Market Watch by the experts of Fibo Group
Market Watch
Tolerance for risk continues to increase
In today’s release, we’ll cover the following topics:
- US dollar weakness throughout the market.
- US inflation report.
- The decision on interest rates and control of the yield curve from the US Federal Reserve.
On the second trading day, we are observing a general weakening of the USD along with most currencies. As a result, the US dollar index once again reached new lows and before the opening of the American trading session, the general trend of trading remained downward, indicating a clear weakness of USD buyers.
I will draw your attention to the EUR / USD currency pair. During the European trading session, the quotes were held below the resistance area of 1.1370–1.1385. A potential breakthrough could trigger some robust growth, paving the way to 1.1485.
A similar situation with the AUD / USD currency pair. Quotes were held at the psychological resistance level of 0.7000, and a break will confirm added buying interest and a potential move to the next technical resistance level at 0.7180.
Now let’s move on to the upcoming publication of the US inflation report. A sharp decline in the consumer price index, which analysts are not expecting, may put additional pressure on the USD. A more significant event for the markets will be the latest interest rate decision from the US Federal Reserve and the subsequent press conference.
Rates are expected to remain on hold so all attention will be focused on the decision of the Federal Reserve to control the yield curve. Despite the fact the probability of using this monetary instrument is low, the USD has noticeably weakened against most currencies.
It’s worth noting that the introduction of control over the yield curve for US government bonds will lead to an increase in demand for gold, as an alternative to US treasury bonds. Therefore, there is a risk of a further increase in the prices of gold and silver. In addition, it is important to understand that any decision by the US Federal Reserve can have a big impact on the USD.
That’s all for me. Closely monitor the news background and be prepared for all the surprises of the market.
Trade with the Fibo Group!
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Thank you for your reply, glad it was useful!
Marketwatch
Weak global economic recovery
In today’s release, we’ll cover the following topics:
- China’s inability to recover from quarantine.
- The German Minister of Economics pessimistic view on rapid economic growth.
- The Stock market in the red zone.
The Chinese Bureau of Statistics said that the economy has not returned to its normal level and this is a very bad signal for the global economy. After all, China was the first to quarantine, but as yet has not fully recovered, due to among other things, external risks. Let me remind you that China is one of the biggest producers in the world, so the current low purchasing power from the USA and Europe, as well as the conflict with the USA, is putting immense pressure on the world’s second largest economy.
Now let’s move on to Europe. There are no important macroeconomic publications today, but even so, trading activity remains elevated. I’ll draw your attention to a decrease in interest for risk, which is due the low rates of recovery in business activity in most countries. Thus, the German Ministry of Economy does not expect a quick recovery and said at the moment it is only about achieving the so-called “bottom”.
I will draw your attention to the EUR / USD currency pair where buying activity has declined rapidly. Despite a statement by the German Ministry of Economy, demand under the strong technical support level of 1.1235 remains stable, indicating clear market uncertainty. As a result, there is a risk we may remain within the trading range of 1.1200–1.1320
Moving to the American trading session and we can notice the general weakening of the stock indices during premarket. As a result, with the opening of exchanges in the United States, selling activity may increase. One of the bearish factors remains internal conflicts and unrest and a selloff in the stock market will strengthen the USD.
During the European session, we observed a moderate growth of the GBP / USD pair, but the overall direction for this currency pair remains downward. Therefore, there is a possibility of further weakening on the back of a strengthening USD. With the opening of trading session in the United States, volatility may increase.
That’s all from me. Closely monitor the news background and be prepared for all the surprises of the market.
Trade with the Fibo Group!