The market is more likely than not going to continue to drift lower, perhaps trying to test the lows near the $1680 level, but I would be surprised to see it go any lower than that anytime soon.

• Gold markets got hammered during the trading session on Friday after Jerome Powell gave a very hawkish speech at Jackson Hole. At this point, the US dollar looks like it’s reasserting its dominance, and that of course he’s going to have a major influence on where we go next.
• This is a market that I think given enough time may retest the $1720 level, possibly even lower than that.
• The market has been very noisy and had tried to rally but now it appears that people are finally getting it through their heads that the Federal Reserve is going to have to stay rather tight going forward.

This should bring interest rates higher, and it should continue to drive the US dollar higher. The US dollar being stronger obviously works against the value of commodities priced in that same US dollar, but it is worth noting that the market did not necessarily meltdown during the day, it just lost 1.2%, well within the tolerance of normalcy.

Market Likely to Drift Lower

The market is more likely than not going to continue to drift lower, perhaps trying to test the lows near the $1680 level, but I would be surprised to see it go any lower than that anytime soon. If it does, that opens up a massive amount of selling pressure that could send gold down to the $1500 level.

If the market rallies from here, the $1760 level will be the first carrier, followed by the 50 Day EMA and then the $1800 level. The $1800 level is an area that previously had been supported, and of course, we have seen a lot of resistance just recently. Because of this, the market will continue to be one that you have to watch through the prism of a downward trend, and it’s not until we clear the 200 Day EMA above that I would assume things have changed at all. The market breaking above that level then opens up the possibility of a move to the $1850 level. Breaking above that level then opens up the possibility of $1900 and more of a “buy-and-hold” type of situation. I do think the gold eventually takes off, but we are nowhere near that right now with the central bank still out there fighting inflation. Higher rates equals lower gold.

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 I have no interest in buying this pair anytime soon, at least not until the fundamental situation changes.

The GBP/USD initially tried to rally during the training session on Friday but gave back early gains as Jerome Powell made it abundantly clear that the Federal Reserve was going to remain very tight and continue to focus on inflation, not other economic indicators.

As a result, the US dollar spiked during the trading session, and it now looks as if we are going to see the next big move in favor of the greenback and of course a significant “risk off” type of move. The market breaking down below the lows of the last several sessions could open up a move down to the 1.15 level. The 1.15 level is my longer-term target, but it is more likely than not going to be very noisy. Any rally at this point in time still continues to look suspicious at best, and the 1.20 level could be the next area of resistance. That being said, the 50 Day EMA sits just above there as well, so it would make a significant amount of sense that we would see sellers in that area if we do rally. Ultimately, I think it’s going to be difficult to break above all of that, let alone even go higher.

Market Likely to Drift Lower as Britain Enters into a Recession

• This is a market that has been in a downtrend for quite some time,
• It makes sense that we would see a continuation of this trend for the time being.
• The market certainly has shifted to the downside during the day, and I think it’s probably only a matter of time before we pick up momentum to the downside on any rally.

The Bank of England has already stated that the British economy is going to go into a recession, so there are no surprises there. In that scenario, it’s likely that the Bank of England is done doing any type of tightening, as the economy is going to be too fragile. The market will ultimately be a situation where there is no real reason to buy this market, and therefore I will be waiting for opportunities every time we rally. This was an excellent shorting opportunity on Friday, and it’s likely that we continue to see negative pressure going forward. I have no interest in buying this pair anytime soon, at least not until the fundamental situation changes.

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Since last Friday’s trading session, the price of the USD/JPY currency pair has been moving in narrow ranges with a bearish slope between the support level 127.14 and the level of 128.30.

It is settling around the level of 127.85 at the time of writing the analysis, waiting for anything new. Despite the recent performance, the US dollar is still the strongest with expectations of raising US interest rates strongly throughout 2022 to contain the largest inflation rate in the country in 40 years.

In this regard, US Federal Reserve policymakers, including Chairman Jerome Powell, repeatedly indicated in May that the bank was likely to raise the US federal funds rate by another 50 basis points at each of its next meetings, but it did not.

US inflation results will be useful in determining whether the Fed ultimately needs to raise interest rates more than is generally seen as likely, which is a big part of why the April core PCE price index reading on Friday is so important to the dollar.

The core PCE price index is the Fed’s preferred measure of price pressures, and therefore will do little to help the dollar if it shows inflation abating in both months.

Amid a torrent of statements by US Federal Reserve policy officials. Atlanta Fed President Rafael Bostik said policy makers may pause interest rate increases in September after raising half a point at each of their upcoming meetings. “I have a basic view where I think a stop in September might make sense,” Bostick told reporters yesterday after a speech to Rotary Atlanta. “As we get through the summer and think about our place in terms of politics, I think a lot of it will depend on the dynamics on the ground that we’re starting to see. My motto is observation and adaptation.”

Bostick reiterated that he supports Governor Jerome Powell’s plan to raise US interest rates by half a point at the FOMC meetings in June and July, adding the warning that a surprise rally in rates may warrant more aggressive action. Inflation was near its highest level in four decades and at rates more than three times the central bank’s 2% target.

“I’m at 50 basis points as long as the economy progresses as I think it will go,” Bostick added. And “if inflation starts moving in a different direction than it is now, I would be open to moving more aggressively. I want to make it clear that nothing is off the table. As the months go by, we will see how it goes.”

Bostick also said he expects inflation to be in the “high 3%” range at the end of the year, with a lot of uncertainty around the outlook. Economic growth is expected to be higher than the general trend for this year. Bostick added that recent moves in financial markets, including a sharp drop in stocks last week, have been consistent with the Fed’s goal of fiscal tightening. There have been few signs on the real side of the economy that the economy is slowing since the Fed began rate hikes in March.

According to the technical analysis of the pair: On the daily chart below, it seems clear that the bears are currently controlling the path of the USD/JPY currency pair. Their control of the trend will increase if the currency pair moves towards the support levels 126.80 and 125.00, respectively. From the last level, it is preferable to think about buying the currency pair, as expectations of a US interest rate hike are still strong and will eventually support the US dollar. On the other hand, the bulls’ control over the trend will be strengthened if the currency pair moves towards the 130.00 psychological resistance level again.

The USD/JPY currency pair will be affected today by the extent to which investors take risks or not, as well as the reaction from the expected statements of US Central Bank Governor Jerome Powell and the announcement of the results of US economic data, the manufacturing PMI, services, and US new home sales.