Daily Markets

• Most Asian currencies firmed slightly on Tuesday, while the dollar drifted lower in holiday-thinned trade as markets awaited inflation data from several major economies this week. Trading holidays in the U.S. and the UK made for languid foreign exchange markets on Monday. But this saw some flows out of the dollar and into more risk-driven currencies, particularly in Asia. The reading set up the possibility of a softer monthly consumer price index inflation reading for the month, which is due on Wednesday. The Japanese yen firmed slightly, with the USDJPY pair falling 0.1%. But the pair remained close to recent highs as apparent currency market intervention by the government, at the beginning of May, provided only fleeting relief to the yen. CPI data from Tokyo is due this Friday and is likely to factor into the Bank of Japan’s outlook on interest rates. The dollar index and dollar index futures fell about 0.1% each on Tuesday, weakening slightly in low-volume trade on account of the Memorial Day holiday. Focus this week is squarely on PCE price index data, due Friday. The reading is the Federal Reserve’s preferred inflation gauge, and is likely to factor into the central bank’s outlook on interest rate cuts. The PCE reading also comes as traders steadily priced out expectations of rate cuts by the Fed this year. The CME Fedwatch tool showed traders now expect a greater chance for a hold in September, compared to earlier, widespread bets on a cut. This trend comes as a string of Fed officials warned that sticky inflation will keep the central bank from loosening policy early. While Friday’s PCE reading is expected to show some cooling in price pressures, inflation is still expected to remain well above the Fed’s 2% annual target. This notion kept broader Asian currencies largely depressed. The Chinese yuan’s USDCNY pair was flat on Tuesday and remained close to six-month highs, amid creeping doubts over a Chinese economic recovery. Key Chinese purchasing managers index data is also on tap this week.

Gold – XAU

Gold on Monday made its intraday high of US$2358.37/oz and low of $2332.12/oz. Gold is up by 0.231% at US$2353.69/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 2350-2400 keeping stop loss closing above 2400, targeting 2320-2309-2300 and 2290-2277. Buy in between 2338-2277 with risk below 2277 targeting 2350-2360 and 2382-2394-2405.

Silver - XAG

Silver on Monday made its intraday high of US$31.83/oz and low of US$30.31/oz settle up by 0.760% at US$31.80/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 30.40-28.90, targeting 31.10-31.90-32.40 and 33.00-33.70-34.90 with stop loss should be placed on the breakage below 23.00. Sell in between 31.00-35.00 with a stop loss above 35.50 targeting 30.40-29.80-28.90 and 28.40-27.90-27.10.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$78.62/bbl, an intraday low of US$77.45/bbl, and settled up by 1.315% to close at US$78.53/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 78.40-89.65 with stop loss at 90.00; targeting 77.50 and 77.00-76.40. Buy above 77.50-75.00 with risk daily closing below 75.00, targeting 78.10-79.00-79.90 and 80.50-81.10-82.00.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0839/EUR, a high of US$1.0866/EUR, and settled the day up by 0.118% to close at US$1.0856/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 1.0890-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0850-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2726/GBP, a high of US$1.2776/GBP, and settled the day up by 0.317% to close at US$1.2767/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 1.2700-1.2050 with a target of 1.2760-1.2830-1.2890 and 1.2950-1.2990 with a stop loss closing below 1.2050. Sell in between 1.2760-1.2900 with targets at 1.2700-1.2670-1.2610-and 1.2500-1.2450-1.2360 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Monday made an intra‐day low of JPY156.65/USD an intraday high of 156.96/USD, and settled the day down by 0.085% at JPY156.78/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 157.50-159.00 with risk above 159.00 targeting 153.10-152.60-151.00 and 150.60-149.90-149.30. Long positions above 156.90-149.50 with targets of 156.50-156.90-157.50 and 158.00-158.60 with stops below 149.50.