Market Update - 10 May 2023

EUR/USD trades without clear direction near 1.0960. Final CPI in Germany rose 7.2 YoY, 0.4% MoM in April. US inflation figures will be in the limelight later in the session. The European currency keeps the prudent stance well in place and motivates EUR/USD to gyrate around the 1.0960 region on Wednesday.

EUR/GBP bounces off a multi-month low touched on Wednesday, though lacks follow-through. The mixed comments by ECB policymakers fail to impress the Euro bulls or provide any impetus. Traders also seem reluctant to place fresh directional bets ahead of the BoE meeting on Thursday.

USD/JPY gains traction for the fourth straight day and touches a one-week top. Dovish remains by the BoJ Governor Ueda weigh on the JPY and lend support. A modest USD downtick acts as a headwind ahead of the crucial US CPI report.

USD/CAD is aiming to recapture the round-level resistance of 1.3400 as oil corrects and the USD Index has rebounded. A bipartisan agreement is anticipated from US debt ceiling talks as a delay in the debt ceiling raise is not an option. An expression of consistently increasing inflation could compel the Federal Reserve to reconsider its neutral tone conveyed in the prior policy meeting. Oil prices are struggling to stretch recovery as investors are worried that persistence in the US inflation would deepen fears of recession.

The index hovers around 101.60 amidst a tight range. US yields trade without direction ahead of key data. US inflation figures will take centre stage later in the NA session. The USD Index (DXY), which tracks the Greenback vs. a bundle of its main rivals, navigates without a clear direction around the 101.60 area on Wednesday.

GBP/USD struggles to justify the previous day’s bullish Doji candlestick formation. Bearish RSI divergence, nearly overbought positioning prod Cable buyers ahead of the key US CPI for April. Buyers remain hopeful unless witnessing clear break of 1.2500 support confluence.

USD/CHF rebounds from intraday low but stays mildly offered amid pre-data inaction. Market sentiment remains fragile amid mixed concerns about US debt ceiling woes. Cautious mood ahead of data allows Swiss Franc (CHF) pair to edge lower. Positive surprise from US CPI for April can add to US Dollar’s strength.

NZD/USD regains positive traction on Wednesday, albeit lacks follow-through buying. The cautious market mood lends some support to the USD and acts as a headwind. The downside seems cushioned as traders seem reluctant ahead of the key US CPI.

USD/INR reverses from 13-day high to pare the first weekly gains in three. US Dollar snaps two-day rebound amid mixed concerns about debt ceiling expiration, banking woes. Cautious optimism, hopes of easing inflation pressure favor Indian Rupee buyers.

AUD/USD turns lower for the second successive day, albeit lacks follow-through selling. A softer risk tone lends some support to the USD and weighs on the risk-sensitive Aussie. The downside remains cushioned as traders keenly await the release of the crucial US CPI.

Tuesday’s inconclusive price action in natural gas prices came along rising open interest and volume, which leaves practically unchanged the consolidation theme within $2.00-$2.50 per MMBtu in place since late March.

Gold price has slipped back to near $2,030.00 as investors have shifted their focus back to US inflation. US CPI has regained the spotlight as US debt ceiling negotiations have adjourned till Friday. No raise in the debt ceiling is not an option as it would result in a default of obligated payments.

Silver price portrays pre-data anxiety inside weekly symmetrical triangle, 100-SMA, 200-SMA adds strength to the breakout points. Steady RSI suggests further grinding of XAG/USD price, highlighting the importance of US CPI for April. Multiple trading filters stand tall to challenge commodity prices while buyers keep the reins.

Source: FXStreet

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