23.04.202109:27 Forex Analysis & Reviews: US stock market to slide into deep correction; weekly results

Daily chart on S&P500

The US market corrected yesterday. All the major indexes- the Dow, S&P500, and NASDAQ lost 0.9%. Such a decline clearly indicates a correction, not a drop in some other sectors of the market. Importantly, a fall in the stock market took place immediately after the strong employment report. Long-term unemployment dropped below 3.7 million, while initial jobless claims decreased to 550,000. Notably, a few weeks ago, they reached 800,000. Experts linked the decline in the equity market with Biden's plans to significantly raise taxes. In my opinion, this is not the case1) The tax increase was included in the new $ 2trillion stimulus plan – investors were well aware of this and the market continued to grow; 2) The tax hike plan still needs to get through Congress where Biden does not have a majority. Republicans are strongly opposed to raising taxes. It can also hardly surprise anyone,

The third wave of the coronavirus is still a threat. Besides, new cases of infection have reached new highs in the world. There have been 880 K new cases per day, e.g. in India, +330 K cases per day, in the US +70 K thanks to mass vaccination.

Dow 33,822. Forecast, trading range 33,500-33,950.

Wall Street is poised for a big correction. The indexes may fall to 5% from the highs or more. We are following the closing results of this week.

USDX 91.20. The US dollar index seems to have found support in the area of 90.80. It may rebound to this level. So, it is likely to be trading in the range of 90.80–91.50

USDCAD. The Canadian dollar strengthened sharply yesterday after the growth of the US stock market. However, today, the pair lost ground. The pair may face a support level of 1.2450. It is likely to be trading in the range of 1.2400–1.2600.

Conclusion: Investors will carefully monitor the closing of the US stock market. A new drop will be a signal for the development of a correction.