Market Analysis
XAUUSD
Prediction: Decrease
Fundamental Analysis:
Today, the Federal Reserve is set to announce its interest rate decision during the U.S. trading session. The prevailing market sentiment anticipates that the Federal Reserve will maintain the current interest rates, with federal funds futures indicating a 99% probability of this outcome. However, if the Federal Reserve adopts a hawkish tone, suggesting that interest rates may need to remain elevated for a prolonged period, it could disrupt the market's expectation of a rate cut in the upcoming November meeting. This scenario would likely bolster the U.S. dollar, exerting downward pressure on precious metal prices.
Technical Analysis:
Gold prices have been declining since breaking below an upward wedge pattern. A decisive drop below the May 3 low of $2277 could signal further declines. The next significant support level for gold is the psychological threshold of $2250. The 14-day RSI is below 50, currently around 44, which suggests a continued downtrend for gold prices. For any recovery, gold would need to break above the 50-day moving average at $2344. Beyond that, surpassing the 21-day moving average at $2355 is essential to negate the recent bearish momentum.
EURUSD
Forecast: Decrease Predicted
Fundamental Analysis:
The three major U.S. stock indexes opened lower, leading to a stronger U.S. dollar and a weaker euro, making it the second worst-performing major currency. Over the weekend, far-right opponents secured most of the votes in the European Parliament elections in France, prompting Macron to announce elections on Monday. The prospect of the French Parliament being led by the far-right could highlight France's poor financial situation, potentially destabilizing the EUR. We believe that French political developments are another reason the EUR will remain low for a long time.
Technical Analysis:
The EUR/USD pair is poised for further decline. The daily chart indicates the pair is trading below all its moving averages, with a flat 200-period SMA acting as dynamic resistance around the $1.0790 level. Additionally, the 20 SMA has turned lower, reflecting increased selling interest, and remains above the 100 and 200 SMA. The 4-hour chart also shows a strengthening downward trend. The next support level is at $1.0719, with the next resistance level at $1.0804, which corresponds to the 200-period SMA.
USDJPY
Prediction: Increase
Fundamental Analysis:
The USD/JPY swiftly climbed to $157.23. With upcoming interest rate decisions from both the Federal Reserve and the Bank of Japan, a hawkish stance from the FOMC might favor the U.S. dollar. Analysts highlight that USD/JPY is approaching a significant bullish breakout level. Japan's first-quarter GDP report for 2024 shows a 5.1% decline in exports compared to the previous quarter. Despite USD/JPY surpassing $150 in the first quarter, exports remain weak. However, the depreciating yen could fuel speculation that the Bank of Japan might raise interest rates to strengthen the yen.
Technical Analysis:
The USD/JPY has consistently moved above the 50-day and 200-day EMAs, indicating a bullish trend. If it breaks above $157.5, it could rise to the $158 level. Should it reach $158, the bulls might target the April 29 high of $160.209. Conversely, if USD/JPY dips below $156, the bears might engage near the 50-day moving average. A drop below the 50-day moving average could lead to the $151.685 support level. With the 14-day RSI at 57, USD/JPY might climb to the April 29 high of $160.209 before reaching the overbought zone.
US Oil
Prediction: Decrease
Fundamental Analysis:
US oil prices have maintained strength in recent trading sessions, buoyed by optimism surrounding demand during the Northern Hemisphere's summer vacation season. However, uncertainties loom ahead of upcoming economic data releases, particularly the May CPI figures from the world's largest economies. Market sentiment is cautious as investors await China's CPI data, expected to show a steady increase of 0.3%.
Technical Analysis:
WTI oil prices have rebounded approximately 7.5% from recent lows near $72.50 per barrel. Despite this recovery, prices encountered significant resistance at the $78.00 per barrel mark. Long-term bullish momentum could be constrained by a persistent downward trendline. To sustain a rally towards $80.00, prices must successfully break and hold above the 200-day EMA, currently around $78.90. The RSI indicator nearing 70 suggests potential overbought conditions, hinting at a possible correction in the near term.
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