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Daily Pivots: (S1) 143.89; (P) 144.70; (R1) 145.31; More...

USD/JPY's break of 144.02 support now argues that rebound from 139.87 has completed as a correction to 148.64. Intraday bias is back on the downside for retesting 139.87 support. For now, risk will stay on the downside as long as 146.08 minor resistance holds, in case of recovery.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8256; (P) 0.8309; (R1) 0.8337; More….

USD/CHF's downside accelerations suggests that corrective recovery from 0.8038 has already completed with three waves up to 0.8475. Intraday bias is back on the downside, and break of 0.8184 support will solidify this bearish case. Further break of 0.8038 will resume larger down trend to 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757 next. On the upside, above 0.8347 minor resistance will delay the bearish case and turn intraday bias neutral again first.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8765) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

Dollar came under broad selling pressure in Asian session, with fresh technical signals suggesting that the near-term recovery has already run its course. Also, the selloff appears to be gathering pace on a range of fundamental concerns.

One focus is on Capitol Hill, where the House of Representatives is expected to vote on a multitrillion-dollar spending and tax package backed by US President Donald Trump. The bill is projected by nonpartisan analysts to add US 3 to 5 Trillion to the national debt, further exacerbating fiscal sustainability concerns in the wake of the Moody’s downgrade last Friday.

Simultaneously, ongoing trade negotiations with major partners — including the EU, Japan, and China — have hit apparent roadblocks, reintroducing geopolitical friction into already cautious markets.

Adding to Dollar’s vulnerability is the backdrop of the G7 finance ministers’ meeting underway in Canada. With concerns that US officials may be quietly welcoming a weaker Dollar to cushion trade headwinds and debt concerns, any perceived shift in post-meeting communiqué could further undermine confidence in the greenback.

In the currency markets, risk-off tone is building up. Swiss Franc leads as the strongest performer this week so far, followed by Euro and Yen. The Dollar is the weakest, with Loonie and Aussie close behind. Sterling and Kiwi are hovering in the middle.

Technically, Gold's rally accelerates along with the selloff in the greenback. The break of 3265.74 resistance solidifies the case that correction from 3499.79 has completed with three waves down to 3120.34. Further rise is expected as long as 55 4H EMA (now at 3215.81) holds. Retest of 3434.76/3499.79 resistance zone should be seen next.

In Asia, at the time of writing, Nikkei is down -0.21%. Hong Kong HSI is up 0.50%. China Shanghai SSE is up 0.39%. Singapore Strait Times is down -0.31%. Japan 10-year JGB yield is up 0.006 at 1.529. Overnight, DOW fell -0.27%. S&P 500 fell -0.39%. NASDAQ fell -0.38%. 10-year yield rose 0.006 to 4.481.

Looking ahead, UK CPI is the main focus in European session. Later in the day, Canada will release new housing price index.

Fed's Musalem warns tariffs still a threat despite US-China truce

St. Louis Fed President Alberto Musalem cautioned that even with the 90-day trade truce between the US and China, the current level of tariffs could still have “significant” short-term effects on the economy.

In a speech overnight, he warned that tariffs are likely to "dampen economic activity" and further weaken the labor market. At the same time, tariffs could raise inflation both directly, through higher import prices, and indirectly, by triggering broader cost increases in domestic goods and services.

Musalem outlined two potential monetary policy responses depending on how persistent the inflationary effects of tariffs prove to be.

If the price impacts are temporary and inflation remains controlled, then it may be appropriate for the Fed to “look through” the short-term inflation spike and consider easing policy to cushion the labor market.

However, if inflation proves stickier and starts to unanchor long-term expectations, Musalem argued that restoring price stability should take precedence, even at the cost of weaker growth and higher unemployment.

“History tells us that restoring price stability is more costly for the public... if inflation expectations are not well anchored,” Musalem said.

Fed's Bostic: Tariff impact to surface as front-running shielding fades

Atlanta Fed President Raphael Bostic warned that the economic effects of recent tariffs may be set to emerge more visibly, as businesses begin to exhaust their earlier stockpiling and "front-running" strategies.

Speaking on the sidelines of a conference, Bostic said that “a lot of the tariff impact to date has actually not shown up in the numbers yet,” but the strategies used to insulate against cost shocks — such as building up inventories — “are starting to run their course.”

As these buffers fade, Bostic expects that changes in prices could follow soon, offering a clearer view of how tariffs will impact both inflation and consumer behavior. “We’re about to see some changes in prices, and then we're going to learn how consumers are going to respond to that,” he noted.

Given the heightened uncertainty, Bostic maintained a cautious tone on policy. “We should wait and see where the economy is going before we do anything definitive,” he said.

Japan’s US-bound exports fall -1.8% yoy as tariffs and strong Yen Bite

.Japan’s export growth slowed to just 2.0% yoy in April, marking the weakest pace since October 2024.

Notably, shipments to the US fell -1.8% yoy — the first decline in four months — as demand for automobiles, steel, and ships weakened. Exports of automobiles alone dropped -4.8% yoy by value, impacted by a stronger Yen and reduced demand for high-end models.

The decline coincides with the imposition of 25% US tariffs on Japanese auto, steel, and aluminum exports, alongside the 10% blanket levy applied to most trade partners under the current US trade regime.

Trade with Asia remained more resilient, with exports rising 6.0% yoy. However, shipments to China dipped -0.6% yoy.

On the import side, Japan saw a -2.2% yoy contraction, resulting in a trade deficit of JPY -115.8B.

Seasonally adjusted figures show a -2.7% mom drop in exports and a -1.4% mom drop in imports, with the adjusted trade deficit widening to JPY -409B.

Australia’s leading index falls to 0.2%, growth pulse fades

Australia’s Westpac Leading Index slowed from 0.5% to 0.2% in April, signaling a loss in growth momentum.

According to Westpac, the above-trend growth seen earlier this year has "all but disappeared," primarily due to rising global trade uncertainty and weaker commodity prices.

While these external pressures dominate, domestic factors such as a slowing labor market and only modest support from interest rate cuts are also contributing to the loss of momentum.

The overall picture suggests a stalling in the already tepid recovery, with GDP growth expected to reach just 1.9% by the end of 2025, well below historical averages.

Following RBA's recent 25bps rate cut to 3.85%, Westpac expects a cautious pause at the next policy meeting on July 7–8. The central bank is likely to await further clarity from the Q2 inflation data due at the end of July before considering additional easing.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.8256; (P) 0.8309; (R1) 0.8337; More….

USD/CHF's downside accelerations suggests that corrective recovery from 0.8038 has already completed with three waves up to 0.8475. Intraday bias is back on the downside, and break of 0.8184 support will solidify this bearish case. Further break of 0.8038 will resume larger down trend to 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757 next. On the upside, above 0.8347 minor resistance will delay the bearish case and turn intraday bias neutral again first.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8765) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

Australia’s Westpac Leading Index slowed from 0.5% to 0.2% in April, signaling a loss in growth momentum.

According to Westpac, the above-trend growth seen earlier this year has "all but disappeared," primarily due to rising global trade uncertainty and weaker commodity prices.

While these external pressures dominate, domestic factors such as a slowing labor market and only modest support from interest rate cuts are also contributing to the loss of momentum.

The overall picture suggests a stalling in the already tepid recovery, with GDP growth expected to reach just 1.9% by the end of 2025, well below historical averages.

Following RBA's recent 25bps rate cut to 3.85%, Westpac expects a cautious pause at the next policy meeting on July 7–8. The central bank is likely to await further clarity from the Q2 inflation data due at the end of July before considering additional easing.

Full Australia Westpac leading index release here.

.Japan’s export growth slowed to just 2.0% yoy in April, marking the weakest pace since October 2024.

Notably, shipments to the US fell -1.8% yoy — the first decline in four months — as demand for automobiles, steel, and ships weakened. Exports of automobiles alone dropped -4.8% yoy by value, impacted by a stronger Yen and reduced demand for high-end models.

The decline coincides with the imposition of 25% US tariffs on Japanese auto, steel, and aluminum exports, alongside the 10% blanket levy applied to most trade partners under the current US trade regime.

Trade with Asia remained more resilient, with exports rising 6.0% yoy. However, shipments to China dipped -0.6% yoy.

On the import side, Japan saw a -2.2% yoy contraction, resulting in a trade deficit of JPY -115.8B.

Seasonally adjusted figures show a -2.7% mom drop in exports and a -1.4% mom drop in imports, with the adjusted trade deficit widening to JPY -409B.

Atlanta Fed President Raphael Bostic warned that the economic effects of recent tariffs may be set to emerge more visibly, as businesses begin to exhaust their earlier stockpiling and "front-running" strategies.

Speaking on the sidelines of a conference, Bostic said that “a lot of the tariff impact to date has actually not shown up in the numbers yet,” but the strategies used to insulate against cost shocks — such as building up inventories — “are starting to run their course.”

As these buffers fade, Bostic expects that changes in prices could follow soon, offering a clearer view of how tariffs will impact both inflation and consumer behavior. “We’re about to see some changes in prices, and then we're going to learn how consumers are going to respond to that,” he noted.

Given the heightened uncertainty, Bostic maintained a cautious tone on policy. “We should wait and see where the economy is going before we do anything definitive,” he said.

St. Louis Fed President Alberto Musalem cautioned that even with the 90-day trade truce between the US and China, the current level of tariffs could still have “significant” short-term effects on the economy.

In a speech overnight, he warned that tariffs are likely to "dampen economic activity" and further weaken the labor market. At the same time, tariffs could raise inflation both directly, through higher import prices, and indirectly, by triggering broader cost increases in domestic goods and services.

Musalem outlined two potential monetary policy responses depending on how persistent the inflationary effects of tariffs prove to be.

If the price impacts are temporary and inflation remains controlled, then it may be appropriate for the Fed to “look through” the short-term inflation spike and consider easing policy to cushion the labor market.

However, if inflation proves stickier and starts to unanchor long-term expectations, Musalem argued that restoring price stability should take precedence, even at the cost of weaker growth and higher unemployment.

“History tells us that restoring price stability is more costly for the public... if inflation expectations are not well anchored,” Musalem said.

Key Highlights

• Gold found support near $3,120 and started a fresh increase.
• It cleared a key bearish trend line with resistance at $3,220 on the 4-hour chart.
• EUR/USD is moving higher above the 1.1250 resistance zone.
• WTI Crude Oil prices recovered and climbed above the $63.00 level.

Gold Price Technical Analysis

Gold prices remained supported above $3,120. The price formed a base and started a fresh increase above the $3,180 and $3,200 resistance levels.

The 4-hour chart of XAU/USD indicates that the price cleared a key bearish trend line with resistance at $3,220. There was a clear move above the 50% Fib retracement level of the downward move from the $3,437 swing high to the $3,120 low.

The price settled above the $3,270 level, the 200 Simple Moving Average (green, 4 hours), and the 100 Simple Moving Average (red, 4 hours). On the upside, immediate resistance is near the $3,315 level and the 61.8% Fib retracement level of the downward move from the $3,437 swing high to the $3,120 low.

The next major resistance sits near the $3,365 level. A clear move above the $3,365 resistance could open the doors for more upsides. The next major resistance could be $3,380, above which the price could rally toward the milestone level of $3,400.

On the downside, initial support is near the $3,280 level. The first key support is near $3,250. The next major support is near the $3,240 level. The main support is now $3,220. A downside break below the $3,220 support might call for more downsides. The next major support is near the $3,150 level.

Looking at EUR/USD, the pair started a decent upward move and might soon aim for a fresh increase if it clears the 1.1320 resistance.

Economic Releases to Watch Today

• ECB's Lane speech.
• Fed's Barkin speech.

• S&P 500 saw its six-day winning streak end amidst rising US yields and concerns over Trump's tax cut proposals and US debt.
• The "Magnificent 7" stocks are currently underperforming but could potentially drive a larger S&P 500 recovery in the second half of 2025.
• Technical analysis indicates bullish momentum for the S&P 500, although a recent pullback suggests potential for a bearish correction.

The S&P 500 struggled today as US yields rose and markets await a crucial vote in Washington DC over US President Trump's tax cut proposals.

Trump visited Capitol Hill on Tuesday to urge Republican lawmakers to agree on a bill that would extend the 2017 tax cuts from his first term, among other measures.

Investors are concerned that this bill could increase the U.S. budget deficit faster than expected.

On Friday, Moody's Investors Service downgraded the U.S. credit rating, adding to worries about the country's growing debt.

Source: LSEG

Markets do appear to have shrugged off the Moody’s downgrade with yesterday's rally hinting at such.

Markets are also waiting on comments from Federal Reserve officials scheduled for later today as uncertainty around US monetary policy decisions continue to linger.

The S&P 500 is on a six-day winning streak but for the year thus far the magnificent 7 stocks have underperformed. As markets eye a bigger recovery, will the ‘mag 7’ stocks be the catalyst?

Magnificent 7 2025 Performance YTD

The magnificent 7 stocks still have some catching up to do in comparison to the rest of the index. This is actually a welcome change given last year's concern that the Mag 7 had been the driving force of the rally over the last 24 months or so.

The change in market dynamics has seen market participants spread their exposure around this year and pivot to other sectors.

The interesting question though, is if the Mag 7 stocks post a good recovery in the second half of 2025 will this drag the S&P to fresh all-time highs? Now obviously this would depend on a lot of variables but it does require a closer look.

A recent Bloomberg survey revealed Wall Street strategists have mixed views regarding the end of year target for the S&P 500. According to the survey, the median S&P 500 year-end target is 5,900 for 2025, but the forecasts range widely from 5,200 to 7,007, reflecting significant divergent market views.

Source: IsabelNet, Bloomberg

This is a definite possibility but there are a host of variables that are in play. These estimates could change pretty drastically as the year progresses, we have already seen some drastic changes to global forecasts on a host of asset classes in 2025. This rollercoaster is one I expect may continue.

Technical Analysis - S&P 500

From a technical standpoint, the S&P 500 on the weekly timeframe enjoyed a bullish week last week.

The new week has started somewhat more cautiously but bulls still appear to be holding the upper hand.

The period-14 RSI reinforces this as it remains above the neutral 50 handle which suggests bullish momentum remains intact.

Tuesday daily candle close did however snap a six-day winning streak with the S&P closing as an imperfect hanging man candlestick. This is usually a sign of a bearish correction which may concern bulls looking at intraday moves.

S&P 500 Weekly Chart, May 20, 2025

Source: TradingView (click to enlarge)

Dropping down to a four-hour chart (H4), the S&P 500 index has been staircasing its way higher since bottoming out on April 7, 2025.

More recent price action shows that bulls remain in control following a series of higher highs and higher lows.

However Tuesday's session did see a significant pullback toward support at 5910 before bouncing higher once more.

For now, the bullish structure remains intact with a four-hour candle close below the 5883 handle needed to invalidate the bullish momentum.

Until then the chances of another higher high remains strong but this will obviously hinge on market sentiment remaining positive.

S&P 500 Four-Hour Chart, May 20, 2025

Source: TradingView (click to enlarge)

Support

• 5910
• 5883
• 5828

Resistance

• 5971
• 6000
• 6025

Currently trading at around ~33.0865 per troy ounce, silver trades higher in today’s session on a weaker dollar and renewed safe-haven demand.

XAG/USD: Key Takeaways

• With the dollar continuing to weaken, XAG/USD trades ~2.25% higher today, trading above $33 for the first time since May 6th.
• The recent downgrade of the United States’ credit rating has boosted safe-haven demand, with questions asked over escalating US national debt and rising interest rate costs.
• Increased US rate cut bets are also benefiting silver pricing, with markets increasingly anticipating two interest rate cuts in 2025.

XAG/USD: Silver gains on U.S. debt downgrade

With the market having time to digest Moody’s report from Friday, investor confidence has made way for renewed safe-haven demand, ultimately benefiting precious metal pricing.

Cited at $36 trillion by Moody’s, the outstanding budget deficit has proven a cause for concern for American investors, with weakness in public finances weighing negatively on the dollar and US bond markets.

In the face of this, Trump continues to seek congressional approval of his proposed “big, beautiful” tax bill, representing the latest Trump administration proposal. With seemingly no end to radical policy changes, markets are understandably somewhat mixed about the future of the US economy, with traditional safe-haven assets reporting increased inflows.

CME FedWatch, CME Group 20/05/2024

XAG/USD: Dollar weakness extends silver rally

Snapping a 4-week winning streak and now on pace for its worst week since early April, the U.S. dollar (DXY) continues to weaken amid evolving monetary policy expectations and general market uncertainty on the US economy.

Choosing to maintain rates in their most recent meeting, recent commentary from the Federal Reserve has markets increasingly anticipating two rates in 2025, coupled with data showing inflation is cooling faster than expected.

This will be welcome news for President Trump, who recently clarified his preference for lower interest rates.

As a non-yielding asset, a more hawkish Federal Reserve is likely to benefit stores of wealth such as silver, with the opportunity cost of holding precious metals becoming comparatively lower.

A chart showing the recent price action of XAGUSD & DXY. OANDA, TVC, TradingView, 20/05/2024

XAG/USD technical analysis

• Acting as a significant resistance level, silver broke above $33 for the first time since May 6th in today’s session, paving the way for further upside. If the rally is to continue, bulls will likely target ~33.18832.
• Current readings suggest a growing trend strength when using the 14-period ADX on the daily timeframe. Trading at a ~5.30% discount from all-time highs, further upside remains viable.