May 23, 2024
CURRENCIES
Gold Forecast:
- Gold (XAU/USD) dropped sharply on Wednesday, holding above support at $2,375.
- Bulls need to defend this level to prevent a deeper retrenchment towards $2,360.
- Continued weakness could shift focus to $2,335, the 38.2% Fibonacci retracement of the 2024 rally.
- A bullish reversal could push prices towards $2,420 and potentially $2,430.
- Overcoming $2,430 could lead to a rally towards the all-time high around $2,450.
EUR/USD Forecast
- EUR/USD declined on Wednesday, nearing key support at 1.0810.
- To maintain a bullish outlook, the euro must stay above this threshold.
- Losing this floor could lead to a retreat towards the 200-day simple moving average at 1.0790.
- Further weakness could spotlight 1.0725.
- A bullish turnaround could target resistance at 1.0865, intersecting with the 50% Fibonacci retracement of the 2023 decline.
- A successful breakout may aim for 1.0980, the March swing high.
USD/JPY Forecast
- USD/JPY rose on Wednesday, nearing horizontal resistance at 156.80.
- Bears must defend this barrier to prevent a climb to 158.00 and eventually 160.00.
- Advances to these levels risk intervention by Japanese authorities to bolster the yen.
- A bearish swing could find initial support at 154.65.
- A breach might lead to a descent towards the 50-day simple moving average at 153.75.
- Further losses could expose trendline support just above 153.00.
STOCK MARKET
Demand and Supply Issues:
- Nvidia (NVDA) CEO Jensen Huang faces strong demand but insufficient supply.
- Following Nvidia’s first-quarter earnings report, Huang addressed concerns about a potential demand lull amid transitions between AI chip generations.
AI Chip Transition:
- Nvidia is moving from its current Hopper AI platform to the advanced Blackwell system.
- Despite analysts’ concerns, Hopper demand has grown even after the Blackwell announcement.
Demand vs. Supply:
- Demand for both Hopper and Blackwell platforms will exceed supply well into next year.
- The complexity of Nvidia’s chips contributes to supply constraints.
Financial Performance:
- Q1 results topped Wall Street forecasts with adjusted EPS of $6.12 on $26 billion in revenue, marking a 461% and 262% increase from the previous year.
- Non-GAAP operating income was $18.1 billion.
- Nvidia expects Q2 revenue to be around $28 billion, exceeding analysts’ expectations of $26.6 billion.
Stock Split and Dividend Increase:
- Nvidia announced a 10-to-1 stock split, effective June 10 for shareholders as of June 7.
- The quarterly dividend increased to $0.10 per share from $0.04.
Market Reaction:
- Nvidia stock rose as much as 6% in extended trading on Wednesday.
AI Training and Inferencing:
- Huang discussed transitioning from AI training to AI inferencing.
- Nvidia’s chips are expected to remain powerful for inference due to their complex software stack and model capabilities.
Broadening Customer Base:
- Beyond major cloud service providers (Microsoft, Google, Amazon), companies like Meta, Tesla, and pharmaceutical firms are increasingly purchasing Nvidia chips.
- Automotive industry, excluding cloud companies, is a significant user of Nvidia’s data-center chips.
Future of Autonomous Vehicles:
- Huang highlighted Tesla’s lead in self-driving cars.
- He emphasized that all cars will eventually need autonomous capabilities.
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