Stocks Decline as Fed Chair Testimony Looms.

Introduction

In anticipation of the testimony by Federal Reserve Chair Jerome Powell, stock markets in the United States experienced a decline. This article provides a comprehensive overview of the recent market developments, key news events, and the impact on various currencies.

US Stock Markets Face a Slow Start

After a prolonged weekend break, the US stock markets began the week on a disappointing note. Investor confidence dwindled as they awaited critical testimony from Fed Chair Jerome Powell. By the end of the trading session, the Dow dropped by 0.72%, the S&P declined by 0.47%, and the Nasdaq experienced a loss of 0.16%.

China’s Rate Cut Impacts Dollar and Oil Prices

Yesterday, China’s decision to lower its benchmark loan prime rates for the first time in ten months had repercussions on the US dollar and oil prices. The US dollar gained ground against currencies from the other side of the world due to this development. As a result, oil prices also decreased, with WTI currently trading at approximately $70.50/b and Brent at around $76/b.

Anticipated Market Movements Today

While the week began with relative calmness, market activity is expected to pick up pace starting today. The release of the Monetary Policy Meeting Minutes by the Bank of Japan (BOJ) during the Asian session has already caused an upward movement in the USD/JPY currency pair. The minutes confirmed the justification for maintaining ultra-low rates. In Asia, no significant releases are scheduled, but the United Kingdom is set to unveil important inflation data shortly before the opening of the London market on Monday. The focus during the New York opening will be on the release of Canadian Retail Sales statistics, although Jerome Powell’s testimony later in the day is likely to have a significant impact on the markets.

Recap of the US Session

During the US session, several noteworthy events unfolded. Building permits saw the issuance of 1.49 million, surpassing the estimated 1.42 million. Additionally, 1.63 million housing starts were initiated, exceeding the anticipated 1.40 million. These figures indicate a sharp rise in new residential building projects, which can stimulate job creation, enhance consumer confidence, and attract capital inflows. Consequently, the USD currency may receive support from these positive developments.

Impact on the Asian Session

If the Bank of Japan’s Monetary Policy Meeting Minutes are perceived as being hawkish, the USD/JPY currency pair might experience a plunge to 141.00. Conversely, if the minutes are not hawkish, the recent intra-day highs of approximately 141.75 are likely to be tested.

The Dollar Index (DXY)

Key News Events Today

The key news event for today revolves around the testimony of Federal Reserve Chair Jerome Powell.

What to Expect from DXY Today?

The impending hearing of Federal Reserve Chair Jerome Powell before the House Financial Services Committee will potentially affect the Semi-Annual Monetary Policy Report and interest rates. If Powell hints at a potential shift in monetary policy towards a lower Fed Funds rate, the dollar is expected to decline.

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 26 July 2023.

Next 24 Hours Bias

The bias for the next 24 hours is mixed.

The Swiss Franc (CHF)

Key News Events Today

No major news events are expected today.

What to Expect from CHF Today?

Today, the Swiss Franc (CHF) is unlikely to be affected by any significant news occurrences. However, upcoming data releases are anticipated to have an impact on the currency’s market direction. Traders and investors closely watch announcements such as the SNB Press Conference, the SNB Policy Rate (currently at 1.50%), and the SNB Monetary Policy Assessment. These releases shed light on the outlook and monetary policy decisions of the Swiss National Bank.

Central Bank Notes:

• The policy rate has been raised to 1.5% to counter inflationary pressure and ensure price stability. The SNB may need to raise the policy rate further in the future.
• The SNB is providing liquidity assistance to Credit Suisse, and the crisis has been halted.
• The new inflation forecast assumes a policy rate of 1.5% and projects average annual inflation at 2.6% for 2023 and 2.0% for 2024 and 2025.
• Mortgage and real estate market vulnerabilities persist.
• The next meeting is scheduled for 22 June 2023.

Next 24 Hours Bias

The bias for the next 24 hours is weak-bullish.

The Pound (GBP)

Key News Events Today

No major news events are expected today.

What to Expect from GBP Today?

Compared to the previous estimate of 8.7%, the predicted year-over-year CPI (Consumer Price Index) stands at 8.4%. If the actual data aligns with the forecast, it may have a favorable impact on the GBP and indicate a reduced need for immediate monetary tightening. However, significant deviations from the forecasts or higher-than-anticipated numbers could raise concerns about inflation and result in a decline in the value of the pound.

Central Bank Notes:

• The Monetary Policy Committee (MPC) of the Bank of England (BoE) voted 7-2 to increase the Bank Rate by 0.25 percentage points to 4.5%.
• Updated projections indicate that CPI inflation is expected to decrease slightly above 1% at the two- and three-year horizons, remaining below the 2% target.
• CPI unexpectedly increased but is projected to decline sharply for the rest of the year due to lower energy prices.
• The next meeting is scheduled for 22 June 2023.

Next 24 Hours Bias

The bias for the next 24 hours is mixed.

Global Market Overview

Asian Stock Markets

• Nikkei: Up 0.56%
• Shanghai Composite: Down 0.81%
• Hang Seng: Down 1.90%
• ASX: Down 0.58%

European Equities

• DAX futures: Down 0.55%
• CAC 40: Down 0.27%
• FTSE: Down 0.25%

US Stock Market

• Dow Jones: Down 0.72%
• S&P 500: Down 0.47%
• Nasdaq 100: Down 0.16%

Commodities

• Gold: $1933.89 (-0.05%)
• Silver: $23.09 (-0.17%)
• Brent Oil: $76.03 (+0.17%)
• WTI Oil: $71.36 (+0.24%)

News & Data

• GBP CPI (YoY) (May): Actual 8.7%, Forecast 8.4%, Previous 8.7% at 11:30
• GBP CPI (MoM) (May): Actual 0.7%, Forecast 0.5%, Previous 1.2% at 11:30
• JPY Monetary Policy Meetings Minutes at 05:20
• CAD Core Retail Sales (MoM) (Apr): Forecast 0.4%, Previous –0.3% at 18:00
• CAD Retail Sales (MoM) (Apr): Forecast 0.2%, Previous –1.4% at 18:00
• USD Fed Chair Powell Testifies at 19:30

GBPUSD: Bearish Momentum Suggests Lower Market Trend

Introduction

In the world of foreign exchange trading, the GBP/USD chart is currently displaying a bearish momentum, indicating a downward trend in the market. Traders and investors are closely monitoring the support and resistance levels to make informed trading decisions. In this article, we will explore the key levels and analyze the trade suggestion for GBP/USD.

Key Support Levels

1.2703: Pullback Support and Fibonacci Retracement

The first support level at 1.2703 holds significant importance as it serves as pullback support and aligns with both the 38.20% and 50% Fibonacci Retracement levels. Traders anticipate a potential bearish continuation at this level, indicating a downward movement in the market.

1.2628: Pullback Support and Fibonacci Retracement

Another noteworthy support level is identified at 1.2628, which also functions as a pullback support. This level corresponds to the 61.80% Fibonacci Retracement, further reinforcing its significance in the market.

Key Resistance Levels

1.2703: Swing High Resistance

On the upside, the initial obstacle for the GBP/USD pair is encountered at 1.2703. This level acts as a swing-high resistance, indicating a barrier to the bullish momentum in the market.

Trade Suggestion

Based on the analysis of the support and resistance levels, a potential trade suggestion for GBP/USD is as follows:

• Trade: Sell
• Entry Point: 1.2711
• Take Profit: 1.2672
• Stop Loss: 1.2736

By following this trade suggestion, traders aim to capitalize on the bearish momentum and anticipate a downward movement in the GBP/USD market.

EURUSD: Neutral Momentum Indicates Uncertain Market Direction

Introduction

The EUR/USD chart currently exhibits neutral momentum, indicating an absence of a distinct directional bias in the market. Traders and investors are carefully assessing the support and resistance levels to determine future price movement. In this section, we will delve into the key levels and explore the trade suggestion for EUR/USD.

Key Support Levels

1.0892: Overlap Support and Fibonacci Retracement

The first support level at 1.0892 plays a crucial role as it functions as an overlap support and aligns with the 23.60% Fibonacci Retracement. Traders should monitor this level closely as it could influence the price action of EUR/USD.

1.0846: Pullback Support and Fibonacci Retracement

Another significant support level is observed at 1.0846, serving as a pullback support and aligning with the 38.20% Fibonacci Retracement. This level adds to the overall support structure of the market.

Key Resistance Levels

1.0928: Overlap Resistance

On the upside, the first barrier encountered by the EUR/USD pair is located at 1.0928. This level acts as an overlap resistance and presents a challenge to the bullish momentum in the market.

1.0994: Swing High Resistance and Fibonacci Retracement

The second resistance level at 1.0994 coincides with the 78.60% Fibonacci Retracement, making it a significant level of resistance. Traders should closely monitor this level as it could potentially hinder further upward movement.

Trade Suggestion

Based on

the analysis of the support and resistance levels, a trade suggestion for EUR/USD is as follows:

• Trade: Buy
• Entry Point: 1.09255
• Take Profit: 1.09416
• Stop Loss: 1.09123

By following this trade suggestion, traders aim to take advantage of potential price fluctuations in the EUR/USD market.

AUDUSD: Bearish Momentum Indicates Downward Market Trend

Introduction

The AUD/USD chart currently exhibits bearish momentum, suggesting a downward market trend. Traders and investors are closely monitoring the support and resistance levels to gauge future price movement. In this section, we will explore the key levels and analyze the trade suggestion for AUD/USD.

Key Support Levels

0.6760: Pullback Support and Fibonacci Retracement

The initial support level at 0.6760 serves as pullback support and aligns with the 23.60% Fibonacci Retracement. Traders anticipate a potential bearish break at this level, indicating a downward movement in the market.

0.6708: Retreat Support and Fibonacci Retracement

Another noteworthy support level is identified at 0.6708, which acts as a retreat support and coincides with the 38.20% Fibonacci Retracement. This level may come into play if the bearish momentum continues.

Key Resistance Levels

0.6814: Swing High Resistance

On the upside, the first resistance level at 0.6814 represents a significant swing-high resistance. Traders should pay close attention to this level as it may impede further bullish movement.

0.6883: Fibonacci Extension Level

The second resistance level at 0.6883 holds importance as it coincides with a Fibonacci Extension level. This level adds to the overall resistance structure of the market.

Trade Suggestion

Based on the analysis of the support and resistance levels, a potential trade suggestion for AUD/USD is as follows:

• Trade: Sell
• Entry Point: 0.6760
• Take Profit: 0.6708
• Stop Loss: 0.6806

By following this trade suggestion, traders aim to capitalize on the bearish momentum and anticipate a downward movement in the AUD/USD market.

USDJPY: Bearish Momentum Indicates Downward Market Trend

Introduction

The USD/JPY chart currently exhibits bearish momentum, pointing towards a downward market trend. Traders and investors are closely monitoring the support and resistance levels to determine potential trading opportunities. In this section, we will explore the key levels and analyze the trade suggestion for USD/JPY.

Key Support Levels

141.17: Overlap Support

The first support level at 141.17 plays a significant role as it serves as an overlap support. Traders should pay attention to this level as it holds importance in the market structure.

140.28: Retreat Support

The second support level at 140.28 acts as retreat support, providing additional reinforcement to the overall support structure.

Key Resistance Levels

141.95: Fibonacci Retracement and Swing High Resistance

On the upside, the 61.80% Fibonacci Retracement level and the first resistance level at 141.95 hold significance. Traders should closely monitor this level as it may pose a challenge to the bearish momentum.

142.94: Swing High Resistance

The intermediate resistance level at 142.94 also serves as a swing high resistance. Traders should take note of this level as it could impact the price movement.

Trade Suggestion

Based on the analysis of the support and resistance levels,

a potential trade suggestion for USD/JPY is as follows:

• Trade: Sell
• Entry Point: 141.88
• Take Profit: 141.57
• Stop Loss: 142.145

By following this trade suggestion, traders aim to take advantage of the bearish momentum in the USD/JPY market and anticipate a downward movement.

DOW JONES: Bullish Trend Continues with Important Support Level

Introduction

The price of the DOW JONES index is approaching a significant support level at 33854, which serves as overlap support and a 38.2% Fibonacci retracement. Traders and investors are analyzing the price action to assess the continuation of the bullish trend. In this section, we will explore the key levels and analyze the trade suggestion for DOW JONES.

Key Support Levels

33854: Overlap Support and Fibonacci Retracement

The support level at 33854 plays a crucial role as it serves as overlap support and aligns with the 38.2% Fibonacci retracement. Traders should closely monitor this level as it indicates the continuation of the bullish trend.

33262: Fibonacci Retracement

In case the first support level is breached, traders should be aware of the second support level at 33262, which represents a 61.8% Fibonacci retracement. This level may come into play if the price experiences a further decline.

Key Resistance Levels

34332: Overlap Resistance

On the upside, the level at 34332 acts as a significant overlap resistance. Traders should pay attention to this level as it could impede further upward movement in the market.

Trade Suggestion

Based on the analysis of the support and resistance levels, a potential trade suggestion for DOW JONES is as follows:

• Trade: Sell
• Entry Point: 34333
• Take Profit: 34161
• Stop Loss: 34476

By following this trade suggestion, traders aim to capitalize on the potential price decline in the DOW JONES index.

WTI CRUDE OIL: Positive Momentum Indicates Rising Market Trend

Introduction

The WTI CRUDE OIL chart currently displays positive momentum, indicating a rising market trend. Traders and investors are monitoring the key support and resistance levels to identify potential trading opportunities. In this section, we will explore the levels and analyze the trade suggestion for WTI CRUDE OIL.

Key Support Levels

66.83: Overlap Support and Fibonacci Retracement

The first support level at 66.83 holds importance as it represents an overlap support level and corresponds with the 50% Fibonacci retracement. Traders should consider this level as it provides additional support to the market structure.

63.52: Swing-Low Support

The second support level at 63.52 serves as a swing-low support, further reinforcing the overall support structure.

Key Resistance Levels

71.25: Overlap Resistance and Fibonacci Retracement

On the upside, the level at 71.25 acts as the first resistance level and coincides with an overlap resistance and the 78.6% Fibonacci retracement. Traders should closely monitor this level as it may pose a challenge to further upward movement.

76.49: Overlap Resistance

The second resistance level at 76.49 represents another overlap resistance. Traders should take note of this level as it could impact the price dynamics.

Trade Suggestion

Based on the analysis of the support and resistance levels, a potential trade suggestion for WTI CRUDE OIL is as follows:

• Trade: Buy
• **

Entry Point**: 71.30

• Take Profit: 73.50
• Stop Loss: 70.45

By following this trade suggestion, traders aim to capitalize on the positive momentum in the WTI CRUDE OIL market and anticipate a rising market trend.

Gold: Bearish Momentum Signals Downward Market Trend

Introduction

The XAU/USD chart currently shows bearish momentum, indicating a downward market trend for gold. Traders and investors are closely observing the support and resistance levels to assess potential trading opportunities. In this section, we will delve into the key levels and analyze the trade suggestion for gold.

Key Support Levels

1932.64: Overlap Support

A bearish continuation towards the first support level at 1932.64 is conceivable, as it is designated as an overlap support. This level holds significance and could provide a level of support for the market.

1859.34: Overlap Support

Another overlap support is provided by the second support level, located at 1859.34. Traders should pay attention to this level as it could act as a crucial support level if the bearish momentum persists.

Key Resistance Levels

1982.62: Multi-Swing High Resistance

On the upside, the initial resistance level at 1982.62 represents a significant multi-swing high resistance. Traders should closely monitor this level as it could impede further upward movement.

2047.59: Overlap Resistance

The second resistance level at 2047.59 is an overlap resistance, adding to its significance as a potential barrier to upward price movement.

Trade Suggestion

Based on the analysis of the support and resistance levels, a potential trade suggestion for gold is as follows:

• Trade: Sell
• Entry Point: 1935.03
• Take Profit: 1924.72
• Stop Loss: 1941.29

By following this trade suggestion, traders aim to capitalize on the bearish momentum in the gold market and anticipate a further downward market trend.

Ethereum Price Analysis: Key Levels to Watch

Introduction

In the world of cryptocurrencies, Ethereum has been grabbing attention as it tests a significant resistance level at 1827. This article analyzes the current price movement and highlights the key levels to watch for potential reversals and breakthroughs.

Testing Resistance: 1827 Level

The price of Ethereum is currently testing a significant resistance level at 1827. This level represents a -27% Fibonacci expansion and a 78.6% Fibonacci projection. It also acts as a pullback resistance. If the price manages to break above this level, it could indicate a bullish trend continuation. Traders and investors are closely monitoring this development.

Potential Breakthrough: 1919 Level

Beyond the 1827 resistance, another obstacle lies in 1919. This level serves as an overlap resistance and a -61.8% Fibonacci expansion. Should the price successfully break the initial resistance, reaching 1919 could signal further upward momentum for Ethereum. Traders should keep a close eye on this level for potential trading opportunities.

Support Levels: 1731 and 1654

In the event of a reversal and price drop, Ethereum has two support levels to watch. The first support level is at 1731, known as the overlap support. If the price fails to break the resistance and starts to decline, it could find support at this level. However, traders need to remain cautious as breaching this support may lead to a further drop.

The second support level is situated at 1654, also an overlap support level. If Ethereum experiences a significant reversal and breaches the first support, this level becomes crucial. Monitoring the price action around 1654 will provide insights into the strength of the bearish momentum.

Trade Suggestion

Based on the current analysis, a potential trade suggestion for Ethereum is as follows:

• Buy at 1814.0
• Take Profit (TP) at 1831.7
• Stop Loss (SL) at 1799.9

Traders should exercise their own discretion and consider their risk tolerance before executing any trades.

conclusion

In conclusion, the US stock markets started the week on a decline due to investor concerns ahead of Fed Chair Jerome Powell’s testimony. The US dollar gained ground against other currencies after China lowered its benchmark loan prime rates. Oil prices also decreased as a result of China’s decision. The upcoming data and events, including inflation data from the UK and Jerome Powell’s testimony, are expected to impact the markets. The monetary policies and announcements of central banks such as the Federal Reserve, the Swiss National Bank, and the Bank of England will also play a significant role in market direction. Traders and investors are closely monitoring these developments to make informed decisions.

Frequently Asked Questions (FAQ)

Q: What is the significance of Fed Chair Jerome Powell’s testimony?

A: Fed Chair Jerome Powell’s testimony provides insights into the Federal Reserve’s monetary policy stance and future outlook. It can influence market expectations regarding interest rates and overall economic conditions.

Q: How does China’s decision to lower its benchmark loan prime rates affect the US dollar?

A: China’s decision to lower its benchmark loan prime rates can impact the US dollar. When China lowers its rates, it can lead to a decrease in the value of its currency, making the US dollar relatively stronger in comparison.

Q: Why did the US stock markets decline ahead of Jerome Powell’s testimony?

A: The decline in US stock markets ahead of Jerome Powell’s testimony can be attributed to investor caution and uncertainty about the potential impact of his statements on monetary policy, interest rates, and market conditions.

Q: What are building permits and housing starts, and why are they important indicators?

A: Building permits refer to the authorization granted by local governments for new construction projects, while housing starts represent the actual initiation of construction for residential buildings. These indicators are crucial as they reflect the level of activity and investment in the housing sector, which has significant implications for employment, consumer confidence, and capital inflows.