May 3, 2021

Daily Market Analysis

Market Focus

Stocks dropped from a record as traders assessed corporate earnings, economic data showing potential inflation pressures and hawkish remarks from a Federal Reserve official. The dollar climbed.

The S&P 500 trimmed its biggest monthly advance since November, with energy and technology shares leading declines on Friday. Twitter Inc. tumbled as the social media company posted a sluggish start to the year in its advertising business. Despite living up to Wall Street’s profit expectations, Chevron Corp.retreated after disappointing investors who were anticipating a revival of buybacks.

Signs of excess risk-taking in markets show it’s time to start debating a reduction in bond purchases, said Robert Kaplan, president of the Dallas Fed, breaking ranks with Chairman Jerome Powell. Data showed personal incomes soared in March by the most in monthly records back to 1946, powered by fiscal stimulus. A key measure of consumer prices that the Fed officially uses for its target had the biggest increase since 2018.

The S&P 500 has had better months, but never before has a rally been so widespread, according to one measure tracked by Bloomberg. During 18 sessions in April through trading on Thursday, 95% or more of the index’s members were above their 200-day moving average.

Main Pairs Movement:

The dollar increased by the most in almost two months as the U.S. economy rebounds at a faster pace than others in Europe and Asia, leaving traders covering short bets and rebalancing portfolios as the month ends.

The dollar is now poised to end a three-week losing streak. President Joe Biden administration’s unprecedented spending packages are helping to boost economic growth, a positive for dollar bulls. But bears argue that America’s growth will eventually be overshadowed by a broader revival in the global economy and renewed appetite for riskier assets.

The greenback gained more support as Robert Kaplan, president of the Dallas Federal Reserve, said it’s time for the U.S. central bank to start debating whether to start pulling back on some of its asset purchases as growth quickens. Traders also cited 10-year Treasury yields holding near recent highs and profit-taking ahead of central bank meetings, with the Bank of England and the Reserve Bank of Australia set to meet next week.

Technical Analysis:

EURUSD (4 hour Chart)

GBP/USD pair came under strong downside stress during American session while US dollar index usher to above 91 level, traing at 1.38 as of writing. Major rival currencies against greenback were dragged down amid euro plummet after German GDP fail to beat estimation with -1.7% versus -1.5% expected. At the meantime, some trader said it seems to be a product of month-end flows into London fix. For RSI side, indicator shows 34 figures, suggesting a window for bearish momentum at least for short term interval. On moving average price, 15-long SMA is turning it head down to negative slope whilst 60-long SMA is turning flat move.

Sum up above, we see market is confronting a critical time at current stage as it seems to establish a “M” pattern in short term For price action, current stage at 1.3822 level indicate as neckline of “M” pattern, moreover, it’s also considered low bound for longer perspective as well. Therefore, we stay tune on immediate support at 1.3822, 1.3796 following.

Resistance: 1.39, 1.396, 1.4

Support: 1.3822, 1.3795

USDJPY (4 Hour Chart)

Japan yen is poised to upper side as it continue rallied which fueled by strong greenback, trading at 109.32. In the absence of a significant news pump, the furious pull up seemingly driven by weakness Fiber. For RSI side, indicator has ratched up to 68 figures, suggesting an room for upper movement. Moreover, 15-long SMAs accelerating it upward slope and 60-long SMA maintaining a smooth movement.

Overall, we expect market still have a room for bullish momentum which motivate the strong price action pattern notwithstanding RSI is poised to over bought area. On slid way, we see the priority support of price cluster at 109 and 108.37 following as neckline of longer view.   

Resistance: 110.412

Support: 109, 108.37, 107.936

USDCAD (Daily Chart)

Loonies snap days appreciation streak as pan-commodities market whispaw and greenback turn north territory, trading at 1.22865 level as of writing. Meanwhile, WTI crude oil had slipped over 2.1% to 63.5 level as market close. For RSI side, indicator still occupy the over sought territory at 28 figure, suggesting an over pessimetic sentiment at the moment.

Continue our recently perspective, we estill expect loonie will have an immense space for downward trend as it penetrated 2 years neckline. Moreover, we do not see any support level on lower bound in long term view.

Resistance: 1.238, 1.246, 1.2491

Economic Data