The U.S. Dollar Index (DXY) closed Thursday’s session around 0.89% weaker, closing near the 98 level. Friday’s early session initially saw some support, but momentum turned bearish with the index falling further by 0.16%. The dollar’s weakness saw the EUR/USD pair jump up 0.47%, while a major catalyst turned the USD/JPY pair 2.40% lower.
On the macroeconomic front, the US Q1 GDP estimates indicated 2% QoQ growth, below the 2.2% expected. Meanwhile, the Core PCE Price Index rose by 3.2%, up from the previously reported 3%. These reports reinforced fears of stagflation in the US economy, leading to a downward trend in major dollar pairs. Another major catalyst for a selloff in the dollar came after Japan confirmed that it intervened in the currency markets and conducted a Yen-buying operation, following the USD/JPY pair’s crossing of the 160 mark.
From a technical standpoint, the dollar index fell sharply after hitting resistance near the 200-day EMA at around 99.06 and is now testing a support zone in the high 97s, near the mid-April lows. A fall below the 97.63 mark from 17th April lows could trigger further weakness. Meanwhile, USD/JPY may find some support near the 200-day EMA level around 154.89.
Today, both SPX and NDX are trading nearly flat at $7,223 and $27,474, respectively.Global markets are still moving higher, mainly because company earnings, especially from tech and AI, continue to come in strong.
U.S. stocks have largely ignored economic concerns, as big tech companies continue to deliver solid results. Even traditional companies like Caterpillar are benefiting, showing that the AI boom is spreading beyond just tech. Apple’s positive outlook and share price recovery have also helped boost confidence. Stock futures hitting record highs suggest Wall Street could open strong again.
There are still some risks, oil prices are high, and central banks remain cautious about inflation, but investors are focusing more on the positives. Companies are still making good profits, job markets are strong, and spending on cloud computing and data centres is growing quickly. For now, strong earnings, plenty of money flowing into stocks, and clear opportunities to profit from AI are keeping markets upbeat and the rally going.
The S&P 500 is currently moving sideways around 7,216–7,235, hovering near record highs, which shows the overall trend is strong. On the 4-hour chart, the index is staying close to the top of its recent range (upper Bollinger Band), meaning momentum is still positive, and buyers are in control. Any pullbacks are likely to be small and quickly bought. The key level to watch is around 7,160. As long as the index stays above this, the uptrend remains intact. If that support holds, the market could continue higher toward 7,239- 7,300 soon. For now, any dips are seen as buying opportunities in a strong upward trend.
Oil prices are on course for their second consecutive weekly gain after President Trump refused Iran’s latest proposal and extended the blockade of the Strait of Hormuz indefinitely. The ongoing tensions have sent WTI prices up12% so far this week. Iran’s leader also cast doubt on the possibility of a deal with the U.S. as the country does not wish to relinquish its nuclear and missile capabilities, as reported in a fresh statement on Thursday. Broadly speaking, oil prices have risen by more than 25% over the past two weeks as negotiations remain deadlocked. Companies like ConocoPhillips have indicated the possibility of severe oil shortages for certain import-dependent countries, especially between June and July. Tightness has started to materialize domestically in the U.S. market, due to which the gap between paper and physical prices has started to narrow.After soaring to a four-year high, Brent retreated slightly and is holding steady at around $116.72. The commodity has immediate support around $114.58, which capped the gains in early April. The 5-period RSI on the day chart is in overbought territory at 78.44, which could result in near-term consolidation or a very short-lived dip. However, the bias remains firmly tilted to the upside. Sustained moves above $120.54 could fuel another leg of the bull run. WTI is down 0.23% at $107.56, with immediate support at $106.29, followed by $101.43. Sustained moves above yesterday’s intraday high of $113.29 could reinforce a move up to $116.30.
Gold rebounded in yesterday’s session as oil saw profit-taking and the dollar retreated sharply amid reports of Japan’s likely intervention in the FX market. However, it continues to face downward pressure as long as the geopolitical tensions persist and the Strait of Hormuz remains closed. The energy-supply shock caused by the nine-week conflict has added to inflation risks, raising the likelihood that central banks will keep rates steady for longer or even hike them, which is a headwind for non-yielding bullion. This may lead to a similar episode seen in early March, in which another wave of equity correction could drive selling pressure in the yellow metal. However, in the long term, the fundamentals of gold remain strong as central banks add gold holdings at the fastest pace in more than a year in the first quarter. Net official-sector purchases totalled 244 tons in the first three months, up from 208 tons in the previous quarter, according to estimates from the World Gold Council.Technically, the metal is trading below the 9- and 21-day SMAs at $4,594 and $4,715, respectively. On the 4-hour chart, it is trading within a descending channel connecting the highs at $4,892, $4,730, and $4,621, and the lows at $4,670 and $4,510, respectively. It failed to break through the channel resistance at $4,621, and the 5-period RSI is trending downward toward the 50 level. A break below the $4,580 level may lead to further bearishness, towards the $4,520 levels, followed by the channel low at $4,455. Conversely, if the $4580 support holds, and it crosses the channel resistance at $4621, the metal’s direction turns positive in the near term.
