Markets Hope for Powell's Mercy

U.S. stock market managed to recoil in horror from the depth of the abyss in the beginning of the week. Futures on S&P 500 broad market index managed to perform a real miracle bouncing from the dip of the last month at 4136 points to 4125 points, surging by 2%. 

One may consider somebody has dragged the U.S stock market upwards so the index could not reach its low at the important support levels of the week. This week a lot of Federal Reserve representatives are scheduled to speak after a vicious revising of its monetary policy intentions by the Fed towards early interest rates hike and tapering of the monthly bond buying program of $120 billion. 

Anyway, it is hard to imagine Jerome Powell and other Fed members would change their hawkish rhetoric they have made last week. So, we may consider that pressure on the U.S. stock market may resume after their testaments. 

Nevertheless, technical picture for the S&P 500 broad market index suggests a high probability of a downward move. The strongest resistance is at 4250 points, where the most interesting spots for sell orders are located. Support levels are at 4115-4070-4030 points, where S&P index might be heading for. 

Crude prices have returned to $74.80 per barrel. The major reason for such pull back might be the suspension of U.S.-Iran nuclear deal negotiations after Ebrahim Raisi, a hardline judge who is under U.S. sanctions for human rights abuses, secured victory on Saturday in Iran’s presidential election.

However, technical picture suggests even more upside rally this week to $75.40-76.70 and even to $80.80 per barrel. So, it the U.S. stock market would avoid going down crude prices may surge higher ahead of the OPEC+ meeting on July 1. 

Gold prices are bouncing back a little from their month lows at $1760 per troy ounce to $1785 per ounce. It is difficult for the yellow metal to climb any further if 10-year Treasuries yields would decline below 1.43% since the fall in yield would mean extra demand for U.S. Treasuries. So, we should better stay away from gold for the moment. 

The U.S Dollar pulled backed a little in the FX market after several days of unstoppable rally. The EURUSD is trying to return to the resistance at 1.19350 that may hold the pair from dipping to 1.15300. So, it the pair would climb to 1.19350 or to 1.20700 traders may consider opening sell positions there.

GBPUSD has exhausted its decline limit this week after bouncing from the support level at 1.38100 to 1.39200 on Monday. Nonetheless, no second chance to buy the pair is seen. Traders should wait the pair to decline to 1.37000-1.37300 with buy positions to open at these levels. Amy sell positions might be considered only after the pair would reach 1.40800 or 1.42000. 

The USDJPY is likely to decline to 109.20-108.60 or even to 108.00. The later support level might be considered a s a good buy point. The major resistance level is at 111.00 where sell positions might be interesting to open.