Headlines:

• Market fears abate slightly to start the new week
• Japan top currency diplomat says intervention is an option during excessive FX moves
• BOE’s Pill: We have done a lot on interest rates
• Eurozone August trade balance €6.7 billion vs €6.5 billion prior
• Germany September wholesale price index +0.2% vs +0.2% m/m prior
• SNB total sight deposits w.e. 13 October CHF 483.8 bn vs CHF 479.9 bn prior
• China economy expected to have slowed down in Q3 – poll

Markets:

• NZD leads, CHF lags on the day
• European equities a little higher; S&P 500 futures up 0.3%
• US 10-year yields up 7.3 bps to 4.701%
• Gold down 0.8% to $1,915.09
• WTI crude up 0.1% to $87.82
• Bitcoin up 2.8% to $27,737

There wasn’t much in terms of major headlines in European trading today as the Israel-Hamas conflict continues to rage on. But the fears surrounding it are abating slightly, as the two big movers were gold and Treasuries as both were offered during the session.

Gold fell down by over 1% at one point to $1,908 but is now keeping lower still by roughly 0.8% to $1,915 on the day. Meanwhile, 10-year Treasury yields slowly advanced from 4.67% to 4.70% now after an opening gap higher amid some unwinding of the flight to safety from Friday.

That being said, there were not any much bigger retracements elsewhere with US futures hanging on to tentative gains after a bit of back and forth during the session. Then, we have oil which remains flattish as traders are still sorting out the outlook after US president Biden warned that any Israeli occupation of Gaza would be a ‚big mistake‘.

As for major currencies, the dollar is seeing a mild retreat but nothing to really shout about. EUR/USD is up 0.2% to 1.0530 while USD/JPY is flattish at 149.55, so there isn’t much for traders to really get excited about.

The big mover is the kiwi with NZD/USD up 0.6% to 0.5920 and held gains throughout after the opening gap higher, following the NZ election results here.

This article was written by Justin Low at www.forexlive.com.

Last Friday, the market sold off as the University of Michigan Consumer
Sentiment report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war. This could lead to a relief rally and the technical levels can help in
identifying the likely entry and exit points.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite last Friday fell into the upward trendline where we
have also the confluence with the
red 21 moving average. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for another rally into the major downward trendline
around the 13800 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the support zone
around the 13370 level where we have further confluence from the red 21 moving
average, the 50% Fibonacci retracement level
and the previous resistance turned support. This is
a very good level for the buyers to position for a rally. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will likely pile
in even more aggressively to extend the drop into the lows and target a
complete breakdown.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that more
conservative buyers might want to wait for the price to break above the counter-trendline
to join the rally into the major downward trendline, while the sellers could
use it to target the break below the 13370 support with a better risk to reward
setup.

Upcoming
Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.

This article was written by FL Contributors at www.forexlive.com.

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This article was written by FL Contributors at www.forexlive.com.

There’s not much going on so far in European morning trade apart from a slight retracement to the Friday moves in gold and bond yields. Major currencies are not much changed while oil is also flattish, with stocks hanging on to tentative gains for now. S&P 500 futures are up 0.2% while European indices are mostly little changed.

The price action so far on the session has been rather sideways and that speaks to the lack of conviction upon the return from the weekend.

As much as tensions surrounding the Israel-Hamas conflict aren’t getting much worse, there’s still much uncertainty in the region at the moment. And that is likely keeping traders on edge for now.

We’ll have to see what Wall Street makes of this later today but as mentioned earlier, the longer we go without any major escalation in the developments in the Middle East, that is every minute that markets will start to breathe a bit easier to step out of the shelter since Friday i.e. adding confidence to the unwinding of the risk-off flows.

This article was written by Justin Low at www.forexlive.com.

Last Friday, the market fell as the University of Michigan Consumer
Sentiment report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war “provided that Israel does not dare to attack Iran”. This could lead to
a relief rally and the technical levels can help in identifying the likely
entry and exit points.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
found resistance around
the red 21 moving average and the
previous swing level. The buyers should still be targeting the resistance
around the 34000 level where we have a much stronger confluence from the
previous swing low level, the 61.8% Fibonacci retracement level
and the major trendline. In
fact, if the price continues higher, we can expect the sellers to pile in even
more aggressively around the resistance to position for another selloff into
the lows with a better risk to reward setup.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the buyers are
stepping in around the 33500 level as they have the confluence from the 38.2%
Fibonacci retracement level and the red 21 moving average. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will start to
pile in to target the 32597 support.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the support zone around the 33500 level and the rangebound price action
as the battle between buyers and sellers is starting to heat up. Watch what
happens around this level as a bounce should translate into another rally into
the resistance zone, while a break lower is likely to trigger a selloff into
the 32597 support.

Upcoming Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.

This article was written by FL Contributors at www.forexlive.com.