Eyes on US inflation this week

The US jobs report showed positive results with an increase in new jobs, a decrease in unemployment rate, and steady wages.
The jobs report released on Friday has caused a change in expectations regarding the first rate cut. Prior to the report, it was expected that the rate cut would happen in June. However, now the June Fed Fund Futures are indicating a less than 60% chance of a 25-basis-point rate cut and less than a 90% chance of a rate cut in July.

Since the beginning of the year, the US data has experienced many revisions, so we should keep this in mind when assessing the results. Recently, when February’s jobs report was announced, January’s data was revised 60% lower.

Eyes on inflation this week

The focus of investors and the Federal Reserve is currently on inflation, and it is expected that a report will be released later this week. The report is likely to have a significant impact on the markets, depending on any surprises it may hold. This is especially true given the recent rally in commodities.

According to Bloomberg estimates, the year-on-year Consumer Price Index (CPI) is expected to increase while the core CPI is expected to decrease. This indicates that inflation is still under control. As long as the core inflation continues to decrease, there is no reason for markets to be concerned about a possible change in the Federal Reserve’s policy.

DXY remains below 104.60

The US Dollar Index dropped below the key area of 104.50-104.60 last week, failing to maintain its gains and keeping the bearish outlook unchanged.

To maintain a bearish outlook for this week, the index needs to remain below the high of last week and below the key resistance area mentioned above. If it crosses this level, there is a risk of a change in the current trend.

On the downside, the next support area is at 104.0. A break below that support will lead to deeper declines towards 103.65.

Silver facing new resistance

Silver continued to rally last week following the other commodities, including Gold and Crude Oil. Silver started the week higher reaching as high as $28, which is the highest level since June 2021.

In the meantime, the current rally faces multiple resistance levels ahead, including $28.10 followed by $28.80 which should be watched very closely, as a break of those levels would clear the way for further gains, possibly towards $29.85.

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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