ATFX Market Outlook 21st May 2025

ATFX Market Outlook 21st May 2025

Gold Reclaims $3,300 Amid Sovereign Debt Concerns in the U.S.

Market HighlightOn Tuesday, Federal Reserve officials warned that U.S. tariff hikes could drive prices higher, though it remains unclear whether the impact on inflation will be short-lived or persistent. U.S. stocks declined, ending the S&P 500’s six-day rally, as rising Treasury yields and concerns over sovereign debt weighed on market sentiment. The Dow declined by 0.27%, the S&P 500 dropped by 0.39%, and the Nasdaq slipped by 0.38%.  

Concerns that the proposed tax cuts might exacerbate the federal deficit more swiftly than anticipated, coupled with a rise in corporate bond issuance, caused long-term Treasury yields to increase slightly. As Fed officials adopted a more cautious stance on the economy, the value of the US dollar declined further. Future U.S.-Japan talks, which may involve currency discussions linked to trade negotiations, are another topic that the markets are keeping an eye on.  

Gold surged nearly 2%, supported by a weaker dollar, falling stock prices, and geopolitical tensions, including potential ceasefire talks between Russia and Ukraine. Spot gold closed at around $3,289.01 per ounce and broke above $3,300 this morning. U.S. crude also increased modestly, bolstered by indecisive news regarding U.S.-Iran and Russia-Ukraine negotiations, while Chinese reports indicated a cautious economic outlook.

Key Outlook

The U.K. will publish April CPI data today. Following two months of decreasing inflation, economists are anticipating a revival, with an annual CPI growth of 1.1%, up from 0.3%. A stronger figure would exert pressure on the Bank of England to consider rate cuts to balance inflation risks against the need to support the economy.

Key Data and Events Today:

14:00 GB CPI & PPI APR *** 

22:30 EIA Crude Oil Inventories ** 

Tomorrow

08:30 JP Manufacturing & Services PMI MAY ** 

09:30 BoJ Noguchi Speech ** 

15:30 EU GERMANY Manufacturing & Services PMI MAY ** 

16:00 EU GERMANY Ifo Business Climate MAY ** 

16:00 EU Manufacturing & Services PMI MAY ** 

16:30 GB Manufacturing & Services PMI MAY** 

19:30 ECB Minutes ** 

20:30 BoE Pill Speech ** 

20:30 US Initial Jobless Claims *** 

21:45 US Manufacturing & Services PMI MAY *** 

EURUSD

· Resistance: 1.1318 / 1.1378

· Support: 1.1258 / 1.1184

EUR/USD rose 0.3% to 1.1279 on Tuesday, reaching a new monthly high, buoyed by a weaker USD and improving EU-U.S. trade dialogue. Technically, the pair broke above the falling trendline and is currently consolidating. A successful retest of the 1.1258 zone could set the stage for a move towards the next resistance at 1.1318. Investors are now awaiting the Eurozone May Consumer Confidence data for sentiment direction.

GBPUSD

· Resistance: 1.3464 / 1.3504

· Support: 1.3363 / 1.3332

GBP/USD climbed to 1.3387 on Tuesday, supported by a weaker U.S. dollar and renewed UK-EU cooperation. Technically, the pair is nearing the upper boundary of a rising wedge near 1.3464. A breakout could indicate upside potential. Attention now turns to today’s UK CPI data; a surprising increase in core inflation may raise expectations for additional BoE tightening, providing more strength to the pound.

USDJPY

· Resistance: 144.77 / 145.51

· Support: 143.30/142.37

USD/JPY fell to 144.49, marking its lowest level since early May, as safe-haven demand and surging Japanese bond yields strengthened the yen. Technically, the pair remains within a descending channel and has broken below its median line, exposing support near 143.30. Focus now shifts to upcoming Japan-U.S. FX discussions, which may inject further downside pressure on the dollar.

US Crude Oil Futures (JULY)

· Resistance: 64.85/ 65.95

· Support: 61.22/ 60.10

WTI crude rose above $63 on Tuesday, supported by stalled U.S.-Iran nuclear talks, new Russia sanctions, and a larger-than-expected draw in U.S. gasoline inventories. Near-term resistance lies at $64.85, and support is seen at 61.22.

Spot Gold

· Resistance: 3355/3392

· Support: 3243/3196

Spot Silver

· Resistance: 33.24/33.42

· Support: 32.81/32.62

Spot gold surged past $3,300 before retreating to $3,290 as geopolitical risks (Israel-Iran tensions), Moody’s U.S. credit downgrade, and a weaker USD heightened safe-haven demand. Dovish comments from the Fed and expectations for a rate cut in 2025 further bolstered gold. Resistance is observed near $3,355, and it could potentially retrace to the nearest support at $3,243 before the uptrend continues.

Dow Futures

· Resistance: 43303/43740

· Support: 42265/41928

Dow Futures fell 0.27% to 42,677.24 on Tuesday, pressured by Moody’s U.S. credit downgrade and concerns about the fiscal deficit. Technically, the price is nearing the support zone around 42,265. A successful hold could trigger a bullish rebound towards the recent high of 43,303. Market participants watch forthcoming Fed comments and the House vote on Trump's tax bill for further cues.

NAS100

· Resistance: 21743/22171

· Support: 20730/20294

NAS100 snapped its six-day winning streak, falling 0.38% to 19,142.71 on Tuesday as rising Treasury yields and uncertainty over Trump’s tax bill weighed on sentiment. Technically, the price is consolidating in a range, and a breakdown could trigger a pullback towards the 20,730-support zone before any rebound. Markets are anticipating clarity on the tax bill’s fiscal implications.

 BTC

· Resistance: 108211/108796

· Support: 105735/105003

Bitcoin hovers around $106,549, capped at $107,350. The U.S. Senate has advanced a stablecoin bill, and Argentina has concluded the LIBRA probe. Meanwhile, Germany missed out on $2.3B in BTC gains from early sales. Technically, maintaining support at $105,735 may prompt a resistance test at $108,211.

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