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EUR/USD Gains Momentum on ECB's Hawkish Stance and USD WeaknessFrom a technical perspective, the EUR/USD is currently trading within a bullish channel, and in the last hour, the price has been attempting to establish a new swing high. There is an identifiable ABCD pattern, with the D point serving as our target. The D leg corresponds to the 1.217% Fibonacci extension, located at the 1.0800 level. We are observing a potential setup for a bullish move. On the fundamental side, the Euro received a slight boost after Christine Lagarde, the President of the European Central Bank (ECB), hinted at the likelihood of further interest rate increases. This statement was prompted by the absence of clear evidence indicating that underlying inflation has reached its peak. Lagarde's remarks, coupled with recent hawkish comments from various ECB officials, have reinforced market expectations that the central bank will continue raising rates despite a decrease in inflationary pressures. It is important to note that Eurozone Consumer Price Index (CPI) figures for May showed a greater deceleration than anticipated, with a year-on-year rate of 6.1% compared to the previous 7.0%. Additionally, Core CPI declined from 5.6% to 5.3% last month. Moreover, the emergence of USD selling has contributed to a moderate intraday rebound of approximately 50 pips for the EUR/USD pair. In fact, the US Dollar Index (DXY), which tracks the performance of the Greenback against a basket of currencies, lost momentum and relinquished its modest intraday gains following the disappointing release of the US ISM Services Purchasing Managers' Index (PMI) for May, which fell to 50.3. This data, coupled with dovish rhetoric from several Federal Open Market Committee (FOMC) officials last week, has reinforced market expectations for an imminent pause in the Federal Reserve's tightening cycle. Market participants are now pricing in a higher probability of the US central bank keeping interest rates unchanged at the conclusion of its upcoming two-day policy meeting on June 14. Consequently, US Treasury bond yields experienced a significant overnight decline, keeping USD bulls on the defensive during the Asian session on Tuesday and providing support to the EUR/USD pair. However, it is worth noting that a cautious market sentiment could strengthen the safe-haven demand for the US dollar and limit gains for the Euro. Nevertheless, the aforementioned fundamental backdrop appears to favor the bulls and supports the potential for an intraday appreciation in the EUR/USD pair. Investors are now awaiting the release of German Factory Orders data and Eurozone Retail Sales figures, which could provide fresh impetus. Meanwhile, there are no significant market-moving economic data releases expected from the US, which leaves the Greenback influenced by US bond yields and overall risk sentiment.
by FOREXN1
8
USD/JPY Eyes Fresh Sprint as Pullback Presents New OpportunitiesDuring the early North American session, the USD/JPY currency pair witnessed a surge, reaching a new high for the day around the 139.45 region. However, as it climbed to higher levels, it encountered a fresh wave of selling pressure. Consequently, spot prices swiftly retreated towards the lower end of the daily range, currently trading just above the 139.00 mark. This retreat followed the release of the monthly jobs data from the United States, which presented a mixed picture. USD/JPY pair remains within a bullish trend. and is notably a retracement in the vicinity of the 138.500 area has served as a fresh impetus for the pair's upward movement. Traders are now eyeing the D Leg extension of the ABCD pattern, which is projected to occur around the 141.500 level. This target represents the next significant milestone for the pair's upward trajectory, and investors are closely monitoring developments to assess the likelihood of reaching this level.
Long
by FOREXN1
16
NZD/USD Vulnerable to Bearish Pressure: A Closer LookThe NZD/USD pair initially reached a five-day high at 0.6111 before declining to around 0.6065. This movement was driven by strong labor market data from the US, which indicated robust employment growth and potentially prompted a reevaluation of additional rate hikes by the Federal Reserve (Fed). As a result, the US Dollar gained traction, supported by increasing US bond yields. The US Bureau of Labor Statistics reported that employment in the United States exceeded expectations, with a 339k increase in May compared to the consensus forecast of 190k. However, the Unemployment Rate slightly rose to 3.7% instead of the expected 3.5%. Average Hourly Earnings, which serve as an indicator of wage inflation, registered a year-on-year growth of 4.3%, slightly below the projected 4.4%. While labor demand shows signs of deceleration, the strong employment growth and mounting inflationary pressures make a case for the Fed to reconsider a 25 basis points (bps) hike in their upcoming June meeting. Consequently, US bond yields have been trending upward, with the 10-year yield rising to 3.68%, a daily gain of 2.70%. Similarly, the 2-year yield stands at 4.51%, marking a 3.64% increase, and the 5-year yield is at 3.84%, up by 3.81%. The Federal Reserve's ultimate objective is to achieve full employment and price stability. Therefore, the release of the May Consumer Price Index (CPI) next week will be crucial in shaping the expectations and considerations of the Federal Open Market Committee (FOMC) regarding future interest rate decisions. Currently, the CME FedWatch tool indicates that markets are still assigning higher probabilities to no rate hike in the upcoming June 13-14 meeting, but the possibility of a 25 bps hike has gained some relevance. When examining the price action using technical analysis, it becomes evident that there was a notable retracement occurring at the 38.2% Fibonacci level, which coincided with the previous resistance level. This confluence of factors indicates a significant area of interest for traders. Presently, our focus lies in identifying a new bearish setup, aligning with the observed price movement and potential resistance, to potentially capitalize on a downward market trend.
by FOREXN1
16
GBP/USD Bulls Surge, Pair Climbs Toward 1.2550 Amid USD WeaknessGBP/USD is displaying a bullish trajectory as it inches higher towards the 1.2550 level in early Europe. The currency pair is benefiting from a risk-friendly market environment, leading to a weakening of the safe-haven US Dollar. Despite concerns over UK economic challenges stemming from Brexit, GBP/USD remains resilient. Investors now shift their attention to the eagerly awaited US Non-Farm Payrolls (NFP) report. Earlier on Wednesday, GBP/USD faced bearish pressure and dipped to the 1.2350 region due to safe-haven flows bolstering the US Dollar (USD). However, during the late American session, the USD lost its strength as the risk sentiment improved following the US House of Representatives' passage of a bill to suspend the debt-ceiling until January 1, 2025. Additionally, dovish comments from Federal Reserve (Fed) officials further weighed on the USD's performance. Both Philadelphia Fed President Patrick Harker and Fed Governor Philip Jefferson expressed their reluctance to consider a rate hike in June. Consequently, the probability of a 25 basis points rate increase at the upcoming policy meeting, as indicated by the CME Group FedWatch Tool, rose above 60%, up from around 30% earlier in the day. Nevertheless, the USD is putting up some resistance against its counterparts early on Thursday, which is temporarily limiting the upside potential for GBP/USD. However, given the prevailing risk-positive market sentiment and the current market expectations regarding the Fed's rate outlook, the USD may struggle to outperform other major currencies. Later in the American session, the Automatic Data Processing (ADP) will release the private sector employment report, with market expectations of a growth of 170,000 jobs in May, following the impressive 229,000 increase recorded in April. A weaker-than-expected reading in this report could weigh on the USD in the short term, providing an opportunity for GBP/USD to extend its upward momentum. Conversely, a stronger-than-anticipated figure may limit GBP/USD's gains. Additionally, the US economic calendar will feature the ISM Manufacturing PMI survey for May, with the headline PMI expected to remain below 50, indicating continued contraction in the sector's activity. Unless this data exhibits a recovery above 50, it is unlikely to provide support for the USD. Our bullish outlook suggests that GBP/USD may experience a continuation of its upward trend, with a target towards the 1.26500 area.
Long
by FOREXN1
7
GBP/JPY: Riding the Wave of a Continuation Bullish TrendThe GBP/JPY currency pair is exhibiting a persistent bullish trend across various timeframes, consistent with our previous forecast. Yesterday, there was a notable price retracement around the 172.55 level, coinciding with the critical 50% and 61.8% Fibonacci retracement areas. This pullback aligns with the overall uptrend, suggesting a potential opportunity to join the prevailing bullish momentum. We anticipate a continuation of the bullish tendency in the GBP/JPY pair. Traders and investors should remain watchful for further upward price movements, as the market sentiment remains optimistic.
Long
by FOREXN1
18
EUR/USD Remains Below 1.0700 Amid USD Index Strength Policy Div.The EUR/USD currency pair is currently experiencing oscillations below the 1.0700 level, primarily influenced by the USD Index surpassing the immediate resistance level of 104.30. This development reflects the strength of the US dollar and its impact on the pair's movements. Financial markets are witnessing a state of chaos due to the conflicting views among Federal Reserve policymakers regarding interest rate guidance. This divergence of opinions is causing uncertainty and instability in the markets, adding to the complexity of the current situation. European Central Bank President Müller expresses confidence in the central bank's plan to raise interest rates by 25 basis points on multiple occasions, emphasizing the persistent nature of core inflation. This stance implies a potentially more aggressive approach from the European Central Bank. At present, the EUR/USD pair is consolidating within a narrow range below the significant psychological resistance level of 1.0700 during the early European session. Traders anticipate heightened market activity as the release of Eurozone inflation and United States employment data approaches. In the Asian session, S&P500 futures have recorded substantial gains, indicating a recovery in investor risk appetite. However, caution prevailed among market participants on Wednesday, leading to a sell-off of US equities. This cautious sentiment arose from mounting expectations of an additional interest rate hike by the Federal Reserve (Fed). Our analysis suggests the possibility of a potential pullback at the 61.8% Fibonacci retracement level from the previous swing, which coincides with the dynamic trendline of the bearish channel and the resistance area. This confluence of factors presents an opportunity for the formation of a new AB=CD pattern, with the D leg extending at 1.272%.
by FOREXN1
8
EUR/USD: Potential for Further Decline below 1.0700 - SHORTThe EUR/USD pair continues to demonstrate a bearish bias on the 1-hour chart, as it remains within a downward channel. The next potential target point could be the AB=CD Leg D with an extension at 1.06750. However, in a worst-case scenario, the price may reach the 1.06500 level. From a fundamental analysis perspective, the Euro weakened during the European session and experienced negative performance against the pound. Among major currencies, the Euro exhibited lagging performance on Monday, failing to break its negative streak against the US Dollar. On Tuesday, Spain is scheduled to release the preliminary report on May's Consumer Price Index (CPI), providing an initial glimpse into price behavior for the current month. This data holds significant importance for European Central Bank (ECB) officials and market expectations. The US Dollar displayed mixed results on Monday, influenced by an improvement in risk sentiment. The DXY index recorded a modest gain of less than 0.1%, enabling it to achieve the highest closing level in two months, surpassing 104.20. As expectations shift from a pause at the upcoming Federal Open Market Committee (FOMC) meeting to a 25-basis-point increase, any potential decline in the US Dollar is likely to be limited. US markets were closed on Monday in observance of Memorial Day, resulting in a relatively quiet trading day. Market participants absorbed the weekend agreement in Washington to suspend the debt limit. However, the legislation still requires approval from Congress, necessitating ongoing attention. Investors also analyzed Friday's US consumer inflation data in anticipation of a busy week filled with economic reports. On Tuesday, the US will release housing data and consumer confidence figures. Key reports later in the week include Thursday's ADP employment report and Friday's Nonfarm Payrolls.
Short
by FOREXN1
21
GOLDReacts to USD Correction and Fed Rate Hike ExpectationsGold (XAU/USD) experienced significant selling pressure following a brief pullback near $1,970.00 during the Asian session. The precious metal has extended its decline to around $1,932.00 as the US Dollar Index (DXY) recovers and aims to reach a new daily high. Technically, the outlook suggests a bearish continuation for gold, with a potential decline to the 61.8% Fibonacci level at $1,905.50 before a possible pullback and price increase. The fundamental overview indicates that with the return of full market activity on Tuesday, the US Dollar is losing ground in anticipation of positive news on the US debt deal, which is boosting risk sentiment. The US Dollar correction is challenging the 104.00 level against other currencies, accompanied by a 1.70% drop in 10-year US Treasury bond yields. Gold is currently defending the key support level at $1,937. If the risk-on trading sentiment gains momentum, the downward pressure on gold could intensify, especially as the US Dollar correction is expected to be limited due to increased expectations of a 25 basis points rate hike by the Federal Reserve (Fed) in June. Recent strong US economic data and the hawkish outlook on interest rates from Fed officials have contributed to this view. The market is now pricing in a 57% probability of a June Fed rate hike, down slightly from Monday but significantly higher than the 15% probability seen a week ago. Attention will now shift to the release of top-tier US economic data, particularly the US Conference Board Consumer Confidence data. Gold traders will also closely monitor developments regarding the US debt agreement and any relevant commentary from the Fed for further trading guidance.
OANDA:XAUUSD
by FOREXN1
17
USD/JPY Upside Potential Supported by Hawkish Fed RemarksFollowing the recent surge to a two-month high, USD bulls are choosing to secure some profits as US Treasury bond yields retreat. This decision, coupled with a slightly overbought Relative Strength Index (RSI) on the daily chart, leads to unwinding of long positions in the USD/JPY pair. However, the downside for the USD is cushioned by expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. Market pricing currently indicates a higher likelihood of a 25 basis points rate increase at the upcoming FOMC monetary policy meeting in June. This sentiment is reinforced by recent hawkish comments from influential Fed officials and the release of the US Core PCE Price Index, which revealed persistent inflation. Such factors are expected to act as tailwinds for the USD and support the potential for dip-buying in the USD/JPY pair. Meanwhile, Bank of Japan Governor Kazuo Ueda has stated that the central bank will continue its easing measures through yield curve control. Additionally, the Tokyo Consumer Price Index (CPI) for May, released last Friday, showed a lower-than-expected inflation rate in Japan's capital city. This aligns with the BoJ's view that inflation in Japan is likely to fall below the 2% target in the middle of the current fiscal year, allowing the central bank to maintain its dovish stance. With a positive risk sentiment prevailing, the safe-haven Japanese Yen (JPY) may face pressure, limiting the downside for the USD/JPY pair. Furthermore, US lawmakers have indicated a tentative agreement to suspend the US government's debt ceiling until January 25, thus averting a potential default by the world's largest economy. This development boosts investor confidence, evident from the positive mood in equity markets, and drives capital away from traditional safe-haven assets, including the JPY. Considering the aforementioned fundamental backdrop, the path of least resistance for the USD/JPY pair appears to be on the upside. Based on our analysis, we anticipate a potential pullback at the 61.8% Fibonacci level, which could initiate a new bullish impulse in alignment with the prevailing uptrend.
by FOREXN1
26
EUR/CAD: Riding the Ascending Channel with Short Setup PotentialThe EUR/CAD currency pair remains within an upward trend, as observed in recent trading sessions. After reaching the support area near 1.45200, the price initiated a sequence of higher highs and higher lows within an ascending channel. Notably, the price has repeatedly tested the 50% Fibonacci Resistance level, and following the latest retest and subsequent rejection, it is anticipated that the price may continue its descent towards the lower region of the chart to retest the aforementioned support area, potentially surpassing it. Moreover, there is the formation of an AB=CD pattern, indicating a potential trading opportunity. Based on our analysis, we propose a new short setup with the target of reaching the 1.127 Fibonacci extension of the AB=CD pattern, estimated to be around the 1.4500 area. This suggests a favorable opportunity to capitalize on the projected price movement and potentially profit from the anticipated downward momentum.
Short
by FOREXN1
28
GBP/USD downtrend deepens towards 1.2340 amid rising USD demand.The GBP/USD pair is exhibiting a bearish bias, as it heads southward towards the 1.2300 level during the early European morning session, erasing gains made during the Asian trading hours, which saw the pair reach 1.2380. The resurgence of concerns regarding the approval of the US debt deal and heightened expectations of a June interest rate hike by the Federal Reserve are bolstering demand for the US Dollar. The start of the new week has been relatively quiet for GBP/USD due to the Spring Bank Holiday in the UK and the Memorial Day holiday in the US, leading to low trading volumes. Technical analysis reveals the presence of a bearish triangle pattern, indicating the potential for a new downward move that could extend towards the 1.272 Fibonacci extension level and potentially reach the 1.618 level. Last week, hawkish expectations regarding the Federal Reserve provided a boost to the US Dollar, causing GBP/USD to decline by approximately 100 pips. Before the weekend, the US Bureau of Economic Analysis reported that the Core Personal Consumption Expenditures (PCE) Price Index, which is the Fed's preferred gauge of inflation, rose slightly to 4.7% on a yearly basis in April, surpassing market expectations of 4.6%. Furthermore, additional details from the report indicated that consumer activity remained robust, with personal spending increasing by 0.8% on a monthly basis. According to the CME Group FedWatch Tool, the likelihood of the Fed maintaining its current policy rate in June has dropped below 40%, compared to nearly 75% a week ago. Meanwhile, over the weekend, US President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement to suspend the debt limit. If this development leads to a risk-on sentiment when bond markets and US stock index futures resume trading early Tuesday, the US Dollar could face difficulties in finding demand, potentially allowing GBP/USD to recover some ground.
by FOREXN1
2
EUR/USD pair is showing signs of further decline below 1.0700The EUR/USD pair is showing signs of further decline below the 1.0700 level as the trading week comes to a close. Examining the daily chart, we observe that the pair has experienced a downward trend for the third consecutive day, extending its overall decline. Notably, the EUR/USD pair reached a fresh two-month low of 1.0760 on Thursday, and it is currently trading around the 1.0720 price level, indicating a subdued sentiment leading up to the end of the trading day. The strength of the Greenback remained prominent on Thursday, as the market sentiment remained negative due to the ongoing uncertainty surrounding a potential extension of the United States' debt-ceiling. House Speaker Kevin McCarthy provided an update on the discussions during American trading hours, noting that a deal has not yet been reached. Nevertheless, McCarthy emphasized that the country would not default. The disagreements between Republicans and the government primarily revolve around spending, with the opposition advocating for spending cuts rather than tax hikes. Turning to the latest economic data, Germany reported a downward revision of its Q1 Gross Domestic Product (GDP), which now stands at -0.3% quarter-on-quarter. This news added further pressure on the Euro. Conversely, the US data provided some support to the USD, leading up to the opening of Wall Street. The US Q1 GDP was upwardly revised to an annualized growth rate of 1.3%. Additionally, the Initial Jobless Claims for the week ending May 19 surpassed expectations, declining to 229K. Furthermore, the April Chicago Fed National Activity Index rose from -0.37 to 0.07, indicating an improvement in economic activity. However, Pending Home Sales experienced a decline of 20.3% in April, which was better than the anticipated 22.5% decline. Looking ahead to Friday, there are no significant macroeconomic data releases expected from the European Union (EU). However, the United States is set to publish several notable figures, including April Durable Goods Orders and the Personal Consumption Expenditures Price Index for the same month. Based on our analysis, we anticipate a continuation of the bearish trend, particularly after observing the price reacting at the 38.2% Fibonacci continuation retracement level.
by FOREXN1
25
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
25
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
25
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
14
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
43
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
16
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
37
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
20
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