Markets are still digesting disappointing inflation data in the United States released last week while the effect of Federal Reserve’s calming statements is no longer enough to support markets. The S&P 500 broad market index fell by 0.6%, Dow Jones by 0.5%, and Nasdaq 100 performed almost traditionally worse losing 1%. The U.S. 10 year Treasuries started this week at 1.635%.
Negative sentiment may prevail today too as no positive drivers for markets are in sight. However, markets are waiting for FOMC Minutes to be released on Wednesday night where the Fed would provide detailed position of its monetary decisions from the last meeting. But before that market may be suppressed slipping to last week’s lows.
In this case, the S&P 500 index may retest the support level at 4040 points with no clear direction to follow. Investors are mostly convinced that the Fed would use every opportunity to inspire and inflate stock markets to new records. But we may seriously doubt that in the existing economic situation the Fed could offer something that would be enough to push markets any further. So, we may have a visible possibility for S&P 500 to dive to the 3720 points level, or to recover to 4140 or 2210 points levels.
Crude market is gaining premium amid rising geopolitical tensions between Israel and Palestine. Missile exchanges may involve neighboring countries in this military conflict. Iran and Turkey had voiced unfailing support for Palestinians, and that may ruin efforts achieved by the U.S. in reclaiming nuclear deal with Iran. Industry data on this background is less important for traders that are mostly looking at the technical picture now. The resistance level for Brent crude benchmark is still at $70.10 per barrel, while support levels are at $66.20 and $64.70 per barrel. As soon as the Israeli-Palestinian conflict would be tamed, crude prices could return to support levels.
Gold prices are fueled by the Middle East conflict too. 10-year U.S. Treasuries yields at 1.63% imply gold prices below $1800 per ounce instead of the recent $1865 per ounce. So, any negotiations between the parties may result in declining gold prices.
The Greenback is continuously stepping back returning to last week’s lows despite stock market weakness. The EURUSD is almost at the key resistance level at 1.21850, where you may seek a possible sell entry points with targets at 1.20500 and 1.19400. The GBPUSD has finally jettisoned from strong support level at 1.40900 and is trying to climb towards 1.43600, where sell entry points would be extremely interesting.
The USDJPY is slowly drifting to the support level at 108.70 level, where would likely see a rebound to 109.40 and 110.30 levels.