Today market outlook

[Zeologic]

USD/JPY Climbs Towards the Crucial 160.00 Level

The safe-haven USD/JPY currency pair is showing bullish sentiment towards the crucial 160.00 level. Overall, current sentiment remains dominated by the strength of the US dollar, but is limited by the risk of currency intervention by the Japanese government. The current price is 159.933 on the FXOpen chart, nearly approaching the previous peak of 160.723, which then fell to a low of 155.549.

The market is currently monitoring the USD/JPY price movement, which is generally influenced by three main factors: the BoJ's dilemma due to energy pressures, the resilience of the US dollar, and the risk of intervention at the psychological level of 160.00.

The Japanese economy actually grew quite resiliently in the first quarter, at 0.5%. The market also expects the BoJ to raise its benchmark interest rate by 25 basis points at its June 15-16 meeting. However, the surge in global energy prices due to current geopolitical tensions is weighing heavily on Japan, as an energy importer. This worsened Japan's trade balance and continued to pressure the JPY.

Meanwhile, the US dollar remained strong, driven by solid economic growth, one factor supported by massive investment in global AI infrastructure. The still-high US bond yields compared to Japanese bonds have led market players to choose to hold USD over JPY for carry trades.

However, there is a risk of intervention by the Japanese government at the crucial 160.00 level. Because the price is currently very close to this psychological level, the market is becoming extra cautious. This level is a psychological barrier where the Japanese Ministry of Finance and the Bank of Japan typically intervene suddenly by injecting billions of dollars to rescue the Yen. This has made USD/JPY buyers cautious about pushing the price higher before the release of important US data.

Technically, the price is currently above the 50-day moving average (MA), indicating maintained bullish momentum, approaching the upper band line, which appears to be expanding.

Today, the market will shift its focus to the important, high-impact US ADP Non-Farm Employment Change for May, which measures the estimated number of job additions in the private sector. If the actual figure is higher than expected, it tends to support USD strength. Another important data item is the ISM Services PMI, which measures the level of purchasing managers' activity in the service sector.

The forecasted fair price range for USDJPY is around $158.00 to $180.00. Immediate support is around 159.20, with the next target around 158.80. Immediate resistance is around 159.80, with the next target around 160.50. This forecast could be wrong.

[Zeologic]

AUD/USD falls after weaker-than-expected GDP release

The AUD/USD currency pair fell to the 0.71233 price area from the 0.71807 range. The price drew a long-bodied bearish candle with almost no shadow. The current price is at 0.71277 on the FXOpen chart, just above the 50-day moving average (MA).

The dynamics of the AUD/USD movement attracted sellers due to slowing Australian domestic economic data and market anticipation of US employment data. The Aussie currency faced selling pressure following the release of Q1 GDP data.

Australian economic growth was only 0.3%, below market expectations of 0.55%. Annually, Australia's economic growth remained at 2.5%. Interestingly, this slight growth was supported by massive investment in the data center sector. Without this investment, the Australian economy is at risk of contraction.

Australian inflation remains around 3.4%, supporting the RBA's hawkish stance. Weak economic growth and household spending make it more likely the RBA will hold interest rates rather than raise them again in the near future.

Regarding the USD, the DXY is currently rising to 99.530 from a low of 98.751, implying stability within a relatively narrow consolidation range.

The market is closely monitoring developments in US-Iran negotiations for a peaceful solution and the reopening of the Strait of Hormuz. This positive progress is gradually reducing demand for the USD as a safe-haven.

Investors are currently adjusting their positions ahead of tomorrow's Nonfarm Payrolls (NFP) data. Given the solid JOLTS job openings data earlier this week, the market is speculating that the Fed, under the new leadership of Kevin Warsh, will remain cautious and not rush to cut interest rates. This maintains the foundation of the USD's strength.

Australia relies heavily on Chinese demand for commodities in international trade. Concerns about slowing Chinese growth due to high energy costs and weak manufacturing activity are hindering the AUD's strength.

Technically, AUDUSD is currently just above its 50-day moving average (MA), with a reasonable price range forecast between 0.70750 and 0.72000. Nearest support is around 0.71000, with the next target around 0.7075. The nearest resistance is around 0.7155, with the next target at around 0.7180. This forecast could be incorrect.