April 6 Daily Market Analysis

Daily Market Analysis

Daily market analysis by OptionRally

EUR/USD

The pair extended lower for the 4th day in a row as renewed concerns over Eurozone’s fiscal situations flare up on higher Spanish borrowing costs and downbeat German data which further weakened the shared currency sentiments while the US dollar still having the upper hand on the FX markets amid positive employment data which still playing against liquidation prospects. The cross dropped below the rising trendline connects to yearly lows of 1.2623; also the main moving averages are firmly biased to the downside as well as providing gradual resistance lines. Above 20 HMA at 1.3100 and better to reclaim the mentioned broken trendline, currently at 1.3117, may allow to a corrective bounce particularly with the charts showing extreme oversold conditions. On the other hand, Below recent lows 1.3034 we can determine many support pivots around the psych barrier 1.300 but the most closely watched would be the past two months lows at 1.3003, then 1.2967. Clearance of this area would resolve and favors bearish extension which also may come after a limited consolidative phase could be expected ahead of holiday’s session.

GBP/USD

Cable dipped to a fresh 2-week lows barely above 1.5800 key ground where found a temporary buying interest which allowed retracing slightly higher, also was supported by cross buying against the falling Euro. However, The pound remain mostly weak US dollar still broadly firmer as concerns over the euro zone prompted investors to sell the European currencies. The BOE rate decision gave no inspiration to markets while negative manufacturing figures further weakened the sterling. The chart shows a market on a clear bearish mood with 200 4H-MA serves as an immediate resistance barrier to cap upside for now below 1.5850 which if hold in the upcoming hours may signal further easing to retest 1.5800 prices, with a loss here opens up key pivot 1.5770 and we should remain conservative about the downside extension at the current phase as the mentioned support levels have triggered many upward swings in several times, though unless regaining prices above 1.5900 we still on bears territory. Loss of the latter initially would translate the greenback rally into a longer run and for the pound it should mean a return to medium term support lines at 1.5600 to test longer ascending trend lines.

AUD/USD

The pair traded on a mild positive territory on Thursday’s session as the Aussie was relatively resilient than European majors which suffered from growing debit worries. Moreover, the commodity currency found a support from Wall Street’s stabilization while heading to close a holiday-shortened week and benefited in the wake of a better than expected jobless figures. The pairing has been rallying modestly since forming a double low below 1.0250 but has not shown any significant pullback so far while price still struggling to sustain gains above 1.0300 barrier which keep bulls sidelined. The near-term outlook still firmly bearish as cross is required at least to overcome 1.0455 weekly high to ease the impact of lower highs pattern. Above 1.0400 handle may allow for such a chance. Next downside objectives remain at 1.0143, yearly lows and 61.8% retracement of late November’s bulls run, also the key pivot that did provide actual support in January for a rally of about 700 pips.

USD/CHF

The pair spiked on Thursday to peak a fresh 3-week high at 0.9220 as the Franc still keeping on track its decline mode against the greenback despite a slight increase of the Swiss CPI and a cross buying against the Euro which dipped briefly below 1.200 SNB`s floor on early trades following weaker bond auctions in Eurozone. Technically, the cross continues to trend mildly higher, after overnight brief correction that was contained at 0.9140. Fresh strength would be expected once being able to sustain gains above 0.9200 key barrier to open way towards significant resistance zone at 0.9250-0.9300, followed by the double high pattern around 0.9330. No signals of reversal yet, despite being in overbought territory. Initial support lies at 0.9180 key pivot and previous high, then around mentioned daily lows while 200 4H-MA at 0.9100 major barrier still seen as the main short-term support line.

Commodities

Precious metals bounced slightly on Thursday’s trades to recoup part of past two sessions` steep losses. The yellow metal moved off its lowest levels since early January as bargain hunting provided a relief ahead of a prolonged weekend due to Easter Day holidays with U.S. markets closed on Friday while Europe will remain closed till Monday. The yellow metal plunged more than 5% on the week after Fed’s minutes in March dashed hopes over a fresh QE round which boosted the greenback sentiments across the board, which in turn typically weighing on metals and other dollar-dominated assets as make them more expensive for buyers using other currencies. Meanwhile, Thursday’s upside was largely limited as higher Spanish bond yields affirmed a negative outlook over Eurozone’s fiscal stability. The price fell out of favor above 1630$ mark which may signal a weaker buying interest ahead of testing previous supports around 1640$. Fresh weakness is on the cards with closing below 1625$ key mark. While above 1650$ may ease downward pressure and allow to strength the price to develop a stronger corrective rally.

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 ended a choppy trade on mild gains as Wednesday’s selloff created attractive entry points after prices fell sharply following FOMC minutes which reduced further stimulus measures and caused a broader slump in all commodity markets. Furthermore, A sharp increase in U.S. weekly inventories added more pressures after hit its highest in nearly four years with a jump by around 9M barrels. Earlier on the session, The crude turned lower following weak European bond auctions in Spain and France with the first mentioned became the center of focus this week on market doubts about ability to fix its public finances and meet deficit targets while the economy suffering from contractionary signals and higher employment rates. The negative bill auctions if extended would lift worries of a return to debt crisis territory and by extension would add further pressure on demand strength forecasts, particularly with troubled region still suffering with a mild recession. Elsewhere, The American employment data provided a relief on subsequent trades after jobless claims declined slightly from the preceding week figures though it came below market expectations. Moreover, there is an upbeat view about Friday’s payrolls report following a better than expected of ADP jobs figures on Wednesday.

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 ended largely unchanged Thursday with the major indexes swung between fractional gains for The NASDAQ Index while S&P 500 and the Dow closed slightly lower. Nevertheless, Wall Street’s weekly performance stayed on the red, mainly due to March’s FOMC minutes that showed officials` relative upbeat outlook of the economy, which curbed forecasts for a third round of monetary stimulus known as Quantitative Easing. However, some analysts argue that the bearish impact may not last for a long time or trigger a steep selloff in the stocks. Firstly, because such upbeat assessment should be supportive in the longer term. Secondly, Current monetary policy is already ultra-accommodative despite Fed’s intention to stop carrying out its easing cycle for the time being. Sentiments were rattled as fiscal concern surrounding Eurozone’s region amid increasing yields in sovereign debt markets and recession signals which overshadowed improving U.S. employment data. The Labor Department stated in its weekly report that initial jobless claims dropped slightly by 6K to 357K. Investors` focus now turns to Friday’s non-farm payrolls report, which should shed further light on the recovery strength of the U.S. economy.

The Dow Jones industrial average declined 14.61 points, or 0.1%, at 13,060.1.

The S&P 500 index fell nearly 1 point to 1,398.08.

The NASDAQ composite Index added 12.41, or 0.4%, points to 3,080.50.

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