The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
How US protests affect market?
The main source of volatility for global markets is US-China tensions. Investors were waiting for US President’s speech on Friday for some hints. But, Donald Trump was not so disruptive as everybody expected. He didn’t impose any direct sanctions on China for its treatment of Hong Kong. According to investors, the US impact on China and Hong Kong is likely to be limited and more symbolic while the financial sector is unlikely to be affected.
That improved the market sentiment and pushed stocks up. Let’s look at S&P 500. It has been climbing since March 20. It has already passed the 3040 mark. If it breaks through the retracement level at 3070, it will make the way towards 3110. Support levels are 3000 and 2935.
Nevertheless, violent protests in some American cities bothered investors, as crowds increase chances for the second coronavirus wave and economic activity loss.
As a result, EUR/USD rose on the weak greenback. Moreover, investors highly expect the ECB to unveil the rescue program with an additional 500 billion euros of asset purchases. All that played well for the EUR.
The price reached the March high at 1.114. The next retracement is at 1.117. If it manages to break through it, it may go even higher to 1.121. Support levels are at 1.11 and 1.10.
Gold moved up
The gold has passed 1740 and it’s moving up to a recent high at 1750. The overall trend is bullish, as you can see. And, the gold is likely to stick to the trend. Support levels are 1730 and 1700.
Let’s talk about oil a little bit. Crude surged a record 88% in May driven by the OPEC+ deal. What’s more, OPEC+ is likely to expand its supply cuts in next months. However, prices are still well below where they have been at the beginning of the year. That’s because the demand yet need to show a sustained improvement for oil to keep rallying. Thanks to China, its oil demand has risen to near pre-coronavirus levels. However, the US demand stays low because of violent protests in the USA. Lrt's look at WTI oil chart. If the price crosses the 100-day moving average, it may go further to 37.5. Support are 31.5 and 27.
To trade WTI with FBS you need to choose WTI-20N.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.