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A new week comes with a few key economic releases. However, volatility is here to stay amid rumors of more struggling banks, especially in Europe. There were some rumors on Friday about Deutsche bank, but no actual news until now, which could be a piece of good news. It doesn’t mean that the banking crisis is over, we still don’t have all the info. Therefore, you need to be careful with your risk level this week.

Friday Is The Key

There are multiple economic releases this week. However, what matters the most is the US Core PCE Price index, which will be released on Friday. Here’s why:

First, there is no doubt that this is the Federal Reserve’s most respected inflation indicator. Last month it showed a surprise to the upside, rising from 4.6% to 4.7% even though the estimates were to decline toward 4.3%. This release has led to a notable shift in expectations, as everyone thought that if Core PCE Price Index surprised higher, then CPI and Core CPI will be something to be concerned about. Yet, CPI and Core CPI showed a surprise lower.

Secondly, the market declined right after this specific release as everyone thought that this is the beginning of another wave of severe inflation, which means that the Federal Reserve is likely to hike by another 50bps. Yet, amid the banking crisis and lower Core CPI, the fed decided to raise by 25bps only.

Finally, if the Core PCE Price Index on Friday showed us a surprise lower. This will be one of the best-case scenarios for equities, as the Federal Reserve might need to pause, especially if the data showed a faster slowing down than expected, and it’s also near our long waited key date of the 3rd of April, which is next Monday.

DXY Retracement

The US Dollar managed to hold above 102.0 over the past two sessions. However, this is another short-term retracement, which is likely to remain limited between 103.35 and/or 103.90 over the next few days. Therefore, we maintain our bearish outlook and will be looking to short on rallies.

Possible Entries This Week

  1. AUDUSD: Is on my watchlist for a possible long. But it needs a few more days as I wait for time/price confirmation. If so, I will be interested in going long over 0.6730, targeting 0.69 over the next few weeks.
  2. Coca Cola (KO): Time/Price met last week confirming the end of the downside retracement which started in January. On Monday it pushed higher toward $61.40 so far and we will be looking to buy options contracts and/or actual shares in the coming days after a slight retracement, with a stop at $58.40.
  3. Crude Oil: Bounced back after declining by $67 from March 2022 high within 267 days. This is when Brent Crude squared its price. This means that the downside move is over and a new trend is underway. We will be watching for a possible long position around $75 during this week.

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