US Dollar Index
On Thursday, the Dollar Index continued its positive momentum, extending its rebound above 105.00 during the trading session. This followed the Federal Reserve's decision on Wednesday, with the market digesting the new Producer Price Index data for May and the weekly initial jobless claims, which showed inflation weaker than expected and higher unemployment claims. In the early Asian session on Thursday, after the Federal Reserve maintained a hawkish stance, renewed dollar demand provided some support for the Dollar Index. Federal Reserve Chairman Powell stated at a press conference that the restrictive stance of monetary policy is impacting the inflation the Fed aims to see, but the central bank will wait for sufficient progress in inflation. Following the more hawkish-than-expected revisions to the Federal Open Market Committee's rate forecasts, the Dollar Index showed an upward trend.
From a technical perspective, following the Federal Reserve's hawkish stance, intraday outlook indicators have improved, but the 14-day Relative Strength Index (RSI) on the daily chart has moved back above the 50 level, indicating the index is still in a short-term tug-of-war between bulls and bears. The index is currently above key support areas at 104.25 (Wednesday's low), 104.46 (200-day moving average), and 104.58 (23.6% Fibonacci retracement from 106.50 to 103.99), reinforcing a bullish outlook. If it unfortunately breaks below these areas, the next targets are 104.00 (round number) and 103.99 (June 7 low), with a break pointing to 103.57 (March 19 low). On the upside, levels to watch are 105.54 (61.8% Fibonacci retracement) and 105.74 (May 9 high).
Today, consider shorting the Dollar Index around 105.35, with a stop loss at 105.50 and targets at 105.00 and 104.95.
WTI Spot Crude Oil
On Thursday, before the release of U.S. Producer Price data, WTI oil prices remained stable. Oil prices may weaken due to rising interest rates suppressing U.S. economic growth. Crude oil prices faced challenges despite U.S. crude oil inventories decreasing by 1.55 million barrels but increasing by 3.7 million barrels. Early Thursday morning, prices touched just above $78.00. Earlier on Wednesday, U.S. CPI inflation for May cooled faster than expected. In early U.S. trading, the market priced a greater than 70% probability of a 25 basis point rate cut in September. This cautious sentiment from the Fed overshadowed market sentiment. The U.S. Energy Information Administration (EIA) reported that for the week ending June 7, U.S. crude inventories unexpectedly increased again, rising by 3.73 million barrels from the previous week's 1.233 million barrels, against an expected decrease of 1.55 million barrels.
From a technical perspective, WTI oil prices reached a near two-week high of $79.35, then faced technical resistance from the descending trendline from the 2024 high of $87.12, with bears currently in control. However, the 21-day moving average at $77.35 and the 50.0% Fibonacci retracement at $77.51 (from $67.93 to $87.08) provided technical support, possibly preventing further declines. After hitting a bullish peak on Wednesday, U.S. crude might reverse its rebound from a recent low near $72.45. Resistance at the 200-day moving average is at $79.30, with the next level to watch at $80.00 (psychological level).
Today, consider going long on crude oil around $77.70, with a stop loss at $77.50 and targets at $79.00 and $79.20.
Spot Gold
After weak U.S. Producer Price Inflation data, gold prices rose above $2,320, then turned downward, falling below $2,310 to around $2,303. Despite lower U.S. Treasury yields, gold struggled to find support as the dollar benefited from safe-haven demand. Midweek, spot gold reached a high of $2,341.70, the highest this week, as the dollar fell after the U.S. Producer Price Index release. Gold prices retreated from the highs after the Wall Street opening as demand for high-yield assets accelerated, weakening the positive momentum of the precious metal, although most intraday gains were maintained above the $2,330 level. The focus now shifts to the Federal Reserve Chairman's press conference. The Federal Open Market Committee ended its two-day meeting and kept rates unchanged, with gold pulling back after the rate decision, though overall volatility was limited.
From the daily chart perspective, gold prices have risen for the third consecutive trading day, though gains are modest. The positive momentum is limited as the 14-day Relative Strength Index (RSI) turned lower again, currently around 45, indicating that the risk for gold prices remains slightly tilted to the downside and in negative territory, but with some upward movement. Meanwhile, the 20-day Simple Moving Average is slightly down at current levels, providing dynamic resistance around $2,349.70. The next levels to watch are the May 24 high at $2,364 and the June 7 high at $2,388. With the RSI turning lower to around 45, the risk for gold prices remains tilted to the downside. The short-term support level for gold prices is at $2,300, with a break below this level threatening the May 3 low at $2,277. Sustained breaking below this level is crucial for resuming the downtrend.
Today, consider going long on gold before $2,300, with a stop loss at $2,296 and targets at $2,318 and $2,322.
AUDUSD
The AUD/USD pair partially weakened the strong gains it made after the U.S. Consumer Price Index (CPI) data on Wednesday, as investors re-priced the likelihood of a Federal Reserve rate cut in December, causing the dollar to rebound significantly. The AUD/USD pair faced renewed downward pressure despite Thursday’s employment data release. Australia’s employment change showed an increase of 39.7k in May, up from the previous 38.5k, and better than the market consensus of 30k. Additionally, the unemployment rate was 4.0%, below the expected 4.1%. Meanwhile, the Business Conditions Index fell to 6 points, slightly below the long-term average. After the Federal Reserve's hawkish statements, the dollar recouped its recent losses, dragging down the AUD/USD pair. At its June meeting on Wednesday, the Federal Reserve maintained the benchmark lending rate at the 5.25%-5.50% range for the seventh consecutive time, as widely expected. Last week, RBA Governor Philip Lowe indicated that the central bank is prepared to raise rates if the CPI does not return to the 1%-3% target range.
From the daily chart, the AUD/USD traded near 0.6650 on Thursday, consolidating in a horizontal channel with a neutral bias. The 14-day Relative Strength Index (RSI) is slightly above 50 at 54, indicating that further fluctuations could suggest a clear directional trend. The immediate support area is at 0.6600 (psychological level) and near the 50-day moving average at 0.6582, followed by the 200-day moving average around 0.6542. On the upside, the AUD/USD could test the 0.6700 (psychological level), 0.6704 (Wednesday’s high), and 0.6714 (May 16 high) resistance levels, followed by the January 5 high at 0.6747.
Today, consider going long on AUD/USD before 0.6620, with a stop loss at 0.6605 and targets at 0.6670 and 0.6680.
GBPUSD
On Thursday, during the U.S. session, the GBP/USD struggled to gain bullish momentum and traded in the negative territory below 1.2800. The mixed performance on Wall Street reflected a negative shift in risk sentiment, which supported the dollar. Midweek, the GBP/USD pair gave up some of its gains after the Federal Reserve decided to keep interest rates unchanged at 5.25%-5.50%, trading just below 1.2800. In terms of economic projections, the Fed revised its annual Personal Consumption Expenditures (PCE) forecast down from 2.6% to 2.4%, while growth expectations remained unchanged. The so-called dot plot indicated that the interest rate for the end of 2024 was raised from 4.6% to 5.1%, and for 2025, it was raised from 3.9% to 4.1%. The forecast rate for 2026 is 3.1%, with the long-term rate revised up from 2.6% to 2.8%. Weak Consumer Price Index (CPI) data for May led to a sharp early decline in U.S. Treasury yields, with the dollar subsequently rebounding.
The daily chart shows technical indicators significantly rebounding, remaining deep in bullish territory. The 14-day Relative Strength Index (RSI) moved towards 57, while the Moving Average Convergence Divergence (MACD) shows narrowing red bars, indicating reduced selling pressure. As the GBP/USD is above the 20-day (1.2744), 100-day (1.2640), and 200-day (1.2546) Simple Moving Averages, the overall outlook remains bullish. On the resistance side, the static level at 1.2850 is notable. A break above this level could push the GBP/USD pair to test around the March 8 high at 1.2893. For support, the initial level is at 1.2730 (Wednesday’s low), and further support is at the 30-day moving average of 1.2685, with additional support near 1.2645 (May 17 low).
Today, consider going long on GBP/USD before 1.2750, with a stop loss at 1.2735 and targets at 1.2790 and 1.2800.
USDJPY
The Japanese yen slightly weakened as the market widely expects the Bank of Japan to keep rates unchanged on Friday. With investors generally cautious ahead of the BOJ's policy decision on Friday, the yen's downside may be limited. During the Asian session on Thursday, USD/JPY fluctuated higher, likely extending the overnight rebound from the multi-day low around 155.70, triggered by weak U.S. consumer inflation data. However, USD/JPY lacks bullish momentum, currently trading near the 156.75-156.90 area, as the market's focus has shifted to the BOJ's policy meeting. Given the inflation trend is expected to be higher than previously anticipated, the need for rate cuts this year has been reduced. They now expect only one rate cut in 2024, compared to three in March. Nevertheless, the Fed's adjusted economic outlook should support the dollar and underpin the USD/JPY pair's further upside prospects. However, with uncertainty about whether the BOJ will announce a reduction in monthly government bond purchases amid economic weakness, bulls seem reluctant to trade aggressively. Therefore, the focus remains on the outcome of the BOJ's two-day, highly anticipated meeting on Friday.
USD/JPY rebounded from its intraday low around 155.80 and broke through the key resistance level of 156.00, but was capped by the weekly high of 157.40. Buyers must break through 157.98 (May 1 high) and 158.00 (psychological level) and test the April 26 high at 158.44 and the upper limit near 158.60 to expand gains further. Further upside could reach 160.20, the highest level in over thirty-four years. On the downside, while the chart remains technically bullish as it has been for the past few months, fundamentals will be key to the next move. The psychological level of 156.00 is a major support level. Breaking below this level could exacerbate downward pressure on the USD/JPY exchange rate, potentially leading it towards the 155.00 (round number) and the retracement support area near 154.95 (38.2% Fibonacci retracement of 146.47 to 160.20).
Today, consider shorting USD/JPY before 157.15, with a stop loss at 157.30 and targets at 156.50 and 155.40.
EURUSD
As market participants continue to adjust to the Federal Reserve's stance of prolonged tightening, the EUR/USD pair succumbed to the re-emergence of a strong dollar buying bias, giving back most of Wednesday's gains. Due to weak U.S. inflation data for May, EUR/USD briefly reclaimed the critical 1.0800 level, reaching a three-day high. Midweek, EUR/USD seemed to temporarily set aside new political concerns from the Old Continent, especially those rekindled after the European Parliament elections last weekend. The Fed kept interest rates steady and indicated that rate cuts might not begin until December, which was the most notable event of the day. In the short term, the ECB's recent rate cuts, compared to the Fed's hold, have widened the policy gap between the two central banks, potentially weakening EUR/USD further. However, in the long run, the eurozone's economic recovery trend, combined with expectations of a U.S. economic slowdown, should help alleviate this gap, providing some support for EUR/USD.
From the daily chart perspective, EUR/USD has once again faced the challenge of the 200-day moving average at 1.0788. Wednesday's bullish push saw the pair enter consolidation, with a downward trendline forming from around 1.1150 earlier in 2024, but recent technical resistance has kept the pair under pressure. The pair has formed recent technical resistance at 1.0841 (23.6% Fibonacci retracement) and 1.0864 (the midline of the horizontal channel on the daily chart), opening the possibility of a bearish trend this week. It is challenging the June low at 1.0732, followed by 1.0700 (psychological level). A break below these key support levels would continue to test 1.0668 (78.6% Fibonacci retracement of 1.0601 to 1.0916).
Today, consider going long on EUR/USD before 1.0720, with a stop loss at 1.0705 and targets at 1.0765 and 1.0870.
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