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Trading ideas for EUR/USD, USD/JPY and XAU/USD

May 24, 2023

EUR/USD: EUR/USD bears took a breather in early Asian season on Wednesday, after posting the biggest daily loss in a week. That said, escalating fears of the US default, hawkish Fed bets and anxiety ahead of the Fed minutes seem to contribute the maximum in the latest sour sentiment, as well as to the EUR/USD weakness. No progress in talks to avoid the US debt ceiling and fears that the US may mark the ‘catastrophic’ default weighed on the market sentiment. Looking ahead, the Eurozone calendar remains empty and may add strength to the latest EUR/USD inaction. However, risk catalysts and the latest Federal Open Market Committee Meeting Minutes will be crucial to watch for clear directions.

SELL LIMIT 1.0806/TP 1.0741/SL 1.0840


USD/JPY: The US dollar briefly touched a six-month peak against the Japanese yen as expectations that US interest rates will remain higher for longer, while ongoing debt ceiling negotiations kept investors on edge. Among a slew of Federal Reserve heavyweights who spoke on Monday, some hinted that the central bank had further to go in tightening monetary policy. S&P 500 futures have posted some gains in early Tokyo. US equities were heavily sold out as investors are worried that a default by the United States economy in addressing its obligated payments will trigger a recession. Market sentiment has dampened amid uncertainty in global markets. On the Japanese Yen front, economic prospects are getting stronger amid wage growth and a recovery in overall demand. Business sentiment at big Japanese manufacturers turned positive for the first time this year and service-sector morale hit a five-month high, providing more evidence of an economy after a COVID recession.

SELL STOP 138.20/TP 137.30/SL 138.60


XAU/USD: Gold Price struggles to defend the previous day’s corrective bounce from the short-term key support line, mildly bid around $1,975 amid early Wednesday. In doing so, the precious metal awaits more clues to cheer the latest pause in the US dollar’s run-up at the day high as the Federal Open Market Committee Meeting Minutes loom. It’s worth noting that a pullback in the US Treasury bond yields and doubts over the US debt ceiling extension deal seems to prod the gold buyers of late. Given the mixed markets and the gold price consolidation ahead of the key events, traders may witness further lack of activity. Even so, updates about the US debt ceiling negotiations and the US-China tension, which are on the spike of late, will be the key to watch for clear directions of gold.

BUY 1975.00/TP 1985.00/SL 1970.00