Natural Gas Price (XNG/USD) continues its rebound and is trading near the intraday high around $2.34. The price is benefiting from a weaker US Dollar and cautious market optimism as investors await key US inflation data for May and the upcoming Federal Reserve (Fed) monetary policy meeting.
The US Dollar Index (DXY) has reversed its two-day uptrend and is down 0.20% intraday to around 103.43. The downtrend in the US dollar is driven by dovish expectations for the Fed’s policy decision on Wednesday. The CME’s FedWatch Tool indicates a high probability of the Fed maintaining its current stance, with an 80% chance of a 0.25% rate increase in July.
The recent softer US economic data and uninspiring Fed communications have contributed to a dovish sentiment among traders. Additionally, the rate cut by the People’s Bank of China (PBoC) and expectations of increased energy demand due to hot summer weather in the West are supporting the Natural Gas Price.
However, cautious market sentiment ahead of the key US Consumer Price Index (CPI) figures and US-China tensions are weighing on Natural Gas Price. Softer CPI figures could delay concerns about a rate hike in July and prevent the Fed from sounding hawkish. On the geopolitical front, the US has expanded its import ban from Xinjiang, and China has vowed to protect domestic firms against any US sanctions.
In terms of technical analysis, the 10-day moving average (10-DMA) is acting as a support level near $2.31. However, downward-sloping resistance lines from late May around $2.35 and $2.37 are limiting the rebound in XNG/USD.