Daily Markets

• Most Asian currencies rose slightly on Wednesday, retaking some ground against a weaker dollar as markets awaited more cues on interest rates from key U.S. inflation data due later in the day. Traders also grew more confident that the Federal Reserve will not hike interest rates further in 2024, following comments from Chair Jerome Powell on Tuesday. This notion sparked some weakness in the dollar, even as factory inflation data for April surprised to the upside. Still, most regional currencies were nursing steep losses against the dollar in recent months, as traders largely priced out most expectations of interest rate cuts in 2024. The dollar index and dollar index futures both fell slightly in Asian trade on Wednesday, extending overnight losses even as producer price index data surprised to the upside. Comments from the Fed’s Powell, specifically that monetary policy was currently tight enough to eventually bring down inflation, was a key driver of the dollar’s decline. But Powell also warned that the central bank was losing confidence that inflation was easing quickly, and that price pressures could take longer to reach the bank’s 2% annual target. His comments, plus the strong PPI reading, put markets on guard over a potentially hotter-than-expected consumer price index reading for April, due later in the day. Any signs of sticky inflation are likely to further diminish expectations of rate cuts in 2024, presenting a strong outlook for the dollar and more headwinds for Asian markets. Overnight weakness in the dollar afforded some strength to Asian currencies on Wednesday, despite a string of weak domestic factors. The Chinese yuan’s USDCNY pair fell 0.1% even as the U.S. imposed strict tariffs against key Chinese sectors such as electric vehicle batteries and semiconductors. The move is expected to attract retaliation by Beijing and could reignite a heated trade war between the world’s two biggest economies, presenting a weak outlook for China. The Japanese yen’s USDJPY pair fell slightly but remained well above the 156 yen level, as markets remained on guard over any more currency market intervention by the government. The government was last seen intervening around 160 yen, which a bulk of traders said was the new line in the sand. Focus this week is also on first-quarter Japanese gross domestic product data, due on Thursday.

Gold – XAU

Gold on Tuesday made its intraday high of US$2359.53/oz and low of $2334.76/oz. Gold is up by 0.929% at US$2357.68/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 2364-2400 keeping stop loss closing above 2400, targeting 2351-2,340-2329 and 2300-2280-2267. Buy in between 2344-2254 with risk below 2250 targeting 2353-2360-2,370 and 2,382-2,390-2,400.

Silver - XAG

Silver on Tuesday made its intraday high of US$28.72/oz and low of US$28.08/oz settle up by 0.044% at US$28.58/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 27.90-23.90, targeting 28.90-29.40 and 30.00-30.40-31.00 with stop loss should be placed on the breakage below 23.00. Sell in between 28.90-30.50 with a stop loss above 30.50 targeting 28.10-27.50-26.40 and 25.90-25.45-24.60.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$78.89/bbl, an intraday low of US$77.27/bbl, and settled down by 0.913% to close at US$78.03/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 78.90-89.65 with stop loss at 90.00; targeting 79.00-78.10-77.80 and 77.00-76.40. Buy above 78.00-75.00 with risk daily closing below 75.00, targeting 79.00-79.90-80.50 and 81.10-82.00-82.90.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.0766/EUR, a high of US$1.0825/EUR, and settled the day up by 0.271% to close at US$1.0818/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0805-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0750-1.0450 with risk below 1.0400 targeting 1.0805-1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2508/GBP, a high of US$1.2592/GBP, and settled the day up by 0.2508% to close at US$1.2590/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2674) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2450-1.2050 with a target of 1.2500-1.2540 and 1.2600-1.2690-1.2730 with a stop loss closing below 1.2050. Sell in between 1.2600-1.2700 with targets at 1.2360-1.2300-1.2240 and 1.2190-1.2100 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY156.04/USD an intraday high of 156.73/USD, and settled the day up by 0.142% at JPY156.40/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 155.90-159.00 with risk above 159.00 targeting 153.10-152.60-151.00 and 150.60-149.90-149.30. Long positions above 154.90-149.50 with targets of 154.90 and 156.10-156.90-157.50 with stops below 149.50.