US STOCK FUTURES RISE ON EXPECTATION OF FED RATE CUTS

American futures rose on Monday as investors waited for important earnings by top American companies. Some of the top companies that will publish their results this week are Apple, Google, Coca-Cola, Ecolab, Kimberly-Clark, and PulteGroup among others. Analysts expect that most of these companies will publish relatively weak results because of rising costs. According to FactSet, the average earnings growth of the companies that have published this month has been less than 5%, which is the lowest it has been since 2020. Futures tied to the Dow Jones, S&P 500, and Nasdaq 100 index rose by more than 0.45%. In Europe, the DAX, FTSE 100, and CAC 40 indices were mixed as companies like Vodafone published their results.

The US dollar index declined slightly as investors placed their bets that the Federal Reserve will need to cut interest rates in 2023 to boost growth. They also expect that the bank will continue hiking rates this year in its bid to fight inflation. The Fed will start its meeting on Tuesday and deliver its rate decision on Wednesday. Analysts expect that the bank will increase rates by either 75 or 100 basis points. The US dollar will also react to the latest consumer confidence data that will come out on Tuesday. With gas prices at an elevated level, analysts expect that confidence continued falling in June.

The euro rose slightly after the latest business confidence data from Europe. Business expectations declined from 85.5 to 80.3, which was lower than the median estimate of 83. In the same period, the current assessment declined from 99.4 to 97.7 while the Ifo business climate dropped to 92.2. These numbers signal that the German economy is struggling as companies remain concerned about gas rationing and falling demand. The numbers came a few days after the European Central Bank (ECB) hiked interest rates for the first time in over a decade.

EURUSD

The four-hour chart shows that the EURUSD pair has been in a tight range in the past few days. It is trading at 1.0221, which is slightly below last week’s high of 1.0281. On the four-hour chart, the pair has moved slightly above the 25-day moving average. The Average Directional Index (ADX) has formed a bearish divergence pattern. The same is true with the Relative Strength Index (RSI). The pair has formed an inverted head and shoulders pattern. Therefore, the pair will likely continue rising especially if it moves above the resistance at 1.0281.

USDJPY

The USDJPY pair moved sideways in the past few days even after last week’s dovish statement by the Bank of England (BoE). The pair is trading at 136.40, which is slightly above last week’s low of 135.30. It has moved slightly below the important resistance level at 136.74 while the Relative Strength Index (RSI) continued falling. The momentum indicator has also continued falling. Therefore, the pair will likely resume the bearish trend as sellers target the support at 135.

ETHUSD

The ETHUSD pair declined as the recent rally faded. It dropped to a low of 1,540, which was the lowest point since Friday. It moved slightly below the 25-day moving average while the MACD and the Relative Strength Index (RSI) have been falling. The pair has formed an ascending channel that is shown in green. The pair will likely continue rising as bulls target the key resistance level at 1,665.