April 5 Daily Market Analysis

Daily Market Analysis

Daily market analysis by OptionRally

EUR/USD

The pair expended the losses cycle that began after Tuesday’s FOMC minutes to hit its lowest prices since mid-March on renewed euro zone concerns after Spanish bond yields jumped on Wednesday’s bill auction. The dollar strength gathered more momentum from U.S. positive employment and ISM data which further dampened hopes of easing prospects amid sustained recovery. ECB rate decision gave no inspiration despite a slight upbeat assessment from Mario Draghi to the growth outlook. Technically, the cross found a footstep after the rising trend line from yearly lows offered a good support to contain the dip barley above 1.3100 key handle. Afterwards, the price turned moderately higher on oversold conditions but couldn’t translate moving off lows into a solid corrective swing as remain stabilized below the main moving averages on smaller frames so far. Above 1.3145 (Fib 61.8% of 1.3003-1.3485 ascend) may improve the tone but looking at EUR/USD charts shows the upside looks likely to be limited below 1.3220-1.3200 zone as turned to provide a strong resistance after played as a solid support floor through past two weeks. Fresh weakness is on the cards with clearing recent lows while cracking 1.3085 key pivot and 78.6% retracement is needed to confirm bearish extension and signal further easing toward 1.300 psych level.

GBP/USD

Cable recovered modestly on late Wednesday’s dealings and moved off lows as better than expected American data eased risk-off mood somewhat and allowed for mild corrections. The strong PMI Services in UK provided some support for the pound against major rivals but failed to lift from its weakness against the greenback. Technically, the pair bottomed out after printed lows at 1.5831 where 200 4H-MA and Fib 50% of 1.5601-1.6060 ascend played to offer enough support. Above 1.5900 barrier and extremely preferable to regain 1.5920 pivot may shelve downward scenario and signal additional upside risk toward the broken ascending trendline around 1.5950, above which should sideline short term bears and open a scope for testing the fresh yearly highs above 1.600 psych handle. On the other hand, Clearance of current lows initially exposes 200 DMA at 1.5820, then 1.5800 major ground with a violation here could suggest that latest bullish run from 1.5769 has already completed.

AUD/USD

The pair resumed downward moves on Wednesday’s hours after failed earlier to sustain rebounds above 1.0300 barrier to print with the subsequent slump it lowest levels in almost three months at 1.0241, levels not seen since early January. Australian trade deficit along with Chinese slowdown fears has exacerbated the Aussie outlook though the RBA kept interest rates unchanged on Monday. The cross currently struggling with 1.0250 level which is 50% retracement of broader uptrend between connect to November’s lows 0.9660 up to recent yearly highs of 1.0854. If the price respected the 1.0300 handle as a resistance in the upcoming hours we may expect further easing with breaching recent lows support. Next downside objective lies around 1.0140 which is the 2012 low, also 61.8% retracement of the mentioned ascend. While if recovered above 1.0300 and respected with a throwback as a support we may favor to develop another corrective wave toward 1.0360-1.0400 price zone which is also expected to cap upside for now.

USD/CHF

The pair extended firmly higher yesterday to peak its best points in more than two weeks at 0.9181 before moderated slightly as better risk appetite that followed upbeat US economic data weakened the greenback slightly and helped to ease off session’s highs. As mentioned before the 0.9175-0.9200 resistance area managed to cap aggressive upward moves as clearance above should come in the context of a solid bullish trend which isn’t guaranteed yet with the recent upswing. If the stalling below recent high 0.9180 persists in the coming session, which is in confluence with 38.2% retracement of uptrend connects to yearly lows, it could favor some bearish correction with main support offered by 200 HMA around 0.9100 key handle. It should be noted that upside risk may begin with breaching above 0.9200 barrier first toward the double high pattern around 0.9250, followed by 0.9300 major level.

Commodities

Precious metals resumed decline on Wednesday’s trades and added more losses to post FOMC minutes selloff with gold prices down more than five percent in the course of past two sessions. The yellow metal still unable to take a breath as risk aversion remain dominating markets broadly after Spanish borrowing costs surged yesterday following the budget announcement which showed that the European nation failed to meet the previously agreed deficit target, even there are doubts about Spain’s ability to achieve the actual estimated deficit of 5.3% of GDP this year. The latest developments revived concerns over fiscal health in the Eurozone’s troubled region, thus, weakened the single currency sentiments which gold prices tended to follow in the recent weeks. The US dollar strength still a main depressing factor in the bullion market while American employment data released Wednesday fueled dashed hopes over easing resumption after ADP figures stayed above 200K psych level to signal a sustained improving conditions in the jobs market which should further dampen prospects of a stimulus action from the Federal Reserve. Technically, the price initially breached below a key support level at 1625$ that represents 61.8% retracement of the broader uptrend between 1522$-1792$, also close to March’s lows. Holding below this level may trigger fresh selling interest in the coming hours with 1590$-1600$ serves as the last support area before exposing yearly lows around 1560$.

Gold for June delivery declined $57.90, or 3.5%, to end at $1,614.10 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s lowest settlement since Jan. 9.

Silver futures for May delivery were down $2.22, or 6.7%, to $31.04 an ounce.

Oil prices traded at the lowest level since mid February yesterday, adding to Tuesday’s declines as weekly report of U.S. crude oil inventories fueled concerns over the demand strength in the American economy which considered the largest oil consumer across the globe. The Energy Information Administration stated a steep increase in crude stockpiles by 9.0 M barrels in the past week, sharply above previous expectations of an increase by around 2M barrels for the week ended March 30. The stronger greenback which strengthened across the board against major counterparts Wednesday added significant pressure on oil and other dollar-dominated commodities in general. The bullish news for the oil even failed to provide an inspiration to markets after upbeat ADP figures only boosted dollar sentiments, by lowering further monetary easing prospects, rather than offering a relief to improve demand outlook. Oil traders will pay attention to Friday’s key payrolls report to gauge recovery strength of the U.S. economy which is a main proxy for future consumption prospects.

WTI Crude oil for May delivery declined $2.54, or 2.4%, to $101.47 a barrel on the New York Mercantile Exchange. Brent oil for May settlement fell $2.52, or 2 percent, to end the session at $122.34 a barrel on the London-based ICE Futures Europe exchange.

Wall street & Equity Markets Review

U.S. stocks held on to steep losses Wednesday as market was hit by renewed concerns over fiscal stability on Europe amid rising Spanish borrowing costs which should weigh down on its weak public finance, while expansion in non-manufacturing ISM and positive jobs figures failed to bring a relief as further reduced expectations for additional monetary easing amid improving U.S. economy. The stocks were already on the defensive following FOMC minutes which indicated that the Federal Reserve is ruled out to introduce further stimulus measures in the near future. The payroll processing firm ADP stated in a report the economy added 209K jobs in March, slightly above previous estimates of 205k but less than February’s 230K. A separate report from the Institute of Supply Management showed ISM non-manufacturing index dropped to 56 versus 57.3 in the preceding month. It could be argued that Wall Street showed a muted reaction to mixed U.S. data while the negative impact came from lowering QE prospects. Meanwhile, European fresh concerns were the main depressing factors though the matter still far from comparing with Greece manner but it came in conjunction with market need to some downside corrections after the long run-up since last summer as well as the best Q1 performance in several years.

The Dow Jones industrial average fell 124.8 points, or 1.00 %, to 13,074.7.

The S&P 500 index declined 14.42 points, or 1%, to 1,398.96.

The NASDAQ composite Index retreated 45.48 points, or 1.5%, to 3,068.09.

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