Daily Market Report
23 May 2023

The single currency started the week on the positive foot and added to Friday’s advance north of 1.0800 the figure on the back of the generalized absence of direction in the greenback (and the rest of the FX universe).
 
On the latter, the USD Index (DXY) came under further downside pressure and put the key 103.00 support to the test against the backdrop of further advance in US yields across the curve, while the 10-year bund yields also prolonged Friday’s corrective move.
 
In the meantime, negotiations around the US debt ceiling are expected to dictate the sentiment around the global markets this week, while the release of the FOMC Minutes and US inflation figures tracked by the PCE should also add to the weekly entertainment.
 
Some wupport for the greenback emerged after St. Louis Fed J. Bullard advocated for a couple of extra rate hikes in the next months, while Minneapolis Fed N. Kashkari argued that the June event is a close call.
 
In the domestic calendar, the European Commission’s advanced Consumer Confidence for the broader Euroland improved marginally to -17.4 for the month of May and the Construction Output contracted at an annualized 1.5% in March.
 
There were no data releases across the Atlantic.
 
Quick help lies ahead for the EUR/USD assuming that it keeps on declining, beginning with the May low at 1.0759 (May 19). After that, there is a minor level at 1.0712 (March 24). On the off chance that the pair breaks underneath this level, it might actually test the March low at 1.0516 (March 15) preceding arriving at its absolute bottom in 2023 at 1.0481 (January 6). Then again, there is a temporary obstacle at the 55-day SMA at 1.0868 before the mental 1.1000 limit. There are no significant obstacles to overcome beyond the latter until it reaches the 2023 peak of 1.1095 on April 26. The round level of 1.1100 comes shortly after, ahead of the weekly high of 1.1184 (March 31, 2022) and the round level at 1.1200. The daily RSI edged higher and surpassed 40.
 
Resistance levels: 1.0874 1.0904 1.0955 (4H chart)
 
Support levels: 1.0759 1.0712 1.0516 (4H chart)

The mild recovery in the greenback and the so far unabated march north in US yields across the curve motivated USD/JPY to quickly leave behind Friday’s pullback and resume the uptrend on Monday.
 
Indeed, US yields maintained the upside bias in place for yet another session and appeared underpinned by hawkish comments from Fed’s Bullard and Kashkari early in the NA session.
 
In Japan, the JGB 10-year yields remained within the multi-session range bound theme near 0.40%.
 
Further upside in USD/JPY faces the next barrier at the 2023 top of 138.74 (May 18). If the pair continues to gain value, it may retest the weekly peaks of 139.89 (November 30, 2022) and 142.25 (on November 21, 2022). On the other hand, the first line of support can be found at the crucial 200-day SMA at 137.12, prior to the provisional 55- and 100-day SMAs at 134.10 and 133.19, respectively. South from here aligns the weekly low of 133.01 (April 26) before the minor support at 132.01 (April 13) and the April low of 130.62 (April 5). A deeper decline could see the March low of 129.63 (March 24) and the February low of 128.08 (February 8) revisited ahead of the 2023 low of 127.21 (January 16). The daily RSI ticked higher past 65.
 
Resistance levels: 138.74 139.89 141.61 (4H chart)
 
Support levels: 137.42 135.64 134.71 (4H chart)

GBP/USD faded the initial uptick and reversed part of Friday’s advance, running out of steam around the 1.2470 region at the beginning of the week.
 
The corrective decline in Cable came on the back of the tepid advance in the greenback amidst persistent cautiousness in light of the discussions around the US debt ceiling expected later in the week.
 
In the meantime, the downbeat tone in Sterling was also accompanied by further strength in the UK 10-year Gilt yields, which kept navigating the area above the 4.0% mark, levels last seen back in October 2022.
 
There were no data releases in the UK calendar on Monday.
 
There is a potential vulnerability for GBP/USD, which may lead to immediate support levels at the May low of 1.2391 (May 18) ahead of the weekly low of 1.2344 (April 10). If Cable continues to decline, it might encounter further support around the April low of 1.2274 (April 3), which appears reinforced by the interim 100-day SMA (1.2272). However, in the event of a persistent drop, the crucial 200-day SMA at 1.1968 could be approached, followed by the 2023 low of 1.1802 (noted on March 8). Conversely, if there is an upward movement, the initial obstacle to overcome would be the 2023 high of 1.2679 (May 10). Buyers might also set their sights on the 200-week line SMA at 1.2864 before the psychological level of 1.3000. The daily RSI ticked lower and approached 46.
 
Resistance levels: 1.2483 1.2510 1.2546 (4H chart)
                                                                  
Support levels: 1.2391 1.2386 1.2367 (4H chart)

The vacillating price action in the global markets echoed on the AUD/USD, which ended the session near Friday’s closing levels around 0.6640/50 at the beginning of the week.
 
The equally inconclusive session in the greenback also weighed on the commodity universe and prevented the Aussie dollar from gathering extra strength, as both copper prices and iron ore traded on the defensive.
 
There Australian calendar was empty at the beginning of the week.
 
The quick battle area for AUD /USD is now around the May low of 0.6604 (May 18) ahead of the April low of 0.6573 (April 28), which seems to have been overtaken by the 2023 low of 0.6563 (March 10). In addition, the weekly lows at 0.6386 (November 10 2022) and the November 2022 low at 0.6272 (November 3) represent other potential support levels. The next critical hurdle to overcome is the 200-day line SMA at 0.6710 ahead of the May high of 0.6818 (May 10). If this level is cleared, the critical round level of 0.7000 becomes a conceivable target, alongside the weekly top of 0.7029 (February 14) and the 2023 peak at 0.7157 (February 2). The RSI on the daily chart settled just above the 46 mark.
 
Resistance levels: 0.6675 0.6709 0.6818 (4H chart)
 
Support levels: 0.6604 0.6573 0.6563 (4H chart)

Gold prices succumbed to the continuation of the march north in US yields across the curve as well as a mild (but sufficient) bid bias around the greenback.
 
Against that, the yellow metal kicked in the new trading session with modest losses, still below the critical $2000 mark per ounce troy and around an area coincident with the 55-day SMA.
 
Moving forward, the FOMC Minutes and US inflation figures are expected to set the tone among traders later in the week, always amidst the Fed’s data-dependent stance and rising speculation of a potential rate raise at the June 14 gathering.
  
Gold continues to develop the new breakdown of the immense $2000 level, supporting the prospect that further mishaps are coming up for the yellow metal in the near future. On account of selling pressure fortifies, bullion could fall back to the May low of $1952 (May 18), which seems upheld by the April low of $1949 (April 3) and precedes the 100-day SMA at $1930. South from here arises the key 200-day SMA at $1826, all before the 2021 low of $1804 (February 28). If it climbs, there are no resistance levels of note until the 2023 top of $2067 (May 4), approved by the March 2022 high of $2070 (March 8) and the unmatched zenith of $2075 (August 7, 2020)..
 
Resistance levels: $1984 $2005 $2022 (4H chart)
 
Support levels: $1952 $1934 $1885 (4H chart)

Silver prices followed the mood of its cousin gold and faded part of Friday’s marked gains, retreating to the $23.60 region after an unsuccessful attempt to revisit the $24.00 mark per ounce on Monday.
 
Higher US yields, the decent bounce in the greenback, and prospects of an uneven recovery in the Chinese economy all weighed on the grey metal, along with the generalized selling pressure in the commodity galaxy.
 
Meanwhile, the Gold/Silver Ratio charted the first session with gains after five consecutive daily pullbacks, briefly flirting at the same time with the key 200-day SMA in the mid-83.00s.
 
If the May low of $23.33 (May 18) is breached, there is a possibility that silver could face a challenge in confronting the 200-day SMA located at $21.95. This would be followed by the 2023 low of $19.90 (March 10). Just the opposite, it is important for bullish investors to take note of a noteworthy resistance level, which corresponds to the highest point achieved in 2023, specifically $26.12 (May 5). Afterward, this level is succeeded by the April 2022 peak of $26.21 (April 18), preceding the 2022 high at $26.94 (March 8), and the significant round level of $27.00.
 
Resistance levels: $24.01 $24.20 $24.91 (4H chart)
 
Support levels: $23.30 $22.80 $22.12 (4H chart)

Costs of the barrel of WTI stayed close to Friday's end levels around the $72.00 mark amidst rising wariness in front of US debt ceiling talks.
 
Furthermore, the bid predisposition around the greenback likewise burdened dealers' mood, while possibilities for a bounce back in the demand for the commodity in the last part of the year never really ignited a significant response.
 
Likewise playing against a manageable bounce back in crude oil prices, market participants kept on figuring in the likelihood that the Fed could raise rates by and by in June. This view has been not just supported by firm US results in fundamentals lately yet additionally from constant hawkish story from Fed’s officials.
 
Later in the week, the API and the EIA are supposed to provide details regarding US petroleum inventories in the week to May 19.
 
So far, the trend of the WTI price has been quite unstable. If the sellers regain control of the market, the next significant support level to look out for would be the 2023 low of $63.61(May 4). This is followed by the December 2021 low of $62.46 (December 2), and the crucial $60.00 level per barrel. On the upside, there is likely to be an obstacle at the weekly high of $79.14 (April 24). This is followed by the key level of $80.00 and the vital 200-day SMA at $80.23. The subsequent resistance levels include the 2023 peak at $83.49 (April 12), and the November 2022 top at $93.73 (November 7).
 
Resistance levels: $73.53 $75.78 $76.89 (4H chart)

Support levels: $70.01 $69.38 $63.61 (4H chart)

Equity markets, as measured by the Dow Jones, started the week on a negative note, while the S&P500 and Nasdaq were up slightly. All this amid growing investor unease ahead of crucial debt ceiling negotiations later this week.
 
In addition, speculation about another Fed rate hike seemed to be revived at the June meeting after St. Louis Fed J. Bullard argued for some additional rate hikes in the coming months.
  
All in all, the Dow Jones dropped 0.33% to 33318, the S&P500 gained 0.19% to 4199, and the tech-heavy Nasdaq Composite advanced 0.63% to 12736.
 
The May low of 32937 (May 4) emerges as the immediate contention for the Dow Jones in case losses accelerate in the near term. Further down comes the significant 200-day SMA of 32774 prior to the 2023 low of 31429 (March 15) and the 2022 low of 28660 (October 13). On the flip side, the May top of 34257 (May 1) is the first possible target, followed by the 2023 high of 34342 (January 13) and the December 2022 peak of 34712 (December 13). If the index surpasses this level, it could accelerate towards the April 2022 high of 35492 (April 21). The step-by-step RSI slipped back below 48.
 
Top Performers: 3M, Intel, American Express,

Worst Performers: Nike, Procter&Gamble, Coca-Cola

Resistance levels: 33652 33772 34257 (4H chart)

Support levels: 33006 32937 31805 (4H chart)