Stock Markets Rebound, Dollar On Standby

European markets flashed green thanks to encouraging data from Europe while tech shares led a rebound on Wallstreet.

Treasury Secretary Janet Yellen rattled financial markets yesterday by suggesting that interest rates may need to rise to prevent the US economy from overheating. The negative reaction witnessed across the equity space laid bare the market sensitivity to inflation expectations. Interestingly, Yellen later clarified that she was not forecasting interest rate hikes – which came as a breath of fresh air to the Technology sector. The Nasdaq 100 has gained over 0.6% this afternoon, while the S%P 500 and Dow Jones have both gained almost 0.5%.

Looking at the technical charts, the Nasdaq turned bearish on the daily timeframe after securing a solid daily close below the 13750 support. If this level transforms into a dynamic resistance, the index could decline towards 13350 – a level just above the 50-day Simple Moving Average. Alternatively, a sharp rebound back above 13750 is likely to trigger a move towards the 14000 regions.

Dollar on standby ahead of NFP

The Dollar slightly weakened on Wednesday afternoon after the U.S. private payroll data for April missed market expectations.

According to the data released by the ADP Research Institute, the USD ADP employment change came in at 742,000 last month. This was below the 850,000 market expectations but still, the highest growth seen in eight months.

Given how the main risk event and potential market shaker remains the US jobs report on Friday, the Dollar could remain on standby. Looking at the technical picture, the Dollar Index (DXY) could challenge 91.80 if a solid daily close above 91.31 is achieved. Should this level prove to be reliable resistance, a decline back towards 91.05 and 90.50 could be on the cards.

Commodity spotlight – Gold

Gold is trading within a range on the daily charts with layers of support around $1700 – $1665 and resistance at $1800. Although the MACD trades above 0, prices seem to be capped below the 100-day Simple Moving Average. There is a possibility that the precious metal remains rangebound until the US jobs report is published on Friday. Should the Dollar push higher on Thursday, this could inject Gold bears with enough confidence to drag prices below the $1770 – $1665 regions with the first level of interest at $1755.

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Lukman Otunuga

Lukman Otunuga is a research analyst at FXTM. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in the various factors affecting the currency and commodity markets. Lukman provides in-depth analysis on the global currency and commodity markets and is often quoted by leading international media outlets such as: MarketWatch, CNBC, NASDAQ, Reuters, AFP, The Guardian and Yahoo. Prior to joining FXTM, Lukman spent two years as a research analyst with international currency broker FXCM, where he focused on a technical and fundamental analysis of the global currency, commodity, and stock markets. Lukman was also responsible for leading educational seminars for international and local high net worth individuals, and has published a series of educational articles on forex trading with City A.M. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance, where he studied corporate finance, mergers & acquisitions and the role of international financial institutions