Investors
are still digesting two main issues that have been directing markets over the
last couple of days. The first is the overdue attempts of the Federal Reserve
(Fed) to tame inflation and the second is the persistent progression of European
countries towards economic disaster.
Several
influential members of the Fed, including Governor Lael Brainard, have called
for interest rates to be raised by 0.5%
in May. The Federal Open Market Committee (FOMC) Minutes which were released this
week revealed the Fed’s exact plan to tighten monetary policy by a monthly
selling of $95 billion of Treasuries and mortgage-backed bonds from its
holdings.
The U.S.
stock market was certainly not happy with this. The S&P 500 broad market
index scaled back from its weekly highs by 3% to reach 4450 points, which could
lead to a change in direction to the
downside. However, the Atlanta Fed President Raphael Bostic and Chicago Fed
President Charles Evans
came to the rescue and calmed down
investors while calling on the Fed not to rush with sharp interest rate hikes.
So, we may witness
some kind of insider trading here. Nevertheless, tension has eased in the
markets, and the S&P 500 index has resumed its upside track to the 4515-point
level by Friday afternoon.
Moreover, the index
kept its upside pattern, but it now has rather limited potential. Next week
maximum resistance could move to 4530 points, while the nearest support could
be at 4430-4400 points, or a minimum of this week. So, it is better to avoid opening
any long positions now, while it is too early to open short positions. The
chance to open short positions may appear next week.
The oil marked missed
its chance to soar to the unbelievable highs of $160-180 per barrel of Brent
crude before mid-May. Prices are gravitating to $100 per barrel, while hovering
within the support range of $96-105 per barrel. This range is likely to be
sustained for the entire month of April. Only new moves of the European nations
to ban crude and gas imports from Russia may shift this balance to the upside
before that time.
Gold prices are
holding gains at $1930 per troy ounce despite unfavourable conditions. The
negative trend for gold is likely to continue through to the end of April. Open
short positions from $1950-1960 per ounce with the target at $1840 are still
looking good.
The Greenback continues
to straighten against major currencies. EURUSD continues to lose ground as
macroeconomic performance is deteriorating in the Eurozone while economic
authorities are not willing to act accordingly to improve economic situation.
The pair is close to meeting the target at 1.07000-1.08000. Current prices are
allowing for the closure of a part of
aggressive short positions that were opened at 1.10450. The rest of these
positions could remain active for the final strike down that may lead the pair
to 1.07000 or even lower.
GBPUSD remain within
the downside pattern with a target at 1.28000-1.28500. Short positions opened at
1.31200-1.31800 reached the first target at 1.30300-1.30400. It could be wise
to close partially short positions now, while leaving the second part open in
case the pair slides to 1.29000-1.29500.