All Eye on Today’s U.S. PCE

• Strong U.S. GDP and Job data buoyed the dollar at a 2-month high level. 

• Heightened geopolitical tension spurs higher gold and oil prices. 

• ETH prices found support from its bearish trend, awaiting spot ETH ETF launching confirmation. 

Market Summary

The Dollar Index (DXY) showed resilience following early-session easing on Wednesday, bolstered by strong U.S. economic indicators including upbeat Initial Jobless Claims and GDP figures. However, bullish momentum remained tempered amidst market perceptions of a potential Fed policy shift in September, reflected in a decline in U.S. Treasury yields. Investors are eagerly anticipating today‘s U.S. Personal Consumption Expenditures (PCE) data for further insights into the dollar’s trajectory. 

Today‘s release of the UK’s GDP figures is set to provide crucial insights into the economic landscape, shaping sentiment around the Pound Sterling. Concurrently, escalating geopolitical tensions in the Middle East, with ongoing conflicts between Israel and Lebanon, have heightened market uncertainty. This geopolitical unrest has bolstered safe-haven demand for gold and sparked concerns over oil supply disruptions, thereby pushing oil prices higher. 

In the cryptocurrency market, Ethereum (ETH) has found support after recent bearish trends, buoyed by reports suggesting the imminent launch of a spot ETH Exchange-Traded Fund (ETF) on July 2nd. This development has injected optimism into ETH markets amidst broader market volatility.

Current rate hike bets on 31st July Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (89.7%) VS -25 bps (10.3%) 

Market Movements

DOLLAR_INDX, H4

The US Dollar eased slightly from its bullish trend before the release of the Initial Jobless Claims and GDP data, which provided buoyancy for the dollar. The dollar stands relatively flat ahead of the crucial PCE data, due later today, which will have a direct impact on the dollar's strength. However, it is notable that the US treasury yield slid yesterday, which may hinder the dollar's strength as well. Market participants are closely monitoring these developments, as the PCE data is a key indicator of inflation and will influence the Federal Reserve's future monetary policy decisions.

The Dollar Index has been trading in a bullish trajectory despite the bullish momentum having eased slightly. The RSI remains near the overbought zone, while the MACD has been hovering above the zero line, suggesting the bullish momentum remains intact with the dollar. 

Resistance level: 106.35, 106.85

Support level: 105.65, 105.15

XAU/USD, H4

Gold prices rebounded strongly in the last session and surpassed the crucial liquidity zone near the $2310 level. The recent heightened geopolitical tension in the Middle East, where Israel and Lebanon have been exchanging fire, stimulated this movement. The potential widening of the conflict in the region raises uncertainty in the market and increases demand for the safe-haven asset. As geopolitical risks intensify, investors often flock to gold as a store of value and a hedge against volatility. If the situation in the Middle East escalates further, gold prices may continue to rise as market participants seek stability amid the turmoil. 

Gold prices have rebounded and are testing their short-term resistance level at $2335. A break above this level suggests a bullish bias for gold. The RSI has rebounded, while the MACD has crossed at the bottom, suggesting that the bearish momentum is vanishing. 

Resistance level: 2350.00, 2368.45

Support level:  2320.00, 2286.00

GBP/USD，H4

The Pound Sterling, despite a slight rebound yesterday, remains in its bearish trajectory. The upbeat U.S. economic data unveiled yesterday fueled the dollar's strength, preventing the pair from breaking above its resistance level at 1.2660. The U.K.'s GDP data, due later today, is anticipated to be a critical catalyst for the Sterling, potentially influencing its direction before the U.S. PCE data is released. Positive GDP figures may provide support for the Sterling, helping it to counteract the dollar's strength.

GBP/USD has been forming a lower-high and lower-low price pattern suggest a bearish bias for the pair. The RSI has been in the lower region while the MACD flowing below zero line suggests the pair remain trading with bearish momentum. 

Resistance level: 1.2660, 1.2760

Support level: 1.2600, 1.2540

EUR/USD，H4

The EUR/USD pair continues to trade within a sideways range between the 1.0745 and 1.0680 levels. With the euro lacking catalysts this week, U.S. dollar-related factors will directly impact the pair's price movement. The upcoming U.S. PCE data release is highly anticipated and is expected to trigger significant market volatility, potentially causing the pair to break out of its current sideways trend. Should the PCE data indicate higher-than-expected inflation, it could reinforce the hawkish stance of the Fed, thereby strengthening the dollar and pushing the EUR/USD pair below its current support level of 1.0680

The EUR/USD edged higher from its support level, and the sideway trend persisted. The RSI rebounded to the 50 level, while the MACD flowed closely toward the zero line, which gave a neutral signal for the pair. 

Resistance level: 1.0730, 1.0770

Support level: 1.0630, 1.0570

NASDAQ (US100)，H4

The tech-heavy U.S. index edged slightly higher in yesterday's session despite U.S. economic indicators beating market expectations. Notably, U.S. Treasury yields eased, as the market adjusted to the expectation of a potential monetary policy shift from the Federal Reserve. This heightened expectation of a dovish shift improved risk appetite in the market and fueled the upward momentum for the equity market. Despite strong economic data, the market's anticipation of a more accommodative stance from the Fed suggests that investors are hopeful for a moderation in the tightening cycle.

The pair has broken above the 61.8% of the Fibonacci Retracement from its previous technical retracement, suggesting a potential trend reversal for the index. The RSI is moving upward toward the overbought zone while the MACD is about to break above the zero line suggesting a bullish momentum is forming. 

Resistance level: 20000.40, 20300.00

Support level: 19630.00, 19380.00

USD/JPY, H4

The Japanese Yen has found support, with the USD/JPY pair currently facing resistance near the 160.80 level. The Tokyo Core CPI reading increased to 2.1% from the previous 1.9%, providing a catalyst for the Yen's strength. This uptick in CPI enhances the likelihood of a more restrictive monetary policy from the Bank of Japan (BoJ), as the market anticipates a potential interest rate hike in July.

USD/JPY is currently trading at its highest level in decades, awaiting a catalyst to break another high. The RSI has been hovering closely toward the overbought zone, while the MACD remains elevated, suggesting that the pair's bullish momentum remains strong. 

Resistance level: 161.30, 162.00

Support level: 159.80, 158.75

CL OIL, H4

Crude oil prices edged slightly higher and are attempting to break above the strong short-term resistance level at $82.20. This upward movement is primarily driven by escalating tensions in the Middle East, where the conflict is widening and involving more oil-producing countries. Concerns over potential disruptions to oil supplies are pushing prices higher as market participants weigh the risks of reduced output from the region. If the geopolitical situation continues to deteriorate, it could lead to further price increases as traders anticipate supply constraints.

Oil prices have been consolidating, followed by an uptrend. A break above its current resistance level at 82.20 will serve as a bullish signal for oil. The RSI has been hovering near the overbought zone, while the MACD has signs of rebounding from above the zero line, suggesting bullish momentum is forming. 

Resistance level: 82.20, 84.75

Support level:  80.05, 78.60