Fed expects stock market crash

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Market Watch review. 11.11.2020

In today's release, we’ll cover the following topics:

  • Fed expects stock market crash. 
  • USD is ready to resume growth. 
  • Rising oil prices. 

It's no secret that the world economy is in a stalemate. For several months, most of the world's countries have been on the verge of a financial crisis, which can only be avoided thanks to significant monetary incentives from central banks. And if earlier analysts and experts of the largest financial organizations spoke about this, the Fed also noted the threat of a market collapse now.

Please note that for the second trading day in a row, the main US stock indices froze. It is also noteworthy that this happened immediately after the S&P500 index updated its historical high and its incredibly rapid decline below $3,600. As a result, it is extremely difficult to rule out a bearish scenario, which in turn can provide incredibly strong support for the USD. 

Now I suggest to pay attention to the EUR/USD currency pair. After the collapse of quotations to the support level of 1.1800, the activity of sellers remains very weak. It is also interesting that we do not see any obvious excitement among buyers. Therefore, even a slight strengthening of the USD will provoke another wave of sales. The nearest target for sellers will be 1.1700, a breakout of which will open the way to 1.1615 – this is a local goal.

The general strengthening of the American currency will affect all pairs with the US dollar, while the potential for growth of USD/JPY looks like one of the most powerful. A return of the pair's quotes above 105.50 may trigger a strong wave of growth, opening the way to 107.00. But we should also not exclude the alternative scenario, which involves the resumption of a downward price movement, since the pair is held under the trend line.

Moving to the American trading session, I will note a steady rise in oil prices. There are enough reasons for the recovery of the “black gold” market. First, and perhaps most importantly, pharmaceutical company Pfizer reported surprisingly good results in vaccine trials during its third phase. And the second reason is the fact that Joe Biden does not intend to support the oil sector, as it was under Trump, which could lead to a decrease in black gold production, thereby supporting oil prices.

Closely monitor the news background and be prepared for all the surprises of the market.

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