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USD/JPY:Fundamental + Technical Analysis Points to Bullish SetupThe US Dollar (USD) partially recouped its slight decline earlier in the day as the US Bureau of Economic Analysis (BEA) released data indicating that the headline PCE Price Index rose by 0.4% in April, a significant increase compared to the previous month's 0.1% growth. Furthermore, the annual rate saw a rise to 4.4%, surpassing expectations of a decrease to 3.9% from March's 4.2%. Detailed figures revealed that the Core PCE Price Index, which serves as the Federal Reserve's preferred measure of inflation, inched up to 4.7% from 4.6%, surpassing consensus forecasts. These data points reinforced the market's belief that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. Consequently, this provided some support for the US Dollar and acted as a tailwind for the USD/JPY pair. Presently, market expectations indicate a more than 50% likelihood of a 25 basis point increase occurring at the June FOMC meeting. This sentiment is further bolstered by a recent rise in US Treasury bond yields, resulting in a widening US-Japan interest rate differential and diverting capital away from the Japanese Yen (JPY). Moreover, the Bank of Japan's (BoJ) adoption of a more accommodative stance is expected to continue weakening the JPY, indicating that the path of least resistance for the USD/JPY pair is to the upside. Even from a technical standpoint, the emergence of buying interest following a brief dip on Friday, along with the pair's ability to remain above the 140.00 level, reinforces the positive setup. Consequently, there is a strong possibility of further upward momentum towards the next significant resistance zone around 140.45-140.50. Our technical analysis suggests that the price may experience a pullback and potentially reach the 61.8% Fibonacci retracement area before embarking on a new bullish move in alignment with the prevailing trend.
by FOREXN1
18
GBP/USD Faces Potential Correction Amidst Quiet Market Conditionhe GBP/USD pair continues to trade within a bearish channel on the H4 timeframe. In the recent session, there was a pullback towards the 50% Fibonacci level, coinciding with a previous resistance area and the dynamic trendline of the bearish channel. Based on this technical analysis, we are currently seeking a new short setup. From a fundamental perspective, the GBP/USD pair started the week with limited activity due to the Spring Bank Holiday in the UK and the Memorial Day holiday in the US, resulting in thin trading volumes. The near-term technical outlook indicates that buyers are staying on the sidelines, but a potential extended correction may occur once Pound Sterling stabilizes above the 1.2360 level. Last week, hawkish expectations regarding the Federal Reserve (Fed) provided support to the US Dollar (USD), causing the GBP/USD pair to decline by nearly 100 pips. Before the weekend, the US Bureau of Economic Analysis released data showing that the Core Personal Consumption Expenditures (PCE) Price Index, which is the Fed's preferred measure of inflation, slightly increased to 4.7% on a yearly basis in April, surpassing market expectations of 4.6%. Additional information from the report indicated healthy consumer activity, with a 0.8% monthly rise in Personal Spending. According to the CME Group FedWatch Tool, the probability of the Fed keeping its policy rate unchanged in June decreased to below 40% from nearly 75% a week ago. Meanwhile, US President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement to suspend the debt limit on Sunday. If this development leads to a risk-positive sentiment when bond markets and US stock index futures resume trading early Tuesday, the USD may face difficulty in finding demand, potentially allowing the GBP/USD pair to gain momentum.
by FOREXN1
26
GOLD Rebounds, Targets Short Continuation Amid ConcernsGold rebounds further from a two-month low, reclaiming the $1,950 level during the early European session and breaking a two-day losing streak. The Gold price is benefiting from a slight weakness in the US Dollar (USD) as traders take profits following its recent surge to a two-month high. However, significant upside for Gold remains elusive, at least for now, as expectations of the Federal Reserve (Fed) maintaining higher interest rates to combat inflation could act as a headwind for the precious metal. The market is already pricing in the possibility of another 25 basis points (bps) increase at the upcoming Federal Open Market Committee (FOMC) policy meeting in June. These expectations were fueled by hawkish comments from several Fed officials and better-than-expected economic data from the United States (US) released on Thursday. The revised estimate of the Gross Domestic Product (GDP) report showed a 1.3% annualized expansion in the economy for the January-March quarter, surpassing the initial estimate of 1.1%. Additionally, a surprise drop in Initial Weekly Jobless Claims indicated strength in the US labor market, providing the Fed with room to continue raising rates. Attention is now focused on the US Personal Consumption Expenditures (PCE) Price Index, which will influence expectations of future rate hikes and impact the USD. The yield on the two-year US government bond, sensitive to interest rate changes, has reached a two-and-a-half-month high due to hawkish Fed expectations. This may discourage aggressive bullish bets on Gold before the release of the PCE Price Index during the North American session. Furthermore, concerns about a global economic slowdown and the US debt ceiling are supporting the safe-haven appeal of Gold amid a generally softer tone in equity markets. Negotiations between Democrats and Republicans to raise the US government's borrowing limit have shown little progress, and credit rating agencies like Fitch and DBRS Morningstar have expressed concerns, potentially dampening investor appetite for riskier assets. Our idea is to anticipate a continuation of the short-term downward momentum trend, with a potential pullback and retest at the previous 50% to 61.8% Fibonacci area. This area coincides with the previous neckline resistance from the double top breakout and could prompt a price decline for a short-term continuation.
OANDA:XAUUSDShort
by FOREXN1
27
Analyzing CAD/JPY's Upward Trajectory Amidst USD/JPY's BullishThe CAD/JPY currency pair has been exhibiting sustained growth across various timeframes due to its significant correlation with USD/JPY. Notably, the USD/JPY pair has been experiencing a robust bullish trend, exerting downward pressure on the JPY and creating favorable conditions for the CAD to appreciate. A recent development of note is the price breakout of the Ascending Triangle pattern on the H4 timeframe. In light of this, our analysis suggests the likelihood of a new bullish continuation, aligning with the prevailing uptrend direction.
Long
by FOREXN1
15
AUD/JPY Downbeat Data and Cautious Sentiment Weigh.The AUD/JPY currency pair continues to face downward pressure, hovering around its intraday low after experiencing a decline from its eight-day high. The pair's movement is influenced by the release of key economic data, including Australia's employment report and Japan's trade numbers for the month of April. As the AUD/JPY pair is considered a risk barometer, qualitative factors will play a significant role in determining its direction, particularly due to the light economic calendar. The AUD/JPY pair is currently experiencing selling pressure, pushing it to refresh its intraday low near 91.20. This rapid decline amounts to nearly 50 pips, triggered by the disappointing Australian jobs report for April, which came in below expectations. Furthermore, the pair is also weighed down by the negative yield and cautious sentiment prevailing in the market. Australia's employment change figure for April came as a surprise, showing a decline of 4.3K jobs compared to the expected increase of 25K and the previous month's figure of 53K. Additionally, the unemployment rate in Australia rose to 3.7% from the previous 3.5%. Earlier in the day, Japan's merchandise trade balance total for April showed improvement, reaching ¥-432.4B, surpassing the expected ¥-613.8B and the previous month's ¥-755.1B. However, both imports and exports for April experienced a decline on a year-on-year basis, with imports contracting by 2.3% and exports growing by 2.6%, falling short of market forecasts of -0.3% and 3.0% respectively. These figures represent a decrease from the previous month's values of 7.3% and 4.3% for imports and exports respectively. On the previous day, Australia's wage price index for the first quarter of 2023 remained unchanged at 0.8% quarter-on-quarter (QoQ), failing to meet the market consensus of 0.9%. However, the year-on-year (YoY) numbers showed improvement, reaching 3.7%, surpassing the expected 3.6% and the previous reading of 3.3%. In contrast, Japan's preliminary reading of the first quarter (Q1) 2023 gross domestic product (GDP) figures revealed a growth rate of 0.4%, exceeding the market's expectation of 0.1% and the previous reading of 0.0%. It is worth noting that the AUD/JPY pair's recent upward momentum was driven by the market's improved risk appetite, mainly due to diminishing concerns regarding a US default. Additionally, hopes of increased investment from China also supported the pair's recovery, as the National Development and Reform Commission of the People's Republic of China (NDRC) announced measures to stimulate consumption and stabilize and expand manufacturing investment. However, the lack of further positive catalysts, along with a cautious sentiment ahead of significant Australian data and doubts regarding the Reserve Bank of Australia's (RBA) hawkish stance, has led the risk barometer pair to consolidate its weekly gains. Despite the positive performance on Wall Street, S&P 500 Futures show slight losses, and US Treasury bond yields remain stagnant near multi-day highs. Specifically, the yields on the 10-year and two-year Treasury bonds have risen to their highest levels since May 01 and April 24 respectively, with a four-day uptrend near 3.57% and 4.16%. However, they have slightly decreased to 3.55% and 4.13% respectively at the time of writing. Looking ahead, with a light economic calendar, the AUD/JPY pair may consolidate its recent gains if market sentiment continues to deteriorate. From a technical analysis standpoint, it is worth considering that the price of AUD/JPY may experience a new pullback around the 50% and 61.8% Fibonacci retracement levels. These levels coincide with the dynamic trendline, adding to their significance. This potential pullback could serve as a temporary pause in the downward movement before the price resumes its upward trajectory.
by FOREXN1
15
GBP/JPY Rebounds on UK Q1 GDP Growth - Bullish Momentum BuildsIn the European morning on Friday, GBP/JPY continues its recovery momentum and is climbing towards the 169.000 level after the release of UK data indicating a 0.1% growth in Q1 GDP. Additionally, both Industrial Production and Manufacturing Production saw expansions of 0.7% in March. On the technical side, GBP/JPY experienced a rebound on the dynamic trendline that is in conjunction with the 61.8% Fibonacci level. Notably, the dynamic trendline has served as a support in the past and allowed the price to rebound. With this in mind, our idea revolves around a fresh long impulse towards the maintrend in a pure swing trading setup.
Long
by FOREXN1
44
USD/JPY: Fundamental Outlook and Next Target SetupDuring the Asian session, the USD/JPY pair broke below the crucial support level of 140.00. This decline was influenced by the movement of the US Dollar Index (DXY), which also experienced a correction, falling close to 104.11 after failing to maintain a recent two-month high at 104.31. The correction in the USD/JPY pair appears to be more significant compared to the correction in the USD index, indicating that the Japanese Yen has gained some strength. In the Asian session, S&P500 futures continued to decline, reflecting an increase in risk aversion. However, on Thursday, US equities saw significant buying, driven by a strong recovery in the technology and financial sectors. Nevertheless, investors are becoming anxious as negotiations between White House officials and Republican leaders seem to be never-ending, which puts the US economy at risk of approaching a default situation. Fears of a US economic default are leading to higher US Treasury yields, with the yields on 10-year government bonds surpassing 3.83%. On Friday, there is expected to be significant activity in the USD Index with the release of US Durable Goods Orders data for April. The economic data is projected to contract by 1.0% compared to the previous reported expansion of 3.2%. Federal Reserve policymakers are in support of not raising rates in June. Several economic indicators in the US economy are suggesting a need for the Federal Reserve (Fed) to pause its policy-tightening measures during the June monetary policy meeting. Labor market conditions in the US have started to cool down, the Consumer Price Index (CPI) is consistently decelerating, and businesses are anticipating a gloomy economic outlook. Reuters reported on Thursday that weekly emergency lending by the Federal Reserve to banks has reached its lowest level since the banking sector faced difficulties in March. This indicates that companies are using their retained earnings to meet their working capital requirements and avoid higher interest rates, or they are operating at reduced capacity. Investors should take note of the minutes from the May Federal Open Market Committee (FOMC) meeting, which revealed that several Federal Reserve policymakers expressed uncertainty about further interest rate increases due to tight credit conditions imposed by regional US banks. Expectations of the Fed maintaining its rate-hiking cycle in June solidified further after dovish comments from Boston Federal Reserve Bank President Susan Collins, who stated that the Federal Reserve "may be at or near" the time to pause interest rate increases. She added, "While inflation is still too high, there are some promising signs of moderation." The Bank of Japan (BoJ) could make adjustments to its Yield Control Curve (YCC) strategy in the near future. BoJ Governor Kazuo Ueda stated on Thursday that they might tweak the YCC strategy if the balance between its benefits and costs were to change. The BoJ has also left room to potentially shorten the duration of bond yield targets from the current 10-year zone to a 5-year zone as part of the YCC. Additionally, the Japanese Yen strengthened after the release of Tokyo CPI data for May, which showed a deceleration. Headline inflation eased from the previous release of 3.5% to 3.2%, falling short of expectations for an acceleration to 3.9%. However, core CPI, which excludes oil and food prices, decreased to 3.9% compared to estimates of 4.3%, but it remained higher than the previous release of 3.8%. Our idea is to initiate a long setup at the 61.8% retracement level of the Fibonacci sequence, aiming to capitalize on a new long position aligned with the prevailing trend.
Long
by FOREXN1
18
GOLD: Uncertainty Over US Debt Talks Impacts Currency and GoldUS debt talks to avoid default create market uncertainty as no resolution reached over the weekend, ongoing discussions expected. White House Adviser Ricchetti and President Biden express commitment to finding a solution. The looming risk of a US default negatively affects the US Dollar and Treasury bond yields, supporting the recovery gains in Gold prices. The lack of a decision on the US debt ceiling could lead to market turmoil and trigger risk aversion if Biden and McCarthy fail to reach an agreement. In such a scenario, a flight to safety may boost the US Dollar, although its upside potential could be limited by losses in Treasury bond yields. As a result, Gold prices could experience some volatility but likely remain within a familiar range. With no major US data releases, the focus remains on the US debt ceiling talks. Last Friday, anxiety surrounding the US debt ceiling talks and Chairman Powell's speech caused the US Dollar to lose its weekly bullish momentum, leading to a significant bounce in Gold prices. During a Federal Reserve conference, Chairman Powell indicated that stresses in the banking sector might alleviate the need for a significant rise in the policy rate to achieve goals. This hint at a potential pause in the June Fed rate hike exacerbated the US Dollar's decline, accompanied by a retreat in the benchmark 10-year Treasury bond yields from their two-month highs of 3.72%. Consequently, the market is now pricing a 14% probability of a 25 basis points rate hike next month, compared to about 33% prior to Powell's speech. From a technical standpoint, Gold remains in a bearish momentum. In recent sessions, the price experienced a pullback at the 38.2% Fibonacci continuation retracement, suggesting a potential continuation of this trend.
OANDA:XAUUSD
by FOREXN1
39
XAU/USD Bears Pressure Amid Rising Dollar and Yields - GOLDGold price bears are grappling with the impact of rising United States Treasury bond yields and the strength of the US Dollar. The ongoing impasse in US debt ceiling talks, coupled with hawkish sentiments expressed by Federal Reserve officials, has further bolstered Treasury bond yields and the US Dollar, placing downward pressure on XAU/USD. Traders are closely monitoring risk catalysts and upcoming second-tier US data for clearer indications of the Gold price's future direction. Today, financial markets are experiencing a sense of risk aversion, with the US Dollar capitalizing on this sentiment. As a result, XAU/USD has declined throughout the day and is approaching its daily lows within the $1,956 price range. The downward pressure was fueled by comments made by United States House Speaker Kevin McCarthy following another round of talks with President Joe Biden regarding the extension of the debt ceiling. McCarthy highlighted the ongoing differences between Republicans and Democrats, emphasizing the Republican stance on spending cuts and opposition to tax hikes. However, he reassured that the US would not default and expressed optimism that a deal would eventually be reached. In addition to the uncertainty surrounding the US debt ceiling, market sentiment is also influenced by speculations regarding the future monetary policy of the Federal Reserve. Traders are eagerly awaiting the release of the Minutes from the recent Federal Open Market Committee (FOMC) meeting, as it may provide insights into the central bank's stance. In recent days, policymakers have surprised investors with hawkish comments, suggesting the possibility of one or two more interest rate hikes before a potential pause. These factors combined have contributed to the current environment, wherein Gold price bears are struggling amid rising Treasury bond yields and a strengthening US Dollar. Traders remain attentive to various risk drivers and upcoming economic data releases, seeking clearer signals for the future trajectory of the Gold price.
OANDA:XAUUSD
by FOREXN1
22
AUD/USD Bears Target 0.6500 Amid Dollar Strength & Debt CeilingThe AUD/USD bears continue to push the currency pair lower, reaching a multi-day bottom near the 0.6500 level. The strengthening of the US Dollar has contributed to this decline, driven by uncertainty surrounding the extension of the US debt ceiling and concerns about the Federal Reserve's actions. Market participants anticipate that the Reserve Bank of Australia (RBA) may follow the dovish stance of the Reserve Bank of New Zealand (RBNZ), thereby widening the divergence between the RBA and the Fed. This, coupled with the release of the FOMC Minutes and ongoing discussions within the Federal Reserve, has put pressure on the Australian Dollar (AUD). The recently published minutes of the FOMC meeting reveal a division among policymakers regarding the recent 0.25% rate hike by the US central bank. This uncertainty casts doubts on the market's expectations of another rate hike in June, despite the hawkish sentiments expressed by Atlanta Fed President Raphael Bostic and Federal Reserve Governor Christopher Waller. Meanwhile, negotiations surrounding the US debt ceiling extension and the upcoming long weekend for the House Representatives have created contrasting views. While some negotiators believe progress has been made in the talks, rating agencies such as Fitch and Moody's have expressed caution regarding the US credit rating status. The US Treasury Department has acknowledged these concerns. In light of these developments, US stock futures are experiencing a downturn, and US Treasury bond yields have reached their highest levels since mid-March. Looking ahead, the market will closely monitor the progress of the debt ceiling talks for clearer indications. Additionally, key economic indicators such as US weekly jobless claims, the Chicago Fed National Activity Index, and pending home sales will be released. Given the current situation, our perspective suggests a continuation of the short setup, targeting the level of 0.6500
by FOREXN1
18
EUR/USD:Comprehensive Fundamental Analysis and Next Target LevelThe EUR/USD remains under pressure as it approaches the 1.0700 level, influenced by several factors contributing to a cautious market mood. The downward revision of Germany's Q1 GDP and the prevailing uncertainty surrounding the US debt ceiling have weighed on the pair, bolstering the safe-haven appeal of the US Dollar. Traders are closely watching upcoming ECB speeches and key US data releases. The EUR/USD has experienced a consecutive decline over the past two days, marking the lowest daily close in two months. The strength of the US Dollar continues to drive the pair downwards, supported by higher Treasury yields and risk aversion sentiment. Although there was a temporary recovery during the European session, the pair retreated back towards the 1.0750 level. On Wednesday, economic data revealed a slight decline in Germany's IFO Business Climate Index for May, dropping to 91.7 from April's revised figure of 93.4 (previously reported as 93.6). This reading fell short of market expectations set at 93, but its impact on the Euro was limited. Germany is also set to release a new estimate of Q1 GDP, expected to remain at 0%, on Thursday. The recently published FOMC minutes unveiled a division among officials regarding the future path of interest rates. While some members advocated for further rate hikes, others expressed doubts about the necessity of additional tightening after the current meeting. The minutes reflected a general sense of uncertainty among participants regarding the appropriate level of policy tightening. Although the US Dollar experienced a slight weakening following the minutes, it retained most of its daily gains. Market sentiment has further deteriorated due to concerns about a sluggish growth outlook and ongoing negotiations surrounding the debt ceiling in the United States. While talks continue in Washington, a deal has not yet been reached. Thursday's economic reports in the US include Jobless Claims, which will be closely monitored. The EUR/USD has some support in the 1.0715/25 range, but if breached, further support is limited until the 1.0500/0515 area. This downside risk remains unless the US April core PCE deflator indicates a substantial decline. Our next target point is set at 1.6500.
by FOREXN1
7
EUR/USD Retreats as US Dollar Rebounds - Fundamental ViewThe EUR/USD currency pair experienced a retreat from its intraday high as the US Dollar managed to pare back some of its recent losses. The European Central Bank (ECB) President, Christine Lagarde, attempted to defend a hawkish bias but acknowledged that a significant portion of the journey toward curbing inflation had already been covered. Meanwhile, Federal Reserve Chair Jerome Powell referred to the banking crisis as a means to alleviate pressure on the bank to raise interest rates, and Neel Kashkari from the Fed sounded defensive. The sentiment surrounding the US-China relationship, as well as discussions on the US debt ceiling by President Joe Biden, influenced the recent market sentiment and the performance of the US Dollar. As a result, the EUR/USD pair extended its pullback from the intraday high, dropping to 1.0810 as the European session began on Monday. The cautious optimism regarding US-China ties and hopes of avoiding a US default contributed to the Euro's rebound. However, mixed comments from ECB President Christine Lagarde weighed on the major currency pair. President Joe Biden, following the Group of Seven (G7) summit in Japan, expressed his expectation of improved ties with China in the near future, following a dispute over an alleged spy balloon that strained relations earlier this year. However, the banning of Micron Technology products by China raised concerns about ongoing tensions between the US and China. President Biden also expressed optimism about his discussion with Republican House Speaker Kevin McCarthy, stating that they would continue their talks on Monday. During an interview on the Buitenhof TV show aired on Sunday, ECB President Christine Lagarde stated that significant progress had been made in taming inflation and bringing it back to the target set by the bank. On the other hand, Federal Reserve Chair Jerome Powell acknowledged inflation concerns but mentioned that the recent banking crisis, which resulted in tighter credit standards, has relieved some pressure to raise interest rates. Nevertheless, market expectations for a 0.25% rate hike by the Fed in June have increased, and calls for a rate cut in 2023 have diminished due to positive US economic data from the previous week and hawkish comments from Fed officials. From a technical standpoint, the price of the EUR/USD pair is currently within a bearish channel. Last week, the value experienced a rebound at the 50% Fibonacci area as predicted, but it appears to be continuing its downward trend. Our stance remains strongly bearish.
by FOREXN1
23
GBP/USD pressured as USD rises and UK rate outlook weighs.In-Depth: The GBP/USD pair experienced renewed selling pressure, slipping below the mid-1.2400s during the European session and approaching a three-week low. The US Dollar (USD) continued its upward trend for the third consecutive day, reaching a nearly two-month high, which weighed heavily on the major currency pair. Optimism surrounding the potential lifting of the US debt ceiling and expectations of a prolonged period of higher interest rates from the Federal Reserve (Fed) provided support to the Greenback. US President Joe Biden and top congressional Republican Kevin McCarthy expressed their determination to reach a deal soon to raise the federal government's debt ceiling of $31.4 trillion. An agreement needs to be reached and passed by both chambers of Congress before the federal government faces a potential shortage of funds to meet its obligations by June 1. Furthermore, hawkish comments from several Fed officials pushed back against speculations of interest rate cuts later in the year, supporting elevated US Treasury bond yields and bolstering the US Dollar. Conversely, the British Pound (GBP) was weighed down by expectations of fewer rate increases by the Bank of England (BoE) in the coming months to address inflation. This speculation was fueled by underwhelming UK jobs data released earlier in the week and less hawkish remarks from BoE Governor Andrew Bailey. During a speech at the British Chamber of Commerce Conference, Bailey stated that UK inflation is expected to decrease significantly in the upcoming months. However, he reiterated the BoE's commitment to raising interest rates to bring inflation back to the 2% target. Considering the fundamental factors at play, the GBP/USD pair is currently biased towards further downside movement. Any attempted recovery could be viewed as an opportunity for bearish traders and may fizzle out quickly. Market participants are now closely monitoring the US economic docket, including Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales data. Additionally, speeches from influential FOMC members, developments in US bond yields, and progress in US debt-limit negotiations will drive USD demand and provide fresh impetus to the major currency pair. From a technical standpoint, the GBP/USD rebounded at the predicted 61.8% area and continues its bearish rally based on the identified AB=CD pattern. Our outlook remains bearish.
by FOREXN1
25
AUD/USD Dips on Dollar Strength and Mixed Data - FundamentalThe AUD/USD pair had a negative performance at the beginning of Tuesday, following a slow start to the week. It faced selling pressure, reversing the earlier rebound during the mid-Asian session and recording slight losses around 0.6650 at the current time. This decline can be attributed to the stronger US Dollar, despite the lack of a deal between US President Joe Biden and House Speaker Kevin McCarthy to avoid the debt ceiling expiration. The US Dollar Index (DXY) has been gradually rising and is currently around 103.30. Meanwhile, Australia's preliminary S&P Global PMI readings for May showed a mixed picture. The Manufacturing gauge came in at 48.0, slightly higher than the expected 47.3, while the Services PMI decreased to 51.8 from the previous reading of 53.7 and the forecast of 48.9. The Composite PMI for Australia stood at 51.2, down from April's figure of 53.0. Additionally, the tensions between the West and Russia, as well as conflicts between the G7 and China, are weighing on the AUD/USD pair. Russia's strengthening ties with China, including the potential increase in trade turnover to $200 billion, has strained relations with the West. Given Australia's relationship with China, such developments have a negative impact on AUD/USD. Furthermore, the increasing likelihood of a 0.25% interest rate hike by the Federal Reserve in June, as well as no rate cuts expected in 2023, compared to the Reserve Bank of Australia's dovish stance, also contribute to the bearish sentiment for AUD/USD. In the broader market, S&P500 Futures are showing a slight uptrend near 4,220, rising for the second consecutive day after pulling back from a nine-month high on Friday. The positive performance of US stock Futures and Wall Street is causing a pause in the five-day uptrend of the benchmark 10-year and two-year US Treasury bond yields, which had reached their highest levels in two months. Looking ahead, the initial readings of S&P Global Purchasing Managers Indexes (PMIs) for May in the US will be important for AUD/USD traders to determine clear directions. Additionally, the ongoing US debt ceiling negotiations and discussions by the Federal Reserve will be significant factors to monitor. From a technical perspective, the price has experienced a rebound at the 61.8% Fibonacci level within a bearish channel, and there seems to be a formation of an AB=CD pattern, indicating a potential target point around the 1.272% Fibonacci extension. Overall, the outlook suggests a continuation of the bearish trend for AUD/USD.
by FOREXN1
26
NZD/USD Nears Completion of AB=CD PatternThe NZD/USD is experiencing significant selling pressure in response to the unexpected dovish shift by the Reserve Bank of New Zealand (RBNZ). Meanwhile, the USD remains strong, nearing a two-month high, which further contributes to the sharp decline throughout the day. The current fundamental landscape favors bearish traders as market focus shifts to the release of the FOMC minutes. The NZD/USD pair continues its downward trajectory after a significant drop from the 0.6300 level in the previous day. This selling pressure intensified following the RBNZ's policy announcement on Wednesday. As a result, spot prices have reached a nearly one-month low, around the 0.6130 region during the early part of the European session. The New Zealand dollar experienced a widespread decline as the RBNZ surprised the markets by signaling the end of its most aggressive hiking cycle since 1999. It's worth noting that the central bank had raised its official cash rate (OCR) by 25 basis points earlier in the week, bringing it to 5.5%, the highest level since the 2008 financial crisis. In the accompanying monetary policy statement, the RBNZ forecasted that the official cash rate would peak at its current level. This, coupled with the strength of the US dollar, has prompted aggressive selling in the NZD/USD pair. The USD Index (DXY), which tracks the performance of the US dollar against a basket of currencies, remains steady near a two-month high reached on Tuesday. This is due to expectations that the Federal Reserve (Fed) will maintain higher interest rates for a longer period. In fact, the market is currently pricing in the possibility of another 25 basis points rate hike in June, a sentiment reinforced by recent hawkish comments from several Fed officials. Additionally, concerns about global economic growth slowing down further benefit the safe-haven appeal of the US dollar and weigh on the risk-sensitive New Zealand dollar. On the other hand, USD bulls seem hesitant and are awaiting the release of the FOMC meeting minutes, scheduled for later during the US session. These minutes will be closely analyzed for insights into the Fed's rate-hike trajectory, which will impact the USD in the near term and provide fresh direction for the NZD/USD pair. However, the unexpected dovish shift by the RBNZ suggests that the path of least resistance for spot prices is downward. As a result, any attempted recovery in the pair might be seen as an opportunity to sell and may quickly fizzle out. From a technical perspective, the NZD/USD pair is nearing completion of a potential AB=CD pattern, and we anticipate a resumption of price movement with a bullish impulse. However, if the price continues to decline, an alternative scenario may come into play.
by FOREXN1
6
EUR/GBP:Economic Outlook and Forex Analysis: PMI Data and Trend.In May, the Preliminary French S&P Global Manufacturing PMI is expected to be 46.0, while the Preliminary French S&P Global Services PMI is predicted to be 54.2, and the Preliminary French S&P Global Composite PMI is anticipated to be 52.3. Traders can compare these figures to the April data, which reported the French S&P Global Manufacturing PMI at 45.6, the French S&P Global Services PMI at 54.6, and the French S&P Global Composite PMI at 52.4. Similarly, for Germany, the Preliminary German S&P Global Manufacturing PMI for May is forecasted at 45.0, the Preliminary German S&P Global Services PMI at 55.5, and the Preliminary German S&P Global Composite PMI at 53.5. Traders can refer to the April figures of the German S&P Global Manufacturing PMI (44.5), the German S&P Global Services PMI (56.0), and the German S&P Global Composite PMI (54.2) for comparison. Moving to the Eurozone, the Preliminary Eurozone S&P Global Manufacturing PMI for May is expected to be 46.2, the Preliminary Eurozone S&P Global Services PMI at 55.6, and the Preliminary Eurozone S&P Global Composite PMI at 53.7. These figures can be compared to the April data for the Eurozone: the S&P Global Manufacturing PMI (48.5), the S&P Global Services PMI (56.2), and the S&P Global Composite PMI (54.1). In terms of the Eurozone's Current Account (s.a) for March, it is predicted to be -€20.2B. Traders can compare this to the February figure, which was reported as €24.3B. Shifting focus to the UK, the predicted UK Public Sector Net Borrowing for April is £17.50B, while the UK Public Sector Net Borrowing excluding Banking Groups is expected to be -£0.57B. These figures can be compared to the March data, which reported UK Public Sector Net Borrowing at £20.71B and UK Public Sector Net Borrowing excluding Banking Groups at £18.87B. Finally, the Preliminary UK S&P Global Manufacturing PMI for May is forecasted at 48.0, the Preliminary UK S&P Global Services PMI at 55.5, and the Preliminary UK S&P Global Composite PMI at 54.6. Traders can refer to the April figures of the UK S&P Global Manufacturing PMI (47.8), the Preliminary UK S&P Global Services PMI (55.9), and the Preliminary UK S&P Global Composite PMI (54.9) for comparison. Considering the EUR/GBP currency pair the question remains whether the bulls will overpower the bears and exert pressure on the EUR/GBP towards its horizontal resistance area.
by FOREXN1
3
EUR/JPY Extends Upside Momentum, Aims for 2023 Highs above 150EUR/JPY continues its upward trajectory after a minor retreat on Friday, remaining below the 150.00 level at the start of the week. A successful breach of the key psychological barrier at 150.00 could pave the way for a potential test of the 2023 high at 151.61. From a technical perspective, EUR/JPY demonstrates robust bullish momentum across various timeframes, indicating a favorable environment for further extension of long positions.
Long
by FOREXN1
3
EUR/USD: Fundamental Analysis and Potential PullbackAt the start of the European session, the risk sentiment remains subdued as Asian equities trade with mixed results, failing to capitalize on the previous rally in Wall Street. The US Dollar, on the other hand, is consolidating its weekly gains near two-month highs, mirroring the lackluster performance of US Treasury yields across the yield curve. Optimism surrounding a potential US debt ceiling deal was dampened by a Reuters report that highlighted concerns from a small but influential Republican faction. They warned that they could block any agreement to raise the $31.4 trillion debt ceiling in the House of Representatives unless the accord includes substantial federal spending cuts. Furthermore, fresh tensions between the US and China over Taiwan are keeping traders on edge. The US Trade Representative's office announced a partial agreement between the US and Taiwan on their "21st Century" trade initiative, covering customs, border procedures, regulatory practices, and small businesses. This development clouds the outlook for a scheduled visit to the US by a Chinese commerce official next week. However, US stock futures are showing a 0.15% increase, as market participants maintain hope for a debt ceiling deal by Sunday when President Biden and House Minority Leader Kevin McCarthy resume talks. Despite the overall risk-on sentiment in the market, the US Dollar has extended its upward trend for the past three days. This is mainly due to hawkish comments from US Federal Reserve (Fed) policymakers and increasing expectations of a 25 basis points (bps) interest rate hike in June. Market expectations for a June rate hike have risen to a 36% probability, compared to a mere 10% chance at the beginning of the week. Dallas Fed President Lorie Logan stated that current data does not support skipping an interest rate hike in the upcoming June meeting. Fed Governor Philip Jefferson highlighted that inflation remains elevated, while St. Louis Fed President James Bullard advocated for higher interest rates, viewing them as insurance against inflationary pressures. Looking ahead, market focus will be on updates regarding the US debt ceiling and speeches by central bank officials, as there are no major economic data releases scheduled on both sides of the Atlantic. The speech by Fed Chair Jerome Powell will receive particular attention, while end-of-the-week flows are expected to influence market dynamics. EUR/USD is experiencing renewed buying interest, resuming its rebound towards the 1.0800 level in early European trading. This comes as the US Dollar corrects in tandem with the pullback in US Treasury bond yields. Eurostoxx futures are up 0.05% at the moment. According to sources cited by Bloomberg, the European Central Bank (ECB) is reportedly intensifying its scrutiny of bank liquidity and may consider raising liquidity requirements. From a technical perspective, there is a possibility of a pullback today around the previous resistance level, particularly at the 38.2% and 50% Fibonacci retracement levels. Only in this scenario would we consider a new short setup.
by FOREXN1
23
NZD/CAD:Potential Bullish Pullback Expected based on FundamentalAccording to economists, inflation in New Zealand is expected to remain high for an extended period, with increased government spending being a significant factor. While there are no current predictions for the next quarterly inflation figures due in July, the government is focused on maintaining fiscal sustainability and keeping inflation under control. As a result, the Reserve Bank of New Zealand (RBNZ) is likely to continue its hard-line approach to monetary policy by raising interest rates, which could have a positive impact on the New Zealand dollar. From a technical perspective, the NZD/CAD price is currently within a bullish channel and is expected to retest the lower side of the dynamic trendline of support, which coincides with the 61.8% Fibonacci level. The RSI is also in oversold territory. Considering these technical indicators along with the fundamental aspects, our forecast suggests a possible pullback towards the bullish main trend, as seen on the daily charts.
by FOREXN1
19
USD/CAD Approaching Crucial Resistance at 1.3650In the Asian session, the USD/CAD pair is making headway towards the significant resistance level of 1.3650. The Canadian dollar is gaining momentum after a period of reduced volatility, while the US Dollar Index (DXY) is on the brink of completing its nominal correction. The current price of USD/CAD has now reached a confluence zone, where the Fibonacci Area of reversal and the Dynamic trendline that have previously acted as resistance intersect. Our stance on USD/CAD remains bearish, and we anticipate a reversal from this area.
Short
by FOREXN1
7
GBP/JPY Dips on Surprise Jump in Japan's Inflation - FundamentalThe GBP/JPY pair experienced a significant decline below the 172.00 level, triggered by an unexpected surge in inflation rates in Japan. This sudden rise in Japan's inflation numbers, exceeding projections, is not anticipated to have an impact on the Bank of Japan's (BoJ) prolonged ultra-dovish policy stance. Market participants do not expect the Bank of England (BoE) to bring inflation down by half before the year ends. During the Asian session, the GBP/JPY pair suffered a sharp drop after failing to sustain levels above the immediate resistance at 172.00. This downward pressure on the cross was the result of the Statistics Bureau of Japan reporting higher-than-expected inflation data for April. The national headline Consumer Price Index (CPI) rose to 3.5% from the previous release of 3.2%, surpassing the consensus estimate of a slowdown to 2.5%. Meanwhile, the core CPI, which excludes food and energy prices, accelerated to 4.1% compared to the consensus of 3.4% and the previous release of 3.8%. The publication of inflation numbers exceeding projections brings some relief to Bank of Japan (BoJ) policymakers, but it does not alter their prolonged ultra-dovish policy stance. BoJ's Kazuo Ueda has already indicated that inflation projections are softening, and the central bank is committed to taking necessary measures to maintain inflation steadily above the 2% target. Meanwhile, the Pound Sterling has remained resilient in recent trading sessions due to the lack of promising signs of inflation deceleration in the United Kingdom. Investors are speculating that the Bank of England (BoE) will not be able to reduce inflation by half before the end of the year. BoE Governor Andrew Bailey has already acknowledged underestimating the strength and persistence of inflation. Additionally, UK Finance Minister Jeremy Hunt has pledged a reduction in the tax burden on households, which is expected to further stimulate retail demand. The UK Office for National Statistics (ONS) reported on Thursday that 18% of UK firms are planning to pass on the impact of higher input prices and increased labor costs to consumers, compared to 23% in the previous survey. From a technical perspective, the pair rebounded from the previous resistance level, and our analysis suggests a potential pullback between the 38.2% Fibonacci level and the 61.8% level. This pullback could lead to a fresh bullish impulse aligning with the overall bullish trend observed across higher timeframes.
by FOREXN1
14
EUR/AUD: Fundamental Analysis and Anticipated Technical SetupEUR/AUD Continues Bearish Momentum as Mixed ECB Comments and Australian Wage Data Impact Sentiment The EUR/AUD pair remains within a bearish momentum, with the price consolidating in recent hours and forming a bearish triangle pattern that could potentially trigger a new bearish setup. The Euro's demand is undermined by mixed comments from European Central Bank (ECB) officials. Vice Bank of Spain's Governor, Pablo Hernandez de Cos, expressed concerns on Wednesday about the persistence of higher inflation, suggesting that it could slow down the recovery and potentially lead to further tightening measures in the euro area. On the Australian side, recent data revealed that the Wage Price Index rose by 0.8% quarterly during the first quarter, slightly below the market consensus of 0.9%. However, the annual rate climbed to 3.7%, reaching the highest level since September 2012. While labor costs play a crucial role for the Reserve Bank of Australia (RBA), it's important to note that the Q1 data alone may not be sufficient to drive a decision towards a rate hike. Overall, the combination of mixed ECB comments and the Australian wage data adds to the sentiment favoring a continued bearish outlook for the EUR/AUD pair.
by FOREXN1
7
GBP/USD Extends Decline as US Dollar Strengthens - FUNDAMENTALDuring the European trading hours, GBP/USD is experiencing a drop towards the 1.2400 level after facing rejection just shy of 1.2500. Despite a mixed market mood, the US Dollar is holding onto its recovery gains, exerting downward pressure on the pair. Traders are eagerly awaiting the testimony of Bank of England Governor Andrew Bailey, as it could provide fresh impetus for trading. GBP/USD has continued its downward slide mid-week, reaching its lowest level since late April near 1.2420. The pair's bearish outlook remains intact in the short term, with sellers likely to dominate the market as long as the 1.2500 level acts as resistance. The US Dollar has benefited from risk aversion on Tuesday, putting GBP/USD on the defensive. Although recent headlines suggest that a deal to raise the US debt ceiling could be reached by the end of the week, market caution prevails on Wednesday. According to a report from the Wall Street Journal, House Democrats are planning to collect signatures for a "discharge petition to raise the debt ceiling." In the European session, the UK's FTSE 100 Index is trading flat, while US stock index futures show mixed performance. Meanwhile, UK Finance Minister Jeremy Hunt expressed full support for the Bank of England's policy decision and acknowledged that there is no automatic solution to bring down inflation. However, these comments failed to generate demand for Pound Sterling. In the latter half of the day, market participants will closely watch the release of Housing Starts and Building Permits data from the US for potential market-moving catalysts. If these data remind the market of the negative impact of the Federal Reserve's tight policy on the real estate sector, the US Dollar could weaken, potentially allowing GBP/USD to stage a rebound. It is also worth noting that the valuation of the US Dollar will continue to be influenced by the overall risk sentiment during the American session. A further decline in Wall Street's main indexes would support the US Dollar, while the opposite could weaken the currency.
by FOREXN1
17