Last week, the global markets suffered due to high geopolitical tensions. Commodities rose significantly while stocks tumbled, and the dollar held its gains. However, since there were no escalations over the weekend, the markets began this week in a better mood. Yet, this could change as many key economic releases and corporate earnings are scheduled for this week. Traders are advised to remain cautious about their risk level.

Earnings this week

The Magnificent Seven, a group of tech giants consisting of Microsoft Corp., Tesla Inc., and Facebook parent Meta Platforms Inc., are expected to release their earnings in the coming days. Investors are hopeful that these companies will report higher profits, which could confirm the positive role of AI and potentially outpace the overall S&P500 earnings growth.

Company EPS Est. Revenue Est.
MSFT $2.82 $60.84B
GOOG $1.51 $78.69B
META $4.32 $36.14B
TSLA $0.49 $22.27B

Eyes on US Core PCE this week

Investors will be closely watching the Core PCE Price Index, the Federal Reserve’s preferred inflation gauge, towards the end of this week despite other economic releases.
The recent CPI data confirms that inflation is sticky and could rise further, so the new data should confirm or deny this trend.

If the Core PCE index shows an unexpected increase, the chances of multiple rate cuts by the Federal Reserve this year will decrease. It may bring down the estimates to just one rate cut. However, if it shows a slowdown, it will increase the likelihood of a rate cut in June or July.

Traders should exercise caution and avoid rushing to conclusions in uncertain times. It’s wise to wait until things become clearer.

DXY remains above 106.0

The US Dollar Index closed slightly higher last week, trading above 106.0 throughout, nearing its key resistance area of 106.65, the highest level since October last year.

Despite the recent bullish trend in the Dollar index, the technical indicators suggest that the market is heavily overbought. This means that a period of downside retracement is more likely to occur before the uptrend resumes. As we have previously mentioned in our reports, this retracement could provide a buying opportunity for interested investors.

Gold failed to break above $2400

Gold prices have increased for five consecutive weeks. However, it has been unable to maintain a value above $2400. Furthermore, the weekly chart shows a pattern of lower highs, and the daily chart displays reversal candles, indicating that a downward retracement may be underway.

In order to confirm the downside retracement, it needs to close one day below $2350. If this condition is met, it could result in another leg lower in the coming days. The next support levels are $2322 and $2289 respectively.

 

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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