The forex markets are displaying some calmness today. While Dollar is trading as the strongest performer, it lacks clear upside momentum indicating a reversal of the decline started last week. With no significant economic data expected from the US for the remainder of the week, Dollar’s next move hinges on shifts in risk sentiment and movements in other major currencies.

Meanwhile, New Zealand Dollar is standing as the second strongest, benefiting from Australian Dollar’s selloff following RBA’s decision to maintain a neutral stance without leaning towards a hawkish tone. Additionally, Euro garners support from better-than-expected Eurozone retail sales data, positioning it as the third strongest currency for the day.

In contrast, Japanese Yen underperforms, emerging as the worst performer, followed by Australian Dollar and Swiss Franc. Sterling and the Canadian Dollar hold intermediate positions.

Technically, AUD/USD’s retreat from 0.6645 temporary top is so far rather shallow. As long as 55 4H EMA (now at 0.6554) holds, further rally will remain in favor. Break of 0.6645 will resume the whole rise from 0.6361 to 100% projection of 0.6361 to 0.6585 from 0.6464 at 0.6688. The next move will depend on how risk markets flare, in particular in Asia.

The Japanese yen is down for a second straight day on Tuesday. USD/JPY has risen 0.45%, up 154.59, up 0.45% at the time of writing. The yen is down 1% this week after soaring 3.4% against the dollar a week earlier.

The markets are still buzzing after Japan’s Ministry of Finance apparently intervened twice last week in the currency markets in order to prop up the ailing Japanese yen. Previous interventions have provided only a brief boost for the yen and after crossing above the 160 line last week, the yen has already lost some of last week’s huge gains. With the Fed signaling that it won’t rush into cutting rates, the US/Japan rate differential remains wide and is putting pressure on the yen.

Bank of Japan Governor Ueda weighed in on the yen’s woes on Tuesday, saying that the BoJ would monitor recent yen moves in guiding policy, as such moves could have a “major impact on the economy and prices”. The BoJ tightened policy in March but rates remained around zero and Ueda hasn’t indicated plans to tighten further. Investors were not impressed and the yen continued to lose ground until last week’s intervention.

-EURUSD returns within range between 1.0725 and 1.0930
-MACD and RSI detect a lack of directional momentum
-For the bears to recharge, a break below 1.0725 may be needed
-The outlook may turn bullish if the price breaks above 1.0930

EURUSD has been in a recovery mode since April 16 when it hit support near the 1.0610 area. Since then, the pair has been respecting an upside support line, which let it on Friday back within the sideways range that has been containing most of the price action since mid-November. This has turned the short-term outlook back to neutral.

Both the MACD and the RSI suggest a lack of strong directional momentum, corroborating the notion of a neutral picture for now. The former lies below zero, but above its trigger line, while the latter, although it returned above its equilibrium 50 level, has been flattening.

For the bears to be considered in charge again, EURUSD may need to fall below both the 1.0725 zone, which is the lower end of the aforementioned range, and also below the newly established upward sloping trendline. Such a dip could initially aim for the 1.0610 barrier, the break of which could encourage more sellers to jump into the action and perhaps push the price towards the 1.0520 zone, which offered support between October 18 and November 1.

On the upside, the pair is still capped by the downtrend line taken from the high of December 28, but even if the bulls breach it, they may feel more comfortable taking the steering wheel after EURUSD breaks the upper bound of the range at around 1.0930. After that, their next test may be at around 1.1000.

To recap, EURUSD continued moving higher, returning within the sideways range between 1.0725 and 1.0930. For the outlook to shift either bullish or bearish, traders may need to exit that range again. Either way SELL EURO against USD…. Keep BUYING USD on dips

daily chart for XAU/USD shows it keeps meeting sellers around a Fibonacci level, the 23.6% retracement of the April/May rally at $2,326.50. The next Fibonacci level and critical support comes at $2,260.80, a potential bearish target should Gold finally lose the $2,300 mark. In the mentioned chart, technical indicators remain within negative levels, with neutral-to-bearish slopes, reflecting the absence of buying interest. At the same time, a flat 20 Simple Moving Average offers dynamic resistance around $2,339,00, while the longer moving averages maintain their bullish slopes far below the current level.

In the near term, and according to the 4-hour chart, XAU/USD is neutral. Technical indicators head nowhere around their midlines, while the pair stands midway between a bullish 200 SMA and a bearish 100 SMA. At the same time, the pair hovers around a flat 20 SMA. Overall, the risk skews to the downside, although limited by absent US Dollar demand.

Spot Gold retreated from the $2,330 price zone and trades in the red on Tuesday, although still confined to familiar levels. The slide can be attributed to a better market mood, as European indexes closed with substantial gains. The lack of momentum, however, resulted from United States (US) indexes consonsolidating around weekly highs yet showing little signs of life. Gains among US indexes are modest, as investors lack a clear directional catalyst.
Gold had a positive start to the week, bouncing back above its 20-day exponential moving average (EMA), but the bullish attempt was not strong enough to drive the precious metal successfully above the constraining zone of 2,325. This is where the 23.6% Fibonacci retracement of the February-April uptrend and a former restrictive line are placed.

The price seems to have reached a make-or-break point and the technical picture cannot guarantee a meaningful bullish breakout. While the positive trend in the stochastic oscillator is an encouraging sign, the RSI has yet to violate its almost one-month-old downward path despite showing signs of a recovery above its 50 neutral mark.

If the bears retake control below the 20-day EMA, the price might slide towards the 38.2% Fibonacci of 2,260 and perhaps test the 50-day EMA around the same region. If the falling support line from April proves fragile around 2,240 as well, the next stop could be somewhere between 2,220 and the 50% Fibonacci of 2,207. A step lower could aggressively push the price towards the 61.8% Fibonacci of 2,154.

In the case the bulls win the battle around 2,325, they might initially challenge the 2,350 area, where the price peaked on April 26. I AM A SELLER OF GOLD. So SELL on rallies towards 2,330 and above targeting break of 2,300

The United States session included a speech from Federal Reserve (Fed) Minneapolis President Neel Kashkari, who said that the most likely scenario is that interest rates will stay on hold for an extended period. He also said that raising rates is not the most likely but cannot be ruled out. Finally, Kashkari said he would need to see multiple readings on easing inflation to be confident enough to cut rates. His dovish words came as no surprise and had a limited impact on financial markets.

Meanwhile, easing US government bond yields weigh on US Dollar demand. The 10-year Treasury note offers 4.43%, down 5 basis points on the day, while the 2-year note yields 4.80%, down 1 bps and further away from its recent peak above 5%.

Prepared by: Mr. SAM KIMA, Senior Vice President