Market Focus

The Nasdaq Composite and the S&P 500 bounced slightly on Friday as investors attempted to find some footing following a brutal week. The Nasdaq rose 1.43% while the S&P 500 climbed 0.22% to 3,674.84. The Dow Jones Industrial Average declined 0.13%, remaining below 30,000. Federal Reserve Chairman Jerome Powell’s speech on Friday featured strong language promising full effort in  restoring price stability and inflation. Powell also addressed the possibility that a recession could be avoided even with monetary tightening.

It has been another bad week for the cryptocurrency market. Over the weekend, the world’s largest cryptocurrency, Bitcoin, once plunged below $19,000 and Ethereum was once down below $950. The cryptocurrency market continues to face heavy selling pressures following the Federal Reserve aggressively raising interest rates in response to the inflation, prompting investors to sell off risky assets like cryptocurrencies. In the meantime, lending and trading platform Celsius Network has announced that it would be pausing all crypto transfers and withdrawals, while Coinbase, a crypto trading platform, started laying off approximately 18% of its workforce.

Main Pairs Movement

EUR/USD was down 0.5%, finished with 1.04933 on Friday. The US dollar gained traction following the Fed reiterating  its promise to continue tackling inflation and focus on returning inflation to 2%.

USD/JPY was back to a bullish move after a two consecutive day of correction. USD/JPY was up 2.04%, closing at 134.855 at the end of the day. The Japanese yen witnessed a volatile day amid the dovish comments from the Bank of Japan.

Gold retreated south amid the speech from the Fed Chairman Jerome Powell and recovering US Treasury bond yields in the second half of the day on Friday. Gold posted a 0.88% loss, closing with $1,840.40 on Friday.

WTI dipped to a fresh weekly low, and was down 5.15% following an unexpected rise in the US oil inventories. The EIA showed that crude oil production climbed to 12000K from 11,900K on a weekly basis. In the meantime, the US might influence oil prices ahead of the OPEC+ meeting on June 30.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD edged lower on the last trading day of the week. The US Greenback recovered after a large sell off on Thursday as market participants return to risk off sentiment. The US 10 year treasury yield continued to fall as market participants weighed economic concerns and soaring inflation. The ECB’s decision to rotate into higher yielding bonds has prevented the shared currency to fall further and retain some of the gains from Thursday.

On the technical side, EURUSD has met fresh resistance at 1.05483 after a three day winning streak. Fresh support has formed at 1.04036 for EURUSD. RSI for the pair sits at 42.85, as of writing. On the four hour chart, EURUSD currently trades below its 50, 100, and 200-day SMAs.

Resistance:  1.05483, 1.07691

Support: 1.04036, 1.03783

GBPUSD (4-Hour Chart)

GBPUSD experienced a correction on the last trading day of the week. As market participants process the most recent interest rate hike by the BoE, economic worries and inflation again weigh on the British Pound. The US Greenback has also gained steam as risk off sentiment continues to evolve around global markets. U.K. treasury bond yields have retreated 1.5%, while the US treasury yield is rising modestly.

On the technical side, GBPUSD has met fresh resistance at 1.23806 and new support level at 1.2173. RSI for Cable sits at 50.4371, as of writing. On the four hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMAs.

Resistance: 1.25944, 1.23806

Support: 1.2173, 1.20824

USDJPY (4-Hour Chart)

The BoJ announced its interest rate policy during the Asia trading session. The Japanese central bank retains its easy money policy and announces that the bank will conduct 12 trillion yens of purchase of fixed rate 10 year JGBs at 0.25% for consecutive days, in order to support the economy. In sharp contrast to the Fed, the BoJ’s monetary policy has continued to disfavor the Japanese yen in the foreseeable future.

On the technical side, USDJPY found support at our previously estimated support level at 133.5 and fresh resistance at 135.16. RSI for the pair sits at 56.98, as of writing. On the four hour chart, USDJPY currently trades above its 50, 100, and 200-day SMAs.

Resistance: 134.56

Support: 133.5, 132.5