Market Analysis

The US dollar is trading flat

FOREX

The US dollar is trading flat so far this week after the gains of last week sparked by the Fed’s pivot to a more hawkish stance. It appears that investors are now pausing and looking for further direction from the American central bank. Later today Jerome Powell will offer his testimony to Congress, a moment that may end up offering further clues on the Fed’s true stance and, depending on the tone of Mr Powell’s address, has the potential to either reignite the dollar rally or halt it.

Ricardo Evangelista – Senior analyst, ActivTrades

 

GOLD

Gold’s bearish price action since the beginning of the month is slowing down as the price loses more and more directionality. The market is consolidating between $1,770 and $1,800 following last week’s sell-off as investors struggle to get more clarity on the near-term outlook for gold. The bearish pressure is likely to remain as long as the US Dollar keeps on registering higher highs and investors will cautiously monitor the next move on the greenback following Jerome Powell’s testimony today and reorganize their exposure to safe havens accordingly. Technically speaking, there is no reversal pattern yet and the current consolidation is trending towards an extended correction so far. A plunge through the $1,760-$1,770 zone would open the way for the price to drop to around $1,735 or even below $1,700.

Pierre Veyret– Technical analyst, ActivTrades

 

EUROPEAN SHARES 

Share markets fluctuated in Europe on Tuesday, with most benchmarks holding yesterday’s gains amid strengthened market sentiment. Even if investors were recently torn between the economic recovery and the idea of dovish monetary policies to come, Jerome Powell managed to reassure markets about the temporary effect of mounting inflation ahead of his testimony later this afternoon. This sentiment is shared by other Fed officials and this unity is lifting market sentiment towards riskier assets this week.

 

Meanwhile in Europe, cyclical values and other energy shares are offsetting losses in the tech sector with most indices in green territory. This is not the case in Frankfurt where the DAX-30 Index fluctuates around 15,560pts, between the resistance at 15,655pts and the support at 15,535pts. The short-term technical configuration remains bearish so far, following the invalidation of the mid-term bullish channel, and the market will have to clear 15,655pts to catch up with historical highs at the edge of 15,800pts.

Pierre Veyret– Technical analyst, ActivTrades

 

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