Dollar paring yesterday's gains but pullbacks should be temporary

• Investors await another catalyst for big market moves;

• Dollar paring yesterday’s gains but pullbacks should be temporary;

• Pressure building on $1,185 in Gold;

• WTI and Brent may hit $70 and $76 before new trading range is established.

US futures are pointing marginally higher on Wednesday, paring some of the losses made on Tuesday in response to Yellen’s unwavering hawkish stance and growing Greek concerns.

With little new to focus on today, we could see markets continue to pare gains early in the session and in the absence of any news flow, find a trading range for the day. I don’t see any reasons why indices would build too much on the gains being seen in the futures market but equally, I feel investors may await a catalyst of some kind, be it an announcement or a rumour, before backing a larger move.

I’m sure there’ll be plenty of comments throughout the day on the Greek negotiations which have the potential to create a storm in the markets but there’s been so many mixed views on what progress is being made that it may take a concrete announcement to get people excited. Greek Finance Minister Yanis Varoufakis seems optimistic that a deal will be done every time we hear from him yet his German counterpart is often far more downbeat, stressing that there remains big differences between the two sides. If a deal is going to be done, I think certain Greek red lines are going to have to be withdrawn as the “institutions” are not going to have it dictated to them the terms by which they bailout the country again. Not with anti-austerity parties in other countries such as Spain gaining in popularity.

We’ve seen a strong resurgence in the dollar recently backed by the Fed’s insistence that first quarter weakness was transitory and rates should rise this year. Many expected the first quarter data to dissuade them from hiking any time soon but there appears to be little appetite to put it off until next year. As long as that remains the case, I find it very difficult to be anything other than bullish on the dollar.

In the short term, there is likely to be short periods of weakness but I do feel that the moves lower seen between March and May is about all we’re going to get in terms of sustained weakness. Barring a change in Fed stance, I think the longer term trend in the dollar will now resume and we remain on course for EURUSD to achieve parity in the fourth quarter.

As for today, we could see the dollar paring yesterday’s gains which would be good for commodities which really did take a beating yesterday. Gold suffered a big decline on Tuesday but did find support around $1,185 which I think could be an important short term level. A break below this would bring $1,131.50-1,142.80 back into play in the coming weeks.

Further consolidation in WTI and Brent crude looks likely today although from a technical standpoint, both are looking a little bullish. There has been suggestions that oil has potentially topped having rallied strongly since the beginning of March but I get the feeling we could see $76 and $70 being hit in Brent and WTI, respectively, before we see both determine their new range. It looks as though $62 and $54 at this stage are the new trading range lows although I would like to see further confirmation of this.

The S&P is expected to open 2 points higher, the Dow 28 points higher and the Nasdaq 7 points higher.