Solid ECN—The Swiss franc has remarkably recovered, climbing to 0.91 against the US dollar from a seven-month low of 0.92 on May 1st. This rebound was sparked by unexpectedly high inflation data, which reduced the market's expectation that the Swiss National Bank (SNB) would further relax monetary policy. In April, inflation surged to 1.4% from a low of 1% the previous month, significantly exceeding forecasts of 1.1%.
Inflation Concerns Shape Policy
The recent jump in inflation rates is noteworthy, especially since the SNB had warned that prices could be unstable due to global tensions and a relaxed stance on the franc. Although foreign currency reserves have increased, the rapid inflation has fueled worries about potential ongoing price rises. These concerns have led to speculation about whether the SNB will reduce interest rates again in June.
Dollar's Influence on the Franc
Additionally, the franc's strength was bolstered by a weakening US dollar after the Federal Reserve avoided strong indications of future rate hikes. This backdrop provides a complex landscape for forex traders and investors, suggesting a cautious strategy approach.
Solid ECN – The EURUSD currency pair pulled back from last week's trading session's 61.8% Fibonacci support level. As of posting, the pair trades around the 1.078 mark, clinging to the descending trendline on the 4-hour chart.
Technical indicators suggest a bullish trend. However, for the uptrend to continue, the bulls must close and stabilize the price above 1.079. If this scenario comes into play, the European currency will likely gain more ground against the U.S. dollar, with 1.081 as the initial target, followed by the 1.083 mark.
Conversely, the downtrend will likely continue if the EURUSD price dips below the 1.075 minor support. In this case, bears would test the 1.073 level, followed by the 50% Fibonacci support.
Solid ECN – Gold has declined from $2,378 against the U.S. dollar on May 10 and is currently trading around $2,340. With technical indicators signaling a bearish trend, the dip is likely to extend to the EMA 50, a level supported by the lower line of the bullish flag.
Given the primary bullish trend, the EMA 50 can provide a good opportunity for traders and investors to join the bull market.
However, if the XAUUSD price dips below the 38.2% Fibonacci level, the downtrend will likely extend to $2,306, followed by the 50% Fibonacci support level.
Solid ECN – The Euro has strengthened above $1.078, reaching a five-week high. This rise comes as investors focus on important US and Euro Area economic data. Key figures like US inflation, first-quarter GDP, and employment statistics are closely monitored, as they could influence future monetary policies.
ECB and Fed Rate Expectations
The European Central Bank (ECB) is expected to start cutting interest rates in June, with a projected reduction of around 70 basis points this year. In contrast, the Federal Reserve will likely delay its rate cuts until September, with anticipated decreases of less than 45 basis points. These differing timelines reflect each central bank's response to their respective economic conditions.
Bank of England's Potential Moves
The Bank of England maintained its interest rates unchanged in May. However, a rate cut during the summer is possible. This potential move signals the bank's readiness to adjust its policy in response to economic developments.
Solid ECN—Silver trades an uptrend above the 50% Fibonacci retracement level. The XAG/USD pair is currently experiencing a pullback from the $28.7 resistance, trading at about $28.3.
Silver's primary trend remains bullish if the price stays above EMA 50 and the 50% Fibonacci level. However, the awesome oscillator shows divergence, which could cause the trend to reverse or step into a consolidation phase.
From a technical standpoint, if the price falls below the ascending trendline, the decline that began at $28.7 can extend to EMA 50 and then to the 38.2% Fibonacci level.
Conversely, bulls must push the market to close above the $28.7 resistance for the uptrend to resume.
Solid ECN – The GBP/USD pair is testing the upper band of the bearish trend line on the 4-hour chart, which coincides with the 78.6% Fibonacci retracement level. As of now, the pair trades at approximately 1.258 as the uptrend cools down.
From a technical perspective, if the price remains below the descending trend line, it will likely target 1.256, followed by the 50% Fibonacci retracement level.
Conversely, if buying pressure escalates and the pound sterling rises above 1.259, the bullish wave that began on May 9 will likely target the 1.263 resistance level.
Solid ECN—WTI crude futures climbed to $79 per barrel on Wednesday, helping to recover some losses from the previous day. The rise was mainly due to wildfires in Canada threatening the country's oil sands industry, which produces 3.3 million barrels daily.
Oil Prices Boosted by US Inventory Drop
Oil prices were also supported by US industry data showing a drop in crude inventories by 3.104 million barrels last week. This decline was more significant than the expected 1.35 million barrel draw. The US EIA will release official data later today.
OPEC Exceeds Limits But Remains Optimistic
Despite an OPEC+ report revealing members exceeded production limits by 568,000 barrels per day last month, OPEC remains positive about future demand. They project global oil demand to rise by 2.25 million barrels per day in 2024 and 1.85 million in 2025.
Solid ECN—In today's trading session, the AUDUSD broke through the 0.665 resistance, and bulls are working to stabilize the price above this key level.
Technical indicators signal bullish trends, suggesting the uptrend is likely to continue. If the Australian dollar sustains above the 50 EMA, the uptrend could persist, with the next bullish target set at the 0.676 mark.
Conversely, falling below the 50 EMA would invalidate the current bullish technical analysis.
Solid ECN – The Euro climbed above $1.085, marking its highest point in five weeks. This rise comes as traders anticipate changes in monetary policies between the US and Europe.
The European Central Bank (ECB) is expected to cut interest rates at its meeting on June 6. Market predictions suggest a potential decrease of around 70 basis points over the year. This expectation has contributed to the Euro's recent strength.
There is growing speculation in the US that the Federal Reserve will cut rates this year. This follows a slowdown in core inflation in April, the first in six months. If the Fed does cut rates, it could further influence forex markets.
Recent GDP data showed that the Euro Area has exited recession in the first quarter. The European Commission's latest forecasts indicate a steady economic path ahead. This positive outlook supports the Euro's strength and adds confidence for investors.
The USDJPY traded at about 155.3 in today's trading session, which is inside the wedge pattern on the daily chart. The upper trendline acts as resistance, which the bulls are testing it. % 50 Fibonacci backs this level.
If the price breaks above the descending trendline and maintains momentum, we could see a retest of the immediate resistance at 157.0. A successful breakout above this level could target the next resistance at 158.4.
Bearish Scenario
If the price fails to break above the descending triangle and falls below the ascending trendline, we could see a decline toward the immediate support at 151.8.
