Weekly Summary: Market Sentiment is Worsening

The week is nearing its dusk with a strange sense of shivering and danger that nudge investors to seek warm shelter for a cold night. The worsening of the market sentiment is seen across financial markets. The S&P 500 broad market index lost 0.6% this week to 4128 points. More iciness hit commodities and cryptos. Brent crude prices dived by 7.0% to $80.70 per barrel, copper is down by 2.5% to $8800 per ton, while Bitcoin tumbled by 8.2% to $27,800 per coin.

The U.S. Dollar has become a new shelter for investors, instead of gold, that was the most desired asset during the banking quake in March. This week the Greenback edged higher by 0.5% to a basket of major currencies. The simple logic behind this is that the probability of a  recession in major economies is rising, which is highlighted by the Federal Reserve (Fed) and large financial institutions, and framed by the respective macroeconomic data. This intensifies the perception of iciness with a strong desire to seek shelter. Large American banks have given markets the impression that they are built on strong sustainability and this made gold and cryptocurrencies much less haunted in a time of a possible recession. Fed officials were pressing with their continuous monetary tightening intentions in order to slow down inflation, including further interest rate hikes. The Greenback benefited the most from these vectors amid a seemingly stable banking sector and rising recession fears.

The reporting season will continue next week, probably prolonging inflating recession fears and dismay. The first estimate for Q1 2023 GDP in the United States will be released next week, and may point to further economic increases. So, the trend for a slow landslide in the stock market and strengthening of the Dollar may continue during next week too.

Technically, the S&P 500 index has an upside formation with targets at 4150-4250 points that have already been met, but without a clear reversal. The index is now in a reversal zone and may look for an upside if it survives above 4000 points by the end of the day. More ambitious upside targets at 4500-4600 points may emerge in this case.

Brent crude prices rebounded from the resistance of $86 per barrel, lowering chances for an upside move to $94-96 per barrel. The recession scenario may become a leading one if prices continue to fall down below $80.70 per barrel towards $40-60 per barrel of the Brent crude benchmark. But now it is too early to put all bets on the downside scenario as a drop in crude prices may become a simple technical correction if they move above $78.00 per barrel.

Gold prices are moving inside the mid-term upside formation with targets at $2000-2100 per troy ounce by the middle of 2023. However, the tension is mounting as prices may continue to go down to $1900 per ounce if they pass the $1980 threshold. If the support survives, prices may lift to $2080-2100 per ounce. So, it is better to wait until the battle over $1980 ends and prices move above $2000 per ounce.

The U.S. Dollar is expected to be supported by the emerging upside signals in April. Short trades for EURUSD opened at 1.06700-1.07200 with a downside target at 5000 points below the opening level and the same 5000 points for a stop-loss order are intact. The decline of the EURUSD to 1.05000-1.05500 was used to close half of the trade. The other half should be continued until the targets of 1.03000-1.03500 are met.

Besides, short positions for AUDUSD from 0.66900-0.67400 with the target of 3500 points and the same stop-loss order could be considered interesting. Short positions for GBPUSD from 1.23300-1.23800 with a target of 5000 points and the same 5000 points for a stop-loss order could be considered. Rising risks and market volatility could prompt trade volumes to be reduced.