Forex
The conference of central bankers in Portugal conveyed a unified stance against inflation in
June 2023. The Fed's chairman, Jay Powell, cited a tight labor market as a factor contributing to
alarming wage inflation. According to Powell, inflation, excluding volatile prices for food and
energy, is not expected to return to 2% within the year or next.
Powell went beyond his wait-and-see approach, suggesting rate increases at "consecutive"
meetings—a departure from the Fed's previous approach, which was to hold rates stable for the
very first time since the beginning of 2022.
Meanwhile, Christine Lagarde, head of the European Central Bank, predicted that both the Bank
of England and the ECB would likely raise interest rates again in the next month. BOE Governor
Andrew Bailey stated that the latest 50-point rate increase was due to the economy's resiliency
and the inflation rate's persistence and that they would continue to take "what is necessary."
Despite the fact that the EUR/USD registered a significant advance earlier this month, its retreat
lower from recent highs near 1.10 suggests that it may move toward 1.0800. Reports on
inflation in various parts of Europe and the US GDP are other possible drivers for EUR/USD
prices.
Before the UK CPI and the BOE's infamous 50bp boost, bullish bets on GBP/USD futures
increased, reaching range peaks of 100% for the 3-month, 1-year, and 3-year time frames.
At the time of publication, GBP/USD was trading above 1.2600, the 38.2% Fibonacci
retracement level of the most recent rise. If the pair breaks through that level and confirms it as
resistance, the next bearish objectives are 1.2570 (50% Fibonacci retracement) and 1.2550
(200-day SMA).
Technically, USD/JPY has surged after stabilizing below the 141.00 resistance for the first two
weeks of June. Since then, we have gained more than 300 pip momentum toward the 145.00 level.
After a small recovery, the decline in the AUD/USD pair from 0.6898 resumed, and the intraday
bias turned downward once again during the last week of June. The path back to the crucial
support level of 0.6457 will be opened up by a sustained breach of the 61.8% Fibonacci
retracement at 0.6625.
Commodities
Crude oil price clearly broke through the 68.75 barrier, moving it in the direction of a developing
bullish wave with a potential upside target at 70.00 and may extend to 71.55. The price also
needs to exceed the resistance near 69.45 to make it easier to reach the anticipated targets.
However, a move below the 68.75 level will halt the anticipated climb and may lead the price to
decline again.
The gold price hit below the 1913.15 level on 29 June, confirming the level's breach and paving
the way for further declines on an intraday and short-term basis. This breakout plotted a bearish
channel on the daily price chart, indicating XAUUSD price may head for a potential downside
target near 1873.50 in the next month.
The silver price moves calmly and negatively as it slowly drifts away from the 23.00 level during
June, supporting thoughts that the bearish trend will continue and waiting for a test of 22.25 as
the next major goal.
The EMA50 exerts consistent downward pressure on the XAGUSD price to support
expectations of a decline. It should be noted that a break of the targeted level will, in the near
term, cause the bearish wave to extend to areas around 21.35, while a breach of 23.00 will halt
the bearish trend and cause the price to turn upward.
Indices
The S&P 500's seven-day slide from the 14-month high of 4,447 was stopped around 4,328 on
26 June as strong US data and rising mood sparked a comeback to 4,384. Although the price
must exceed the psychological resistance 4,400 level and sustain above the level to continue
the upside rally.
The Dow Jones Industrial Average (DJIA) fell 64 points, or 0.2%, on June 28, following worries
about trade restrictions with China and remarks from Federal Reserve Chair Jerome Powell. He
maintained his belief that more rate increases are necessary to bring U.S. inflation within control
while addressing a meeting of central bankers in Portugal.
The UK 100, which tracks the FTSE 100 index performance, is having trouble maintaining its
momentum after losing a lot of ground when it touched June lows during the third week of the
month. If it can maintain the pace, we expect the index to continue rising toward the declining
trendline. The trendline dates back to April and must be broken above for FTSE 100 to move
toward the upcoming resistance near 7,650.
Market Events
The US ISM Manufacturing PMI decreased to 46.9 in May 2023 compared to 47.1 in April,
published on 1st June. Following the day, the US economy added 339K jobs in May 2023, the
most in four months, and way above market forecasts of 190K. Figures for March and April were
revised up, bringing employment 93K higher than previously reported.
Reports from the Australian Bureau of Statistics on June 7th, the Australian economy grew by
0.2% qoq in Q1 of 2023, less below market expectations of a 0.3% increase.
The Bank of England increased its benchmark interest rate up 50 basis points to 5.0% on 22
June, making it the 13th increase in a row. This unexpected move caused borrowing prices to
jump to their highest point since the financial meltdown of 2008.
Meanwhile, the Fed kept the funds' rate target at 5%-5.25% in June, but it hinted that rates could rise to 5.6% by year's end.
