Softer US economic data on Thursday reignited expectations for Federal Reserve rate cuts, leading to a sharp drop in Treasury yields and a rally in cyclical stocks. Producer prices fell 0.5% in April, retail sales declined, and factory output dropped, signaling cooling demand and increased chances of Fed easing later this year. The 2-year yield dipped below 4%, and markets now price in two rate cuts, likely starting in September.
Equities gained on the rates shift, led by cyclical sectors, while FX markets remained largely driven by technicals rather than fundamentals.
Crude oil prices fell over 2% as news of a possible US-Iran nuclear deal raised the prospect of more Iranian supply returning to the market, pressuring already weak demand.
USD/JPY Technical Focus
The USD/JPY pair shows limited correlation with interest rate differentials or risk sentiment. Technical indicators like RSI and MACD hint at a potential momentum shift lower but remain neutral. Key support levels are 145, 144, and 141.65, while resistance is near the 50-day moving average at 146. A sustained break above 146 could open a retest of 148.70.
Gold’s Strong Bounce
Gold reversed earlier losses with a nearly 2% gain, bouncing off the December 2024 uptrend. This move reinforces gold as a buy-on-dips asset. Resistance lies at $3,270, with a break possibly targeting $3,367. Support levels include $3,168, near the uptrend and 50-day moving average.
Momentum indicators show mixed but slightly bullish signals, with RSI breaking its downtrend and MACD still above zero. Price action currently favors a modest upside bias going into the weekend.
Crude Oil Near Key Levels
Crude formed a topping pattern and broke its recent uptrend, with bearish momentum building. Support levels to watch are $60.50, $57.70, and $55.13, while resistance around $64 remains a hurdle for any rally attempts.
