ATFX Market Outlook 16th May 2025

ATFX Market Outlook 16th May 2025

Gold Surges Amid Powell’s Call to Reassess Fed’s Inflation and Employment Strategy

Market HighlightU.S. retail sales increased at a much weaker rate in April as the pre-tariff scramble to purchase automobiles exhausted itself and shoppers trimmed other spending in the face of growing economic uncertainty. In addition, Federal Reserve Chairman Jerome Powell stated the Fed needs to reconsider its existing employment and inflation paradigm within monetary policy.

U.S. equities ended Thursday with a mixed close. The Dow Jones gained 0.65%, the S&P 500 rose 0.4%, and the Nasdaq Composite fell 0.18%. U.S. Treasury yields nosedived, and the dollar was lower following a series of economic reports that showed worsening consumer health and growing concern over the outlook for the economy. The U.S. Dollar Index fell 0.11% to 100.89 by the New York close.

Gold prices rose more than 1%, supported by a softer dollar and weak U.S. data. Russian President Vladimir Putin's skipping of peace talks also created some safe-haven demand. Spot gold rose 1.93% to $3,239.80 an ounce, after hitting a more than one-month low earlier in the session. Oil prices closed on expectations that the U.S. and Iran will reach a nuclear deal, which would ease sanctions and push more Iranian oil onto the global market.

Key Outlook

Later today, the U.S. will release April’s housing starts and building permits statistics. The former previously posted the biggest decline in a year, and markets will be interested to see if there is any reversal. On the agenda is also the preliminary May reading of the University of Michigan Consumer Sentiment Index. Given the steep slowdown in retail sales of late, the data may reflect additional weakening of consumer confidence. Key Data and Events Today:

12:00 BoJ Board Member Nakamura Speaks *** 

17:00 EU Balance of Trade MAR ** 

22:00 US Michigan Consumer Sentiment Prel MAY *** 

23:00 ECB’s Lane Speaks ** 

Key Data and Events Coming Week:

Monday: EU CPI and Fed’s Williams Speech

Tuesday: Interest Rate Decision and Press Conference, Germany PPI and Canada CPI

Wednesday: GB CPI & PPI

Thursday: ECB Minutes, US Manufacturing & Services PMI

Friday: JP CPI, GB and Canada Retail Sales

EURUSD

· Resistance: 1.1263 / 1.1309

· Support: 1.1143 / 1.1108

EUR/USD whipsawed yesterday, dipping briefly to 1.1000 before recovering to close near 1.1200. Weaker Eurozone Q1 GDP data and decelerating US PPI inflation helped to stabilize sentiment. Traders now await Friday's UoM consumer sentiment, which is anticipated to bounce back after four straight months of weakening. Technically, price broke its uptrend line, finding resistance at 1.1263. Below 1.1143, additional weakness could be triggered.

GBPUSD

· Resistance: 1.3337 / 1.3362

· Support: 1.3230 / 1.3205

GBP/USD was stuck in a range close to 1.3300 in spite of firmer-than-expected UK Q1 GDP (0.7% QoQ) and weaker US PPI (0.1% MoM). The market response was indifferent. From the technical front, price is fast approaching a critical resistance area at 1.3337 and a falling trendline. inability to break above may cause a retreat to the 1.3230 support.

USDJPY

· Resistance: 146.25 / 147.17

· Support: 144.03/143.30

USD/JPY fell for a third day, breaking below the 10-day moving average, suggesting a trend reversal. With bearish momentum setting in, the pair can move towards 144.00, with initial support near the 20-day moving average at 144.20.

US Crude Oil Futures (JUNE)

· Resistance: 62.35/ 63.45

· Support: 60.11/ 59.00

Oil prices fell on Thursday, as WTI tumbled 2.42% to $61.62 on hopes of a US-Iran nuclear agreement that suggested more Iranian supply. A surprise U.S. inventory build, together with Putin's rejection of Ukraine peace negotiations, provided an additional push.

Spot Gold

· Resistance: 3280/3318

· Support: 3197/3159

Spot Silver

· Resistance: 33.00/33.23

· Support: 32.25/32.01

Gold gained over 1% on Thursday, supported by a weaker dollar, poor US data, and rising geopolitical tension following Putin's absence from peace talks. Markets now expect a delay in Fed rate cuts. Technically, gold broke above the descending trendline, trading above $3,200. The key support is $3,197, with potential upside towards $3,280 if the level holds.

Dow Futures

· Resistance: 42613/42961

· Support: 41928/41486

Dow Futures gained 0.65% to 42,322.75 on Thursday, with Cisco and utility stocks leading the way. Sentiment was supported by hopes of tariff relief, which may serve to contain inflation. Technically, the index is trading above an ascending trendline. Support is critical at 41,928; holding this level can see a challenge of the 42,613–42,961 resistance zone.

NAS100

· Resistance: 21738/22164

· Support: 20728/20294

NAS100 declined 0.18% to 19,112.32 on Thursday, dragged down by Amazon's 2.4% drop and UnitedHealth's 11% plunge. Tech stocks were also weighed down by tariff and regulatory concerns. Despite the pullback, the uptrend remains intact. A key support is at 20,728, if this holds, another challenge of the 21,739 resistance is on the cards.

BTC

· Resistance: 105735/106317

· Support: 101902/101301

BTC fell below $102,000 following successive rejections to $105,000 yesterday. As risk appetite eludes Russia-Ukraine peace talks, shunned by top leaders. BTC can still attempt to retest the $105,000 resistance. Technically, RSI is falling, MACD is nearing bearish crossover, and if a break under $101,902 & $101,301 can stretch the correction.

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