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  • Market Focus: Markets are Craving Support from Yellen and Lagarde

Market Focus: Markets are Craving Support from Yellen and Lagarde

U.S. stock markets seem to be losing all  hope for any kind of recovery. The S&P 500 broad market index is flatly sliding down without any signs of a rebound that could inspire investors. Maybe it is because it is the beginning of the summer season, maybe investors are not seeing any drivers for growth, or maybe everybody is waiting for the major shows of the week as U.S. Treasury Secretary Janet Yellen is set to testify on the Federal budget 2023 before U.S. Congress on Tuesday and Wednesday. It will be very interesting to hear how the Treasury Secretary will defend high budget spending amid soaring prices. However, Mrs. Yellen is well experienced in such mental acrobatics, so she will probably find the right words to support markets.

The second and most expected show this week is that of the European Central Bank (ECB) meeting on monetary policy on Thursday. The market could be caught by a surprise action as the ECB is lagging behind other central banks’ actions to tackle inflation. The ECB’s President Christine Lagarde is also an experienced official, and she may wrap any unpleasant decision for the market up into a magnificent attractive-looking present.

The third show will come in the form of the May inflation data in the United States that will be released on Friday. Consensus suggests that inflation will remain at 8.3% year-on-year. And this looks like a possibility considering fuel prices last month.

So, if Yellen and Lagarde will juice up markets and inflation is released according to the forecast, markets may perform moderate volatility that could offer some buy options on the S&P 500 index. This would certainly be a high speculative long position with a target at 4180-4250 points. But first, the index should drop to a strong support level at 4030-4050 points.

Brent crude prices are slowly crawling to $124 per barrel. Investors are not very worried about the current price level, but there may be trouble if prices rise to $135-137 per barrel. The window of opportunity for Brent crude prices to lift off to $160-180 per barrel is open until the end of June, so a breakthrough of this last resistance would initiate this extreme scenario.

Gold prices are in a descending mode that could last until the end of July. The current levels at $1840-1845 per troy ounce are close to the optimal sell levels at $1860-1870. Thus, investors may try to open small short positions with targets at $1730-1750 per ounce.

EURUSD remains in the aggressive upside pattern with a possibility to hit 1.08500 target. However primary upside targets for the pair were reached once it crossed the 1.07500 landmark. There are no good entry points for any deal now.

GBPUSD is resting close to the strong support level at 1.24900-1.25100. The pair has a resistance level at 1.25900-1.26200 that is suitable for opening short positions towards the support this week.