The Week Ends Strong for USD and Indices

So far, Friday’s session looks very promising for stock traders. Major indices are climbing higher and traders are fighting for a bullish close of a very bullish week, which would definitely improve the long-term situation for buyers. The main boost for indices came on Wednesday from the US, where inflation data was lower than estimated. Lower inflation means a less hawkish FED, which is perceived as a positive factor for stocks.

Speaking of US inflation data, it was a shock for the American dollar, which dropped quite significantly on Wednesday. While inflation is still a hot topic for stocks, for the dollar it’s not. The USD is strengthening again today, across the board. On EURUSD it’s definitely not happening in a random place. EURUSD is currently bouncing off a crucial horizontal resistance on the 1.035 and the long-term down trendline. If EURUSD has to start a new bearish wave aiming for parity – that’s a perfect place to start.

Today’s calendar was not as busy as last Friday’s, but we still have some important numbers. The UK’s GDP came in negative but not as negative as expected. The same with Industrial and Manufacturing Productions. Although the numbers are flashing green, they’re still negative, and so was the reaction on the GBP, which today is rather weak.

Still to come we have the Prelim UoM Consumer Sentiment. The forecast is 52.5, which would mean an increase from the previous print of 51.5. Let’s see if this last bit of important data this week will be disappointing or not.

Commodities are mixed. Oil is climbing higher but WTI met a crucial horizontal resistance on the 95 USD/bbl, which can be a place to end the bullish correction. Gold, on the other hand, is having a third bearish day in a row although the changes are really small, so it is more of a flat correction than a start of a new bearish trend.