EURUSD
- EUR/USD fell 0.23% to 1.0725, nearing a two-month low, as the German economy contracted slightly in Q1 2023, entering a recession.
- European Central Bank officials, including Governing Council member Bostjan Vasle, have hinted at further interest rate increases to combat inflation.
- The U.S. dollar strengthened in Europe, reaching a two-month high, amid increasing concerns of a U.S. default as Fitch threatens a rating downgrade.
- Minutes from the recent Fed meeting revealed a division among officials regarding the need for additional interest rate hikes to address inflation, while the labour market and price pressures have been more resilient than anticipated.
- Market sentiment towards EUR/USD remains bearish as economic indicators and central bank actions influence the currency pair.
| SMA (20) | Falling |  |
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| RSI (14) | Falling | |
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| MACD (12, 26, 9) | Falling | |
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Closing statement:The EUR/USD pair faced downward pressure, driven by the German economy's contraction and diverging monetary policy stances between the ECB and the Fed. Traders will continue to monitor economic data releases and central bank communications for further insights into the future direction of the currency pair.
GBPUSD
- GBP/USD edged lower to 1.2366, remaining close to its lowest level since April 3, with key support levels at 1.2307. The next resistance levels to watch are 1.2461 and 1.2529.
- The DXY, which tracks the dollar against a basket of currencies, climbed 0.15% to 104.050, reaching its highest level since mid-March.
- The dollar has been strengthened by a more hawkish stance on the Federal Reserve's monetary policy, supported by the resilience of the U.S. economy amid previous tightening measures.
- Market participants will be focusing on upcoming data releases, including U.S. weekly jobless claims and the second estimate of Q1 U.S. GDP.
- The current market dynamics are placing downward pressure on GBP/USD, influenced by the strength of the U.S. dollar and potential economic data outcomes.
| SMA (20) | Neutral | |||
| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement:GBP/USD continued its downward trend, hovering near recent lows, as the U.S. dollar gained strength and the Federal Reserve's monetary policy outlook remained hawkish. Traders will closely monitor upcoming economic data for further insights into the currency pair's direction.
GOLD
- Gold prices remained near two-month lows as concerns over raising the U.S. debt limit weighed on market sentiment. Copper prices also declined due to worries about economic growth and weakened demand outlook.
- The U.S. dollar, acting as a safe haven, benefited from the lack of progress in debt ceiling negotiations. The approaching early-June deadline for potential funding issues added to market unease, leading ratings agency Fitch to place the United States' "AAA" rating on watch for a possible downgrade.
- The uncertainty surrounding the debt ceiling and the rating watch heightened global market jitters, impacting various asset classes.
- Surprisingly, gold saw limited demand as a safe haven, with traders favouring the U.S. dollar instead.
- The ongoing market volatility and the interplay between gold, the U.S. dollar, and the debt ceiling negotiations will be key factors to monitor moving forward.
Closing statement: Gold prices remained subdued near two-month lows as market concerns over the U.S. debt limit persisted. The U.S. dollar continued to benefit from its safe haven status, while the lack of safe haven demand for gold reflected the preference for the greenback. Traders will closely observe developments in the debt ceiling negotiations and their impact on gold and other financial markets.
CRUDE OIL
- Crude oil prices experienced a slight decline in Asian trade, following three consecutive days of gains, due to mounting pressure from a strong dollar and ongoing uncertainty surrounding the U.S. debt ceiling negotiations approaching the June deadline.
- Profit-taking activities contributed to the decline after crude prices surged to three-week highs in the previous session. The rally was largely driven by expectations of reduced U.S. supplies as the summer season, typically characterized by increased travel, approaches.
- Prices received a boost from a warning issued by the Saudi Arabian energy minister against shorting oil, adding to market sentiment.
- The U.S. Energy Information Administration reported a significant drop of 12.5 million barrels in crude oil inventories for the week ending May 19, signalling potential supply tightness.
- Russian Deputy Prime Minister Alexander Novak stated that he anticipates no new measures from the OPEC+ group of oil producers at their meeting in Vienna on June 4, according to Russian media. This comes after the group implemented substantial output cuts earlier this year.
| SMA (20) | Slightly Falling | |
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| RSI (14) | Slightly Falling | |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Crude oil prices experienced a modest decline amid pressure from a stronger dollar and ongoing uncertainty surrounding the U.S. debt ceiling. Profit-taking activities and positive inventory data contributed to the market dynamics. Traders will continue to monitor the developments in the debt ceiling negotiations, global supply dynamics, and upcoming OPEC+ meeting for potential impacts on crude oil prices.
DAX
- European stock markets faced a retreat on Thursday following the release of data indicating that Germany, the largest economy in the region, entered a recession in the first quarter of the year.
- The DAX index in Germany experienced a further decline of 0.41%, while the FTSE 100 in the UK and the CAC 40 in France also fell by 0.24% and 0.36%, respectively.
- The data revealed a contraction in German output, with a 0.3% decline in the first quarter compared to the previous three months, following a 0.5% drop in the previous quarter. This points to a winter recession impacting Europe's primary growth driver.
- The June GfK consumer sentiment index indicated persistent weakness in German sentiment, with a marginal improvement to -24.2 in June from -25.7 in the previous month.
- Bundesbank head Joachim Nagel and ECB chief economist Philip Lane are scheduled to speak later, and their remarks are expected to be closely analysed by market participants.
| SMA (20) | Neutral | ||
| RSI (14) | Falling | |
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| MACD (12, 26, 9) | Slightly Falling | |
Closing statement:European stock markets, including the DAX40, faced a decline after Germany slipped into recession, highlighting challenges in the region's economic recovery. Weak consumer sentiment and cautious market sentiment are additional factors impacting the market. Traders will closely monitor upcoming speeches by Bundesbank and ECB officials for potential insights into the economic outlook and policy implications.