Daily Market Lookup

• The U.S. dollar index strengthened to 100 for the first time in nearly two years on Friday, supported by the prospect of a more aggressive pace of Federal Reserve interest rate hikes. The greenback has gained ground on a basket of rivals over the past month, particularly against the euro, which has been pressured by investor concerns about the economic costs of war in Ukraine and a potentially nail-biting election in France. The dollar index rose as high as 100 in early European trading hours, its best level since May 2020. It later lost some momentum and was last broadly flat at 99.876. The index is up 1.4% this week, which would be its biggest increase in a month, backed by hawkish remarks from several Federal Reserve policy makers who are calling for a faster pace of interest rate increases to curb rapid inflation. This week's release of the minutes of the Fed's March meeting showed "many" participants were prepared to raise interest rates in 50-basis-point increments in coming months. Meeting minutes from the European Central Bank published on Thursday suggested its policy makers are keen to act to combat inflation, but the eurozone has so far taken a more cautious tack than other central banks, weakening the euro. A tightening election race in France between president Emmanuel Macron and far-right candidate Marine Le Pen has added to pressure on the euro, raising investor concerns about the future direction of the euro zone's second-biggest economy, though Macron is still ahead in polls. The yen has steadied this month after tumbling in March, but remains under pressure as the U.S. raises interest rates and the Bank of Japan intervenes in the bond market to keep rates low. St. Louis Fed President James Bullard, a voter this year on the Federal Open Market Committee and a known hawk, continued to sound the alarm on inflation on Thursday. He said the Fed remains behind in its fight against inflation despite increases in mortgage rates and government bond yields that have raced ahead of actual changes in the central bank's target federal funds rate. Bullard's comments, however, had little impact on the dollar. Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic, neither of whom are voters in 2022, on Thursday supported rate increases, but provided a somewhat dovish counterpoint. The dollar gained on Wednesday after minutes from the March Fed meeting showed "many" participants were prepared to raise interest rates in 50-basis-point increments in coming months. The Fed also said it will reduce the Fed's balance sheet after the May meeting at a rate of $95 billion per month, the beginning of the reversal of the massive stimulus it pumped into the economy during the pandemic.
• Gold was down on Friday morning in Asia but was trading within a tight range. The dollar strengthened as the U.S. Federal Reserve looks to tighten its monetary policy quicker than expected, which partially offset the safe-haven demand from the ongoing war in Ukraine. The dollar, which normally moves inversely to gold, edged up on Friday to a near two-year high and was also set for its best week in a month. The benchmark U.S. 10-year Treasury yield also hit a three-year high during the previous session. The Fed’s hawkish tone in the minutes from its latest meeting also gave the greenback a boost. St. Louis Fed President James Bullard added on Thursday that he prefers hiking the policy rate to 3% to 3.25% in the second half of 2022. However, Chicago Fed President Charles Evans and his Atlanta counterpart Raphael Bostic said that they favor hiking rates to neutral while continuing to monitor the economy. Gold, however, is being supported by the Ukraine war, rapid inflation, and the COVID-19 pandemic. However, the Fed's aggressive stance to combat inflation, recovering bond yields, the stronger dollar, and easing of pandemic restrictions on higher vaccination rates will put a lid on gold prices, Fitch Solutions said in a note. In the most somber assessment since its invasion of Ukraine on Feb. 24, Russia described the "tragedy" of mounting troop losses and the economic hit from sanctions. Meanwhile, Ukrainians evacuated from eastern cities ahead of an anticipated major offensive.
• Oil prices rose on Friday but were set to drop around 3% for the week as consuming countries' planned release of 240 million barrels from emergency stocks offset some concerns over reduced supplies from Russia because of western sanctions. Analysts said the emergency oil release, amounting to about 1 million barrels per day (bpd) from May to the end of the year, might cap price rises in the short term, but would not fully cover volumes lost if more countries impose sanctions against Russia over its invasion of Ukraine, which Moscow calls a "special operation". Member nations of the International Energy Agency will release 60 million barrels combined over the next six month with United States matching that amount as part of its 180 million barrel release announced in March. The release may deter producers, including the Organization of the Petroleum Exporting Countries (OPEC) and U.S. shale producers, from accelerating output increases even with oil prices around $100 a barrel, they said. Investors are also assessing the fundamentals in the oil market amid uncertainties over slowing demand in China, where cities have been locked down due to the latest wave of coronavirus infections, and the loss of supplies from Russia. A think tank affiliated to China's state-backed CNPC lowered its view on China's second-quarter oil demand by 180,000 bpd from its previous estimate due to the lockdowns there. At the same time, the European Union's consideration of a ban on Russian oil, following its plan to embargo Russian coal, will limit any drop in oil prices in the near term.

Gold – XAU

Gold on Thursday made its intraday high of US$1937.71/oz and low of US$1920.31/oz. Gold up 0.387% at US$1931.51/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside is expected before it gets stretched. Stochastic Oscillator is in neutral territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Sell below 1925-1974 keeping stop loss closing above 1973, targeting 1911-1900-1888 and 1877-1870. Buy in between 1911-1877 with risk below 1877, targeting 1925-1941-1950 and 1958-1965-1973.

Silver - XAG

Silver on Thursday made its intraday high of US$24.70/oz and low of US$24.53/oz settled up by 0.500% at US$24.68/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. MACD is below zero line and histograms are decreasing trend and it will bring bearish stance in the upcoming sessions. RSI is approaching neutral region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 24.20-22.90, targeting 25.10-25.70-26.50 and 26.75-27.50-27.80 with stop loss should be place on the breakage below 22.90. Sell in between 24.55-27.90 with stop loss above 27.90; targeting 24.40-23.90-23.40 and 23.50-23.01.

Oil - WTI

Crude Oil on Thursday made an intra‐day high of US98.11/bbl, intraday low of US$93.32/bbl and settled down by 0.858% to close at US$96.49/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 68.50 which is a support level and breakage below will call for 65.40. MACD is above zero line and histograms are in increasing mode 0will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in neutral region and giving positive crossover for confirmation of bullish stance; while the RSI is in neutral region and more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 98.45-102.90 with stop loss at 102.90; targeting 96.60-95.10-94.00 and 92.60-91.40. Buy above 96.60-91.40 with risk daily closing below 91.40 and targeting 98.45-99.60-100.50 and 102.00-102.90-104.00.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.0864/EUR, high of US$1.0937/EUR and settled the day down by 0.0991% to close at US$1.0877/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.1191), which become immediate support, break below will target 1.1270. MACD is above zero line and histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving positive crossovers to signal for bullish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0900-1.1145, targeting 1.0870-1.08520 and 1.0765-1.0720-1.0640 with stop-loss at daily closing above 1.1200. Buy above 1.0870-1.0640 with risk below 1.0640, targeting 1.0900-1.0950-1.1105 and 1.1145-1.1190-1.1265.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.3051/GBP, high of US$1.3106/GBP and settled the day up by 0.0466% to close at US$1.3072/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3760) is become immediate support level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and giving positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.3035-1.2850 with target 1.3110-1.3240-1.3290 and 1.3320-1.3360-1.3400 with stop loss closing below 1.2820. Sell in between 1.3110-1.3400 with targets at 1.3035-1.2970 and 1.2925-1.2850 with stop loss should be 1.3300.

USD/JPY

USD/JPY on Thursday made intra‐day low of JPY123.99/USD and made an intraday high of JPY123.99/USD and settled the day up 0.100% at JPY123.89/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), which is initial support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 123.00-126.90 with risk above 126.90 targeting 122.00-121.00-120.10 and 119.60-119.00. Long positions above 122.00-118.10 with targets of 123.00-124.00 and 124.90-125.50-126.00 with stop below 115.50.