Fundamentals to lead the markets

Fundamentals to lead the markets

The USD remained relatively stable yesterday and during today’s Asian session and given the low number of high impact financial releases on today’s calendar, we expect fundamentals to lead the markets. The USD is expected to maintain the initiative in the FX market with its safe haven status being the primary factor behind its direction. Issues like the latest developments in the US-Iranian conflict and the Fed’s intentions about its monetary policy are considered key currently.

Oil’s pullback seems to be preserved

The drop of oil prices on Monday seems to be maintained for now as oil prices retreated in today’s Asian session. On a fundamental level, oil market participants seem to be placing their hopes for a possible deal between the US and Iran that would re-open the Straits of Hormuz and allow for oil shipments to restart.

US stock markets remain confident

US stock markets tended to remain confident, with market hopes for the potential of AI technology and a reopening of the Straits for Hormuz feeding the bulls. In the specifics, we highlight the drop of Ferrari’s (#RACE) share price yesterday as the revealing of the company’s first EV seems to be disappointing traders.

Gold’s bearish tendencies

Gold’s price edged lower yesterday and during today’s Asian session as the USD tended to strengthen a bit in the FX market. We continue to view the negative correlation between the two trading instruments as active and should the USD continue to rise we may see gold’s price losing more ground. 

Other highlights for today

Today we get the US Richmond Fed Composite Index for May and later on the US API weekly crude oil inventories figure. On a monetary level we note that Dallas Fed President Logan, RBA’s MPB member Hewson and Fed Board Governor Cook speak. In tomorrow’s Asian session, we get New Zealand’s business outlook for May and Australia’s CapEx rate for Q1. We also note that ECB’s Chief Economist Lane, BoJ’s Deputy Governor Himino and Fed Vice Chair Jefferson speak. 

Charts to keep an eye out

USD Index

The USD Index despite some wobbling remained relatively stable just above the 98.85 (S1) support line. We tend to maintain our bias for a sideways motion of the index. The RSI indicator remains near the reading of 50, implying a rather indecisive market, which in turn may allow the sideways motion to continue. Should the bears take over, we may see the USD Index breaking the 98.85 (S1) support line and start aiming for the 98.20 (S2) support level. Should the bulls take over, we may see the USD Index nearing if not breaking the 99.40 (R1) resistance barrier.  

Nasdaq

Nasdaq’s continued to edge higher, remained close to the 29680 (S1) support line though. We intend to maintain our bullish outlook for the index as long as the upward trendline guiding it remains intact. We note that the RSI indicator has risen above the reading of 70, highlighting the strong bullish market sentiment for the index yet at the same time also suggesting that the index is at overbought levels and possibly ripe for a correction lower. On the other hand the price action is still below the upper Bollinger band, which implies that the bulls have some more room to play. Should the bulls remain in charge, we may see Nasdaq’s price aiming if not breaking the 31000 (R1) resistance line. Should the bears take over, we may see the index breaking the 29680 (S1) support line, break also the prementioned upward trendline, in a first signal that the upward motion has been interrupted and continue to reach or even breach the 28750 (S2) support level.

USDIndex_M6 Daily Chart

• Support: 98.85 (S1), 98.20 (S2), 97.40 (S3)
• Resistance: 99.40 (R1), 100.30 (R2), 101.00 (R3) 

US100Cash Daily Chart

• Support: 29680 (S1), 28750 (S2), 27500 (S3)
• Resistance: 31000 (R1), 32500 (R2), 34000 (R3) 

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