U.S. stock market fell despite inspiring first quarter corporate
reporting from Coca-Cola and Harley-Davidson. Stock indices are under strong
pressure without any particular reason that is clear for investors’ majority.
European stocks fell too. The U.S. Dollar that should be strengthening
as a safe haven instrument was sold off on Monday losing around 0.5%, which is
a lot for a single day, especially Monday.
The reason for such decline could be geopolitics, but it is not clear
since gold prices are also under pressure. It could a market noise or a
short-term drop that will be immediately bought out as it was many times before
this year.
To get a clear answer we should wait for the S&P 500 broad market
index to return to last week’s highs at 4175 points to reconfirm markets
strength, or reasons for the decline would emerge.
There is no important macroeconomic data on Tuesday except labor
statistics in the United Kingdom. However, the British Pound has depleted its
upside reserves and is more looking for correction.
Investors will continue to monitor earning reports in the United States
that will be presented by Johnson&Johnson, Procter&Gamble and streaming
giant Netflix. These companies are likely to continue outstanding first quarter
reporting season for American companies, and may help stock market to recover.
The landmark of 4175 point is of high importance for the S&P 500 index.
This level should not be left alone for a long period as the target at 4500
points may turn overdue. If the index will fail to return to this landmark that
would dring it down to the support level at 4040 and 3930 points.
The volatility in the oil market is rather tamed with Brent crude prices
holding at $67 per barrel. If crude reserve in the U.S. due to be published on
Wednesday would be down for another week Brent crude prices may jump to $68.1
per barrel, where sell positions with targets at $64.90 and $63.90 per barrel
would be justified.
Gold prices hit $1790 per ounce at the beginning of the week. Prices
could go further but rising yields on U.S. Treasuries limited such efforts. So,
gold prices have lost its steam being close to the resistance level at $1800
per ounce. If the yields of 10- year Treasuries would not step back from 1.59%
gold prices may plunge below $1750 per ounce.
The overall
picture in the FX market looks overwhelmingly clear as the EURUSD reached its
first resistance level at 1.20500, where short-term sell positions might be interesting
to open. If the pair rises to the next resistance at 1.21500 even a mid-term
sell positions would be interesting to consider.
The GBPUSD
is already in the sell zone with the least resistance level located at 1.39900
and the closest support level at 1.38600. So, is it about time to open sell
orders.
The
USDJPY is close to its first support level at 107.60. It this supports would be
crashed the pair may plunge to 103.60. However, if the Greenback shows its
strength the pair may recover to 109.00. The last scenario is seen as less
likely.