Natural Gas (XNG/USD) Jumps To $2.35 Amid Inflation Fears
Natural Gas (XNG/USD) remained bullish and finally managed to touch the $2.34 price level while building from its previous 1-week low.
According to experts, the bullish nature of XNG/USD can be traced back to the softer USD, along with the cautious approach of the markets. After all, the long-awaited inflation numbers for the month of May are due along with the Fed meeting.
US Dollar Index (DXY) Remains Downbeat
The US Dollar index (DXY), which serves as a gauge of the USD strength, also broke its recent uptrend and ended the day with a 0.20% loss. When checked last time, the day's trading price was 103.43, which signals the downbeat sentiment surrounding the USD.
The current sentiment of the USD is expected, considering we have the FOMC ahead, which will decide the next direction for the greenback.
It is also worth noting that the data coming out of the USA is soft, and when paired with the Fed talks, it makes sense for the USD to show weakness. In addition, there's a 70% chance that no action will be taken at the Fed's meeting.
If we look outside the USA, the PBoC has also introduced rate cuts. When paired with more demand for energy in the summer season, it makes sense for the XNG/USD to stage a bullish run.
Overall, the market conditions in the USA, China, & the rest of the world are supportive of high XNG prices. In addition, the economic uncertainty and the policy rate decisions are also supporting natural gas advances.
If we look at the XNG/USD technical outlook, the 10 SMA on the daily charts is keeping the Natural gas depressed at $2.31. In addition, there are also trendlines near $2.35 as well as $2.37 that may serve as stoppers for natural gas. But once these resistance zones are broken, the Natural Gas will likely go up with an even higher bullish momentum.