Daily Market Report
20 Apr 2021
The EUR/USD pair surged to 1.2047, its highest since early March, currently trading in the 1.2030 price zone. Investors sold the greenback amid persistent hopes for a soon-to-come economic bounce following the pandemic slump. The positive mood was reflected by falling government bond yields and fresh records in Wall Street, although, for a change, the wider movements were seen across the FX board. In the American afternoon, US indexes retreated from highs while Treasury yields recovered, barely enough to prevent the dollar from falling further.
The macroeconomic calendar had little to offer, as the EU published the February Current Account, which posted a seasonally adjusted surplus of €25.9 billion, missing expectations. Construction Orders in the same month were down by 2.1% MoM, also below forecast. The US did not release macroeconomic figures. On Tuesday, Germany will unveil the March Producer Price Index, while the US calendar will have nothing relevant to offer.
The EUR/USD pair bottomed in the American session at 1.2014, now the immediate support. The near-term picture indicates that bulls are in charge, although a corrective decline is not out of the cards. The 4-hour chart shows that the 20 SMA heads firmly higher above the longer ones, while the 100 SMA is finally gaining upward traction. The Momentum indicator advances within positive levels, while the RSI has lost bullish traction, consolidating near overbought readings.
Support levels: 1.1995 1.1940 1.1900
Resistance levels: 1.2045 1.2090 1.2130
The broad dollar’s sell-off resulted in USD/JPY testing 108.00 during the European session, holding nearby as the day came to an end. The pair got to bounce just modestly after Wall Street’s opening, but retreated from the 108.30 level, as US indexes turned south quickly after posting fresh all-time highs. Meanwhile, US Treasury yields seesawed between gains and losses, to end the day with modest gains. The yield on the 10-year Treasury note hit 1.61%
Japan published the March Merchandise Trade Balance Total, which posted a wider-than-anticipated surplus of ¥663.7 billion, as exports soared 16.1% while imports increased 5.7%. February Industrial Production was down 2% YoY, slightly better than expected, while Capacity Utilization fell 2.8% vs an expected 3.2% advance. Early on Tuesday, the country will publish the February Tertiary Industry Index, previously at -1.7% MoM
The USD/JPY pair stabilized around 108.10 and maintains its bearish stance. The 4-hour chart shows that the pair settled well below a bearish 20 SMA, which heads firmly lower below the longer ones. Technical indicators have stabilized near daily lows, the Momentum within negative levels and the RSI at around 23. The risk remains skewed to the downside, with a break below 108.00, opening the door for a steeper slide.
Support levels: 108.00 107.65 107.20
Resistance levels: 108.35 108.70 109.10
The British Pound was among the best performers this Monday, soaring against the greenback to 1.3992, its highest in over a month. The GBP/USD pair maintained its strength as the dollar’s sell-off coupled with a successful vaccination campaign in the UK. In the absence of macroeconomic news, investors focus on covid-related updates, which showed that the kingdom continues progressing toward some form of normality after giving at least one shot to over 49% of the population.
The UK will publish Tuesday its latest employment data. The March Claimant Count Change, meaning the number of unemployed people, is foreseen at 24.5K, much better than the previous 86.6K. The ILO unemployment rate for the three months ending February is expected at 5.1% from 5% previously. Finally, Average Hourly Earnings are foreseen unchanged in the same period, compared to the three months to January.
The GBP/USD pair posted gains for a sixth consecutive day, consolidating near the mentioned high ahead of the Asian opening. The 4-hour chart shows that the pair is extremely overbought, with technical indicators having lost their bullish strength but consolidating near daily highs. The pair has broken above its 200 SMA before rallying over 150 pips, while the 20 SMA accelerated north and is about to cross above the longer one, in line with the latest bullish momentum.
Support levels: 1.3805 1.3760 1.3715
Resistance levels: 1.4066 1.4179 1.4291
The AUD/USD pair surged to 0.7784, recovering from an intraday low of 0.7705, to finish the day with gains in the 0.7750 price zone. Australia published HIA New Home Sales at the beginning of the day, which was up 90.3% in March, quite an improvement from 22.9% in the previous month. The pair rallied during US trading hours following Wall Street’s advance, retreating alongside equities afterward.
On Tuesday, the Reserve Bank of Australia will publish the Minutes of its latest meeting. As the central bank maintains its monetary policy on hold, little is expected from the event.
The AUD/USD pair is neutral-to-bullish in the near-term, unable to clear the 0.7700 resistance. The 4-hour chart shows that the pair is currently developing above a bullish 20 SMA, which advanced above the longer ones. Technical indicators, however, have retreated from intraday highs, with the Momentum hovering around its midline and the RSI heading south at around 58. Bears won’t have a case unless the pair breaks below the 0.7710 support.
Support levels: 0.7710 0.7690 0.7640
Resistance levels: 0.7770 0.7820 0.7860
The price of silver was taking the brunt of the market's preference for alternative holdings in the precious metals arena. XAG/USD was closing down some 0.5% and the gold to silver ratio rallied over 0.2%.
Despite the drop in the greenback, precious metals were unable to collect investor’s interest, but given the move in industrial metals, silver could find itself playing catch up in the forthcoming sessions. Both copper and iron ore rallied on the day and the commodity complex, in general, was better bid despite markets being on the defensive in the main.
Meanwhile, there could be some attention paid to the rise in US yields which would be expected to support the greenback. However, with that being said, MSCI's emerging market currency index hit its highest level in a month. Top emerging markets tend to have positive correlations to commodities and the price of silver.
Technically, the price struggles at daily resistance, and in the day’s move to the downside, it has subsequently formed a new 4-hour resistance at 25.91. Bears would be expected to reengage there on a retest which argues the case for a deeper bearish retracement towards the early April highs and a confluence with the 50% mean reversion level of the latest bullish daily impulse at 25.50.
Support: 25.65 24.99 24.03
Resistance: 26.61 27.27 28.23
WTI ended the day up by nearly 0.6% having travelled from a low of $62.65 and reaching a high of $63.62 despite surging caseloads of coronavirus infections in India and other countries.
India reported 261,500 new coronavirus infections on Sunday, taking cases to nearly 14.8 million, second only to the United States, which has reported more than 31 million infections. In other related news, Hong Kong will suspend flights from India, Pakistan, and the Philippines from April 20 due to imported coronavirus infections.
Nevertheless, the commodity complex, in general, was buoyed by a weaker dollar which makes oil more attractive to nations denominated in other currencies. Meanwhile, the UK and US are showing signs of a solid economic recovery and the onus remains on a powerful surge in demand growth to support the ongoing rally in energy markets.
Technically, the price is range-bound but is showing a reluctance to move much higher as the bulls test the bear’s commitments at daily resistance. The daily W-formation is bearish which argues the case for at least a 38.2% Fibonacci retracement to test bull’s commitments at 62 the figure. A break there opens the risk of a deeper retracement to 61.25.
Support: 61.89 59.93 56.79
Resistance: 65.03 67.00 70.14
Gold prices were ending the day down by the closing bell on Monday. XAU/USD was negative by around 0.3% having fallen from a high of $1,790.10 to a low of $1,766.82. The precious metals were under pressure despite a fiercely lower greenback.
DXY ended lower by nearly 0.6% in a slide from 91.7460 to a fresh six-week low of 91.0340. The move in the greenback was technical as it breached a significant daily support structure, despite a firmer bid in US yields. Improved risk sentiment last week as shown by the rally in global stocks to record highs has continued to weigh on both the greenback and gold. Markets are in a period of consolidation ahead of the Federal Reserve during the media blackout period which might help to explain the disjointed intermarket associations at the start of the week as investors reshuffle their portfolios.
Technically, XAU/USD traded to the ceiling of the supply zone on the daily chart before resuming the downside in what might turn out to be the start of a deeper retracement. The bears have the prior resistance on the radar which comes in at around a 61.8% Fibonacci retracement of the recent bullish impulse in the 1,750s. The offer has resulted in a newly formed 4-hour resistance structure that would be expected to hold-off the bulls on a retest between 1,775/77.
Support: 1,761 1,739 1,701
Resistance: 1,799 1,821 1,896
Wall Street slumped on Monday with stocks lower ahead of a busy round of corporate earnings reports. The benchmarks were retreating from the record highs set last week amid upbeat company results and economic data.
The Dow Jones Industrial Average lost 0.4% to 34,077.63, the S&P 500 declined 0.5% to 4,163.26, and the Nasdaq Composite fell 1% to 13,914.77. As for performers, the consumer discretionary sector fared worst while real estate stocks were the only group to gain ground.
Meanwhile, we also had strong quarterly results from beverage giant Coca-Cola with stock prices rising 0.6%. Ambow Education Holding also climbed over 33% after saying it is expanding its partnership with Amazon Web Services with the launch of an artificial intelligence-supported training platform for teachers.
Technically, the DJIA index is giving back ground to test the 38.2% Fibonacci retracement of the latest bullish impulse, consisting of three daily bullish candles. If the recent price action is anything to reply upon, then a move to the upside can be expected to print a fresh higher record high for the benchmark.
Support: 34,001 33,745 33,290
Resistance: 34,456 34,712 35,167