Market Overview:
Yesterday, US stock markets experienced a significant sell-off, marking the largest drop since August.
The Nasdaq fell by 3.02%, with the S&P 500 down 1.97% and the Dow Jones losing 1.48%. Concerns over the Federal Reserve potentially cutting rates by 50 basis points, compounded by disappointing ISM Manufacturing PMI data, sparked the sell-off. Tech stocks were hit hardest, as traders reassessed their portfolios amid rising market uncertainty.
US Treasury yields declined, with the 2-year yield dropping 6.2 basis points to 3.865%, and the 10-year yield falling 7 basis points to 3.841%, reflecting increased expectations of a Fed rate cut. In turn, the US dollar strengthened, with the DXY index gaining 0.2% on safe-haven demand. However, the dollar showed no significant movement against the Japanese yen.
Oil prices tumbled to near nine-month lows, driven by speculation of a potential deal in Libya. Brent crude dropped 4.9% to $73.75 per barrel, and WTI fell 4.4% to $70.34 per barrel. Gold prices initially dipped but later rebounded, finishing the session 0.3% lower at $2,492.60 per ounce.
Fear Gauge Surges:The VIX, Wall Street’s "fear gauge," spiked as the market braces for Friday's jobs report, with traders fearing a repeat of last month’s weak figures. Adding to the uncertainty, Nvidia faced a US Department of Justice subpoena over potential antitrust violations, further rattling the tech sector.
Economic Events to Watch Today:
The focus today will be on the JOLTS Job Openings report, expected to show 8.09 million available positions in the US.
In addition, the Bank of Canada is expected to announce a 25-basis-point rate cut later in the day, while Australian GDP data met expectations earlier, showing 0.2% quarter-on-quarter growth.
Trade Scenarios for Today – 04/09/24:
1. EUR/USD: Bearish Setup
Potential Direction: Bearish
Overall Momentum: Bearish
Pivot: 1.1069
Supporting reasons: Overlap resistance, supported by the 38.20% Fibonacci retracement, which has previously acted as a strong level of rejection.
1st Support: 1.1021
Supporting reasons: Pullback support, reinforced by the 161.80% Fibonacci extension, suggesting this area could stabilize the price after a pullback.
1st Resistance: 1.1111
Supporting reasons: Marked by pullback resistance and backed by the 50% Fibonacci retracement, indicating potential selling pressure here.
Trade Idea:
Entry: 1.1065
Take Profit: 1.1020
Stop Loss: 1.1080
2. USD/JPY: Bullish Setup
Potential Direction: Bullish
Overall Momentum: Bullish
Pivot: 145.06
Supporting reasons: Identified as overlap support, reinforced by the 61.80% Fibonacci retracement, suggesting strong potential for an upward move.
1st Support: 143.51
Supporting reasons: Multi-swing low support, where price previously found stability during declines.
1st Resistance: 149.32
Supporting reasons: Swing high resistance, indicating a key level where the price may face selling pressure.
Trade Idea:
Entry: 145.10
Take Profit: 149.00
Stop Loss: 144.50
3. XAU/USD (Gold): Bearish Setup
Potential Direction: Bearish
Overall Momentum: Bearish
Pivot: $2,494.29
Supporting reasons: Pullback resistance, suggesting this level may act as a barrier to further upward movement, leading to a potential reversal.
1st Support: $2,473.76
Supporting reasons: Overlap support, reinforced by the 38.20% Fibonacci retracement and 161.80% Fibonacci extension, which indicate a strong confluence of support factors.
1st Resistance: $2,526.17
Supporting reasons: Multi-swing high resistance, indicating a historical area where previous rallies have faced significant selling pressure.
Trade Idea:
Entry: $2,490
Take Profit: $2,474
Stop Loss: $2,500
Key Takeaways for Today:
EUR/USD: Bearish, look for shorts near 1.1065.
USD/JPY: Bullish, buy opportunities around 145.10.
Gold (XAU/USD): Bearish, short positions around $2,490.
Keep a close watch on today's JOLTS Job Openings report for further market direction, especially with Friday’s US employment data looming large.
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