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May 23, 2023

EUR/USD: The euro initially gained but gave up ground against the dollar as investors awaited fresh signals on whether the Federal Reserve is likely to continue hiking interest rates and watched for news on the debt ceiling. Money markets are pricing in a roughly 26% chance that the Fed will deliver another 25-basis-point rate hike next month. Investors are also focused on negotiations to raise the U.S. debt limit, with the risk of a default seen as denting risk sentiment even as it is viewed as unlikely, but the debt ceiling deadline in the United States remains a concern. While there have been positive overtures from both sides, the work is not yet complete. Markets appear to be assuming that negotiations are a done deal, suggesting that any deviations in tone as negotiations play out could upset risk sentiment.

SELL STOP 1.0794/TP 1.0756/SL 1.0815


GBP/USD: The pound eased since dollar steadied as investors awaited fresh signals on whether the Federal Reserve could continue hiking interest rates and a meeting between U.S. President Joe Biden and House Republican Speaker Kevin McCarthy to discuss raising the U.S. debt ceiling. Markets await the minutes of the latest U.S. Federal Open Market meeting due on Wednesday. Moving on, the first readings of the UK’s S&P Global index for May will precede the US S&P Global for the said month to direct intraday moves. However, major attention will be given to the mentioned risk catalysts and the UK’s inflation data, to be published on Wednesday.

BUY STOP 1.2455/TP 1.2530/SL 1.2420


XAU/USD: Gold failed at defending its immediate support in the Asian session. The precious metal dropped significantly as the Federal Reserve policymakers are confident that more interest rate hikes by the central bank are in the pipeline in the fight against stubborn United States inflation. S&P 500 futures have added more gains in the Asian session, portraying a strong recovery in the risk appetite. It seems that investors are confident that US President Joe Biden will get the US debt-ceiling increase ahead. However, Monday’s meeting between US Biden and House of Representatives Kevin McCarthy concluded without an agreement but remained constructive at best. Meanwhile, St. Louis Fed Bank President said on Monday that the Fed wants to fight inflation amid a strong labor market. He further added that the policy rate will have to go higher this year, perhaps by 50 basis points.

BUY LIMIT 1951.00/TP 1996.00/SL 1930.00