The dollar posted another rise against most major currencies on Friday as hopes for U.S. tax reforms were boosted after the Senate approved a budget that will allow Republicans to pursue tax cuts without Democratic support.
Markets expect this fiscal boost to push up inflation, paving the way for the U.S. Federal Reserve to raise interest rates.
Sterling was broadly higher on hopes for progress in the Brexit negotiations after British Prime Minister Theresa May met with European Union leaders in Brussels.
In the commodities markets, crude oil prices gained after oil services firm Baker Hughes reported a drop in its weekly count of active oil rigs in the United States the lowest level since June.
Gold continues to move lower, pressured lower by the stronger U.S. dollar which was supported by President Donald Trump's plans for tax reforms.
In cryptocurrency news, Bitcoin reached new record highs exceeding $6,000 on Friday, pushing its market capitalization to $100 billion, as investors continue to place funds in the digital currency.
In the week ahead, investors will be watching the European Central Bank meeting for further details on plans to scale back its massive stimulus program.
Markets will keep an eye on a preliminary reading of third-quarter U.S. growth to further assess the impact of recent hurricanes on economic activity and how it could affect the Federal Reserve’s view on monetary policy.
The euro continues to lose ground against the dollar on Monday, on reports that Republicans are in the process of producing tax reforms without the need for support from the Democrats.
However, questions like what cuts to make and how to pay for them still raise concerns that the White House still faces a long battle to push through its agenda.
Later in the week, investors will be focusing on the ECB meeting and its plans to reduce its massive bond buying program while the U.S. will be releasing third quarter GDP data.
Pivot: 1.18
Support: 1.174 1.172 1.17
Resistance: 1.18 1.182 1.184
Scenario 1: short positions below 1.1800 with targets at 1.1740 & 1.1720 in extension.
Scenario 2: above 1.1800 look for further upside with 1.1820 & 1.1840 as targets.
Comment: as long as 1.1800 is resistance, look for choppy price action with a bearish bias.
Gold
Gold prices lost ground on Friday, receiving pressure by the recent strength of the dollar which was boosted after President Donald Trump's plans for tax reforms cleared a critical hurdle.
Further pressure in the precious metal came on Monday as the dollar showed strong gains after Japan's Premier Shinzo Abe won re-election, signalling continued easy policy.
Third quarter U.S. growth data will be in the spotlight for gold traders as they try to assess the impact of recent hurricanes on economic activity and how it could affect the Federal Reserve’s view on monetary policy.
Pivot: 1282
Support: 1270 1265 1261
Resistance: 1282 1286 1291
Scenario 1: short positions below 1282.00 with targets at 1270.00 & 1265.00 in extension.
Scenario 2: above 1282.00 look for further upside with 1286.00 & 1291.00 as targets.
Comment: the RSI is capped by a bearish trend line.
WTI Oil
Oil prices gained on Friday, as political tensions in the Kurdistan region continued to disrupt crude supplies.
The supply disruption in Iraq comes amid ongoing political uncertainty in the region following conflict between Iraqi and Kurdish forces.
Meanwhile, oilfield services firm Baker Hughes said Friday that oil rigs operating in the United States fell to the lowest level since June.
In the week ahead, investors will be watching closely on weekly inventory data from the U.S. to assess the strength of demand in the U.S.
Pivot: 51.6
Support: 51.6 51.3 50.85
Resistance: 52.4 52.6 52.8
Scenario 1: long positions above 51.60 with targets at 52.40 & 52.60 in extension.
Scenario 2: below 51.60 look for further downside with 51.30 & 50.85 as targets.
Comment: the RSI is bullish and calls for further upside. Crude oil broke above a declining trend line. In addition, it is still trading above both rising 20-period and 50-period moving averages.
US 500
The S&P 500 posted a sixth week of gains after the U.S. Senate passed a budget resolution, lifting hopes that President Donald Trump's tax-cut plan may move forward.
The Senate's approval late Thursday of a 2018 budget blueprint could pave the way for Republicans to pursue a tax-cut package without Democratic support.
A notable fact is that shares of General Electric (NYSE:GE) reversed an early drop of 6.3 percent to end 1.1 percent higher, and the S&P industrials index also finished up 1.1 percent.
Key earnings report from General Motors (NYSE:GM), Coca-Cola, Visa, Microsoft (NASDAQ:MSFT), Twitter, Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) are due this week along with many other multinationals.
Pivot: 2563.5
Support: 2563.5 2558 2551
Resistance: 2577 2580 2585
Scenario 1: long positions above 2563.50 with targets at 2577.00 & 2580.00 in extension.
Scenario 2: below 2563.50 look for further downside with 2558.00 & 2551.00 as targets.
Comment: The upside breakout of the previous top area opened the way towards 2580 (Fibonacci projection).