Bullish sentiment improves
The US stock market showed a strong start this week, with the S&P500 closing up by just over 1%, Nasdaq increasing by 1.13%, and Dow Jones closing higher by 0.46%. There is a growing bullish sentiment among investors who are anticipating more than two interest rate cuts before the end of the year. This is especially after recent economic data releases, including the US Jobs Report.
Geopolitical tensions
Israel rejected the deal announced by Egypt and Qatar and continued with their invasion of Rafah, causing commodities like Gold, Silver and Crude Oil to rise in price.
Traders should be exceptionally careful as volatility is expected to rise, and unforeseen actions are highly probable.
DXY hovering above 105.0
On Friday, the US Dollar Index dropped following a weaker-than-expected US Jobs Report, but it later bounced back from its support area at 104.70. However, last week’s closing confirmed that the downside trend has resumed, especially after breaking multiple key support areas, not to mention the break of the daily trendline.
In the meantime, any potential upward movement is likely to be restricted below the key resistance level of 106.0, before the downward trend resumes. It is possible to break last week’s low and the next support level is at 104.40.
Gold stabilizing above $2300
At the beginning of the week, Gold prices rose above $2300. On Friday, prices dipped towards $2277 due to the US Jobs Report. Geopolitical tensions have helped the recovery, and the stabilization above $2300 has improved the technical outlook.
However, the downside correction may continue as long as Gold trades below $2350. A break above that resistance is needed to confirm that Gold is on its way towards new highs above $2360 and $2370.
RBA leaves rates unchanged
The Reserve Bank of Australia kept its current policy unchanged as expected. However, the bank’s tone appeared to be more cautious than optimistic, similar to the approach of the Federal Reserve. This came as a surprise to foreign exchange traders, resulting in a widespread decline of AUDUSD.
For now, the negative pressure is expected to be temporary and not too severe. A small step back is likely to happen before the positive trend continues. The next point of support is currently at 0.6585. However, if that support is broken, it could lead to a more significant setback towards 0.6520-10.
Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.
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