US core PCE in the spotlight

Today’s report: US core PCE in the spotlight

Investors are doing their best to buy the dip on hope the Fed may not be as unfriendly with the rate cut path in 2024. That hope came by way of a softer round of US economic data highlighted by a miss on the US GDP print.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0900 – Figure – Medium
  • R1 1.0896 - 16 May high – Medium
  • S1 1.0788 - 30 May low– Medium
  • S2 1.0724 – 9 May low – Strong

EURUSD – fundamental overview

The Euro has been better bid as it gets help from both sides of the coin. On the Euro side, there has been demand from Thursday's Eurozone consumer confidence improvement and dip in the Eurozone unemployment rate. On the US side, a softer round of US data has forced a dovish repricing of Fed bets, opening more Euro demand. As we look at Friday’s calendar for the remainder of the day, the major standouts come from German retail sales, UK consumer credit and mortgage approvals, Eurozone inflation, Canada GDP, US core PCE, and Chicago PMIs.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2000.

  • R2 1.2804 – 21 March high – Medium
  • R1 1.2801 – 29 May high – Medium
  • S1 1.2643 – 16 May low – Medium
  • S2 1.2578 – 15 May low – Medium

GBPUSD – fundamental overview

Absence of any first tier UK news has left the Pound focused on the US Dollar fundamentals which have been supportive of the UK currency. Thursday's softer round of US economic data has forced a dovish repricing of the Fed rate outlook, driving yield differentials back towards the Pound. As we look at Friday’s calendar for the remainder of the day, the major standouts come from German retail sales, UK consumer credit and mortgage approvals, Eurozone inflation, Canada GDP, US core PCE, and Chicago PMIs.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

  • R2 157.99 – 1 May high – Medium
  • R1 157.71 – 29 May high – Medium
  • S1 153.60 – 16 May low – Medium
  • S2 151.86 – 3 May low – Strong

USDJPY – fundamental overview

The Yen has found some bids on the back of Thursday's softer US economic data and today's stronger Japan data. Japan CPI came in on the hotter side, while retail trade rebounded. As we look at Friday’s calendar for the remainder of the day, the major standouts come from German retail sales, UK consumer credit and mortgage approvals, Eurozone inflation, Canada GDP, US core PCE, and Chicago PMIs.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6800– Figure – Medium
  • R2 0.6715 – 16 May high – Medium
  • S1 0.6591– 30 May low – Medium
  • S2 0.6558 – 8 May low – Strong

AUDUSD – fundamental overview

Aussie private sector credit came in above forecast, though China PMI reads were softer and offsetting. Overall, Aussie has been chopping around but has been trying to find more bids on momentum from Thursday's softer round of US data. As we look at Friday’s calendar for the remainder of the day, the major standouts come from German retail sales, UK consumer credit and mortgage approvals, Eurozone inflation, Canada GDP, US core PCE, and Chicago PMIs.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3847 – 16 April/2024 high – Strong
  • R1 1.3785 – 30 April high – Medium
  • S1 1.3586 – 10 May low – Medium
  • S2 1.3547 – 9 April low – Strong

USDCAD – fundamental overview

Canada's CFIB business barometer saw an impressive jump to its best reading since June of 2022. This in conjunction with a round of softer US economic data helped to drive the Canadian Dollar higher, despite weakness in the price of oil. As we look at Friday’s calendar for the remainder of the day, the major standouts come from German retail sales, UK consumer credit and mortgage approvals, Eurozone inflation, Canada GDP, US core PCE, and Chicago PMIs.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6200 – Figure – Medium
  • R1 0.6171 – 28 May high– Medium
  • S1 0.6083 – 22 May low – Medium
  • S2 0.6031 – 15 May low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been supported on the back of a softer run of Thursday US economic data which has driven yield differentials out of the Buck's favor. As we look at Friday’s calendar for the remainder of the day, the major standouts come from German retail sales, UK consumer credit and mortgage approvals, Eurozone inflation, Canada GDP, US core PCE, and Chicago PMIs.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. At the same time, the latest bullish breakout to a fresh record high beyond the 2024 high opens the door for the next measured move upside extension targeting the 5650 area. Key support comes in at 4928.

  • R2 5400 – Round Number – Strong
  • R1 5352 – 23 May/Record high – Medium
  • S1 5196 – 14 May low – Medium
  • S2 5165 – 8 May low – Medium

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite major disruption to the stock market.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.

  • R2 2500 – Psychological – Strong
  • R1 2451 – 20 May Record high – Medium
  • S1 2300 – Round Number – Medium
  • S2 2277– 3 May low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.

Peformance chart: 30-Day Performance vs. US dollar (%)

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