The Dow Jones Has Settled in at Historic Highs

Fundamentals

There was no significant news about fundamentals on Monday. It is worth mentioning that on the first day of the business week many traders were watching for information about the M3 money supply published in the European Union. The actual number was 4.9% against the forecast of 5.2%.
Today the fundamental news that we are waiting for will be the consumer price indices in Germany and Spain and the US consumer confidence indicator. The Conference Board’s consumer confidence indicator will be published in the United States at 2:00 pm GMT. The forecast, 120.1, is slightly below the previous number.
At this time, there is no certainty that the Fed will increase the interest rate at its next meeting on June 14, 2017, so any statistics, especially Friday's Non-Farm Payroll, might move both the currency and stock markets significantly.

Stocks

Speaking of stock markets, the Dow Jones, the major US index, absolutely refuses to fall and remains at its historic highs. Its growth since March 2009, after the 2008 crisis, has been more than 200%. From our viewpoint, the US stock market is a little overheated, i.e., to continue their attack in any case, the bulls will have to take their profits. But the bears obviously might attempt a counterattack. The bears still have a trump card in reserve, in the form of a twofold increase in interest rates.
Yesterday the US markets were closed for Memorial Day. We might see a gap down at the opening today.
We are not expecting any corporate reports of interest today. Russian traders might try to make a little money on the InterRAO and Lukoil reports.

Currency Market

The aussie continues to fall against the loonie. The pair is fluctuating around the currencies’ parity. As we wrote yesterday, the bears may continue the attack to 0.9970. They therefore might try to take advantages of bounces to build short positions in the short term. A short-term trend reversal can be expected only if there is a breakthrough at 1.0060, which is a 38.2% Fibo correction.
It’s been a long time since we’ve written about the EUR/JPY pair. Technically, the pair intersected the 9-day MA top down. The question is whether the bears will manage to consolidate below the current level or even below 124 yen per euro. The support is at 123 yen, the location of the lower Bollinger Band and a 23.6% Fibo correction relative to the previous wave's minimum of 114.79. If the bears’ attack is successful, the next support on the daily charts is at 121.6.
On Monday the EUR/USD pair approached the support at 1.1160, where the 9-day EMA is located. As always, one should respond depending on the situation. If there is a top down breakthrough of the exponential average, traders will trade right down to 1.1000. The reversal of the MACD speaks well for a breakthrough. The lines have not yet intersected on the daily charts, but a reversal signal is close. Note also the signal from the Williams %R, which intersected the upper boundary and entered trading territory.

Nikolay Dudchenko, Olymp Trade analyst

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