The US dollar retreated slightly after strong economic data from the United States. Data by the commerce department showed that durable goods orders rose from 0.4% to 0.7%. That was a bigger increase than the median estimate of 0.1%. Core durable goods rose from 0.2% to 0.7%. Meanwhile, surprise data showed that pending home sales rose by 0.7% in May after falling by 4% in the previous month. Other housing numbers published last week like new and existing sales dropped in May. The next key data to watch will be the upcoming American consumer confidence. Expectations are that confidence dropped to 100 as the cost of doing business rose.
The Dow Jones, Nasdaq 100, and S&P 500 indices moved sideways as last Friday’s rally fizzled. The three indices were little changed as some investors took profits. Investors are also assessing the recent statements by the Federal Reserve. The bank has committed to hike interest rates in the coming months in a bid to fight inflation. Stocks also wavered after a relatively weak report by JP Morgan. The survey of 1,500 companies with revenues of between $50 million and $500 million shows that only 19% of them were optimistic about the economy.
The price of crude oil rose as the G7 members continued their meeting. The leaders agreed to increase forces on high alert to 300,000 in response to the Russia’s invasion of Ukraine. Most of these reserves will be stationed near Russia while countries will dramatically increase their defense spending. The members also decided to impose new sanctions on technology used to manufacture weapons. These new sanctions and posture by NATO could push Russia to influence the oil market since most NATO members are struggling with high gas prices.
The XBRUSD pair has been in a bullish trend for the past few days. It is trading at 110.55, which was the highest point since June 27. On the four-hour chart, the pair has formed a bearish flag pattern, which is usually a bearish sign. It also remains slightly below the 25-day moving average. Also, it has moved below the lower side of the ascending channel shown in white. Therefore, the pair will likely resume the downward trend as bears target the lower side of the flag at 107.
The EURUSD pair rose after a hawkish statement by Christine Lagarde. The pair rose to a high of 1.0618, which was the highest level since June 13. On the four-hour chart, it moved above the upper side of the ascending triangle pattern. It has also moved above the 25-day moving average while the DeMarker indicator moves above the overbought level. Therefore, the pair will likely continue rising now that it has formed a bullish breakout.
The USDJPY pair moved sideways and is hovering near its highest point in over 24 years. It is trading at 135.33, which was lower than the year-to-date high of 136.70. It has moved slightly below the 25-day moving average while the momentum indicator has tilted upwards. The Relative Strength Index has moved to the neutral point. It will likely remain in this range for a while.