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Gold keeps firm tone on Thursday and extends Wednesday’s 1.3% advance, sparked by softer than expected US June inflation.

Fresh bulls cracked pivotal resistance zone at $1961/64 (55DMA / Fibo 38.2% of $2080/$1892) and hit the highest in almost one month, with firm break here to confirm reversal signal on daily chart, after larger bears were trapped under $1902/00 (Fibo / round-figure supports).

Also, bullish weekly close will contribute to developing reversal signal on weekly chart.

The metal was lifted by strong fall of US dollar, weakened on speculations that Fed’s tightening cycle is nearing its end, with upbeat June CPI numbers adding to idea and contributing to support from bullish daily techs.

However, bulls are likely to face increased headwinds at this zone as 14-momentum turned sideways, stochastic is strongly overbought and falling and thickening daily cloud above the price, weighs.

Limited correction so far seen as likely scenario, with dips expected to find support above $1940 zone to keep bulls in play for final push through $1964 pivot and challenge of daily cloud base ($1981) and unmask psychological $2000 barrier.

Converged daily Tenkan-sen and Kijun-sen ($1933) mark pivotal support, loss of which would sideline bulls.

Res: 1964; 1981; 1986; 2000.
Sup: 1952; 1940; 1936; 1933.

• UK GDP contracts in May but beats estimate
• British pound hits 15-month high against the US dollar

The British pound continues to rally against the US dollar. GBP/USD has risen to 1.3068, up 0.62%. The pound hit a 15-month high earlier today and is up a sizzling 1.77% this week.

UK GDP contracts but beats estimate

Today’s GDP release was good and bad, depending on how you view the half-full cup. Investors opted for the positive view and the British pound has responded with strong gains.

The GDP report for May contracted by 0.1%, down from a 0.2% gain in April. Not great news, but the markets chose to focus on the fact that GDP beat the consensus estimate of -0.3%, and one could argue that a 0.1% move in either direction is essentially a stall in economic growth. An additional holiday for King Charles’ coronation also weighed on the May release. The Office for National Statistics stated that if June GDP is flat or higher, then the UK economy will avoid a contraction for the second quarter as a whole. So, the UK economy may have contracted a bit, but things could always get worse, right?

The US dollar had a rough Wednesday after US inflation dropped lower than the estimate.  Headline inflation fell from 3.0% y/y to 4.0%, and more importantly, the core rate dropped to 3.8%, down from 5.3%. Both readings were lower than the forecast and point to inflation continuing to move in the right direction.

The Federal Reserve will no doubt be pleased with the numbers, but the money markets don’t think the inflation release will sway the Fed from hiking rates on July 27th.  However, the probability of a pause in September is higher and it’s entirely possible that this prolonged rate-tightening cycle could wrap up after July if inflation and employment numbers show that the US economy continues to cool down.

GBP/USD Technical

• GBP/USD has support at 1.2972 and 1.2906
•  GBP/USD tested resistance at 1.3060 earlier in the day. Above, there is resistance at 1.3116

Yesterday, important data on inflation in the United States was published: the CPI index was 3% in annual terms, this is the lowest value since the beginning of 2021. Thus, inflation is slowing down for the 12th month in a row, approaching the target of 2%.

Markets greeted the news with a surge of volatility — perhaps the quotes win back the expectations that the Fed will soften the current tightening policy (which is far from a fact). Against this background, the dollar index, calculated against a basket of other currencies, fell to a minimum of 2023 — respectively, the prices of EUR/USD and GBP/USD reached the highs of the year. Dollar-denominated stocks also rose in price (the Nasdaq 100 index updated a year's high), as did commodities (the price of oil rose to a maximum since the beginning of May, and gold rose in price by more than USD 20 in 2 hours after the news was published).

It is curious that the bitcoin rate against the dollar reacted with a weak growth, which was leveled by the subsequent bearish movement — a negative sign. Moreover, on the BTC/EUR chart, the price is near the support at 27,200, moving within a bearish channel (shown in red on the attached chart), which is becoming more and more evident.

Note that today at 15:30 GMT+3 another portion of important news will be released, US PPI data will be published, as well as unemployment data. Get ready for another burst of volatility, which could both further weaken the US dollar and allow it to take revenge for yesterday's decline.

The USD/CHF rate fell below 0.87 for the first time since the spring of 2020, when financial market participants saw the Swiss franc as a “safe haven” amid panic associated with the spread of the coronavirus pandemic. Perhaps the demand for the Swiss franc in 2023 is facilitated by geopolitical factors: ongoing hostilities in Ukraine, tensions between the US and China.

The immediate hope for the bulls in the USD/CHF market may be presented by:

→ the lower line of the long-term channel (shown in red), which, from the point of view of technical analysis, can become a support for a rebound;

→ new statistics (once again, will be published today at 15:30 GMT);

→ official statements of influential people. For example, FOMC member Christopher J. Waller is scheduled to speak late Thursday evening, his words about new Fed rate hikes will help strengthen the dollar.

Daily Pivots: (S1) 0.9626; (P) 0.9661; (R1) 0.9692; More...

EUR/CHF's decline from 1.0095 resumed by breaking through 0.9670 decisively. And intraday bias is now on the downside. Current fall would target 100% projection of 0.9995 to 0.9670 from 0.9840 at 0.9515. On the upside, break of 0.9721 support turned resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, medium term outlook is staying bearish as the pair is capped below falling 55 W EMA (now at 0.9913). Down trend form 1.2004 (2018 high) is in favor to extend through 0.9407 at a later stage. Nevertheless, decisive break of 38.2% retracement of 1.1149 to 0.9407 will raise the chance of bullish trend reversal.

Daily Pivots: (S1) 0.8526; (P) 0.8551; (R1) 0.8596; More...

Intraday bias in EUR/GBP is turned neutral with current recovery, and some consolidations could be seen. Near term outlook will stay bearish as long as 0.8657 resistance holds. Break of 0.8502 will resume larger decline from 0.8977 to 61.8% projection of 0.8874 to 0.8517 from 0.8650 at 0.8436.

In the bigger picture, the down trend from 0.9267 (2022 high) is still in progress. It's seen as part of the long term range pattern from 0.9499 (2020 high). Deeper fall could be seen towards 0.8201 (2022 low). But strong support should be seen from there to bring reversal. This will now remain the favored case as long as 0.8657 resistance holds.

Daily Pivots: (S1) 1.6337; (P) 1.6418; (R1) 1.6482; More...

EUR/AUD is staying in range below 1.6552 and intraday bias remains neutral first. With 1.6247 support intact, further rally is expected. As noted before, correction from 1.6785 should have completed with three waves down to 1.5846. Above 1.6552 will target a retest on 1.6785 high next. Nevertheless, on the downside, firm break of 1.6247 will dampen this view and turn bias to the downside for 1.5846 support.

In the bigger picture, with 38.2% retracement of 1.4281 to 1.6785 at 1.5828 intact, rally from 1.4281 is still in progress. Firm break of 1.6785 will confirm rise resumption. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. On the other hand, rejection by 1.6785 will extend the corrective pattern with another fall leg. But outlook will stay bullish as long as 1.5828 holds.

Daily Pivots: (S1) 179.09; (P) 180.32; (R1) 181.14; More...

GBP/JPY recovered after falling to 179.45 and intraday bias is turned neutral first. Further fall remains in favor, and break of 179.45 will target 55 D EMA (now at 176.65). On the upside, above 182.00 minor resistance will turn bias to the upside for retesting 183.99 high instead.

In the bigger picture, as long as 172.11 resistance turned support holds, uptrend from 123.94 (2020 low) is expected to continue. On resumption, next target is 195.86 (2015 high). Nevertheless, firm break of 172.11 will argue that larger correction is already underway.

Daily Pivots: (S1) 153.62; (P) 154.08; (R1) 154.67; More....

EUR/JPY recovered after falling to 153.32 and intraday bias is turned neutral first. Further decline is in favor as long as 155.66 minor resistance holds. Below 153.32 will target 55 D EMA (now at 152.36) and below. nevertheless, above 155.66 will turn bias back to the upside for retesting 157.99 high instead.

In the bigger picture, as long as 151.60 resistance turned support holds, rise from 114.42 (2020 low) is in progress. On resumption, next target is 100% projection of 124.37 to 148.38 from 138.81 at 162.82. Nevertheless, sustained break of 151.60 will argue that larger correction is already underway.

EURUSD is holding near new 2023 high and the highest since Apr 2022 on Thursday morning, following 1.1% advance on Wednesday (the biggest daily gains since Feb 1).

Weaker than expected US inflation in June added pressure on dollar on growing expectations that Fed’s tightening cycle may end soon and lifted the single currency.

Bulls neared barrier at 1.1182 (200WMA) and eye next target at 1.1223 (Fibo 61.8% retracement of 1.2266/0.9535 downtrend) but may take a breather for consolidation before resuming higher, as daily studies are overbought.

Former top (1.1095) now marks initial support, followed by 5DMA (1.1050) which should contain dips and guard lower pivot at 1.10 (psychological/20DMA).

Res: 1.1182; 1.1204; 1.1223; 1.1271.
Sup: 1.1150; 1.1095; 1.1050; 1.1000.