Market Analysis

XAUUSD

Prediction: Decline

Fundamental Analysis:

The US Consumer Price Index (CPI) for May showed signs of cooling, which led to a significant drop in the dollar ahead of the Federal Open Market Committee (FOMC) statement and updated forecasts expected at 19:00 (UK time). For a detailed real-time analysis, refer to our US CPI report by senior strategist Nicholas Cawley. The report was favorable overall, with both core and headline inflation figures coming in lower than anticipated on a yearly and monthly basis. Fed officials closely monitor services inflation and super core inflation (services excluding housing and energy) as vital indicators of inflation momentum. Recently, there has been a particular interest in the monthly core CPI breaking the trend of consecutive 0.4% increases, a trend that shifted with April's 0.3% and May's 0.2%.

Technical Analysis:

Gold prices are entering a bearish phase as the 50-day moving average (MA) crosses below the 200-day MA, and the Relative Strength Index (RSI) drops below the 50 mark. A crucial level to watch is the 2275 area. If the price falls below 2275, we can anticipate a continued decline, potentially reaching previous support levels at 2200 and 2000. According to Fibonacci retracement, 2325 presents an optimal entry point for a downward trend.

SPY

Prediction: Expected Decrease

Fundamental Analysis:

Leading up to the latest inflation report, US equity markets were cautious, hovering near recent highs. With inflation showing signs of stabilizing, there's renewed speculation about potential interest rate cuts by the Fed. This prospect has injected fresh optimism into stocks.

The Federal Reserve is set to update its projection for the Fed funds rate in 2024. Initially forecasting three rate cuts in March, recent inflation data might prompt a revision to two cuts, or even just one. Despite this uncertainty, anticipation of lower rates has bolstered stock market sentiment, with attention now turning towards the 5,500 level as a potential upside target.

Technical Analysis:

The S&P 500 recently surpassed the 2.618 Fibonacci extension level and is aiming for another extension target at 596.76. A strategic entry point could be around the support area near 535, with a bullish outlook towards the 600 mark.

USDJPY

Prediction: Increase

Fundamental Analysis:

Persistent concerns over yen depreciation and market volatility have been a focus for Japanese authorities. However, recent US CPI data has alleviated some pressure. The Bank of Japan (BoJ) is scheduled to meet soon with potential discussions on easing aggressive bond purchases, allowing Japanese Government bond yields to rise above 1%. This move aims to normalize policy without unsettling markets.

Technical Analysis:

USD/JPY has shown a clear uptrend with strong technical indicators supporting further gains. The RSI is expected to exceed 70, signaling potential for short-term corrections. According to Fibonacci retracement levels, a rise to the 157.7 to 160 range may precede a price decline.

BTCUSD

Prediction: Upward Movement Expected

Fundamental Analysis:

There's been a notable trend of large BTC withdrawals from exchanges, indicating a shift towards self-custody. Normally, decreased exchange availability tends to drive prices up due to increased scarcity. However, recent liquidation heatmap data reveals significant sell-offs, particularly at price levels of $72,000, $69,000, and $66,000. These liquidations, driven by forced closures of leveraged positions, have exerted downward pressure on Bitcoin's price, leading to rapid declines.

Technical Analysis:

Bitcoin has been trading between approximately $72,700 and $56,000 over the past two months. Price action suggests continued movement within these ranges, with key support seen at the 0.618 Fibonacci retracement level around $66,500. If this support holds, potential profit-taking targets could be around $69,236 on the upside or $64,600 on the downside.

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