Last week was very interesting for the markets, as we saw the releases of the US Inflation and Disney’s earnings report. So let's see what we should await this week!
Rise of NZD, dovish Fed, and stocks indices' sell-off
- Stock indices S&P 500 and Nasdaq are falling for seven days in a row. Yesterday, US benchmarks started rebounding their losses and were heading to close green, but at the end of the day plunged on concerns that the stock valuations are too high.
- Fed’s Powell held a meeting yesterday and said that the central bank wouldn’t tight its easing policy anytime soon. Besides he mentioned that higher bond yields reflected economic optimism, not inflation fears, giving investors more confidence to go long on riskier assets.
- The Reserve Bank of New Zealand on Wednesday left its rates and bond-buying at the same level. The New Zealand dollar skyrocketed to almost two-years highs.
- Other riskier currencies the aussie and pound surged to their highest levels since early 2018, while the safe-haven Japanese yen plunged.
EUR/USD has dropped back to the 50% Fibonacci level at 1.2150 after breaking it. It should be just a natural sell-off ahead of the further rally up to the 61.8% Fibo level at 1.2200. EU speeds up vaccinations, so it may help the euro to rise. Support levels are at the recent lows of 1.2100 and 1.2030.
GBP/USD has broken the ceiling of the channel established in November. The way up to the next resistance at 1.4250 is clear now. However, the RSI indicator in combination with the Bollinger Bands point to the overbought zone. Thus, we could see a drop to the recent low of 1.4050 soon. The next support will be at 1.4000.
USD/JPY has approached the 200-day moving average of 105.50. If it manages to break it, the way up to the next round number of 106.00 will be open. Support levels are Monday’s low of 105.00 and the low of February 9 at 104.50.
NZD/USD is heading to 0.7400. If it manages to break it, the way up to the next round number of 0.7500 will be clear. In fact, if we look at the monthly chart, we’d notice that 0.7500 is a key level that was support, but now plays as a resistance. Since the price retraced back to this level, it is likely to reverse down. Support levels are 0.7150 and 0.7000.
The volatility that the markets experienced last week promises the second tidal wave! What should your favorite assets anticipate during the first week of February?
The US will reveal Non-farm payrolls on January 7, Friday, at 15:30 GMT+2 (MetaTrader time).
The US Bureau of Economic Analysis will publish Core Personal Consumption Expenditures (PCE) on May 27 at 15:30 GMT+3.
The United States will publish the Preliminary GDP on Thursday, May 26, at 15:30 GMT+3.
The Reserve Bank of New Zealand will publish a monetary policy report and make an update on the interest rate on May 25, at 05:00 GMT+3.