April 10 Daily Market Analysis

Daily Market Analysis

Daily market analysis by OptionRally

EUR/USD

The pair traded modestly higher Monday amid thin volumes as markets in Europe still closed due to the Easter holiday as well as there was no major economic data which kept inventors focused on Friday’s disappointing U.S. employment report. The overall technical outlook remain bearish with the broken trendline connects to 1.2625 January’s low (currently around 1.3130) still able to contain upside pressure so far. Further corrective gains could be expected with breaking above the latter, initially toward 38.2% retracement of the yearly ascend at 1.3155. On the flip side, the 1.2973-1.3000 price zone remain serving as the main near term support which a clearance below may trigger fresh selling interest to resume the downward cycle from yearly highs near 1.3500 handle.

GBP/USD

Cable gained further ground yesterday to hit a fresh 4-day high at 1.5912, buoyed mainly by a persistent softer greenback on renewed QE speculations. Currently, the price is struggling at the cusp of 1.5900 key barrier while a sustained break above 1.5930 which is Fib 50% of the latest bearish run between 1.6060-1.5803 could turn the smaller frames relatively more bullish to push toward testing 1.6000 prices. On the contrary, Staying below near resistances and above 1.5820 (200 Day-MA) support level could reflect the continuation of consolidation momentum. Below 1.5800 psych ground that holds the downside for now will bring bears fully in play and damage the short term positive structure, suggesting further corrections for the wider uptrend from 1.5601 March lows.

AUD/USD

The pair was mostly unchanged on Monday’s quiet holiday trades and showed a muted reaction to Chinese inflation data which rose 3.6% in March, versus expectation of 3.4%. However, downward pressures may grow on the upcoming sessions as higher CPI data should make Chinese policy makers more reluctant to introduce further liquidation despite economic slowdown threats. Technically, The pair still able to rally after price failed to break below recent lows of 1.0240 despite renewed attempts but momentum couldn’t help translate the upswing into a longer run as resistance offered by 200 HMA (currently at 1.0340) held to cap upside for now while a stronger obstacle is expected at 1.0385-1.0400 area which represents 200 DMA and 38.2% retracement of up-trend connects to November’s lows. Only above the mentioned may pause bearish resumption and shift focus toward past week’s highs around 1.0550.

USD/CHF

The pair trimmed early gains to give up 0.9200 handle on late Monday as the US dollar weakened against its major rivals which was extended from Friday’s session and was triggered by declining jobs figures that came well below the 200K psych level for the first time in five months, which in turn called the health of U.S. recover into question. Technically, the near-term outlook is mixed somewhat as the cross remain caught in a tight 80 pips-range during past four sessions. Nonetheless, the hourly studies shows more negative sentiment with the price stalling below 0.9220 recent peak, also a double high pattern could be seen clearly. Loss of 0.9135 which is 38.2% retracement of the last bull run between 0.9000-0.9220 could be a chance of further selling pressures, initially toward 0.9100 key barrier. To the upside, we can only consider a sustained break above mentioned highs to signal further strengthening that first opens up 0.9250 previous high and key pivot, then 0.9300-0.9330 major near-term resistance zone.

Commodities

Precious metals traded mildly higher on Monday’s quiet session with markets in Europe remain closed on Easter day holidays, which in turn allowed to some bargain hunting as the greenback still showing weakness due to negative impact of Friday’s disappointing jobs data that lifted hopes over further easing measures from the Federal Reserve and carried over its effect to yesterday’s session. As mentioned previously, the decision made by Indian jewelers to reopen their shops after a large-scale strike that persisted almost three weeks on their government promises to review tax hikes provided another support for buying interest on better physical demand outlook. Other metals including silver were biased to downside as higher inflation figures in China sparked some concerns that the world’s largest metals consumer could turn cautious in adding further stimulus in order not to lose control on inflationary pressures which is typically supportive for the yellow metal bulls. Nonetheless, the most important data from china is expected on Friday with investors highly anticipating gross domestic product of the first quarter. There will be a strong technical resistance around 1660$ and selling pressures could reappear at these levels. Also, below 1630$ support may revalidate the bearish scenario.

Gold for June delivery added $13.80, or 0.9%, to settle at $1,643.90 an ounce on the Comex division of the New York Mercantile Exchange.

Silver futures for May delivery retreated 21 cents, or 0.7%, to $31.52 an ounce.

Oil prices dipped sharply on Monday’s early trades as higher than expected CPI in China which jumped to 3.6% in March, comparing with 3.2% in the preceding February, weakened expectations that the world’s second largest oil consumer could introduce new monetary easing measures. The data added to concern over demand strength outlook across the globe, especially after the market began to price in the negative meaning of downbeat payrolls data released from the U.S. last Friday and casted doubts over the strength of the U.S. economic recovery. Easing supply concern was at play with oil’s traders shifting focus to Turkey which expected to host talks between Iran, the key oil’s producer and exporter, and major global powers, including the U.S. over its nuclear program. A geopolitical tension between the Islamic republic and the western powers was a main motive behind the crude latest climbs. However, the prices rebounded later on the session as the weaker dollar and falling prices created attractive entry points.

WTI Crude oil for May delivery fell 85 cents, or 0.8%, to $102.46 a barrel on the New York Mercantile Exchange. Brent oil for May settlement dropped 76 cents, or 0.6 percent, to end the session at $122.67 a barrel on the London- based ICE Futures Europe exchange.

Wall street & Equity Markets Review

U.S. stocks came from holidays to perform its worst during the month as investors found the chance to price in negative jobs report because Wall Street was closed in the meantime in observance of Good Friday. The reaction excluded the role of negative payrolls data in boosting QE prospects which reflects market sensitivity to growth strength after previous upbeat assessments played as a main motive behind the prolonged gains cycle which persisted with no major pullbacks since last summer. However, The recent decline still seen as a corrective rally with many analysts arguing that the somewhat disappointing Non-farm payrolls in March may not be able to distort the solid recovery picture over past months as the quarterly increase of 635k in the last three months still much better than the 2010 Q4 performance which jumped with only 492k. Moreover, unemployment rate dipped to a three year low of 8.2%. Hence, while the stocks might experience some pressure in near term, there is not much possibility of a steep and deep selloff. Meanwhile, European debt crisis and Chinese slowdown could be more important in setting the overall trend in second quarter.

The Dow Jones industrial average closed down 130.55 points, or 1%, to 12,929.59.

The S&P 500 index declined 15.88 points, or 1.1%, to 1,382.20.

The NASDAQ composite Index fell 33.42 points, or 1.1%, at 3,047.08.

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