Global markets started the new week with positive news. US President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation's legal debt ceiling on Saturday. However, the markets hardly moved on Monday morning as the U.S. and UK markets are closed for public holidays. US Equity Markets are closed in Observance of Memorial Day.

Moving ahead, the most important thing in the market is undoubtedly the announcement of Friday’s US employment report. The market is looking for payrolls to rise by 180k in May, slowing from 253k in April while the unemployment rate is expected to rise to 3.5% from 3.4%. The jobs report will put light on the next Fed action becasue the market is already pricing in another interest rate hike in the next FOMC meeting on June 14th.

On the earnings front, the companies scheduled to release their last quarter financial results this week will be Dell, HP, Crowdstrike, Lululemon, Salesforce and Chewy.

GOLD

The safe-haven metal started the new week on a bearish note after the recent strong US consumer spending data and inflation PCE figures raised expectations of another rate hike by the Federal Reserve. The market is pricing in a 63% chance the FED increases rates by 25 basis points at their June meeting. On Friday the gold price settled below $1950, the past 4 trading sessions have been a tough time for gold buyers. The prices have fallen from $1985 to the $1940 area. This week, the US jobs data will likely have a significant effect on the gold price and other precious metals.

Technically, gold prices are near the support trend line of the Ascending Channel. The next movement will depend on if we have a confirmed retracement or the breakout of the support. On the upper side, the metal needs to break and close above $1970 to have a chance to develop upside momentum in the medium term. If the price break and closes above $1970, the next upside level to watch is $1980/85. Nevertheless, if it continues to fall, the slump will quickly extend toward the $1932 and $1925 marks.

DOLLAR INDEX

The US dollar, which is also often seen as the ultimate safe-haven currency, held firm against many other rivals, including the euro and commodity-linked currencies. The US dollar received strong upside momentum last week supported by hawkish comments from the FED policymakers and better-than-expected US macro-economic data. Looking ahead, it seems safe to assume that movement in the greenback will remain highly volatile. The crucial NFP data this week will be the key economic data points which could determine the next move for the common currency.

For DXY this week, immediate support is expected at the 103.85 area, with this zone having held on Friday while further down, demand is also expected around 103.50, which will act as the next area of support. On the flip side, the first immediate resistance level for the pair is 104.40, then the stronger resistance is 104.70.

EURUSD

Euro plunged to a fresh 2-month low of 1.0703 against the US dollar driven by the disappointing German GDP data. The GDP data showed Europe’s largest economy, Germany enters recession after GDP falls for the second successive quarter. While the currency pair continued to move upward over the last week against trade-sensitive and ‘risk on’ currencies like the Aussie dollar and New Zealand dollar. The crucial Eurozone and German inflation figures this week will be the key economic data points which could determine the next move for the currency.

From a technical perspective, The 1.0700 area of confluence has recently been held as a firm support, failure to defend the mentioned support levels has the potential to drag the pair further towards the 1.0650 support zone. On the upper side, in case the pair manages to settle above 1.0800, it will regain upside momentum and head towards the next resistance level at 1.0840 then 1.0870.

DOW JONES

Dow Jones made an impressive comeback by the end of last week as US officials were close to an agreement on a debt ceiling. Dow futures extend the gains and started with a strong bullish note on Monday. The upside momentum was boosted after the US government reached a tentative debt ceiling deal. This week, Investors and traders should shift their emphasis from debt ceiling concerns to the US employment data, this is one of the key inputs for the Fed to decide if it hikes rates by 25bps at its next meeting

Although the medium-term trend is mixed, in the short term it seems that evidence is starting to emerge that a short-term recovery of the Dow. On the upper side, the first resistance is located around 33,450, a break above this level will confirm a possible move to 33,600 and 33,760. On the downside, key support seems to have formed in the 32,600 area. A daily close below that area could be seen as a strong bearish shift and open the floor to an extended slide toward 32,200.

Trading is risky and your entire investment may be at risk. Please ensure that you fully understand the risks involved.