Market Sector Scanner: Nasdaq Rally Continues as Strong U.S. Data Pushes USD Higher
Strong U.S. retail sales, better consumer sentiment data, and solid company earnings pushed the U.S. dollar and long-term U.S. interest rates higher last week. The Nasdaq reached new record highs as AI-related optimism continued, while USD/JPY moved back close to 160. This week, markets will focus on Iran news, WTI oil prices, and key central bank meetings from the BoJ, Fed, and ECB.
Strong U.S. retail sales, better consumer sentiment data, and solid company earnings helped support the U.S. dollar and pushed long-term U.S. interest rates higher last week, lifting USD/JPY back close to 160. Gold came under pressure as the dollar strengthened, while European stocks and EUR/USD fell on concerns that higher oil prices and supply disruption from the Iran conflict could hurt growth. Although the extension of the two-week Iran ceasefire helped global stocks rise, WTI oil prices also moved higher as traders stayed focused on supply risks.
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Forex Market
USD/JPY
Last Week Recap
WTI returning close to $100 and strong U.S. economic data helped USD/JPY rise back near 160 last week. However, warnings from Japan about possible intervention to stop further yen weakness continued to limit gains.
Technical Picture
The Bollinger Bands narrowed further last week, showing that volatility remains limited. The upper band acted as resistance, while the 10-day moving average moved sideways, also pointing to a range-bound market.
Outlook This Week
Range trading remains the best strategy for now. The market will focus on this week’s Bank of Japan meeting and any comments about the timing of future interest rate hikes. However, traders should be ready to change strategy if unexpected BoJ news creates a new trend.
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GBP/JPY
Last Week Recap
GBP/JPY returned to recent highs last week as the uptrend continued. Higher-than-expected U.K. inflation data and stronger-than-expected U.K. economic data supported the pair, while the weak yen also helped push the market higher.
Technical Picture
The Bollinger Bands widened last week, with the upper band moving higher and removing some near-term resistance. The 10-day moving average continues to act as support, pointing to a market that still has upward momentum.
Outlook This Week
The uptrend remains in place, but GBP/JPY may find it difficult to rise significantly this week because of the risk of intervention by Japanese authorities. For now, looking for range trading opportunities may be the better strategy.
EUR/USD
Last Week Recap
EUR/USD fell last week as strong U.S. retail sales data and higher long-term U.S. interest rates encouraged selling. Concerns about possible oil supply shortages in Europe also weighed on sentiment, as traders worried this could hurt European economies.
Technical Picture
The recent fall from the upper Bollinger Band and the break below the 10-day moving average suggest that EUR/USD may remain under pressure in the short term.
Outlook This Week
The uptrend has now ended, so the market may move sideways to lower this week. Traders will focus on the statements after this week’s FOMC meeting for signals on the U.S. interest rate outlook, along with the ECB meeting.
Equities
Last Week Recap
The Nasdaq had another strong week, reaching new record highs despite higher WTI oil prices. The market focused on continued advances in AI and stronger-than-expected U.S. company earnings announced last week.
Technical Picture
The 10-day moving average continues to show a very strong uptrend. With the market still having space to move toward the upper Bollinger Band, further gains remain possible.
Outlook This Week
The market remains overbought, so a short-term pullback is becoming more likely. Medium-term traders may be better waiting for weakness to buy, rather than buying at current levels.
Commodities
Gold
Last Week Recap
Gold fell last week as the stronger U.S. dollar and higher long-term U.S. interest rates encouraged selling. Strong U.S. economic data helped push both the dollar and interest rates higher, creating pressure on gold.
Technical Picture
The Bollinger Bands narrowed again last week, while the 10-day moving average moved sideways. This suggests the market may be preparing for its next larger move.
Outlook This Week
Last week’s fall broke the recent short-term uptrend, suggesting that range trading may be the better strategy this week.
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Markets are likely to stay focused on Iran news and WTI oil price moves this week. Three major central bank meetings will also be important. The Bank of Japan may have the biggest impact, as traders watch for comments on possible rate hikes while USD/JPY stays near 160. The Fed and ECB will be watched for signals on inflation and possible rate cuts later this year.
