The tension between U.S. and China is not yet settled and now present Donald Trump decision to withdraw from Iran nuclear deal increased the tension in the eastern region as well. It is not long since the push and pulls between the U.S. and China trade dispute created a stressed situation in the market and now the U.S. had started to mess with Iran as well. In a recent post, the newly appointed U.S. ambassador to Germany tweeted “German companies doing business in Iran should wind down operations immediately,” taking note that Germany and Iran share a strong trading relationship in the past which lead to a conflict rising situation between Germany and the U.S. as well.
On the other hand, the withdraw of U.S. form the Iran nuclear deal it seems to be increasing the risk of violence in the middle east as the cold war going on between the Iran and Israel is already getting heat and the withdraw of the U.S. can set Iran free to develop its nuclear weapon.
Also the upcoming meeting between president of United States Donald Trump and North Koran leader Kim Jong-un is going to be very important for global peace as it is expected to shape the future relationship between the U.S. and North Korea where both of the leaders are expected to come out with a decision on the denuclearizing of North Korea after the meeting. However, the past comments and words exchanged between the two leaders are not friendly at all and that is the thing which will concern the market as any unpleasant statement shared between the two can result in a highly negative outcome.
Trading Opportunities in financial markets in the upcoming week:
While these situations building the year 2018 is going to be a very important year for the global financial markets, be it commodities, bonds, equities or foreign exchange the recent moves and development had pointed on a continuation of increased volatility which we had encountered in the recent times. The increase in volatility is expected to provide good trading opportunities for short-term traders as well as investors who know how to take advantage of inverse market conditions with the right investment tool.
Here is the outlook of major currency pairs and commodity which can help a trader to make profits out of the market in the coming week by spotting the trend and reading the recent development in the global economic conditions.
With a fairly quiet last week due to the holidays in few of the European markets, the trading in the pair had majorly influenced by the movement of U.S. dollar last week. When the U.S. dollar had corrected its movement after a disappointing core inflation data the EUR/USD pair followed its movement and retreated from this year’s lows and bounced back near to the 1.1950 mark.
EUR/USD 4H chart
On the technical ground, we are expecting this pair to test the resistance zone near 1.2070 levels in coming week which is supported by January 2018 and September 2017 highs along with retracement levels. The pair had given a breakout of its recent downtrend and a potential bullish movement is around the corner. However, the upcoming German GDP numbers and ECB president Draghi speech due on Wednesday is going to be the key focus of the market where The President of the European Central Bank is expected to give some insights about the development in the monetary policy front in Frankfurt where he will honor long-time Vice President Vitor Constancio.
This pair had performed well last month due to the strong U.S. dollar which pushed the price of the pair to test the high of November 2017 and now the pair is started to take correction. The major economic event which can affect the movement in this pair is the SNB Chairman Jordan Speaks due on Wednesday this week along with the U.S. retail sales data and Federal Reserve member’s speech.
USD/CHF Daily chart
On technical ground the pair is showing some short-term bearish signals and indicating to a potential retracement near to the level of 0.9850 levels in this pair as this pair is currently in an overbought stage and the U.S. dollar index is also set to give a correction which is in line with the pair’s movement and that can result in a bearish week for this pair.
The withdrawal of U.S. from the Iran nuclear deal and imposing sanctions had resulted in an elevated Oil price which supporter the Canadian dollar and pushed the price of USD/CAD in the bearish territory again. However, after the disappointing jobs report the pair had managed to regain some movement in the last trading session of last week but the bearish pressure created by the Iran deal is still in play along with weak U.S. dollar which is expected to take correction in near term.
On the technical grounds the pair is currently showing signs of potential bearish movement which can push the price down below the near to the level of 1.2640 and a break of this level can result in a much deeper drop to near 1.2400 levels in coming weeks.
However, the movement of U.S. dollar is going to play a very important role in the movement in the pair which largely depends on the upcoming major economic reports along with Federal reserve members stance on the policy front.
Gold is the only currencies which have the potential to outperform every other commodity in global economic and political stress due to its important position in the world’s economic and financial system. It is the favorite investment option in times of stressed market situations. Gold always worked well as a safe haven investment instrument in the past and the current market scenario also makes it a very attractive investment option for long-term investors as well as for traders.
In short term, the increased tensions in the Middle East due to the withdrawal of U.S. from the Iran nuclear accord had resulted in an elevated bearish pressure in the Gold. On the other hand, the announcement of the upcoming meeting between the North Korean leader and U.S. leader had balanced the market sentiments.
Gold Daily chart
On technical ground gold is showing some bearish signals for short term and the strong U.S. dollar is putting pressure on the price which is expected to continue for short term however the elevated tensions in the middle risk can change the market sentiments and investors can shift to safe havens in near future.
Major economic reports and events of the week ahead:
The main focus of the market will be on the Retail Sales figure which is going to release on Tuesday. Retail Sales report is one of the most important reports and analysts had expected it to be 0.5% V/S 0.2% in previous month. This figure is very important and it can give to the bullish movement to U.S. dollar if the report will come positive then the expectation as the US economic system is highly related with the level of consumption and after the slow first quarter growth market is expecting the economy to speed up the growth in the second quarter.
On Wednesday, we have housing figure along with Crude Oil inventory. The housing figure is expected to be similar to the data in March.
On Thursday there is the weekly Jobless Claims release which is expected to be slightly higher than the last figure with was 211K and this time it is expected to fall at 219k. Also, there is the Philly Fed Manufacturing Index for which is going to release on Thursday.
In the market, the focus will also be on the speeches of Federal Reserve Officials which is spread across the week which will keep the speculation over the interest rate alive.
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