EURUSD
- The EUR/USD pair continues to strengthen on Thursday, benefiting from the prevailing positive market sentiment, which favors risk-sensitive currencies like the Euro.
- The decline in the US Dollar gained momentum following the Federal Reserve's decision to maintain its interest rates unchanged at 5.25%-5.50%, as expected, at the conclusion of its two-day meeting on Wednesday.
- Chair Jerome Powell's remarks, suggesting that rate cuts would not be appropriate until the Fed is more confident about inflation returning to its 2% target, added to the selling pressure on the Greenback.
- Market expectations for a 25-basis points interest rate cut at the September 18 meeting, as indicated by the FedWatch Tool monitored by CME Group, decreased to around 40%.
- Recent indications from ECB board members suggest the possibility of the ECB starting its easing cycle in June, fueling speculation about potential interest rate cuts totaling 75 basis points for the rest of the year.
| SMA (20) | Slighlty Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD pair advanced further amid positive market sentiment and a weakened US Dollar following the Fed's decision to maintain interest rates unchanged. Chair Jerome Powell's comments dampened expectations of imminent rate cuts, contributing to the Dollar's decline. Meanwhile, speculation about ECB easing measures in June fuelled expectations of interest rate cuts in the Eurozone, shaping the dynamics of the EUR/USD pair.
GBPUSD
- The GBP/USD pair has risen, buoyed by the substantial decline in the US Dollar following the decision of the US Federal Reserve to maintain its interest rates unchanged.
- As anticipated, the Fed retained its benchmark rate within a target range of 5.25%– 5.50% during its May meeting, the highest level in over two decades.
- Fed Chair Jerome Powell's statement during the press conference, indicating the unlikelihood of the next policy rate move being a hike, elicited a modestly dovish reaction in the markets.
- Meanwhile, market participants anticipate the Bank of England (BoE) to reduce borrowing costs in either the June or August meetings, driven by BoE Governor Andrew Bailey's confidence in headline inflation returning to 2% in April.
- However, BoE Chief Economist Huw Pill cautioned against the risks of cutting interest rates too quickly, suggesting a cautious approach.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The GBP/USD pair climbed amid a weakened US Dollar following the Fed's decision to maintain interest rates unchanged, which prompted a dovish market reaction. Market expectations of potential rate cuts by the Bank of England in upcoming meetings also influenced the dynamics of the GBP/USD pair. However, cautionary remarks from BoE officials highlighted the need for prudence in monetary policy decisions, contributing to the overall sentiment surrounding the currency pair.
GOLD
- Gold price is consolidating its gains from Wednesday's rebound in Asian trading on Thursday, with buyers awaiting further data on US employment and wage inflation to guide future trading decisions. As anticipated, the Federal Reserve kept the Fed Funds Rate unchanged within the range of 5.25% to 5.5% during its May policy meeting. However, Fed Chair Jerome Powell emphasized the central bank's desire for "greater confidence" in inflation moving towards the 2% target.
- A relief rally in US stocks diminished demand for safe-haven assets like the US Dollar, following Powell's remarks suggesting a reluctance towards rate hikes and a leaning towards potential rate cuts later in the year.
- The US Dollar faced additional pressure from suspected intervention by Japanese authorities overnight, leading to a sharp decline in USD/JPY.
- Later in the day, market participants will closely monitor weekly US Jobless Claims and preliminary Unit Labor Cost data for the first quarter, ahead of Friday's highly anticipated Nonfarm Payrolls release.
Closing statement: Gold price maintained its gains from Wednesday's rebound as buyers awaited key US employment and wage inflation data for further direction. The Federal Reserve's decision to hold interest rates steady and Chair Jerome Powell's emphasis on inflation confidence influenced market sentiment, while a relief rally in US stocks and suspected Japanese intervention added pressure on the US Dollar, supporting demand for the precious metal.
CRUDE OIL
- WTI prices experienced a loss of momentum, hovering near seven-week lows around $78.80 on Thursday, reflecting ongoing bearish sentiment in the oil market.
- Concerns about weakening oil demand intensified as US crude inventories surged by 7.256 million barrels to 460.9 million barrels for the week ending April 26, marking the highest level since June 2023. Signs of easing geopolitical tensions in the Middle East exerted downward pressure on WTI prices, as market participants reacted to reports of potential truce talks.
- The Federal Reserve's decision to keep interest rates steady in its latest rate call, as widely expected, was influenced by concerns about persistent inflationary pressures, limiting the central bank's ability to consider rate cuts.
- Oil traders will closely monitor US employment data for April, including Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings, on Friday for fresh market direction.
| SMA (20) | Slightly Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: WTI prices remained under pressure near seven-week lows as concerns about weakening oil demand were exacerbated by a significant increase in US crude inventories. Easing geopolitical tensions in the Middle East further weighed on oil prices, while the Federal Reserve's decision to maintain interest rates steady highlighted concerns about inflationary pressures, limiting the possibility of rate cuts. Traders await US employment data for April on Friday for potential market-moving insights.
DAX
- German retail sales surged by 1.8% in March, indicating robust consumer spending, but this was contrasted by an increase in unemployment from 2.719 million to 2.732 million in April, suggesting potential headwinds for consumption.
- Despite mixed signals from retail sales and unemployment figures, the GDP numbers for Q1 showed a positive trend, with the German economy expanding by 0.2%, signaling an improving macroeconomic environment.
- Economic indicators for the Eurozone, including Q1 GDP growth of 0.3% and a slight easing in the annual core inflation rate from 2.9% to 2.7% in April, captured investor attention amid expectations of a June ECB rate cut.
- Finalized Manufacturing PMI numbers for Germany and the Eurozone on Thursday will be closely monitored by investors for insights into the manufacturing sector's performance.
- The overnight FOMC press conference is expected to impact the DAX, with Fed Chair Powell emphasizing the lack of progress in achieving the Fed's 2% inflation target, potentially influencing market sentiment.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: Mixed signals from German retail sales and unemployment figures were observed, with retail sales showing a strong surge while unemployment increased slightly. However, positive GDP numbers for Q1 and economic indicators for the Eurozone highlighted an improving macroeconomic environment. Finalized Manufacturing PMI numbers and the FOMC press conference will be key factors influencing investor sentiment and the direction of the DAX.