Analysis of the S&P 500, GBP/USD, EUR/USD and gold at new all-time highs

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Safe-haven demand sent gold to new record highs on Monday, even as the dollar surged. The indicators from the American industry unexpectedly surprised. However, due to the holidays, Monday’s price action may not be informative. Friday’s data from the US labor market will be crucial for further short-term development of the dollar.

Fundamental analysis

The Fed’s preferred measure of PCE (price index for personal consumption expenditures) inflation rose 2.5% year-over-year in February, while the core PCE price index was 2.8% over the same period. The data were broadly in line with market expectations and suggested that the recent pro-inflation surprises may have been a mere deviation from a deflationary trend.

On Monday, the data of the ISM purchasing managers’ index in the manufacturing industry were presented, which unexpectedly rose to a value of 50.3 from 47.8 points. The value of the index has moved above 50 for the first time since September 2022, indicating an expansion in the manufacturing industry.

That sparked a jump in the U.S. dollar, and according to investing.com’s Fed Rate Monitor, the odds of a June rate cut fell from 64% to 56%.

However, Morgan Stanley added: “We maintain our forecast that the first cut will occur in June. We believe that core PCE will average 0.22% month-on-month from March to May and that these lower readings will be sufficient evidence of a sustained decline in inflation towards the inflation target. ”

The Fed’s goal is to push inflation down to 2%.

This week, on Friday, we are expecting data from the American labor market, the so-called NFP, when we can expect the usual higher volatility. In addition, on Wednesday we will see how inflation in the Eurozone develops.

Technical analysis

If we stick to the lesson: trade what you see, not what you think, then everything is clear on the S&P 500 index. We see a growing trend and within a growing trend it is more profitable to speculate long than short.


Chart No. 1: S&P 500 on the H4 time frame

Entry to long opportunities would be on a pullback to some level of support. This may be the lower rising trend line that the price is approaching. Another support that has not yet been tested is around $5,190, where there is also an unfilled Fair Value Gap.

In the next sample, we have the development of the currency pair GBP/USD on a daily chart.


Chart No. 2: GBP/USD on a daily time frame

For traders whose trading strategy is based on the smart money concept and liquidity withdrawal, the attractive value will be 1.2500. First, it is a round number, which tend to be strong psychological values ​​of support and resistance. Furthermore, there is a swing low, below which there will very likely be liquidity in the form of pending orders – either stop losses of those traders who will speculate long, or sell stops of traders who will speculate short after the breakout.

For a long entry at this level, it will be ideal to wait for liquidity selection and only after creating a false break can you consider entering the trade.

In the next image we have the EUR/USD pair on a daily chart.


Chart No. 3: EUR/USD on a daily time frame

The approach could be similar to that of the British pound. Wait for a liquidity selection below the value of 1.0694 and enter long after the appearance of a false break. It will be important to pay attention to the development of inflation in the Eurozone, which will be published this week.

Finally, we look at gold, which set a new all-time high on Monday.


Chart No. 4: Gold on a weekly time frame

Monday’s fresh record high came as an unexpected expansion in U.S. manufacturing activity cooled hopes of an earlier rate cut, sending Treasury yields and the dollar higher. But sentiment for the safe haven of gold is fueled by geopolitical tensions that have risen after Iranian and Syrian media reported that an Israeli strike hit a building next to the Iranian embassy in the Syrian capital on Monday.

The first support is at $2,135, the next is at $2,076 per ounce of the yellow metal.

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The article is in Czech

Tags: Analysis GBPUSD EURUSD gold alltime highs

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