Good day traders
Markets are heading into another important week, with inflation, interest rates and geopolitical tensions all in focus. US inflation remains elevated after last week’s PPI and CPI reports, which pushed expectations for further Fed tightening higher. As a result, the US dollar and Treasury yields are moving up. At the same time, renewed tensions in the Middle East continue to support crude oil, which is trading near the monthly highs.
The main event this week will be Wednesday’s Fed rate decision, together with updated economic projections and Chair Warsh’s press conference. Markets will focus not only on whether the Fed hikes rates, but also on whether policymakers signal that more hikes could follow.
Higher oil prices and yields are keeping stocks in a corrective pullback, with some more weakness still possible in the near term. At the same time, the Dollar Index could be headed towards the 99.60- 100 area.
From an Elliott Wave perspective, the move on crude still looks impulsive and incomplete. Price is approaching the 261.8% Fibonacci extension, so we should be aware that this extended wave three could eventually slow down and give us a wave four pullback. In such a case, $100 per barrel would be the first important support on dips, followed by the $95 area. But generally speaking, as long as crude oil remains in this uptrend, other markets can experience more pain.
GH
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