January 28, 2021

Daily Market Analysis

Market Focus

U.S. stocks extended losses in after-hours trading after disappointing earnings from tech giants and amid growing concern that equities have become overvalued. The dollar jumped the most since September and Treasury yields slipped.

Facebook Inc. and Tesla Inc both fell after reporting results, dragging down ETFs that track major stock gauges. The S&P 500 Index recorded its worst rout since October in the cash session, with the gauge down 2.6% after Federal Reserve officials left their main interest rate unchanged without promising any more aid for the economy. The selloff was widespread, sinking all 11 groups in the benchmark stock gauge.

Turmoil continued in pockets of the market where retail traders are becoming a dominant force, with shares of GameStop Corp. and AMC Entertainment Holdings Inc. soaring as investment pros questioned whether there’s any rationale behind the moves.

The Stoxx Europe 600 Index declined the most in five weeks as the European Union and AstraZeneca Plc squabbled over vaccine delivery delays. The euro fell after a European Central Bank official said the markets are underestimating the odds of a rate cut. Officials in the U.K. announced new rules to try to curb the spread of Covid-19 and Germany cut its 2021 economic growth forecast to 3% from 4.4%.

An extended run higher for stocks has reversed this week as investors look to a spate of earnings releases for clues about the health of the corporate world. Federal Reserve Chairman Jerome Powell said at a press conference that the U.S. economy was a long way from full recovery and still short of policy makers’ inflation and job goals.

Elsewhere, Bitcoin fell below $30,000 before paring the decline and precious metals slumped. Asian stocks fell for a second day as investors took a breather following the regional benchmark’s ascent to a record high Monday.

Few Takeaways for Fed Speaks.

Market Wrap

Main Pairs Movement

The dollar rose against all Group-of-10 currencies as equities continued to tumble, and as Federal Reserve Chair Jerome Powell reiterated the central bank’s commitment to accommodative monetary policy, adding the U.S. was a long way from a full recovery. The greenback ticked up following the Fed decision and as Powell spoke in his press conference.

Pace of bond purchases to remain at $120 billion per month, the Fed said in its policy statement. It also added a mention of vaccines, saying the path of the economy will depend in part on the progress of inoculations. U.S. bond price rise, yields fell.

The pound remained lower in New York afternoon trading. Prime Minister Boris Johnson said March 8 was the soonest national Covid-19 restrictions could be eased. Johnson also said he was confident in AstraZeneca’s vaccine supply amid a showdown between the company and the European Union over the timing of inoculation deliveries. GBP/USD falls -0.4%.

EUR/USD is -0.5% to about 1.21; fell to the lowest level since Jan. 18.

Technical Analysis:

GBPUSD (4 Hour Chart)

The Cable once boost to 1.3745, highest level days ago, then retreated to 1.3681 level as of writing. At the meantime, the U.K. house of lords is looking into the BoE’s stimulus-providing bond purchase, including whether the program has undermined perception of the central bank’s independence and how it can be unwound. The central bank was criticized by its internal watchdog for not communication the QE policy well enough, meaning that most of the public doesn’t understand it. Governor Andrew Bailey has promised to improve.

From a technical perspective, indeed, long term SMAVG indicator vigorous is supporting sterling in high-level stair. On the other hands, short-term SMAVG indicator maintain an upward slope, despite fell at the end of day. Additionally, the RSI is whipsawed today lowest at 49 which under neutral area, considering a bearish suggestion. If sterling could find a support in current stage and indicators are turn into positive, it would be expected to stay in long-term ascend channel. On the flip side, if the GBPUSD reverses its recent momentum even breakthrough the channel, the last critical support would be 1.3605.

Resistance: 1.3745, 1.3767

Support: 1.3693, 1.3645, 1.3606

EURUSD (4 Hour Chart)

The euro dollar slumped as much as 0.8% once after a reporting indicating that European Central Bank officials believed markets were largely ruling out more interest-rate cuts, and agreed to emphasize that such stimulus is still a possible alternative. The market is becoming increasingly familiar with attempts from European Central Bank officials to talk down the euro; lately, these have had short-term success as investors look for action rather than just verbal intervention in order to abandon their euro-long exposures.

Technically speaking, short and long-term SMAVG indicator were both turn into negative slope only haven’t death cross yet, suggesting a bearish momentum ahead. On the other hands, RSI indicator has slipped to 38 figure which consider a bearish trend, moreover, it seemingly still has space for upwind momentum as it hasn’t breach over sought area. As price action and derivative market aspect, risk reversals are almost unchanged Wednesday, suggesting it may take more than just a rate-cut threat to see the euro below key support around 1.19. Therefore, if market slide sequentially, the immediately support is psychological level at 1.21, 1.2077 and 1.2054 follow next.

Resistance: 1.2131, 1.2165, 1.2182

Support: 1.21, 1.2077, 1.2054

XAUUSD (4 Hour Chart)

Gold market has tamped down to day-low amid the greenback ticked up once few days high, even 10 years Treasuries yield slid. It seems like pair is having quite difficult for upward momentum. the pair is testing consolidation range between 1859.2 and 1842.8.

From a technical perspective, the RSI indicator ebbed to 43 which suggest the bearish trend ahead. Additional, short- and long-term SMAVG is moving to divergence way as short-term one is slightly pick up. On price action, the “M shape” pattern is built and currently at the right shoulder. Therefore, we expect that market seems to try to direct a way for it position. On slip side, the urgent first pivot level is required on 1842.8 level as current stage, 1824 is considered the last critical support level. On contrast, up way is resisted by 1859 as first level.

Resistance: 1859, 1875, 1891

Support: 1849, 1842, 1824

Economic Data