U.S. economic indicators released Thursday showed signs of a slowdown, fueling renewed expectations that the Federal Reserve may ease monetary policy later this year. Producer prices dropped 0.5% in April, retail sales declined, and factory output fell—signals that point to weakening demand.
In response, Treasury yields fell sharply, with the 2-year yield dipping below 4%, as markets priced in the likelihood of two Federal Reserve rate cuts beginning as early as September. This shift also triggered gains in equities, particularly among cyclical sectors sensitive to economic cycles. Meanwhile, foreign exchange markets continued to move largely on technical factors rather than fundamental shifts.
Oil Prices Drop Amid Potential U.S.-Iran Nuclear Deal
Crude oil prices declined more than 2%, pressured by reports of a possible nuclear agreement between the U.S. and Iran. The prospect of increased Iranian oil supply returning to global markets added to concerns over already subdued demand.
USD/JPY Technical Outlook
The USD/JPY currency pair remains largely disconnected from interest rate differentials or broader risk sentiment. Technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest a possible shift toward weaker momentum, though both remain neutral. Key support levels stand at 145, 144, and 141.65, while resistance is near the 50-day moving average at 146. A sustained break above this level could pave the way for a retest of 148.70.
Gold Rebounds Strongly
Gold staged a strong recovery, reversing earlier losses with a near 2% gain. The metal bounced off the upward trendline established since December 2024, reinforcing its status as a buy-on-dips asset. Resistance is seen around $3,270, with a potential target near $3,367 should that level be breached. Support levels lie at $3,168, near both the uptrend and the 50-day moving average.
Momentum indicators present a mixed but mildly bullish picture. The RSI has broken its downward trend, while the MACD remains above zero, suggesting a modest upside bias as the market heads into the weekend.
Crude Oil Approaches Key Technical Levels
Crude oil prices have formed a topping pattern and recently broke their uptrend, signaling growing bearish momentum. Key support levels to watch include $60.50, $57.70, and $55.13. Resistance near $64 continues to present a challenge for any sustained rally attempts.
