Markets to watch this week
What to watch for US Dollar Index, GBP/AUD, Brent Crude and US Tech 100.
US Dollar Index: Heading to near two-month high
Following a false breakdown of a trendline support at the start of the month, the US dollar has since recovered close to 1.8% over the past two weeks. The feat of overcoming its post-Federal Open Market Committee (FOMC) dip seems to reflect buyers’ strength, as the US dollar successfully defended its Ichimoku Cloud support on the daily chart to keep the upward bias intact. On any downside, the trendline support will leave the 104.80 level as immediate level to hold.
On the daily relative strength index (RSI), a downward trendline has also been broken to the upside lately, which reflects a switch in momentum to the bullish end. A firm sit above the key mid-line shows buyers in control as well, which overall validates the near-term upward trend in place.
Thus far, market rate expectations continue to lean towards two 25 basis point (bp) rate cuts by the Federal Reserve (Fed) through 2024. Eyes will be on the US Personal Consumption Expenditures (PCE) data this week, which will determine the scope at which the Fed can ease on its policy settings. Expectations are for US headline PCE to come in at 2.6% year-on-year versus 2.7% prior, while the core aspect is expected to come in at 2.6% versus 2.8% prior. A more persistent read may support the high-for-longer rate narrative, which may offer a boost to the US dollar.
Levels:
R2: 107.00
R1: 106.14
S1: 105.30
S2: 104.00
US Dollar Index chart:
GBP/AUD: Bullish hammer formation at trendline support
After retracing close to 2% over the past two weeks, the GBP/AUD is back to retest an upward trendline support in place since the start of the year, with the formation of a bullish hammer on the daily chart suggesting some defending from buyers. One to watch for any positive follow-through this week to support a near-term bounce, with the risks being the situation where the upward trendline fails to hold.
On the broader scale, the pair seems to trade within a symmetrical triangle pattern, with any bounce from the lower trendline potentially supporting a move to retest the 1.923 level next. For the longer term, buyers may have to find conviction from a break above the upper triangle trendline, alongside a reversion in its daily RSI back above the 50 level.
Levels:
R2: 1.948
R1: 1.923
S1: 1.890
S2: 1.870
GBP/AUD chart:
Brent Crude: Can the upmove in oil prices continue?
Oil prices have seen some renewed traction lately, with prices breaking above a near-term downward trendline last week to deliver a near two-month high. Its daily RSI has managed to cross above its mid-line for the first time since April this year while its daily moving average convergence/divergence (MACD) has also crossed over into positive territory, which may suggest buyers taking greater control for now.
That said, prices are now heading into its daily Ichimoku Cloud resistance around the US$84-$86 range, which could prompt some consolidation. Buyers may seek to defend the previous resistance-turned-support level at the US$84.22 level for now, with any failure to do so potentially paving the way for prices to retrace to the US$82.12 level next, where the 200-day moving average (MA) stands.
Levels:
R2: 91.56
R1: 87.68
S1: 84.22
S2: 82.12
Brent Crude chart:
US Tech 100: Moderation from overbought technical conditions
The rally in Nasdaq 100 index has come to a slight breather lately as technical conditions attempt to moderate from previous overbought conditions. Its daily RSI has crossed back into neutral territory, while a bearish crossover was formed on its daily MACD. One to watch if last week’s low at the 19,622 level can be defended. With the formation of a minor bearish pin bar on the weekly chart to end last week, any move below the low of 19,622 may potentially ignite fresh selling pressures.
On the broader scale, the upward trend remains largely intact, with the pair trading within an ascending channel pattern since October last year. Recent weakness could come due to the interaction with its upper channel trendline resistance and trading in line with the trend will still leave any buying-on-retracement on watch. Any further retracement will leave eyes on the 19,500 level, while a greater support confluence may be at the 18,500 level, where the lower channel trendline stands alongside its daily Ichimoku Cloud support.
Levels:
R2: 20,346
R1: 20,000
S1: 19,500
S2: 18,500
US Tech 100 chart:
Calendar
Monday, 24 June, 2024
Data:
- Germany Ifo business climate
- US Dallas Fed manufacturing index
Tuesday, 25 June, 2024
Data:
- Canada consumer price index
- US Chicago Fed national activity index
- US S&P Case Shiller home price index
- US CB consumer confidence
- US API crude oil inventories
Wednesday, 26 June, 2024
Data:
- Australia monthly CPI indicator
- Germany Gfk consumer confidence
- France consumer confidence
- US new home sales
- US EIA crude oil inventories
Thursday, 27 June, 2024
Data:
- China industrial profits
- Eurozone economic sentiment
- US durable goods orders
- US Q1 GDP
- US initial jobless claims
- US pending home sales
Friday, 28 June, 2024
Data:
- Japan Tokyo CPI
- Japan industrial production
- Japan retail sales
- Germany retail sales
- UK Q1 GDP final
- France consumer price index
- US Core PCE price index
- US personal income and spending
- US Baker Hughes oil rig count
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