Daily Analysis 24/05/2023


EURUSD

  • EUR/USD experienced a 0.21% increase, reaching 1.0790, following the release of the German Ifo business climate index for May, which showed a slight deterioration in confidence in Europe's largest economy.
  • ECB President Christine Lagarde is scheduled to lead the celebrations for the central bank's 25th anniversary, attracting attention from market participants.
  • From a technical perspective, there is a possibility of EUR/USD reaching a support level and forming a double bottom with the low from March 24th. This suggests a potential reversal pattern.
  • The U.S. dollar stabilized during early European trade, maintaining proximity to the two-month high reached in the previous session, due to the lack of progress in negotiations regarding the U.S. debt ceiling.
  • The market's focus will be on Christine Lagarde's remarks and any insights she provides regarding the ECB's future monetary policy decisions.
SMA (20) Falling
RSI (14) Slightly Rising
MACD (12, 26, 9) Slightly Falling
BUY

Closing statement: EUR/USD saw a modest increase after the release of the German Ifo business climate index, although confidence in the economy showed a slight decline. As market participants anticipate Christine Lagarde's comments on the ECB's 25th anniversary, the technical analysis suggests the possibility of a support level and a potential reversal pattern for EUR/USD. Meanwhile, the U.S. dollar remains stable, influenced by the ongoing uncertainty surrounding the U.S. debt ceiling negotiations.

GBPUSD

  • GBP/USD saw a modest increase of 0.05% to 1.2419, rebounding from a one-month low, following the release of UK headline CPI figures. The April CPI fell to 8.7% from March's 10.1%, while core inflation, excluding volatile energy and food prices, rose to 6.8%, the highest rate since March 1992.
  • The Bank of England recently raised interest rates by 25 basis points, and the CPI data is likely to strengthen expectations of another rate hike in June (22.06.2023).
  • The DXY, which measures the dollar against six other currencies, traded mostly unchanged at 103.395, just below the two-month peak of 103.65 reached on Tuesday.
  • Despite ongoing discussions between political parties regarding the U.S. debt ceiling, progress has been slow, and there are few indications of an imminent deal being reached to address the government's $31.4 trillion debt.
  • Market participants will closely monitor developments in both UK inflation and the ongoing negotiations on the U.S. debt ceiling for further insights into the direction of GBP/USD.
SMA (20) Neutral
RSI (14) Neutral
MACD (12, 26, 9) Slightly Falling

Closing statement:GBP/USD rebounded slightly from its one-month low after the release of UK CPI data, which showed a smaller decline than expected in headline inflation but an increase in core inflation. This data is likely to strengthen expectations of another interest rate hike by the Bank of England in June. Meanwhile, the dollar remained steady near its recent two-month peak as discussions on the U.S. debt ceiling continue with limited signs of progress.

GOLD

  • Gold prices remained range-bound on Wednesday as investors awaited progress in the negotiations regarding the U.S. debt ceiling. Meanwhile, copper prices reached six-month lows due to indications of a slowdown in global manufacturing activity.
  • U.S. Treasury Secretary Janet Yellen stated that there is just over a week remaining before the early-June deadline, after which the department may face a shortage of sufficient cash to operate normally.
  • Gold has been trading within a narrow range of $1,950 to $1,980 per ounce for nearly a week, following its drop below the key level of $2,000.
  • Market participants will closely examine the minutes of the Federal Reserve's May meeting, scheduled to be released later in the day, for any indications of when the central bank plans to pause its rate hike cycle. Recent hawkish remarks by several Fed officials suggest that U.S. interest rates are likely to remain elevated for a longer duration.
  • Traders will monitor developments in the U.S. debt ceiling negotiations and the Fed's monetary policy signals for potential impacts on gold prices.
SMA (20) Neutral
RSI (14) Neutral
MACD (12, 26, 9) Falling

Closing statement: Gold prices maintained a narrow trading range as investors awaited progress in the U.S. debt ceiling negotiations, while copper prices hit six-month lows due to concerns about global manufacturing activity. With the approaching early-June deadline for the U.S. Treasury's cash supply, market participants are keeping a close eye on developments. Additionally, the release of the Fed's May meeting minutes will provide insights into the central bank's stance on future rate hikes, which could influence gold prices.

CRUDE OIL

  • Crude oil prices retreated slightly on Wednesday but remained strong, supported by tightening U.S. inventories and fuel supplies, as well as a warning from the Saudi energy minister against speculators, hinting at potential OPEC+ output cuts.
  • Concerns about a supply squeeze increased after the Saudi energy minister vowed to keep short sellers, who bet on price declines, at bay, indicating a firm stance to defend prices.
  • Market participants interpreted the minister's statement as a potential indication that OPEC and its allies, including Russia (OPEC+), may consider further output cuts during their upcoming meeting on June 4.
  • According to market sources citing the American Petroleum Institute (API), crude inventories declined by approximately 6.8 million barrels in the week ending May 19.
  • Investors will closely monitor the OPEC+ meeting and any decisions regarding output cuts, as well as inventory data, for potential impacts on crude oil prices.
SMA (20) Falling
RSI (14) Neutral
MACD (12, 26, 9) Slightly Rising

Closing statement: Crude oil prices experienced a slight pullback but maintained strength due to tightening U.S. inventories and fuel supplies. The warning from the Saudi energy minister against speculators raised the possibility of additional output cuts by OPEC+ members. Market participants are anticipating the upcoming OPEC+ meeting on June 4 for further insights into potential supply adjustments. Additionally, the decline in crude inventories according to API figures adds to the supportive sentiment in the market.

DAX

  • European stock markets experienced significant declines on Wednesday due to concerns over persistent U.K. inflation, indicating potential future monetary tightening, and the lack of progress in negotiations to raise the U.S. debt ceiling.
  • The German IFO Business Climate Index for May recorded a slight decrease, falling to 91.7 from April's revised figure of 93.4 (initially reported as 93), which was below market expectations of 93.
  • The stalled talks between U.S. political parties regarding the increase of the $31.4 trillion debt ceiling added to the negative sentiment in the market.
  • The DAX index in Germany exhibited a 0.87% decline, while the FTSE 100 in the U.K. and the CAC 40 in France experienced sharper falls of 1.15% and 1.59% respectively.
  • The combination of concerns over inflation and the lack of progress in debt ceiling negotiations contributed to the overall negative sentiment in European stock markets.
SMA (20) Neutral
RSI (14) Falling
MACD (12, 26, 9) Neutral

Closing statement:European stock markets faced significant declines as worries about persisting U.K. inflation and the lack of advancement in U.S. debt ceiling negotiations weighed on investor sentiment. The German IFO Business Climate Index also reflected a slight decrease, further contributing to the negative market outlook.

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