Daily Market Lookup

• The U.S. dollar edged higher in early European trade Wednesday, helped by higher Treasury yields as the focus turned once more towards soaring global inflation. The index had fallen to a five-week low of 101.29 earlier in the week as expectations started to grow that U.S. inflation showed signs of peaking amid the Federal Reserve's aggressive policy tightening, suggesting the U.S. central bank could pause its cycle of interest rate hikes after two more increases in June and July. However, sentiment has started to shift again after data showed Eurozone consumer inflation soaring to a record, and oil prices climbed to their highest levels since early March, resulting in benchmark 10-year Treasury yields reaching 2.88% overnight, the highest since May 19. Additionally, U.S. President Joe Biden met with Fed Chairman Jerome Powell, with Biden affirming a “laser focus on addressing inflation” ahead of the November midterms. The Fed will start shrinking its $8.9 trillion balance sheet and release its Beige Book, later in the day, while New York Fed President John Williams and St. Louis Fed President James Bullard will also speak at separate events. In terms of economic data, April job openings, the JOLTS job report, are due at 10 AM ET (1400 GMT), ahead of Friday’s release of the widely watched monthly official employment report. The accompanying statement is likely to sound hawkish to justify the hefty hike and leave open the possibility of another half-point increase at the next meeting in July as the central bank attempts to tame inflation.
• The dollar rose to a two-week high versus the yen on Wednesday, lifted by higher Treasury yields as global inflation worries flared anew. The dollar index swooned to a one-month low of 101.29 on Monday after pulling back from a nearly two-decade high above 105 reached in mid-May, as U.S. inflation and other economic indicators showed signs of peaking amid the Federal Reserve's aggressive policy tightening. Markets have priced half-point interest rate rises for the Fed's meetings this month and next, in line with what policymakers have been signalling, but the outlook beyond that is murky. A monthly U.S. jobs report due on Friday may offer new clues.
• Gold was down on Wednesday morning in Asia, over rising U.S. Treasury yields and a strengthening U.S. dollar. Gold prices fell about 1% during the previous session and recorded a second consecutive month of declines in May. U.S. President Joe Biden met with the U.S. Fed Reserve Chairman Jerome Powell on Tuesday with historic inflation. Biden stressed that he respects the central bank’s independence but also affirmed a “laser focus on addressing inflation” ahead of the November midterms. To combat inflation, the Fed will start shrinking its $8.9 trillion balance sheet and release its Beige Book later in the day. However, investors are also concerned about a potential recession caused by monetary tightening, with many investors pricing in two half-point interest rate hikes in June and July. In Asia-Pacific, Shanghai eased its lockdown on June 1, which raises hope for economic recovery. The China Caixin manufacturing purchasing index released earlier in the day recorded 48.1 in May, which is above the 46 recorded in April 2022 and a forecast of 48 prepared by Investing.com.
• Oil prices inched higher on Wednesday after European Union leaders agreed to a partial and phased ban on Russian oil and as China ended its COVID-19 lockdown in Shanghai. EU leaders agreed in principle on Monday to cut 90% of oil imports from Russia by the end of this year, the bloc's toughest sanctions yet on Moscow since the invasion of Ukraine three months ago, which Moscow calls a "special military operation". Once fully adopted, sanctions on crude will be phased in over six months and on refined products over eight months. The embargo exempts pipeline oil from Russia as a concession to Hungary and two other landlocked Central European states. In China, Shanghai's strict COVID-19 lockdown ended on Wednesday after two months, prompting expectations of firmer fuel demand from the country.
• Capping gains were reports that some producers were exploring the idea of suspending Russia's participation in a production deal of OPEC+, a grouping of Organization of the Petroleum Exporting Countries members and their allies, on expectations such a move would increase supply. While there was no formal push for OPEC countries to pump more oil to make up for any potential Russian shortfall, some Gulf members had begun planning for an output increase sometime in the next few months, the Wall Street Journal reported, citing OPEC delegates. U.S. crude oil production rose in March by more than 3% to the highest since November, according to a monthly report from the U.S. Energy Information Administration on Tuesday. Data from the U.S. government on stockpiles was expected on Thursday. Analysts, in a Reuters poll, expected U.S. crude oil inventories to fall last week, while gasoline and distillate stockpiles were seen up.

Gold – XAU

Gold on Tuesday made its intraday high of US$1857.12/oz and low of US$1835.09/oz. Gold up 0.871% at US$1837.36/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 1841-1890 keeping stop loss closing above 1890, targeting 1831-1820 and 1801-1789-1780. Buy in between 1831-1769 with risk below 1769, targeting 1841-1858-1868 and 1879-1890-1900.

Silver - XAG

Silver on Tuesday made its intraday high of US$21.99/oz and low of US$21.47/oz settled down by 1.884% at US$21.55/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 21.60-19.60, targeting 22.05-22.50 and 23.05--23.95-24.55-25.10 with stop loss should be place on the breakage below 19.50. Sell in between 22.10-23.75 with stop loss above 23.75; targeting 21.50-21.05-20.60 and 20.00-19.60.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US118.62/bbl, intraday low of US$112.92/bbl and settled down by 1.783% to close at US$113.99/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 115.80-123.80 with stop loss at 123.80; targeting 114.50-113.25-112.50 and 111.60-110.10. Buy above 114.50-111.60 with risk daily closing below 111.60 and targeting 118.20-119.00-119.60 and 121.00-123.80.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.0678/EUR, high of US$1.0777/EUR and settled the day down by 0.295% to close at US$1.0729/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0736), which become immediate support, break below will target 1.0647. 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 1.0750-1.0970, targeting 1.0690-1.0630-1.0550 and 1.0490-1.0450-1.0390 with stop-loss at daily closing above 1.1100. Buy above 1.0690-1.0210 with risk below 1.0210, targeting 1.0741-1.0795 and 1.0920-1.0970-1.1005.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2559/GBP, high of US$1.2653/GBP and settled the day up by 0.396% to close at US$1.2599/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2834) is become immediate resistance level. 14-D RSI is currently in oversold 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 1.2575-1.2010 with target 1.2650-1.2745 and 1.2800-1.2975 with stop loss closing below 1.2010. Sell in between 1.2650-1.2975 with targets at 1.2575-1.2490-1.2420 and 1.2310-1.2200-1.2150 with stop loss should be 1.2975.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY128.50/USD and made an intraday high of JPY129.54/USD and settled the day up 0.731% at JPY129.44/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 128.90-132.50 with risk above 132.50 targeting 127.50-126.90-126.10 and 125.00-124.30. Long positions above 127.50-124.30 with targets of 128.90-129.60 and 130.60-131.20-132.00 with stop below 124.30.