Markets are pricing Feds 75-basis-points rate hike. Thus, all attention will be drawn to Powell's rhetoric regarding the next decision at the December 14 meeting. How will it affect the USD?
What to Trade on July 4-8
Information is not investment advice
Last week was bearish for risky assets such as stocks, oil, gas, and crypto. S&P500 dropped 5%, Nasdaq fell by 6%, WTI and Brent slid below 110, and BTCUSD crossed the 20 000 level to the downside. Will the upcoming week change the situation across the markets? Let’s look at it in detail!
The strength of the US dollar was pulling other currencies lower against it. This way, EURUSD retested June's low at 1.0400, AUDUSD fell to the low of June 2020, and USDJPY retested 136.70. This week additional volatility of the major pairs is expected with the FOMC Meeting Minutes on Wednesday and Nonfarm payrolls on Friday. If the USD keeps strengthening, EURUSD will cross the support area between 1.0400-1.03800 and target 1.0200. However, the chances of the reversal from this zone are high. If it breaks the resistance at 1.0500, a further rise to 1.0600 will be in focus. Also, USDJPY may show us interesting movements since the pair has formed a double top on the chart. Don’t underestimate the RBA Rate Statement on June 5, where the bank is expected to raise the interest rate to 1.35%.
The week was full of ups and downs for oil prices. If we look at the daily chart of both XBRUSD and XTIUSD, we notice that both instruments were balancing between 50- and 100-day SMA. Consider opening long positions for both assets when they stick above the 50-day SMA. The target for Brent will lie at $115; the next one lies at $118. As for WTI, after the breakout of $115, the target will lie at $120.
Gold finally broke the lower border of the triangle at 1800. A strong USD may pull it even lower to the next support area at $1750. If it rises back, the first resistance will lie at $1835.
Stocks moved lower last week after the Fed Chair Powell hinted at more aggressive monetary policy amid rising inflation. If a downtrend in the US stocks continues, US500 (S&P500) will cross the 3700 level and reach 3500. As for Nasdaq, after the crossover of the support at 11 000, the next target will lie at 9500.
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