Musalem: Treasury Selloff Shows Fed Needs to Bolster Inflation Credibility

GOOGL shares have risen 6.4% over the past 24 hours, entering overbought territory with the RSI at 75.6, signaling overbought conditions. The news headline emphasizes the need for Treasury sales to enhance the Fed's credibility in fighting inflation, which could strengthen rate hike expectations and dampen risk appetite. In the short term, the likelihood of profit-taking and a technical correction increases following high gains. The MACD is positive, but the price is well above the SMA20 and SMA50, indicating overextension. Therefore, a downward move is expected over a 1-3 day horizon.

The DXY is trading below its 20- and 50-day moving averages, with the RSI at 35, indicating weak momentum. The MACD is negative and below the signal line, confirming short-term bearish momentum. The news headline highlights that Treasury auctions suggest the need for the Fed to reinforce its inflation credibility, which could heighten expectations of tighter monetary policy and weigh on the dollar in the near term. However, the downside is likely limited, as the market may have already priced in such news. Overall, the short-term outlook remains slightly negative.

News of the Treasury sale could dampen risk appetite by heightening concerns over inflation credibility. GLD's latest close at 4044.45 is well above its SMA20 (373) and SMA50 (372.46), which may signal overvaluation. The RSI at 46.2 is in neutral territory, but the MACD is negative and below its signal line, indicating weakening short-term momentum. A 1.49% decline over the past 24 hours suggests that selling pressure may persist. Therefore, the likelihood of downward movement in the short term is considered moderate.