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Market Analysis

XAUUSD Prices Set to Rebound Amid CPI Data
Dupoin · 74.2K Views

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XAUUSD

Forecast: Rise

Fundamental Analysis: 

 

The XAUUSD witnessed a slight pullback in its recent uptrend as investors braced themselves for significant data releases on Wednesday. Gold prices dipped approximately 1.3% at the beginning of the week, declining from a high of $2,365 to a daily low of $2,331 per troy ounce. However, early Tuesday saw a resurgence in buying interest, pushing gold prices back up to around $2,345.

 

This decline in gold prices precedes the release of the consumer price index (CPI) data, a crucial indicator for gauging inflationary pressures. The forthcoming CPI figures will be pivotal in determining the Federal Reserve's stance on interest rates. If April's inflation rate aligns with expectations, showing a 3.4% increase (down from March's 3.5%), it could ease investor concerns. However, any surprise uptick in inflation could spark anxiety in the markets regarding the Fed's future policy actions.

 


Technical Analysis:


Recent market movements suggest that the XAUUSD remains in a bullish trajectory, with the 50-day moving average (MA) maintaining its position above the 200-day MA. This indicates a continued upward momentum in prices. Targets for potential future price levels include $2,380 and $2,400. However, should the 50-day MA cross below the 200-day MA, it may signal a reversal in the trend, potentially leading to a retreat in prices back towards the $2,300 level.

 

 

USDJPY


Forecast: Rise


The US dollar experienced a slight decline on Tuesday, responding to an unexpected rise in US producer prices during April, showcasing persistent inflation pressures at the onset of the second quarter. The Labor Department's report highlighted robust increases in the costs of both goods and services, although there was a decline in food prices. Consequently, traders adjusted their expectations regarding the likelihood of a Federal Reserve interest rate cut in September.


Despite a general weakening of the dollar against most major currencies, it continued its ascent against the yen. The USD/JPY pair gained 0.06% to reach 156.535 on Wednesday, briefly touching a high of 156.80 overnight.


In terms of technical analysis, the USD/JPY pair has displayed an upward trend lately. It successfully breached a significant resistance level at the Fibonacci 0.5 mark of $156.025. With this breakthrough, the price is anticipated to target the 0.618 Fibonacci level at 157.004, possibly extending towards 160.183. Traders are advised to monitor indicators like the Relative Strength Index (RSI) and other overbought signals for potential pullbacks.

 

 

 

BTCUSD


Forecast: Decline


Fundamental Analysis:


The State of Wisconsin Investment Board (SWIB) has disclosed significant exposure to Bitcoin through spot ETFs. In a filing dated May 14 with the United States Securities and Exchange Commission (SEC), the governmental body revealed investments of approximately $100 million in BlackRock iShares Bitcoin Trust (IBIT) and $64 million in the Grayscale Bitcoin Trust (GBTC). The filing hints at potential digital asset exposure within the Wisconsin Retirement System.


Recent analysis indicates that Bitcoin has nearly concluded its primary price drawdown phase following the halving in April.


Technical Analysis:


Bitcoin is currently positioned below both the 50-day and 200-day moving averages, indicating a bearish trend in both the short and long terms. Should Bitcoin breach the 50-day moving average and the resistance at $60,589, it could prompt bullish momentum toward the $69,000 resistance level. However, heightened selling pressure may drive the price below $60,000, potentially leading to a decline towards $56,000.

 

 

 

 

USDCNH


Prediction: Upward Movement Expected


Fundamental Analysis:

 

The Chinese yuan has declined to its lowest point against the dollar in two weeks. This decline is attributed to discouraging domestic credit data, which underscores the necessity for further policy interventions. Additionally, the looming possibility of new U.S. tariffs on China, the world's second-largest economy, has dampened market confidence.


Recent figures from China's central bank reveal a significant drop in new bank lending in April compared to the previous month. Moreover, overall credit growth has hit a historic low. Analysts, such as Tommy Xie from OCBC Bank, suggest that these indicators may prompt the People's Bank of China (PBOC) to consider further reductions in its policy rate.


In a bid to safeguard American jobs, President Joe Biden has announced plans to substantially increase tariffs on various Chinese imports, spanning electric vehicles, solar cells, semiconductors, and electric vehicle batteries. These tariffs include a 100% tariff on electric vehicles, a 50% tariff on semiconductors, and a 25% tariff on electric vehicle batteries imported from China.

 


Technical Analysis:

 

The USD/CNH pair has been hovering near its historical high throughout the year. Should the USD maintain its strength against the offshore yuan, we anticipate a rebound from the 0.618 Fibonacci level, potentially leading to a test of the 7.27475 resistance level. Conversely, if the USD weakens, the pair may test support at 7.21272, with additional support likely around 7.21974 based on previous price action.

 

 

 

 

Disclaimer

 

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