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• Gold is under pressure while below the daily trendline but bulls eye a break higher.
• Bears eye $1,930s to open risks of a bearish extension.

Gold prices rose for a third-straight session posting a minor gain on Friday although we are at a critical resistance area on the daily charts as the following will illustrate.

From a top-down perspective, there are mixed outlooks.

Gold monthly chart

The monthly chart is bearish and bears eye the 61.8% Fibonacci target.

Bulls, however, might be encouraged by the neckline of the M-fibonacci that is yet to be tapped where the 38.2% Fibos comes in. 

Gold daily chart

On the other hand, there are prospects of a move lower while the price is on the front side of the bearish trendline on the daily chart.

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• USD/JPY surges to a YTD high of 141.91, though failure to surpass 142.00 could trigger a sell-off.
• The rising wedge pattern sparks uncertainty as USD/JPY nears key resistance.
• Japanese FX intervention may influence future USD/JPY direction.

USD/JPY soared more than 1% on Friday due to safe-haven flows and a jump in US Treasury bond yields. On its way north, the USD/JPY reached a new year-to-date (YTD) high of 141.91 after bouncing off daily lows of 139.85. At the time of writing, the USD/JPY is exchanging hands at 141.85.

USD/JPY Price Analysis: Technical outlook

USD/JPY finished the week with a higher tone but facing solid resistance, as the daily chart shows. The major has been trading within a rising wedge, and the USD/JPY closed nearby the top-trendline of the pattern at around 141.86. Failure to crack resistance and push prices above 142.00 would expose the USD/JPY to selling pressure. In addition, Japanese authorities’ language interventions in the FX markets could weigh on the pair and open the door for a correction.

With the USD/JPY’s path of least resistance being upwards, the pair’s first ceiling level would be 142.00. Break above will expose the November 22 high at 142.24, ahead of reaching 143.00. Conversely, the USD/JPY could dive to May’s 29 high turned support at 140.92 before dropping to the 20-day Exponential Moving Average (EMA) at 139.40.

USD/JPY Price Action – Daily chart

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• NZD/USD traded neutral at the 0.6230 area on Friday but set a 1.70% weekly gain.
• Hawkish Fed speakers and upbeat UoM data gave the USD momentum.
• Rising US bond yields limited the Greenback’s traction.

The NZD/USD traded stable at the 0.6210 – 0.6245 range at the end of the week, holding to a 170 pip weekly gain. In that sense, hawkish Federal Reserve (Fed) speakers lifted the US bond yields while upbeat consumer confidence data from the University of Michigan gave the Greenback an additional boost. On the NZD’s side, now relevant economic data was released, and the Kiwi’s gains seem to be capped by the confirmation of New Zealand’s economy entering a recession following Gross Domestic Product (GDP) on Wednesday. 

US bond yields made the US Dollar hold its ground

On Wednesday, Fed Chair Powell stated that a rate-hike pause was needed in order to assess additional information and its implications on monetary policy, while the dot plots showed that members foresee an additional 50 basis points tightening for the rest of 2023. In that sense, as stocks rallied through Thursday, investors seemed not to believe the Fed, so speakers were today on the wires supporting the hawkish case. 

That being said, Fed’s Christopher Waller expressed his concerns regarding the limited advancement in core inflation and indicated the potential need for additional hikes. Later, Fed  Thomas Barkin stated that he is open to taking further action if the data justifies it. As a reaction, shorter-term bond yields rose across the board on Friday. The 10-year bond yield rose to 3.76%, while the 2-year yield increased to 4.73% and the 5-year to 4.00%, respectively, with the 2-year rate leading the way showing a 2% increase and giving support to the USD.

In addition, the University of Michigan (UoM) released its  Consumer Sentiment Index for June, which exceeded predictions, reaching 63.9. This indicates a rise in consumer confidence compared to the previous reading of 59.2. Furthermore, the five-year Consumer Inflation Expectation declined from the expected 3.1% to 3%, with these encouraging figures also contributing to the Greenback holding its ground.

NZD/USD Levels to watch

Both the weekly and daily chart suggest a bullish outlook for the NZD. On the weekly chart, the pair consolidates a third-consecutive advance.Out of the last seven days, the Kiwi tallied gains in six of them. In addition, both the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest that the buyers have the upperhand.

In case of correcting to the downside, immediate support is seen at the 100-day Simple Moving Average (SMA) at 0.6218 followed by the 0.6200 psychological mark and the 200-day SMA at 0.6150. On the other hand, resistances line up at 0.6250 followed by 0.6300 (May 12 high) and the 0.62320 area.

NZD/USD Daily chart

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• EUR/USD bulls eye higher highs but a correction could be on the cards. 
• Bears eye a correction to test trendline support.

The euro surged into the 1.0970 mark vs. the US Dollar on Friday, reaching its strongest level since May, following the European Central Bank’s decision to raise interest rates for the eighth consecutive time earlier in the week. There was also a signal that future rate hikes were on the table, leaving scope for higher highs in the pair:

EUR/USD weekly chart

The market has run into the weekly neckline of the M-formation. This leaves prospects of a correction but it has been a solid drive higher, so there is momentum in this bullish impulse and we could be headed for higher highs still. 

EUR/USD daily chart

We have possible stops above the swing highs that have been left intact, so far. Before a move higher into them, a drive to the downside could be in order first. This brings the 38.2% Fibonacci of the bullish impulse on the daily chart into focus and trendline support. 

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Inflation in the US is well above target and the labor market remains very tight, the US Federal Reserve’s recently published monetary policy report to Congress read, ahead of Chairman Jerome Powell’s Capitol Hill testimony next week, per Reuters.

Key takeaways

“Bringing inflation down likely to require a period of below-trend growh, some softening of labor market conditions.”

“Financial conditions have tightened further since January.”

“Some indicators of future business defaults are somewhat elevated.”

“Several major foreign central banks continued tightening, but also emphasized need to be cautious given lags and uncertainty.”

“Core services ex-housing inflation has not shown signs of easing.”

“Slowing inflation may depend in part on further easing of tight labor market.”

“Outlook for funds rate is subject to considerable uncertainty.”

“Will adjust pace of balance sheet contraction if needed.”

“Bank credit conditions have tightened further since March.”

“March banking system turmoil reportedly left an imprint on bank lending conditions, especially for mid-sized and small banks.”

Market reaction

The US Dollar Index clings to modest recovery gains near 102.40 after this report.

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• USD/CHF is expected to resume its downside journey below 0.8900 amid an upbeat market mood.
• The USD Index is facing the heat as investors are expecting that the Fed might raise interest rates for once only.
• SNB Jordan believes that this is no better waiting for inflation to increase first.

The USD/CHF pair is demonstrating topsy-turvy moves above the round-level cushion of 0.8900 in the European session. The Swiss Franc asset looks delicate above the aforementioned support as the appeal for the US Dollar Index (DXY) has weakened due to the cheerful market mood.

S&P500 futures are trading in positive territory after recovering losses generated in the Asian session. The risk-sensitive assets have hogged the limelight as investors are hoping that the Federal Reserve (Fed) might not stand by its promise of two more rate hikes due to the worsening economic outlook.

US labor market conditions are easing at a decent pace as initial jobless claims are landing higher than expectations consistently from the past four weeks. Factory activity is in a contraction phase for the past seven months and the service sector is showing a mild expansion. Apart from them, factory gate prices have softened dramatically as the demand for durables is facing the heat of high inflation.

This would sharply impact the USD Index and its broader outlook. Economists at TD Securities cited we continue to think that inflation matters more than growth, showing that policymakers won’t actually push back on growth if it accompanies further disinflation. That keeps us biased to fade USD rallies ahead of the July meeting unless we start to see a clear string of upside US data surprises.

On the Swiss Franc front, investors are shifting their focus toward the interest rate decision by the Swiss National Bank (SNB), which will be announced next week. SNB Chairman Thomas J. Jordan believes that this is no better waiting for inflation to increase first. So a hawkish stance is widely anticipated from the SNB.

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• USD/MXN has displayed a recovery move from 17.10 following positive cues from the USD Index.
• S&P500 futures have increased losses as investors are hoping that recession fears in the US have not receded.
• The US economy is operating in a better position beyond full-employment levels and will keep households demand at elevated levels.

The USD/MXN pair has shown a recovery move after defending its crucial support of 17.10 in the European session. The asset is following the footprints of the US Dollar Index (DXY) as the latter has also shown a recovery move from 102.00.

S&P500 futures have increased losses in the London session as investors are hoping that recession fears in the United States have not receded despite the Federal Reserve (Fed) has skipped hiking interest rates in June.

The USD Index has rebounded firmly to near 102.23 as two more interest rate hikes have been announced by Fed chair Jerome Powell. Also, Fed Powell confirmed that rate cuts are not appropriate by year-end. The Fed believes that headline inflation has softened due to the gasoline prices impact while the core inflation is still showing persistence.

Apart from that, US labor market conditions are well tight in spite of the Unemployment Rate having increased to 3.8%. The US economy is still operating in a better position beyond full-employment levels and will keep households’ demand at elevated levels.

On Thursday, US Census Bureau reported that monthly Retail Sales (May) surprisingly expanded by 0.3% while the street was anticipating a contraction of 0.1% but the pace of expansion was slow against the prior pace of 0.4%. Scrutiny of the Retail Sales report shows that demand for automobiles was extremely solid though inflationary pressures have squeezed the real income of households.

On the Mexican Peso front, Bank of Mexico (Banxico) Governor Victoria Rodriguez Ceja is expected to hold interest rates at a record-high for at least the next two meetings before considering neutrality.

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• Litecoin price has slipped from $95 to trade at $74 at the time of writing, nearing March lows of $69.
• Investors’ skepticism has resulted in the short-term holders’ supply increasing by 4% in a month.
• Presence on-chain has declined significantly despite the upcoming halving, still acting as a major trigger.

Litecoin price has had a rather unpleasant month, with the altcoin suffering losses throughout June. While most of the cryptocurrencies have been experiencing the same, LTC was expected to be the exception, given the altcoin has a major network development event coming up soon.

Litecoin price nears March lows

Litecoin price, trading at $74 at the time of writing, has declined by almost 24% throughout the last 14 days. The cryptocurrency stood at $95 at the beginning of the month, preparing a breach of the resistance level at the same price. However, failing to do so led to a correction fuelled by broader market bearishness.

LTC/USD 1-day chart

Naturally, a decline this significant scared LTC holders to the point where their ideal choice was to step back. The supply held by the mid-term holders (addresses holding LTC for more than a month but less than a year) observed a decline. In this duration, their domination over the circulating supply fell by 4%, which moved into the hands of short-term holders.

Litecoin supply distribution

These addresses are usually considered more volatile as they only have been holding on to their LTC for less than a month, making them prone to selling. Plus, at the moment, investors’ presence is a concerning matter as is. 

After peaking at around 880k last month, the number of addresses active on-chain has been declining rapidly. The average daily active investors since have reduced by half to 430k and seem to be on the path of going down further.

Litecoin active addresses

Participation from LTC holders is key to fighting the bearishness in the market and helping to prevent excessive drawdowns in price action. Although the Litecoin halving stands only two months away, network development events are successful only when they have the support of the investors.

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• Gold Price grinds higher after bouncing off the lowest level in three months.
• Pullback in United States Treasury bond yields, mixed US data weigh on US Dollar and propel XAU/USD.
• ECB rate hike versus hawkish Fed halt, China news also down US Dollar, favoring the Gold Price in turn.
• US Michigan Consumer Sentiment Index, Inflation expectations eyed for intraday XAU/USD directions.

Gold Price (XAU/USD) dribbles near $1,958-59 during early Friday after a volatile day that initially refreshed a multi-day low before bouncing off $1,924, as well as posted snapping the four-day losing streak. That said, the XAU/USD previously dropped to the three-month low as the US Dollar licked Federal Reserve (Fed) inflicted wounds amid hopes of a July rate hike before cheering the USD weakness on downbeat data and the market’s cautious optimism to recover from the lowest level since March.

Gold Price rebound relies on US Dollar weakness

Gold Price portrayed a perfect contrasting play with the US Dollar as the XAU/USD initially refreshed the monthly low on the greenback’s recovery amid hopes of a July rate hike from the Federal Reserve (Fed) before downbeat US data weighed on the yields and the USD.

That said, the US central bank kept the benchmark interest rate unchanged at 5.0-5.25%, matching market expectations of pausing the multi-month-old hawkish cycle after 10 consecutive rate increases. However, the upbeat FOMC Economic Projections and Federal Reserve (Fed) Chairman Jerome Powell’s speech backed the hawkish Fed bias surrounding the July meeting and weighed on the Gold Price on early Thursday, before bouncing off $1,924.

On the other hand, Thursday’s United States statistics haven’t been impressive and hence pushed back the July rate hike concerns, which in turn joined other risk-positive catalysts to weigh on the US Dollar and propel the Gold Price.

On Thursday, US Retail Sales growth marks an increase of 0.3% for May versus -0.1% expected and 0.4% previous readings while the Core readings, means Retail Sales ex Autos, match 0.1% market forecasts for the said month, compared to 0.4% prior.

Further, NY Fed Empire State Manufacturing Index jumps to 6.6 in June versus -15.1 expected and -31.8 prior whereas Philadelphia Fed Manufacturing Index drops to -13.7 for the said month from -10.4 prior and compared to -14 market forecasts.

Additionally, US Industrial Production for May cools down to -0.2% against 0.1% estimated and 0.5% prior while Initial Jobless Claims reprints the upwardly revised figures of 262K for the week ended on June 09 versus 249K expected.

Apart from the US data, the European Central Bank’s (ECB) 25 basis points (bps) interest rate hike and clues of more such moves ahead also weighed on the US Dollar.

Elsewhere, the People’s Bank of China (PBoC) cut its one-year interest rate for the first time in 10 months, by 10 basis points (bps), which in turn unleashed hopes of more liquidity in one of the world’s biggest Gold consumer and favor the metal price. It should be noted that downbeat prints of China Retail Sales and Industrial Production and fears of labor problems in Beijing-based factories prod the XAU/USD bulls.

Amid these plays, market players portrayed an optimistic day with upbeat Wall Street performance and a steep fall in the US Treasury bond yields, not to forget the US Dollar Index (DXY) drop to the three-week low. The same offered the Gold Price the much-needed rebound to pare weekly losses inside a bullish chart pattern.

More clues to defy July Fed hike needed for clear XAU/USD direction

Although the latest United States data have been helpful to push back the concerns about the Federal Reserve’s (Fed) July rate increase, the CME’s FedWatch Tool still shows around a 67% chance of the US central bank’s 0.25% rate hike in the next month. Hence, more data rejecting the hawkish bias needs to defend the latest Gold Price rebound.

As a result, today’s preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June and five-year inflation expectations will be in the spotlight. Also important to watch will be the US Treasury bond yields and the US Dollar moves.

Also read: Gold Price Forecast: XAU/USD could well rally on any data showing inflation pressures are easing – TDS

Gold Price technical analysis

Gold Price fades upside momentum within a fortnight-old falling wedge bullish chart formation.

Adding strength to the XAU/USD recovery hopes is the looming bull cross on the Moving Average Convergence and Divergence (MACD) indicator, as well as a U-turn by the Relative Strength Index (RSI) line, placed at 14, from the oversold territory.

It’s worth noting, however, that the 200-bar Exponential Moving Average (EMA) adds strength to the wedge’s top line and makes it harder to cross the $1,968 hurdle.

Also challenging the Gold Price upside is a one-month-old horizontal resistance zone surrounding $1,983-87.

Meanwhile, the stated bullish chart pattern’s lower line, close to $1,923 at the latest, precedes the mid-March consolidation around $1,910-15 to challenge the short-term XAU/USD downside.

Following that, the Gold Price downside towards the $1,900 threshold, $1,890 dynamic support and the early March swing high of near $1,858 will be on the XAU/USD bear’s radar.

Gold Price: Four-hour chart

Trend: Further downside expected

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• AUD/USD sets a sixth consecutive day of gains, jumping to the 0.6870 area.
• Strong US Retails Sales and Jobless Claims data support a dovish Fed.
• Falling US yields and a positive market sentiment favour the AUD.

On Thursday, the AUD/USD pair surged to its highest level since February, gaining 90 pips. In that sense, post the release of US Retail Sales and Jobless Claims data, falling US bond yields and a positive market sentiment weakened the US Dollar and favoured the AUD.

US Economic activity data post-Fed decision weakened the USD Dollar

The latest data from the US Census Bureau revealed a surprising expansion in Retail Sales, surpassing expectations as they increased by 0.3% MoM in May, defying the anticipated contraction of 0.1%. Furthermore, Jobless Claims for the week ending June 9 rose to 262,000, slightly higher than the forecasted 249,000 and the same as the previous week’s reading of 262,000.

In Wednesday’s session, the Fed decided to hold rates steady in order to assess additional information regarding its implication on monetary policy. In addition, Fed Chair Powell, in the press conference, stated that the labour market remains robust and drives the US economy, so weakness in this area makes investors think that the Fed may take a more dovish stance for its next meetings.

Reacting to the data, US bond yields are seeing losses across the curve. The 10-year bond yield slid to 3.75% while the 2-year yield stood at 4.68% and the 5-year yields at 3.95%, with all three seeing declines of between 0.30-1%, applying further pressure to the US Dollar. Stocks, on the other hand, continued to trade strong, with the S&P 500 (SPX) gaining over 0.40%, signalling a positive market environment.

AUD/USD Levels to watch

Technically speaking, the AUD/USD maintains a clear bullish outlook for the short term, as the pair managed to rally above the 20,100 and 200-day Simple Moving Averages (SMA) and the technical indicators suggest that the buyers have the upperhand. However, the pair approaches overbought conditions, suggesting that a downward correction may be on the horizon.

In case the AUD/USD continues to gain traction, the following resistance line up at the daily high at 0.6875, followed by the psychological mark at 0.6900 and the 0.6950 area. On the other hand, to the downside, the next support levels to watch are the 100-day Simple Moving Average (SMA) at 0.6730, followed by the 200-day and 20-day SMA at 0.6690 and 0.6630, respectively.

AUD/USD Daily chart

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