Today's analysis: USD/JPY faces volatility due to economic policy uncertainty.

Product: XAU/USD

Prediction: Decrease

Fundamental Analysis: 

Last Friday, Reuters reported that the People's Bank of China  halted its Gold purchases to its reserves in May, after increasing them for 18 consecutive months. China's Gold holdings remained unchanged at 72.80 million ounces at the end of May, which caused an immediate drop in Gold prices (XAU/USD) below $2,340, erasing a large portion of its weekly gains.

In the U.S. session, the Bureau of Labor Statistics (BLS) announced that Nonfarm Payrolls rose by 272,000 in May, significantly exceeding the market consensus of 185,000. This stronger-than-expected employment data led to a sharp rise in U.S. Treasury bond yields and heavy selling pressure on Gold, resulting in the precious metal losing more than 2% on the day.

Technical Analysis: 

The recent swing high has sparked bullish momentum, but mixed signals warrant caution before positioning for further gains. Resistance around $2,395 may cap any upward move, though sustained buying could lift gold towards $2,425 and challenge the May high of $2,450. On the downside, $2,060 appears critical support. A decline may be seen as a buying opportunity around $2,337, limiting the fall to $2,315-$2,314 or the recent low. However, a breakdown below this support could confirm a move through the 50-day moving average, paving the way for deeper losses and a test of $2,280 support.

Product: EUR/USD

Prediction: Decrease

Fundamental Analysis: 

The European Central Bank trimmed interest rates by 25 basis points, but its decision was seen as hawkish as it cooled expectations for further cuts. The ECB updated its economic projections, revising GDP growth slightly higher for 2024 and inflation forecasts higher for 2024 and 2025.

In the US, employment data showed job openings declined, private sector job creation slowed, and initial jobless claims rose. However, the May Nonfarm Payrolls report beat expectations, with 272K new jobs added. This strong labor market data, along with persistent inflation, is likely to keep the Federal Reserve from cutting rates at its upcoming meeting. Key upcoming data includes US CPI and the Michigan Consumer Sentiment Index.

Technical Analysis: 

The EUR/USD pair faces immediate resistance at 1.0900, the midpoint of the ascending regression channel. If it rises above this level and uses it as support, it could target 1.0950 and 1.0980 next. On the downside, the 1.0860-1.0850 area, including the 50-period and 100-period SMAs and the lower channel limit, is a crucial support before the 1.0800 area, which includes the 200-period SMA and a static level.

Product: USD/JPY

Prediction:Increase

Fundamental Analysis: 

The sharp rise in USD/JPY following the strong US jobs report may be exaggerated, as it contrasts with earlier weaker employment data and the situation in Japan. In Japan, real wages have declined for 25 straight months as inflation outpaces wage growth, complicating the Bank of Japan's (BoJ) policy normalization. The BoJ remains the only major central bank still conducting quantitative easing, leading to a significant yen devaluation that worries policymakers. However, the BoJ may reduce bond purchases, which could strengthen the yen. The Japanese authorities may also intervene directly in the forex market to prop up the yen, as a weak currency is seen as negatively impacting the economy.

Technical Analysis: 

USD/JPY has rebounded notably in early US trading but remains capped by the 157.70 resistance. The immediate bias is neutral for now. A break above 157.70 could revive the broader bullish momentum and target the 160.20 high. Conversely, a decline below 154.53 would shift the focus to the downside, potentially exposing the 151.86 support and opening the door for deeper corrective moves.

Product: US Oil

Prediction:Decrease

Fundamental Analysis: 

The market struggled to find solid footing, raising concerns about potential further declines. The drop followed a robust U.S. jobs report that suggested the Federal Reserve might delay interest rate cuts, typically strengthening the dollar and making oil more expensive for holders of other currencies, thus dampening demand. Additionally, despite OPEC+'s assurances to potentially pause or reverse output increases, the market interpreted the recent OPEC+ meeting as indicative of rising supply, contributing to the bearish sentiment. These factors collectively pressured crude oil prices, with both Brent and WTI registering weekly losses.

Technical Analysis:

Oil price upside faces resistance at $75.9 pivot and $78.13 200-day average. Breach above could spur further gains. Downside break of $72.5 would signal resumed downtrend, potentially targeting $69.64. Key levels to watch as they will likely dictate the near-term direction of the asset.

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