EUR/USD: Bears keep the pressure around 1.0430

EUR/USD looks stuck in the 1.0430 region.

Germany labour market report surprised to the downside.

EMU jobless rate ticked lower to 6.6% in May.

The single currency remains under pressure and motivates EUR/USD to navigate in the lower end of the range around 1.0430 on Thursday.

EUR/USD looks to data, risk trends

EUR/USD remains offered and extend the leg lower after being rejected from the 1.0615 region earlier in the week. The corrective downside in the pair comes in response to the resurgence of the risk aversion sentiment and the resumption of the buying bias in the greenback.

In addition, the decline in the German 10y Bund yields - now approaching the 1.40% zone – also collaborates with the sour mood around the European currency on Thursday.

Further selling hurt the euro after the inaction seen in Chair Lagarde in recent comments, as she only reiterated the bank’s intention to raise rates by 25 bps next month, while further rate hikes would hinge on the progress of domestic fundamentals.

Earlier in Germany, Retail Sales contracted 3.6% in the year to May, the Unemployment Rate ticked higher to 5.3% and the Unemployment Change increased by 133K persons, both prints for the month of June.

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Gold Price Forecast: XAUUSD hits two-week low, near $1,815 ahead of central bank speakers

Gold remained on the defensive for the third straight day and dropped to a nearly two-week low.

Modest USD strength was seen as a key factor that undermined the dollar-denominated metal.

Recession fears, sliding US bond yields might help limit losses ahead of key central bank speakers.

Gold prolonged this week's rejection slide from the very important 200-day SMA and edged lower for the third successive day on Wednesday. The downtick dragged spot prices to a nearly two-week low, around the $1,816-$1,815 region during the early European session.

The overnight hawkish remarks by New York Fed President John Williams and San Francisco’s Mary Daly lifted bets for a faster policy tightening by the US central bank. This assisted the US dollar to build on the previous day's strong move up, which, in turn, undermined demand for the dollar-denominated gold.

Market participants, however, remain divided over the need for a more aggressive Fed rate hike amid growing recession fears. This, along with a fresh leg down in the US Treasury bond yields and the prevalent cautious market mood, could offer some support to the non-yielding yellow metal and help limit deeper losses.

Traders might also refrain from placing aggressive bets and prefer to move on the sidelines ahead of the key event risk. Fed Chair Jerome Powell, the Bank of England Governor Andrew Bailey and the European Central Bank President Christine Lagarde are due to speak at the ECB forum in Sintra, Portugal on Wednesday.

Investors will look for fresh clues about the central bank's tightening path, which will play a key role in driving gold price in the near term. Apart from this, the broader market risk sentiment, the US bond yields, and the USD price dynamics would help determine the next leg of a directional move for the XAUUSD.

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GBP/USD slides to three-day low, around 1.2230 area amid modest USD uptick

GBP/USD witnessed some intraday selling on Tuesday and dropped to a three-day low.

Brexit woes, less hawkish BoE expectations continued acting as a headwind for sterling.

Rising US bond yields revived the USD demand and contributed to the intraday selling.

The GBP/USD pair retreated nearly 60 pips from the daily swing high touched during the early European session and dropped to a three-day low, around the 1.2235-1.2230 region in the last hour.

The latest Brexit-related development over the Northern Ireland Protocol has raised the risk of fresh tension between Britain and the European Union. In fact, the UK House of Commons on Monday voted 295 to 221 in favour of a controversial bill that would unilaterally overturn part of Britain's divorce deal from the EU agreed in 2020.

Apart from this, speculations that the Bank of England (BoE) will adopt a more gradual approach towards raising interest rates amid fears of a UK recession acted as a headwind for the British pound. This, along with the emergence of some US dollar buying dragged the GBP/USD pair away from over a one-week high touched the previous day.

The risk-on flow pushed the US Treasury bond yields higher, which, in turn, assisted the USD to reverse its modest intraday losses. That said, reduced bets for a more aggressive policy tightening by the Fed might hold back the USD bulls from placing aggressive bets and help limit deeper losses for the GBP/USD pair, at least for the time being.

The recent decline in commodity prices now seems to have eased concerns about the persistent rise in inflation. This, along with the worsening economic outlook, forced investors to reassess expectations for a faster policy tightening by the Fed. Hence, the market focus will remain glued to Fed Chair Jerome Powell's appearance on Wednesday.

The BoE Governor Andrew Bailey is also due to speak at the ECB forum in Sintra, Portugal on Wednesday, which would help investors determine the next leg of a directional move for the GBP/USD pair. In the meantime, traders on Tuesday will take cues from the US macro data - the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index.

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GBP/USD Price Analysis: Recaptures critical trendline resistance at 1.2275

GBP/USD bulls are fighting the bearish odds, re-attempting the upside.

UK political jitters, mixed Retail Sales data could remain a drag on cable.

Cable bulls struggle to yield a break above the key 1.2275 hurdle.

GBP/USD is moving back and forth in a 40-pips narrow range so far this Friday, now attempting another bounce towards 1.2300.

The renewed upside in the major is fuelled by a bout of weakness seen in the US dollar across its main peers, as risk sentiment receives a fresh boost. Easing rate hike expectations from the ECB and BOE amid increasing recession risks is helping calm the market nerves.

Bulls, however, could face a hard time extending the latest uptick, as the UK political jitters remain in play. A senior Tory party member resigned after the ruling Conservative Party lost two crucial seats in the parliamentary by-elections on Friday. The latest news put PM Johnson’s leadership in jeopardy, which could undermine the sterling’s upswing.

Further, the UK Retail Sales for May came in mixed, earlier on, with the previous figures revised downwards. The discouraging fundamentals point to the BOE’s dilemma of fighting inflation while balancing the economic growth. UK Retail Sales drop 0.5% MoM in May vs. -0.7% expected

Attention now turns towards the two-tier data from the US for fresh trading impetus, as risk sentiment is likely to lead the way into the weekly close.

Looking at cable’s four-hour chart, the latest uptick in the price has taken out the falling trendline resistance at 1.2275. Should bulls manage to hold above the latter on a four-hourly candlestick closing basis, a test of the bearish 100-Simple Moving Average (SMA) at 1.2336 will be inevitable.

Ahead of that, the 1.2300 round figure will offer stiff resistance to GBP buyers. The Relative Strength Index (RSI) is pointing higher above the midline, allowing room for more upside.

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Gold Price Forecast: XAUUSD bears have the upper hand below 200-DMA amid hawkish Fed

Gold witnessed some selling on Thursday and was pressured by a combination of factors.

Hawkish Fed expectations underpinned the USD and exerted pressure on the commodity.

Recession fears weighed on investors’ sentiment and should limit losses for the XAUUSD.

Gold continued with its struggle to gain any meaningful traction and remained below the very important 200-day SMA through the early part of the European session. The XAUUSD was last seen trading just below the $1,935 level, down over 0.25% for the day.

The markets seem convinced that the Fed would retain its aggressive policy tightening path and have been pricing in another 75 bps rate hike at the next FOMC meeting in July. The bets were reaffirmed by Fed Chair Jerome Powell, saying that the ongoing rate increases will be appropriate. During his testimony before the Senate Banking Committee, Powell added that Fed is strongly committed to bringing inflation back down and the pace of future rate increases will continue to depend on incoming data. This, in turn, was seen as a key factor that continued acting as a headwind for the non-yielding gold.

Apart from this, the emergence of fresh US dollar buying exerted some downward pressure on the dollar-denominated commodity. The downside, however, seems cushioned, at least for the time being, amid the prevalent risk-off mood, which tends to benefit the safe-haven gold. The market sentiment remains fragile amid doubts that major central banks could hike interest rates to curb soaring inflation without affecting economic growth. Adding to this, the disappointing release of the flash Eurozone PMI prints for June added to worries about a possible recession and weighed on investors' sentiment.

The global flight to safety dragged the US Treasury bond yields lower, which might hold back the USD bulls from placing aggressive bets and further help limit losses for gold. That said, acceptance below a technically significant 200-day SMA favours bearish traders and suggests that the path of least resistance for spot prices is to the downside. It, however, would be prudent to wait for strong follow-through selling before traders start positioning for any further near-term depreciating move. Market participants now look forward to Fed Chair Jerome Powell's second day of testimony for a fresh trading impetus.

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GBP/USD pares intraday losses to weekly low, keeps the red ahead of Powell’s testimony

GBP/USD witnessed heavy selling on Wednesday and dropped to a fresh weekly low.

Dovish BoE expectations, recession fears, Brexit woes undermined the British pound.

A goodish pickup in the USD demand further exerted downward pressure on the pair.

The downside seems cushioned as the focus remains on Fed Chair Powell’s testimony.

The GBP/USD pair refreshed its weekly low during the early part of the European session, albeit managing to find some support ahead of mid-1.2100s and recovering a few pips thereafter. The pair was last seen trading around the 1.2225-1.2230 region, still down nearly 0.40% for the day.

The US dollar regained positive traction amid growing market acceptance that the Fed would stick to its policy tightening path and raise interest rates at a faster pace to curb soaring inflation. In fact, the markets have been pricing in another 75 bps rate hike at the next FOMC meeting in July. This, along with a fresh wave of the global risk-aversion trade, boosted the safe-haven USD and exerted downward pressure on the GBP/USD pair.

The British pound was further weighed down by expectations that the Bank of England would adopt a more gradual approach to raising interest rates amid recession fears and the cost of living crisis. The market fears were further fueled by the latest UK consumer inflation data, showing that the headline CPI climbed to a new 40-year high of 9.1% in May. On a monthly basis, the gauge decelerated sharply from a 2.5% increase in April and rose 0.7%.

Apart from this, the UK-EU impasse over the Northern Ireland Protocol of the Brexit agreement further undermined sterling and contributed to the GBP/USD pair's intraday decline. Meanwhile, the global flight to safety triggered a modest pullback in the US Treasury bond yields and held back the USD bulls from placing aggressive bets. This, in turn, was seen as the only factor that assisted the pair to rebound around 65-70 pips from the daily low.

It, however, remains to be seen if the GBP/USD pair is able to capitalize on the intraday bounce as investors await Fed Chair Jerome Powell's testimony before the Senate Banking Committee. Market participants will look for fresh clues about the Fed's policy tightening path, which would play a key role in influencing the USD price dynamics. This, in turn, should assist traders to determine the next leg of a directional move for the GBP/USD pair.

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EUR/USD Price Analysis: Downside pressure alleviated above 1.0700

EUR/USD keeps the march north unabated and tests 1.0580 .

There is a 4-month resistance line around 1.0700.

EUR/USD extends the buying bias for the second session in a row and climbs to the 1.0580/85 band on Tuesday.

If bulls push harder, then the pair could attempt a move to the minor hurdle at the June 16 high at 1.0601. Beyond this level comes the 55-day SMA at 1.0642 prior to the 4-month line around 1.0700. Spot needs to clear the latter to mitigate the selling pressure and allow for the continuation of the recovery in the short-term horizon.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.1155.

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Gold Price Forecast: XAUUSD treads water around $1.840 amid sluggish USD, light trading

Gold Price erases recovery gains after bulls run into the 21 DMA barricade.

US dollar starts the week on the back foot amid a better risk environment.

America observes the Juneteenth holiday, leaving XAUUSD in limbo.

Gold Price is trading modestly flat around $1,840, reversing the rebound seen in the Asian session. The recovery in risk sentiment is boding ill for the safe-haven US dollar, in turn, capping the downside in the bright metal.

Thinner liquidity conditions on account of the Juneteenth holiday in the US also leave the dollar bulls at bay, helping the metal find a floor.

The upside in XAUUSD, however, remains capped, as investors remain wary amid the aggressive Fed’s tightening path. The Fed hiked the key policy rates by 75 bps last week while leaving doors open for a 75 bps increase in July, as the world’s central bank remains committed to fighting inflation.

Meanwhile, gold price also lacks the follow-through recovery momentum, as the US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, hit fresh monthly lows below 2.60%. The yellow metal is often considered a hedge against inflation.

Markets now remain focused on the testimony from ECB President Christine Lagarde for fresh hints on the monetary policy, which could have a significant impact on risk sentiment, which may affect gold dynamics. Next of note for the metal remains Fed Chair Jerome Powell’s testimony due later this week.

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GBP/USD struggles to find demand near 1.2350, Powell eyed

GBP/USD stalls its recovery mode just below 1.2350.

US dollar holds the rebound despite the upbeat market mood.

Fed-BOJ policy divergence keeps GBP bulls on the defensive.

GBP/USD is fading its recovery momentum from the daily low of 1.2253, as bulls run into strong resistance just shy of the 1.2350 barrier.

The further upside in the pair remains capped, as investors reassess the BOE’s gradual approach to policy tightening, as it hiked the key rates by 25 bps on Thursday. Meanwhile, the Fed has left doors open for a 75 bps lift-off in July after delivering a 75 bps increase on Wednesday. The BOE remains way behind the curve when compared to the US central bank, which remains a drag on the pound.

“The 10-year UK T-bond yield is down 1.5% and the 10-year US T-bond yield is rising 1%, making it difficult for the pair to preserve its bullish momentum.

Earlier on, the recovery in the major was triggered by the return of risk flows in the European session, reflective of the 1% rally in the S&P 500 futures. Markets ignored the renewed upside in the US dollar, as nerves settle over fears over a potential recession, helping lift the overall risk sentiment.

Looking ahead, the BOE Quarterly Bulletin will be eyed for fresh insights on the economy and monetary policy. Later in the NA session, Fed Chair Jerome Powell’s speech will stand out amid other minority US economic releases.

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Russia's Novak: Oil market is balanced but there are lots of uncertainties

Following his meeting with Saudi Arabia's energy minister, Russian Deputy Prime Minister Alexander Novak said on Thursday that they have discussed forecasts on oil prices.

"It is important to continue joint work at OPEC+ to avoid collapse on the oil market," Novak added and noted that the oil market is currently balanced while acknowledging that there were lots of uncertainties.

Market reaction

Crude oil prices showed no immediate reaction to these comments and the barrel of West Texas Intermediate (WTI) was last seen trading at $113.50, where it was down 2% on a daily basis.

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GBP/USD: Rebound remains capped below 1.2100 ahead of the Fed

GBP/USD extends the bounce ahead of the critical Fed outcome.

US dollar retreats alongside yields and amid a rally in EUR/USD.

BOE is set to hike rates by 25 bps while the Fed could go for a 75 bps hike.

GBP/USD is consolidating the steep upsurge below 1.2100, as bulls take a breather after extending the recovery by over 150 pips.

The main catalyst behind cable’s impressive rebound could be linked to the broad-based US dollar correction, as investors take profits off the table on their USD longs ahead of the all-important Fed interest rate decision. The Fed pre-committed to a 50 bps rate hike in June and July, although markets have baked in a 75 bps lift-off after Friday’s hot US inflation.

Meanwhile, the pick up in the EUR/USD recovery following news that the ECB has called on an emergency meeting to discuss the recent sell-off in the bond market. The euro capitalized on the ECB news, as it fuelled hopes that the central bank was ready to act on the market turmoil. The renewed uptick in the main currency pair triggered a fresh downswing in the dollar across its main peers, boding well for the beleaguered pound.

On Thursday, the Bank of England (BOE) monetary policy decision will take the center stage after Wednesday’s Fed outcome is out of the way. The BOE Is widely expected to hike the key rates by 0.25 bps to 1.25% this month.

Although a surprise 50 bps rate hike remains on the table amid higher inflation expectations and hopes that the BOE could take a strong action to control inflation.

Ahead of these central bank policy outcomes, the US Retail Sales data will be eyed for near-term trading impetus. The data, however, is unlikely to drive markets.

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Gold Price Forecast: XAUUSD struggles amid rapid rises in bond yields – Commerzbank

Gold came under considerable pressure on Monday and fell by almost 3% to around $1,820. As strategists at Commerzbank note, gold is facing headwind from the persistently firm US dollar and, above all, from the further rapid rises in bond yields. 

Fed could hike interest rates by 75 bps at its June meeting

“Yields on two-year US Treasuries have surged by around 30 basis points. Yields on ten-year US Treasuries climbed for a time above 3.4%, their highest level in more than eleven years. As a result, real interest rates have also picked up significantly and at 0.68% now find themselves at their highest level in over three years. This makes gold less attractive as a non-interest-bearing alternative investment.” 

“According to the Wall Street Journal, the US Federal Reserve will be raising interest rates by 75 basis points tomorrow, which the market immediately priced in. The market now anticipates rate hikes totalling 200 basis points by September.”

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US dollar to weaken over short-term on a 50 bps hike from the Fed – Nordea

Economists at Nordea believe the Federal Reserve will hike by 50 bps, but uncertainty is very high. If they are right, the USD could weaken in favour of other G10 currencies.

USD could strengthen on a 75 bps hike from the Fed 

“We believe the Fed will hike by 50 bps this week but we admit that the uncertainty is very high. If we are right, we will likely see the USD weaken again in favour of other G10 currencies such as EUR, NOK, SEK, DKK, etc over the short-term. 

“If we are wrong, the USD could strengthen somewhat more against the rest of G10 currencies.”

“From a technical standpoint, the USD is close to being overbought against most G10 currencies currently.”

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GBP/USD hits multi-week lows near 1.2420 pre-US CPI as UK growth fears linger

GBP/USD hit multi-week lows on Friday in the low 1.2400s, with bears eyeing a push lower into the 1.2300s.

Near-term focus is on the upcoming US CPI release and whether it will impact Fed tightening expectations.

GBP/USD broke out to fresh multi-week lows in the 1.2420 area on Friday amid mixed FX market conditions and somewhat risk-averse pre-US inflation data trading conditions. The pair was last trading with losses of roughly 0.5% on the day, with bears eyeing a push lower into the 1.2300s in the week ahead should fears about the weakening UK economy linger.

According to a REC survey cited by Reuters on Friday, UK employers hired staff at the slowest pace since early 2021 in May, with the hiring pace having now declined for a sixth successive month. Sterling also has domestic politics to worry about, with the UK government reiterating its intention to pass legislation that would unilaterally amend the Northern Ireland Protocol (putting the UK’s free trade deal with the EU at risk) and with UK PM Boris Johnson’s authority having been weakened after a no-confidence vote on Monday that saw a larger than expected rebellion from his own MPs.

In the near-term, focus will be on US Consumer Price Inflation data scheduled for 1230GMT and analysts think that the data might ease inflation worries, which could (at the margin) relieve some pressure being felt by the Fed to tighten monetary policy so quickly in the quarters ahead. This could provide GBP/USD with some short-term support. But given Fed/BoE policy divergence and a comparatively weak UK growth story, traders may be inclined to sell any sterling rallies.

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Gold Price Forecast: XAUUSD to shrug off ECB meeting 

Gold is on standby ahead of European Central Bank (ECB) meeting. Economists at Commerzbank expect the ECB decision to be ignored by the yellow metal.

Gold is popular with central banks as a safe haven and store of value

“We believe that the ECB will decide today to bring its bond purchases to an end at the start of the third quarter. In addition, it is likely to signal fairly clearly that interest rates will be raised at its next meeting in July and that the deposit rate will no longer be negative by the end of September. This would imply that the next rate hike will come in September.”

“We believe it is questionable whether any statement will be made about the longer-term interest rate outlook, as there is still a lack of consensus on this issue within the ECB Governing Council. The hawkish remarks expected from Lagarde are probably already priced in, for the most part, so under normal circumstances, we would not expect any major reaction from the gold price this afternoon.” 

“According to a survey of nearly 60 central banks conducted by the World Gold Council (WGC), about a quarter of central banks are planning to top up their gold reserves in the next twelve months. What is more, the majority of survey respondents expect the proportion of gold in the currency reserves to increase in the next few years.” 

“The WGC says that gold is popular with central banks as a safe haven and store of value. Furthermore, gold is expected to perform better in times of crisis. That said, central banks have been buying considerably less gold of late.”

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 AUD/USD remains on the defensive near 0.7200 mark, downside seems cushioned

AUD/USD came under some renewed selling pressure on Wednesday amid modest USD strength.

A goodish pickup in the US bond yields and a softer risk tone benefitted the safe-haven greenback.

A break below the 0.7150 area is needed to confirm a bearish outlook ahead of the US CPI on Friday.

The AUD/USD pair met with a fresh supply on Wednesday and erased the previous day's modest gains back closer to the 100-day SMA resistance. The pair remained on the defensive heading into the North American session and was last seen trading around the 0.7200 mark, down nearly 0.35% for the day.

A combination of factors provided a modest intraday lift to the US dollar, which, in turn, exerted some downward pressure on the AUD/USD pair. Investors remain concerned that the global supply chain disruption caused by the Russia-Ukraine war could push consumer prices even higher and force the Fed to tighten its monetary policy at a faster pace. This, in turn, triggered a fresh leg up in the US Treasury bond yields, which, along with a softer risk tone, offered some support to the safe-haven greenback.

The market sentiment remains fragile amid doubts that central banks can hike interest rates to curb inflation without impacting economic growth. This, to a larger extent, overshadowed a more hawkish Reserve Bank of Australia (RBA) decision on Tuesday. It is worth recalling that the RBA raised interest rates by the most in 22 years and indicated that further tightening is in the pipeline as it battles to restrain surging inflation. The markets were quick to price in the real risk of another 50 bps rise in July.

That said, the AUD/USD pair's inability to gain any meaningful traction and repeated failures near the 100/200-day SMA confluence suggests that the recent bounce from the YTD low has run out of steam. Traders, however, seemed reluctant to place aggressive bearish bets and preferred to wait for the US consumer inflation figures, scheduled for release on Friday. Hence, it will be prudent to wait for sustained weakness below the 0.7150 horizontal support before positioning for any further depreciating move.

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EUR/USD looks offered and drops to 3-day lows near 1.0660

EUR/USD loses further ground and revisits the 1.0660 region.

The greenback extends the bid bias despite lower yields.

Germany Construction PMI eased to 45.4 in May.

Sellers appear well in control of the sentiment around the European currency and drag EUR/USD back to the 1.0660 zone on Tuesday.

EUR/USD in multi-day lows

EUR/USD sheds ground for the third session in a row on Tuesday and pushes further south of the 1.0700 mark in the first half of the week, always in response to the selling pressure in the risk-associated universe.

Also reflecting the offered bias in the risk complex, US and German yields recede from recent tops, although they manage well to keep the trade in the upper end of the range.

In the domestic calendar, German Factory Orders contracted at a monthly 2.7% in April and the Construction PMI eased a tad to 45.4 in May. Across the Atlantic, Balance of Trade results and the Consumer Credit Change figures are due later in the NA session.

What to look for around EUR

EUR/USD continues to lose momentum and extends further the rejection from peaks beyond the 1.0700 mark in past sessions.

The pair’s recent multi-week recovery has been on the back of supportive ECB-speak, which continued to point at an initial rate hike as soon as in July, while the consensus view that the bond-purchase programme should end at some point in early Q3 has also lent legs to the European currency.

However, EUR/USD is still far away from exiting the woods and it is expected to remain at the mercy of dollar dynamics, geopolitical concerns and the Fed-ECB divergence, while higher German yields, persistent elevated inflation in the euro area and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.

Key events in the euro area this week: Germany Construction PMI (Tuesday) – Advanced EMU Q1 GDP Growth Rate (Wednesday) – ECB Interest Rate Decision (Thursday).

Eminent issues on the back boiler: Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects.

EUR/USD levels to watch

So far, spot is retreating 0.09% at 1.0686 and a breach of 1.0627 (monthly low June 1) would target 1.0532 (low May 20) en route to 1.0459 (low May 18). On the upside, the next resistance aligns at 1.0786 (monthly high May 30) seconded by 1.0936 (weekly high April 21) and finally 1.0945 (100-day SMA).

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Gold Price manages to hold above key support, awaits next catalyst

Gold Price is fluctuating in a tight range near $1,850 on Monday.

10-year US T-bond yield stays flat following last week's rally.

Strong near-term support seems to have formed at $1,840.

Gold Price moves sideways near $1,850 at the start of the week following the sharp drop witnessed on Friday. Trading conditions remain thin due to the Whit Monday holiday in Europe. The US economic docket will not be offering any high-impact data releases and XAUUSD is likely to continue to fluctuate between key technical levels.

Rising US yields limit gold's upside

The US Bureau of Labor Statistics announced on Friday that Nonfarm Payrolls in the US rose by 390,000 in May, surpassing the market expectation for an increase of 325,000. Further details of the report showed that the Labor Force Participation Rate improved modestly to 62.3% and the annual wage inflation edged lower to 5.2% as expected. The US Treasury bond yields shot higher on the upbeat US jobs report and forced gold to erase its weekly gains. The benchmark 10-year yield rose more than 7% last week and snapped a three-week losing streak. At the time of press, the 10-year yield was moving up and down in a narrow channel near 2.95%.

Gold Price could react to ECB, US inflation data

Later in the week, the European Central Bank (ECB) is widely expected to keep policy rates unchanged. The bank is set to hike its policy rate by 25 basis points in July with the Asset Purchase Programme (APP) coming to an end in July. According to Bloomberg, some policymakers want ECB President Christine Lagarde to deliver a convincing message that borrowing costs of vulnerable countries will be contained and fragmentation will not be allowed. A strong reaction in XAUEUR to ECB's policy announcements could impact XAUUSD's movements in the second half of the week.

The most important data release of the week will be the May inflation report from the US on Friday. The Consumer Price Index (CPI) and the Core CPI are forecast to decline to 8.2% and 5.9%, respectively, on a yearly basis. With the NFP data confirming that labor market conditions remain tight in the US, stronger-than-expected CPI figures are likely to trigger another leg higher in US yields and make it difficult for gold to find demand. On the other hand, a retreat in consumer inflation could cause investors to start pricing in a pause in Fed rate hikes in September and help XAUUSD push higher.

Ahead of the above-mentioned key events, XAUUSD could have a hard time making a decisive move in either direction. The market mood seems to have turned upbeat at the beginning of the week. In case risk flows continue to dominate the markets, the dollar could lose interest and help gold hold its ground. In that scenario, however, US yields could gain traction and not allow gold to turn north.

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US Dollar Index looks cautious around 101.70 ahead of NFP

DXY trades without a clear direction near 101.70.

Activity in US yields remain muted and near Thursday’s close.

US Nonfarm Payrolls, Unemployment Rate next of note in the docket.

The greenback alternates gains with losses around the 101.70 region when measured by the US Dollar Index (DXY) on Friday.

US Dollar Index remains vigilant ahead of Payrolls

Market participants remain vigilant ahead of the publication of the key May’s Nonfarm Payrolls later on Friday, motivating the index to hover around the 101.70 zone amidst the generalized lack of direction in the global markets.

Activity in the US cash markets show the same performance so far, with yields along the curve looking consolidative in the upper end of the weekly range.

As indicated, Nonfarm Payrolls for the month of May are due later in the NA session seconded by the Unemployment Rate and the ISM Non-Manufacturing. Additionally, the final Services PMI is also due followed by the speech by FOMC’s Governor L.Brainard (permanent voter, centrist).

What to look for around USD

The dollar came under pressure in the past session and returned to the area below the 102.00 mark against a cautious backdrop ahead of the release of May’s labour market figures.

Renewed weakness in the dollar came in response to the rising perception that inflation might have peaked in April, which in turn supports the idea that the Fed may not need to be as aggressive as market participants expect when it comes to raising the Fed Funds rates.

In the meantime, the Fed’s divergence vs. most of its G10 peers coupled with bouts of geopolitical effervescence, higher US yields and a potential “hard landing” of the US economy are all factors still supportive of a stronger dollar in the next months.

Key events in the US this week: Nonfarm Payrolls, Unemployment Rate, Final Services PMI, ISM Non-Manufacturing (Friday).

Eminent issues on the back boiler: Powell’s “softish” landing… what does that mean? Escalating geopolitical effervescence vs. Russia and China. Fed’s more aggressive rate path this year and 2023. US-China trade conflict. Future of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is retreating 0.01% at 101.72 and faces the next contention at 101.36 (55-day SMA) followed by 101.29 (monthly low May 30) and then 99.81 (weekly low April 21). On the upside, a break above 102.73 (weekly/monthly high June 1) would open the door to 105.00 (2022 high May 13) and finally 105.63 (high December 11 2002).

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GBP/USD Price Analysis: Inverted Flag confirms more downside, 1.2400 eyed

The greenback bulls challenge the demand zone, which is placed in a 1.2548-1.2570.

An Inverted Flag formation advocates a follow-up sell-off after a topsy-turvy move.

A death cross, represented by the 50- and 200-period EMAs add to the downside filters.

The pound bulls have displayed a subdued performance in the entire Asian session amid the unavailability of any potential trigger. A phase of topsy-turvy moves in the cable is witnessed after a sheer downside move from a high of 1.2600. The asset experienced intense selling pressure after slipping below the critical support of 1.2558.

On an hourly scale, the GBP/USD pair has formed an Inverted Flag chart pattern that indicates further downside after a rangebound move. Usually, an Inverted Flag dictates the initiation of fresh shorts by those investors, which prefer to execute positions after the establishment of a downside bias. The cable is hovering near the demand zone placed in a 1.2548-1.2570.

A death cross has been displayed by the 50- and 200-period Exponential Moving Averages (EMAs) at 1.2555, which signals more pain ahead.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a bearish range of 20.00-40.00, which adds to the downside filters.

Should the asset drops below Wednesday’s low at 1.2459, the greenback bulls will get strengthened and will drag the asset towards May 20 low at 1.2438. A breach of the latter will open room for more downside to near the round-level support at 1.2400.

On the contrary, an upside move above Tuesday’s high at 1.2630 will trigger an initiative buying action, which will drive cable towards May’s high at 1.2667, followed by the round-level resistance at 1.2700.

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Gold Price Analysis: XAU/USD slides back under 200DMA as buck/yields rise ahead of key US data releases

Gold is trading around $1830, having dropped back below its 200DMA as the buck/US yields rise pre-key US data releases.

Gold bulls want to see evidence of weakening US growth/inflationary pressures and a paring of Fed tightening bets.

As the rise in longer-term US bond yields enters its third day, with the 10-year yield now up around 17 bps versus last week’s lows around 2.70%, and as the US Dollar Index’s recovery from this week’s multi-month lows extends, spot gold (XAU/USD) prices have not surprisingly come under pressure. XAU/USD was last trading around the $1830 per troy ounce mark, below its 200-Day Moving Average at $1840 and taking losses on the week to around 1.1%.

Key upcoming US economic data is in focus, the most important release being Friday’s May labour market report, though traders will also closely scrutinised Wednesday’s ISM Manufacturing PMI survey that is slated for release at 1400GMT. Gold bulls want to see evidence that inflationary pressures are backing off, meaning people will be watching the Prices Paid subindex of Wednesday’s ISM PMI survey and the wage growth component of Friday’s jobs report.

Any such evidence will lessen the pressure on the Fed to tighten monetary policy settings quite so aggressively beyond the planned 50 bps rate hikes at the June and July meetings. Gold bulls will also want to simultaneously see evidence of a slowing US economy, as this further spurs the demand for safe-haven assets (like gold) and reduces pressure on the Fed to hike. In the best-case scenario of weak/less inflationary data in the coming days, if that also spurs a drop once again in the US dollar/US yields, XAU/USD might well recover back to the north of its 200DMA and the $1850 mark.

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