The US dollar retreated from the 2-month highs while US stocks and oil prices ended slightly lower on Friday following the mixed remarks from US Treasury Secretary Janet Yellen and Fed Chair Jerome Powell. The Fed chair Jerome Powell reinstated that inflation is still far above the target, but rates may not have to rise much higher due to tightening credit conditions. Powell said that it would take “some time” for inflation to moderate and that the central bank would continue to look at data as it considers whether to raise rates next month. US Treasury Secretary Janet Yellen told bank CEOs that more merges may be necessary after a series of bank failures spooked investors.
Moving ahead, this week the markets have a lot of economic data to digest and the main highlights of the economic calendar will be the RBNZ interest rate decision, FOMC minutes, US GDP, PCE inflation and durable goods orders data. While It will also be an idea to keep a lookout for the fresh updates from the US debt ceiling negotiations and comments from the FED speakers this week including FED members James Bullard and Bostic.
On the earnings front, the companies scheduled to release their last quarter financial results this week will be Nvidia, Costco, Gap, Zoom and Snowflake.
Gold price fails to witness a positive start for the new week as investors cautiously wait for new updates from the US debt ceiling negotiations. During the last week, the safe-haven metal after making a low at $1952, staged a smart recovery back to above $1980 on Friday as the USD gave back some of the gains. For this week, gold investors and traders should continue to monitor the comments from the FED policymakers and the last FOMC meeting minutes for clues as to their outlook for interest rates.
This week, the metal needs to stay above 1985 to have a chance to develop upside momentum in the near term. If the price break and closes above 1985, the next upside level to watch is $1993/95 then $2000. On the downside, if the metal break below the previous week's low of $1952 the next immediate downside area is to watch $1940 and $1935/32.
The dollar index traded with a bearish bias on Friday but again the DXY found support near the 103 area. Therefore, the outlook of the pair is neutral with a bullish bias. More downside will be confirmed only if it moves below 103. For the dollar this week, important economic news to watch includes US FED minutes on Wednesday, the US GDP report on Thursday and PCE inflation data on Friday.
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 DXY above the previous week's high of 103.60, a break above this level will confirm a possible move to 104. On the downside, any meaningful pullback now seems to find some support near the 103 area, below which the slide could further get extended towards the 102.70/60 regions.
The currency pair recovered part of its loss on Friday after showing steep weakness in the first few days of last week. While the upside momentum was limited after the latest German producer price inflation slowed down to its lowest level in over two years, suggesting that inflationary pressures in Europe's largest economy have further eased. The key data for Euro for this week will once again be the Manufacturing data from Eurozone and Germany. However, the US dollar movement will continue to play a vital role in this currency pair's future direction.
From a technical perspective, The 1.0760 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 1.0730 and 1.0710 support zone. On the upper side, in case the pair manages to settle above 1.0850, it will regain upside momentum and head towards the next resistance level at 1.0900 and 1.0930.
Dow Futures started the new week on a mixed note as investors wait to see the outcome of the US debt ceiling meeting. Meanwhile, a busy Q4 earnings season is largely over while there are few earnings of broad significance due this week. This week, the FED minutes from its May meeting will likely have a significant effect on the Dow Jones and other US indices because the minutes will hold more clues on what could come next.
Technically the overall momentum remains mixed. The first support for the Dow appears to be around 33,200 followed by 33,000, in the short-term any break below 33,300, the next downside level to watch is 32,800. On the other upper side, the immediate resistance is around 33,680 then 33,800, any break and close above 33,800 will open 34,200/50.
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