Global equities and precious metals ended last week on a downbeat note driven by mixed earnings results, rising inflation and tightening measures by the Fed. Last week, the Federal Reserve raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years. This week inventors anxiously awaiting the latest US and China inflation numbers, which are set to be released on Wednesday.
On the earnings front, the companies due to release their results will be the Walt Disney, Roblox, Affirm and Palantir will be among those reporting earnings this week.
Gold price started the new week on a bearish note. During the last week, the precious metal closed below the psychological level of $1900 as it struggles to find 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 US CPI data.
For this week, considering heavy volatility there are chances the metal can rally back to above the key resistance of $1920. On the downside, the decline is more extensive, and it will be hard to rule out a run towards $1850 and $1840 if the metal breaks below $1860. The expected trading range for the metal this week is between $1826 support and $1920 resistance.
The US Dollar Index, which measures the greenback’s value against the basket of six major currencies hits a fresh 20-year high of 104.16 on Monday. One of the key factors the Dollar traders should monitor this week is the latest US consumer inflation figures on Wednesday.
The Index remained in a range above 102 last week, and the initial bias remains neutral for the upcoming week. The key resistance is located for the pair around 104.10, a break above this level will confirm a possible move to 104.40/60. On the downside, any meaningful pullback now seems to find some support near the 103.20 zones, below which the slide could further get extended towards the 102.80 regions.
EURUSD retreated back to below 1.0500 on Monday morning after the buyers failed to hold the upside momentum. On Monday, earnings morning session the European Central Bank Governing Council member Olli Rehn reiterated that they may start raising rates in July. The main attraction for EURO this week is the Germany Zew economic sentiment data and German inflation data.
This week, the pair needs to stay above 1.0650 to have a chance to develop upside momentum in the near term. If the price break and closes above 1.0650, the next upside level to watch is 1.0700 then 1.0740. On the downside, if the index break below the previous week's low of 1.0470 the next immediate downside area is to watch 1.0440 and 1.0410.
Dow Jones ended the first week of this month in the negative territory driven by a more aggressive policy tightening by the Fed. The downticks in the index were further bolstered by last week following the release of weak Q1 earnings results from the big US companies like Lyft and Under Armour. Moving ahead, Dow is expected to remain under pressure this week by rising inflation and geopolitical tensions.
Technically the overall momentum remains bearish. This week, If the bearish momentum continues the next key support area is to watch is 32,200 then 32,000. On the upper side, If the index regains upside momentum and press back above 33,050 then the key resistance area to watch is 33,300/600.
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