DOW JONES READIES A BULLISH BREAKOUT AS EARNINGS SEASON CONTINUES

US stocks wavered on Monday as worries about supply chain issues remained. The Dow Jones declined by more than 60 points while the Nasdaq 100 rose by more than 100 points. This price action happened after data by the US statistics agency showed the impact of Hurricane Ida and the supply chain disruptions. The data showed that capacity utilization by firms declined to 75.2% in September. At the same time, manufacturing and industrial production declined by 0.7% and 1.3%, respectively. Stocks also reacted to earnings by companies like Albertsons and State Street. Later today, the companies to watch will be Johnson & Johnson, Dover Corporation, and United Airlines.

The US dollar was little changed ahead of the latest US housing numbers. The data, which will come out later today, is expected to show that the US building permits declined from 1.72 million in August to 1.68 million in September. In the same period, analysts polled by Reuters expect the data to show that housing starts made a modest increase to more than 1.62 million. These numbers will come out at a time when the US housing market is relatively strong. The sharp increase in demand has also helped push prices to record highs.

The economic calendar will be muted today. In the morning session, Switzerland will publish the latest trade numbers. Although important, these numbers will likely have no major impact on the Swiss franc. The next key event will be two speeches by Fed’s Raphael Bostic. Meanwhile, investors will be focusing on the energy sector. The price of natural gas soared to a record high after Gazprom said that it won’t ship natural gas through Ukraine in November. The next key thing to watch will be how Bitcoin trades now that there is a BTC ETF.

EURUSD

The EURUSD pair formed a major resistance level at 1.1625. It has struggled to move above this level several times in the past few days. On the four-hour chart, the pair is still above the 25-day moving average. Notably, it seems like it has formed an inverted head and shoulders pattern, whose neckline is at 1.1625. Therefore, the pair will likely break out higher as bulls target the next key resistance at 1.1700.

GBPUSD

The GBPUSD pair was little changed during the American session as investors started pricing in a rate hike by the Bank of England (BOE) in the coming months. The pair is trading at 1.3735, which is slightly below last week’s high of 1.3777. On the four-hour chart, the pair retested the upper side of the ascending channel. It also moved above the 25-day moving average. Therefore, the pair will likely remain in this range today.

US30

The Dow Jones index declined slightly on Monday. But the index is still hovering near its highest level on record at $35,690. On the daily chart, the pair moved above all moving averages while the Relative Strength Index (RSI) has been rising. The Average True Range, which is a measure of volatility has also risen modestly. Therefore, the index will likely have a bullish breakout as earnings season continues.