The week ahead – Calm before the storm

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SPX 500 index continues to rally
SPX 500 index : Continues to rally with resilience in the American economy and Fed policy.

The SPX 500 index reigns supreme as another record is set. The index is on track for a fifth straight winning month and has been rallying since Q4. The American economy has remained resilient despite the Fed refusing to budge on their rate cutting as inflation remains controlled. As the Fed looks to be the key catalyst in price action, financial and cyclical stocks could help the index push above 5500. 5200 is a solid support, and 5280 is a crucial resistance.

AUDUSD resumes the downtrend
AUDUSD: Downward trend resumes as consumer confidence and retail sales decline.

The Australian dollar drifted lower as consumer confidence and retail sales fell. With the RBA holding their stance in their previous interest rate meeting, the US dollar has capitalised. Uncertainty in the financial system could be another factor that could prompt the central bank to stay higher for longer in its next meeting. With the balance of trade data expected to slip, the Aussie could be in for a rough Q2. 0.6620 is a fresh resistance, and 0.6460 is the closest support.

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NZDUSD hoping for a bullish bounce
NZDUSD: Hoping for a bullish bounce ahead of the RBNZ rate decision.

The New Zealand dollar continues to collapse ahead of the RBNZ rate decision. Short-term inflation expectations remain at 5.5% and are still worryingly high according to the RBNZ standard. With inflation way above the 2% target, it will take time for monetary policy to work its magic. According to the chief economist, the central bank might need to do more. Since the recent double top, the pair has been pressured below 0.6100 with a bullish divergence, hoping for a lift above 0.6000.

XAUUSD pushing for another record
XAUUSD: Gold pushes for another record amid haven demand and Fed testimony.

Gold maintains its uptrend as investors look for further record highs. The surge in haven demand means that gold is the ultimate gauge of wariness in the market. With all eyes on the following Fed testimony, policymakers will test the market to see if their ‘higher for longer’ approach will see a fresh move on the dollar. With the NFP also gearing up to exceed expectations, the yellow metal could be subdued for the subsequent few sessions. 2210 is the next test higher, whilst 2150 becomes support.

 

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