The week is
nearing its dusk with a strange sense of shivering and danger that nudge
investors to seek warm shelter for a cold night. The worsening of the market
sentiment is seen across financial markets. The S&P 500 broad market index
lost 0.6% this week to 4128 points. More iciness hit commodities and cryptos.
Brent crude prices dived by 7.0% to $80.70 per barrel, copper is down by 2.5%
to $8800 per ton, while Bitcoin tumbled by 8.2% to $27,800 per coin.
The U.S.
Dollar has become a new shelter for investors, instead of gold, that was the
most desired asset during the banking quake in March. This week the Greenback edged
higher by 0.5% to a basket of major currencies. The simple logic behind this is
that the probability of a recession in
major economies is rising, which is highlighted by the Federal Reserve (Fed)
and large financial institutions, and framed by the respective macroeconomic
data. This intensifies the perception of iciness with a strong desire to seek
shelter. Large American banks have given markets the impression that they are
built on strong sustainability and this made gold and cryptocurrencies much
less haunted in a time of a possible recession. Fed officials were pressing
with their continuous monetary tightening intentions in order to slow down
inflation, including further interest rate hikes. The Greenback benefited the
most from these vectors amid a seemingly stable banking sector and rising
recession fears.
The reporting
season will continue next week, probably prolonging inflating recession fears
and dismay. The first estimate for Q1 2023 GDP in the United States will be
released next week, and may point to further economic increases. So, the trend
for a slow landslide in the stock market and strengthening of the Dollar may
continue during next week too.
Technically,
the S&P 500 index has an upside formation with targets at 4150-4250 points
that have already been met, but without a clear reversal. The index is now in a
reversal zone and may look for an upside if it survives above 4000 points by
the end of the day. More ambitious upside targets at 4500-4600 points may
emerge in this case.
Brent crude
prices rebounded from the resistance of $86 per barrel, lowering chances for an
upside move to $94-96 per barrel. The recession scenario may become a leading
one if prices continue to fall down below $80.70 per barrel towards $40-60 per
barrel of the Brent crude benchmark. But now it is too early to put all bets on
the downside scenario as a drop in crude prices may become a simple technical
correction if they move above $78.00 per barrel.
Gold prices
are moving inside the mid-term upside formation with targets at $2000-2100 per
troy ounce by the middle of 2023. However, the tension is mounting as prices
may continue to go down to $1900 per ounce if they pass the $1980 threshold. If
the support survives, prices may lift to $2080-2100 per ounce. So, it is better
to wait until the battle over $1980 ends and prices move above $2000 per ounce.
The U.S.
Dollar is expected to be supported by the emerging upside signals in April.
Short trades for EURUSD opened at 1.06700-1.07200 with a downside target at
5000 points below the opening level and the same 5000 points for a stop-loss
order are intact. The decline of the EURUSD to 1.05000-1.05500 was used to
close half of the trade. The other half should be continued until the targets
of 1.03000-1.03500 are met.
Besides,
short positions for AUDUSD from 0.66900-0.67400 with the target of 3500 points
and the same stop-loss order could be considered interesting. Short positions
for GBPUSD from 1.23300-1.23800 with a target of 5000 points and the same 5000
points for a stop-loss order could be considered. Rising risks and market
volatility could prompt trade volumes to be reduced.