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EUR/USD (4 Hours)
EUR/USD Hits Multi-Month High but Retreats as US Dollar Recovers
The EUR/USD pair reached its highest level in months at 1.1011, but failed to sustain above the 1.1000 mark and corrected to around 1.0950. The US Dollar regained strength, causing the pair to decline. Expectations surrounding the European Central Bank (ECB) were overshadowed by Federal Reserve Chair Powell’s testimony, which hinted at the likelihood of more rate hikes.
Analysts are currently discussing the ECB’s final interest rate decision. Some predict a single hike in July to 3.75%, while others suggest an additional hike in September, raising the rate to 4%. These actions will depend on various factors, primarily the Consumer Price Index.
The upcoming release of the flash Purchasing Managers’ Index (PMI) for June on Friday will hold significance. Projections indicate a potential increase in German Manufacturing PMI to 43.5, while the Service PMI is expected to decline from 57.2 to 56.2. The Eurozone Manufacturing PMI is anticipated to remain at 44.8, with the Service PMI predicted to decrease from 55.1 to 54.5.
On Thursday, US yields rose, providing support to the US Dollar. After three days of decline, the US Dollar Index climbed back above the 102.00 level. Chair Powell reiterated that interest rates are likely to rise in the coming months, with the Federal Reserve’s decision relying on a balance between economic performance and inflation indicators.
Thursday’s data revealed that Initial Jobless Claims reached their highest level since October 2021, but there was a positive note with an increase in Existing Home Sales. The June PMI figures, to be released on Friday, will be closely monitored.
According to technical analysis, the EUR/USD pair experienced a correction move on Thursday and was able to break inside the support and resistance levels and move back to the middle band of the Bollinger Bands. The Relative Strength Index (RSI) is currently at 53, indicating that the EUR/USD is back in a neutral stance for the last day of the week.
Resistance: 1.0965, 1.1003
Support: 1.0920, 1.0890
XAU/USD (4 Hours)
US Dollar Appreciates as XAU/USD Hits Lowest Level in Months
The US Dollar strengthened, causing XAU/USD to reach its lowest point since mid-March. The currency pair, currently trading slightly above the $1,912.78 mark, has declined for four consecutive days. Despite some initial struggles, the USD remained robust, especially after Federal Reserve Chairman Jerome Powell’s testimony on the Semi-Annual Monetary Policy Report before the Senate Banking Committee.
Powell indicated that the committee largely supports one or two more rate hikes, while rate cuts are not expected. He acknowledged the persistent nature of inflation but expressed the desire for confidence in its downward trajectory.
Simultaneously, disappointing macroeconomic data in the United States added to concerns and exerted additional pressure on high-yield stocks. Initial Jobless Claims for the week ending June 16 exceeded expectations at 264K, while the Q1 Current Account showed a deficit of $219.3 billion.
Additionally, the May Chicago Fed National Activity Index unexpectedly declined to -0.15, and May Existing Home Sales saw a modest 0.2% increase, surpassing the projected -0.6% decrease.
According to technical analysis, the XAU/USD pair is moving lower and created a push to the lower band of the Bollinger Bands. There is potential for a slight upward movement, aiming to reach the middle band. Currently, the Relative Strength Index (RSI) is at 26, indicating that the XAU/USD is in oversold stance.
Resistance: $1,930, $1,950
Support: $1,912, $1,885
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