25.07.2024: Following hunch on Wall Street, USD may comply with go well with. EUR/USD, Brent crude, and RUB
Hasty trading decisions never bring success in the market. This rule is carefully followed by experienced traders. For this reason, financial markets have come to a standstill today.
Investors are looking forward to important news from the United States. The first estimate of GDP growth for the second quarter is released today. This report is sure to have a significant impact on the changes in monetary policy by the Federal Reserve. The US economic growth rate is expected to accelerate to 1.9% in the previous quarter.
The US dollar index, which reflects the greenback’s dynamic against a basket of six major currencies, slowed down its growth near a 2-week high and pulled back slightly to 104.30.
Investors are discouraged that several US top companies reported downbeat corporate earnings yesterday, which triggered a collapse in the stock market. The S&P 500 and Nasdaq Composite recorded their steepest declines since 2022, induced by a sell-off in high-tech stocks.
Poor quarterly results from Tesla and Alphabet sparked a sell-off. Other large-cap tech companies such as Nvidia, Apple, and Microsoft followed suit. Weak quarterly performance of high-tech giants has raised doubts about the sustainability of the AI-driven bull market.
Meanwhile, official statistics are not yet ringing the alarm bell, on the contrary. The S&P Global US PMI showed that overall business activity remained robust in the back of faster growth in the services sector. On the flip side, manufacturing unexpectedly contracted for the first time this year.
In parallel, the American mass media began speculations on the likelihood of cutting the central bank’s key interest rate already during the policy meeting on July 31. Investors are likely to price in this idea, thus putting pressure on the market. Such prospects are bearish for the US dollar.
In the meantime, the EUR/USD pair is moving in a correctional phase from the psychological level of 1.0950. The instrument has already fallen by more than 100 pips. This move still fits into the uptrend. If we assume that the correction is still going on in the market, the price could reach the level of 1.0800 as part of the inertial movement. However, based on technical signs that the euro is oversold, our analysts suppose that traders will gradually close short positions. So, the euro/dollar pair could resume its growth.
As for oil prices, yesterday we assumed speculative activity in the market. And now there is practically no doubt about this. Judging by data from the US Department of Energy, oil reserves have decreased by another 3.7 million barrels. The negative trend has been going on for four weeks in a row. During this time, US crude inventories have shrunk by 24.2 million barrels. So, the talk about a decrease in demand has nothing to do with reality.
Meanwhile, oil prices have been trading flat at best. By and large, oil has been extending its slide. This disconnect from reality can be explained entirely by speculative activity. Therefore, oi prices may spike at any moment, followed by a rapid rally. The only problem is that it is impossible to say exactly when it will happen.The level of 80 can serve as support for sellers, where the Brent price has declined recently. However, based on the theory of inertia, speculators may neglect all technical signals.
The ruble, as expected, is extending its strength at a rapid pace. As a result, the US dollar fell below 87 rubles. The tax period is not the only factor in the ruble advance. Judging by the market behavior, the tax season has entered its peak phase.
But the market also remembers that the Bank of Russia is holding a policy meeting tomorrow which is likely to end up with another rate hike to 18% per annum. This move will also support the ruble.
00:00 INTRODUCTION
00:14 TRADERS ARE WAITING FOR
IMPORTANT US NEWS
00:41 USDX
00:55 S&P 500
01:42 OFFICIAL STATISTICS OF USA
02:07 US MEDIA ABOUT RATE CUT
02:29 EUR/USD
03:10 CRUDE OIL STOCKS IN THE USA
03:49 BRENT
04:32 USD/RUB
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