June 23, 2021

Daily Market Analysis

Market Focus

Stock futures opened slightly higher Tuesday evening, holding onto gains from the regular session. The three major indexes ended higher for a second straight day, and the Nasdaq Composite surged to a record high as technology stocks outperformed. Microsoft (MSFT) shares steadied after jumping to a record level, bringing its market cap up to $2 trillion.

The S&P 500 extended gains into a second day as the Fed chief said he’s got “a level of confidence” that prices will eventually come down, while noting that it would be “very, very unlikely” to see the kind of 1970s-style inflation. In a testimony to the House Select Subcommittee Tuesday, Powell also said that a 5% inflation environment wouldn’t be acceptable, and urged patience at evaluating data on prices.

“So inlfation is larger than they expected,” said Art Hogan, chief strategist at National Securities. “That part is true. But the part about that’s going to force their hand faster than we think is the part that he’s pushing back on. I think markets have calmed down about that.”

Earlier Tuesday, New York Fed President John Williams noted that a discussion about raising interest rates is still “way off in the future.” At the same time, his Cleveland counterpart Loretta Mester said very low rates for a long period of time and unconventional policy tools such as asset purchases can lead to too much risk-taking and financial-stability issues.

Main Pairs Movement:

Optimism returned to financial markets and weighed on the greenback. However, dollar’s losses were limited and seemed corrective after last week’s surge. US Federal Reserve chief Jerome Powell testified before Congress on the Fed’s response to the pandemic.

High-yielding currencies posted modest intraday advances. The euro pair is currently trading at 1.1930, cable stands at 1.3940, while aussie hovers around 0.7560. The loonie pair approached the 1.2300 level, while ninja nears 2021 high at 110.96.

UK Health Minister Matt Hancock said covid-related data looks encouraging and suggests lockdown can fully end on July 19 as planned because a recent rise in cases is not resulting in deaths. On the other hand, concerns arose globally after the report of a new covid variant called Delta Plus, which may trigger new waves.

Little action around commodities. Gold keeps hovering around $ 1,780 per ounce, while crude oil prices retained gains. WTI settled at $73.00 a barrel, and Brent again stands on the $75.00 price level.

Cryptocurrencies were extremely volatile in the previous day. Bitcoin once tumbled below $30000, first time since January, and now rebouned back to $33500. Ethereum alike plummeted to its lowest level since March, and now struggled to get back to the $2000 price level.

Technical Analysis:

XAUUSD (Daily Chart)

Gold trades in a narrow range, around $1770ish, amid Powell’s testimony. In the near- term, bulls seem to be in control of gold as gold has breached the key resistance at $1770.95. In the meanwhile, both RSI and bollinger band signal that gold still have chance to the upside as the RSI is slightly above the oversold territory and gold is currently in the lower band of bollinger band, suggesting that gold is due to a bounce back. To the upside, if gold can climb all the way to its next resistance around $1820, then it will confirm its bullish as it will trade above the 50 SMA. Otherwise, the downside momentum is still in control in the bigger outlook.

Resistance: 1786.38, 1811.25, 1836.12

Support: 1755.6, 1705.86

EURUSD (Daily Chart)

EURUSD edges higher above 1.1930 level during the American trading hour. From the technical perspective, the pair remains bearish in the short- term as it continues to fall within the descending channel. The pair keeps clinging around Fibonacci resistance, the 61.8% retracement at 1.1945. On the daily time frame, the pair is scheduled to the downside as it is unable to recover above the 20 SMA. The technical indicator, RSI, retreats from the previous oversold territory whilst the MACD continues to lend supports to the bears. All in all, the pair remains skewed to the downside unless it can advance and breach above the 20 SMA, which is around 1.2100 level.

Resistance: 1.1945, 1.2349

Support: 1.1695, 1.1492, 1.1290

GBPUSD (Four- Hour Chart)

From the technical aspect, after the recent decline, GBPUSD reverses from bearish to bullish in the near- term. The bulls seems to be held and supported by the technical indicators; MACD is now bullish, lending supports to bulls, whilist the RSI is outside of the overbought territory, giving the pair rooms to extend further north. On the four- hour chart, the pair is heading to its next resistance at 1.3963. In order to turn bullish in a bigger outlook, the bulls need to break the price to the resistance level of 1.4139 to return to its former ascending channel. So far, the sterling is moving away from the descending trend line; further move of the pair will be afftected by the announcement of the BoE’s meeting.

Resistance: 1.3963, 1.4017

Support: 1.3896, 1.3787

Economic Data