April 27 Daily Market Analysis

Daily Market Analysis

EUR/USD

The pair extended gains on Thursday’s session and managed to print fresh weekly highs above 1.3260, buoyed mainly by a progressively weaker US currency which lost momentum after a modest boost by Fed’s outcomes that dashed hopes over a near QE resumption. Technically, holding below 1.3300 maintains overall sideways bias in the medium term coupled with expecting fresh throwbacks toward the main range floor. While staying above 1.3170-1.3200 price zone keeps short-term bulls in play to speculate further bullish attempts. The mentioned support zone comprises rising trendline off 1.2993 monthly low, 200 4H-MA and Fib 50% barrier of the last bear run connects to monthly high of 1.3384. Breaking below the latter opens up 200 HMA at 1.3156, then 38.2% retracement around 1.3140, with a loss here to risk a near-term topping that may lead with aggressive down moves to spark renewed attacks at 1.3000 psyche barrier.

GBP/USD

The Cable advanced yesterday to strike its highest levels in nearly seven months at 1.6205, prices not seen since early September. The cross looked as though it could completely clear the major resistance pivot but lost the steam and moderated modestly in subsequent dealings after a comment by a key BOE member suggested that central bank could expend asset purchases after UK GDP contracted for a second quarter. However, the pound found decent buying demand at 1.6155 which allowed catching upside again and currently pricing barely below 1.6200 handle. Technically, the underlying price should have tested its broken resistances in the 1.6140-1.6165 area, however, if remained stalling bellow recent peaks it may signal further tests to confirm the bullish breakout. If the aforementioned support area managed to hold in upcoming hours we may expect further gains, initially toward September’s key highs around 1.6250. Inversely, if the pound gives up its short term supports it may risk deeper retracement at previous yearly high around 1.6060 which should hold to protect the strong bullish structure.

USD/CHF

The pair plunged to fresh lows on Thursday at 0.9057 but a modest risk-off rally sparked by negative European and American data helped to recover slightly and pushed higher to attack 0.9100 prices where the retracing attempt was capped. Technically, the 100 HMA which is in confluence with falling trendline off monthly highs still pressing to protect the lower highs lows pattern and suggest further dips. The 20 HMA currently acts as an immediate resistance along with Fib 61.8% of 0.8930-0.9250 upleg, if cleared it may allow the cross to retest daily highs, nonetheless, without reclaiming prices above 200 MA and 50% retracement beyond 0.9130, the scenario of bearish resumption would remain favored ultimately. Recent low which is a few pips above 78.6% retracement barrier should offer initial support before attacking 0.9000 psych level.

AUD/USD

The pair spiked slowly higher in overnight trades to hit a new 1-week high at 1.0397, supported mainly by a better risk-on environment and solid gains in commodity and stocks market as well as Fed’s stimulus prospects which weakened the US dollar across the board. Technically, the cross to maintain its bullish bias in the short-term it should defend its current base around 1.0370 which represents previous key resistances including 61.8% reattachment of latest bearish swing off 1.0450 and broken bear trendline from 1.0555 high. Also, the 20 HMA offers a good support in the same place that held through the running week. In such a case, the price should target a double high pattern at 1.0416, then 1.0450-1.0470 resistance area. On the other hand, if the cross broke below the said supports it would keep the overall bias sideways to bearish while refocus next barriers at 1.0340, then the key near-term support at 1.0300 handle.

Commodities

Precious metals rallied Thursday with gold prices hitting a fresh two-week high above $1660, propelled mainly by a weaker greenback as negative unemployment data boosted possibilities of a dovish action by the Federal Reserve despite Wednesday’s meeting that showed no change in the central bank’s stance over further stimulus measures. The yellow metal often rises amid QE talks as additional liquidation often come with an inflationary impact, boosting the metal appeal as store of value and inflation hedge against the weakening paper currencies. Moreover, it adds more pressures on the US currency which is a plus for all dollar-prices commodities. Technically, the price initially broke above a key resistance in the short-term around $1658, above which the binary commodity should meet 61.8% retracement for the last decline off $1696 at 1665$ followed by the bear trendline projected from monthly highs at 1669$. On contrary, below 1643$ which is 200 HMA and 38.2% retracement would weaken the corrective structure and risks a return to test recent lows below 1630$.

Gold for June delivery advanced $18.20, or 1.1%, to settle at $1,660.50 an ounce on the Comex division of the New York Mercantile Exchange.

Silver futures for May delivery gained 85 cents, or 2.8%, to end at $31.21 an ounce.

Oil prices extended higher on Thursday as a weaker US dollar along with rising QE forecasts supported the bulls for a second day. The crude demand outlook was lifted on Wednesday after Fed upwardly revised its growth projections and suggested economic recovery to pick up more steam in the coming quarters. On Thursday, initial jobless claims rose last week above market expectations and stayed above 380K for the third consecutive week. The negative data suggested that Fed, as promised, may consider additional easing monetary policies if labor market conditions continues its degradation. FOMC meeting left monetary policy on hold and gave no hints at a possible QE resumption but a subsequent press conference by Chairman Ben Bernanke left doors open for further easing to ensure recovery. Technically, the prices are currently heading toward testing a strong resistance around $105 mark which comprises the recent peak, falling trendline off yearly high and 61.8% retracement of $110.55-$100.80 descend. Breaching above the latter should boost upside outlook and suggest further advance toward next retracement barrier around $106.20.

WTI Crude oil for June delivery added 43 cents, or 0.4%, to settle at $104.55 a barrel on the New York Mercantile Exchange. Brent oil for June settlement increased 80 cents, or 0.7 percent, to $119.92 a barrel on the London-based ICE Futures Europe exchange.

Wall street & Equity Markets Review

U.S. stocks advanced Thursday for the third consecutive session with the three major indexes ending steady above their symbolic levels as investors digested American data which showed an impressive increase in pending houses sales that also overshadowed downbeat unemployment data and mixed quarterly earnings released earlier on the day. The rising jobless claims though it painted a negative picture for labor market recovery after hit its highest levels in almost three months, but binary markets look likely have priced the data in a positive theme by lifting hopes of a fresh QE round. Fed’s officials pledged in their last meeting to remain open to more stimulus measures if the economic recovery starts to falter. Adding to bullish sentiments, pending home purchases soared by 4.1% in March, the highest percentage advance in more than two years. GDP growth through first quarter will be highly anticipated by investors on today’s trades to gauge recovery strength which according to Fed’s statement could moderate marginally before picking up in the second half of the year.

The Dow Jones industrial average surged 113.90 points, or 0.9%, to 13,204.62, up 1.4% so far for the week.

The S&P 500 index added 9.29 points, or 0.7%, to 1,399.98.

The NASDAQ composite Index rose 20.98 points, or 0.7%, to 3,050.61, up 1.7% so far for the week.

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