Daily Market Lookup

• The U.S. dollar and the euro stabilized in early European trade Thursday, with traders cautious ahead of a widely-anticipated meeting of the European Central Bank which should signal the tightening of its monetary policy. EUR/USD edged higher to 1.0716, having traded in a range-bound fashion for much of the week, as traders eagerly await news from the ECB policymakers The central bank is widely expected to announce the end of its long-running asset purchase program, while also paving the way for a first increase in interest rates in more than a decade next month. Hikes of 25 basis points in July and September, lifting the deposit rate from -0.5% at present, is the current consensus expectation. But there is a great deal of uncertainty surrounding the size of any hikes and the pace of the future tightening, especially with inflation currently running at more than four times the central bank’s 2% medium-term goal. The ECB meeting “will raise the question of why it's delayed tightening and whether a 25bp rate rise in July is a done deal or if there's room for more,” said analysts at ING, in a note. Central banks around the globe have started to respond to soaring inflation by aggressively tightening monetary policy. The Federal Reserve hiked by 50 basis points last month, as did the central banks of both India and Australia earlier this week. The ECB policy announcement is due at 7:45 AM ET (1145 GMT), with the press conference following 45 minutes later. Bank of Japan - the outlier of the central bank world - keeping its accommodative monetary policy to boost a weak economy while the rest of the world starts to tighten. However, Goldman Sachs maintained its bullish stance on the Japanese currency, seeing two broad scenarios for the yen to strengthen, either soon in a U.S. economic downturn or thanks to a central bank policy shift or intervention. GBP/USD fell 0.2% to 1.2514, ahead of a speech by British Prime Minister Boris Johnson on making it easier for young people to buy homes, as he attempts to relaunch his leadership after surviving a no-confidence vote earlier this week.
• The yen dropped to a new 20-year low versus the dollar on Thursday, and the euro inched higher ahead of a highly-anticipated meeting of the European Central Bank, which should offer insights into its monetary policy tightening plans. The ECB is all but certain to flag an end to its long-running asset purchase programme at the end of this month, and promise a rate hike for July, but the size and pace of its tightening are uncertain. Speculation is growing that red hot euro zone inflation could push the ECB into kicking off its hike campaign with a large 50 basis point rate increase. In the event ECB President Christine Lagarde "leans into a more hawkish interest rate move in the future, that's going give a boost to euro-dollar," said Carol Kong, currency strategist at Commonwealth Bank of Australia. The Japanese currency has been weighed down by rising interest rates around the world at a time when the Bank of Japan remains wedded to keeping policy highly stimulatory. Japan's shrinking current account surplus is also weighing. In contrast, Germany's 10-year yield, the benchmark for the euro area, rose to a new eight-year high of 1.368% on Wednesday, and the gap between the German and Japanese benchmarks grew to its widest in nine years on Thursday.
• Oil was up on Thursday morning in Asia as U.S. demand stays strong and China demand may rebound with COVID-19 curbs easing. Wednesday’s U.S. crude supply data from the U.S. Energy Information Administration (EIA) showed a build of 2.025 million barrels for the week ended June 3. EIA data also suggested that U.S. gasoline stockpiles dropped by 812,000 barrels to 218.18 million barrels last week, indicating fuel demand resilience during peak summer despite soaring prices. Crude supply data from the American Petroleum Institute released the day before, showed a build of 1.845 million barrels. China’s trade data released earlier in the day showed that the exports of the world’s largest oil importer grew at a double-digit pace in May, adding to hopes that global oil demand could grow even further as China continues easing COVID-19 curbs. On the supply side, UAE energy minister Suhail Al Mazroui said on Wednesday that efforts by the Organization of the Petroleum Exporting Countries and allies (OPEC) oil producers to increase output are “not encouraging”. The block agreed to accelerate production increases to cool fuel prices, while producers have little spare capacity to meet the agreed output.

Gold – XAU

Gold on Wednesday made its intraday high of US$1859.63/oz and low of US$1844.65/oz. Gold up 0.039% at US$1853.07/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 1851-1907 keeping stop loss closing above 1907, targeting 1851-1842-1827 and 1820-1801-1789. Buy in between 1841-1790 with risk below 1790, targeting 1840-1851-1870-1879 and 1890-1900-1907.

Silver - XAG

Silver on Wednesday made its intraday high of US$22.24/oz and low of US$21.80/oz settled down by 0.814% at US$22.10/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 Wednesday made an intra‐day high of US121.31/bbl, intraday low of US$117.55/bbl and settled up by 2.09% to close at US$120.60/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 112.10-125.10 with stop loss at 125.10; targeting 119.00-118.20-117.10 and 115.80-114.50-113.25. Buy above 119.00-114.50 with risk daily closing below 114.50 and targeting 120.10-121.00-122.00 and 123.90-125.00.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.0670/EUR, high of US$1.0748/EUR and settled the day up by 0.279% to close at US$1.0715/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$1.2429/GBP, high of US$1.2598/GBP and settled the day up by 0.473% to close at US$1.2531/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 1.2490-1.2010 with target 1.2575-1.2650-1.2745 and 1.2800-1.2975 with stop loss closing below 1.2010. Sell in between 1.2575-1.2975 with targets at 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 JPY132.49/USD and made an intraday high of JPY134.47/USD and settled the day up 1.265% at JPY134.22/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 130.60-133.50 with risk above 133.50 targeting 129.60-128.90-127.50 and 126.90-126.10-125.00. Long positions above 129.60-124.30 with targets of 130.60-131.20-132.00 and 132.90-133.50 with stop below 124.30.