Market Focus

Led by big tech, US stocks advanced on Friday and notched the best month since 2020. Amazon.com Inc. and Apple Inc. soared as higher revenues from the powerhouses relieved fears of profit and growth slowdown. Despite some worrying signals from economic proxies, the earnings season as a whole performed better than expected, with nearly 75% of the firms within S&P500 reporting a result beating analyst estimates. Investors cannot help but speculate that Corporate America will be able to stand firmly through the storm of inflation, jumbo-sized rate hikes and dwindling growth. However, two key US price index reports were higher than forecast, especially the personal consumption expenditures index, which the Federal Reserve is highly focused on, climbing at the fastest pace since 2005. Overall, the rebound of stocks this month still can not convince investors that this is a start of a new bull market.

The benchmarks, S&P500 and Dow Jones Industrial Average both rallied on Friday with a lighter than expected earnings season. S&P 500 went up 1.42% on a daily basis and the Dow Jones Industrial Average rose 1% for the day. Nine of eleven sectors stayed in positive territory with Energy and Consumers Discretionary the best performing among all groups, rising 4.51% and 4.27% respectively. The Nasdaq 100 meanwhile advanced with a 1.8% gain on Friday and MSCI World index rose 1.2% for the day.

Main Pairs Movement

The US dollar declined on Friday, dropping to a three-week low level below 105.6 as investors were concerned about a recession amid a mixed batch of economic data. The DXY index continued its bearish momentum and fell to a three-week low at the first half of the day, but then rebounded to a daily high level above 106.6 during the middle of the Europe trading session. The US price index showed that inflation is still unstoppable in June, and a more aggressive spike on interest rate is not impossible.

GBPUSD remained stable on Friday, with a 0.07% loss. Cable witnessed some fresh transactions and reached a daily high above 1.224 during the Asian trading session amid a weaker US dollar across the board, but then fell to a daily low level below 1.207 with the announcement of  a strong US Personal Consumption Expenditures report ahead of the NY trading session, and then regain upside traction to recover most of its daily losses. Meanwhile, EURUSD touched its daily high level above 1.025 during the middle of the Asian session, then fell back to a daily low level below 1.015. The pair  rose 0.23% for the day.

Gold advanced with a 0.58% on a daily basis,  and stands rootly on a level above $1760 marks as US yields erase earlier gains and concerns of inflation. Meanwhile, WTI oil gained bullish momentum from late Asia session and reached $99 area on Friday.

Technical Analysis

XAUUSD(4-Hour Chart)

Gold gathered bullish momentum following a dip earlier in the session as the US yields turned south. From the technical perspective, gold continues to build its upside momentum beyond the 1746 support zone and gains positive traction for the third consecutive day on Friday at the time of writing. The four- hour outlook is bullish as gold remains way above the ascending trend line. Despite the RSI indicator having reached beyond the overbought territory, the positive MACD seems to continue to support the bulls. As long as gold sustains its momentum above the trend line, its positive outlook remains unchanged. To the upside, the breakout of the immediate hurdle of 1766 would give gold another rally.

Resistance: 1766, 1786, 1811

Support: 1746, 1721, 1680

USDJPY (4-Hour Chart)

USDJPY plunges badly to near 133.00 as the US dollar confronts selling pressure following the fading aggressive Fed tightening expectations. From the technical perspective, it is now seen as a correction of the four-hour outlook uptrend. Since USDJPY has officially broken the bullish channel, the bias becomes downside. A strong support is expected to see at 132.50 for the rebound. A breakout of the support level of 132.50 would accelerate the downside, heading further south. For now, in order for the bull to reclaim position, USDJPY needs to at least rise above 135.94.

Resistance: 134.13, 135.13, 135.94

Support: 132.50

EURUSD (4-Hour Chart)

EURUSD edged higher near 1.0200 as the US dollar lost traction. From the technical aspect, the euro dollar starts a fresh recovery against the dollar after hitting the midline of the Bollinger band and the 20 Simple Moving Average. EURUSD looks to oscillate in the range of 1.0109- 1.0284 on the four- hour chart. The outlook of EURUSD is currently neutral as the RSI indicator hovers around the midline and the MACD remains neutral. On the upside, the resistance of 1.0284 would be the first major hurdle to break in order to begin the bullish move of the euro dollar. On the contrary, if EURUSD falls below 1.0109, the pair might decline towards the 0.9952 level.

Resistance: 1.0284, 1.0362, 1.0459

Support: 1.0109, 0.9952