Global stocks and commodities fell ahead of congressional testimony by Federal Reserve Chair Jerome Powell as markets await for clues on the timing of policy tightening and the central bank's plans to tackle inflation. Powell will deliver his testimony on the economy to the Senate Banking Committee on Wednesday morning. Last week the central bank increased its benchmark interest rate by 75 basis points for the first time in nearly three decades.
US futures extended the decline on Wednesday morning, the focus shifted to Powell's testimony. On the other hand, Investors also reviewing the last round of Q1 earnings to get more details on how inflation is impacting business and consumer activity.
Crude oil futures plunged to the fresh monthly lows after the buyers failed to hold the upside momentum. The strong bearish momentum is fuelled by concerns over a possible recession. Recently, The Cleveland Fed chief Loretta Mester added to concerns, saying that the risk of a recession in the United States was increasing and it would take several years to bring inflation down from four-decade highs to the bank's 2% target.
In the currency market, the Greenback, in terms of the US Dollar Index (DXY), remains in favour as a safe haven currency due to uncertainty over global growth in the face of inflation and rising interest rates. The EURUSD slightly recovered from the early session losses supported by the hawkish comments from ECB policymakers.
The precious metal hovers near the fresh weekly lows as increased prospects of faster rate hikes by the Federal Reserve lifted the dollar. At the time of writing, the metal trades below $1825.
On the data front, the UK inflation increased to 9.1% in May, from 9% in the previous month, the highest since 1982. The Bank of England said last week that inflation was likely to remain above 9% over the coming months.
Worldwide, more than 539 million people have been confirmed infected and more than 6.3 million have died. The United States has confirmed over 86 million cases and has had more than 1013,200 deaths from COVID-19, the highest total in the world.
Technical Outlook and Review
EURUSD: For today, the resistance for the currency pair is around 1.0590, any break over targets 1.0640. On the downside, any meaningful pullback now seems to find some support near the 1.0470 zones, below which the slide could further get extended towards the 1.0440 regions.
The important levels to watch for today: Support- 1.0500 and 1.0470 Resistance- 1.0550 and 1.0590.
GOLD: For gold, the first nearest support level is located at 1820. In case it breaks below this level, it will head towards the next support level which is located near 1812. On the upside, 1840 will act as an immediate and strong hurdle while 1860 will be a critical resistance zone because above this, bulls are likely to dominate.
The important levels to watch for today: Support- 1820 and 1812 Resistance- 1835 and 1850.
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