchanged. However, they expect the post-meeting statement and the dot plot to emphasize that this inaction should be seen as "skipping a rate hike" rather than signaling an end to monetary tightening.Aside from the Federal Reserve's policy decision, market attention will also be on the Bank of Japan (BoJ) and its interest rate decision. Economists at OCBC Bank believe it may be too soon to expect any policy shift during the upcoming Monetary Policy Committee meeting. Nonetheless, they are in favor of BoJ policy normalization due to broadening inflationary pressures and wage growth in Japan.From a technical analysis perspective, the USD/JPY pair is currently trading within a price range as market participants await the Federal Reserve (Fed) meeting and its decision. The pair maintains a significant correlation with the US 10-year Treasury yield, and yesterday's positive movement had an impact on the pair's dynamics. However, it's important to note that upcoming events scheduled for this week could influence the market outlook and potentially lead to changes in the current analysis.

XAUUSD

Soft consumer inflation figures released from the United States reaffirm market expectations of a pause in the Federal Reserve's rate-hiking cycle, providing some support to the price of Gold. In May, the Consumer Price Index (CPI) showed minimal growth, with the year-on-year rate slowing to its lowest level since March 2021. However, the annual inflation rate of 4.0% remains twice the Fed's target, keeping hopes alive for further tightening of monetary policy.The markets are still pricing in the possibility of an additional 25 basis point increase at the July Federal Open Market Committee (FOMC) meeting, leading to a sharp rise in US Treasury bond yields. This acts as a tailwind for the US Dollar and a headwind for Gold, which lacks yield. However, cautious trading prevails as market participants wait for key central bank events.The Fed's policy decision is expected to be announced later in the US session, and it is widely anticipated that the Fed will maintain its current stance. Traders will pay close attention to Fed Chair Jerome Powell's comments during the post-meeting press conference for any indications of future rate hikes. The focus will then shift to the European Central Bank (ECB) policy meeting on Thursday, followed by the Bank of Japan's (BoJ) monetary policy update on Friday. In the meantime, if risk sentiment remains weak, it may continue to support the safe-haven appeal of Gold.

Gold prices have remained within the same range for the past month. The outcome of today's Federal Reserve (FED) meeting could potentially determine the future direction of the precious metal. On the 4-hour chart, the 200-day moving average (200MA) stands as a significant resistance level, while on the daily chart, the 100-day moving average (100MA) is providing support for the price of Gold.

DAX40

European markets opened with mixed performance as investors awaited the U.S. Federal Reserve's monetary policy decision. The benchmark Stoxx 600 index showed a 0.23% increase, with sectors experiencing both gains and losses. Auto stocks rose by 0.7%, while travel stocks dipped by 1%.In the UK, April's economic growth met expectations, with a 0.2% increase driven by the services sector.Entain, the owner of Ladbrokes, saw a significant drop of 10.0% and landed at the bottom of the STOXX 600. This decline followed the announcement of its acquisition of Poland-based sports betting operator STS Holdings for £750 million ($946 million).Traders have largely priced in the expectation of the Fed keeping rates within the 5.00%-5.25% range later in the day. However, there is a 63% chance of a rate hike in July, according to the CME FedWatch tool.

The European Central Bank is set to hold its policy meeting on Thursday, and it is widely anticipated that rates will be raised by another 25 basis points in an effort to tackle persistent inflation.The DAX index started the session positively, aiming to reach the last resistance level at 16,320. Global equity sentiment remains positive, and there is a significant slowdown in inflation levels. Investors should closely monitor the next resistance level at 16,800, as it could pose a significant challenge for further upward momentum. On the other hand, if the index experiences a decline, support is expected around the 15,900 level.