Summary:
Due to the Swiss National Bank cutting interest rates again, market focus has shifted to interest rate differentials between countries. On June 20 (Thursday), the US dollar fell against a basket of currencies, excluding the Canadian dollar. The dollar index rose in overnight trading and expanded its gains throughout the day, ending higher. The dollar index, which measures the greenback against six major currencies, rose 0.32% on the day and closed at 105.588.
Gold prices rose more than 1%, or over $30, on Thursday (June 20), reaching a two-week high of $2365.35 per ounce and closing at $2359.87 per ounce. Recent US economic data suggested signs of slowing, boosting bets on a Fed rate cut this year. Gold prices have currently broken above the 50-day moving average of $2343.82, with MACD forming a golden cross and KDJ in a bullish crossover mode. Until it loses the 50-day moving average, the short-term trend leans bullish, with resistance focusing on the June 7 high of $2387.59 and the 2400 level.
Data and News from the Previous Day:
Earlier on the 20th, the Swiss National Bank announced a further 25 basis point rate cut, bringing the benchmark rate down to 1.25%, a larger cut than the market's expected 12.5 basis points. The Swiss National Bank also lowered its 2026 inflation forecast to 1%. This decision significantly weakened the Swiss franc.
At the same time, the Bank of England announced on the 20th that it would maintain the current benchmark rate of 5.25%, which was in line with market expectations.
Karl Schamotta, Chief Market Strategist at Cambridge Global Payments, stated that it was evident multiple central banks were clearly signaling a loosening of monetary policy early in the day. The prospect of lower future borrowing costs has improved market liquidity expectations, reviving sentiment for global risk assets.
Monex USA forex trader Helen Given said that the real driver for the dollar is global central banks, while political uncertainty tends to strengthen the dollar. Although unfavorable macroeconomic data might typically weaken the dollar, hedging for global political uncertainty will continue to provide some strength to the US dollar until these issues settle and the market can adapt to the new political order.
Senior analyst Fawad Razaqzada noted that after a 1% decline last week, the EUR/USD exchange rate has been relatively stable so far this week. The stabilization of French bond yields and the resulting narrowing of the yield gap between German and French bonds indicate that investors are starting to calm down regarding Europe's political situation. However, this might only be a temporary respite; the outcome will largely depend on the French elections starting on June 30.
On Friday (June 21) in the Asian market, spot gold is experiencing narrow fluctuations, currently trading around the 2360 mark. Gold prices rose more than 1%, or over $30, on Thursday, reaching a two-week high of $2365.35 per ounce and closing at $2359.87 per ounce, supported by recent US economic data showing signs of slowing, bolstering bets on a Fed rate cut this year.
Bart Melek, Head of Commodity Strategy at TD Securities, said, "The market is increasingly expecting the Fed to start an easing policy. I suspect there might be some long positions entering the market."
The US Department of Labor reported on Thursday that the number of Americans filing for initial unemployment benefits decreased last week, but the latest data showed continued claims at their highest level since January, indicating that the US job market continues to cool.
In other news from the US Department of Commerce, the housing market continues to struggle under the pressure of high interest rates implemented by the Federal Reserve. Both housing starts and building permits fell in May to the lowest levels in about four years.
The US Department of Labor reported that for the week ending June 15, the number of initial claims for unemployment benefits decreased by 5,000 to a seasonally adjusted 238,000, reversing about a third of the previous week's surge, which had pushed initial claims to a ten-month high. Economists expected last week's claims to be 235,000.
Since the Federal Reserve raised rates by 525 basis points starting in 2022 to curb inflation, the momentum in the labor market has weakened in tandem with the overall economy. The easing of labor market conditions has led to reduced inflationary pressure. Although Federal Reserve policymakers have become more hawkish, financial markets still expect one or more rate cuts this year.
The CME's FedWatch tool shows that traders now see about a 64% chance of a Fed rate cut in September.
Independent trader and analyst Vladimir Zernov from FxEmpire predicts that despite a stronger dollar and rising US Treasury yields, the gold market continues to rise. The increased geopolitical tensions and strong demand for precious metals support this trend; if gold prices hold above $2350 per ounce, they may test the resistance level between $2390 and $2400 per ounce.
From a technical perspective, on the daily chart, gold prices have currently broken above the critical 50-day moving average of $2343.82. With MACD forming a golden cross and KDJ in a bullish crossover mode, the short-term trend leans bullish, with resistance focusing on the June 7 high of $2387.59 and the 2400 level.
Keep an eye on the performance of June PMI data from European and American countries today, as well as the annualized total US existing-home sales for May and geopolitical news.
Dollar Index Technical Analysis:
The dollar index rose on Thursday but met resistance below 105.65 and found support above 105.15, suggesting that after a short-term decline, the dollar may maintain an upward trend. If the dollar index stabilizes above 105.30 today after a decline, the target for the subsequent rise will be between 105.80 and 105.95. Today's short-term resistance for the dollar index is between 105.75 and 105.80, with significant resistance between 105.90 and 105.95. Today's short-term support for the dollar index is between 105.30 and 105.35, with significant support between 105.00 and 105.05.
EUR/USD Technical Analysis:
EUR/USD fell on Thursday but found support above 1.0700 and met resistance below 1.0750, indicating that after a short-term rise, EUR/USD may continue to decline. If EUR/USD meets resistance below 1.0740 today, the target for the subsequent decline will be between 1.0690 and 1.0675. Today's short-term resistance for EUR/USD is between 1.0735 and 1.0740, with significant resistance between 1.0765 and 1.0770. Today's short-term support for EUR/USD is between 1.0690 and 1.0695, with significant support between 1.0675 and 1.0680.
Gold Technical Analysis:
Gold fell on Thursday but found support above 2327.00 and met resistance below 2366.00, suggesting that after a short-term decline, gold may maintain an upward trend. If gold stabilizes above 2338.00 today after a decline, the target for the subsequent rise will be between 2374.00 and 2389.00. Today's short-term resistance for gold is between 2373.00 and 2374.00, with significant resistance between 2388.00 and 2389.00. Today's short-term support for gold is between 2338.00 and 2339.00, with significant support between 2334.00 and 2335.00.
CWG Market Forecast:
For the dollar today, the short-term strategy is to buy on dips, placing stop-loss at break points. Set a profit target of 30 points or more, and exit any pending orders before the US market opens. This strategy is suitable for margin trading and can be used as a reference for actual trading.
Dollar Index: Buy within the 105.30--105.95 range at the lower limit, with a 30-point stop-loss upon a valid breakout, targeting the upper limit of the range.
EUR/USD: Sell within the 1.0675--1.0740 range at the upper limit, with a 30-point stop-loss upon a valid breakout, targeting the lower limit of the range.
GBP/USD: Sell within the 1.2620--1.2710 range at the upper limit, with a 40-point stop-loss upon a valid breakout, targeting the lower limit of the range.
USD/CHF: Buy within the 0.8850--0.8950 range at the lower limit, with a 40-point stop-loss upon a valid breakout, targeting the upper limit of the range.
USD/JPY: Buy within the 158.05--159.15 range at the lower limit, with a 40-point stop-loss upon a valid breakout, targeting the upper limit of the range.
AUD/USD: Sell within the 0.6630--0.6680 range at the upper limit, with a 30-point stop-loss upon a valid breakout, targeting the lower limit of the range.
USD/CAD: Sell within the 1.3655--1.3715 range at the upper limit, with a 30-point stop-loss upon a valid breakout, targeting the lower limit of the range.
Gold: Buy within the 2340.00--2388.00 range at the lower limit, with a 10-dollar stop-loss upon a valid breakout, targeting the upper limit of the range.
