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.