US shares rallied on Friday, rebounding off the lows of the bear market, capping their first weekly advance since May. The Dow Jones Industrial Average advanced 2.68%, 823.32 points. The S&P 500 jumped 3.06%, and the Nasdaq Composite rallied 3.34% to 11,607.62 on Friday. All three major indices snapped their losing streaks as investors deliberated the idea of whether stock markets have been oversold and have hit a bottom. However, several investment banks have remained pessimistic. Moreover, looking at US economic data, the US Consumer Sentiment from the University of Michigan survey hit a record low of 50 in June. Gloomy consumer sentiment basically means that the demand for goods and services has decreased, impacting the entire economic ecosystem, including corporations, employment opportunities, and the stock market.
Over the weekend, G-7 countries have announced that they will ban the import of Russian gold. According to US President Joe Biden, world leaders need to work together against Russia as the invasion of Ukraine by Russia has brought serious impact on food and energy supplies across the world. Imposing gold sanctions toward Russia might strike a serious blow to Russia as Russia has used gold to support its currency as a way to circumvent other sanctions. One example would be swapping the gold for a more liquid foreign exchange that is not subject to sanctions from other countries.
Main Pairs Movement
EUR/USD edged higher, up 0.38% on Friday. The Greenback was unable to gather bullish momentum amid the concerns of economic slowdown in the US. In the meantime, the ECB pointed out that it would have to aim for large interest rate hikes since its monetary policy has fallen behind. Thus, the euro dollar got boosted.
USD/JPY moved upwards after the release of Japan’s inflation data. The core CPI in Japan jumped to 2.1% in May, the second consecutive jump. With the BOJ continuing to keep its ultra- loose monetary policy, the Japanese yen has weakened further against the greenback. On Friday, USD/JPY was up 0.17%, finished with 135.16.
Gold was up 0.25%, closed with $1,827.31 on Friday. The precious metal was comparably stronger than the greenback as the greenback lost some interests amid cooling hawkish expectations from the Fed.
AUD/USD was up 0.7%, trading at 0.6942 at the end of the day. The Aussie rallied as the demand for the US dollar decreased resulting from the risk sentiment. In the meantime, during the testimony of the Fed Chairman Jerome Powell, he pointed out the possibility of raising rates would be based on the incoming economic data and the outlook of the economy. Thus, the dovishly-hawkish comments brought the US dollar down.
EURUSD (4-Hour Chart)
EURUSD gained 0.38% over the course of the last trading day of the week to end the week in positive territory. Depressed PMI data from Germany and the Euro area has added concerns over an impending recession in the EU and uncertainty to the ECB’s abilities to tame inflation and support economic growth. On the economic docket, ECB President Lagard is set to speak on the 28th and Fed Chair Jerome Powell is set to speak on the 29th.
On the technical side, EURUSD continues to trade below our previously estimated resistance level of 1.05754. Selling pressure remains strong around this level. RSI for the pair sits at 55.93, as of writing. On the four hour chart, EURUSD currently trades above its 50 day SMA, but below its 100 and 200-day SMAs.
Resistance: 1.05754, 1.06315
GBPUSD traded sideways over the course of the last trading day of the week. Cable ended the week with a 0.44% gain. U.K. retail sales declined by 0.5% on a monthly basis in May, thus hurting some of the demand of the British Pound. On the economic docket, British GDP figures are set to release on the 30th, after BoE governer Bailey’s speech on the 29th.
On the technical side, GBPUSD continues to trade below our previously estimated resistance level of 1.2381; on the other hand, support levels for Cable remain firm at 1.2173 and 1.20824. RSI for the pair sits at 44.58, as of writing. On the four hour chart, Cable currently trades below its 50, 100, and 200-day SMAs.
Resistance: 1.2381, 1.25047
Support: 1.2173, 1.20824
USDJPY (4-Hour Chart)
USDJPY gained 0.17% on the last trading day of the week to close the week in positive territory despite experiencing strong pull backs on Wednesday and Thursday. Bullish sentiment continues to surround USDJPY as interest rate differences between the US and Japan continue to overshadow any sort of fundamental news effects. On the economic docket, Japan’s Tankan large non-manufacturers index is set to release on the 30th.
On the technical side, USDJPY has found new support at the 134.76 price region and continues to trend upwards. Resistance level at 136.57 has not been challenged since Wednesday. RSI for the pair sits at 61.73, as of writing. On the four hour chart, USDJPY currently trades above its 50, 100, and 200-day SMAs.
Support: 133.84, 134.76