Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Final US Composite PMI for June is predicted at 51.2, and the Final US Services PMI at 51.6. Forex traders can compare this to the US Composite PMI for May, reported at 53.6, and to the US Services PMI, reported at 53.4.
The US ISM Non-Manufacturing PMI for June is predicted at 54.3, and the ISM Non-Manufacturing Business Activity Index at 54.0. Forex traders can compare this to the US ISM Non-Manufacturing PMI for May, reported at 55.9, and the ISM Non-Manufacturing Business Activity Index reported at 54.5.
US JOLTS Job Openings for May are predicted at 11.000M. Forex traders can compare this to US JOLTS Job Openings for April, at 11.400M.
Traders await FOMC meetings today, which could confirm the expected 75 basis point interest rate for July, together with a worsening economic and inflation outlook. Markets flashed another recession warning as the 2-year and the 10-year yield curve inverted. While some continue to debate if the US will fall into a recession, including the US Fed, more market participants have it now as their base case. A recession does not happen overnight but goes through a process, and some argue the US already entered a recession.
Inflation manifested itself in the economy, and it could take years to subside to acceptable levels. The bear market continues to gain strength and has two more down cycles before it could become dormant. While a steep recession is unlike, traders should get comfortable with the idea of a shallow but long recession that may not end until 2024. Afterward, an equally shallow growth and stagflation could become the dominant theme for the rest of this decade. US financial markets have more room to the downside to shake unrealistic valuations.
The forecast for the NASDAQ 100 remains bearish after price action has tried to stabilize. Confirming the lack of bullishness are the flat Kijun-sen and Tenkan-sen. The Ichimoku Kinko Hyo Cloud provides ongoing downside pressure but shows signs of a sideways trend, suggesting a volatility rise as bulls and bears fight for control. Traders should monitor the CCI as it approaches extreme overbought territory. It may spike above 100 and record a lower high before accelerating to the downside, giving traders a final sell signal. Can bears extend their dominance and force the NASDAQ 100 into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the NASDAQ 100 Index remain inside the or breakdown below the 11,590 to 12,230 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 11.775
- Take Profit Zone: 9.755 – 10.105
- Stop Loss Level: 12.560
Should price action for the NASDAQ 100 Index breakout above 12,230, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 12.560
- Take Profit Zone: 12.945 – 13.390
- Stop Loss Level: 12.230
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