Downtrend Line Broken, Short-Term Bullish Outlook

Forex

Summary:

UK April CPI unexpectedly rose, potentially delaying BoE rate cuts and boosting the pound. Meanwhile, improved risk sentiment has weakened safe-haven demand for the yen.

BUY GBPJPY

Close Time

CLOSED

193.257

Entry Price

199.100

191.300

206.907 -0.193 -0.09%

138.3

Pips

Profit

191.300

194.640

Exit Price

193.257

Entry Price

199.100

Fundamentals

On Wednesday, UK April CPI surged to 3.5% YoY (vs. 2.6% in March), while core CPI climbed to 3.8% (vs. 3.4%), both exceeding expectations and hitting a 15-month high. The inflation spike, driven by energy, water bills, and airfare costs, reinforced market expectations of delayed BoE easing, or even a hawkish tilt, providing solid support for GBP.

Additionally, UK May flash PMIs (manufacturing & services) remained above 50, signaling continued expansion, while Japan's April composite PMI dipped below the boom-bust line. This divergence strengthens the case for the GBP outperformance.

With U.S.-China trade tensions easing, global risk appetite has improved, reducing the demand for the Yen. Concurrent U.S. dollar weakness this week further supports GBP/JPY upside.

Technical Analysis

Downtrend Line Broken, Short-Term Bullish Outlook_1

The daily chart shows GBP/JPY has decisively broken its prior downtrend line, suggesting a potential shift from bearish to bullish. The moving average system shows upward inflection, with the MA20 crossing above MA60 and MA144 (a golden cross), reinforcing bullish momentum.

Having breached both the downtrend resistance and the March 27 high, GBP/JPY's upside appears open, with initial targets at the psychological 200.00 level.

Trading Recommendations

Trading direction: Buy

Entry price: 193.30

Target price: 199.10

Stop loss: 191.30

Valid Until: June 06, 2025, 23:00:00

Support: 191.88/190.29

Resistance: 196.40/200.00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

If the pair once again fails to gain traction above this key technical barrier, bearish momentum could gain ground, possibly pushing the pair back toward the 0.6200 support region.

SELL AUDUSD

Close Time

CLOSED

0.64500

Entry Price

0.62000

0.65600

0.66431 +0.00048 +0.07%

4.4

Pips

Profit

0.62000

0.64456

Exit Price

0.64500

Entry Price

0.65600

At its policy meeting on Tuesday, the Reserve Bank of Australia (RBA) opted to cut its Official Cash Rate (OCR) by 25 basis points, bringing it down to 3.85% from 4.10%. The central bank attributed the decision to continued progress in reducing inflation and a more balanced risk outlook. In its statement, the RBA emphasized that “inflation has declined substantially from its 2022 peak,” and that “inflation risks have become more evenly balanced.” While the central bank acknowledged signs of improvement, it also stressed a cautious tone, noting that “significant uncertainty remains surrounding aggregate demand and supply.”

Australia’s economic activity remains relatively steady, with the manufacturing sector holding its ground and the services sector showing signs of losing momentum. This combination points to an economy that is stable but lacking strong growth drivers. The recent rate cut gives the RBA room to assess evolving conditions, with flexibility to either hold or ease further depending on how the data develops in the coming months.

In the United States, President Donald Trump has applauded the passage of what he describes as the “big, beautiful bill” in the House of Representatives. While the administration frames it as a major victory for working Americans, financial markets have responded with skepticism. The legislation, which includes major tax reductions and expanded government spending, is raising red flags among analysts due to its potential to widen the fiscal deficit significantly.

According to estimates from the nonpartisan Congressional Budget Office (CBO), the bill could increase the national debt by as much as $3.8 trillion over the next decade. This would likely lead to a notable rise in interest payments and impose greater strain on public finances.

Despite being marketed as a growth-friendly and socially supportive initiative, the bill is expected to substantially erode federal revenue. In response to the expected shortfall, the administration has floated the idea of cutting spending on crucial welfare programs such as Medicare and food assistance. This has raised concerns over the social and economic impact of shifting fiscal responsibility away from taxation and toward cuts in public support.

On the monetary policy front, Federal Reserve Governor Christopher Waller reaffirmed his position that the inflationary effect of tariffs would likely be temporary. In a Reuters report, Waller reiterated that the Fed’s policy framework typically discounts short-term price spikes driven by trade measures.

Market participants are now focused on the upcoming release of the S&P Global Flash Purchasing Managers’ Index (PMI) for May, set to be published at 13:45 GMT. The data is expected to provide an updated snapshot of U.S. business conditions, which could influence expectations for future Fed action.

Labor market data also continues to show resilience. Initial Jobless Claims for the week ending May 16 came in at 227,000—slightly below the projected 230,000 and marginally down from the previous week’s figure of 229,000. Although the improvement is modest, it reflects continued strength in employment conditions. Key Resistance May Trigger Bearish Reversal in AUDUSD_1

Key Resistance May Trigger Bearish Reversal in AUDUSD_1

Technical Analysis

AUD/USD is struggling to break above the 200-day moving average, which is currently located around the 0.6451 mark on the daily chart. Each approach to this level has been met with notable resistance, suggesting that sellers may see this as a potential zone to initiate downside moves. If the pair once again fails to gain traction above this key technical barrier, bearish momentum could gain ground, possibly pushing the pair back toward the 0.6200 support region.

The Relative Strength Index (RSI) is currently at 51.9, remaining in neutral territory. However, a bearish divergence between the RSI and price action has become increasingly evident. Should this divergence persist and the price fail to establish a new local high above 0.6516, the bearish setup would remain intact. On the other hand, a decisive breakout above that level would invalidate the current bearish bias and potentially pave the way for a new leg higher. Until such a breakout occurs, traders are likely to view the 200-day moving average as a key inflection point that could cap further gains and reinforce downside risk.

Trading Recommendations

Trading direction: Sell

Entry price: 0.6450

Target price: 0.6200

Stop loss: 0.6560

Validity: May 30, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

A strong close above these levels could trigger an acceleration of bullish momentum, with the next upside target seen near 0.8620.

BUY USDCHF

Close Time

CLOSED

0.83050

Entry Price

0.86190

0.81450

0.80336 -0.00119 -0.15%

22.2

Pips

Profit

0.81450

0.83272

Exit Price

0.83050

Entry Price

0.86190

U.S. President Donald Trump recently praised the approval of what he calls the “big, beautiful bill” in the House of Representatives. While the administration presents it as a major relief measure aimed at supporting working Americans, financial market participants have raised serious concerns over its long-term fiscal consequences. The bill, which includes sweeping tax cuts and expansive spending plans, is expected to significantly deepen the nation’s fiscal deficit.

According to the nonpartisan Congressional Budget Office (CBO), the newly approved legislation could add as much as $3.8 trillion to the national debt over the next decade. This increase would place additional pressure on the federal budget, particularly in the form of rising interest obligations.

Though marketed as a pro-growth, worker-friendly initiative, the bill is projected to substantially reduce federal revenues. In an attempt to offset the shortfall, the administration has proposed cuts to vital social programs such as Medicare and food assistance. This has sparked concern among analysts and lawmakers about the potential social and economic fallout of shifting the tax burden onto essential welfare services.

Meanwhile, Federal Reserve Governor Christopher Waller reiterated his stance that tariffs are likely to result in only a one-time spike in prices. According to a report from Reuters, Waller emphasized that the Fed’s conventional policy framework typically overlooks such temporary inflationary pressures.

In the economic calendar, investors are awaiting the preliminary S&P Global Purchasing Managers’ Index (PMI) data for May, scheduled for release at 13:45 GMT. This report could provide key insights into the state of U.S. business activity and help shape expectations around monetary policy.

On the labor front, Initial Jobless Claims for the week ending May 16 came in slightly below forecasts. A total of 227,000 individuals filed for unemployment benefits for the first time, compared to market expectations of 230,000 and a prior reading of 229,000. While the decline is modest, it still points to a resilient labor market.

Adding to the pressure on the U.S. dollar, credit rating agency Moody’s downgraded the country’s sovereign debt last week. The downgrade, combined with ongoing fiscal uncertainty triggered by the introduction of the “One Big, Beautiful” tax bill, has dented investor confidence in the greenback.

Elsewhere, the Swiss National Bank (SNB) has signaled its openness to deploying negative interest rates once again if global economic turbulence intensifies due to the imposition of U.S. tariffs.

SNB President Martin Schlegel recently confirmed that all monetary policy tools—including a potential return to sub-zero rates—remain on the table. While he noted a preference to avoid such measures, the market is now broadly anticipating a 25 basis point rate cut to zero at the SNB’s upcoming policy meeting on June 19. Upside Potential Builds as USDCHF Holds Crucial Support_1

Upside Potential Builds as USDCHF Holds Crucial Support_1

Technical Analysis

USD/CHF has rebounded off the 0.8218 level, a zone that appears to be acting as a short-term support. The pair recently closed above the 200-period moving average and is now approaching a potential breakout above the 100-period moving average, located around 0.8280 and 0.8308. A strong close above these levels could trigger an acceleration of bullish momentum, with the next upside target seen near 0.8620.

The Relative Strength Index (RSI) has dipped to 27, entering oversold territory. Interestingly, this move has created a bullish divergence when compared to price action from May 7, which could attract buying interest from traders anticipating a rebound. However, if the support at 0.8218 fails to hold and price breaks decisively lower, the bearish trend may resume with further downside ahead.

Trading Recommendations

Trading direction: Buy

Entry price: 0.8302

Target price: 0.8619

Stop loss: 0.8145

Validity: May 30, 2025 15:00:00

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Silver prices retreated more than 2% from a seven-week high on Thursday, slipping from $33.70 to around $32.95 intraday.

SELL XAGUSD

Close Time

CLOSED

33.000

Entry Price

31.760

33.800

57.953 -0.364 -0.62%

80.0

Pips

Loss

31.760

33.804

Exit Price

33.000

Entry Price

33.800

Silver prices (XAG/USD) slipped sharply on Thursday following an initial rally to seven-week highs near $33.70, succumbing to renewed strength in the U.S. dollar after surprisingly firm U.S. economic data. At the time of writing, the precious metal was trading around $32.95, marking an intraday drop of over 2%, driven by a confluence of profit-taking, technical resistance, and macroeconomic catalysts.

The sharp reversal comes just one day after silver staged a robust upside breakout that saw prices rocket through prior resistance levels, buoyed by weakening dollar sentiment and strong demand for metals amid global inflationary pressures. However, that momentum faltered during the New York session as the greenback found fresh support from upbeat U.S. Purchasing Managers Index (PMI) readings.

According to preliminary data released by S&P Global, U.S. PMI figures for both the manufacturing and services sectors exceeded expectations, suggesting that the U.S. economy is expanding at a healthier pace than many had anticipated. This unexpected resilience provided a shot in the arm for the U.S. dollar, pulling silver lower due to their inverse correlation.

Technical Analysis

Market reaction was swift. With silver approaching the psychologically important $34.00 mark—near April’s highs—technical selling pressure emerged as traders opted to book profits amid overbought conditions. The Relative Strength Index (RSI), which had climbed deep into elevated territory during Wednesday's breakout, began flashing warning signs of exhaustion.Thursday’s retracement appears to be a natural cooling-off phase following an extended rally.

Currently, silver is hovering near an overlap resistance zone, with traders eyeing $33.62 as a critical short-term barrier. A failure to break convincingly above this level could signal a more extended consolidation phase. On the downside, immediate support is seen around $31.76, a zone defined by multiple prior swing lows.

A popular tactical setup being floated in intraday trading circles includes a short position from $33.00—where the market has repeatedly failed to hold—with a stop loss above $33.80, which represents the recent swing high. The take-profit target is set at $31.76, aligning with a multi-month support cluster.

TRADE RECOMMENDATION

SELL SILVER

ENTRY PRICE: 33.00

STOP LOSS: 33.80

TAKE PROFIT: 31.76

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

The current quote for USDCAD is 1.3877. The Canadian dollar received robust buying support overnight, driving USDCAD to a two-week low; nonetheless, the currency pair remains in a range-bound oscillation pattern.

SELL USDCAD

Close Time

CLOSED

1.38782

Entry Price

1.35400

1.40200

1.38224 +0.00077 +0.06%

110.2

Pips

Profit

1.35400

1.37680

Exit Price

1.38782

Entry Price

1.40200

Fundamentals

USDCAD rebounded significantly from the overnight low in the 1.3815-1.3810 area but showed signs of waning bearish momentum for the fourth consecutive day on Thursday.

Statistics Canada reported on Tuesday that Canada's overall annual inflation rate fell from 2.3% in March to 1.7% in April, primarily due to a 12.7% plunge in overall energy prices following the cancellation of the federal consumer carbon tax. However, two out of the three core inflation indicators closely monitored by the Bank of Canada reached 13-month highs, influenced by underlying price pressures.

The Bank of Canada had forecast last month that the overall inflation data would drop to around 1.5% due to the cancellation of the carbon tax and the decline in crude oil prices. Gasoline prices fell by 18.1% compared to April 2024, and natural gas prices dropped by 14.1% year-over-year. However, consumer spending on groceries increased by 3.8% year-over-year, up from 3.2% in March. Tourism prices rose by 6.7% year-over-year in April.

On a monthly basis, the inflation rate declined by 0.1%, compared to the analysts' prior forecast of a 0.2% drop.

The money market reacted to the inflation data, reducing the probability of an interest rate cut at the June 4 meeting from 65% before the data release to 48%. (CAD-positive)

Technical Analysis

During the day, the trend of USDCAD currently remains biased to the downside. The asset previously broke below the crucial 200-day moving average and subsequently fell through the 1.3900 level, continuing to favor bearish trades. This, in turn, indicates that the path of least resistance for USDCAD remains downward.

The rebound from 1.3749 may complete a pullback to 1.4014. If it re-tests 1.3749, further declines are likely. A break below this level would rekindle the downtrend since 1.4791. For now, as long as the 1.4014 resistance level holds, the risks remain skewed to the downside.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3900

Target Price: 1.3540

Stop Loss: 1.4020

Valid Until: June 6, 2025, 23:55:00

Support: 1.3810/1.3752/1.3724

Resistance: 1.3902/1.3978/1.4016

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Traders' Opinions

Summary:

West Texas Intermediate crude declined to near $61.10 in early Thursday trading, pressured by renewed US-Iran nuclear talks and a surprise build in US crude inventories.

SELL WTI

Close Time

CLOSED

60.600

Entry Price

56.500

63.500

59.880 +0.071 +0.12%

6.9

Pips

Profit

56.500

60.531

Exit Price

60.600

Entry Price

63.500

Oil markets traded on edge Thursday as geopolitical and supply-side pressures combined to nudge West Texas Intermediate (WTI) crude prices slightly lower during the Asian session. The US benchmark fell to around $61.10 per barrel, retracing recent gains and flirting with key technical support levels amid a complicated mix of diplomatic developments and unexpectedly high stockpile data.

The downturn was triggered primarily by news that the United States and Iran are set to resume nuclear talks in Rome on Friday. The diplomatic overtures come at a time of escalating regional tension, with new intelligence suggesting Israel may be preparing strikes against Iranian nuclear facilities. According to CNN, US officials have received information that Israeli military planning is underway, although no final decision has been made by Israeli leadership. If such an attack were to proceed, it could derail the negotiations entirely and ignite broader instability across the Middle East—a region responsible for roughly one-third of global oil production.

This delicate geopolitical backdrop has reintroduced a layer of volatility in energy markets, but for now, the prospect of successful diplomacy is taking precedence. Any tangible progress in US-Iran negotiations could pave the way for increased Iranian oil exports, particularly if sanctions relief becomes part of the agreement. This possibility is weighing heavily on market sentiment, capping upside momentum in WTI and Brent futures alike.

Meanwhile, the latest data from the US Energy Information Administration (EIA) added further bearish pressure to crude markets. The EIA reported a 1.328 million barrel increase in domestic oil inventories for the week ending May 16. This came as a surprise to many, given that consensus expectations had pointed to a 1.85 million barrel draw. Although smaller than the prior week’s 3.454 million barrel build, the persistent inventory accumulation underscores ongoing demand fragility and ample supply conditions in the US market.

Looking ahead, oil traders are bracing for a fresh round of US economic data later on Thursday. Key releases include the advanced S&P Global Purchasing Managers’ Index (PMI), the Chicago Fed National Activity Index, initial jobless claims, and existing home sales. Any signs of economic cooling could put additional downward pressure on the US dollar, which in turn might offer near-term support to oil prices due to the inverse relationship between the two.

Still, the broader narrative is one of caution. The recent WTI retreat below $61 suggests market participants are pricing in near-term risks from both diplomatic developments and underlying supply dynamics. While a weaker dollar might cushion oil’s fall, the balance of risks appears skewed to the downside unless the geopolitical situation sharply escalates or demand indicators stage a rebound.

Technical Analysis

From a technical standpoint, WTI crude has decisively broken below the $61.20 support level, slipping outside the bounds of a short-term bullish corrective channel. The break coincides with continued bearish pressure driven by its position below the 50-period Exponential Moving Average (EMA), reinforcing the downside bias.

However, the Relative Strength Index (RSI) is beginning to flash early signs of bullish divergence, suggesting the potential for short-term relief or consolidation. While the RSI remains in oversold territory, its initial upward inflection could slow the pace of losses in the immediate sessions.

The next crucial support level lies at $60.13. A confirmed breakdown below this threshold would likely accelerate losses toward $59.69 and potentially $56.50. Conversely, a sustained move back above $61.38 would invalidate the current bearish thesis and suggest a return to near-term bullish momentum.

TRADE RECOMMENDATION

SELL WTI

ENTRY PRICE: 60.60

STOP LOSS: 63.50

TAKE PROFIT: 56.50

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

Gold prices retreated from a two-week high near $3,345 to trade around $3,300 on Thursday, weighed down by a rebound in the U.S. Dollar.

SELL XAUUSD

Close Time

CLOSED

3305.00

Entry Price

3100.00

3350.00

4208.20 +10.29 +0.25%

450.0

Pips

Loss

3100.00

3350.00

Exit Price

3305.00

Entry Price

3350.00

Gold prices edged lower on Thursday during European trade, surrendering early-session gains after touching a two-week high around $3,345. At the time of writing, spot gold (XAU/USD) was seen hovering near the $3,300 mark, pressured by a modest recovery in the U.S. Dollar. While the metal lost ground intraday, its broader outlook remains notably firm, underpinned by renewed U.S. fiscal concerns and escalating geopolitical tension surrounding the ongoing war in Ukraine.

The U.S. Dollar Index, which gauges the greenback against a basket of six major currencies, climbed about 0.15% to trade near 99.85 after bottoming at 99.35 earlier in the week. A firmer dollar tends to exert downward pressure on gold, making it more expensive for foreign buyers. Yet this renewed strength in the dollar appears more of a technical rebound than a reversal in the fundamental narrative that continues to favor gold in the medium term.

Driving the metal’s underlying support is the intensifying spotlight on U.S. fiscal instability. On Wednesday, the House Rules Committee, under Republican control, advanced President Donald Trump’s sweeping tax package for a full vote in the House. The bill is projected by the Congressional Budget Office to increase the federal deficit by $3.8 trillion over the next ten years. It includes extensions of Trump-era tax cuts and adds new breaks on tips, overtime pay, and car loan interest. At a time when the U.S. national debt is already exceeding $36 trillion, market participants are increasingly concerned that such measures may further strain the country’s long-term creditworthiness.

That anxiety was validated by Moody’s, which downgraded the U.S. sovereign credit rating from Aaa to Aa1 last week. In its statement, the ratings agency cited ongoing legislative dysfunction and a failure by both Congress and successive administrations to implement meaningful deficit reduction strategies. As investors digest the implications of spiraling debt and widening deficits, many are reallocating toward traditional safe-haven assets like gold.

Adding to the bullish undertone is the gloomy domestic macroeconomic narrative. Fears of stagflation—where inflation persists alongside stagnating growth—are mounting among both investors and policymakers. JPMorgan Chase CEO Jamie Dimon added his voice to the chorus this week, expressing support for the Federal Reserve’s decision to hold interest rates steady while cautioning that the U.S. economy remains far from stable. In an interview with Bloomberg, Dimon said he does not believe the current environment is a “sweet spot,” highlighting risks posed by inflation, geopolitical shocks, and the rising cost of capital. These factors, combined with a fragile labor market, suggest the Fed may remain in a holding pattern, which could cap gains in the dollar while supporting non-yielding assets like gold.

Geopolitically, tensions are again flaring over the war in Ukraine. According to reports from the Wall Street Journal, President Trump told European leaders in a private call that Russian President Vladimir Putin sees no incentive to agree to a ceasefire, believing he is winning the war. This latest stance contradicts Trump’s own public messaging earlier this week on Truth Social, where he claimed that both sides had agreed to initiate truce talks in the Vatican. The mixed messaging has only added to investor uncertainty, which has historically buoyed gold demand in times of global unease.

Technical Analysis

While the macro and geopolitical backdrop remains broadly supportive, gold’s immediate technical setup paints a more cautious picture. On the four-hour chart, gold continues to trade within a descending channel that has been in place for several sessions. The price is currently near the upper boundary of this channel around $3,355, which is acting as a resistance level. If this level holds and sellers step back in, the metal could reverse lower, with a potential move toward $3,200 or even $3,100 if the lower boundary of the channel is respected.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 3305

STOP LOSS: 3350

TAKE PROFIT: 3100

Risk Warnings and Disclaimers

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