Market Update - 23 May 2023 

EUR/USD is oscillating above 1.0800 as investors are confused over further action after Monday’s US debt-ceiling meet ended without agreement. Federal Reserve policymakers delivered mixed responses on interest rate guidance as June’s monetary policy is approaching faster. European Central Bank has already warned that more than one interest rate hike is appropriate to bring down sticky inflation. EUR/USD is making efforts for shifting comfortably above the 50% Fibonacci retracement at 1.0806.

AUD/USD fades bounce off intraday low, turns bearish after sluggish week-start. Mixed prints of Aussie PMIs, hawkish Fed concerns join hopes of no US default to weigh on AUD/USD. Cautious optimism in the markets, sluggish yields fail to lure bulls.

USD/CAD picks up bids to recover from intraday low, remains sluggish for third consecutive day. Oil price retreat recently weighs on Loonie pair even as US Dollar grinds higher. May’s monthly PMIs for US, Oil inventory data eyed for clear directions.

GBP/USD is expected to display more weakness below 1.2420 as the focus shifts to BoE Bailey’s speech. The USD Index is facing barricades above 103.30 as the upside is capped due to further delay in US debt-ceiling issues. UK’s inflation is seen declining due to a fall in the oil price.

USD/JPY pulls back after touching a fresh YTD peak on Tuesday, albeit lacks follow-through. Elevated US bond yields continue to underpin the USD and act as a tailwind for the major. The Fed-BoJ policy divergence supports prospects for a further near-term appreciating move.

The index alternates gains with losses around 103.30. No deal emerges from the Biden-McCarthy debt discussions. Housing data, flash PMIs next of note in the US calendar. The greenback trades without a clear direction around the 103.30 region when gauged by the USD Index (DXY) on Tuesday.

NZD/USD comes under some selling pressure after facing rejection near the 0.6300 mark on Tuesday. The USD stands tall near a two-month high and turns out to be a key factor dragging the pair lower. Traders now look to the US PMIs for some impetus ahead of the RBNZ policy meeting on Wednesday.

USD/INR is oscillating in a narrow range above 82.80 as investors are confused due to a further delay in US debt-ceiling issues. The USD Index is approaching the 103.50 resistance as Fed policymakers are confident of more rate hikes this year. The Indian economy is going through the buzz of a ban on Rs. 2000 notes by the Reserve Bank of India.

USD/ZAR steadies above short-term moving average, pauses the previous pullback from all-time high. RSI conditions suggest pullback in prices but previous resistance line from October 2022 holds gate for South African Rand buyers. Week-long resistance line restricts USD/ZAR run-up towards 20.00.

WTI crude oil fades week-start rebound amid inverse correlation with US Dollar. IEA warns about Oil supply shortage in H2 2023, output from Canada, OPEC+ also drop. US Dollar cheers hawkish Fed bets, optimism about debt ceiling despite no deal in sight. API’s weekly inventory data, risk catalysts and monthly PMIs eyed for clear directions.

Gold price drops closer to its lowest level since early April amid modest US Dollar strength. A combination of factors keeps the US bond yields elevated and underpins the Greenback. Looming recession risks could lend support to the safe-haven XAU/USD and help limit losses.

Silver price prints two-day downtrend, reverses Friday’s corrective bounce. Looming bear cross on MACD, sustained trading below 50-SMA keeps XAG/USD sellers hopeful. Silver sellers can keep 61.8% Fibonacci retracement on radar unless breaking $24.55 resistance.

Source: FXStreet

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