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It is going to be a big week in the market with plenty of things to take into consideration. But by the end of it all, I would not be the least bit surprised if we continue to stick with the reflation narrative in the bigger picture of things.
That could see risk trades keep higher, bonds continuing to trend sideways for now (long-term bias for yields to still climb), and the dollar feeling vulnerable as the technicals start to break down a little as seen since the latter stages of last week.
US PCE inflation data on Friday will be one to watch but also keep in mind that we have the FOMC meeting on Wednesday first to get through.
Adding to that will be other risk events such as the BOJ meeting, OPEC+ meeting, and key earnings releases (big tech) during the week.
The usual virus and vaccine headlines will continue to do the rounds but also just be mindful in case we hear more on Biden’s tax policies that could rock the boat a little.
That just about covers market sentiment for the week ahead.
Going to the charts, the dollar looks especially vulnerable with EUR/USD clinching a firm break above its 100-day moving average on Friday and may look towards 1.2200 next perhaps. Meanwhile, USD/JPY is sticking with the downtrend as it breaks below key trendline support and may look towards extending the downside to 107.00.
USD/CAD is also continuing its run lower to its lowest levels in almost six weeks as it treads water below daily support @ 1.2476-00 since the end of last week.
Elsewhere, Bitcoin and cryptocurrencies are staging a strong rebound to start the week with the former climbing back above $52,000 now. The start of a resurgence?
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.