Title: Nasdaq 100 Forecasted to Rise Amid EUR/USD Weakness and WTI Oil Recovery
Original Author: Axel Rudolph, Senior Market Analyst at IG
Original Source: https://www.ig.com/en/news-and-trade-ideas/nasdaq-100-expected-to-rise-as-eur-usd-drops-and-wti-regains-los-260105
Overview
On Monday, June 3rd, 2024, the Nasdaq 100 index is poised for a higher opening following a week of modest gains and slightly bearish momentum in global markets. In the broader macroeconomic context, the market’s outlook is being shaped by a declining euro against the dollar and a rebound in West Texas Intermediate (WTI) crude oil prices. Investors are positioning themselves cautiously ahead of significant U.S. labor market data due later in the week, including the widely watched non-farm payrolls report.
Factors Driving Stock and Commodity Markets
Several key elements are influencing market sentiment and projected price movements:
– Renewed selling pressure on EUR/USD, reflecting dollar strength
– A technical rebound in WTI oil prices from recent lows
– Anticipation surrounding U.S. labor data, particularly non-farm payrolls
– Central bank monetary policy expectations
– Broader risk sentiment due to macroeconomic indicators, such as inflation and GDP growth
Nasdaq 100: Outlook and Technical Indicators
The Nasdaq 100 is showing resilience despite subdued risk appetite in broader equity markets. After a weekly gain of approximately 1.3%, the index is gearing up for a bullish start to the first full week of June. Friday’s trading session closed at 18,777 points with modest day-over-day movement.
Key highlights for Nasdaq 100:
– June outlook starts on a bullish tone following a positive end to May
– Technology sector maintains leadership despite stretched valuations
– Investors await key data that could define Fed policy direction
– A break above key resistance at 18,850 would serve as a bullish confirmation
– Support levels to watch include 18,600 and 18,400
The resilience of tech-heavy indices suggests that investors continue rotating into growth sectors in anticipation of potential interest rate cuts later in the year. However, any negative surprise in U.S. employment data or inflation readings could reverse that momentum.
EUR/USD Pressured as Dollar Gains Strength
The euro began the week on the defensive, falling sharply against the U.S. dollar. This trend continues the pattern established in late May, as solid economic data in the United States and cautious sentiment from the European Central Bank (ECB) have placed downward pressure on the single currency.
Key EUR/USD Insights:
– Pair dropped below 1.0850, the lowest since mid-May
– Weaker euro emerges amid dovish ECB comments ahead of the bank’s next decision
– Rising U.S. Treasury yields support the dollar’s advance
– Federal Reserve’s hawkish tone remains intact as inflation remains sticky
– Markets now anticipate fewer ECB rate cuts in 2024 than previously expected
Technically, a break below the 1.0800 level would open the door toward further downside, possibly targeting 1.0725 in the coming sessions. Traders are watching closely for the ECB’s upcoming monetary policy announcement, with expectations for a rate cut tempered by persistent price pressures in the euro area.
WTI Crude Oil Recovers After OPEC+ Decision
West Texas Intermediate (WTI) crude oil prices rebounded Monday morning after registering broad losses the previous week. The focus is now on OPEC+ production guidance after the group concluded its latest meeting over the weekend. Member nations agreed to extend voluntary output cuts through the third quarter of 2024 but indicated they might gradually phase them out beginning in October.
Market highlights:
– WTI futures rose toward $75 after declining to $73.25 last week
– OPEC+ extended 2.2 million barrels per day of voluntary cuts until the end of Q3
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Read more on EUR/USD trading.