Global markets including equities, commodities and precious metals started the new on a bearish note ahead of the Federal Reserve's monetary policy announcement on Wednesday. The Federal Reserve is widely expected to raise rates by a half-point at its meeting. On the other hand, the other key economic events to watch for this week are the Bank of England interest rate decision on Thursday and the US employment report on Friday.
On the earnings front, the companies due to release their results will be the Moderna, Pfizer, Uber, AMD and Shopify will be among those reporting earnings this week.
The precious metal struggling to find the upside momentum. On Friday, the metal slightly rebounded from the weekly lows after the USD gives back some of the gains. This week the main drivers for the precious metal remain the movement of the US dollar and the FED decision. The safe-haven metal will likely trade sideways between $1900 and $1870 levels until the FED decision.
For this week, $1870 remains the first immediate support level, followed by $1864. If the metal breaks below $1864/60, the slump will quickly extend toward the $1850/46 mark. On the flip side, the first resistance at $1896/1900 any break above this level will open at $1920 minimum.
The US Dollar Index, which measures the greenback’s value against the basket of six major currencies almost flat on Monday but the Index remained in favour as a safe haven currency as investors anticipate the US central bank will raise interest rates faster and further than other developed countries. While on Friday, the USD slightly retreated from the Multi-year highs after the release of US Q1 GDP data. The GDP unexpectedly contracted by 1.4% instead of the projected growth of 1.1%. Moving ahead to this week, the future direction of the USD will depend on the FOMC decision which will release on Wednesday.
The DXY continue to trade near the important resistance level of 103.40. If the bulls manage to push the price to break above the 103.40/50 resistance level, the next target will be at 104. On the flip side, a move below the 102.80 level will have the bears targeting the lower level of 102.20/00.
The currency pair fell below the 1.05 mark last week for the first time since March 2017. However, the currency pair found some support on Friday after the release of the inflation report from the Eurozone posted another increase, with headline CPI ticking up to 7.5% from 7.4% in March, while core CPI increased to 3.5% from 2.9% previously.
Technically the overall momentum remains bearish. For this week, the first nearest support level is located at 1.0470. In case it breaks below this level, it will head towards the next support level which is located near 1.0440. However, a fresh demand for the pair can be anticipated once the Euro rises above the 1.0610 resistance. A break above this level will confirm a possible move to 1.0700.
The Dow Jones finished lower last week following the release of disappointing results from Amazon and Apple Inc. The key data for the Dow this week will once again be the FOMC meeting outcome, Q1 earnings results and US Nonfarm Payrolls report.
Technically the overall momentum remains bearish for the Index after Frida’s sell-off. In the short term, if the index breaks below 32,900 which would open doors towards 32.600 then 32,300. On the upper side, the first immediate resistance is around 33,650 and then 33,950.
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