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EURUSD - ECB and Fed Rate Cuts, What to Expect?

Solid ECN – The Euro has strengthened above $1.078, reaching a five-week high. This rise comes as investors focus on important US and Euro Area economic data. Key figures like US inflation, first-quarter GDP, and employment statistics are closely monitored, as they could influence future monetary policies.


ECB and Fed Rate Expectations

The European Central Bank (ECB) is expected to start cutting interest rates in June, with a projected reduction of around 70 basis points this year. In contrast, the Federal Reserve will likely delay its rate cuts until September, with anticipated decreases of less than 45 basis points. These differing timelines reflect each central bank's response to their respective economic conditions.


Bank of England's Potential Moves

The Bank of England maintained its interest rates unchanged in May. However, a rate cut during the summer is possible. This potential move signals the bank's readiness to adjust its policy in response to economic developments.

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Forecasting Silver Prices Amidst Technical Signals

Solid ECN—Silver trades an uptrend above the 50% Fibonacci retracement level. The XAG/USD pair is currently experiencing a pullback from the $28.7 resistance, trading at about $28.3.

Silver's primary trend remains bullish if the price stays above EMA 50 and the 50% Fibonacci level. However, the awesome oscillator shows divergence, which could cause the trend to reverse or step into a consolidation phase.

From a technical standpoint, if the price falls below the ascending trendline, the decline that began at $28.7 can extend to EMA 50 and then to the 38.2% Fibonacci level.

Conversely, bulls must push the market to close above the $28.7 resistance for the uptrend to resume.

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GBPUSD at a Crossroad

Solid ECN – The GBP/USD pair is testing the upper band of the bearish trend line on the 4-hour chart, which coincides with the 78.6% Fibonacci retracement level. Currently, the pair trades at approximately 1.258 as the uptrend cools.

From a technical perspective, if the price remains below the descending trend line, it will likely target 1.256, followed by the 50% Fibonacci retracement level.

Conversely, if buying pressure escalates and the pound sterling rises above 1.259, the bullish wave that began on May 9 will likely target the 1.263 resistance level.

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WTI Crude Rises Amid Canadian Wildfires

Solid ECN—WTI crude futures climbed to $79 per barrel on Wednesday, helping to recover some losses from the previous day. The rise was mainly due to wildfires in Canada threatening the country's oil sands industry, which produces 3.3 million barrels daily.

Oil Prices Boosted by US Inventory Drop

Oil prices were also supported by US industry data showing a drop in crude inventories by 3.104 million barrels last week. This decline was more significant than the expected 1.35 million barrel draw. The US EIA will release official data later today.

OPEC Exceeds Limits But Remains Optimistic

Despite an OPEC+ report revealing members exceeded production limits by 568,000 barrels per day last month, OPEC remains positive about future demand. They project global oil demand to rise by 2.25 million barrels per day in 2024 and 1.85 million in 2025.

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GBPUSD Eyes Key Levels as Bulls Gain Momentum

Solid ECN – The GBPUSD currency pair broke out of the descending trendline and the 1.2590 barrier. The bulls will likely target 1.263 this week, and if this level is breached, the path to 1.2708 will be paved.

If the price dips to 1.2590 support, there is a buying opportunity. This level offers a decent bid to join the bull market. Therefore, traders and investors should monitor this level closely if the price bounces.

The 61.8% Fibonacci level plays a pivotal role between the bear and bull markets. Should this level be breached, the bull market would be invalidated, and the bearish trend beginning from 1.263 will likely continue with the ascending trendline as the initial target.

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AUDUSD: Bulls Target 0.676 Amid Bullish Indicators

Solid ECN—In today's trading session, the AUDUSD broke through the 0.665 resistance, and bulls are working to stabilize the price above this key level.

Technical indicators signal bullish trends, suggesting the uptrend is likely to continue. If the Australian dollar sustains above the 50 EMA, the uptrend could persist, with the next bullish target set at the 0.676 mark.

Conversely, falling below the 50 EMA would invalidate the current bullish technical analysis.

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Euro Climbs: What Traders Need to Know

Solid ECN – The Euro climbed above $1.085, marking its highest point in five weeks. This rise comes as traders anticipate changes in monetary policies between the US and Europe.

The European Central Bank (ECB) is expected to cut interest rates at its meeting on June 6. Market predictions suggest a potential decrease of around 70 basis points over the year. This expectation has contributed to the Euro's recent strength.

There is growing speculation in the US that the Federal Reserve will cut rates this year. This follows a slowdown in core inflation in April, the first in six months. If the Fed does cut rates, it could further influence forex markets.

Recent GDP data showed that the Euro Area has exited recession in the first quarter. The European Commission's latest forecasts indicate a steady economic path ahead. This positive outlook supports the Euro's strength and adds confidence for investors.

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USD/JPY

Solid ECN – The USDJPY traded at about 155.3 in today's trading session, which is inside the wedge pattern on the daily chart. The upper trendline acts as resistance, which the bulls are testing it. % 50 Fibonacci backs this level.

If the price breaks above the descending trendline and maintains momentum, we could see a retest of the immediate resistance at 157.0. A successful breakout above this level could target the next resistance at 158.4.

Bearish Scenario

If the price fails to break above the descending triangle and falls below the ascending trendline, we could see a decline toward the immediate support at 151.8.

EUR/USD Analysis

Solid ECN—The EUR/USD 4-hour chart reveals a strong uptrend within a well-defined ascending channel. The price is currently trading near the upper boundary of this channel, suggesting that upward momentum is being maintained.


Bullish Scenario:

If the pair continues to respect the ascending channel and the bullish indicators hold, the next immediate target could be the recent high around 1.089. A breakout above this level could see the pair testing the psychological resistance at 1.0900 and potentially extending towards 1.0930.


Bearish Scenario:

Should the pair fail to maintain the current momentum and break below the lower boundary of the ascending channel, immediate support is expected around the 38.2% Fibonacci retracement level at 1.08. A further decline could be seen in the pair testing the 50% retracement level at approximately 1.07.

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UK Labour Data Fuels Rate Cut Expectations

Solid ECN – The British pound edged slightly lower to $1.25 as traders digested recent labor data and the monetary policy outlook. The UK’s unemployment rate rose for the third month, while wage growth remained steady at 6%. This data aligns with the Bank of England’s (BoE) forecast and suggests that a rate cut could be on the horizon.

The probability of a BoE rate cut by June has increased slightly to 50%. Traders are betting that the central bank will deliver two quarter-point cuts by the end of the year. During its May meeting, the BoE maintained interest rates, but two members advocated for a rate cut, indicating a possible shift towards lower borrowing costs.

Governor Andrew Bailey hinted at potential future rate cuts, suggesting a more accommodative monetary policy ahead. This aligns with market expectations and reinforces the view that the BoE might soon reduce interest rates to support the economy.

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GBP/USD Bullish Momentum: Key Levels to Watch

Solid ECN – The GBP/USD daily chart reveals a recent uptrend within a well-defined ascending channel, indicating bullish momentum. Currently, the price is testing a key resistance level (1.27), which will be critical in determining the next direction.

RSI (14)
The Relative Strength Index (RSI) is at 64.99, suggesting bullish momentum. Although it is approaching overbought territory, it still has room to rise before a potential reversal.

Awesome Oscillator (AO)
The Awesome Oscillator shows increasing green bars, indicating strengthening bullish momentum. This positive momentum supports the potential for further upward movement.

Resistance Levels
1.270: The immediate resistance level, which the price is currently testing.
1.280: Next significant resistance level.

Support Levels
1.264: Immediate support level within the ascending channel.
1.259: Lower boundary of the ascending channel and a previous support level.

Bullish Scenario

If the pair breaks above the immediate resistance at 1.270, the next target would be the resistance 1.280. Sustained bullish momentum could see the pair aiming for 1.28 and potentially higher levels towards 1.289. The ascending channel supports this outlook, indicating the trend may continue upward if the price remains within the channel.

Bearish Scenario

If the pair fails to break the resistance at 1.2708 and falls below the immediate support at 1.264, we could see a decline towards the lower boundary of the ascending channel at 1.259. A breakdown below this level could target further support of around 1.2400.

NZD/USD Bullish Momentum Faces Critical Test

Solid ECN–The NZD/USD 4-hour chart shows the pair experiencing a recent uptrend. The price moves between key support and resistance levels, indicating potential future movements.

RSI (14)
The Relative Strength Index (RSI) is at 57.82, suggesting moderate bullish momentum without being overbought.

Awesome Oscillator (AO)
The Awesome Oscillator displays positive bars, indicating bullish momentum. However, the decreasing size of the bars suggests weakening momentum.

Bollinger Bands
The price recently touched the upper Bollinger Band and is now pulling back toward the middle band, indicating a potential consolidation phase.

Resistance Levels
0.613: Immediate resistance level.
0.6215: Key resistance level marking a recent high.

Support Levels
0.609: Immediate support level.
0.604: Further support level.
0.598: Key support level indicating a strong foundation for the price.

Bullish Scenario
If the price maintains above the immediate support at 0.609 and rebounds, it could test the resistance at 0.613. A breakout above this level could target the next resistance at 0.621. Sustained bullish momentum could drive the pair towards 0.6250.

Bearish Scenario
If the price falls below the immediate support at 0.609, it could decline towards the next support at 0.604. A breakdown below this level could target the key support at 0.598. Further bearish momentum could push the price to 0.5950.

USCHF Technical Analysis

Solid ECN – The USD/CHF pair bounced from the 0.9 resistance and is trading at around 0.91 at the time of writing. The American currency is closing above the middle line of the Bollinger Band, a development that could lead to further growth against the Swiss Franc.

From a technical standpoint, the primary trend remains intact if the price exceeds the immediate support at 0.9. If the bulls cross above the immediate resistance at 0.91, the exchange rate could extend to 0.922.

Conversely, if the USD/CHF price dips below the immediate support of 0.9, the decline that began on May 1 will likely escalate and target the 0.88 mark.

GBP/USD Bullish Trend Faces Overbought Signals

Solid ECN– The GBP/USD pair is trading at about 1.27, above the 61.8% Fibonacci retracement level in today's session. The RSI indicator is at 67.2, suggesting strong bullish momentum and approaching overbought territory. On the other hand, the recent bars of the Awesome Oscillator are smaller, indicating the uptrend is weakening.

From a technical standpoint, the primary trend is bullish, but the RSI signals that the pair might be overbought. Therefore, waiting for the GBP/USD to consolidate near the 50-day EMA would provide a better entry point than going long on the pair at the current price.

Conversely, the bullish trend would be invalidated if the price dips below the 50-day EMA at 1.263.

Consolidation Phase for AUD/USD

Solid ECN – The AUD/USD currency pair bounced from the EMA 50, trading around $0.666, while the Awesome Oscillator shows a divergence signal. This suggests the trend might reverse or enter a consolidation phase.

The bullish channel supports the uptrend, and as long as AUD/USD stays within this range, the primary trend remains intact.

From a technical standpoint, the consolidation phase that began last week might extend to the immediate support at 0.662 if the price remains below the immediate resistance level of 0.668.

Conversely, the bulls must close and stabilize the price above the 0.668 resistance for the uptrend to resume. If this scenario occurs, the next target could be the 0.671 high.

NZD/USD Testing Key Support at 0.609

Solid ECN – The NZD/USD is testing immediate support at 0.609 today, aligning with the lower band of the Bollinger Bands. The RSI hovers around the middle line, and the Awesome Oscillator approaches the zero line with red bars, indicating a lack of momentum for the currency pair.

From a technical standpoint, NZD/USD could dip to the 50 EMA, followed by the ascending trendline if bears maintain their position below the immediate resistance at 0.611.

Conversely, if bulls push above 0.611, the bullish trend will likely resume, with the immediate target being the 0.613 mark.

USD/JPY Eyes Key Resistance Levels!

Solid ECN – The USD/JPY pair trades within a bullish channel and above the EMA 50 and Ichimoku cloud. The pair trades around 156.4 when writing, facing immediate resistance at 156.56.

The primary trend is bullish. If the bulls break out from the immediate resistance at 156.56, the uptrend that began at 153.6 could target 157.9, which aligns with the flag's upper line.

Conversely, 155.26 is the immediate support. If the USD/JPY price dips below this support, the downtrend could likely extend to the ascending trendline.

Unexpected Rise in US Crude Inventories Amid Rate Concerns

Solid ECN – On Wednesday, TWTI crude futures dropped to about $78 per barrel, marking a downward trend for the third consecutive day. The slide is primarily due to concerns about when the US Federal Reserve will start reducing interest rates.

This week, Fed officials advocated for prudence and a solid indication that inflation would stabilize at 2% before any rate cuts occur. Contrary to expectations of a decrease, US crude stockpiles rose by 2.48 million barrels last week. Additionally, tension in the Middle East, which typically increases oil prices, has eased without impacting oil supplies.

The upcoming OPEC+ meeting on June 1 is now in focus. Key oil producers are expected to continue limiting production to avoid a surplus and support higher prices.

Gold Stable Amid Tensions and Fed Talks

Solid ECN—Gold prices are steady at around $2,410 per ounce this Wednesday. The price calmed a bit after reaching new peaks. As investors ponder comments from Federal Reserve officials, caution remains a theme.

Many Fed leaders suggest waiting a few more months to be sure inflation targets are being met before cutting interest rates. Later today, details from the Fed's recent meeting will be shared, and additional insights are expected from Fed speeches.

Meanwhile, tensions between the U.S. and China, alongside worries about increased conflicts in the Middle East following the death of Iran's President Ebrahim Raisi, are preventing a significant drop in gold prices. Also, efforts in China to address troubles in its real estate sector are helping to support gold prices.

Silver Prices Hold Steady Amid Fed Policy Evaluations

Solid ECN – Silver prices have settled at around $31.7 per ounce, maintaining the peak levels not seen since December 2012. This stability comes as investors reevaluate the U.S. Federal Reserve's future actions based on recent statements from the officials.

Fed Vice Chair Michael Barr highlighted the need for patience in assessing the impact of current policies. At the same time, Atlanta Fed President Raphael Bostic projected only a single interest rate reduction this year. Although higher interest rates generally reduce the attractiveness of non-yield-bearing assets like silver, its demand continues due to widespread industrial use.

Furthermore, silver supply shortages persist, entering the fourth year of deficits. Stock levels at the London Bullion Market Association have dropped to near-record lows in April, with similar trends observed in New York and Shanghai's exchanges.