EUR/USD remains well on the defensive, extending its weekly leg lower to the 1.1620-1.1615 band on Friday, or new five-week troughs. Meanwhile, the pair continues to suffer the broad-based strength of the Greenback and a cautious market mood, as firm inflation data reinforces expectations of a tighter Fed policy stance in the next few months.
Japan CFTC JPY NC Net Positions fell from previous ¥-61.7K to ¥-75.1K
EUR/USD remains well on the defensive, extending its weekly leg lower to the 1.1620-1.1615 band on Friday, or new five-week troughs. Meanwhile, the pair continues to suffer the broad-based strength of the Greenback and a cautious market mood, as firm inflation data reinforces expectations of a tighter Fed policy stance in the next few months.
United States CFTC Gold NC Net Positions climbed from previous $163.3K to $171.6K
EUR/USD remains well on the defensive, extending its weekly leg lower to the 1.1620-1.1615 band on Friday, or new five-week troughs. Meanwhile, the pair continues to suffer the broad-based strength of the Greenback and a cautious market mood, as firm inflation data reinforces expectations of a tighter Fed policy stance in the next few months.
Gold sinks 2% as Iran war fuels fresh inflation shock
Gold price retreats by over 2.30% on Friday amid fears that prolonged hostilities between the US and Iran could trigger a second wave of inflation, forcing central banks to hike interest rates. The XAU/USD trades at $4,551 after bottoming at around $4,511.
XAU/USD slides as yields surge and Fed cuts vanish
US Treasury yields are soaring, with the 10-year T-note coupon hitting yearly highs at 4.591%, up 10 basis points and poised to challenge the 2025 high of 4.627%. The Greenback has followed suit, as shown by the US Dollar Index (DXY), which tracks the performance of the American currency against the other six, up 0.33% to 99.19.
Overnight news of US President Donald Trump revealing that he’s losing patience with Iran pushed Oil prices higher, amid speculation of a resumption of hostilities. US inflation data released on Tuesday and Wednesday had erased the chances of the Federal Reserve (Fed) easing, a headwind for Bullion, which fares well in low interest rate environments.
The Fed, under Kevin Warsh’s first meeting as the new Chair, is expected to hold rates unchanged in June and through the end of the year, according to Prime Terminal data.
Several Fed policymakers stressed this week that containing inflation remains a priority, with some leaving open the possibility of further rate hikes if price pressures persist.
US data showed Industrial Production rose 0.7% MoM in April, beating forecasts of 0.3% and rebounding from March’s 0.3% decline.
Next week, US traders are now awaiting housing and labor market data, as well as remarks from Fed officials.
XAU/USD technical outlook: Gold set to trade sideways, but bears loom
From a technical standpoint, Gold is poised to consolidate around $ 4,500–$4,650 in the short term after clearing key Simple Moving Averages (SMAs) during the week. Momentum is clearly bearish as depicted by the Relative Strength Index (RSI), falling toward oversold territory after diving beneath the 50-neutral level two days ago.
If XAU/USD clears the next area of interest being the May 4 daily low of $4,500, this opens the door for further losses. Downwards, the next support would be the March 26 daily low of $4,351, before challenging the 200-day SMA at $4,322.
On the upside, if Gold regains control above $4,600, the next resistance is the 20-day SMA at $4,662, ahead of the psychological $4,700. The next area of interest is the 50 and 100-day SMAs at $4,729 and $4,785, respectively. Up next is the $4,800 milestone.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
US Dollar: Hawkish Fed repricing drives breakout – ING
ING’s Francesco Pesole notes the US Dollar (USD) is gaining strong short-term momentum as hotter US data reinforce expectations for a Federal Reserve (Fed) hike. With US Dollar Index (DXY) breaking above late April highs and no progress on Gulf tensions, they see risks of further Dollar strength, contingent on incoming headlines from Beijing and developments in Oil and equities.
DXY breaks higher on Fed repricing
“The dollar seems to be gaining some serious short-term momentum. We had speculated yesterday that the Trump-Xi meeting could have yielded some positive headlines (perhaps also on Iran) that would have capped USD and lifted sentiment. It’s been too little so far, and a turn lower in equity futures today alongside another leg higher in oil prices is allowing the dollar to benefit from the latest hawkish data and the resulting repricing higher in Fed hike bets.”
“Overall, there is little evidence so far that higher fuel costs are curbing broader consumer spending, supporting a narrative of a resilient US economy rather than an increasingly negative impact on RoW activity from higher energy prices.”
“We have suddenly broken above the late April highs in DXY, and it’s still dangerous to call for a peak in the dollar, considering the lack of any progress in the Gulf. Risks are of a move to 100 unless some positive headlines start flowing in.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Japanese Yen: Interventions need rate backing – Commerzbank
Commerzbank’s Michael Pfister argues that Japanese authorities cannot rely on FX interventions alone to support the Japanese Yen (JPY) against the US Dollar (USD). He notes that past intervention episodes delivered mixed results and July 2024’s relative success coincided with a Bank of Japan (BoJ) rate hike. Pfister expects two further BoJ hikes and forecasts USD/JPY to decline over 2026, but warns that failure to tighten would keep the Yen under pressure.
BoJ hikes seen key to yen support
“In recent months, there has been a sense that levels above 160 in USD/JPY mark the critical threshold for actual interventions, although, of course, warnings of intervention by the MoF grow increasingly vocal even before USD/JPY reaches that level.”
“The major success in July 2024 was due to a different factor.”
“At the end of July, the Bank of Japan implemented its second interest rate hike, providing additional support for the interventions through monetary policy.”
“In short, interventions alone won’t save the yen.”
“For the interventions to be successful, the BoJ would therefore need to hike interest rates further.”
“Our expectation of two further interest rate hikes is also the reason why we continue to expect USD-JPY levels to fall over the course of the year, even after our latest forecast revision.”
“However, if the BoJ fails to deliver these, the outlook for the yen is likely to remain challenging.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Asia stocks fall before Trump-Xi talks; South Korea’s Kospi slumps from record high
Most Asian stocks fell on Friday, shrugging off the overnight rally on Wall Street led by hopes for improving relations between the US and China – the world’s two biggest economies. Investors, however, remain on edge amid high-stakes talks between US President Donald Trump and Chinese President Xi Jinping in Beijing.
Meanwhile, Chinese markets steadied near multi-year highs as markets sought more details on reports of the US allowing more chip sales to China. In contrast, South Korea’s KOSPI is by far the worst performer, retreating sharply from a fresh record high after a US trade official said U.S. chip export controls were not discussed in detail during recent talks. This comes on top of amid concerns of concentration risks, particularly in artificial intelligence stocks, leading to heavy losses in major chipmaking stocks and South Korean markets.
Furthermore, a finance ministry report said that the South Korean government saw continued downside risks to the economy amid the Middle East tensions. In fact, the Ministry of Economy and Finance said in its monthly report, called Green Book, that the Asian economy recently faced lingering downward risks stemming from the Iran war despite the continued recovery trend shown in the significantly expanding first-quarter growth.
On the geopolitical front, Trump said in an interview aired on Thursday night on Fox News that he would not be much more patient with Iran and urged Tehran to reach a deal. Further, a commercial vessel was reportedly seized by Iranian personnel off the United Arab Emirates (UAE), stoking concerns over the flow of energy supplies through the critical Strait of Hormuz. This turns out to be another factor weighing on investors’ sentiment and contributing to a generally weaker tone across the Asian equity markets on Friday.
The market focus remains squarely on the incoming headlines from the second day of talks between Trump and Xi. Apart from this, developments surrounding the Middle East crisis might continue to infuse some volatility in the financial markets and contribute to producing short-term trading opportunities heading into the weekend.
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
Euro weakens to near 1.1650 as hot US inflation boosts Fed hike expectations
The EUR/USD pair trades in negative territory near 1.1660 during the early Asian session on Friday. The US Dollar (USD) edges higher against the Euro (EUR) as surging US inflation, linked to Middle East tensions, reinforces expectations that the US Federal Reserve (Fed) will keep interest rates higher for longer or potentially hike them.
US economic data released this week showed US Producer Price Index (PPI) inflation accelerated to the fastest pace since 2022 in April, while the Consumer Price Index (CPI) rose the most since 2023. Hotter-than-expected US inflation data have reinforced a “higher-for-longer” US interest rate outlook, supporting the Greenback and acting as a headwind for the major pair.
Markets are now pricing in nearly a 36.9% chance that the US central bank will raise the interest rate by at least 25 basis points (bps) at the December meeting, up from 22.5% a week ago, according to the CME FedWatch tool.
Nonetheless, positive developments surrounding the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing could lift a riskier asset, such as the shared currency.
Trump said on Thursday that he hoped the relationship between the US and China would be “stronger and better than ever before,” adding that Xi offered help to resolve the conflict and pledged not to provide military equipment to Iran. Xi also wants to see the critical Strait of Hormuz reopened.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Gold slides as strong USD, US-China summit dent haven demand
Gold (XAU/USD) retreats by some 0.25% during the North American session on Thursday as tensions in the Middle East remain high, while the US-China summit is underway, with President Donald Trump meeting Chinese President Xi Jinping. At the time of writing, the XAU/USD pair trades at $4,678.
XAU/USD falls as resilient US data boosts Dollar demand
Negotiations between the US and Iran have stalled, failing to provide relief for investors, yet US equities have pushed towards new all-time highs, as risk appetite improved. In the meantime, discussions between Presidents Trump and Xi began, with the former saying that Beijing agreed to buy 200 Boeing jets, while clearing sales of NVIDIA H200 chips to 10 Chinese firms.
The Chinese President, warned Trump that disagreements over Taiwan could push relations to “a very dangerous place” as the two began the two-day summit. Xi told Trump that negotiations between the US and Chinese trade teams in South Korea reached “balanced and positive outcomes.”
Economic data in the US showed that Retail Sales rose 0.5% MoM in April, matching forecasts but below March’s 1.6% reading. On an annual basis, sales increased 4.9%, beating expectations for 3.3% growth. At the same time, Initial Jobless Claims for the week ending May 9 came in at 211K, above the 205K forecast.
After the data, bullion extended its losses as the Greenback printed another leg higher, as American consumers remained resilient despite paying high gasoline prices at the pump.
The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, is up 0.38% at 98.82, refreshing two-week highs with investors setting their sights on the 100.00 barrier.
Another factor weighing on Gold is the latest US inflation data, which reflected the energy shock: the Producer Price Index (PPI) rose 6% YoY, and the Consumer Price Index (CPI) reached 3.8%, moving further away from the Federal Reserve’s 2% target.
Investors turned skeptical that the Federal Reserve will cut rates in 2026. Data from Prime Terminal shows that money markets expect the Fed to hold rates unchanged at the next meeting, the first under the new Fed Chair, Kevin Warsh.
Earlier, Kansas City Fed’s Jeffrey Schmid stated that “inflation is the most pressing risk to the US economy.” He added that the economy “has shown remarkable resilience” and that the job market is “functioning effectively.”
Cleveland Fed Beth Hammack commented that central bank independence “is important in achieving our dual mandate goals of maximum employment and price stability.” She added that it allows policymakers to make decisions based “on incoming data and the evolving outlook.”
Ahead in the week, traders will eye the release of the New York Fed Empire State Manufacturing Index and speeches by Federal Reserve officials.
XAU/USD technical outlook: Gold consolidates within $4,650-$4,700
Gold continues to struggle to decisively break the $4,700 milestone, as bullish momentum fades and sellers seem to gain traction. The Relative Strength Index (RSI) shifted bearishly, indicating further downside lies ahead.
For a bearish continuation, sellers must clear $4,650. Once hurdled, the next area of interest would be the $4,600 mark before diving to the May 4 daily low of $4,500.
On the other hand, if bulls reclaim the $4,700, this could pave the way to challenge the 50- and 100-day Simple Moving Averages (SMAs) at $4,740 and $4,783, respectively. Once surpassed, the next stop would be $4,800.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
XRP holds key support as MVRV suggests undervaluation
Ripple (XRP) is struggling to hold above $1.42 short-term support at the time of writing on Thursday, down roughly 5% from the monthly peak around $1.51. The remittance token’s recovery appears lock-step, as risk-off sentiment and softening institutional demand weigh.
Why XRP could be undervalued
The XRP on-chain Z-Score metric extended its decline to 0.04 on Wednesday, remaining below the token’s realized value. According to Glassnode, the Market Value Realized Value (MVRV) Z-Score evaluates whether XRP is overvalued or undervalued relative to its “fair value.”
When XRP’s market value, calculated by multiplying the spot price by supply, is lower than the realized value, measured by cumulative capital inflows into the asset, it signals a local market bottom.
On the other hand, a market value above the realized value often signals a local market top. The chart below shows the MVRV Z-Score holding persistently slightly above the XRP fair value since early February, suggesting possible undervaluation and a likely local bottom.
Still, XRP lacks the tailwind to trigger a reversal, despite being undervalued, especially amid faltering demand for spot Exchange-Traded Funds (ETFs). Institutional activity remained muted on Wednesday, with US-listed ETFs not recording any flows. SoSoValue data shows cumulative inflows steady at $1.36 billion, while net assets declined slightly to $1.14 billion, from $1.16 billion the previous day.
Technical analysis: XRP stages fresh recovery bid
XRP trades above $1.42, holding between major Exponential Moving Averages (EMAs), the 50-day EMA at $1.42 and the 100-day EMA at $1.49, leaving the near-term bias broadly neutral. The 200-day EMA, higher up at $1.70, continues to frame the broader bearish structure.
The Relative Strength Index (RSI) around 53 on the daily chart and a slightly positive Moving Average Convergence Divergence (MACD) histogram hint at modest, but not decisive, bullish momentum as price consolidates near the current range.
On the topside, immediate resistance lies at $1.45, followed by the 100-day EMA around $1.49 and the downward resistance trendline near $1.50. Moreover, the 200-day EMA at $1.70 serves as a more distant cap if buyers extend the recovery. On the downside, initial support lies at the 50-day EMA around $1.42, reinforced by the latest Parabolic SAR print at $1.40. A sustained break below these levels would expose the pair to deeper corrective pressure despite the current neutral tone.
(The technical analysis of this story was written with the help of an AI tool.)