This week
has started with Independence Day in the United States, meaning that European
investors have had to support liquidity and steer markets by themselves. However,
Europeans are not likely to move markets, as they prefer to follow U.S. large
investors. Thus, the market is likely to close on Monday around the level it
was during Friday’s closing bell. Volatility is expected to be below average.
Within the next
four trading days the major milestones of the week will be a publication of the
Federal Open Market Committee (FOMC) Minutes on Wednesday followed by the NonFarm
Payrolls report on Friday. Both are of paramount interest as they may give an
answer to how close the U.S. economy is to a recession, and the reason behind why
the Federal Reserve (Fed) hiked interest rates by 75 basis point, the biggest
hike in the last 28 years.
The FOMC’s minutes
are unlikely to deliver any good news for the stock market after Fed’s leader
Jerome Powell repeatedly confirmed that the monetary watchdog would be bringing
down inflation at any cost. So, the minutes are likely to have a negative
impact on the market and the S&P 500 broad market index in particular. The
negative setup for the index , with targets at 3450-3550 by the beginning of
August, is intact despite closing on Friday above 3770 points, which has now become
a strong support level. Therefore, a downside scenario for this week is going
to be moderate. No good entry points are seen for this week.
The crude
market lift-off countdown is ticking. This week is likely to be the final for
Brent crude prices to soar towards $160-180 per barrel. This lift off is seen to
be rather logical in the current sentiment. So, a hover around $114-115 per
barrel of Brent crude is puzzling. This upside scenario could well contribute
to the start of the recession and EU nations seem to be pushing for this kind
of a scenario to also become their
reality. This scenario could be manifested from the ban of the insurance on oil shipments from Russia and other oil grades from non-Russian origins that contain even a minor quantities of Russian grades. This is a very strict ban that
justifies crude prices upside expectations. Thus, long trades opened at $112.70
per barrel of Brent crude are intact.
Gold prices
fell to $1785 per troy ounce and quickly rebounded to $1810. U.S. 10-year
Treasuries yields continue to run below 3.0%, while the U.S. Dollar remains at
its highs since 2017. Short trades opened at $1860-1880 are better to be kept,
while traders should be prepared to close them partially at $1750-1760 per
ounce. It would be better for stop-loss orders to moved downside to avoid any
losses in the unlikely case of price rebound.
EURUSD is
moving aggressively downside to the targets at 1.00500-1.01500 by the end of
this week. The level at 1.04300-1.04500 is a strong resistance level where it
might be interesting to open short trades . However, a further strengthening of
the U.S. Dollar is seen fragile and questionable. Thus, short trades should be
opened at small amounts.
FBPUSD has
already met the aggressive downside target at 1.19500-1.20500 and is now very
close to the important resistance level at 1.21300-1.21500. Some short
positions at this level could be considered interesting to open. These trades
are at risk as the pair has met its primary downside targets already.