The Weekend Sees the Stock Markets Take a Breather.

Introduction

In the wake of a flurry of central bank announcements and economic data releases, international stock markets experienced a remarkable surge last week, particularly in the United States. However, as the weekend approached, these markets showed signs of slowing down and pulled back from their elevated levels. The Dow Jones ended the day down 0.32%, the S&P 500 down 0.37%, and the Nasdaq faced a larger decline, closing the day down 0.68%. Nevertheless, this slight retreat was not entirely unexpected, considering the impressive performance witnessed throughout the week. Moreover, the benchmark 10-year US treasury yield rose by 4 basis points (bps) to reach 3.77% on Friday, and the US dollar managed to regain some lost ground from the FOMC meeting, trading 0.2% higher over the weekend. Additionally, oil prices saw an increase, with WTI up by 1.6% and Brent concluding the day with a gain of 1.2%.

Despite Hawkish Central Banks, the Markets Continue to Boom

Amidst warnings of imminent rate hikes by central banks worldwide, the stock markets have delivered a resounding message of optimism to investors in recent weeks. In light of expectations that central banks will gradually ease their tight monetary policies, which have been in place since the COVID-19 pandemic, stock markets, and risk assets have continued to soar to new heights. Recent weeks witnessed unexpected rate hikes from the Bank of Canada and the Reserve Bank of Australia. Furthermore, the Federal Reserve’s decision to maintain its current policy stance was accompanied by indications of future rate increases. While some investors anticipate storm clouds on the horizon as we enter the second half of the year, concerns such as inverted yield curves, which traditionally signal an impending recession, have yet to impact the market. Consequently, the market appears more divided than ever regarding the future direction of global financial markets, leading to increased volatility. It’s an intriguing space to observe.

What Happened in the US Session?

U.S. Core Retail Sales Show Modest Decline

U.S. Core Retail Sales experienced a slight drop of 0.1%, down from the previous figure of 0.4%. Although this decline may be seen as a cause for concern, other indicators paint a more positive picture.

Empire State Industrial Index Surpasses Expectations

The Empire State Industrial Index, which rose from -31.8 to 6.6, significantly outperformed expectations, suggesting a robust recovery in the industrial sector. This increase indicates a favorable outlook for the overall economy.

Modest Increase in US Retail Sales

US retail sales witnessed a modest increase of 0.3%, surpassing the projected decrease of -0.2%. This growth suggests that consumer spending remains relatively strong, supporting the overall stability of the US economy.

Stable Job Market

The number of jobless claims in the US remained at 262K, indicating a stable job market. While the figures do not show rapid improvement, they suggest a steady employment situation.

What Does It Mean for the Asian Session?

Bank of Japan’s Monetary Policy and Inflation Concerns

The Bank of Japan (BOJ) continues to implement its ultra-loose monetary policy aimed at promoting economic growth. The BOJ’s policy rate remains at -0.10%, consistent with previous and projected rates. However, there are concerns that the core Consumer Price Index might slow down in the coming months, raising fears of low inflation. Consequently, the Japanese Yen (JPY) may experience fluctuations in both appreciation and depreciation, depending on the BOJ’s decision to adjust its monetary policy.

Gold (XAU)

Key News Events Today

No major news events are anticipated in the gold market today.

What Can We Expect from Gold Today?

The recent decline in gold prices can be attributed to concerns about a global recession. As the Federal Reserve aggressively raises interest rates to combat inflation, apprehensions regarding a significant economic slowdown have arisen.

Next 24 Hours Bias

The outlook for gold in the next 24 hours is weakly bearish, implying a downward trend.

Oil

Key News Events Today

No specific news events are anticipated in the oil market today.

What Can We Expect from Oil Today?

Oil prices are expected to remain volatile as market participants await further clarity on the global economic outlook and the pace of demand growth. However, there are indications that demand for oil remains robust. For instance, according to the US Energy Information Administration (EIA), US crude oil inventories have declined for three consecutive weeks, with a decrease of 2.8 million barrels reported in the week ending June 10. Additionally, the OPEC+ meeting scheduled for today, where discussions on oil production policy will take place, could potentially impact oil prices.

Next 24 Hours Bias

The next 24 hours may exhibit a weak bearish bias for the oil market, suggesting a potential downward trajectory.

The Japanese Yen (JPY)

Key News Events Today

No major news events are expected regarding the Japanese yen (JPY) today.

What Can We Expect from JPY Today?

Given the Bank of Japan’s (BOJ) ongoing monetary easing policies, the Japanese yen (JPY) is projected to remain weak against the US dollar (USD) today. The BOJ has committed to maintaining ultra-low interest rates and purchasing Japanese government bonds (JGBs) to stimulate the economy. Consequently, the increased supply of JPY has contributed to the currency’s depreciation.

Central Bank Notes

• The Bank of Japan will continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control to achieve the 2% price stability target.
• Japan’s economy is expected to recover gradually.
• The bank is prepared to implement additional easing measures if necessary.
• The next meeting is scheduled for June 20, 2023.

Next 24 Hours Bias

The next 24 hours may exhibit a mixed bias for the Japanese yen (JPY).

Global Markets

Asian Stock Markets

• Nikkei: Down by 1.00%
• Shanghai Composite: Down by 0.54%
• Hang Seng: Down by 0.64%
• ASX: Up by 0.60%

European Equities

• DAX Futures: Down by 0.48%
• CAC 40: Down by 0.45%
• FTSE: Down by 0.23%

US Stock Market

• Dow Jones: Down by 0.32%
• S&P 500: Down by 0.37%
• Nasdaq 100: Down by 0.68%

Commodities

• Gold: $1953.05 (-0.84%)
• Silver: $24.99 (-0.77%)
• Brent Oil: $76.45 (-0.21%)
• WTI Oil: $71.75 (-0.21%)

News & Data

• CAD: RMPI (MoM) (May) Forecast 1.7%, Previous 2.9% at 18:00
• ECB’s Lane Speaks at 16:30

GBPUSD

Bearish Momentum Indicates Negative Market Trend

The GBP/USD chart is currently experiencing a strong bearish momentum, signaling a negative market trend. Traders and investors should take note of the possibility of a bearish reaction at the first resistance level of 1.2845. Such a reaction could lead to a subsequent slide toward the first support level at 1.2777. It is crucial to remain aware of this potential development.

Key Levels and Significance

The first support level at 1.2777 holds particular importance as it acts as a pullback support. This level may attract buyers and contribute to market stabilization. Conversely, the first resistance level at 1.2845 serves as a swing-high resistance and a potential barrier to price increases. Adding to its significance as a resistance region is the presence of the 61.80% Fibonacci Projection, which coincides with the second resistance level at 1.29718.

Trade Suggestion: Sell at 1.2805, Take Profit at 1.2767, Stop Loss at 1.2840

To capitalize on the bearish market sentiment, a trade suggestion is to sell GBP/USD at 1.2805. Set the take profit level at 1.2767 and the stop loss level at 1.2840. This strategy aims to benefit from the expected downward movement in the market.

EURUSD

Positive Momentum Indicates Bullish Market Trend

The EUR/USD chart displays positive momentum, suggesting a bullish market trend. The price’s position above an important ascending trend line indicates the potential for further upward movement and sustains the current momentum.

Support and Resistance Levels

It is likely that the price may experience a temporary drop toward the first support level at 1.09039 before rebounding and moving upward toward the first resistance level at 1.09518. Noteworthy support levels include the first support level at 1.09039, which acts as pullback support, and the second support level at 1.08476, coinciding with the 38.20% Fibonacci Retracement.

Resistance and Potential Roadblocks

On the upside, an overlap resistance is observed at 1.09436, indicating a potential roadblock for upward price movements. Additionally, the second resistance level at 1.10109 aligns with the 78.60% Fibonacci Retracement, further reinforcing its significance.

Trade Suggestion: Buy at 1.09175, Take Profit at 1.09468, Stop Loss at 1.09044

To take advantage of the bullish market trend, consider buying EUR/USD at 1.09175. Set the take profit level at 1.09468 and the stop loss level at 1.09044. This trade suggestion aims to capitalize on the anticipated upward movement.

AUDUSD

Bearish Momentum Indicates Downward Market Trend

The AUD/USD chart currently exhibits bearish momentum, indicating a downward market trend. Traders should be mindful of the possibility of a bearish response at the first resistance level of 0.69302, which could lead to a slide toward the first support level of 0.68458.

Support Levels and Overlap Support

The presence of the 23.60% Fibonacci Retracement level provides evidence that the first support level at 0.68538 is overlap support. Additionally, the second support level at 0.68176, corresponding to the 38.20% Fibonacci Retracement, also acts as an overlap support.

Resistance Levels and Swing High Resistance

On the upside, the first resistance level at 0.69302 represents a swing high resistance. Furthermore, the second resistance level at 0.69534 aligns with the 127.20% Fibonacci Extension, further reinforcing its significance.

Trade Suggestion: Sell at 0.68458, Take Profit at 0.67813, Stop Loss at 0.69032

To capitalize on the bearish market trend, consider selling AUD/USD at 0.68458. Set the take profit level at 0.67813 and the stop loss level at 0.69032. This trade suggestion aims to benefit from the expected downward movement in the market.

USDJPY

Bullish Momentum Indicates Upward Market Trend

The USD/JPY chart currently shows bullish momentum, indicating an upward market trend. Traders and investors should consider the potential for a bullish continuation toward the first resistance level at 142.20.

Support Levels and Entry Points

The initial support level at 141.41 is noted as overlap support, highlighting its importance as a possible entry point for buyers. Additionally, the second support level at 140.63 serves as a multi-swing low support, further emphasizing its significance.

Swing High Resistance and Future Barrier

To the upside, the first resistance level at 142.20 represents a swing-high resistance, which could serve as a barrier to future price increases.

Trade Suggestion: Buy at 141.980, Take Profit at 142.266, Stop Loss at 141.773

To benefit from the upward market trend, consider buying USD/JPY at 141.980. Set the take profit level at 142.266 and the stop loss level at 141.773. This trade suggestion aims to capitalize on the anticipated upward movement in the market.

DOW JONES

Bullish Momentum Indicates Rising Market Trend

The DJ30 chart currently displays bullish momentum, indicating a rising market trend. Investors should take into account the likelihood of a strong rebound at the first support level of 34153.44, potentially leading to a rise toward the first resistance level of 34582.74.

Pullback Support and Fibonacci Projection

The first support level at 34153.44 serves as pullback support and is also the 61.80% Fibonacci Projection level. Additionally, the second support level around 33641.57 acts as a pullback support, further providing market stability.

Swing High Resistance and Fibonacci Confluence

On the upside, the first resistance level at 34582.74 represents a swing high resistance. The occurrence of the 127.20% Fibonacci Extension and the 78.60% Fibonacci Projection at this level further supports its significance. The second resistance level at 35210.19 also functions as a 100% Fibonacci projection.

Trade Suggestion: Buy at 34291.43, Take Profit at 34366.20, Stop Loss at 34229.57

To take advantage of the bullish market trend, consider buying DOW JONES at 34291.43. Set the take profit level at 34366.20 and the stop loss level at 34229.57. This trade suggestion aims to benefit from the expected upward movement in the market.

WTI CRUDE OIL

Bearish Momentum Indicates Market Downturn

The WTI chart currently shows bearish momentum, indicating a market downturn. The reasons for this surge are currently unknown.

Potential Bearish Reaction and Support Levels

There is a possibility of a bearish reaction at the first resistance level of 71.38, which could result in a slide toward the first support level of 66.83. The second support level at 63.80, often referred to as multi-swing low support, provides additional market support.

Overlap Resistance Zone

On the upside, the first resistance level at 71.38 represents an overlap resistance zone. The second resistance level at 76.49 also acts as a barrier to upward price movements.

Trade Suggestion: Sell at 76.15, Take Profit at 75.61, Stop Loss at 76.69

To capitalize on the bearish market trend, consider selling WTI CRUDE OIL at 76.15. Set the take profit level at 75.61 and the stop loss level at 76.69. This trade suggestion aims to benefit from the expected downward movement in the market.

GOLD

Bearish Momentum Indicates a Broad Downward Tendency

The XAU/USD chart’s current movement within a descending channel suggests a bearish momentum, indicating a broad downward tendency in the market.

Resistance Levels and Selling Pressure

A negative response to the first resistance level at 2017.37 has the potential to reverse the price trend and push it further downwards toward the first support level at 1956.71. Additional support can be identified at the second support level at 1914.16. These levels align with previous price peaks and offer potential entry points for buyers.

Multi-Swing High Resistance and Overlap Resistance

On the other hand, the initial resistance level at 1966.59 acts as a significant roadblock for upward price movement. It represents a multi-swing high resistance, indicating significant selling pressure at that level. Further emphasizing its significance, the second resistance level at 2080.19 also acts as an overlap resistance.

Trade Suggestion: Sell at 1949.53, Take Profit at 1936.41, Stop Loss at 1959.24

To take advantage of the bearish market trend, consider selling GOLD at 1949.53. Set the take profit level at 1936.41 and the stop loss level at 1959.24. This trade suggestion aims to capitalize on the expected downward movement in the market.

ETHEREUM

Bearish Momentum Points to Downward Market Trend

The ETH/USD chart currently exhibits bearish momentum, indicating a downward market trend. This is further supported by the price position below the bearish Ichi Moku cloud.

Potential Bearish Reaction and Support Levels

There is a risk of a negative reaction at the first resistance level of 1798.35, which could lead to a slide toward the first support level of 1711.68. Important support levels include the first support level at 1711.68, identified as a swing low support, and the second support level at 1578.06, recognized as an overlap support.

Pullback Barrier and Overlap Resistance

On the upside, the first resistance level at 1798.35 functions as a pullback barrier. The second resistance level at 1808.2 represents a zone of overlap resistance that coincides with the 50% Fibonacci Retracement level.

Trade Suggestion: Sell at 1713.2, Take Profit at 1679.3, Stop Loss at 1740.8

To benefit from the downward market trend, consider selling ETHEREUM at 1713.2. Set the take profit level at 1679.3 and the stop loss level at 1740.8. This trade suggestion aims to capitalize on the expected downward movement in the market.

FAQs

1. What does the technical outlook indicate for GBP/USD?

The technical outlook for GBP/USD suggests a bearish momentum, indicating a negative market trend. Traders should be cautious of a potential bearish reaction at the first resistance level of 1.2845, which could lead to a subsequent slide toward the first support level at 1.2777.

2. Is the market trend for EUR/USD bullish or bearish?

The market trend for EUR/USD is currently bullish, with positive momentum observed on the chart. The price’s position above an ascending trend line suggests the potential for further upward movement.

3. What trade suggestion is provided for AUD/USD?

The trade suggestion for AUD/USD is to sell at 0.68458, with a take profit level at 0.67813 and a stop loss level at 0.69032. This trade suggestion aims to take advantage of the bearish momentum and the expected downward movement in the market.

4. Is the technical outlook for USD/JPY bullish or bearish?

The technical outlook for USD/JPY indicates a bullish momentum, suggesting an upward market trend. Traders should consider the potential for a bullish continuation towards the first resistance level at 142.20.

5. What is the trade suggestion for WTI Crude Oil?

The trade suggestion for WTI Crude Oil is to sell at 76.15, with a take profit level at 75.61 and a stop loss level at 76.69. This trade suggestion aims to capitalize on the bearish market trend and the expected downward movement in the market.

Conclusion

In summary, global stock markets experienced a positive week, although they took a slight dip on Friday after the significant gains. Central banks’ hawkish signals regarding potential rate increases have not dampened investor optimism. However, concerns about recession indicators, such as inverted yield curves, remain on the horizon. The market is currently divided on the future direction of the economy, leading to increased volatility. Various economic indicators and events, including retail sales data, the Bank of Japan’s monetary policy, gold prices, oil market dynamics, and upcoming OPEC+ discussions, will continue to shape market trends. It is important for investors to stay informed and monitor these factors to make well-informed decisions.