Correction sentiment squeezed markets. Bitcoin has lost more than a third of its value in the last two weeks, crude prices lost 5%, U.S. stock market was close to a full-scale correction while the Dollar tried to return to the upside movement.
Most interesting is that Fed’s intensions are becoming clearer. Fed’s solid position of maintaining ultra-soft monetary policy was challenged by some FOMC members that called the Fed to reconsider its current policy towards tapering extraordinary measures in the future.
The behavior of the Fed seemed to be very strange, as it has not mentioned such alternative opinion in it statement after the meeting in April. It seems the Fed is running out of time as the correlation between Bitcoin and the S&P broad market index points towards deep correction of the U.S. stock market in the coming days.
Friday’s large portion of the PMI data for the G7 countries may, however, present a brighter picture. But evet the latest figures for continuing jobless claims in the United States jumped suddenly to 3.751 million vs 3.64 million expected. That may underpin negative trends in the world’s largest economy. It also means that buying U.S. stock market is not the case now. But we should also wait for S&P 500 index to slip below 4040 points to open sell positions. But before that, it would be wise to stay off the market.
Crude market has suffered a short correction after Brent prices hit $70.10 a barrel level, and report of a significant progress in U.S.-Iran negotiations over the nuclear deal. Brent crude prices plunged to $65 a barrel triggering a bearish scenario with targets at $64.00 a barrel. However, sell positions would be interesting if the price returns to $67.70 level.
Gold prices are suffering high volatility. Despite surging U.S. 10-year Treasuries yields to 1.69%, prices remain above $1870 per ounce on geopolitical tensions. So, it would be wise to leave the gold market and seek for a possible positions next week after Israeli-Palestinian conflict showed some new developments.
The Greenback is falling further with some attempt of correction in the middle of this week. The EURUSD is still gravitating to 1.21850, and would hardly make an upside jump this week. We cannot exclude it may also dive to 1.2050 following the developments in the U.S stock market.
The GBPUSD has failed to leave the orbit of the strong support level at 1.40900. Despite its formal achievements above 1.41600 it would hardly continue its rally towards 1.43600 this week.
The USDJPY was testing 108.70 level several times, but failed to go down. It would likely to be squeezed today between the support at 108.70 and the resistance at 109.40.