Solid Goold Trading

Monday’s Edition

With Nick Goold

USD/JPY remained volatile last week. The pair continued to fall after the Bank of Japan appeared to intervene again during Japan’s Golden Week holidays, when market liquidity was lower. USD/JPY tested the 155 area before recovering and closing almost unchanged. Reports suggest Japan may have spent around ¥10 trillion, or about $64–65 billion, on yen-buying intervention since April 30, showing that officials are serious about defending the yen against excessive volatility.

U.S. data also kept pressure on the yen. April nonfarm payrolls rose by 115,000, beating expectations of 62,000 and marking a second consecutive month of stronger job growth. This makes it harder for the Federal Reserve to argue for rate cuts this year, especially while inflation concerns remain. At the same time, equity markets rallied as strong corporate earnings supported buying. The Nasdaq rose for a sixth straight week as AI optimism remained very strong.

Japan’s Nikkei 225 surged over 5% and reached a record high on Thursday, led by technology and semiconductor shares. Bitcoin also continued to rise as risk-on sentiment encouraged buying. Meanwhile, WTI oil fell back below $100 as markets waited for Tehran’s response to Washington’s 14-point memorandum, keeping hopes of a possible U.S.–Iran deal alive. However, consumer sentiment weakened sharply, with the University of Michigan index falling to 48.2 in early May, its lowest reading on record.

Markets This Week

U.S. Stocks

U.S. stocks remained strong last week, with the Nasdaq reaching new record highs. However, the Dow was unable to break above its February highs. Strong earnings reports from U.S. companies and lower WTI oil prices supported market sentiment, as traders continued to expect a quick end to the conflict. In the current environment, buying on weakness remains the preferred strategy. Resistance levels are at 50,000, 50,500 and 51,000. Support is seen at 49,000, 48,500, 48,000, 47,000 and 46,000.

Japanese Stocks

Following the Golden Week holiday, the Nikkei 225 surged to record highs, supported by strong optimism around AI-related stocks. The stronger yen after suspected intervention had little impact on the market, showing that buying momentum remains strong. The move to new highs is positive, so it may be better not to fight the uptrend. Waiting for a pullback closer to the 10-day moving average could offer better buying opportunities this week. Resistance is seen at 64,000, 65,000, 66,000, 67,000 and 68,000, while support is at 62,000, 61,000, 60,000, 58,500 and 57,000.

USD/JPY

Another round of yen-buying intervention from the Bank of Japan appeared to trigger several sharp drops in USD/JPY during the holiday period, when market liquidity was lower and the impact could be stronger. However, despite official warnings that intervention could continue, USD/JPY still ended the week almost unchanged. The upside now looks limited while intervention risk remains high, but buying interest is still appearing below current levels. In this environment, taking advantage of volatility and trading the short-term range may be the best approach. Resistance is at 157.00, 158.00, 159.00, 160.00 and 160.50, while support is seen at 156.00, 155.00, 154.00 and 152.50.

Gold

Gold found support last week as WTI oil prices fell and long-term U.S. interest rates moved lower. This helped gold break above its recent downtrend and encouraged some longer-term buyers to return. However, with the 10-day moving average still pointing sideways, range trading may be the best approach this week. Resistance is at $4,750, $4,900, $5,000, and $5,100, while support is at $4,550, $4,500, and $4,400.

Crude Oil

Ongoing negotiations between Iran and the U.S. kept WTI crude oil in focus last week, with markets expecting a possible resolution in the coming days. This helped WTI move back below $100 as traders priced in hopes of lower geopolitical risk. However, negotiations are still likely to take time, so trading against large short-term moves may be the better approach for day traders this week. Resistance is at $100, $110 and $120, while support is at $90, $80, $75, $70, and $67.50.

Bitcoin

Bitcoin continued to test higher last week as positive sentiment returned to the market. Expectations of a possible end to the conflict involving Iran also supported risk appetite. However, selling by ETF holders limited further gains during the week. The outlook remains positive, so buying opportunities may still be preferred as long as Bitcoin stays above $75,000. Resistance is at $82,500, $85,000, and $90,000, while support is at $75,000, $65,000, $60,000, and $55,000.

This Week’s Focus

Monday: China CPI and PPI, U.S. Existing Home Sales
Tuesday: Japan Household Spending, German CPI, E.U. ZEW Economic Sentiment, U.S. CPI
Wednesday: Japan Current Account, E.U. GDP and Industrial Production, U.S. PPI
Thursday: U.K. GDP, Industrial Production and Trade Balance, U.S. Retail Sales
Friday: U.S. NY Empire State Manufacturing Index and Industrial Production

USD/JPY will remain in focus this week as traders watch whether the market tests higher to see if the Bank of Japan has finished intervening, or whether Japanese authorities continue to defend the yen around the 157 area. Ongoing negotiations between the U.S. and Iran will also continue to affect WTI oil and wider market sentiment, with traders hoping for a possible end to the conflict soon. Equity markets will look to extend recent gains, while this week’s U.S. inflation and retail sales data will be important for judging whether higher oil prices are starting to affect inflation and consumer demand.