Here comes the earnings season

Here comes the earnings season – The S&P 500 reached its 46th record high of the year on Monday, despite the recent mix of stronger-than-expected jobs and higher-than-expected inflation numbers. These factors suggest that the Federal Reserve (Fed) might need to slow down its planned policy easing. The index traded at 5871. Nvidia rebounded from its summer weakness and approached all-time high levels after the company’s CEO, Jensen Huang, announced that the next generation Blackwell chip, which experienced some delays, is now in full production and the demand for it is incredibly high.

The earnings season started off strong for the major US banks that have announced their earnings. In addition to banks, about 6% of the S&P500 companies have disclosed their earnings, with nearly 80% reporting a positive EPS surprise, according to FactSet.

Today, Goldman, Bank of America, and Citigroup will report earnings. Tomorrow, Morgan Stanley will report, followed by ASML. On Thursday, we will focus on TSM and Netflix results. So, fasten your seatbelt.

DXY testing 103.40 resistance

The US Dollar Index has continued to rally, reaching as high as 103.40 during yesterday’s trading. This level is considered a strong resistance and marks the highest point for the index since the beginning of August. However, the technical indicators are now showing that the market is overbought on the daily chart. This suggests that the current upward movement may not have much room to continue.

At the moment, the index is gaining strength as the Fed Funds Futures are indicating a rate cut of less than 50 basis points by the Fed from now until the end of the year. However, the data continues to show a mixed picture. Despite this, the current upward movement is still considered a short-term retracement before the downward trend resumes. The next resistance area is between 103.70 and 104.0, which is likely to hold.

EURUSD below 1.09

EURUSD continued to decline further, reaching as low as 1.0891, which is the lowest level since the beginning of August. This level is considered a notable support area, extending from 1.09 to 1.0870. It should be watched carefully, as a break below that support would pave the way for a much deeper correction.

The technical indicators are approaching oversold levels, indicating that the current downward correction may be nearing its end. If the price stabilizes above the support area mentioned, it could present an opportunity for buyers to enter the market once again.

Gold remains capped below $2660

At the end of last week, the price of Gold rose to $2664 amid rumors of a potential Israeli attack on Iran. However, with no such event occurring over the weekend, the price of Gold started the week lower, trading near $2640. Technical indicators show a flat trend.

As long as the price of Gold remains below $2660, there is a likelihood of further downward retracement, possibly revisiting last week’s low around $2604. However, a break below $2620 is necessary first. Furthermore, if the price falls below $2600, it could lead to a more significant correction, potentially continuing towards $2580.

Brent below $75

Brent crude started the week with a sharp decline, dropping below $75 after closing last week’s trading around $79. The decrease during yesterday’s US session follows reports by The Washington Post, stating that Israel won’t target Iran’s nuclear or oil facilities.

Despite the recent decline, the time/price method indicates that the bear market for oil ended on October 3rd. The current decrease is seen as a short-term retracement before the upward trend resumes. As per the method, as long as Brent crude is trading above $72, there is a high likelihood of another upward movement, with a possibility of retesting $80 in the coming weeks.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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