ATFX Market Outlook 19th May 2025

ATFX Market Outlook 19th May 2025

Moody’s Downgrade Hits Dollar, Sends Yields Surging

Market HighlightDespite a sharp decline in consumer sentiment, U.S. stocks extended gains on Friday, supported by optimism over the recent U.S.-China tariff truce. The University of Michigan survey showed May confidence fell to a three-year low, while 12-month inflation expectations surged to their highest since 1981.

Moody’s downgraded the U.S. sovereign credit rating from “Aaa” to “Aa1,” citing concerns over fiscal sustainability. This was the final move among the three major agencies to strip the U.S. of its top-tier AAA rating.

In response, U.S. Treasury yields spiked into the close. The Dollar Index rose 0.36% to 101.13, posting a 0.7% weekly gain—its fourth straight weekly advance and strongest since early March. The euro slipped 0.37% to 1.1146, down 0.9% for the week, its weakest since early February. The dollar gave back some gains in early Monday trading.

Gold fell 1.16% to $3,202.28/oz, down 3.67% on the week—its worst since November—amid improved risk appetite. Oil logged a second straight weekly gain, though concerns over increased supply from Iran and OPEC+ limited upside.

Key Outlook

Today, markets will watch the Eurozone’s final April CPI, with headline inflation expected at 2.2%. A prior upside surprise in core CPI (2.7%, an 8-month high) has clouded the ECB’s rate cut outlook and added policy uncertainty. The focus will also be on the U.S. April Leading Economic Index, which is forecast to remain negative at -0.9% (prior: -0.7%), along with remarks from Fed officials, especially on global trade policy developments.

Key Data and Events Today:

Canada Holiday

10:00 CN Industrial Production & Retail Sales APR ** 

10:00 CN The State Council Information Office Press Conference ** 

17:00 EU Core CPI Final APR *** 

20:45 Fed’s Williams Speech ** 

22:00 US CB Leading Index APR **

Tomorrow

09:00 CN 1-Yr and 5-Yr Loan Prime Rate ** 

12:30 RBA Interest Rate Decision *** 

13:30 RBA Press Conference *** 

14:00 EU Germany PPI APR ** 

20:30 CA CPI YoY APR *** 

EURUSD

· Resistance: 1.1256 / 1.1317

· Support: 1.1120 / 1.1061

EUR/USD fell 0.37% to 1.1146 on Friday, the lowest since early February, and is down 0.9% for the week. Slower Eurozone data and a high dollar sent the pair lower. Attention now is on April's final Eurozone CPI, with higher core inflation making the ECB rate cut proposal harder. Technically, the EUR/USD is still capped by a descending trendline, with a bearish bias towards the 1.1120 support level.

GBPUSD

· Resistance: 1.3362 / 1.3402

· Support: 1.3270 / 1.3239

GBP/USD fell 0.2% to 1.3270 on Friday, down 0.1% for the week. While the markets' focus stayed fixed on U.S. trade policy and Fed rate views, the pound generally lagged broad USD action. Technically, the pair is holding above a rising trendline and attempting to break a descending wedge pattern. A sustained move above 1.3362 could open the way toward the next resistance at 1.3402.

 USDJPY

· Resistance: 145.51 / 146.25

· Support: 144.03/143.30

USD/JPY rose 0.16% to 145.89 on Friday, up 0.4% for the week. Japan’s weaker-than-expected Q1 GDP raised concerns over the economic recovery, but a broadly stronger dollar supported the pair. However, USD/JPY remains under pressure below 145.51 resistance, with price action showing a bearish structure. A break below 145.00 could accelerate downside toward the next key support at 144.03.

US Crude Oil Futures (JULY)

· Resistance: 63.45/ 64.85

· Support: 61.23/ 60.11

Crude prices rose on Friday, with WTI settling at $62.49, up 2.4% for the week. Easing trade tensions lifted sentiment, though expectations of increased supply from Iran and OPEC+ capped further upside. The IEA now sees global output rising by 1.6 million bpd in 2025. Technically, WTI is holding above its ascending trendline and may retest resistance at $63.45 if the uptrend persists.

Spot Gold

· Resistance: 3318/3355

· Support: 3197/3159

Spot Silver

· Resistance: 33.00/33.24

· Support: 32.25/32.01

Gold rose 1% on Monday to $3,246, rebounding from last week’s sharp drop following Moody’s downgrade of the U.S. sovereign credit rating. This move came after a U.S. credit downgrade and tariff warnings. The price remains above trendline support, with $3,318 as the next upside target.

Dow Futures

· Resistance: 42961/43303

· Support: 41928/41486

The Dow rose 0.78% on Friday, extending a 5-day winning streak as easing trade tensions lifted sentiment. While consumer confidence remained weak and tax reform efforts stalled, markets stayed cautiously optimistic. Technically, the index is holding its uptrend, with eyes on a potential move toward resistance near 42,961 if support at 41,928 holds.

NAS100

· Resistance: 21738/22164

· Support: 20728/20294

NAS100 rose 0.52% on Friday, gaining 7.2% for the week on the heels of solid tech strength. UnitedHealth's 6.4% rebound bumped healthcare up, but Applied Materials dropped 5.3% on soft earnings, highlighting sector divergence. Technically, it can test support near 20,728 before climbing towards resistance at 21,738 if the trend intensifies.

BTC

· Resistance: 107655/108233

· Support: 103834/103247

Moody’s downgraded the U.S. sovereign credit rating from “Aaa” to “Aa1”, citing concerns about fiscal sustainability. Bitcoin surged past $105,500, generating bullish sentiment. Some analysts anticipate $116,000 soon and year-end targets reaching $200,000. BTC remains above a breakout pattern, with key resistance at $107,655 and additional targets at $108,233. The nearest support sits at nearly $103,834.

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