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Nestlé India shares rose 3% on quarterly profit growth.On July 22, David Zahn, head of European fixed income at Franklin Templeton, stated in a report that the firms base case forecast is for the European Central Bank (ECB) to raise interest rates for the final time in September, with inflation expected to remain above the ECBs 2% target for the next few quarters. Afterward, the ECB is expected to hold rates steady to assess the impact of the already implemented tightening policies. However, Zahn said the ECB remains highly data-driven. "If renewed tensions in the Gulf region push up energy prices and keep inflation above target for an extended period, policymakers may be forced to consider further rate hikes." Franklin Templeton anticipates the ECB will begin easing policy in 2027.The Hang Seng Tech Index fell by more than 3%, with PCB, AI applications, and prominent tech stocks among the biggest losers.The commander of the Kyiv drone force said that Ukrainian drones struck 13 Russian ships in the Black Sea and the Sea of Azov in the past 48 hours.Futures Commentary by Everbright Futures: Overnight, gold, copper, and oil prices rose in tandem, with London spot gold surging above $4,100/ounce in early trading, indicating a recovery in market sentiment. However, the global market is still digesting the uncertainty surrounding US trade policy and geopolitical conflicts. Recently, the US tariff policy entered a transition period, with the US announcing a 50% tariff increase on some Canadian products. Given the combination of macroeconomic fluctuations and geopolitical disturbances, a cautious approach is advised for gold in the short term. On the macro front, the market is in a quiet period ahead of the Federal Reserves interest rate meeting, focusing on the US-Iran conflict. Yesterday, the US president clearly dampened the prospects for US-Iran talks, stating that Iran wants to talk but the US has "no interest," and that it will "soon" strike the Kosan nuclear facility. Furthermore, US Trade Representative Greer hinted that the US will soon introduce new tariff policies to replace the expiring 10% global import tariff. Since the renewed conflict between the US and Iran, gold prices have not remained pessimistic amid fluctuating inflation and interest rate expectations; instead, the price has begun to rise, potentially indicating a gradual shift in market trading logic for gold in the second half of the year. However, whether this trend can continue remains to be seen. In the short term, a defensive approach is still recommended to cope with the highly volatile environment. Investors should continue to monitor the US-Iran conflict, Federal Reserve policy expectations, and whether rising interest rates will trigger liquidity risks in overseas financial markets.

The Dollar Index's Top-to-Bottom Reversal Indicates a Potential Momentum Shift

Drake Hampton

Apr 11, 2022 10:52

On Friday, the US Dollar fell versus a basket of foreign currencies after gaining more than 100 points for the first time in over two years. It reached a high of 100.20 during the session, its highest level since May 2020.

 

Despite the fact that it formed a potentially bearish closing price reversal top, it ended the week up 1.3 percent. Throughout the week, the dollar index was mostly supported by a rise in US Treasury yields and a weaker Euro.

 

The June US Dollar Index closed at 99.753 on Friday, down 0.007 or -0.01 percent. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) closed at $26.68, an increase of $0.01 or 0.02%.

 

On Friday, the US Treasury 10-year yield surpassed 2.7 percent for the first time in three years, aided by the likelihood of more aggressive Federal Reserve tightening. Additionally, this week's release of the Fed's March meeting minutes revealed that "many" members were prepared to raise rates in future months in 50-basis-point increments.

 

In other news, the Euro was under pressure as the election battle between President Emmanuel Macron and far-right contender Marine Le Pen tightened in France, the Euro Zone's second-largest economy. Macron continues to lead polls.

Technical Analysis of the Daily Swing Chart

According to the daily swing chart, the primary trend is upward. However, Friday's closing price reversal top implies that momentum is about to move downward.

 

A move above 99.745 will confirm the price reversal top at the close. This could initiate a 2-3 day adjustment. A break of 100.200 will invalidate the chart pattern and suggest the resumed uptrend. The primary trend will revert to the downside upon a break of 97.730.

 

Minor values range from 97.730 to 100.200. The nearest support level is at its 50% level, or pivot, of 98.965.

 

The critical support level is the long-term Fibonacci retracement level around 98.200.

Scenario of the Bear

Persistent movement below 99.975 indicates the existence of sellers. Taking out 99.745 will confirm the price reversal top at the close. If this generates sufficient downside momentum, expect the selling to extend towards the minor pivot at 98.965.

Scenario of Bullishness

Sustaining a move over 99.975 indicates the presence of buyers. The initial objective on the upside is 100.200.

 

If 100.200 is breached, the closing price reversal top will be invalidated, signaling the resumption of the uptrend. If buying is sufficiently strong, we may see an acceleration to the upside, with the next big objective of 100.560 – 100.930.

 

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