Daily Market Analysis By FXOpen

GBP/JPY at Highest Level in Over 15 Years


As shown by today's GBP/JPY chart, the exchange rate has not only surpassed the psychological level of 200 yen per pound but has also exceeded the peak of 29 April 2024. The market is now experiencing prices last seen in 2008.

The main driver of the pound’s strength against the yen is the difference in monetary policies enacted by the central banks. While the Bank of England maintains a rate of 5.5%, in Japan it is 0.10% (having been kept unchanged at -0.10% from January 2016 until March 2024 – over 8 years).

Can the GBP/JPY rate go even higher? Fundamentally, if the imbalance in interest rates persists, it creates conditions for a continued rally.

According to Business Recorder, the Bank of Japan (BOJ) will act cautiously within its inflation targeting framework. BOJ Governor Kazuo Ueda noted that some issues are "exceptionally challenging" for Japan after many years of ultra-loose monetary policy.

“The absence of significant interest rate movements poses a considerable obstacle in assessing the economy’s response to changes in interest rates,” he said.



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In the Spotlight: US Inflation and GDP Data


In the final trading sessions of May, leading currencies have been in a downward trend against the dollar. For instance, the pound/dollar pair lost over 100 pips in a single day, euro sellers in the EUR/USD pair are testing 1.0800, and the USD/CAD pair might update its May high around 1.3760.

USD/CAD

The rise in commodity prices and worsening geopolitical situation in the Middle East are contributing to the sharp increase of the USD/CAD pair. According to the technical analysis of USD/CAD, a bullish “piercing line” pattern was formed on the daily timeframe on 28 May. The confirmation of this pattern could lead to continued growth of the pair towards the May high of this year at 1.3760. If the price consolidates above this level, a test of the important range 1.3840-1.3790 is possible. A break below 1.3610 would invalidate the bullish scenario.

The following news could impact the pricing of USD/CAD:

• Today at 15:30 (GMT +3:00) US GDP for the first quarter
• Today at 18:00 (GMT +3:00) Crude Oil Inventories from the Energy Information Administration (EIA)
• Tomorrow at 15:30 (GMT +3:00) US Core PCE Price Index for April

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

EUR/USD Exchange Rate Has Fallen Below 1.08 Level


As the EUR/USD chart today shows, yesterday the rate dropped by 0.46% – the most significant strengthening of the US dollar against the euro in one day this month. Moreover, the rate fell below the psychological mark of 1.08 euros per dollar (in the first half of May, it served as resistance).

Yesterday's movement was influenced by:

→ news of rising inflation in Germany. As reported by Think.ING, inflation reached 2.4% year-on-year, up from 2.2% in April – highlighting uncertainty and the resilience of inflation;

→ the rise of the US dollar, driven by falling Treasury bonds, which increased the appeal of the American currency due to both higher yields in the US and demand for safe-haven assets.

Analysing the chart on 23 May in the article "EUR/USD Price Forms Bullish Reversal," we:

→ drew an ascending channel (shown in blue);

→ highlighted the importance of resistance at the 1.0875 level.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Nasdaq Index Shows Uncertainty Ahead of PCE Release


The main event of the week is the release of the Personal Consumption Expenditures (PCE) index, which the Federal Reserve particularly focuses on when assessing inflation in the US. The release is scheduled for Friday at 15:30 GMT+3. As this important event approaches, rumours and trader expectations about the news increasingly impact the current price on the stock market.

According to ForexFactory, the Core PCE Price Index on a monthly basis is as follows:
→ forecast for Friday = 0.3%.
→ previous value (a month ago) = 0.3%;
→ value two months ago = 0.3%.

These figures indicate stable inflation, but surprises are not ruled out, which could certainly lead to a spike in volatility.

The price of the Nasdaq index (US Tech 100 mini on FXOpen) has decreased since the beginning of the week – this may indicate market participants' uncertainty about whether inflation will decrease. Meanwhile, as CNBC reports, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, believes that the Fed should wait for significant progress in combating inflation before lowering interest rates.

In his opinion, rates could potentially even be raised if inflation fails to decrease further. “I don’t think we should rule anything out at this point,” Kashkari added.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Market Analysis: GBP/USD Dips While USD/CAD Eyes More Gains


GBP/USD is attempting a recovery wave from 1.2680. USD/CAD is rising and might aim for a move above the 1.3690 resistance zone.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound started a fresh decline from the 1.2800 resistance zone.
• There is a key bearish trend line forming with resistance near 1.2740 on the hourly chart of GBP/USD at FXOpen.
• USD/CAD is showing positive signs above the 1.3660 support zone.
• There is a connecting bearish trend line forming with resistance near 1.3690 on the hourly chart at FXOpen.

GBP/USD Technical Analysis


On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.2800 zone after a decent increase, as mentioned in the previous analysis. The British Pound traded below the 1.2740 support to again move into a short-term bearish zone against the US Dollar.

The pair even traded below 1.2710 and the 50-hour simple moving average. Finally, the bulls appeared near the 1.2680 level. A low was formed near 1.2680 and the pair is now attempting a short-term recovery wave.

There was a fresh upside above the 1.2710 level. The pair climbed above the 23.6% Fib retracement level of the downward move from the 1.2800 swing high to the 1.2680 low.

Immediate resistance on the upside is near the 50% Fib retracement level of the downward move from the 1.2800 swing high to the 1.2680 low at 1.2740 and the 50-hour simple moving average. There is also a key bearish trend line forming with resistance near 1.2740.

The first major resistance on the GBP/USD chart is near the 1.2770 level. A close above the 1.2770 resistance might spark a decent increase. The next major resistance is near the 1.2800 level. Any more gains could lead the pair toward the 1.2880 resistance in the near term.

Initial support sits near 1.2710. The next major support sits at 1.2680, below which there is a risk of another sharp decline. In the stated case, the pair could drop toward 1.2620.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

NIO Shares Surged Over 9% on Sales Growth Expectations


As evidenced by the NIO stock price chart, yesterday's trading closed at $4.93, while today the NIO share price is around $5.40, indicating an increase of over 9%.

According to MarketWatch, the rise is driven by expectations that the Chinese electric vehicle manufacturer's deliveries are likely to reach record levels.

The existing record was set in July last year when the company achieved monthly sales of 20,462 cars. However, analysts believe this result could be surpassed in May this year due to ongoing discounts on new cars and batteries.

The daily chart of NIO shares today shows that the price is in a long-term downtrend (indicated by the red trend channel) due to the global decline in demand for electric vehicles.

However, there are fundamental reasons to expect that the downward trend will be broken:
→ China is intensifying its efforts to develop electric vehicles – the State Council has presented an action plan for decarbonisation.
→ This month, the International Monetary Fund raised its forecast for China's economic growth in 2024 from 4.6% to 5%.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

USD/CHF Rate Falls Over 1% After SNB Chief's Statements


As evidenced by the USD/CHF chart, yesterday one US dollar was worth 0.913 Swiss francs, but today it is already 0.903, indicating a rate drop of approximately 1%.

According to MT Newswires, the franc's strengthening is attributed to statements by Swiss National Bank (SNB) President Thomas Jordan. In his view, an overly weak franc is the most likely source of higher inflation in Switzerland.

Notably, since the beginning of 2024, the Swiss franc has weakened against the US dollar by more than 7%, one of the worst performances among G10 currencies. The exchange rate has formed an ascending trend channel (indicated in blue).



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

WTI Oil Price Unchanged After OPEC+ Meeting


The OPEC+ meeting over the weekend did not have a substantial impact on the price of crude oil. As the chart shows, WTI oil opened today at $76.72 per barrel, while on Friday it closed at $76.57 – indicating that the decision made by oil producers is ambiguous.

The bullish argument is that restrictions on oil production to maintain its price will continue. According to Reuters, on Sunday, OPEC+ members agreed to extend the production cuts of 3.66 million barrels per day until the end of 2025.

The bearish argument is that eight OPEC+ countries have already signalled plans to gradually phase out voluntary cuts of 2.2 million barrels per day from October 2024 to September 2025.

Goldman Sachs analysts overall assessed the results of the meeting as more bearish for the market. "The communication of a gradual unwind reflects a strong desire to bring back production of several members given high spare capacity," they wrote.

The WTI crude oil chart shows that the market is breaking the upward trend (shown in blue), which we mentioned in our review on 10 May.

Since then, bulls attempted to resume the upward trend, but this only resulted in a false breakout of the psychological level of $80 per barrel on 29 May (indicated by an arrow).

Afterwards, bears regained control and sharply pushed the price below the lower boundary of the blue upward channel, making the downward channel (shown in red), which began in April, more relevant.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

MSFT Shares Surge on Record Yearly Volumes


On Friday, 31 May, almost 48 million Microsoft shares were traded on the NASDAQ – the highest number since the start of 2024. Meanwhile, the MSFT price chart formed a “hammer” candle:

→ trading opened at $416.75 per MSFT share;
→ mid-session, the price dropped below $406;
→ however, by the end of trading, the price had recovered to $415.13.

Fundamentally, it is difficult to pinpoint a single piece of news that served as the bullish driver. According to Barron's, a significant incentive for investing in MSFT shares should be considered the prospect of high dividend payouts.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

AUD/USD Analysis: US Dollar Rebounds from Decline


Yesterday, the PMI Manufacturing indices for several countries were published. The news turned out to be disappointing for the US - according to ForexFactory:
→ Final Manufacturing PMI: actual = 51.3; expected = 50.9; previous value = 50.9;
→ ISM Manufacturing PMI: actual = 48.7; expected = 49.8; previous value = 49.2;

This led to a weakening of the US dollar yesterday, as the not-so-strong manufacturing activity data, as reported by Trading Economics, supported arguments in favor of the Federal Reserve lowering interest rates.

As a result, currencies of other countries strengthened against the dollar, notably the AUD/USD exchange rate rose above 0.669 - the highest level in 2 weeks.

However, today the US Dollar is rebounding from yesterday's decline - and this is more clearly visible on the AUD/USD chart, indicating potential internal weakness for the Australian dollar.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.