Summary:

• US dollar loses steam at the beginning of the new trading week, a technical point of view could be more upbeat though
• Asian markets bounce back following the bleak end of the past week
• US futures trade in a positive territory, Treasury futures drop on the day

We have just entered the new trading week with the weaker US dollar as it’s by far the most beleaguered currency among its major peers. The Bloomberg index is trading 0.3% lower while the largest gain can be found in the common currency which is nearing a 1.23 handle in early trading on Monday. Bear in mind that the first session of the week does not abound in macroeconomic releases, hence major attention might be paid to a technical analysis which in turn seems to be in favour of the greenback. Namely, we were offered an evening star candlestick at a weekly time frame and if this formation is not false, it could lead to a deeper pullback even below 1.2150, the level being underpinned by a 50% retracement of the tremendous leg lower made since mid-2014. On top of that, a rising longer-term trend line could also serve as a support for buyers and it’s likely to be a hard nut to crack for bears given the long-term attitude of euro traders.

The EURUSD drew an evening star at the weekly time frame. Is it going to be a turning point in the short-term? Source: xStation5

Looking beyond the FX one may notice relative calmness across stock markets around the world. Chinese benchmarks are set to close above the flat line while the Australian index (AUS200 on xStation5) slid 0.3%. Keep in mind that the Japanese stock market was closed today so the 2.3% loss came from the Friday’s session. Just a while before the close the Hang Seng (CHNComp) is gaining a bit more than 1%, however, do not forget about a gargantuan decline made during the prior week meaning that buyers have a lot to do in order to catch up. The US futures are climbing to some extent as well and from a technical standpoint it could make sense. Let us have a look at the daily SP500 (US500) chart as the index tested a crucial support area twice (a rebound from the 200DMA). For that reason one may count on an increase toward the nearest resistance localized at 2680 points. A breakout of that level would allow buyers to keep on creeping up.

The US500 managed to stay above its significant support after double bounce. Source: xStation5

At the end of the day, one cannot leave out some indications from the US bond market as the Treasury futures are sliding in early trading suggesting another boost to yields. Should the trend continue, it could give rise to subsequent jump in volatility pushing stocks lower at the same time as it was the case last week.