ATFX Market Outlook 20th May 2025

ATFX Market Outlook 20th May 2025

Markets Shake Off U.S. Credit Downgrade: Gold Rebounds, Stock Rally Stalls

Market HighlightDifferent Federal Reserve officials made speeches, issuing warnings on the impact of the U.S. sovereign credit rating downgrade as well as market volatility, as they continue to work in a very uncertain economic environment. Stocks in the U.S. closed nearly even on Monday, with the market mood dampened following the comments on the U.S. credit rating downgrade. Dow gained 0.32%, S&P 500 rose 0.09%, and Nasdaq rose 0.02%. U.S. Treasury yields kept their rise under pressure from the credit rating downgrade, while the U.S. dollar weakened against major currencies to its lowest level in over a week.

Gold prices were higher, driven by the softened US dollar and increased safe-haven demand following the US government credit rating downgrade by Moody's. Spot gold rose approximately 0.8% to $3,228.96 an ounce. Oil prices were slightly higher, with reports of the breakdown in US-Iran nuclear talks offsetting the impact of Moody's US credit rating downgrade.

Key Outlook

During the Asian session, the Reserve Bank of Australia (RBA) will announce its interest rate decision, with expectations leaning towards a second rate cut in the current cycle. The White House reportedly plans to impose at least a 10% tariff on Australian exports to the U.S., and the Australian economy is anticipated to continue slowing significantly. In the evening, Canada will release its April CPI data, with the monthly rate expected to dip to -0.2% (previous: 0.3%), while the annual rate is forecasted to decrease to 1.6% (previous: 2.3%), potentially further supporting the Bank of Canada’s easing path. Additionally, the eurozone’s May Consumer Confidence Index (preliminary) is anticipated to remain in negative territory but exhibit signs of stabilisation.

Key Data and Events Today:

12:30 RBA Interest Rate Decision ***

13:30 RBA Press Conference *** 

14:00 EU Germany PPI APR ** 

20:30 CA CPI YoY APR *** 

Tomorrow

02:30 NYMEX New York Crude June Futures Contract Expires **

04:30 US API Weekly Crude Oil Stock *** 

07:50 JP Balance of Trade APR ** 

14:00 GB CPI & PPI APR *** 

EURUSD

· Resistance: 1.1317 / 1.1377

· Support: 1.1182 / 1.1120

EUR/USD rose 0.6% to 1.1244, its highest level since 9 May, supported by dollar weakness following Moody's downgrade and positive developments in U.S.-EU trade talks. Technically, the pair has broken above a declining trendline and is retracing the 1.1182 support area; if it moves above this level, the path may be clear towards 1.1317 resistance. Markets are also watching the Eurozone May Consumer Confidence flash, which is expected to remain negative but stabilise, potentially providing further support to the euro.

 GBPUSD

· Resistance: 1.3402 / 1.3433

· Support: 1.3301 / 1.3270

GBP/USD rose 0.6% to 1.3355, its strongest level since April 30, as renewed UK-EU defence and trade talks lifted sentiment. Technically, the pair broke free from a consolidation triangle, trading above 1.3301. A sustained base at this support would clear the way for a test of the resistance at 1.3402.

USDJPY

· Resistance: 145.51 / 146.25

· Support: 144.77/144.03

USD/JPY fell 0.5% to 144.98, its lowest since 8 May, as dollar weakness across the board following the U.S. credit downgrade increased demand for yen. Technically, the pair remains within a downward channel, with resistance observed around 145.51. A breakdown below 144.77 may pave the way to retest the support at 144.03.

US Crude Oil Futures (JULY)

· Resistance: 63.45/ 64.85

· Support: 61.23/ 60.11

WTI crude rose by 0.32% to $62.69 per barrel, bolstered by stalled U.S.-Iran nuclear discussions, which mitigated concerns regarding the U.S. credit downgrade. Technically, prices remain above the ascending trendline and are testing the key resistance level near $63.45. A breakout could induce further upside, whereas a drop below $61.22 may reveal downside risk.

Spot Gold

· Resistance: 3281/3318

· Support: 3197/3159

Spot Silver

· Resistance: 32.62/32.81

· Support: 32.01/31.82

Gold climbed to $3,229.51/oz on Monday, supported by haven flows after Moody’s downgraded the U.S. credit rating. A weaker dollar and rising Fed rate cut expectations added momentum, despite elevated Treasury yields. Technically, prices are consolidating near the 23.6% retracement level, potentially pulling back toward the 50%–61.8% support zone (around $3,197) before resuming the broader uptrend.

 Dow Futures

· Resistance: 43303/43740

· Support: 42265/41928

The Dow Futures rose by 0.32% to close at 42,792.07, as investors absorbed Moody’s credit downgrade and concerns over the fiscal impact of Trump’s new tax proposal. Technically, the price may retest the 42,265 support zone aligned with the ascending trendline. A rebound from this area could pave the way toward the 43,303 resistance.

NAS100

· Resistance: 21738/22164

· Support: 21177/20728

NAS100 edged up 0.02% to 19,215.46 on Monday, marking a sixth consecutive gain. While Moody’s U.S. credit downgrade pressured sentiment, strong performance in the tech sector kept the index buoyant. Technically, the index remains within an ascending channel. A short-term pullback towards the 21,177 support zone could present a rebound opportunity, with potential upsides targeting the upper channel resistance near 21,738.

 BTC

· Resistance: 106901/107643

· Support: 105004/104430

Bitcoin has climbed above $106K, maintaining its bullish momentum. Holding above $105K keeps the door open for a test of $107,643 and potentially $110k. On-chain data show substantial accumulation from large wallets (100–10,000 BTC), but bearish divergence in the daily RSI suggests that momentum may fade. However, a drop below $105K could lead to a further decline.

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