Summary:
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S&P 500 (US500) rebounds and climbs back to the recently broken support level
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EURUSD maintains its trading range despite recent hectic price moves
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Silver benefits from investors’ concerns and fulfills the range of the break from the sideways trend
US500
Christmas holiday has already came to an end and markets are back into full swing. Concerns over global economic slowdown in the quarters to come combined with mixed US data impacted stock markets severely. Nevertheless, Wall Street tried to recoup part of the losses in the past few days. In turn, the S&P 500 (US500) crawled back into 2550-2600 pts area that served as the support level previously. Is it just a minor correction in the downtrend or are we experiencing the beginning of a longer-lasting recovery? We shall know more next week as the major US companies will begin to publish their full-year earnings reports. Moreover, the resumption of the US-China trade talks is also a positive sign but the ultimate impact on the global economy will depend on whether World’s biggest economies can reach an agreement or not. From the technical point of view the aforementioned support zone should limit further gains. This is especially true as the US500 decline from the latest ATH exceeded 20% suggesting that the index dropped into bear market territory.
Source: xStation5
EURUSD
The US dollar underperformed recently as investors digested a potential pause in the monetary tightening cycle. At the beginning of the third quarter of 2018 markets expected Fed to raise interest rates 3 times next year while now market odds seem to favour a rate cut in 2019! The main currency pair still trades within consolidation ranging 1.1300-1.1480. However, price moved towards the upper limit of the range recently. Interest rate derivative market hints at much higher levels and USD failed to resist downward pressure even after release of a stellar jobs report on Friday. Having said that, we may be observing a shift in the USD sentiment. From the technical point of view, bulls may find support at the 50-period moving averages channel. Taking a pause there to regroup may allow buyers to conduct a successful attempt to break above the 1.15 handle.
Source: xStation5
Silver
Last but not least, let’s take a look at the silver market. Precious metals benefited significantly in the past few days thanks to weakening USD as well as increased concerns over the condition of the global economy. Moreover, declining US yields also made precious metals more attractive. However, the chart suggest that silver may halt its rally near the current levels. The commodity fulfilled the range of the potential break from the consolidation range started in August 2018. Additionally, this range coincides with the 50% Fibo level of the downward move started in mid-2018. Combining it with the significant momentum that accompanied the latest rally we may experience bears’ dominance in the days to come.
Source: xStation5
