DXY, EUR/USD And U.S. 10-Year Yield Hit 21 DMA; Could A Rally Follow?
Ashraf Laidi | May 19, 2022 01:10AM ET
Just as market sentiment began improving and the US dollar index showed its first 3-day losing run since March, selling resumed across the board.
Tuesday's solid US retail sales gave Powell the confidence to stick to his “inflation-remains priority” rhetoric. Interestingly, DXY, EUR/USD and US 10-year all stabilized at their 21-day moving averages.
No, this is neither a piece about “bear market rallies,” nor about “Intermarket technical confluences” covered successfully at last Thursday's market low.
This, in fact, is about how the market could resume rallying into next week—despite Wednesday's wobble.
Technically, there is a chart pattern confluence support across the NASDAQ 100, SPX and XAU/USD near 12220, 3980, and 1808/12 respectively.
As I emphasized yesterday (and today) on the importance of 1808/9 in gold, this has remained a lone sign of stability—despite earlier $30 daily swings.
The gold part is partly backed by silver holding above the $21.00 level—served as a support/resistance over the last 4 decades.
And if you think there are inflationary effects from China's disrupted supply chains, imagine the inflation from a “fully-open-back-in-demand” China. Whether this will coincide with the Fed easing off from tightening or before, yields are in for a rude awakening soon.
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