Market Analysis
GBPUSD
Prediction: Decrease
Fundamental Analysis:
The GBP/USD pair is poised for significant activity on Friday, driven by crucial UK data releases during the European session and the wrap-up of the week with US PMI surveys. The Bank of England (BoE) maintained its interest rate at 5.25%, opting not to implement rate cuts, which was contrary to some market expectations. Although the BoE's decision was largely anticipated, their remarks on inflation and the labor market have left the pound's value in a state of uncertainty. The BoE is committed to maintaining restrictive policies as long as the labor market remains tight.
On Thursday, weak US economic data, particularly the higher-than-expected jobless claims, dampened investor confidence.
GBP traders are now turning their attention to Friday's UK Retail Sales and PMI data. Retail sales are projected to rebound by 1.5% in May, with PMIs expected to show slight improvements. Conversely, US PMIs for Manufacturing and Services are forecasted to decline slightly.
Technical Analysis:
The pound is currently trading near the lower boundary of an ascending channel against the dollar. The RSI is around 50, indicating a lack of clear momentum. Key support is at 1.2700, aligning with the 200-period SMA and the channel's lower boundary. A break below this level could lead to a move towards 1.2640 (100-day SMA) and 1.2600 (psychological level).
On the upside, resistance levels are at 1.2740 (100-period SMA), 1.2800 (psychological level), and 1.2850 (the end of the latest uptrend). The price action indicates a consolidation phase, with upcoming data and events likely to provide the next directional cue for the pair.
EURUSD
Prediction: Decrease
Fundamental Analysis:
The EUR/USD exchange rate has fallen after struggling to maintain levels above 1.0750. Despite this, positive market sentiment has limited the US dollar's strength. An ECB policymaker suggested that the projected interest rate cuts for 2024 are in line with the bank's forecasts and hinted at the possibility of making quarterly policy decisions. In the US, economic data revealed an increase in jobless claims, a drop in building permits and housing starts, and a manufacturing survey that came in below expectations. Investors are now looking forward to the release of the Eurozone's preliminary June consumer confidence index.
Technical Analysis:
Technically, the EUR/USD pair shows potential for further declines. The daily chart reveals that the pair is trading near its intraday low and below its moving averages. The 20-day SMA is poised to cross below the flat 100 and 200 SMAs, indicating increased selling pressure. Other technical indicators also suggest a bearish trend.
In the short term, the EUR/USD outlook remains neutral to bearish. The 100-day SMA has moved below the 200-day SMA, maintaining a bearish slope, with the pair trading below a flat 20-day SMA. Technical indicators are slightly higher but still in negative territory. Support levels are identified at 1.071 and 1.0665. For a bullish continuation, the pair would need to break above 1.0760, which appears unlikely, with a stronger resistance level at 1.081.
XAUUSD
Prediction: Increase
Fundamental Analysis:
Gold prices have climbed by 0.5% to approximately $2,340 amid escalating global geopolitical tensions. Although the overall market sentiment remains stable, the demand for gold as a safe-haven asset has increased due to rising threat levels. The tensions between Israel and Lebanon have intensified, with Israel warning of a potential "all-out war" with Hezbollah. Additionally, strategic moves by Russia and China, including Russia's agreement with North Korea and Malaysia's intention to join BRICS, have raised concerns among global strategists. Investors are also closely monitoring the upcoming Bank of England policy meeting, as recent UK inflation data suggests a potential rate cut, which could benefit gold prices.
Technical Analysis:
Gold has surpassed the critical resistance level of around $2,340, which aligns with a trendline and the 50-day moving average. This level is a significant technical point that could influence the precious metal's future direction.
A decisive break above this resistance would negate a bearish head-and-shoulders pattern, indicating a continuation of the broader uptrend towards the mid $2,380s. Conversely, if gold falls back below this level, it could reinforce the formation of the head-and-shoulders pattern, which often signals a trend reversal. A break below the $2,279 neckline would confirm the pattern and trigger downside targets. The upcoming trading sessions will be critical in determining gold's near-term direction.
USDJPY
Prediction: Increase
Fundamental Analysis:
The US dollar is currently trading near a critical zone where the Japanese government has previously intervened to support the yen. Japan's top currency official has emphasized the nation's vast resources for forex intervention to counteract extreme currency fluctuations. Despite the bullish technical trend, USD/JPY presents a unique scenario due to the significant risk of market intervention by Japanese authorities. Traders should exercise caution when predicting a continued uptrend, as government actions could disrupt the natural market dynamics.
Technical Analysis:
The USD/JPY pair has regained its upward momentum, breaking above the 158.25 temporary peak. The choppy rise from 151.86 has resumed, with the pair now aiming for a retest of the 160.20 high. However, the upside might face resistance on the first attempt. In the broader view, the price movements from the 160.20 medium-term top are seen as a corrective pattern within the larger uptrend from 150.25. Another rally is anticipated to eventually break through the 160.20 level and continue the broader uptrend. Nevertheless, a decisive break below 150.87 could indicate a more significant correction, potentially targeting the 146.47 support level next.
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