Headlines:

• Spain prime minister Sánchez calls for snap election in July
• Europe looks to inflation data again later this week
• Dollar mildly lower as we get into holiday-thin trading in Europe
• Heads up: US non-farm payrolls to be released later this week

Markets:

• AUD leads, EUR lags on the day
• European equities slightly lower; S&P 500 futures up 0.2%
• Gold down 0.1% to $1,945.17
• WTI crude down 0.2% to $72.51
• Bitcoin up 4.2% to $27,885

It was a quiet session in Europe as it is a bank holiday and UK markets are also out for the day. Add that to the long weekend in the US and it made for a rather subdued session with little focus and appetite in general.

Major currencies held in tight ranges as the dollar trades mildly lower at the balance. However, the technicals continue to favour the greenback with USD/JPY holding above 140.00 despite being down 0.3% to 140.20 levels at the moment.

EUR/USD and GBP/USD are both little changed and flattish around 1.0720 and 1.2345 respectively. Meanwhile, commodity currencies are just lightly higher as US futures are also holding light gains after weekend news that the US debt ceiling deal has been done.

As US markets are also closed, we’ll have to wait on tomorrow to officially kick start the trading week but keep in mind that month-end trading will make things a bit tricky before we get to inflation data in Europe and US non-farm payrolls on Friday.

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

On the daily chart below, we can
see that the Dow Jones has bounced from the key 32684 support as positive news on the debt
ceiling deal lifted the sentiment last Friday going into the weekend. The
market positioned for a possible deal over the weekend and sure enough, Biden
and McCarthy announced
a deal yesterday.

The Dow Jones opened with a
positive gap in electronic trading hours that soon after got closed. We may now
see a classic “sell the fact” trade where the market trades into an expected
outcome and then reverses when the outcome is confirmed. The red 21 period moving
average will be the one to watch as the sellers lately leant on that to
position for more downside.

Dow Jones Technical Analysis

On the 4 hour chart below, we can
see that as we expected last Friday, the Dow Jones bounced from the 32684
support. The long candlesticks wicks on the support were giving a clue that the
buying pressure was high there. The rally broke above the 33000 resistance and
hit today the next 33300 resistance.

From here, we should see a
pullback and then another push into the 33800 level in case the “sell the fact”
trade is invalidated. On the other hand, if we do get the “sell the fact”
scenario, the Dow Jones should fall from here back to the 32684 level and
possibly stretch beyond that.

In the 1 hour chart below, we can
see that the buyers will have the confluence of the 38.2% Fibonacci
retracement level and the red 21 period moving average near
the 33000 resistance
turned support. This will be a key buying zone with a limited
risk just below it. The sellers, on the other hand, will want to see the Dow
Jones to break below that zone to pile in for a bigger fall into the 32684
support.

This article was written by ForexLive at www.forexlive.com.

On the daily chart below, we can
see that the Russell 2000 is still stuck in the range between the 1723 support and the 50% Fibonacci
retracement level as resistance. Last week, the positive
headlines about a debt ceiling deal gave the Russell 2000 a boost going into
the weekend as the market expected a possible deal over the weekend.

Sure enough, Biden and McCarthy announced
a deal and the futures market this morning opened with a positive gap that was
soon after closed during the overnight trading. This may turn into a “sell the
fact” type of trade, so the technical levels will help with identifying that.

Russell 2000 Technical Analysis

On the 4
hour chart below, we can see that the big selloff from the 50% Fibonacci
resistance stalled near the 1740 swing low support and bounced as positive news
on the debt ceiling deal lifted up the risk sentiment. On one hand, if this is
a “sell the fact” trade, we should see the whole rally getting faded and the
Russell 2000 falling back into the 1723 support. On the other hand, if this
isn’t the case, then the price may start to rise again and reach the 50%
Fibonacci resistance at 1820.

On the 1 hour chart below, we can
see that the last Friday we got the breakout of the trendline and the
resistance zone at 1760 that eventually ended up in a strong rally for the
Russell 2000. Now, the buyers should be waiting at the 1775 resistance
turned support where they will also find confluence with the 38.2% Fibonacci
retracement level and the red 21 period moving
average. The sellers, on the other hand, will want to see the price to break
below that 1775 support zone to position for a fall into the 1760 level and,
upon an eventual breakout, target the 1723 low.

This article was written by ForexLive at www.forexlive.com.

It is a bit of a surprise announcement as the general election would already be due in December. The Sunday votes were a bit of a litmus test for Sánchez and the outcome was a resounding failure for him as the conservative People’s party saw massive gains across the country.

Spain’s stock index, the IBEX, opened higher earlier in the day but has erased all of its gains now as political risks start to rear its ugly head again.

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

Are you ready to delve into the world of Bitcoin trading? In this Bitcoin technical analysis and trade idea for May 29, 2023, I will provide you with valuable insights into the current market conditions. By exploring the upward channel and volume profile, we will help you identify potential entry and exit points for your trades. Stay informed and make educated decisions with the latest updates from ForexLive.com.

Bitcoin (BTC) has shown promising signs as it pushes upwards, and it’s essential to consider its correlation with NASDAQ and S&P 500 futures. These assets often influence BTC’s performance, so monitoring their trends can provide valuable clues. Currently, both NASDAQ futures and S&P 500 futures are performing well, indicating a potentially open bullish gate for BTC-USD.

BTC looks bullish but where can I enter?

So, where should you enter the market? One option is to consider the 20 EMA (Exponential Moving Average) on the daily timeframe. At the moment, the 20 EMA is located at 27,296. Placing a long position near this level could be a strategic move. To manage risk effectively, set your stop-loss below the value area low, which is around 24,800. By doing so, you can limit potential losses.

Suppose you are comfortable trading with low leverage. In that case, you may consider aiming for the top of the channel, which currently sits near 35,000. However, keep in mind that higher leverage entails greater risk, and it may not be wise to risk more than ten percent of your capital. Adjust your position size accordingly to align with your risk appetite. Check out the video for the Long trade ideas showing this.

Alternatively, you can set your stop-loss if the price crosses down the channel. This approach reduces risk and offers a potential reward-to-risk ratio of 7.19 to 1. With this strategy, you aim for the significant 35,000 price level, providing an attractive reward. Partial profit-taking near the 30,000 mark, indicated by a previous high, could be a prudent move while still keeping a portion of your position open.

For those willing to take more frequent trades, exploring lower time frames could be an option. However, be aware that this approach may increase the likelihood of being shaken out of the trade. By setting your stop-loss just below the green trend line on a lower time frame, you can have a closer stop. If you return to the daily timeframe, your risk will decrease to 2.19 percent, while the potential reward-to-risk ratio remains nearly 5 to 1. Consider taking partial profits around 30,000 to lock in gains.

Remember, these strategies provide guidance and orientation. Depending on your risk tolerance and trading style, you may choose to adapt and adjust your approach accordingly. It’s crucial to stay updated with market developments, so regularly check ForexLive.com for additional comments, perspectives, and possible updates in the comment section.

In summary, Bitcoin appears to have a bullish outlook as long as it remains within the upward channel presented in the above technical analysis video. However, a bearish premise may develop if BTC crosses down and closes two consecutive daily candles below the value area high of 24,750. In such a scenario, a potential visit to the point of control near 16,750 USD cannot be ruled out. Stay informed and make wise trading decisions based on reliable information.

Have a fantastic week, and don’t forget to stay tuned to ForexLive.com for more insights and updates on the exciting world of Bitcoin trading

This article was written by Itai Levitan at www.forexlive.com.

The debt ceiling charade is all over.

This was the 79th time it’s been raised since 1960 and the US still hasn’t defaulted. Remember that next time.

The US has averted a major economic crisis by raising its debt ceiling as part of a new two-year budget agreement that echoes the structure of the past three such deals. The agreement keeps non-defense spending roughly flat for the current fiscal year and 2024 and removes budget caps after 2025.

The spending levels reached reflect those the Biden administration had negotiated at the end of the last calendar year, thereby averting a potentially catastrophic 22% cut in non-defense discretionary priorities and a decade-long set of caps. The budget deal includes full funding for veterans‘ medical care and elevates funding for the toxic exposure fund over 2024 levels.

Despite Republican requests, the agreement does not incorporate any alterations to Medicaid. It does, however, modify SNAP (food stamp) aid time limits, gradually implementing and then sunseting them for recipients up to age 54. Additionally, reforms are introduced to lower the number of vulnerable people of all ages subject to time limits.

The Inflation Reduction Act funding remains intact for clean energy funds for low-income Americans and pollution cleanup. As the US Supreme Court considers a significant student debt case, the resumption of student loan payments has been put on hold.

The agreement has a few stipulations for lower-income Americans, including the introduction of extra work requirements. There’s uncertainty around funding for the IRS, but House Minority Leader Kevin McCarthy announced there are no new taxes or programs in the deal. He hailed it as achieving ‚historic reductions in spending‘.

They’re calling it an ‚agreement in principle‘ so there’s always a chance some renegades could derail it but here are the main points:

• Keeps non-defense spending ‚roughly flat for current fiscal year and 2024
• Structure of two-year US budget deal is consistent with agreements reached during last three debt limit battles
• There are no budget caps after 2025
• Agreed-upon spending levels reflect what Biden admin had negotiated at the end of the last calendar year
• Averts a 22% of non-defese discretionary priorities and 10 years of caps
• Fully funds veterans medical care and increases funding for toxic exposure fund over 2024 levels
• Includes no changes to Medicaid that had been sought by Republicans
• Phases in and then sunsets SNAP (food stamp) aid time limits to people up to age 54
• Also includes reforms reducing number of vulnerable people of all ages subject to time limits
• Inflation Reduction Act funding preserved for clean energy funds for lower income Americans and pollution cleanup
• Student loan payments will not resume while US Supreme Court considers student debt case
• It includes some extra work requirements for the poor
• It’s not clear if funding for the IRS has been cut
• McCarthy says no new taxes or programs in the deal and that it has ‚historic reductions is spending‘

I can’t see anything here that will move markets. Bitcoin rose about $300 after the deal so I take that as a sign of ‚risk on‘ for markets but a deal should have been largely priced in before the weekend.

This article was written by Adam Button at www.forexlive.com.

A debt ceiling deal isn’t done yet but it’s safe to trade as if it is. Here are the latest comments from US House majority leader Kevin McCarthy.

• We do not have a deal yet
• June 5 date doesn’t change things
• We’ll get debt ceiling deal when it gets right
• Have not dropped permitting reform from debt ceiling negotiations
• ‚Firmly believe‘ all Americans will like debt ceiling bill
• Can meet June 5 deadline

I don’t doubt there will be one more scare as the details are hammered out but — like I’ve said from the beginning — the US was never going to default and this whole thing is the longest-running joke in politics. Here’s a poem that captures my feelings with some help from ChatGPT:

In the heart of the nation where the star-spangled flies,
A cycle persists, underneath the blue skies.
A dance as old as time, with a tune familiar,
A tale of market fears that feel peculiar.

Through the halls of power, a debate is heard,
Over numbers and figures, every single word.
Every few years, when the ceiling is near,
The markets tremble, succumbing to fear.

As the debt approaches the rigid, set cap,
The nation holds its breath, bracing for a mishap.
Market bears and bulls, they squabble and fight,
In the shadow of potential default’s twilight.

From Wall Street to Main, fears wildly grow,
As the words of doom in the media flow.
„Default,“ they whisper, with a chilling dread,
But history’s lessons are often left unread.

For since ’60, the count stands at seventy-eight,
Times when the nation was in a similar state.
Each time, the ceiling, it rose once more,
And the wolf was banished from the door.

In Congress, they bicker, and the clock ticks on,
But in the eleventh hour, an agreement is drawn.
The ceiling rises, the fears allay,
The United States pays its dues, saves the day.

Market’s heartbeat stabilizes, sighs a relief,
As the nation escapes the defaulting grief.
It’s a dance we’ve danced, again and again,
A well-worn path, known by market men.

So as the fears rise, with the ceiling in sight,
Remember the cycle, in the soft moonlight.
For although it teeters on a precarious ledge,
The US always steps back from the edge.

This article was written by Adam Button at www.forexlive.com.

• US April PCE core inflation 4.7% vs 4.6% expected
• US April durable goods orders 1.1% versus -1.0% expected
• US advance good trade balance $-96.77 billion versus $-85.7 billion expected
• US April wholesale inventories -0.2% vs +0.0% expected
• Fed’s Mester: Fed has made slow progress on inflation. It’s concerning
• Republican House negotiator says ‚major issues‘ still not worked out on debt ceiling
• Atlanta Fed GDPNow tumbles to 1.9%
• ECB’s Makhlouf: Haven’t seen wage settlements that raise concerns on a eurozone level
• Dallas Fed April trimmed mean PCE price index +4.4% vs +3.8% prior
• Canadian government fiscal year deficit cut in half
• Goldman Sachs and BofA see a ‚close call‘ on June Fed but market now sees 70% hike odds
• Euro longs retreat in the latest week of CFTC data
• Baker Hughes total rig count down -9 in the current week
• IMF sees US growth at 1.7% this year and 1.0% in 2024
• IMF raises Italy’s 2023 GDP forecast to 1.1% from 0.7%

Markets:

• WTI crude oil up 96-cents to $72.79
• Gold up $6 to $1946
• US 10-year yields flat at 3.81%
• S&P 500 up 1.4%
• GBP leads, JPY lags

The odds of a June Fed hike have risen to 70% from 50% today and that tells the story in FX, with the dollar gaining, though not exactly in a straightforward way. Both the pricing numbers and the consumption numbers were hot in the PCE data and the big winner was USD/JPY, which hit a new high for the year.

Initially it was a broad USD rally but it was more back-and-forth later as the market also weighed the stronger economic prospects. Flows into US tech are also a seemingly-unstoppable force as well, with the Nasdaq gaining another 2.2% on the AI boom.

The pound managed to hold off the US dollar but fell 90 pips from its highs before bouncing late.

Monday is a holiday in the US so there was some position squaring into the weekend, particularly in bonds as longs didn’t want to be caught offside on a debt ceiling deal and a wave of Treasury issuance. Yellen pushed back the deadline to at least June 5, so the charade may go on for another week.

The bigger story though is that the dollar appears to be breaking out on a number of fronts and there’s no US weakness yet in the data. Will next Friday’s non-farm payrolls report change that? Tune in to find out.

Have a good (long) weekend.

For those in the UK and US.

This article was written by Eamonn Sheridan at www.forexlive.com.

Treasury Secretary Janet Yellen has conjured a few extra days for US politicians to grandstand. She now says that extraordinary measures won’t be exhausted until at least June 5.

House Republican leader McCarthy has said his deadline is June 1 but you can never trust a politician.

In any case, a deal will get done and the US won’t default, the same as always. I think the market has already moved on.

This article was written by Adam Button at www.forexlive.com.

There were non-stop flows into US stock markets on Friday, led by the Nasdaq:

• S&P 500 +1.3%
• Nasdaq Comp +2.2%
• DJIA +1.0%
• Russell 2000 +1.1%
• Toronto TSX Comp +0.8%

On the week:

• S&P 500 +0.3%
• Nasdaq Comp +2.4%
• Russell 2000 flat
• Toronto TSX Comp -2.1%

Broadcom was a big winner on Friday, gaining 11% with Qualcom and Intel making some headway as the chip rally broadens out.

This is the fifth week in a row of gains for the Nasdaq and it’s very much looking like the double bottom in Oct/Dec was the low.

This article was written by Adam Button at www.forexlive.com.