However, the pessimist's view also has a valid point. Signs of insufficient breadth and strength of gains in equities could be the first warning bells of the global rally's exhaustion. Also, on the S&P500 chart, a sequence of higher highs corresponds to a sequence of lower peaks, which is a significant bearish factor.
Who will win this battle? We will only be able to judge this at the end of trading next Wednesday following the market reaction to CPI and FOMC.
Who will win this battle? We will only be able to judge this at the end of trading next Wednesday following the market reaction to CPI and FOMC.
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#WaveAnalysis
#Gold reversed from support level 2300
Likely to rise to resistance 2385
Gold recently reversed up from the pivotal support level 2300 (which stopped the previous waves A, (4) and ii, as can be seen below).
The support level 2300 was strengthened by the lower daily Bollinger Band and by the 50% Fibonacci correction of the previous upward impulse from March.
Given the clear daily uptrend and the still oversold daily Stochastic, Gold be expected to rise further to the next resistance 2385, top of the previous correction b.
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#Gold reversed from support level 2300
Likely to rise to resistance 2385
Gold recently reversed up from the pivotal support level 2300 (which stopped the previous waves A, (4) and ii, as can be seen below).
The support level 2300 was strengthened by the lower daily Bollinger Band and by the 50% Fibonacci correction of the previous upward impulse from March.
Given the clear daily uptrend and the still oversold daily Stochastic, Gold be expected to rise further to the next resistance 2385, top of the previous correction b.
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#WaveAnalysis
#EURUSD under bearish pressure
Likely to fall to support level 1.0700
EURUSD currency pair under the bearish pressure after the earlier breakout of the support level 1.0800 (which stopped the previous wave (b) at the end of May).
The breakout of the support level 1.0800 accelerated the active short-term impulse wave 3 from the start of June.
Given the strongly bearish euro sentiment and the continuation of the bullish USD sentiment, EURUSD currency pair be expected to fall further to the next support level 1.0700.
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#EURUSD under bearish pressure
Likely to fall to support level 1.0700
EURUSD currency pair under the bearish pressure after the earlier breakout of the support level 1.0800 (which stopped the previous wave (b) at the end of May).
The breakout of the support level 1.0800 accelerated the active short-term impulse wave 3 from the start of June.
Given the strongly bearish euro sentiment and the continuation of the bullish USD sentiment, EURUSD currency pair be expected to fall further to the next support level 1.0700.
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The #crypto market spent Monday in a very narrow range but started Tuesday with a sell-off, losing over 2.8% in 24h to $2.47 trillion. Bitcoin is down 2.8%, while #Ethereum is down 3.5%. Top altcoins are losing between 2% (Cardano) and 6.6% (#BNB), and Tron is temporarily standing out from the crowd, adding 0.25%. This wariness of cryptocurrency traders may be a manifestation of the downturn in risk appetite in global markets, which may soon establish itself in the dynamics of equities and commodities.
#Bitcoin has pulled back to $67.6K, returning to the local lows at the beginning of the month. This decisive move downward indicates that a deeper correction is in store. We can see just how strong the bearish sentiment is by the first cryptocurrency's momentum near $65K, an intermediate round level near where the 50-day moving average and 76.4% Fibonacci retracement level of the rally from the January lows lie. A quick dip below would force a search for support no sooner than $60K.
#Bitcoin has pulled back to $67.6K, returning to the local lows at the beginning of the month. This decisive move downward indicates that a deeper correction is in store. We can see just how strong the bearish sentiment is by the first cryptocurrency's momentum near $65K, an intermediate round level near where the 50-day moving average and 76.4% Fibonacci retracement level of the rally from the January lows lie. A quick dip below would force a search for support no sooner than $60K.
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#Cardano, whose relative performance is better than its peers, is in a rather vulnerable position in the medium term, testing support for the past two months at $0.43. It is currently trading in the lower half of the range from the October lows, under the 200- and 50-day moving averages. A failure of support potentially opens the way down to $0.38 or even $0.25.
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Alarming UK labour market data
Unexpected weakness in the UK labour market could signal an important turnaround in the economy and raise the urgency of monetary easing. The short-term impact on the Pound has been relatively limited, but the currency market has now adopted a wait-and-see approach ahead of Wednesday's US news.
This morning's batch of data from the UK saw a 50.4K jump in Claimant Count in May after 8.4K a month earlier. This is the biggest monthly increase since the first COVID lockdowns, and before that, the last time there was such a jump was in the depths of the 2009 recession. A frightening acceleration of the upward trend in the indicator has been seen since March last year.
Unexpected weakness in the UK labour market could signal an important turnaround in the economy and raise the urgency of monetary easing. The short-term impact on the Pound has been relatively limited, but the currency market has now adopted a wait-and-see approach ahead of Wednesday's US news.
This morning's batch of data from the UK saw a 50.4K jump in Claimant Count in May after 8.4K a month earlier. This is the biggest monthly increase since the first COVID lockdowns, and before that, the last time there was such a jump was in the depths of the 2009 recession. A frightening acceleration of the upward trend in the indicator has been seen since March last year.
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In a separate indicator, the Unemployment Rate for the February-April period climbed to 4.4%. This is still low by historical standards, but it is a three-year high and 0.6 percentage points above the one we saw in January last year. More actual Claimant claims are points to accelerate the unemployment growth.
Wage growth remained at an impressive 5.9% y/y, including bonuses (above the expected 5.7%). However, this is the typical acceleration in wages that we see in the early stages of mass layoffs when the lowest-paid employees are given the chop.
A fresh labour market report has every chance of shifting the Bank of England's focus from fighting inflation to supporting the economy. This is even more so because, at this stage, reducing the tightness of monetary policy will only be necessary. If this process is delayed, the situation could easily lead to a repeat of the abnormal stimulus we saw in 2008/09 or 2020/21.
Wage growth remained at an impressive 5.9% y/y, including bonuses (above the expected 5.7%). However, this is the typical acceleration in wages that we see in the early stages of mass layoffs when the lowest-paid employees are given the chop.
A fresh labour market report has every chance of shifting the Bank of England's focus from fighting inflation to supporting the economy. This is even more so because, at this stage, reducing the tightness of monetary policy will only be necessary. If this process is delayed, the situation could easily lead to a repeat of the abnormal stimulus we saw in 2008/09 or 2020/21.
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Reacting to the news, the GBP initially lost 0.15% against the USD and EUR but soon recovered almost completely.
GBPUSD is dominated by a wait-and-see mood as all attention and volatility are deferred to inflation figures and monetary policy assessments from the FOMC on Wednesday. EURGBP remains under pressure due to the uncertainty surrounding the unexpected French elections and the disappointing (market-side) results of the European Parliament elections.
UK labour market data is already digging a hole for the Pound, and it remains a matter of days before it could fall into it.
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GBPUSD is dominated by a wait-and-see mood as all attention and volatility are deferred to inflation figures and monetary policy assessments from the FOMC on Wednesday. EURGBP remains under pressure due to the uncertainty surrounding the unexpected French elections and the disappointing (market-side) results of the European Parliament elections.
UK labour market data is already digging a hole for the Pound, and it remains a matter of days before it could fall into it.
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The dollar fought back its uptrend
Friday's labour market data provided the dollar with a strong upward momentum. This bullish signal needs confirmation or refutation, and we are likely to get one or the other by the end of Wednesday.
The dollar index started June with a test of the 200-day moving average. It managed to push back from it after another batch of bullish US labour market data, which showed a 272k increase in employment and accelerated wage growth to 4.1% y/y.
#DXY, having opened the week with a gap up on the results of the European Parliament elections and the subsequent announcement of a snap election for the French National Assembly, is trading above its 50-day moving average.
The dollar's 1.3% rise since Friday has brought it back into the upward range that has existed since the last days of last year. The brief fall out of the range at the beginning of the month was false, as a failure to fall towards 104 (the previous local low) was met with buying rather than intensified selling.
Friday's labour market data provided the dollar with a strong upward momentum. This bullish signal needs confirmation or refutation, and we are likely to get one or the other by the end of Wednesday.
The dollar index started June with a test of the 200-day moving average. It managed to push back from it after another batch of bullish US labour market data, which showed a 272k increase in employment and accelerated wage growth to 4.1% y/y.
#DXY, having opened the week with a gap up on the results of the European Parliament elections and the subsequent announcement of a snap election for the French National Assembly, is trading above its 50-day moving average.
The dollar's 1.3% rise since Friday has brought it back into the upward range that has existed since the last days of last year. The brief fall out of the range at the beginning of the month was false, as a failure to fall towards 104 (the previous local low) was met with buying rather than intensified selling.
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Wednesday's consumer inflation data and the Fed's assessment of the situation have enough potential to bring the dollar back down if it turns out to be significantly softer than expected. Nevertheless, since the end of last week, the main scenario has looked like the dollar is further strengthening against a basket of major currencies.
In this bullish scenario, the dollar index is heading towards the upper boundary of an upward range near 108.7 by the end of the month, which could be the highest since November 2022. Fundamental support for such a scenario would be a batch of data confirming an acceleration in US consumer inflation. Even more positive reactions for the dollar may come in case of signals from the Fed that the committee may be comfortable cutting the rate once before the end of the year or not cutting it at all.
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In this bullish scenario, the dollar index is heading towards the upper boundary of an upward range near 108.7 by the end of the month, which could be the highest since November 2022. Fundamental support for such a scenario would be a batch of data confirming an acceleration in US consumer inflation. Even more positive reactions for the dollar may come in case of signals from the Fed that the committee may be comfortable cutting the rate once before the end of the year or not cutting it at all.
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#WaveAnalysis
#CADJPY reversed from key support level 113.00
Likely to rise to resistance 115.40
CADJPY currency pair recently reversed up from the key support level 113.00 (that reversed the pair with the daily Hammer in the middle of May, as can be seen below).
The support level 113.00 was strengthened by the lower daily Bollinger Band and by the 50% Fibonacci correction of the previous upward impulse from March.
Given the predominant daily uptrend and the bearish yen sentiment, CADJPY be expected to rise further to the next resistance 115.40, top of the previous wave 1.
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#CADJPY reversed from key support level 113.00
Likely to rise to resistance 115.40
CADJPY currency pair recently reversed up from the key support level 113.00 (that reversed the pair with the daily Hammer in the middle of May, as can be seen below).
The support level 113.00 was strengthened by the lower daily Bollinger Band and by the 50% Fibonacci correction of the previous upward impulse from March.
Given the predominant daily uptrend and the bearish yen sentiment, CADJPY be expected to rise further to the next resistance 115.40, top of the previous wave 1.
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#WaveAnalysis
#NZDCAD reversed from support level 0.8400
Likely to rise to resistance 0.8500
NZDCAD currency pair recently reversed up with the daily Piercing Line from the support level 0.8400 (former strong resistance from November, December and May).
The support level 0.8400 was strengthened by the nearby 20-day moving average and by the 50% Fibonacci correction of the previous upward impulse from May.
Given the clear daily uptrend, NZDCAD be expected to rise further to the next resistance 0.8500, top of the Evening Star from the start of this month.
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#NZDCAD reversed from support level 0.8400
Likely to rise to resistance 0.8500
NZDCAD currency pair recently reversed up with the daily Piercing Line from the support level 0.8400 (former strong resistance from November, December and May).
The support level 0.8400 was strengthened by the nearby 20-day moving average and by the 50% Fibonacci correction of the previous upward impulse from May.
Given the clear daily uptrend, NZDCAD be expected to rise further to the next resistance 0.8500, top of the Evening Star from the start of this month.
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The crypto market took a break from support
The #crypto market cap lost another 0.9% over the last 24 hours, pulling back to $2.44 trillion and extending losses from Friday’s peak to 8%. Since the end of the day on Tuesday, market volatility has noticeably decreased as more traders are taking a wait-and-see stance ahead of the inflation report and FOMC meeting results.
Technically, #Bitcoin’s 50-day moving average acted as support, which stopped the active sell-off. If the decline develops, the next support is seen only in the area of $60K. If risk appetite returns to the markets, the price may not only quickly exceed $70K but also head for the renewal of all-time highs.
Bitcoin’s average annualised rate of return over its time on the market has exceeded 103%, Curvo calculates. That’s higher than the annual growth rate of the portfolio of America’s most famous investor, Warren Buffett (10%).
The #crypto market cap lost another 0.9% over the last 24 hours, pulling back to $2.44 trillion and extending losses from Friday’s peak to 8%. Since the end of the day on Tuesday, market volatility has noticeably decreased as more traders are taking a wait-and-see stance ahead of the inflation report and FOMC meeting results.
Technically, #Bitcoin’s 50-day moving average acted as support, which stopped the active sell-off. If the decline develops, the next support is seen only in the area of $60K. If risk appetite returns to the markets, the price may not only quickly exceed $70K but also head for the renewal of all-time highs.
Bitcoin’s average annualised rate of return over its time on the market has exceeded 103%, Curvo calculates. That’s higher than the annual growth rate of the portfolio of America’s most famous investor, Warren Buffett (10%).
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Fed can end US Indices’ divergence
The US indices, #SP500 and #Nasdaq100, closed at new all-time highs, largely due to Apple's positive performance. However, other markets and indices are far from similarly positive. This both leaves room for growth and indicates investor wariness.
The Nasdaq100 index is above 19200, adding 0.7% over the last day and adding 16.1% YTD. Futures are trading in a slight plus on Thursday. The S&P500 rose 0.3% to 5375, bringing its YTD advance to 13.3%. Both have maintained positive momentum since the beginning of the month after a quick correction in late May.
The immediate driver of the gains was a 7.3% jump in Apple shares in a single day. The market's initial negative reaction to the announcement of the AI strategy, which took away 2% at the premarket, turned into an abundant short squeeze by the opening of trading, sending the stock well into the territory of all-time highs. Interestingly, Apple continues to lag in the market, adding 11.6% YTD.
The US indices, #SP500 and #Nasdaq100, closed at new all-time highs, largely due to Apple's positive performance. However, other markets and indices are far from similarly positive. This both leaves room for growth and indicates investor wariness.
The Nasdaq100 index is above 19200, adding 0.7% over the last day and adding 16.1% YTD. Futures are trading in a slight plus on Thursday. The S&P500 rose 0.3% to 5375, bringing its YTD advance to 13.3%. Both have maintained positive momentum since the beginning of the month after a quick correction in late May.
The immediate driver of the gains was a 7.3% jump in Apple shares in a single day. The market's initial negative reaction to the announcement of the AI strategy, which took away 2% at the premarket, turned into an abundant short squeeze by the opening of trading, sending the stock well into the territory of all-time highs. Interestingly, Apple continues to lag in the market, adding 11.6% YTD.
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At the same time, we note the slippage of the Dow Jones, which lost 0.3% on Thursday and is adding just 2.7% YTD. This index formed a double top at the 40,000 touches in March and May and is now 3% below that resistance.
Smaller companies are feeling even worse. The Russell 2000 lost 0.4% the day before and has added 0.6% since the beginning of the year. The index needs to rise another 17% to the all-time high reached in November 2021, and it has been in a downtrend for almost a month.
The inflation data and FOMC comments released today have enough potential to synchronise the dynamics of not only the US indices but also the global risk appetite in general.
Smaller companies are feeling even worse. The Russell 2000 lost 0.4% the day before and has added 0.6% since the beginning of the year. The index needs to rise another 17% to the all-time high reached in November 2021, and it has been in a downtrend for almost a month.
The inflation data and FOMC comments released today have enough potential to synchronise the dynamics of not only the US indices but also the global risk appetite in general.
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Investors are focused on how all of today's events will impact year-end key rate expectations. Right now, rate futures suggest an 88% chance of a cut before year-end, with a 13% chance of a cut of more than 50 points. In other words, markets are plotting a 40-point decline in 2024.
A sharp rise in that number could support the markets' upswing by making it broader. In this case, the Nasdaq100 can reach 20,000 before the end of the month and the S&P500 to 5,600, while the road to all-time highs would open for the #DowJones and #Russell2000 in the perspective of a couple of months.
If inflation or Fed sentiment shifts expectations to one or less downside, however, it would prove to be a blow to the markets, capable of taking 5% or even 10% away from them in the next few weeks.
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A sharp rise in that number could support the markets' upswing by making it broader. In this case, the Nasdaq100 can reach 20,000 before the end of the month and the S&P500 to 5,600, while the road to all-time highs would open for the #DowJones and #Russell2000 in the perspective of a couple of months.
If inflation or Fed sentiment shifts expectations to one or less downside, however, it would prove to be a blow to the markets, capable of taking 5% or even 10% away from them in the next few weeks.
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Inflation in America came out weaker than expected, actualising the question of a key rate cut. This is negative news for the dollar, which at the same time fuels appetite for equities.
The Consumer Price Index was virtually unchanged last month, showing 0.0% m/m and slowing on an annualised basis to 3.3% y/y. Average forecasts had expected to see figures 0.1 percentage point higher. However, market reaction shows that some traders were tuning in for an "upside surprise".
The core CPI, which excludes changes in food and energy prices, showed an even more significant decline. It rose 0.2% m/m (the lowest since October 2023) and slowed to 3.4% y/y (the lowest in three years).
The fresh data is a sigh of relief for the Fed, which will put interest rate cuts back on the near-term agenda. The markets will probably get stronger in expectations of 2 rate cuts this year, soon joining other G7 central banks that have already started easing. The probability of a rate cut in September has risen from 53% to 69% today.
The Consumer Price Index was virtually unchanged last month, showing 0.0% m/m and slowing on an annualised basis to 3.3% y/y. Average forecasts had expected to see figures 0.1 percentage point higher. However, market reaction shows that some traders were tuning in for an "upside surprise".
The core CPI, which excludes changes in food and energy prices, showed an even more significant decline. It rose 0.2% m/m (the lowest since October 2023) and slowed to 3.4% y/y (the lowest in three years).
The fresh data is a sigh of relief for the Fed, which will put interest rate cuts back on the near-term agenda. The markets will probably get stronger in expectations of 2 rate cuts this year, soon joining other G7 central banks that have already started easing. The probability of a rate cut in September has risen from 53% to 69% today.
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#WaveAnalysis
NASDAQ 100 reversed from support level 19000
Likely to rise to resistance 20000
NASDAQ 100 Index recently reversed up from the support level 19000 (former resistance from the middle of May, acting as the support after it was broken previously).
The upward reversal from the support level 19000 continues the active short-term impulse wave 3 of the higher order impulse wave (3) from April.
Given the clear daily uptrend, NASDAQ 100 Index be expected to rise further to the next round resistance 20000, target price for the completion of the active impulse wave 3.
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NASDAQ 100 reversed from support level 19000
Likely to rise to resistance 20000
NASDAQ 100 Index recently reversed up from the support level 19000 (former resistance from the middle of May, acting as the support after it was broken previously).
The upward reversal from the support level 19000 continues the active short-term impulse wave 3 of the higher order impulse wave (3) from April.
Given the clear daily uptrend, NASDAQ 100 Index be expected to rise further to the next round resistance 20000, target price for the completion of the active impulse wave 3.
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