Fundamental Analysis Report With Charting Trends – 10 July 2023
10 Jul 2023
Wall Street Sees Decline Amid Weaker-Than-Expected Jobs Data.
In a challenging day for the market, Wall Street’s major indexes ended lower on Friday as investors digested a U.S. jobs report that revealed weaker-than-expected growth. As they awaited additional economic data and corporate profits in the coming weeks, market participants expressed concerns over anticipated interest rate increases by the U.S. Federal Reserve. This article provides an overview of the market update and the implications of the recent developments.
U.S. Jobs Report Reflects Weaker Growth
In June, the United States added the fewest jobs in two and a half years, raising concerns among investors. However, robust wage growth indicated that the labor market remained tight despite the slowdown. The June jobs data from the Labor Department showed that nonfarm payrolls rose by 209,000, falling short of expectations and signaling a deceleration from the previous month. As a result, the S&P 500 fell by 0.29%, the Nasdaq Composite declined by 0.13%, and the Dow Jones Industrial Average experienced the most significant decline, losing 0.55% of its value.
Volatility in the Afternoon Trading
While the benchmark S&P 500 (.SPX) initially demonstrated steady growth for most of the afternoon, equities began to decline towards the end of the session. This sudden shift in sentiment contributed to the overall negative performance of the market. Despite a strong first half of the year, major indexes closed the week with losses. The S&P 500 experienced a decline of approximately 1.2%, the Dow dropped by nearly 2%, and the Nasdaq fell by around 0.9%.
Anticipated Interest Rate Increases
Although the Federal Reserve paused in June, it is widely anticipated that interest rates will be raised at the upcoming meeting later this month. This expectation is based on the fact that employment growth continues to outpace the levels observed in the decade prior to the pandemic. As the labor market remains a crucial factor for the Fed’s decision-making process, investors will closely monitor the upcoming meeting for any hints regarding the future trajectory of interest rates.
Asia Session: Inflation Numbers from China
During the Asia session, the latest inflation numbers from China indicated a continued decline, reflecting lower demand from both consumers and producers. The Producer Price Index (PPI) experienced a YoY decrease of 5.4%, while the Consumer Price Index (CPI) recorded a reading of 0% YoY, falling below the projected figure of 0.2%. The dollar index (DXY) initially rallied significantly but faced resistance near the 102.50 level.
Europe & US Session: Impact of NFP Figures
Following the release of the Non-Farm Payrolls (NFP) figures last Friday, the movement of the U.S. currency was significantly influenced. Although the ADP report on Thursday indicated substantial job increases, it was the NFP figures that carried more weight in determining market sentiment. After a sharp increase in the morning, the dollar weakened and fell as low as 102.20 when Europe came online.
Dollar Index (DXY) Expectations
Today, Michael Barr, a member of the FOMC, will participate in a panel discussion at the Bipartisan Policy Center in Washington, DC, focusing on bank supervision, regulation, and capital needs. It is expected that he will adopt a hawkish stance on monetary policy, and audience questions will be entertained. The Federal Reserve’s keynotes highlight their commitment to returning inflation to the 2% target and adjusting monetary policy to address emerging risks. The next meeting is scheduled for July 26, 2023. The current bias for the next 24 hours is medium bearish.
Euro (EUR) Outlook
The Sen tix Investor Confidence index has been in decline since March, raising concerns about the German economy and recessionary tendencies within the Eurozone. However, despite the gloomy outlook, the Euro surged above 1.0970 last Friday, and it is likely to continue rising given the impact of the NFP shortfall on the dollar index. The European Central Bank (ECB) recently raised the three key interest rates by 25 basis points and slightly lowered economic growth projections. The next ECB meeting is scheduled for July 27, 2023. The current bias for the next 24 hours is medium bullish.
Gold (XAU) Analysis
Michael Barr, a member of the FOMC, is also expected to speak today in Washington, DC. As part of a panel discussion on bank supervision, regulation, and capital needs, he may express a hawkish stance on monetary policy. The current bias for gold in the next 24 hours is medium bullish.
Global Markets Overview
Asian Stock Markets
- Nikkei: -0.61%
- Shanghai Composite: +0.22%
- Hang Seng: +0.60%
- ASX: -0.54%
- DAX futures: -0.23%
- CAC 40: -0.26%
- FTSE: -0.15%
U.S. Stock Market
- Dow Jones: -0.55%
- S&P 500: -0.29%
- Nasdaq 100: -0.13%
- Gold: $1924.56 (+0.01%)
- Silver: $23.07 (+0.11%)
- Brent Oil: $77.75 (-0.92%)
- WTI Oil: $73.19 (-0.88%)
Notable News and Data
- (CNY) CPI (MoM) (Jun) – Actual: -0.2%, Forecast: 0.0%, Previous: -0.2%
- (CNY) PPI (YoY) (Jun) – Actual: -5.4%, Forecast: -5.0%, Previous: -4.6%
- (AUD) Building Approvals (MoM) – Actual: 20.6%, Forecast: 20.6%, Previous: -6.8%
- (USD) FOMC Member Mester Speaks
- (USD) FOMC Member Daly Speaks
GBPUSD: Potential Market Continuation Despite Weak Trend
In the current market, the GBP/USD chart displays a predominantly weak positive trend, accompanied by low confidence. However, there remains a possibility of a bullish continuation.
Promising Starting Point for Price Support
1.2794: Overlap Support and Fibonacci Retracement
- 1.2794 serves as a promising starting point for potential price support.
- This level is classified as an overlap support, coinciding with a 23.60% Fibonacci Retracement.
- The convergence of these factors adds to its relevance as a significant support level.
Multi-Swing Low Support Indicates Crucial Level
1.2747: Multi-Swing Low Support
- The second support level at 1.2747 is recognized as multi-swing low support.
- Its previous role as a crucial level further solidifies its importance.
Substantial Resistance Levels
1.2823: Overlap Resistance and Fibonacci Projection
- The first resistance level at 1.2823 is a substantial price resistance on the upward movement.
- It is distinguished as an overlap resistance, coinciding with a 78.60% Fibonacci Projection.
- The convergence of these factors emphasizes its significance as a potential roadblock.
1.2853: Overlap Resistance and Fibonacci Projection
- The second resistance level at 1.2853 is also recognized as overlap resistance.
- It coincides with a 100% Fibonacci Projection, further reinforcing its role as a barrier to the upward rise.
- Trade: Buy
- Entry: 1.2824
- Take Profit: 1.2850
- Stop Loss: 1.2747
Despite the weak overall positive trend and low confidence observed in the GBP/USD chart, there is a possibility of a market bullish continuation. Traders may consider the potential support and resistance levels mentioned above for their trading decisions.
EURUSD: Strong Positive Trend Indicates Potential Market Rise
The EUR/GBP chart currently exhibits a strong positive trend, suggesting a potential rise in the market.
Bullish Movement Towards Resistance Level
0.0966: First Resistance Level with Overlap Resistance
- There is a chance that the price will move in a bullish direction until it reaches the first resistance level at 0.0966.
- This resistance level has historically acted as a roadblock for price growth and possesses overlap resistance characteristics.
Multiple Levels of Price Support
0.0956: Multi-Swing Low Support
- The first support level at 0.0956 is a multi-swing low support.
- It is positioned as a strong level of prospective price support.
0.0945: Overlap Support
- The second support level at 0.0945 is considered solid.
- It holds significance as overlap support.
Impact of Resistance Level
0.0982: Second Resistance Level
- The second resistance level at 0.0982 greatly influences the upward progress.
- Trade: Buy
- Entry: 1.0970
- Take Profit: 1.0994
- Stop Loss: 1.0951
The strong overall positive trend observed in the EUR/GBP chart indicates a potential rise in the market. Traders may consider the mentioned resistance and support levels when making their trading decisions.
AUDUSD: Potential Upward Movement Amidst Bearish Trend
The AUD/USD chart currently indicates a bearish trend, suggesting a potential upward decrease in the market. However, there is a possibility of a bearish continuation toward the first barrier level.
Significance of Resistance Level
0.6778: Overlap Resistance and Fibonacci Retracement
- The significance of the resistance level at 0.6778 is attributed to its role as an overlap resistance.
- Additionally, it coincides with a 61.80% Fibonacci Retracement level, further emphasizing its importance.
- If the price manages to break above this barrier level, the positive trend may continue.
Target in Case of Positive Continuation
0.6888: Second Resistance Level
- The second resistance level at 0.6888 may serve as the price’s target in the case of a positive continuation.
Importance of Support Levels
0.6548: Initial Support Level
- The initial support level at 0.6548 plays a crucial role in providing a floor for the price.
0.6461: Swing-Low Support
- The second support level at 0.6461 functions as a swing-low support.
- It reminds us of a previous region where the price found support and reversed its direction upward.
- Trade: Sell
- Entry: 0.6642
- Take Profit: 0.6631
- Stop Loss: 0.6653
Although the AUD/USD chart reflects a bearish trend, there is a possibility of a potential upward decrease in the market. Traders may consider the mentioned resistance and support levels for their trading strategies.
USDJPY: Strong Bullish Momentum Indicates Favorable Market Picture
The USD/JPY chart currently displays a strong bullish momentum with high confidence, indicating a favorable outlook for potential higher movement in the market.
Notable Support Levels
141.42: Pullback Support and Fibonacci Retracement
- The first support level at 141.42 is notable as it is pullback support.
- It coincides with a 23.60% Fibonacci Retracement, adding to its significance.
138.29: Pullback Support and Fibonacci Retracement
- The second support level at 138.29 is also regarded as pullback support.
- It corresponds to a 38.20% Fibonacci Retracement level, strengthening its importance as a support level.
Importance of Resistance Levels
145.57: Initial Resistance Level
- The initial resistance level at 145.57 is an important level due to its proximity to the 78.6% Fibonacci Retracement level.
- It has previously acted as a pricing barrier, preventing the price from rising.
150.26: Second Resistance Level
- The second resistance level at 150.26 is a swing-high resistance, historically significant as a formidable barrier.
- Trade: Buy
- Entry: 142.45
- Take Profit: 142.75
- Stop Loss: 142.01
The USD/JPY chart showcases a strong bullish momentum with high confidence, indicating a favorable market picture for potential higher movement. Traders may consider the mentioned support and resistance levels when making their trading decisions.
S&P 500: Bearish Momentum Suggests Downside Market Bias
The S&P 500 chart currently displays general bearish momentum, indicating a market bias toward the downside. There is a possibility of a bearish continuation toward the first support level.
Potential Bearish Continuation
4,310.30: First Support Level
- The price may move towards the first support level at 4,310.30, indicating a possibility of a bearish continuation.
- This support level holds significance as overlap support and coincides with a 38.20% Fibonacci Retracement, increasing its likelihood of acting as a strong support level.
Strong Support Level
4,190.90: Second Support Level
- The second support level at 4,190.90 strongly supports the price.
- As an overlap support, it has demonstrated historical value as a level of support.
- Additionally, it coincides with a 38.20% Fibonacci Retracement, further solidifying its role as a support level.
Resistance Levels Acting as Barriers
4,451.80: Initial Resistance Level
- The initial resistance level at 4,451.80 acts as a multi-swing high resistance on the upward movement.
- This level has previously served as a pricing barrier, halting the price’s rise.
- Therefore, if the price attempts to move upward, strong resistance is anticipated.
4,586.80: Second Resistance Level
- The second resistance level at 4,586.80 is also an overlap resistance.
- Trade: Buy
- Entry: 4397.98
- Take Profit: 4439.85
- Stop Loss: 4398.50
The S&P 500 chart currently exhibits general bearish momentum, indicating a downside market bias. Traders may consider the mentioned support and resistance levels when making trading decisions.
WTI CRUDE OIL: Potential Bearish Reaction from Resistance Level
The WTI/USD (West Texas Intermediate crude oil) chart suggests a potential bearish reaction from the initial resistance level, characterized by poor bearish momentum and low confidence.
Significance of Resistance Levels
73.02: Resistance Overlap and Fibonacci Retracement
- As the price approaches the first resistance level at 73.02, a potential bearish reaction is possible.
- This level serves as a resistance overlap and coincides with a 50% Fibonacci retracement level, further highlighting its significance as a potential turning point in the market.
- The second resistance level at 75.43 is also regarded as a significant overlap resistance.
Support Levels to Stabilize the Market
70.41: Middle Support Level
- In the event of a negative reaction, a middle support level is located at 70.41.
- This level, known as overlap support, is likely to temporarily stabilize the market if the price decreases from the first resistance level.
67.99: Overlap Support
- The first support level at 67.99 is crucial as it serves as an overlap support.
- Trade: Sell
- Entry: 73.17
- Take Profit: 72.54
- Stop Loss: 73.80
The WTI/USD chart suggests a potential bearish reaction from the initial resistance level. Traders may consider the mentioned support and resistance levels when making their trading decisions.
GOLD: Neutral Momentum Indicates Range-Bound Trading
The XAU/USD (Gold) chart currently exhibits neutral momentum, pointing to a lack of market direction. During this period, price fluctuations within a specific range, determined by the initial support and resistance levels, are possible.
Noteworthy Support Level
1898.94: Initial Support Level with Overlap Support and Fibonacci Retracement
- The initial support level at 1898.94 is significant as it coincides with the 61.80% and 38.20% Fibonacci retracement levels.
- It also serves as an overlap support, further enhancing its importance as a strong foundation for the price.
- The second support level at 1857.06 is positioned at the 78.6% Fibonacci Retracement level and functions as another level of support.
Resistance Levels Acting as Barriers
1933.60: Overlap Resistance
- An overlap resistance is found at the initial resistance level of 1933.60.
- Potential resistance in the market is increased by this level.
1971.15: Second Resistance Level
- The second resistance level at 1971.15 is considered additional overlap resistance.
- Trade: Buy
- Entry: 1929.63
- Take Profit: 1940.17
- Stop Loss: 1920.72
The current Gold chart shows neutral momentum, indicating a lack of market direction. Traders should be aware of the mentioned support and resistance levels, as price fluctuations within this range are possible.
ETHEREUM: Sluggish Bullish Momentum with Potential Decline
The ETH/USD (Ethereum) chart currently displays a sluggish bullish overall momentum with low confidence. In the near future, there is a possibility of a further price decline toward the first support level before rebounding and climbing toward the first resistance.
Notable Support Levels
1841.69: First Support Level with Overlap Support and Fibonacci Retracement
- A potential decline to the first support level at 1841.69 is possible.
- This support level is powerful due to a 50% Fibonacci Retracement and overlap support.
1733.35: Second Support Level with Overlap Support and Fibonacci Retracement
- The second support level at 1733.35 is also considered strong, supported by an overlap support and a 78.60% Fibonacci Retracement.
Resistance Levels Acting as Obstacles
1885.02: First Resistance Level with Overlap Resistance
- The first resistance level at 1885.02 is important due to overlap resistance.
1964.47: Second Resistance Level with Swing-High Resistance and Fibonacci Extension
- The second resistance level at 1964.47 is a swing-high resistance and a 127.20% Fibonacci Extension.
- It poses a significant obstacle to the price’s upward trend.
The ETH/USD chart currently exhibits sluggish bullish momentum with low confidence. Traders should consider the mentioned support and resistance levels when making their trading decisions.
1. What were the key factors contributing to the decline in Wall Street’s major indexes?
- The decline in Wall Street’s major indexes can be attributed to weaker-than-expected job growth and concerns over anticipated interest rate increases by the U.S. Federal Reserve.
2. What was the impact of the U.S. jobs report on the market?
- The U.S. jobs report revealed weaker growth, with the addition of the fewest jobs in two and a half years. Despite this, robust wage growth indicated that the labor market remained tight. The market reacted negatively to the slower job growth, leading to the decline in major indexes.
3. Why are investors concerned about anticipated interest rate increases by the Federal Reserve?
- Anticipated interest rate increases by the Federal Reserve raise concerns among investors as they can impact borrowing costs, corporate profits, and overall economic growth. Investors closely monitor interest rate decisions as they have a significant influence on market sentiment.
4. What were the implications of the inflation numbers from China on the Asian session?
- The decline in inflation numbers from China indicates lower demand from both consumers and producers. This raised concerns about the overall economic outlook. Additionally, the dollar index initially rallied but faced resistance, impacting market sentiment during the Asian session.
5. How did the NFP figures influence the movement of the U.S. currency?
- The Non-Farm Payrolls (NFP) figures had a significant impact on the movement of the U.S. currency. Despite positive job growth reported by the ADP, the weaker-than-expected NFP figures affected market sentiment and resulted in the dollar weakening against other currencies.