EUR/USD
The European currency shows a moderate decrease against the US dollar during the Asian session, retreating from its local highs from April 25, updated the day before. The euro is again testing 1.0750 for a breakdown, waiting for new drivers to appear on the market. The focus of investors today will be on statistics on consumer inflation in the euro area. Current forecasts suggest that annual inflation will accelerate from 7.4% to 7.7% in May, but core inflation is likely to remain unchanged at 3.5%. During the day, the release of data on the labor market in Germany is also expected. It is assumed that the Unemployment Rate in the country in May will remain at the level of 5%, while the Unemployment Change may decrease from -13 thousand to -16 thousand. European statistics released yesterday disappointed investors. The eurozone Business Climate Index fell from 1.59 to 1.26 points in May, while the Economic Sentiment Indicator for the same period slightly increased from 104.9 to 105 points. Statistics on inflation in Germany also turned out to be negative: the Harmonized Consumer Price Index in May accelerated from 7.8% to 8.7%, which was significantly higher than market expectations at the level of 8%.
GBP/USD
The British pound is trading with a downtrend against the US currency during the morning session, correcting after updating local highs from April 26 the day before. GBP/USD is falling for the first time in 5 trading sessions, while the fundamental picture on the market has not changed yet. Demand for risky assets is still moderately increasing as corrective sentiments develop in the US currency. In turn, negative factors also remain in force. The situation around the Russian-Ukrainian conflict is extremely tense, and Western countries are stepping up sanctions pressure, seeking to isolate the Russian economy as much as possible. The new restrictions are pushing prices up everywhere for everyday goods such as gasoline, gas and food. In an attempt to contain the sharp rise in consumer prices, global regulators hastily raise interest rates, but this, as many analysts fear, could lead to a significant slowdown in global economic growth, up to a recession in some economies.
AUD/USD
The Australian dollar shows an uncertain decline, correcting after two sessions of fairly active growth, as a result of which AUD/USD updated local highs from May 5. The US dollar is trying to recover its positions, but so far the further decline of the instrument is limited by restrained optimism from China. Tomorrow restrictions on the work of enterprises will be lifted in Shanghai, which will mean the end of the quarantine caused by another wave of coronavirus, which had an extremely negative impact on the supply of a number of high-tech products to world markets. The Beijing authorities are also partially easing the conditions and gradually allowing the operation of some public transport and retail facilities. Optimism about the Chinese economy was also confirmed by macroeconomic publications from China. Non-Manufacturing PMI in May rose from 41.9 to 47.8 points, which, however, turned out to be worse than optimistic forecasts of an increase to 50.7 points. NBS Manufacturing PMI strengthened in May from 47.4 to 49.6 points, which coincided with the average market forecasts. In addition, investors reacted positively to the growth in Private Sector Credit in Australia in April from 0.4% to 0.8%, as well as the increase in Company Gross Operating Profits from 2% to 10.2% in Q1 2022.
USD/JPY
The US dollar shows moderate gains against the Japanese yen in Asian trading, testing 128.00 for a breakout. The American currency is developing a corrective impetus, formed the day before, and is also rapidly retreating from the local lows of April 18, updated a week ago. The focus of traders today is on statistics from Japan. Retail Sales in the country in April slowed down from 1.7% to 0.8%. At the same time, in annual terms, the indicator accelerated from 0.7% to 2.9%, ahead of market forecasts at the level of 2.6%. Industrial Production fell 1.3% in April after rising 0.3% in March. In annual terms, the decline in production accelerated from -1.7% to -4.8%, which turned out to be almost twice worse than analysts' forecasts. In turn, the Unemployment Rate in April once again fell from 2.6% to 2.5%.
XAU/USD
Gold prices show mixed trading dynamics during the Asian session, holding near 1850.00. The instrument is supported by moderately optimistic news from China, which is preparing to resume the work of enterprises in Shanghai from June 1, and is also easing quarantine restrictions in a number of other regions. The demand for "safe" gold is also supported by the persistence of geopolitical risks around Ukraine, which remain one of the main drivers today. The situation also escalated noticeably in the Persian Gulf, where it was previously reported that the Iranian military had seized two ships under the Greek flag. Finally, demand for the precious metal is boosted by speculation about a pause in the US Fed's interest rate hike cycle. Earlier the American regulator spoke in favor of several more rate hikes by 50 basis points, after which some break may be taken to assess the effectiveness of the measures taken.
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