Market Analysis

 

XAUUSD

Prediction: Decrease

Fundamental Analysis:

Last week, the release of strong U.S. economic data and the hawkish tone in the Federal Reserve's meeting minutes diminished investor confidence in a rate cut this year. Consequently, the dollar strengthened, leading to a drop in XAU/USD by over $80. The market now anticipates the first rate cut may be delayed from September to November, which has driven up U.S. Treasury yields and bolstered the USD, weakening XAU/USD as a result.

Technical Analysis:

XAU/USD appears to be in a downward trend. The 14-hour RSI is around 30, indicating a bearish outlook as it approaches oversold levels. Bears are targeting short-term profits around $2,307, with potential for further decline to $2,276. Conversely, bulls might take profits if the price rebounds to around $2,360, with a possible high of $2,391. Additionally, the $2,400 level serves as significant resistance.

 

 

 

 

EURUSD

Prediction: Decrease

Fundamental Analysis:

The economic disparity between the Eurozone and the United States suggests divergent monetary policies from the Federal Reserve and the European Central Bank (ECB). The robust US economy contrasts with the weaker Eurozone, leading to expectations that the ECB might reduce interest rates before the Fed. This policy divergence is likely to strengthen the Dollar over time, indicating a potential further weakening of the EUR/USD pair in the medium term.

Technical Analysis:

Should the price fall below the 200-day SMA at $1.0787, EUR/USD may decline to the May low of $1.0649, and potentially to the 2024 low of $1.0601. On the upside, resistance is first seen at the May high of $1.0894, followed by the March high of $1.0981. The 4-hour chart reveals an emerging downward trend, with the 100-SMA at $1.0797, the next level at $1.0766, and the 200-SMA at $1.0748. The Relative Strength Index (RSI) is near 50, reflecting investor uncertainty regarding the short-term direction.

 

 

 

 

USDJPY

Forecast: Rise

Fundamental Analysis:

Based on recent developments, the USD/JPY pair appears poised for potential appreciation. Japan's inflation rate, although slightly declining to 2.5% from 2.7% in April, remains above the Bank of Japan's target of 2%, prompting considerations for tighter monetary policies. Concurrently, despite the Federal Reserve's commitment to maintaining high interest rates, the US Dollar has seen considerable depreciation.

Technical Analysis:

Technically, USD/JPY is currently around $157.00, with indications on the daily chart suggesting a possible downward movement nearing a pattern apex. Nevertheless, the 14-day RSI remains above 50, indicating a persistent bullish trend. A breach above $157.20 could propel the pair towards recent highs near $160.32. Conversely, a drop below support at $156.00 might extend losses towards the next support level around $151.86.

 

 

 

US Oil

Prediction: Expected Increase

Fundamental Analysis:

Throughout the week, US oil prices faced downward pressure due to concerns over the Federal Reserve's potential tightening policies and increased oil inventories affecting demand. However, prices saw a slight recovery towards the end of the week. Minutes from the latest Federal Reserve meeting revealed debates among policymakers about the adequacy of current interest rates in managing inflation. Additionally, market attention is focused on the upcoming OPEC+ meeting scheduled for June 2nd, where discussions will center on the extension of a voluntary oil production cut of 2.2 million barrels per day.

Technical Analysis:

 

US Crude Oil rebounded from a 12-week low to reach $77.50 by week's end. WTI crude remains below the 200-hour EMA at $78.05, but a Friday recovery pushed it back within a familiar trading range. Since hitting a low of $68.00 in late 2023, WTI has been fluctuating around the 200-day EMA at $79.03. Despite retaining gains from early 2024, WTI is still down approximately 11% from its peak earlier in the year, around $87.20.

 

 

 

 

 

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