Forex and CFD Trading Analysis: Market Insights, Opportunities
Stay Ahead of the Market with Expert Analysis and Insights
Success in Forex and CFD trading often depends on selecting the right assets to trade and predicting their direction. This weekly analysis provides insights into the market as a whole, considering macro fundamentals, technical factors, and market sentiment. By examining the big picture, traders can identify potential profitable trends. Let's delve into the analysis.
Fundamental Analysis & Market Sentiment: In my previous analysis, I highlighted the following trade opportunities for the week:
- Long position on the NASDAQ 100 Index, which ended the week relatively unchanged.
- Long position on the USD/JPY currency pair following a bounce at ¥139.05 support level. However, the bounce did not occur, and this trade did not materialize.
- Long position on the GBP/USD currency pair after a strong daily close above $1.2500. The market closed 0.15% higher from that point.
Overall, the forecast yielded a 0.15% gain, with an average gain of 0.05% per highlighted asset.
Currently, market focus is on recession concerns, central bank rate hikes, and inflation, particularly in the United States. Speculation has increased about the Federal Reserve raising rates by another 25 basis points at its upcoming meeting. However, the market is pricing in only a 30% chance of another rate hike.
The stock market, particularly in the USA, continues its bull run, with the S&P 500 Index and the NASDAQ 100 Index reaching new highs. However, questions remain about the potential impact of a US recession and the extent of future rate hikes by the Fed. Despite expectations of a rate hike pause, the Fed has made it clear that it doesn't mark the end of the tightening cycle.
Copper market analysis: Investors are turning to copper as a commodity for exposure to the energy transition, driven by the surge in electric vehicles and renewable energy. Citigroup predicts a buying frenzy in the copper market as orders flood in from car-makers and grid operators. The bank expects net bullish positioning in the copper market to reach 4 million tons by 2025, equivalent to a fifth of global supply. As prices rise, substitution away from copper in traditional sectors is expected, exacerbating the demand-supply gap over the next decade. Copper's long-term outlook remains positive, attracting significant investment.
Upcoming Market Events: June 12th – 16th The following key data releases and events are expected this week:
- European Central Bank Main Refinancing Rate and Monetary Policy Statement
- Bank of Japan Policy Rate and Monetary Policy Statement
- US Producer Price Index (PPI)
- US Retail Sales
- US Preliminary University of Michigan Consumer Sentiment
- Chinese Industrial Production
- UK GDP
- New Zealand GDP
- US Unemployment Claims
- UK Unemployment Claims (Claimant Count Change)
- Australian Unemployment Rate
Technical Analysis: Let's take a closer look at some currency pairs and other assets using technical analysis.
US Dollar Index: The US Dollar Index is currently within a long-term bearish trend, although it has found some support around 102.801. Traders should exercise caution when trading against the US Dollar in the coming week. However, some currencies, such as the Canadian Dollar, Swiss Franc, and British Pound, are exhibiting relative strength.
EUR/USD: EUR/USD faces resistance around 1.0804, and support can be found near 1.0779. Last week, the pair reached a high of 1.0784.
GBP/USD: GBP/USD encountered resistance at 1.2589, just below the significant level of 1.2588. The pair starts the week overbought, and a correction towards the low 1.2400s is likely.
Gold: Gold has shown strength recently and is targeting the $2000 level. However, a downturn could see it test the $1900 level, possibly reaching the 50-week exponential moving average.
WTI Crude Oil (US Oil): US Oil is consolidating within a range and is expected to continue range-bound trading over the summer. The support level is around $67.50, while resistance is near $80.
USD/JPY: USD/JPY has support around ¥138, and a break below that level could lead to further downward movement. The upcoming Federal Reserve meeting may influence the pair's direction.
AUD/USD: AUD/USD is overbought relative to NZD/USD. On lower levels, buying opportunities may arise.
NASDAQ 100: The NASDAQ 100 remains in a strong bullish trend, with buyers dominating the market. A retest of the previous resistance around the 15,250 level is anticipated.
