Despite tensions in the Middle East over the weekend, markets rose across Europe and Asia. US futures point to a positive opening bell today.

Markets, while predicting no further escalation, are also cautious in their optimism. Many reports indicate minimal damage, which could potentially lead to a phase of de-escalation. However, traders are advised to exercise great caution as geopolitical tensions are typically unpredictable.

Eyes on US retail sales today

Indicator Forecast Prior
Retail Sales MoM 0.4% 0.6%
Retail Sales Ex. Auto MoM 0.5% 0.3%
Retail Sales Ex. Auto & Gas 0.3% 0.3%

Traders will closely watch the upcoming economic releases in the US session.

A positive report is expected, but there might be revisions as in previous months.

DXY bullish outlook strengthens

The US Dollar had a strong finish in last week’s trading, as expectations for rate cuts in June and July decreased after the release of recent inflation data. Although this inflation data is subject to revision, the US Dollar Index is now considered to be in a stronger position. However, there is still the possibility of a retracement.

The Federal Reserve’s key focus remains on Core PCE. If it slows down, market expectations are likely to shift, resulting in a risk management phase until further notice.

The US Dollar Index technical indicators are heavily overbought and require a retracement before considering a long position.

Gold below $2350

Gold peaked at $2432 last week but closed lower at $2344 on Friday. However, it started this week higher at $2370 due to developments in the Middle East over the weekend.

In the meantime, it is highly possible to close the gap in the coming hours, provided there is no escalation. The next support levels are 2344, followed by 2340 and 2332.

Yen weakens, approaching the 154.0 level

The Japanese Yen has continued to weaken since the beginning of the Asian session today. USDJPY is near 154.0, the highest level since 1990, which increases the likelihood that the Bank of Japan will be forced to intervene at any moment.

 

 

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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