Nasdaq Surges 1.45% as Volatility Persists.

Introduction

In the midst of continued market volatility, the major US indices experienced another positive day, setting an upbeat tone for the weekend. The Nasdaq once again led the pack with a significant increase of 1.45%. Following suit, the S&P saw a gain of 1.23%, while the Dow lagged behind with a more modest rise of 0.84%. Meanwhile, the Euro and the pound both saw gains of 0.4% and 0.7% respectively. The US Treasury yields remained relatively stable, with the benchmark 10-year note holding at 3.84% leading into the weekend. However, the dollar faced some profit-taking as its recent upward trend failed to continue.

A Calm Start to a Busy Week

Today’s trading week began on a relatively calm note, with low trading volume and limited economic data releases on the horizon. Traders turned their attention to the Chinese Caixin Manufacturing PMI data during the Asian session, seeking additional insights into the state of the world’s second-largest economy. In Europe, the market looked forward to the release of the Swiss CPI statistics, anticipating a month-over-month increase of 0.2%. As the North American session unfolded, liquidity was expected to be at a premium due to Canada’s national day celebrations and lower attendance at US trading desks, as staff took an extra day off before Independence Day, creating 4-day weekends. The ISM Manufacturing PMI readings, scheduled for release from the United States, had the potential to introduce some volatility to an otherwise tranquil session.

What Transpired in the US Session?

On Friday, the PCE Price Index revealed a decrease in both monthly and annualized inflation in America. The inflation predictions from the Consumer Sentiment survey conducted by the University of Michigan dropped from 4.2% in May to 3.3% in June, marking the lowest reading since March 2021. This decline was reflected in both the headline and core indices. Consequently, the dollar index (DXY) experienced a dip to 102.75 in response to these economic data points before gradually recovering.

What Does It Mean for the Asia Session?

The bears for the DXY seem to have re-emerged with strength for the first time since mid-June, signaling a potential further decline in the Asia session. The dollar sell-off is expected to gain momentum as markets digest the softer-than-expected US inflation report.

The Dollar Index (DXY)

Key News Events Today

• ISM Manufacturing PMI

What Can We Expect from DXY Today?

As inflationary pressures continue to weaken, it is likely that the upcoming release of the ISM Manufacturing PMI data will reveal a seventh consecutive month of decline in the American manufacturing sector. Both of these developments spell bad news for the US dollar.

Central Bank Notes:

• The federal funds rate target range will be 5 to 5-1/4 percent.
• The Committee is strongly committed to returning inflation to its 2% target.
• The Committee will adjust monetary policy if risks emerge that could hinder achieving its goals.
• Various factors will be considered, including labor market conditions, inflation pressures, inflation expectations, and international and financial developments.
• The next meeting is scheduled for July 26, 2023.

Next 24 Hours Bias

Slightly Bearish

The Australian Dollar (AUD)

Key News Events Today

• Manufacturing PMI

What Can We Expect from AUD Today?

In June, the decline in the Australian manufacturing sector persisted as new orders and output remained in negative territory and price pressures continued to ease. Despite the deteriorating economy, the Australian dollar strengthened during Asian trading hours due to lower inflation statistics from the United States, which triggered a significant decline in the value of the dollar.

Central Bank Notes:

• The RBA increased the cash rate target by 25 basis points to 4.10%.
• Inflation in Australia has passed its peak but remains high at 7% and needs to return to the target range.
• Further tightening of monetary policy may be necessary.
• The next meeting is scheduled for July 4, 2023.

Next 24 Hours Bias

Strong Bullish

The Euro (EUR)

Key News Events Today

• Manufacturing PMI

What Can We Expect from EUR Today?

Following weaker US inflation statistics, the Euro experienced a 90-pip jump on Friday as the US dollar saw a significant sell-off. This rebound in EURUSD is likely to continue as the new trading week begins. Today’s release of the final manufacturing PMI statistics is expected to highlight this industry as a key area of concern.

Central Bank Notes:

• The ECB raised the three key interest rates by 25 basis points.
• Economic growth projections have been slightly lowered.
• The Governing Council will ensure interest rates are sufficiently restrictive to achieve the inflation target and will maintain them at those levels for as long as necessary.
• Rate decisions will be data-dependent, taking into consideration the inflation outlook, economic data, underlying inflation dynamics, and monetary policy transmission strength.
• The next meeting is scheduled for July 27, 2023.

Next 24 Hours Bias

Medium Bullish

Global Markets

Asian Stock Markets

• Nikkei: up 1.70%
• Shanghai Composite: up 1.24%
• Hang Seng: up 1.81%
• ASX: up 0.59%

European Equities

• DAX futures: up 1.26%
• CAC 40: up 1.19%
• FTSE: up 0.80%

US Stock Market

• Dow Jones: up 0.84%
• S&P 500: up 1.23%
• Nasdaq 100: up 1.45%

Commodities

• Gold: $1913.80 (-0.29%)
• Silver: $22.78 (+0.13%)
• Brent Oil: $75.21 (-0.29%)
• WTI Oil: $70.39 (-0.35%)

News & Data

• (CNY) Caixin Manufacturing PMI (Jun): Actual 50.5, Forecast 50.2, Previous 50.9 at 07:15
• (EUR) German Manufacturing PMI (Jun): Forecast 41.0, Previous 43.2 at 13:25
• (GBP) Manufacturing PMI (Jun): Forecast 46.2, Previous 47.1 at 14:00
• (USD) ISM Manufacturing PMI (Jun): Forecast 47.2, Previous 46.9 at 19:30
• (EUR) Manufacturing PMI (Jun): Forecast 43.6, Previous 44.8 at 13:30

GBPUSD: Positive Momentum Supports Bullish Trend

Introduction

In the world of forex trading, the GBP/USD currency pair is currently experiencing positive momentum, suggesting the possibility of further upward movement in the market. Traders and investors are closely monitoring the price action, as it holds above a significant ascending trend line. This indicates the continuation of the positive trend, which further bolsters the bullish sentiment surrounding this pair.

Positive Outlook for GBP/USD

1. Support Level at 1.2667

• A potential bullish bounce could occur from the first support level at 1.2667.
• This support level gains strength from the existence of the 23.60% Fibonacci Retracement, acting as overlap support.
• Additionally, the second support level at 1.2608 represents a swing low support, adding further significance.

2. Resistance Levels

• On the upside, the first resistance level at 1.2703 serves as an obstacle to upward movement.
• Additionally, the intermediate resistance level at 1.2757 acts as a pullback barrier.

Trade Suggestion: Buying Opportunity

Based on the analysis, a potential trade suggestion for traders would be to consider buying at 1.2681, with a take profit (TP) level at 1.2723 and a stop loss (SL) level at 1.2653. This trade suggestion takes into account the positive momentum and the support and resistance levels mentioned above.

EURUSD: Positive Momentum Indicates Higher Trend

Introduction

The EUR/USD currency pair is currently showing positive momentum, indicating a general higher trend in the market. Traders and investors are closely observing the price movements, anticipating potential trading opportunities within this trend.

Potential Scenarios for EUR/USD

1. Support Level at 1.0865

• A negative continuation towards the first support level at 1.0865 is possible.
• This support level is further confirmed as multi-swing low support, as it aligns with the 78.60% Fibonacci Projection.
• Additionally, the second support level at 1.0825 also serves as a multi-swing low support, aligning with the 100% Fibonacci Projection.

2. Resistance Levels

• On the upside, the 78.60% Fibonacci projection and the first resistance level at 1.0902 suggest a multi-swing high resistance.
• Additionally, the second resistance level at 1.0940 is classified as a swing-high resistance.

Trade Suggestion: Buying Opportunity

Considering the positive momentum and the support and resistance levels discussed above, a trade suggestion for traders would be to consider buying at 1.0877, with a take profit (TP) level at 1.0931 and a stop loss (SL) level at 1.0839.

AUDUSD: Bullish Momentum Points to Rising Market Trend

Introduction

The AUD/USD currency pair is currently exhibiting bullish momentum, indicating a rising trend in the market. Traders and investors are closely monitoring the price action, as it suggests potential opportunities for upward movement.

Potential Upside for AUD/USD

• The bullish momentum points to the possibility of the price continuing its upward trend toward the first resistance level at 0.6649.
• On the downside, the 78.60% Fibonacci Retracement and the first support level at 0.6644 act as recognized pullback supports, further adding to their significance.

Trade Suggestion: Buying Opportunity

Based on the bullish momentum and the support and resistance levels mentioned, traders may consider a buying opportunity at 0.6649, with a take profit (TP) level at 0.6655 and a stop loss (SL) level at 0.6644.

USDJPY: Bearish Momentum Signals Lower Market Trend

Introduction

Currently, there is bearish momentum visible on the USD/JPY chart, suggesting a lower trend in the market. While there is a significant ascending trend line, it is important to note that this may trigger a bearish reaction, despite the possibility of bullish momentum.

Potential Scenarios for USD/JPY

1. Support Levels

• A bearish reaction from the first resistance level at 144.88 could lead to a decline toward the first support level at 144.60.
• The first support level is categorized as pullback support, while the second support level at 144.23 is classified as overlap support.

2. Resistance Levels

• On the upside, the 78.60% Fibonacci Retracement and the first resistance level at 145.18 serve as retreat resistance.
• The second resistance level at 145.68 represents a swing-high resistance.

Trade Suggestion: Buying Opportunity

Considering the bearish momentum and the support and resistance levels discussed above, a trade suggestion for traders would be to consider buying at 144.68, with a take profit (TP) level at 144.37 and a stop loss (SL) level at 144.96.

DOW JONES: Bullish Trend Expected to Continue

Introduction

The DJ30 indicator is currently displaying a bullish trend, attracting attention from traders and investors. The market anticipates a potential bullish advance towards the first resistance, considering the existing overlap support and swing low support levels.

Bullish Outlook for DOW JONES

1. Support Levels

• The first support for this instrument is positioned at 34221.82, offering a sturdy basis due to its overlap support.
• Additionally, the second support level at 33815.89 serves as a swing low support and represents a significant 50% Fibonacci retracement point.

2. Resistance Levels

• Looking upward, the initial resistance level at 34676.42 presents an overlap resistance that may impede the bullish continuation.
• Furthermore, an intermediate resistance at 35179.82 acts as a substantial obstacle due to its multi-swing high resistance.

Trade Suggestion: Buying Opportunity

Considering the bullish trend and the support and resistance levels mentioned, a trade suggestion for traders would be to consider buying at 34388.80, with a take profit (TP) level at 34581.54 and a stop loss (SL) level at 34235.31.

WTI CRUDE OIL: Bearish Momentum Signals Potential Decline

Introduction

WTI Crude Oil is currently experiencing bearish momentum, indicating a potential decline in the market. Traders and investors are keeping a close eye on the price movements, anticipating a reversal from the first resistance towards the first support.

Potential Scenarios for WTI Crude Oil

1. Support Levels

• The first support level at 67.70 serves as a multi-swing low support and is considered sturdy.
• Another intermediate support level at 64.32 provides additional strength as a multi-swing low support.

2. Resistance Levels

• On the upside, the initial resistance level at 70.31 is designated as overlap resistance.
• Furthermore, a second resistance level at 73.79 also acts as overlap resistance.

Trade Suggestion: Selling Opportunity

Considering the bearish momentum and the support and resistance levels discussed above, a trade suggestion for traders would be to consider selling at 70.24, with a take profit (TP) level at 69.68 and a stop loss (SL) level at 70.69.

GOLD: Sluggish Positive Trend with Potential for Bullish Reversal

Introduction

The XAU/USD instrument is currently showing a sluggish positive trend and low confidence in the market. However, a potential bullish reversal towards the first barrier level is possible, attracting attention from traders.

Potential Scenarios for GOLD

1. Support Levels

• The initial support level on the downside is located at 1890.83, offering robust support as an overlap support and a Fibonacci confluence with the 61.80% Fibonacci projection level and the 38.20% Fibonacci retracement level.
• The second support level at 1855.19 serves as strong pullback support and a key 78.60% Fibonacci retracement level.

2. Resistance Levels

• The first resistance level at 1914.59 acts as an overlapping barrier.
• Additionally, an overlap resistance or intermediate resistance at 1957.65 may pose a substantial obstacle.

Trade Suggestion: Buying Opportunity

Considering the sluggish positive trend and the support and resistance levels mentioned, a trade suggestion for traders would be to consider buying at 1920.41, with a take profit (TP) level at 1941.31 and a stop loss (SL) level at 1900.70.

ETHEREUM: Positive Momentum Indicates Potential Bullish Continuation

Introduction

The ETH/USD instrument is currently displaying positive momentum, indicating the potential for a bullish continuation in the market. Traders are closely monitoring the price movements, looking for opportunities to capitalize on the upward trend.

Potential Scenarios for ETHEREUM

1. Support Levels

• The initial support level is located at 1885.02, serving as strong support for pullbacks.
• A second support level at 1783.91 provides stability as a swing low support.

2. Resistance Levels

• On the upswing, the initial resistance level at 1953.64 poses a major obstacle due to its strong swing resistance.
• Furthermore, a second resistance level at 2078.71 acts as overlap resistance.

Trade Suggestion: Buying Opportunity

Considering the positive momentum and the support and resistance levels discussed above, a trade suggestion for traders would be to consider buying at 1958.9, with a take profit (TP) level at 2020.4 and a stop loss (SL) level at 1912.2.

Conclusion

As markets remain volatile, the Nasdaq has demonstrated a strong surge of 1.45%. However, the US dollar faced some profit-taking as inflation decreased, contributing to a sell-off. Looking ahead, key economic data releases, such as the ISM Manufacturing PMI, are expected to shape market sentiment. The Australian dollar has shown strength, despite the decline in the manufacturing sector, while the Euro experienced a rebound after weaker US inflation statistics. Global stock markets, including Asian and European equities, are exhibiting positive momentum. In the commodities market, gold and oil prices have shown slight declines, while silver remains relatively stable.

Frequently Asked Questions (FAQ)

Q: What are the main factors contributing to the volatility in the market?

A: Several factors can contribute to market volatility, including economic indicators, geopolitical events, changes in interest rates, corporate earnings reports, and investor sentiment. These factors can create fluctuations in stock prices, currency values, and commodity prices.

Q: How does inflation impact the value of the US dollar?

A: Inflation erodes the purchasing power of a currency, including the US dollar. When inflation is high, the value of the dollar decreases as it can buy fewer goods and services. Conversely, lower inflation can strengthen the value of the dollar as it retains its purchasing power better.

Q: What is the significance of the ISM Manufacturing PMI data?

A: The ISM Manufacturing PMI (Purchasing Managers’ Index) is a widely recognized economic indicator that provides insights into the health of the manufacturing sector. It measures factors such as new orders, production levels, employment, and supplier deliveries. A PMI reading above 50 indicates expansion, while a reading below 50 suggests contraction.

Q: How do central bank decisions affect currency markets?

A: Central bank decisions, particularly regarding interest rates and monetary policy, can significantly impact currency markets. When a central bank raises interest rates, it can attract foreign investors seeking higher returns, leading to an appreciation in the currency’s value. Conversely, lowering interest rates can make a currency less attractive, potentially leading to depreciation.