Fed’s May meeting minutes due out today

During today’s Asian session, the RBNZ Hiked by 25 basis points as was widely expected, however the banks forward guidance it was implied that the door for further rate hikes is open, having stated that “high interest rates are still needed to achieve the MPC’s objectives.”, despite the statement the markets appear to have priced in that the bank has reached its terminal rate, sending the Kiwi lower. Yesterday, the US Preliminary Manufacturing PMI for May came in lower than 50, indicative of a contraction in the sector. Furthermore, House Speaker McCarthy told House Republicans during a closed GOP meeting yesterday that they “are nowhere near a deal yet”, intensifying fears that the US may default on its debt as the two sides appear to have reached an impasse and with the ‘X-Date’ nearing, market worries are intensifying day by day as a deal has not been reached. In the US Equities markets we note Apple’s deal with chipmaker Broadcom Inc, for the development of chips domestically in the US, amplifying the desire of companies to reduce their dependency on Taiwan and Chinese made components as tensions continue to run high. The FOMC May meeting minutes are due out today, potentially indicative a dovish sentiment as the rhetoric from Fed Policymakers has been slightly dovish the past few days. Moving on to the European markets, today’s UK CPI rates showed signs of persisting inflationary pressures in the economy, despite increasing at a slower rate. In the European equities market, we note EU Competition regulators appealing to the bloc’s highest court to force Apple to pay $14.3 billion in back taxes. In addition, we also note the decision by UK regulators to force Meta (#FB) to sell image platform Giphy to Shutterstock, citing competition concerns, further weakening investor confidence in the UK’s appeal as an investment hub following the prohibition of Microsoft’s and Activations $69 billion deal.

EUR/USD appears to be moving in an upwards fashion, despite the RSI indicator currently having a figure of below 50, implying bearish tendencies. After failing to break below support at 1.0760 (S1) on two occasions, with the addition of the bouncing off from the RSI figure of 30, we now hold a bullish outlook for the pair. For our Bullish outlook to continue, we would like to see a clear break above the 1.0830 (R1) level with the next possible target for the bulls being the 1.0890 (R2) resistance ceiling. Should the bears take over we may see the pair breaking the 1.0760 (S1) support line and aim for the 1.0675 (S2) support level.

AUD/USD continued edging lower despite yesterday’s Preliminary PMI figures, coming in higher than expected, with the pair currently testing support at 0.6595 (S1). We tend to maintain a bias for a bearish motion for the pair as the RSI indicator is below 50 and is currently near 30, implying a bearish sentiment. For our Bearish outlook to continue, we would like to see a clear break below support at 0.6505 (S2) with the next possible target for the bears being the 0.6415 (S3) support base. Should the pair find extensive buying orders along its path, we may see AUD/USD breaking the 0.6660 (R1) resistance line and aim for the 0.6730 (R2) resistance level.   

Other highlights for the day:

Today in the European session, we note the release of the UK’s CPI rates for April, Germany’s Ifo indicators for May and the UK’s CBI trends for industrial orders for May. On the monetary front, we note that BoE Governor Bailey and ECB President Lagarde are due to speak . In the American session, we note for oil traders the release of the US EIA weekly crude oil inventories figure while on the monetary front, BoE Governor Bailey is to take the podium once again and Fed Board Governor Waller is also scheduled to make statements. The highlight of the day though may be the release of the Fed’s May meeting minutes in the late American session.

EUR/USD H4 Chart

Support: 1.0760 (S1), 1.0675 (S2), 1.0575 (S3)

Resistance: 1.0830 (R1), 1.0890 (R2), 1.0975(R3)

AUD/USD H4 Chart

Support: 0.6595 (S1), 0.6505 (S2), 0.6415 (S3)

Resistance: 0.6660 (R1), 0.6730 (R2), 0.6815 (R3)

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