Stock markets are up, with the Nasdaq up 1.5%.

On hopes that the Fed will conclude its tightening cycle this week, US stock markets rose sharply once more yesterday. All the main US indices had good days, with the Dow rising 0.53%, the S&P rising 0.93%, and the Nasdaq once more setting the pace, closing 1.53% higher thanks to Apple Inc. reaching a record high. Both the S&P and Nasdaq reached highs not seen since April 2022. In contrast, other markets were far more muted, with Treasuries and FX trading in well-known ranges ahead of Wednesday’s FOMC meeting and tomorrow’s inflation data. Another notable example was the decline in the price of oil, with WTI falling more than 4% after a Goldman report was released with a much lower forecast for oil prices over the coming few months as supply appears to be outpacing demand despite production restrictions.

Fed and Data in Focus

Before important inflation data is released in the US tonight, investors anticipate rather quiet trading conditions today. The CPI statistic is anticipated to reflect a decreasing rise in inflation, with the monthly increase predicted to be 0.2% rather than 0.4%, down from 4.9% y/y in April to 4.1% in May. Given the sharp swing in US equity markets overnight, traders are understandably apprehensive that a topside surprise in these statistics tonight might have a significant impact on Fed policy. As of right now, the market is pricing in a 77% likelihood that the FOMC won’t change interest rates on Wednesday, but if tonight’s report reveals that US inflation is still very much alive and well, then expect those odds to drop considerably. 

What happened in the Asia Session?

The 16.9% decline in visitor arrivals to New Zealand, which exceeded the prior 1.0% decline, may have weakened the NZD because of the decline in foreign inflow.

The Australian Dollar, on the other hand, has conflicting possibilities; a surprising 0.2% increase in Westpac Consumer Sentiment may boost the AUD, but a dismal -4 in NAB Business Confidence may lower its value.

What does it mean for EUROPE & US Session?

The US dollar can decline under the tested support of around 103.30 if the US CPI numbers are lower than anticipated. The psychological level of 103.00 will be tested in this situation, and prosperous bears will try for 102.70. As an alternative, higher-than-expected consumer prices might push the USD to 104.00 since they will increase the likelihood that the Fed will keep raising interest rates.

The Dollar Index (DXY)

Key news events today

CPI m/m

CPI y/y

Core CPI m/m

What can we expect from DXY today?

According to the predicted numbers, the CPI will rise by 0.2% on a monthly basis, 4.1% on an annual basis, and 0.4% on a monthly basis for Core CPI. The CPI m/m and CPI y/y growth rates from the prior statistics were higher at 0.4% and 4.9%, respectively, while the core CPI m/m growth rate held steady at 0.4%. The effect on the USD will depend on how the actual numbers match up with the projections; a higher-than-expected CPI is likely to strengthen the dollar.

Central Bank Notes:

• The committee raised the target range for the federal funds rate to 5 to 5-1/4 percent. The U.S. banking system is sound and resilient.
• Tighter credit conditions for households and businesses may weigh on economic activity, hiring, and inflation.
• The committee is committed to returning inflation to its 2% objective
• The committee will adjust monetary policy as appropriate if risks emerge that could impede the attainment of goals
• The next meeting is on 14 June 2023

Next 24 Hours Bias

Mixed

The Pound (GBP)

Key news events today

Claimant Count Change

What can we expect from GBP today?

Claimant Count Change, which will be released soon for the UK, is expected to show a fall of 21.4K as opposed to the previous release of 46.7 K. It might be a sign of a strengthened labor market, greater economic stability, and boosted investor confidence, which could support the GBP. 

Central Bank Notes:

• The MPC of the BoE voted 7-2 to increase Bank Rate by 0.25 percentage points to 4.5%.
• The updated projections show that CPI inflation is expected to decline slightly above 1% at the two and three-year horizons, below the 2% target.
• CPI increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
• Next meeting on 22 June 2023

Next 24 Hours Bias

Weak bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

There was no significant news story that affected the CAD today. Therefore, the direction of the currency’s price will probably be affected by the data released on Thursday. Housing Starts, with a previous figure of 262K and an anticipated figure of 239K, and Manufacturing Sales m/m, with an earlier growth of 0.7% and a predicted fall of -0.2%, are the crucial figures to pay attention to. These statistics will give us information on the housing market and the manufacturing industry, which may have an impact on how the CAD performs. 

Central Bank Notes:

• The Bank of Canada increased its target for the overnight rate to 4.75%.
• Canada’s economy was more substantial than expected in the first quarter of 2023, with GDP growth of 3.1%.
• The Bank expects CPI inflation to ease to around 3% in the summer, but concerns have increased about inflation staying above the 2% target.
• The next meeting is on 12 July 2023

Next 24 Hours Bias

Mixed

Global Markets:

Asian Stock Markets: Nikkei is up 1.80%, Shanghai Composite is up 0.15%, Hang Seng is up 0.60%, ASX is up 0.23%

European equities, the DAX futures up 0.36%, CAC 40 up 0.57%, and FTSE up 0.13%.

US Stock Market: Dow Jones is up 0.56%, S&P 500 is up 0.93%, and Nasdaq 100 is up at 1.53%.  

Commodities: Gold at $1962.52 (+0.29%), Silver at $24.17 (+0.51%), Brent Oil at $72.51 (+0.96%), WTI Oil at $67.51 (+0.66%)

News & Data

• (GBP) Claimant Count Change (May) Actual –13.6K, Forecast 21.4K, Previous 46.7k at 11:30
• (EUR) German CPI (YoY) (May) Actual –0.1%, Forecast –0.1%, Forecast 0.4% at 11:30
• (USD) Core CPI (MoM) (May) Forecast 0.4%, Previous 0.4% at 18:00
• (USD) CPI (YoY) (May) Forecast 4.1%, Previous 4.9% at 18:00
• (USD) CPI (MoM) (May) Forecast 0.2%, Previous 0.4% at 0.4% at 18:00

TECHNICAL OUTLOOK

GBPUSD

A cautious upward turn in price movement is indicated by the weak positive momentum and low confidence now visible on the GBP/USD chart.

A bullish extension towards the first resistance level at 1.2575 is possible. This resistance level is important since it denotes a resistance overlap zone.

On the downside, it’s crucial to keep an eye on the initial support level at 1.2498. It provides potential price support and is at a 50% Fibonacci retracement level. Another region of support is the second support level at 1.2448, which also serves as a 38.20% Fibonacci retracement and an overlap support level.

TRADE SUGGESTION: BUY AT 1.25616, TP AT 1.26252, SL AT 1.25108

EURUSD

There is now no discernible direction in the price movement, as seen by the EUR/USD chart’s neutral momentum.

Price movement is possible between the first support level at 1.0740 and the first resistance level at 1.0822. While the first resistance level serves as an area of overlap resistance, the first support level serves as an area of overlap support. A 38.20% Fibonacci retracement is another factor supporting the initial barrier level.

Additionally, the second resistance level at 1.0846 and the second support level at 1.0672 both function as overlapped support and resistance levels.

TRADE SUGGESTION: BUY AT 1.07989, TP AT 1.08297, SL AT 1.07764

AUDUSD

The bullish momentum on the AUD/USD chart at the moment suggests that price movement is now inclined upward.

A bullish extension into the first resistance level at 0.6795 is possible. This resistance level is important since it denotes a resistance overlap zone.

The second resistance level at 0.6820, which also serves as an area of overlap resistance, lends support to the possibility of an upward advance.

The initial support level at 0.6707 serves as a level of support on the downside. It is an overlap support region, and the existence of a 23.60% Fibonacci retracement level strengthens it.

Similar to the first support level, the second level at 0.6637 serves as an overlap support region and coincides with a 38.20% Fibonacci retracement level.

TRADE SUGGESTION: BUY AT 0.67789, TP 0.67995, SL AT 0.67603

USDJPY

Currently, the USD/JPY chart shows neutral momentum, meaning that there is no discernible trend in price movement.

The initial support level at 138.80 and the first resistance level at 140.23 represent potential price ranges. These levels stand for areas of resistance and support that overlap.

Furthermore, the 50% Fibonacci retracement at 137.71, the second support level, also emphasizes its relevance as a potential area of support.

The second resistance level, which is located at 140.89, is also an area of overlap resistance, highlighting its significance as a possible level at which price may encounter opposition.

TRADE SUGGESTION: SELL AT 139.441, TP AT 138.069, SL AT 139.790

S&P 500

Bullish momentum is currently visible on the US500 chart, indicating a positive bias in price movement.

A bullish extension into the first resistance level at 4368.21 is possible. This resistance level is important because it shows an overlap in resistance, indicating a possible place where the price can see selling pressure.

The first support level at 4325.44 and the second support level at 4258.61 serve as overlap support on the downside. These levels show possible places where the price can find support during declines.

TRADE SUGGESTION: BUY AT 4340.83, TP AT 4355.90, SL AT 4329.23

WTI CRUDE OIL

The WTI chart currently displays bearish momentum, indicating a price trend toward the downside.

The price may decline below the second support level at 63.94 if it makes a bearish break below the first support level at 67.11. These levels of support are important since they show areas of overlap support. The second support level also coincides with the 127.20% Fibonacci projection, giving it even more significance.

On the upside, the initial resistance level at 70.42 functions as an overlap resistance region, which might lead to selling pressure on the price.

continued overlapping resistance is present at the second resistance level at 72.76, which may serve as a roadblock to continued upward advance.

TRADE SUGGESTION: SELL AT 67.43, TP AT 65.56, SL AT 68.98

SILVER

The silver market is currently trading in a consolidation phase, with the price trading between the support level of $22.50 and the resistance level of $23.50.

The RSI indicator is also in a neutral zone, suggesting that the market is neither overbought nor oversold.

A break above $23.50 could signal a move higher toward $24.00 and $24.50.

A break below $22.50 could signal a move lower towards $22.00 and $21.50.

Overall, the silver market is likely to remain range-bound in the near term.

TRADE SUGGESTION: BUY AT 24.224, TP AT 24.571, SL AT 23.938

BITCOIN

The neutral momentum on the BTC/USD chart at the moment suggests that there isn’t a significant directional bias in price movement.

Between the first support level at 26103.68 and the first resistance level at 26797.44, there is a chance that the price will change. These levels are crucial because they show regions of overlap between resistance and support. The fact that the first support level coincides with the 38.20% Fibonacci retracement level gives it even more significance.

The second resistance level at 27491.20 functions as an extra area of overlap resistance on the upside, possibly acting as a barrier for further upward movement.

TRADE SUGGESTION: SELL AT 26164, TP AT 25664, SL AT 26568