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GBP/USD Faces Correction Amid Potential Reversal Zone IdentifiedGBP/USD Retreats from Highs, Holding Ground Below 1.2600 Level in Early European Trading GBP/USD, after reaching its highest level since May 10 near 1.2570 earlier on Friday, is currently struggling to gain upward momentum and has entered a consolidation phase during the European trading hours. The pair has edged lower, defending minor bids below the 1.2600 level. The US Dollar is maintaining its recovery gains, supported by a cautious market sentiment. The focus remains on the upcoming US Consumer Price Index (CPI) data and the Federal Reserve's decision. On Thursday, the US Dollar faced significant selling pressure as the US Department of Labor's weekly report indicated an increase in Initial Jobless Claims to 261,000 for the week ending June 3, up from 233,000. This data highlighted looser labor market conditions, leading to a retreat in the 10-year US Treasury bond yield, which had previously seen gains following the unexpected rate hike by the Bank of Canada. Consequently, the US Dollar Index declined by more than 0.7%, reflecting the negative impact of the jobless claims data on the currency's performance. Meanwhile, major US stock indexes closed higher. In the European session, US stock index futures are trading mixed, and the UK's FTSE is showing modest gains. If risk sentiment does not continue to dominate market dynamics in the second half of the day, investors might refrain from betting on sustained weakness in the US Dollar ahead of crucial inflation data and the Federal Open Market Committee (FOMC) policy meeting next week. This caution could limit further upward movement in GBP/USD. Considering Thursday's significant rally, market participants may also opt to secure their profits, resulting in a downward correction for GBP/USD. Notably, in the H4 timeframe, a recognizable Gartley Harmonic pattern has emerged, indicating that the price is currently in a potential reversal zone. This pattern could present an interesting option for traders to consider.
Short
by FOREXN1
18
EUR/USD Surges Amid Soft US Employment DataThe EUR/USD faced downward pressure, remaining below the 1.0800 level. However, it experienced a notable upswing on Thursday, delivering its strongest performance in weeks, primarily driven by a weakened US Dollar. The Greenback faltered across the board as softer employment data from the US emerged ahead of the upcoming FOMC meeting next week. This favorable outlook suggests the potential for further gains in the near term. Despite downward revisions in Euro area Q1 GDP, the Euro remained unaffected. The growth rate was adjusted from 0.1% QoQ to -0.1% QoQ. Growth varied across countries, with Italy and Spain displaying a 0.5% expansion, France at 0.2%, and Germany experiencing a contraction of 0.3%. These figures did not significantly alter expectations for the upcoming European Central Bank meeting. Market pricing already accounts for a 25 basis points rate hike. However, the updated macroeconomic forecasts may carry more significance. Thursday's rally in EUR/USD was propelled by a combination of factors, including a weakened US Dollar, increased risk appetite, and technical considerations. In the US, Initial Jobless Claims unexpectedly rose to their highest level since October 2021. These figures further tempered expectations of a more hawkish stance from the Federal Reserve. However, the crucial report to watch will be the release of the May Consumer Price Index next Tuesday, just a day before the FOMC decision. Interestingly, Wall Street responded positively to the negative employment numbers, boosting risk appetite and exerting additional downward pressure on the US Dollar. As we approach Friday, the highlight on the economic calendar will be a speech from ECB's Guindos. Currently, the US Dollar appears weak in the lead-up to the Asian session, potentially extending its losses after some consolidation. However, it's worth noting that a shift in market sentiment could limit the upside potential and potentially favor a sharp correction. From a technical perspective, the EUR/USD is now approaching a series of resistance levels, particularly around the 1.0800 mark, where a reversal may occur. Based on this analysis, our recommendation is to consider a short setup.
by FOREXN1
20
EUR/USD Holds Steady around 1.0750 in Quiet Market ConditionsEUR/USD is maintaining a steady position near 1.0750 as it consolidates its pullback from Friday's movement in the early hours of Monday. The main currency pair is treading cautiously, influenced by a generally stronger US Dollar and US Treasury bond yields. Market activity remains subdued as investors brace themselves for upcoming events from the Federal Reserve (Fed) and the European Central Bank (ECB). EUR/USD kicked off the new week on a positive note, making gains beyond 1.0750 during the European trading session. While the technical outlook suggests the potential for further gains in the near future, investors may adopt a wait-and-see approach ahead of key risk events scheduled for this week. The prevailing risk-on sentiment in the market is making it challenging for the US Dollar (USD) to attract significant demand at the start of the week, which is providing support to EUR/USD. The Euro Stoxx 50 Index is up nearly 1%, and US stock index futures are holding onto modest gains during the early European session. On Tuesday, the US will release May inflation data, with the Consumer Price Index (CPI) anticipated to show a 4.2% year-on-year increase, significantly lower than the 4.9% rise recorded in April. The second half of the week will see increased volatility in financial markets as the Fed and ECB announce their respective policy decisions on Wednesday and Thursday. If Wall Street's main indexes gain bullish momentum after the market opens, the USD could remain under pressure, while a reversal could occur if the opposite scenario unfolds. However, without any high-impact macroeconomic data releases to impact the currency's valuation, the market is likely to focus on the central banks' announcements. From a technical perspective, EUR/USD remains within a bearish channel, approaching significant resistance levels that may prompt a potential downward move.
Short
by FOREXN1
17
GBP/JPY: Continuing Bullish Trend with Potential Swing Approach.The GBP/JPY currency pair has been maintaining its bullish trend across higher timeframes. In the past few hours, the price reached the area around 174.000, but this morning, it initiated the day with a red candle, indicating a retracement at the moment. It is important to note that the GBP/JPY has a strong correlation with the USD/JPY, and currently, we hold a bullish view on the latter. Following this correlation, we are also considering a potential bullish scenario for the GBP/JPY. Currently, the price is approaching the 61.8% Fibonacci retracement level from the previous swing in the H4 timeframe. Additionally, there is an AB=CD pattern formation in progress, with the D extension leg targeting around 175.100. Therefore, this becomes our target point for the swing approach strategy. Considering these factors, we anticipate further upward movement in the GBP/JPY, aligning with the overall bullish trend and the correlation with the USD/JPY. However, it is important to monitor the price action and market conditions closely for any potential changes or developments that may affect this scenario.
by FOREXN1
30
GOLD Price Struggles amid Absence of Fed Talks and Major DataGold Price (XAU/USD) struggles to maintain its bullish momentum as it retreats from its intraday high, signaling a bearish tilt for the precious metal in the second consecutive week. The sluggish performance of the US Dollar, coupled with an unimpressive market environment and mixed data from China, weighs on XAU/USD traders. Multiple hurdles hinder the prospects for gold buyers, particularly around the $1,970 level, as yields trickle lower. Despite the slight advantage held by gold bulls, the lack of clear direction in the market is evident, with the absence of Federal Reserve (Fed) discussions and a dearth of significant upcoming economic data. Furthermore, the conflicting signals arising from upbeat China PMI data and mixed foreign trade figures add to the uncertainty surrounding gold. Additionally, the recent increase in the US Treasury's bond issuance and cautious optimism surrounding China's economic outlook further challenge the bullish sentiment for gold. With no expectations of a rate hike from the June FOMC meeting, gold bulls face an uphill battle to maintain their position in the market.
EIGHTCAP:XAUUSD
by FOREXN1
26
AUD/USD's Sharp Recovery Despite Consolidation BreakdownThe AUD/USD is currently experiencing bullish momentum, and we are looking to capitalize on the next upward movement using a trend-following setup. However, in terms of fundamental analysis, the AUD/USD pair is facing difficulties in sustaining its current rally above 0.6680. This rally was initially sparked by the unexpected announcement of an interest rate hike by the Reserve Bank of Australia (RBA). RBA Governor Philip Lowe raised the Official Cash Rate (OCR) by 25 basis points to 4.10%, despite the fact that Australian inflation levels are significantly below the desired target. As a result, the policy divergence between the RBA and the Federal Reserve (Fed) has narrowed. The S&P500 futures are exhibiting a subdued performance, lacking any significant triggers. The overall market sentiment is cautious as investors hold differing opinions regarding the June monetary policy meeting by the Fed. After a decline driven by weaker-than-expected United States ISM Services PMI data, the US Dollar Index (DXY) has found some support around 103.80. Interestingly, the AUD/USD witnessed a strong recovery despite breaking down from its consolidation range of 0.6563-0.6808 on a daily basis. The lack of sustained selling pressure on the Australian dollar following the consolidation breakdown contributed to this notable rebound.
Long
by FOREXN1
25
GBP/AUD:AU GDP Growth Slows in Q1, Capital Expenditure Picks UpThe Australian AiG Construction Index for May registered a reading of -6.6, showing a slight improvement compared to the April figure of -12.4. Additionally, the AiG Manufacturing Index came in at -5.1, while the AiG Industry Index recorded -10.9. Comparatively, in April, the AiG Manufacturing Index was reported at -20.2, and the AiG Industry Index at -20.1. Turning to the Australian GDP for the first quarter, the growth rate stood at 0.2% on a quarterly basis and 2.3% on an annualized basis. Economists had anticipated a slightly higher increase of 0.3% and 2.4% respectively. In comparison, the GDP for the fourth quarter of the previous year had experienced a quarterly growth of 0.6% and an annualized growth of 2.6%. Furthermore, Capital Expenditure for the first quarter showed a quarterly increase of 1.8%, the Chain Price Index rose by 1.8% on a quarterly basis, and Final Consumption expanded by 0.2% quarterly. The economist's forecasts were for a decline of 5.6% in Capital Expenditure, a rise of 4.3% in the Chain Price Index, and an increase of 1.4% in Final Consumption. By comparison, during the fourth quarter, Capital Expenditure had decreased by 1.4% on a quarterly basis, the Chain Price Index had risen by 0.6% quarterly, and Final Consumption had expanded by 0.4% quarterly. Moving to China, the Trade Balance for May amounted to $65.81B, significantly below the economist's prediction of $92.00B. In April, the Trade Balance had recorded $90.21B. Exports for May experienced an annualized decline of 7.5%, while imports saw a decrease of 4.5%. These figures differed from the economist's forecast of a 0.4% decrease in exports and an 8.0% decrease in imports. Comparatively, in April, exports had surged by 8.5% annually, while imports had dropped by 7.9% annually. In the UK, the Halifax House Price Index for May remained flat with no change at 0.0% on a monthly basis and exhibited a decrease of 1.0% on a tri-monthly annualized basis. This reading aligned with economists' predictions of a flat monthly reading and a slightly smaller decrease of 0.9% on a tri-monthly annualized basis. Looking back to April, the Halifax House Price Index had contracted by 0.4% monthly and experienced a slight tri-monthly annualized increase of 0.1%.
Long
by FOREXN1
5
EUR/USD Slips Below 1.0700 as US Dollar Gains GroundEUR/USD slipped below the 1.0700 level during the early European morning, driven down by a strengthening US Dollar and a lackluster risk sentiment. The pair faced additional pressure from mixed German Industrial Production data. Market focus now turns to ECB-related announcements. Yesterday, the price broke the dynamic trendline of the bullish channel, invalidating the potential bullish impulse from the ABCD pattern and causing a renewed decline in bearish momentum. The next target to watch for is around the 1.06450 area and 1.06100. From a fundamental perspective, the European Central Bank (ECB) is expected to raise interest rates by 25 basis points next week, with the possibility of another hike in July. While the June hike is already priced in, future decisions will depend on data outcomes. Recent economic figures reveal that retail sales in the Eurozone stalled in April, showing consumer caution with a 2.6% decline compared to the previous year. Additionally, Germany reported a weakening in April factory orders, down 0.4% month-on-month. The ECB's monthly survey indicated a decline in inflation expectations to 4.1% in April. On Wednesday, German industrial production data will be released. On Tuesday, the US Dollar experienced modest gains against other currencies as Wall Street saw a slight increase. Traders remain cautious ahead of a significant week, marked by a gloomy global outlook and expectations of higher interest rates. The Federal Reserve is currently in a media blackout period leading up to the next FOMC meeting. Analysts warn that the upcoming May Consumer Price Index, to be released next Tuesday, will play a crucial role in determining the outcome.
Short
by FOREXN1
18
EUR/JPY Outlook: Bears Defend Against Bullish Correction.In the current EUR/JPY price analysis, the bears are putting up a fight to prevent a bullish correction. The currency pair is facing downward pressure within a bearish framework when examining the hourly charts. A notable development is the formation of an AB=CD pattern, further confirming the bearish sentiment. This pattern is observed within a bearish channel, and the recent pullback from the 50% Fibonacci level, as depicted in the chart, adds to the bearish case. Moreover, a significant pattern known as the Head and Shoulders formation is taking shape. If the neckline of this pattern is breached, it would serve as an additional indication of a potential downward push. This breakout could potentially trigger further bearish momentum in the EUR/JPY exchange rate. Given these technical indicators, the analysis suggests a bearish setup for the EUR/JPY currency pair. The bears are actively trying to maintain control and prevent a bullish correction. Traders and investors should be vigilant for opportunities aligned with this bearish outlook.
by FOREXN1
22
GBP/CAD: Price Breaks Support, Eyes 1.6600 Area as Next TargetYesterday, the GBP/CAD experienced a notable decline, reaching a daily low of 1.6725 as the week drew to a close. This downward movement was primarily driven by robust labor market data from the United States, which hinted at the possibility of the Federal Reserve (Fed) reevaluating its stance on further interest rate hikes. Meanwhile, the British Pound continued to face selling pressure, despite the absence of any significant economic events on the British calendar. The GBP/CAD currency pair is currently following a bearish trajectory within a bearish channel. The drop observed yesterday resulted in a break of the dynamic trendline, which had previously acted as a support and allowed the price to rise consistently over time. This breakdown suggests a shift towards a bearish outlook. Furthermore, the price action is forming an AB=CD pattern, indicating a potential continuation of the downward trend. The maximum extension point of the D leg aligns with the 1.618% Fibonacci level, serving as the next target for the price around the 1.6600 area, where a support level is present. Consequently, we anticipate further short-term downward movement within the bearish channel. In summary, the GBP/CAD experienced a decline yesterday, reaching a daily low of 1.6725. This was influenced by strong labor market data from the US, potentially prompting the Fed to reconsider rate hikes. The British Pound faced selling pressure, despite the absence of notable economic events. The currency pair is currently following a bearish channel, with the recent breakdown of the dynamic trendline suggesting a bearish outlook. The price action indicates the formation of an AB=CD pattern, with the next target located around the 1.6600 area, where a support level exists. As a result, we expect a continuation of the short-term bearish movement within the channel.
by FOREXN1
30
USD/JPY Shows Strong Bearish Impulse after Pullback 140.400 In terms of technical analysis, yesterday the USD/JPY experienced a strong bearish impulse after reaching the 140.400 value. This indicates a downward price change and suggests a bearish setup. On the fundamental side, the US Dollar (USD) has been recovering from a one-week low since the release of the Non-Farm Payrolls (NFP) data. This recovery is seen as a positive factor for the USD/JPY pair and is supported by the expectation of a 25 bps rate hike by the Federal Reserve (Fed) at its upcoming policy meeting. The rise in US Treasury bond yields due to this expectation continues to strengthen the US Dollar. On the other hand, the Japanese Yen (JPY) is being negatively affected by the Bank of Japan's (BoJ) more dovish stance. Additionally, the JPY's safe-haven status is being diminished by the prevailing risk-on sentiment in the equity markets, further supporting the USD/JPY pair. However, the possibility of Japanese authorities intervening in the markets limits deeper losses for the JPY and prevents significant gains for the USD/JPY pair, at least for now. Considering these factors, it is advisable for aggressive bullish traders to exercise caution and carefully evaluate before taking any further intraday bullish positions. Nonetheless, the overall fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is upward. Traders are now keeping an eye on the US ISM Services PMI, scheduled for release later during the early North American session. Additionally, the movement of US bond yields, along with the broader risk sentiment, is expected to provide fresh momentum to the major currency pair.
by FOREXN1
6
EUR/USD Gains Momentum on ECB's Hawkish Stance and USD WeaknessFrom a technical perspective, the EUR/USD is currently trading within a bullish channel, and in the last hour, the price has been attempting to establish a new swing high. There is an identifiable ABCD pattern, with the D point serving as our target. The D leg corresponds to the 1.217% Fibonacci extension, located at the 1.0800 level. We are observing a potential setup for a bullish move. On the fundamental side, the Euro received a slight boost after Christine Lagarde, the President of the European Central Bank (ECB), hinted at the likelihood of further interest rate increases. This statement was prompted by the absence of clear evidence indicating that underlying inflation has reached its peak. Lagarde's remarks, coupled with recent hawkish comments from various ECB officials, have reinforced market expectations that the central bank will continue raising rates despite a decrease in inflationary pressures. It is important to note that Eurozone Consumer Price Index (CPI) figures for May showed a greater deceleration than anticipated, with a year-on-year rate of 6.1% compared to the previous 7.0%. Additionally, Core CPI declined from 5.6% to 5.3% last month. Moreover, the emergence of USD selling has contributed to a moderate intraday rebound of approximately 50 pips for the EUR/USD pair. In fact, the US Dollar Index (DXY), which tracks the performance of the Greenback against a basket of currencies, lost momentum and relinquished its modest intraday gains following the disappointing release of the US ISM Services Purchasing Managers' Index (PMI) for May, which fell to 50.3. This data, coupled with dovish rhetoric from several Federal Open Market Committee (FOMC) officials last week, has reinforced market expectations for an imminent pause in the Federal Reserve's tightening cycle. Market participants are now pricing in a higher probability of the US central bank keeping interest rates unchanged at the conclusion of its upcoming two-day policy meeting on June 14. Consequently, US Treasury bond yields experienced a significant overnight decline, keeping USD bulls on the defensive during the Asian session on Tuesday and providing support to the EUR/USD pair. However, it is worth noting that a cautious market sentiment could strengthen the safe-haven demand for the US dollar and limit gains for the Euro. Nevertheless, the aforementioned fundamental backdrop appears to favor the bulls and supports the potential for an intraday appreciation in the EUR/USD pair. Investors are now awaiting the release of German Factory Orders data and Eurozone Retail Sales figures, which could provide fresh impetus. Meanwhile, there are no significant market-moving economic data releases expected from the US, which leaves the Greenback influenced by US bond yields and overall risk sentiment.
by FOREXN1
8
USD/JPY Eyes Fresh Sprint as Pullback Presents New OpportunitiesDuring the early North American session, the USD/JPY currency pair witnessed a surge, reaching a new high for the day around the 139.45 region. However, as it climbed to higher levels, it encountered a fresh wave of selling pressure. Consequently, spot prices swiftly retreated towards the lower end of the daily range, currently trading just above the 139.00 mark. This retreat followed the release of the monthly jobs data from the United States, which presented a mixed picture. USD/JPY pair remains within a bullish trend. and is notably a retracement in the vicinity of the 138.500 area has served as a fresh impetus for the pair's upward movement. Traders are now eyeing the D Leg extension of the ABCD pattern, which is projected to occur around the 141.500 level. This target represents the next significant milestone for the pair's upward trajectory, and investors are closely monitoring developments to assess the likelihood of reaching this level.
Long
by FOREXN1
16
NZD/USD Vulnerable to Bearish Pressure: A Closer LookThe NZD/USD pair initially reached a five-day high at 0.6111 before declining to around 0.6065. This movement was driven by strong labor market data from the US, which indicated robust employment growth and potentially prompted a reevaluation of additional rate hikes by the Federal Reserve (Fed). As a result, the US Dollar gained traction, supported by increasing US bond yields. The US Bureau of Labor Statistics reported that employment in the United States exceeded expectations, with a 339k increase in May compared to the consensus forecast of 190k. However, the Unemployment Rate slightly rose to 3.7% instead of the expected 3.5%. Average Hourly Earnings, which serve as an indicator of wage inflation, registered a year-on-year growth of 4.3%, slightly below the projected 4.4%. While labor demand shows signs of deceleration, the strong employment growth and mounting inflationary pressures make a case for the Fed to reconsider a 25 basis points (bps) hike in their upcoming June meeting. Consequently, US bond yields have been trending upward, with the 10-year yield rising to 3.68%, a daily gain of 2.70%. Similarly, the 2-year yield stands at 4.51%, marking a 3.64% increase, and the 5-year yield is at 3.84%, up by 3.81%. The Federal Reserve's ultimate objective is to achieve full employment and price stability. Therefore, the release of the May Consumer Price Index (CPI) next week will be crucial in shaping the expectations and considerations of the Federal Open Market Committee (FOMC) regarding future interest rate decisions. Currently, the CME FedWatch tool indicates that markets are still assigning higher probabilities to no rate hike in the upcoming June 13-14 meeting, but the possibility of a 25 bps hike has gained some relevance. When examining the price action using technical analysis, it becomes evident that there was a notable retracement occurring at the 38.2% Fibonacci level, which coincided with the previous resistance level. This confluence of factors indicates a significant area of interest for traders. Presently, our focus lies in identifying a new bearish setup, aligning with the observed price movement and potential resistance, to potentially capitalize on a downward market trend.
by FOREXN1
16
GBP/USD Bulls Surge, Pair Climbs Toward 1.2550 Amid USD WeaknessGBP/USD is displaying a bullish trajectory as it inches higher towards the 1.2550 level in early Europe. The currency pair is benefiting from a risk-friendly market environment, leading to a weakening of the safe-haven US Dollar. Despite concerns over UK economic challenges stemming from Brexit, GBP/USD remains resilient. Investors now shift their attention to the eagerly awaited US Non-Farm Payrolls (NFP) report. Earlier on Wednesday, GBP/USD faced bearish pressure and dipped to the 1.2350 region due to safe-haven flows bolstering the US Dollar (USD). However, during the late American session, the USD lost its strength as the risk sentiment improved following the US House of Representatives' passage of a bill to suspend the debt-ceiling until January 1, 2025. Additionally, dovish comments from Federal Reserve (Fed) officials further weighed on the USD's performance. Both Philadelphia Fed President Patrick Harker and Fed Governor Philip Jefferson expressed their reluctance to consider a rate hike in June. Consequently, the probability of a 25 basis points rate increase at the upcoming policy meeting, as indicated by the CME Group FedWatch Tool, rose above 60%, up from around 30% earlier in the day. Nevertheless, the USD is putting up some resistance against its counterparts early on Thursday, which is temporarily limiting the upside potential for GBP/USD. However, given the prevailing risk-positive market sentiment and the current market expectations regarding the Fed's rate outlook, the USD may struggle to outperform other major currencies. Later in the American session, the Automatic Data Processing (ADP) will release the private sector employment report, with market expectations of a growth of 170,000 jobs in May, following the impressive 229,000 increase recorded in April. A weaker-than-expected reading in this report could weigh on the USD in the short term, providing an opportunity for GBP/USD to extend its upward momentum. Conversely, a stronger-than-anticipated figure may limit GBP/USD's gains. Additionally, the US economic calendar will feature the ISM Manufacturing PMI survey for May, with the headline PMI expected to remain below 50, indicating continued contraction in the sector's activity. Unless this data exhibits a recovery above 50, it is unlikely to provide support for the USD. Our bullish outlook suggests that GBP/USD may experience a continuation of its upward trend, with a target towards the 1.26500 area.
Long
by FOREXN1
7
GBP/JPY: Riding the Wave of a Continuation Bullish TrendThe GBP/JPY currency pair is exhibiting a persistent bullish trend across various timeframes, consistent with our previous forecast. Yesterday, there was a notable price retracement around the 172.55 level, coinciding with the critical 50% and 61.8% Fibonacci retracement areas. This pullback aligns with the overall uptrend, suggesting a potential opportunity to join the prevailing bullish momentum. We anticipate a continuation of the bullish tendency in the GBP/JPY pair. Traders and investors should remain watchful for further upward price movements, as the market sentiment remains optimistic.
Long
by FOREXN1
18
EUR/USD Remains Below 1.0700 Amid USD Index Strength Policy Div.The EUR/USD currency pair is currently experiencing oscillations below the 1.0700 level, primarily influenced by the USD Index surpassing the immediate resistance level of 104.30. This development reflects the strength of the US dollar and its impact on the pair's movements. Financial markets are witnessing a state of chaos due to the conflicting views among Federal Reserve policymakers regarding interest rate guidance. This divergence of opinions is causing uncertainty and instability in the markets, adding to the complexity of the current situation. European Central Bank President Müller expresses confidence in the central bank's plan to raise interest rates by 25 basis points on multiple occasions, emphasizing the persistent nature of core inflation. This stance implies a potentially more aggressive approach from the European Central Bank. At present, the EUR/USD pair is consolidating within a narrow range below the significant psychological resistance level of 1.0700 during the early European session. Traders anticipate heightened market activity as the release of Eurozone inflation and United States employment data approaches. In the Asian session, S&P500 futures have recorded substantial gains, indicating a recovery in investor risk appetite. However, caution prevailed among market participants on Wednesday, leading to a sell-off of US equities. This cautious sentiment arose from mounting expectations of an additional interest rate hike by the Federal Reserve (Fed). Our analysis suggests the possibility of a potential pullback at the 61.8% Fibonacci retracement level from the previous swing, which coincides with the dynamic trendline of the bearish channel and the resistance area. This confluence of factors presents an opportunity for the formation of a new AB=CD pattern, with the D leg extending at 1.272%.
by FOREXN1
8
EUR/USD: Potential for Further Decline below 1.0700 - SHORTThe EUR/USD pair continues to demonstrate a bearish bias on the 1-hour chart, as it remains within a downward channel. The next potential target point could be the AB=CD Leg D with an extension at 1.06750. However, in a worst-case scenario, the price may reach the 1.06500 level. From a fundamental analysis perspective, the Euro weakened during the European session and experienced negative performance against the pound. Among major currencies, the Euro exhibited lagging performance on Monday, failing to break its negative streak against the US Dollar. On Tuesday, Spain is scheduled to release the preliminary report on May's Consumer Price Index (CPI), providing an initial glimpse into price behavior for the current month. This data holds significant importance for European Central Bank (ECB) officials and market expectations. The US Dollar displayed mixed results on Monday, influenced by an improvement in risk sentiment. The DXY index recorded a modest gain of less than 0.1%, enabling it to achieve the highest closing level in two months, surpassing 104.20. As expectations shift from a pause at the upcoming Federal Open Market Committee (FOMC) meeting to a 25-basis-point increase, any potential decline in the US Dollar is likely to be limited. US markets were closed on Monday in observance of Memorial Day, resulting in a relatively quiet trading day. Market participants absorbed the weekend agreement in Washington to suspend the debt limit. However, the legislation still requires approval from Congress, necessitating ongoing attention. Investors also analyzed Friday's US consumer inflation data in anticipation of a busy week filled with economic reports. On Tuesday, the US will release housing data and consumer confidence figures. Key reports later in the week include Thursday's ADP employment report and Friday's Nonfarm Payrolls.
Short
by FOREXN1
22
GOLDReacts to USD Correction and Fed Rate Hike ExpectationsGold (XAU/USD) experienced significant selling pressure following a brief pullback near $1,970.00 during the Asian session. The precious metal has extended its decline to around $1,932.00 as the US Dollar Index (DXY) recovers and aims to reach a new daily high. Technically, the outlook suggests a bearish continuation for gold, with a potential decline to the 61.8% Fibonacci level at $1,905.50 before a possible pullback and price increase. The fundamental overview indicates that with the return of full market activity on Tuesday, the US Dollar is losing ground in anticipation of positive news on the US debt deal, which is boosting risk sentiment. The US Dollar correction is challenging the 104.00 level against other currencies, accompanied by a 1.70% drop in 10-year US Treasury bond yields. Gold is currently defending the key support level at $1,937. If the risk-on trading sentiment gains momentum, the downward pressure on gold could intensify, especially as the US Dollar correction is expected to be limited due to increased expectations of a 25 basis points rate hike by the Federal Reserve (Fed) in June. Recent strong US economic data and the hawkish outlook on interest rates from Fed officials have contributed to this view. The market is now pricing in a 57% probability of a June Fed rate hike, down slightly from Monday but significantly higher than the 15% probability seen a week ago. Attention will now shift to the release of top-tier US economic data, particularly the US Conference Board Consumer Confidence data. Gold traders will also closely monitor developments regarding the US debt agreement and any relevant commentary from the Fed for further trading guidance.
OANDA:XAUUSD
by FOREXN1
19
USD/JPY Upside Potential Supported by Hawkish Fed RemarksFollowing the recent surge to a two-month high, USD bulls are choosing to secure some profits as US Treasury bond yields retreat. This decision, coupled with a slightly overbought Relative Strength Index (RSI) on the daily chart, leads to unwinding of long positions in the USD/JPY pair. However, the downside for the USD is cushioned by expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. Market pricing currently indicates a higher likelihood of a 25 basis points rate increase at the upcoming FOMC monetary policy meeting in June. This sentiment is reinforced by recent hawkish comments from influential Fed officials and the release of the US Core PCE Price Index, which revealed persistent inflation. Such factors are expected to act as tailwinds for the USD and support the potential for dip-buying in the USD/JPY pair. Meanwhile, Bank of Japan Governor Kazuo Ueda has stated that the central bank will continue its easing measures through yield curve control. Additionally, the Tokyo Consumer Price Index (CPI) for May, released last Friday, showed a lower-than-expected inflation rate in Japan's capital city. This aligns with the BoJ's view that inflation in Japan is likely to fall below the 2% target in the middle of the current fiscal year, allowing the central bank to maintain its dovish stance. With a positive risk sentiment prevailing, the safe-haven Japanese Yen (JPY) may face pressure, limiting the downside for the USD/JPY pair. Furthermore, US lawmakers have indicated a tentative agreement to suspend the US government's debt ceiling until January 25, thus averting a potential default by the world's largest economy. This development boosts investor confidence, evident from the positive mood in equity markets, and drives capital away from traditional safe-haven assets, including the JPY. Considering the aforementioned fundamental backdrop, the path of least resistance for the USD/JPY pair appears to be on the upside. Based on our analysis, we anticipate a potential pullback at the 61.8% Fibonacci level, which could initiate a new bullish impulse in alignment with the prevailing uptrend.
by FOREXN1
27
EUR/CAD: Riding the Ascending Channel with Short Setup PotentialThe EUR/CAD currency pair remains within an upward trend, as observed in recent trading sessions. After reaching the support area near 1.45200, the price initiated a sequence of higher highs and higher lows within an ascending channel. Notably, the price has repeatedly tested the 50% Fibonacci Resistance level, and following the latest retest and subsequent rejection, it is anticipated that the price may continue its descent towards the lower region of the chart to retest the aforementioned support area, potentially surpassing it. Moreover, there is the formation of an AB=CD pattern, indicating a potential trading opportunity. Based on our analysis, we propose a new short setup with the target of reaching the 1.127 Fibonacci extension of the AB=CD pattern, estimated to be around the 1.4500 area. This suggests a favorable opportunity to capitalize on the projected price movement and potentially profit from the anticipated downward momentum.
Short
by FOREXN1
30
GBP/USD downtrend deepens towards 1.2340 amid rising USD demand.The GBP/USD pair is exhibiting a bearish bias, as it heads southward towards the 1.2300 level during the early European morning session, erasing gains made during the Asian trading hours, which saw the pair reach 1.2380. The resurgence of concerns regarding the approval of the US debt deal and heightened expectations of a June interest rate hike by the Federal Reserve are bolstering demand for the US Dollar. The start of the new week has been relatively quiet for GBP/USD due to the Spring Bank Holiday in the UK and the Memorial Day holiday in the US, leading to low trading volumes. Technical analysis reveals the presence of a bearish triangle pattern, indicating the potential for a new downward move that could extend towards the 1.272 Fibonacci extension level and potentially reach the 1.618 level. Last week, hawkish expectations regarding the Federal Reserve provided a boost to the US Dollar, causing GBP/USD to decline by approximately 100 pips. Before the weekend, the US Bureau of Economic Analysis reported that the Core Personal Consumption Expenditures (PCE) Price Index, which is the Fed's preferred gauge of inflation, rose slightly to 4.7% on a yearly basis in April, surpassing market expectations of 4.6%. Furthermore, additional details from the report indicated that consumer activity remained robust, with personal spending increasing by 0.8% on a monthly basis. According to the CME Group FedWatch Tool, the likelihood of the Fed maintaining its current policy rate in June has dropped below 40%, compared to nearly 75% a week ago. Meanwhile, over the weekend, US President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement to suspend the debt limit. If this development leads to a risk-on sentiment when bond markets and US stock index futures resume trading early Tuesday, the US Dollar could face difficulties in finding demand, potentially allowing GBP/USD to recover some ground.
by FOREXN1
2