Solid Goold Trading

Monday’s Edition

With Nick Goold

USD/JPY was the biggest mover last week, rising above 160 after the Federal Reserve meeting suggested U.S. interest rates may stay high for longer than expected as inflation concerns continue.

After breaking above 160, USD/JPY fell sharply as Japanese officials warned that intervention could be near. Market rumors also suggested that authorities had been calling banks to check market conditions before possible yen-buying action. The rumored intervention amount was around ¥5.48 trillion, or roughly $35 billion, after USD/JPY briefly reached about 160.7. Earlier in the week, the Bank of Japan kept interest rates unchanged at 0.75% as it continued to assess the impact of higher oil prices on the economy.

WTI oil prices rose again as oil supply remained tight despite ongoing negotiations around the Iran ceasefire. Global stock markets also had another strong week, supported by continued positive earnings reports from U.S. companies, which encouraged further buying.

Markets This Week

U.S. Stocks

U.S. stocks continued to test higher last week despite higher oil prices, with technology stocks performing especially well as markets focused on positive company earnings. The Dow’s technical indicators are pointing sideways for now, but there is still potential for new highs if there is positive news from negotiations between Iran and the U.S. For this week, looking for buying opportunities near support may be the best approach. Resistance levels are at 50,000, 50,500 and 51,000. Support is seen at 48,500, 48,000, 47,000, 46,000, and 45,000.

Japanese Stocks

Japanese stocks hit new record highs early last week, but continued high WTI oil prices worried investors due to the potential negative impact on the Japanese economy. The stronger yen surprisingly had little impact on the Nikkei, which continued to hold near high levels. However, the market is now facing resistance around 60,000, and with prices close to the 10-day moving average, short-term range trading looks like the best approach this week. Resistance is seen at 60,000, 60,500, 61,000, 61,500 and 62,000, while support is at 58,500, 57,000, 56,000, 55,000, 54,000, and 52,000.

USD/JPY

USD/JPY pushed higher for most of last week as WTI oil prices moved up and the market tested Japan’s willingness to intervene. The move above 160.50 to new highs for the year was followed by rumored intervention by the Bank of Japan, with the pair falling around 500 points in just a few hours. However, some analysts suggested the fall was smaller than previous intervention moves in 2024. This week could be highly volatile, especially with Japanese holidays creating thinner market conditions. The Bank of Japan may take advantage of this environment to push USD/JPY lower again. Resistance is at 158.00, 159.00, 160.00, 160.50, 162.00 and 165.00, while support is seen at 156.00, 155.50 and 155.00.

Gold

Gold remained under pressure last week as long-term U.S. interest rates continued to rise on inflation concerns, helped by higher crude oil prices. The Federal Reserve also indicated that it remains worried about high inflation, which could delay any interest rate cuts. With the 10-day moving average now turning bearish, looking for selling opportunities may be the best approach this week. Resistance is at $4,665, $4,750, $4,900, $5,000, and $5,100, while support is at $4,550, $4,500, and $4,400.

Crude Oil

The continued closure of the Strait of Hormuz, with negotiations ongoing and no clear end to the war in sight, pushed WTI crude oil back above $100 as traders targeted the yearly highs again. The technical uptrend remains strong, so looking for buying opportunities near the 10-day moving average may be the best approach this week. Resistance is at $110 and $120, while support is at $100, $90, $80, $75, $70, and $67.50.

Bitcoin

Bitcoin had a quiet week, trading sideways as traders cautiously continued to buy the market. Old resistance around $75,000 continued to act as support, helping to keep the short-term outlook positive. As long as Bitcoin stays above $75,000, buying weakness may remain the best approach. Resistance is at $80,000, $85,000, and $90,000, while support is at $75,000, $65,000, $60,000, and $55,000.

This Week’s Focus

Monday: Australia Building Approvals, U.S. Factory Orders
Tuesday: Australia RBA Interest Rate Decision, U.S. Trade Balance, S&P Global Services PMI and New Home Sales
Wednesday: E.U. HCOB Eurozone Services PMI, U.K. S&P Global Services PMI, U.S. ADP Nonfarm Employment Change
Thursday: Japan Monetary Policy Meeting Minutes, Australia Trade Balance, U.K. S&P Global Construction PMI, U.S. Construction Spending
Friday: Japan S&P Global Services PMI, U.S. Nonfarm Payrolls and Michigan Consumer Sentiment

USD/JPY will be in focus this week as traders assess whether the Japanese government can stop the trend of yen weakness, or whether the recent pullback is only a short-term move while the gap between U.S. and Japanese interest rates remains wide. WTI oil prices are still moving higher, although the impact on wider markets appears to be fading for now. That could change if WTI breaks to a new high. Friday’s U.S. employment data will be the key economic release to watch.