New Week Starts With Green on Screens
23 May 2022
It appears that sentiment has shifted to optimistic recently, benefiting equities and riskier assets, such as commodities or other currencies than the USD.
EU indices remain less vulnerable as the ECB is in no rush to hike rates, while the US equity index posted new cyclical lows last week, confirming the bearish trend. However, we are seeing substantial gains across the board during today's London session.
Earlier on Monday, President Joe Biden reaffirmed that tariff reductions against China were being considered, adding that a US recession was "not inevitable."
Later in the day, the Federal Reserve Bank of Chicago will release its National Activity Index for April. Additionally, the World Economic Forum's annual gathering begins in Davos, Switzerland.
Oil prices rose slightly on Monday, supported by expectations of increased demand as Shanghai plans to reopen in early June after a two-month closure and ahead of the start of the primary driving season in the United States and worldwide.
Major top in USD?
The USD has eased significantly in the FX market, pushing the EURUSD pair above 1.06 as it looks like the dollar bulls are exhausted. Therefore, further profit-taking could bring the euro toward the significant 1.08 resistance.
At the same time, the GBPUSD pair advanced above 1.25 for the first time in three weeks, while the large head and shoulders pattern in USDJPY remains intact, likely sending the pair notably lower if it breaks below 127.