Dollar Appears to be Strengthening, Investors Turn to Today’s Retail Sales Data

Tuesday and Wednesday saw very different levels of volatility and price traits. Of course, this was expected when taking into account the high levels of volatility following Tuesday’s Consumer Price Index (CPI) announcement.

Tuesday saw the highest level of volatility in almost 2 years, with strong declines in the US stock market and advances in the price of the US Dollar. Yesterday, the USD saw a break as traders started to look for further clarity. The Dollar managed to hold onto its gains, except against the Japanese Yen. The Yen saw some favorable price movements after indications that the Federal Government and Bank of Japan may consider currency intervention.

Many traders have turned their attention to the US major indices including the S&P 500, NASDAQ and DowJones. The main influences will continue to be the monetary policy and the market’s risk profile.

NASDAQ

The price of NASDAQ increased in value slightly but has formed nothing more than a retracement. The asset still remains over 4% lower than the week’s market open. The price has not managed to break above the 8-day EMA (Exponential Moving Average) in the shorter term, which indicates that the price is still weak and may potentially decline further. The only point of caution for traders is that the price is close to the recent support level which ranged from $11,912 to $11,992.

In the longer term, the price seems to be finding resistance at the 150 average price movement, as can be seen on the 4- and 6-hour charts.

NASDAQ 12-hour chart on September 15th.

Most economists believe that the market is likely to continue to remain pressured as the Federal Reserve keeps raising interest rates. However, there are some analysts who have advised that this is a good time to purchase stocks for longer term portfolios (but not derivatives which are for shorter term investments).

For example, Ray Dalio from Bridgewater advises the market that the Fed will likely increase interest rates as high as 4.5% - 6% before we see inflation come down. He believes that this can cause the US indices to decline further. On the other hand, David Ruberstein advises that the market is near its bottom and consumer demand remains high. Therefore, it is important for CFD traders to continue monitoring the price and the current trend rather than potential movement in the longer term.

EUR/USD

The price of the EUR/USD is again on the decline today, mainly triggered by the US Dollar increasing in value. The price has managed to break below yesterday’s price lows, forming consecutive bearish candlesticks throughout this morning’s Asian session. The Stochastic Oscillator and crossovers remain in favor of the asset decreasing in value.

EUR/USD 2-hour chart on September 15th.

Of course, the price continues to be influenced mainly by the latest inflation figures and the hawkish Fed. However, the situation with the supply of gas remains tense and may pressure the Euro further. The Nord Stream-2 gas pipeline has not reopened, and Nord Stream-1 remains closed due to the only working turbine requiring repair. The latest data shows that gas storage facilities in the EU are filled by 83%, but according to experts, they will last only until February of next year.

Throughout the day, the market will mainly be looking at the US Retail Sales figures and Unemployment Claims. This has the potential to influence both the US Dollar and the US stocks. Stock traders are keen to see sales figures remain resilient while interest rates continue to increase. Investors will then turn their attention to tomorrow’s Prelim Consumer Sentiment.

Quick Summary:

• The NASDAQ forms a retracement but remains weak.
• Markets take a break after the highest volatility level in almost 2 years.
• Most economists believe that the market will remain pressured as the Fed continues to raise the interest rates.
• The Nord Stream-2 gas pipeline has not yet reopened and Nord Stream-1 remains closed due to repairs.
• The EU has enough gas to last until February 2023.