In observance of Showa Day, Japanese banks were closed in the early Asian session. As a result, the Japanese Yen experienced a sharp decline, causing USDJPY to surpass the 160.0 level for the first time since 1990. However, this upward trend did not last long, as USDJPY quickly dropped back to 155.0. At present, there has been no statement by the Bank of Japan regarding an actual intervention.

We can say that the 160.0 mark is the new redline for USDJPY, regardless of whether there was an actual intervention or not. This could mean that 160.0 is the new top for USDJPY, but it’s not certain. The recent erratic movements of the Yen suggest that an intervention is becoming more likely.

US Core PCE data leaves investors uncertain

On Friday, the Federal Reserve’s favored inflation gauge was released. However, markets remained uncertain about the Federal Reserve’s policy, in addition to the uncertainty regarding inflation trends.

Indicator Actual Forecast Prior
Core PCE YoY 2.8% 2.7% 2.8%
Core PCE MoM 0.3% 0.3% 0.3%
PCE Deflator YoY 2.7% 2.6% 2.5%
PCE Deflator MoM 0.3% 0.3% 0.3%

Investors are currently uncertain about inflation. Two weeks ago, when the CPI data was released, it caused market fears that inflation has changed its course and is now heading higher. As a result, the Fed Fund Futures has lowered estimates for a possible rate cut in June, July, and even September. The market anticipated that the Core PCE data would confirm these fears.

On Friday, the latest data failed to confirm or refute concerns regarding inflation. The year-on-year Core PCE remained steady at 2.8%, and the rest of the data aligned with expectations. Therefore, the data neither confirmed an upward trend in inflation nor ruled out a continued slowdown.

Therefore, investors will be waiting for another round of data to give them more clues.

Gold bear flag

Gold stabilized above $2300 after dipping at the beginning of last week’s trading and managed to recover some of its losses. However, technically, this is now considered a bear flag, which may indicate another possible dip in the coming hours/days.

The current support for the bear flag is at $2320. If this support level breaks, it will confirm the possibility of another leg lower. In this case, the next support levels would be at $2315 and $2300. If these levels break as well, it will pave the way for a deeper correction, possibly towards $2260 for now.

EURUSD holding above 1.07

EURUSD has held above 1.06 for two weeks and reclaimed 1.07, resulting in a slight improvement of technical indicators on the daily chart after significant selling.

The pair is currently trading near last week’s high. A break above this would improve the technical outlook. The next resistance area stands at 1.0750 followed by strong resistance at 1.08.

As long as the pair holds between 1.06 and 1.07, the downside pressure is limited. A break below this area confirms a resumption of the downtrend.

 

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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