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Social media companies were hit hard yesterday, as Snap dropped more than 43% in yesterday’s session alone, and is down by 85% since its last September peak. Other companies that make money with digital advertising fell along with Snap. Facebook lost 7%, Alphabet lost almost 5%, Twitter more than 5.50% and Pinterest more than 23%!

One of the rare companies that rebounded was Zoom, its shares jumped more than 5% after reporting a better-than-expected sales forecast beat.

But zooming out, the social media plunge pulled Nasdaq lower yesterday, as the technology-heavy index slid more than 2%, as the S&P500 lost 0.81%, while the Dow eked out a tiny 0.15%.

Fresh earnings from retailers were mixed. Abercrombie took a hit after downgrading its sales outlook, leading to a nearly 30% plunge at yesterday’s session, Best Buy cut its guidance, though the new guidance was still better than the Wall Street estimates – which certainly helped saving the day for Best Buy, while Nordstrom rose its full-year forecast, as the company predicted shoppers will continue to shop despite higher prices.

Overall, the US equity futures are in the positive again, hinting that we may see another positive attempt, in the middle of a storm.

US yields ease

Good news is that we see a further easing in the US 10-year yield, hinting that a significant rise above the 3% level is not on the cards for now. That’s relatively good news, and could help the downside pressure in risk assets ease, but not stop.

As long as the positive pressure on food and energy prices remain, the inflation worries will stick around, and the energy stocks will continue providing a solid hedge to portfolios.

On Tuesday, the US energy stocks outperformed their peers; Exxon Mobil and Chevron rose, Occidental Petroleum eased (but only around 0.50%), while in the UK, BP and Shell were softer but the British oil giants remain on a very strong positive trend, suggesting that the price pullbacks offer interesting dip-buying opportunities rather than a cause for concern.

Gold gains on softer yields

Gold extended gains to $1870 per ounce, and the softer US yields hint that we may see further gains in the precious metal, especially when the predictability in the equity markets remains poor and drives cash into safe haven assets.

The Dollar Index eased below the 102 mark

The EURUSD extended gains to 1.0750. After Christine Lagarde’s blog post on Monday, which called the end of the negative rate era in Europe as soon as in the third quarter, we could start seeing the price pullbacks in euro as interesting opportunities to build fresh long positions aiming a further recovery toward the 1.10 mark against the greenback.

Released yesterday, the flash PMI data came in weaker than expected in the Eurozone, hinting that high energy prices and the war took a bigger toll on the European economic activity than what the analysts predicted. But the price stability is the primary goal of the European Central Bank (ECB), and the ECB must address the rising inflation problem, before it addresses the slower economic growth.

RBNZ raises OCR to 2%, points at 3.95% for Q3, 2023

The Reserve Bank of New Zealand (RBNZ) raised its official cash rate to 2% as expected at today’s monetary policy meeting, and released a more hawkish than expected accompanying statement, saying that the OCR will continue lifting the rates ‘at pace to a level that will confidently bring back consumer price inflation to within the target range’, and the stable inflation expectations will be taken as a key indicator that the policy is working. The RBNZ projected that the cash rate will peak to 3.95% in the third quarter of next year. That’s almost the double of today’s 2% level. The kiwi extended gains to around 65 cents against the US dollar, and is one of the most promising major currencies in the coming months.

Daily Pivots: (S1) 1.0682; (P) 1.0715 (R1) 1.0770; More...

Intraday bias in EUR/USD stays mildly on the upside as rebound from 1.0348 extends. Firm break of 55 day EMA (now at 1.0760) will target 1.0935 resistance next. On the downside, however, below 1.0563 minor support will turn intraday bias back to the downside for retesting 1.0348 low instead.

In the bigger picture, focus stays on 1.0339 long term support (2017 low). Decisive break there will resume whole down trend from 1.6039 (2008 high). Next target is 61.8% projection of 1.3993 to 1.0339 from 1.2348 at 1.0090. However, firm break of 1.0805 support turned resistance will delay this bearish case and bring medium term corrective rebound first.

Daily Pivots: (S1) 1.2472; (P) 1.2535; (R1) 1.2599; More..

Intraday bias in GBP/USD remains neutral for the moment. On the upside, firm break of 1.2637 resistance will bring stronger rebound to 55 day EMA (now at 1.2765). On the downside, below 1.2329 minor support will retain near term bearishness and bring retest of 1.2154 first. Break there will resume larger down trend from 1.4248.

In the bigger picture, based on current momentum, fall from 1.4248 (2018 high) at least at the same degree as the rise from 1.1409 (2020 low). That is, fall from 1.4248 could be a leg inside the pattern from 1.1409, or resuming the longer term down trend. In either case, deeper decline is expected as long as 1.2999 support turned resistance holds. Next target is 1.1409 low.

Daily Pivots: (S1) 126.13; (P) 127.10; (R1) 127.85; More...

USD/JPY's correction from 131.34 is still in progress and deeper fall could be seen. But downside should be contained by 125.09 cluster support (38.2% retracement of 114.40 to 131.34 at 124.86) to bring rebound. On the upside, break of 129.77 minor resistance will suggest that the correction is finished and bring retest of 131.34.

In the bigger picture, current rally is seen as part of the long term up trend form 75.56 (2011 low). Sustained trading above 61.8% projection of 75.56 (2011 low) to 125.85 (2015 high) from 98.97 at 130.04 will pave the way to 100% projection at 149.26, which is close to 147.68 (1998 high). For now, this will remain the favored case as long as 121.27 support holds.

Daily Pivots: (S1) 0.9563; (P) 0.9617; (R1) 0.9659; More...

USD/CHF's fall from 1.0063 could still extend lower. But downside should be contained by 61.8% retracement of 0.9193 to 1.0063 at 0.9525 to bring rebound. On the upside, above 0.9763 minor resistance will turn bias back to the upside for recovery. However, sustained break of 0.9525 will bring deeper decline to 0.9459 support.

In the bigger picture, down trend from 1.0342 (2016 high) should have completed with three waves down to 0.8756 (2021 low) already. Rise from 0.8756 is likely a medium term up trend of its own. Next target is 161.8% projection of 0.8756 to 0.9471 from 0.9149 at 1.0306, which is close to 1.0342 (2016 high). This will remain the favored case as long as 0.9459 resistance turned support holds.

Daily Pivots: (S1) 0.7072; (P) 0.7093; (R1) 0.7128; More...

Further rise is expected in AUD/USD with 0.6948 minor support intact. Rebound from 0.6828 short term bottom would target 55 day EMA (now at 0.7179). Break there will target 0.7265 resistance next. On the downside, though, break of 0.6948 will resume larger fall from 0.8006 through 0.6828 low, and target 0.6756/60 medium term fibonacci level next.

In the bigger picture, price actions from 0.8006 are seen as a corrective pattern to rise from 0.5506 (2020 low). Deeper fall could be seen to 50% retracement of 0.5506 to 0.8006 at 0.6756. This coincides with 100% projection of 0.8006 to 0.7105 from 0.7660 at 0.6760. Strong support is expected from 0.6756/60 cluster to contain downside to complete the correction. However, sustained break of 0.6756/60 would argue that AUD/USD is indeed already in a medium term down trend.

Daily Pivots: (S1) 1.2764; (P) 1.2819; (R1) 1.2875; More...

Intraday bias in USD/CAD remains neutral and further rise is mildly in favor with 1.2712 support intact. On the upside, break of 1.3075 will resume the rise from 1.2401. Sustained trading above 1.3022 fibonacci level will carry larger bullish implications. Next target will be 100% projection of 1.2005 to 1.2947 from 1.2401 at 1.3343. On the downside, however, break of 1.2712 support will indicate rejection by 1.3022 key fibonacci resistance, and bring deeper decline back to 1.2401 support.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.

Daily Pivots: (S1) 1.0284; (P) 1.0317; (R1) 1.0348; More....

Intraday bias in EUR/CHF remains neutral and outlook is unchanged. Corrective rebound from 0.9970 should have completed with three waves up to 1.0513, after rejection by 1.0505 key resistance. Below 1.0228 will target 1.0086 support. Firm break there will bring retest of 0.9970 low. However, break of 1.0359 will dampen this bearish view and bring stronger recovery back towards 1.0513 resistance.

In the bigger picture, as long as 1.0505 support turned resistance (2020 low) holds, long term down trend from 1.2004 (2018 high) is expected to continue. Next target is 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. However, firm break of 1.0505 will suggest medium term bottoming, and bring stronger rebound towards 1.1149 structural resistance.

Daily Pivots: (S1) 157.67; (P) 159.35; (R1) 160.69; More...

GBP/JPY is staying in corrective pattern from 168.40 and intraday bias remains neutral. On the downside, break of 155.57 will extend the correction towards 150.96 key structural support. Nevertheless, on the upside, firm break of 162.16 will indicate that the correction has completed, and bring retest of 168.40 high next.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 150.95 support holds, even in case of deep pull back. However, firm break of 150.95 will indicate rejection by 167.93, and bearish trend reversal.

Daily Pivots: (S1) 135.57; (P) 136.18; (R1) 136.81; More....

EUR/JPY is staying in the corrective pattern from 139.99 and intraday bias remains neutral first. On the downside, break of 132.63 will resume the fall and target 61.8% retracement of 124.37 to 139.99 at 130.33. On the upside, break of 138.33 will indicate that the correction has completed, and bring retest of 139.99 high next.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Next target will be 100% projection of 114.42 to 134.11 from 124.37 at 144.06. In any case, outlook will now remain bullish as long as 124.37 support holds, in case of deep pull back.