Daily Market Lookup

• The U.S. dollar on Tuesday was headed for its best day in nearly two weeks, boosted by traders raising their expectations for interest rate hikes after a hotter-than-expected consumer inflation report. Safe haven demand was also strong as the U.S. and Iran remained at an impasse. Currency market participants were keenly watching the April consumer price index (CPI) report on Tuesday for cues on the future of monetary policy actions and what they could mean for the dollar. As per the Bureau of Labor Statistics, the headline consumer price index (CPI) in April ticked up 0.6% M/M and 3.8% Y/Y, compared to consensus estimates of 0.6% and 3.7%. The 3.8% reading is the highest since a 4% rise in May 2023. Core CPI, which excludes food and energy, was up 0.4% M/M and 2.8% Y/Y, versus estimates of 0.3% and 2.7%. The inflation data confirmed that surging oil prices were indeed boosting consumer prices. The index for energy prices climbed 3.8% M/M in April, accounting for over 40% of the monthly headline CPI growth. However, the energy index did decelerate significantly from March’s 10.9% M/M increase. On a Y/Y basis, the energy index soared 17.9%, its highest since September 2022. The index for gasoline prices advanced 5.4% on a M/M basis in April, much slower than March’s 21.2% gain. On a Y/Y basis, the gasoline index jumped 28.4%, its highest since July 2022. The April CPI report comes at a time of transition for the Federal Reserve, with incumbent chair Jerome Powell’s term coming to an end in three days. He is expected to be replaced by President Donald Trump’s pick Kevin Warsh, a former Fed governor. Odds of interest rate hikes in September, October, and December ticked up after the CPI report, the CME FedWatch tool showed. Higher interest rates generally bode well for the dollar. Turning to the Middle East conflict, no signs of progress on diplomatic efforts between Washington and Tehran kept traders on edge. Trump told reporters on Monday that a ceasefire between Washington and Tehran was on "massive life support" after he rejected Iran’s response to an American peace proposal. Trump dismissed the counteroffer, which was similar to plans previously floated by Iran, in strident terms, calling it "unacceptable" and later "a piece of garbage" that he did not even believe was worth reading fully. Meanwhile, there were indications that brinkmanship was returning to the conflict. According to CNN, Trump, impatient with dithering negotiations, was now seriously mulling restarting major combat operations. Some observers have suggested that Trump’s much-anticipated trip to China and meeting with President Xi Jinping could help crack the stalemate, adding that China, a major importer of Iranian crude, may act as a guarantor of any long-term peace agreement. Trump told reporters that he would be having a "long talk" about Iran with the Asian nation’s leader "So far, China has seemed unwilling to apply pressure on Iran to make concessions to the U.S. to end the U.S.-Iran conflict. That may or may not change during the Trump-Xi summit later this week. But if it doesn’t, the window of risk for a renewal of kinetic actions against Iran begins early next week, when Trump has returned from China," Thierry Wizman, global FX & rates strategist at Macquarie Group, said. Turning to other major currencies, the sterling continued to remain in focus after a disastrous set of council elections for Prime Minister Keir Starmer’s ruling Labour Party last week. The pound was last down 0.5% to $1.3537. Four members of Starmer’s government have resigned and several Labour MPs are calling for him to resign after the elections, in which Nigel Farage’s Reform UK party scored big gains. Elsewhere, the Japanese yen weakened, with the USD/JPY pair up 0.3% to 157.60. Government data showed household spending in Japan slipped 2.9% Y/Y in March, worse than expected.
• Oil prices fell on Wednesday, snapping a three-day rally as investors awaited developments around the fragile Middle East ceasefire and braced for a high-stakes summit in China between U.S. President Donald Trump and President Xi Jinping Both benchmarks have largely hovered around or above the $100 per barrel mark since the U.S. and Israel began attacks on Iran at the end of February and Tehran effectively shut the Strait of Hormuz. Oil prices rose by over 3% on Tuesday, extending earlier gains as hopes for a lasting U.S.-Iran ceasefire faded, dimming prospects of re-opening the strait, through which about a fifth of global oil and liquefied natural gas normally flows. Trump said on Tuesday he does not think he will need China’s help to end the war with Iran, even as hopes for a lasting peace deal dwindled and Tehran tightened its grip over the strait. China is the biggest buyer of Iranian oil despite pressure from the Trump administration. Trump meets his Chinese counterpart Xi in Beijing on Thursday and Friday. The war with Iran has started to take its toll on the U.S. economy, the world’s biggest, as higher oil prices lead to more expensive fuels, and economists expect to see second-round effects in the months ahead. In April, U.S. consumer prices rose sharply for a second straight month, resulting in the largest annual increase in inflation in nearly three years, bolstering expectations that the Federal Reserve would keep interest rates flat for a while. Elevated interest rates make borrowings more expensive, potentially denting demand for oil. As the Iran war continues, U.S. crude oil inventories fell for a fourth straight week last week and distillate inventories also declined, according to market sources citing American Petroleum Institute data.

Gold – XAU

Gold on Tuesday interaday high of US$4773.30/oz and low of $4638.31/oz. God is down by 0.470% at US$4715.27/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 4740-5020 keeping stop loss closing above 5100, targeting 4680-4655-4630-4600 and 4560-4530-4500-4460-4420. Buy in between 4680-4320 with risk below 4320 targeting 4710-4750-4774-4790 and 4796-4835-4875-4900.

Silver - XAG

Silver on Tuesday its intraday high of US87.17/oz and low of US$83.03/oz settle up by 0.460% at US$86.53/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 86.00-80.15, targeting 87.15-87.80-88.50-89.40 and 90.00-90.40-91.00 with stop loss should be placed on the breakage below 67.00. Sell in between 87.15-91.40 with a stop loss above 91.50 targeting 86.00-85.20-84.10-83.00 and 82.10-81.60-81.00-80.40.

Oil - WTI

Crude Oil on Friday high of US$99.31/bbl, an intraday low of US$91.66/bbl, and settled up by 3.44% to close at US$98.68/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upsides can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 97.30 with stop loss at 98.00, targeting 96.60-96.00-95.20-94.50 and 93.86-93.00-92.50-91.90. Buy above 96.60-91.00 with risk daily closing below 91.00, targeting 97.30-98.10-98.70-99.30 and 100.00-101.00-101.90-102.47.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.1721/EUR, a high of US$1.1786/EUR, and settled down by 0.361% to close at US$1.1739/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.1661), which becomes immediate support, a break below will target 1.1695. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.1750-1.1990, targeting 1.1755-1.1690-1.1655-1.1600 and 1.1565-1.1500-1.1450-1.1410 with stop-loss at daily closing above 1.1990. Buy above 1.1720-1.1450 with risk below 1.1450 targeting 1.1.1800 and 1.1920-1.1950-1.1990-1.2010.

GBP/USD

GBP/USD on Tuesday made a intraday low of US$1.3499/GBP, a high of US$1.3609/GBP, and settled the day down by % to close at US$1.3538/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.2674) is becoming a support level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line, but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy between 1.3490-1.3150 with a target of 1.3570 and 1.3600-1.3640-1.3690-1.3725 with a stop loss closing below 1.3150. Sell in between 1.3570-1.3820 with targets at 1.3490-1.3440-1.3395-1.3325-1.3275 and 1.3250-1.3190-1.3150 with a stop loss of 1.3900.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY156.72/USD an intraday high of 157.75/USD, and settled the day up by 0.376% at JPY157.59/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (152.35), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 157.80-163.10 with risk above 163.10 targeting 159.40-158.70-158.10-157.00 and 156.60-153.00-152.65-152.10. Long positions above 160.00-148.00 with targets of 160.90-161.60 and 162.20-162.60-163.00with stops below 148.00.