Market Analysis
XAUUSD
Prediction: Increase
Fundamental Analysis:
The updated numbers show that more people are applying for US Unemployment Claims. This suggests that the job market is getting weaker, which could lead to the Federal Reserve lowering interest rates this year. According to data released by the US Department of Labor on Thursday, the number of people applying for US Unemployment Claims in the week ending May 4th reached 231k (higher that the forecast 212K), the highest since August 26, 2023. The slowdown in the job market is making it possible for the Federal Reserve to lower interest rates twice this year. Financial markets expect the Federal Reserve to start a period of easing in September.
Technical Analysis:
Gold needs to surpass the high point of April 26, which is the latest peak at $2352. Once the price of gold breaks above this level, it will aim for $2400. If it surpasses $2400, the price of gold will accelerate towards the peak of $2417 reached on April 19, and then challenge the historical high of $2431. If the price of gold falls below the $2300 mark, it could potentially drop further. The next support level would be the 50 SMA at $2249.
EURUSD
Prediction: Increase
Fundamental Analysis:
On Thursday, the EUR/USD pair went up, showing gains for the week. This happened because the US Dollar (USD) decreased overall, especially after the number of US Unemployment Claims increased, leading to renewed expectations of interest rate cuts by the Federal Reserve. EUR/USD delivers a sharp recovery to $1.0780. The European Central Bank (ECB) will start lowering its interest rates in June remains firm. A sharp decline in the Eurozone inflation has allowed ECB policymakers to consider that prospect.
Technical Analysis:
On the upside, the EUR/USD pair is expected to face its first challenge at the high point reached in May at $1.0812. After that, it may encounter resistance at the 100-day of $1.0832 and the high point from April at $1.0885. On the downside, if the pair drops below the lowest point of 2024 at $1.0601, it could indicate a return to the lowest point from November 2023 at $1.0516. The 14-RSI has risen above 60, indicating that the market still has momentum for an upward trend.
USDJPY
Prediction: Decrease
Fundamental Analysis:
The Japanese yen has been falling for the fourth consecutive day, reaching a level of $155.85. Last week, the yen increased by more than 3%, and Japanese government might intervene twice to stop the yen decreasing trend. On Thursday, a senior diplomat in Japan's foreign exchange affairs stated that there are no restrictions on intervening in the currency market, which made traders nervous. Additionally, the Bank of Japan's April meeting showed that policymakers have shifted to a more hawkish stance to help stabilize the yen.
Technical Analysis:
The USD/JPY pair attempted to break the Fibonacci 50% level on the 1-hour chart but was unsuccessful. Instead, it retreated back towards the Fibonacci 38.2% level. The resistance level is at $156, while the support level is at $155. The 14-RSI indicator is between the 40-60 level, suggesting that the market still looking for the trend.
GBPUSD
Prediction: Decrease
Fundamental Analysis:
The British Pound recovered a bit against the US Dollar, rising by 0.03% after the Bank of England made its decision on monetary policy. The GBP/USD exchange rate reached $1.2520 after dropping to $1.2445 earlier. By a 7-to-2 decision on MPC Official Bank Rate Votes, the Bank of England on Thursday opted to hold interest rates at 5.25%, with two voters preferring a quarter-point cut. BoE Governor Andrew Bailey mentioned that the bank might need to lower rates more than what the market expects.
Technical Analysis:
Even though momentum favors sellers, as depicted by the 14-RSI being in bearish territory, they would also need to push the exchange rate back below $1.2500. If it happens, the GBP/USD would find support at the low of $1.2445, then at the round number of $1.2400. If it falls below this, the next significant support level is at the year-to-date (YTD) low of $1.2299. If the price keeps the upward trend, it might face a possible attempt to reach the highest point so far in May, which is $1.2634. Beyond that, there's the peak from April at $1.2709.
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