Market Update: EURJPY Remains Pattern-Bound, Will We See a Continuation?

Today we’re returning to the EURJPY as the price continues to trade in its ascending triangle price pattern.

Looking at the daily we can see clearly that price: remains in an uptrend, and continues to trade in an ascending triangle price pattern.

In trends, these patterns are normally seen as continuation patterns. Price is seen to be charging diagonally before it finally pushes through resistance confirming a new move higher continuing the current trend. Over the last 2 months, EURJPY buyers turned resistance into support not once but twice thanks to the same pattern.

Last week we saw an attempt by buyers to breakout. This move was blocked by sellers and the price failed to hold and fell back inside the pattern. After that sellers made an attempt of their own but this was rejected maintaining the current level of support. Friday last week buyers returned with a strong session. This session maintained the pattern and got this idea back on track.

So far today sellers have been holding sway and the pattern top continues to hold in place. The story remains the same, we’re waiting to see if buyers can break out of the pattern and confirm a new continuation of the current main trend of the EURJPY price.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Trading Week Ahead

Last week we saw flat to a mixed week from the majors to the USD. The EUR was an expectation as it rallied strongly mid-week after the ECB rates hold and rates statement. The ECB confirmed that risks remain and things remain clouded in the near term due to the continuing impact of COVID19. At this stage, the ECB advised it wasn’t a time to discuss tapering. Another positive for the EUR was Friday’s PMI data that showed French services increased for the first time since AUG20, and German manufacturing increased. Eurozone services and manufacturing PMI data beat expectations as did UK data, looser pandemic restrictions were seen to help drive the fastest private-sector growth since 2013.

Big News Affected the Markets

The Bank of Canada was another market mover last week when they met. The BOC sent the CAD to 10-month highs after news hit that they cut Q/E purchases to CAD 3 billion a week. The USDCAD was on a bit of a roll before the BOC meeting jumping to 1.2652, after the tapering update price dropped 1.24% from its high ending up back below 1.2500.

Australian retails sales data surprised climbing to 1.4% but this did little to drive the AUD. New Zealand CPI came in as expected at 0.8%. The NZD finished mainly flat to the JPY and had a decent week to the USD.

Stock indexes took a breather last week after several weeks of gains despite Dow was close to a new record. One of the new factors that came into the market was the new tax plan released by president Joe Biden.

President Biden will seek an increase in the tax on capital gains to 39.6% for those Americans earning more than $1 million, this raises taxes on millionaire investors to fund education and other spending priorities as part of an effort to overhaul the U.S. economy. The president is expected to release the proposal formally next week as a way to fund spending in the upcoming American Families Plan. – CNBC

This news looks to have shocked the equity market to a degree. Markets have been sitting very pretty since 2020 on one of the best runs in long while. Investors and traders will now be watching this development closely. If it does have an overly negative impact could this start to form cracks in the bull market?

Oil fell into the red after a decent start to the week. US stockpiles surprised coming in at 0.6M above estimates. OPEC is looking to gradually curb output cuts as demand concerns continue. Gold rallied for the third straight week of buyers retesting 1798.

Bitcoin – The Bigger it Comes, the Harder it Falls

Bitcoin returned to the spotlight last week but not from a record-breaking point of view. Price tumbled trading close to 24% lower at its lows as profit-taking and regulation worries emerged. Over 200 billion was wiped off the cryptocurrency market on Friday alone. Bitcoin traded below $50,000 USD for the first time since March. The market was dramatically overextended. The big question now will be, “Is this just a short-term correction or the start of something bigger?”

Looking Ahead

This week traders will be looking at Biden’s new tax plan and how that could impact equity markets and if momentum shifts how that could influence the USD. Bitcoin’s fall will be a factor this week.

News wise Thursday’s FOMC meeting looks to be the key event of the week. The fund’s rate is expected to remain unchanged but the meat will be in the statement. No changes of surprises in the current bond-buying? The BOJ outlook report and monetary policy are due on Tuesday. Interest remains around the BOJ ETF purchases.

Other points of interest will be OPEC meetings, Australian CPI, and US Advanced GDP which is expected to increase to 6%

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Daily Market View-U.S Stock Market

The S&P 500 and the Dow edged lower yesterday as a resurgence of COVID-19 cases globally sapped appetite for stocks, while market participants digested earnings from U.S airlines and AT&T, along with mixed readings on economic data. Investor sentiment gradually improved by early afternoon, with seven of the 11 main S&P 500 sectors rising. The S&P 500 healthcare sector hit a fresh record high, while industrials were the biggest gainers. Supporting the mood was data showing the number of Americans filing new claims for unemployment benefits last week dropped to a fresh one-year low. The Labor Department report suggested layoffs were subsiding and expectations were rising for another month of blockbuster job growth in April. Investors are now awaiting quarterly results from technology behemoths next week to provide markets with some direction. Shares of Apple Inc. rose 0.3%, helping the tech-heavy NASDAQ remain afloat.

Dow Jones Industrial Average

The Dow Jones Industrial Average declined 0.94%. The best performer of the session on the Dow Jones Industrial Average was Salesforce.com Inc., which rose 0.39% or 0.89 points to trade at 231.45 at the close. Meanwhile, McDonald’s Corporation added 0.34% or 0.78 points to end at 233.04 and Visa Inc. Class A was up 0.07% or 0.15 points to 227.60 in late trade. The worst performers of the session were Dow Inc., which fell 6.01% or 3.90 points to trade at 60.92 at the close. Walgreens Boots Alliance Inc. declined 2.72% or 1.47 points to end at 52.58 and JPMorgan Chase & Co was down 2.12% or 3.19 points to 147.35.

NASDAQ 100

The NASDAQ index lost 0.94%. The top performers on the NASDAQ Composite were Ocugen, Inc. which rose 42.77% to 9.2800, Codiak BioSciences Inc. which was up 35.41% to settle at 15.87, and Qualtrics International Inc. which gained 22.92% to close at 41.57. The worst performers were Evolus Inc. which was down 18.94% to 9.50 in late trade, Tiptree Inc. which lost 13.01% to settle at 12.37 and Sleep Number Corp which was down 11.92% to 110.04 at the close.

Oil

Oil futures finished with a slight gain yesterday, after falling to their lowest intraday levels in more than a week before reversing course, as traders tried to assess the impact on energy demand of the recent surge in COVID-19 cases in Asia in particular. Despite the pessimism seen this week, the overall oil demand remains robust in two of the largest oil markets, the U.S and China. Data Thursday showing new U.S jobless claims now at pandemic lows strengthens that optimism. Despite the rapidly rising cases in India, economic activity, road traffic, and energy consumption remain well above the levels seen last year. Economic activity and oil demand are not expected to decline to the levels seen last year, even though the COVID-19 cases are far greater. West Texas Intermediate crude for June delivery tacked on 8 cents, or 0.1%, to settle at $61.43 a barrel on the New York Mercantile Exchange after tapping a low at $60.61. For oil prices to build up again, it will take global signs of recovery, and such indications are now scarce in key Asian countries.

Precious and Base Metals

Gold slipped 1% yesterday, retreating from a two-month high, as an uptick in the dollar and U.S Treasury yields hurt the metal's appeal, while palladium lingered near an all-time high. Spot gold was 0.7% lower at $1,780.36 per ounce, after hitting its highest since Feb. 25 at $1,797.67. U.S. gold futures dipped 0.7% to $1,780.90. $1,800 was a bit of psychological resistance, so we've come back with tests. The dollar and the 10-year yields are both a little bit higher and that's pressuring gold as well. The dollar was up 0.1% versus a basket of other major currencies, with the 10- year yield rising as far as 1.587%. Gold has dropped 6% so far this year, mostly pressured by rising yields. The downside in gold is likely to be short-lived amid central bank buying and increasing demand for physical gold from China and India. Switzerland in March recorded its biggest monthly gold exports in ten months as shipments to India jumped. But clouding that outlook was a record COVID-19 surge in the country. Also, dimming bullion's appeal was data showing a drop in claims for unemployment benefits last week, strengthening expectations for another month of job growth in April. Meanwhile, palladium eased off a record high of $2,891.50 per ounce and was last down 1.7% at $2,827.20. Silver slipped 1.6% to $26.14 per ounce and platinum fell 0.7% to $1,205.89. Copper prices in London fell yesterday on subdued demand from physical buyers reluctant to purchase the metal after a 21% rally so far this year, although a softer dollar lent some support. Copper prices have more than doubled since March last year to near a decade high on strong macro and fundamental factors, diminishing appetite from some end-users, especially as an economic recovery in top consumer China slowed.

Traditional Agricultures

Corn, wheat, and soybean futures hit multi-year highs yesterday as concerns about tightening global grain supplies triggered short-covering and fund-driven buying. Wheat futures climbed on unfavorable weather in North America and the prospect of high corn prices boosting demand for wheat in livestock feed. This rally is because corn is in short supply and is likely to remain so in 2021-22.

S o u r c e: News & Quotes (Courtesy: Reuters)

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Market Update: US30 Has Support But Can it Clear Resistance to Set New Records?

Hi traders, today we’re looking at the US30 daily chart as buyers have set support, but still have resistance to beat to get the trend back on track.

Looking at the current Dow D1 chart, we can see price remains on two trend lines. With the fast to med-term being the main trend at this point. Price has made a two-bar retracement back to the fast trend before yesterday’s fightback reconfirming current support seen at 33,800. This is why we have noted this point as it’s a repeat of the previous price action. You will notice this support came from previous resistance. This pattern was also seen in March. This can also be called a step.

Resistance becoming support is a good sign in a trend. It’s good to see it repeating as it shows price can respect the pattern. That’s not saying this will work on this occasion but it’s a good sign from a buyer point of view.

Dow price today has also started to test the minor downtrend line, but we still see supply and resistance remaining from 34,110 to 34,180. Buyers need to build on yesterday’s move and break this area of resistance to suggest that we may have a continuation in the process. The next step after that will be a test and break of the current all-time high.

If we see resistance hold and price moves back to support caution on the buy-side could be taken as the current retracement has widening bars which can be seen as a small warning unless US30 price breaks higher.

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Trading Week Ahead

A Mixed Week for Currencies

Last week, we saw some mixed results on the currency front as the USD pulled back as yields fell and profit takers set in. A few factors came into play, one being the IMF upgrading their global growth forecasts. Risk majors were far from unified as the AUD had a mixed week, while the EUR strengthened strongly and the GBP fell. After basically 3-months of gains to the JPY, the USDJPY finally succumb to decent seller pressure. Price was unable to get back to the previous week's highs, and I think that gravity looks to have finally caught up.

Staying on the Yen risk majors had a mixed week with the AUD and GBP falling while the all-conquering EUR moved higher.

The Fed Continues Its Support 

The Fed signaled that the central bank is nowhere near to reducing its support for the US economy. The Fed advised that an uptick in prices will most likely be temporary, and any uptick in COVID cases could slow the recovery. Inflation is also seen to be unlikely at this stage. Some of these points don’t do the USD any favors but are supportive of stocks.

Thursday’s unemployment claims came in higher than expected at 744K this was a touch surprising considering the stronger NFP data seen on the previous Friday.

Stocks Had a Stellar Week

Last week was an excellent week for stock indexes. The Dow and SP500 both hit new all-time highs. Tech stocks looked to have a better week as the Nasdaq outperformed the Dow. The S&P500 was a close second; this index does have a decent tech component, so this was a contributing factor in its gains.

Indexes in Europe moved higher, the FTSE and CAC were the better performers for the week. The DAX and Eurostoxx50 failed to find more momentum after amazing weeks prior.

Oil and Gold Highlights

Oil spent most of the week lower but did see some demand come back into the market on Friday. Crude stockpiles came in at -3.5M during the week, and the outlook remains positive on lower stockpiles and demand as economic growth picks up. One worry remains around the current third wave in Europe and what lockdown actions might do to demand.

Gold continues to remain rangebound, currently price trading between 1700 to the downside and 1758 to the upside. The weaker USD gave buyers some direction last week, but for now, price remains in a medium-term downtrend, and we need some direction to give us an idea of who really has control on the short term.

Looking Ahead

This week we have some significant data coming up, US CPI, which remains a bit of a hot topic and US retail sales data which I would think traders will be watching closely to gauge signs of the current US recovery. Back in Australia, we have unemployment data, and this is the first after the end of Jobkeeper in March. Another to watch out for will be the Chinese GDP which is expected to increase by 18.3%.

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

FOREX-Pulse of the Market

The biggest news yesterday turned out to be concerned about Johnson & Johnson vaccine and not the U.S inflation report. The country’s two health agencies (FDA and CDC) recommended halting the use of the one-shot vaccine after 6 cases of a rare but deadly blood clot disorder. Six cases is small when measured against the nearly 7 million Americans that have received the Johnson & Johnson vaccine but coming off the heels of similar concerns related to AstraZeneca’s shot, regulators are being very cautious as the disorder may appear up to 2 weeks from vaccination. Even if the FDA and CDC deem the vaccine safe after an investigation period, this revelation will increase vaccine skepticism/resistance, dealing a blow to the government’s accelerated vaccination plans. This is bad news for stocks, which ended the day lower, and the U.S. dollar which gave up earlier gains. U.S consumer prices rose 0.6 percent in the month of March with core prices rising 0.3 percent. While these increases were more than expected, investors worried about a much larger upside surprise. The more modest increase made it easier for everyone to heed the Federal Reserve’s guidance and look past the rise. Thursday’s retail sales report is the most important piece of U.S data on this week’s calendar. With a sharp increase in spending expected, the dollar’s decline may be limited. The Fed’s Beige Book report will also be released on Wednesday and optimism is widely anticipated. After the J&J news, the euro reversed its slide to end the day higher against the greenback. German investor confidence fell more than expected in April. Widespread lockdowns and slow vaccine rollout caused the country’s ZEW survey of investor sentiment to fall to 70.7 from 76.6. Not only was this the first drop since November but economists were looking for an increase. The Eurozone ZEW index also dropped from 74 to 66.3. Euro outperformed sterling because U.K GDP expanded less than expected in the month of February. The economy grew 0.4% against 0.6% forecast. Industrial production increased but the trade balance deteriorated significantly. Still, with the outlook brighter for the U.K than the Eurozone, we expect this outperformance to be short-lived. The Canadian and Australian dollars failed to rally despite higher oil prices. AUD was set back by weaker business confidence.

Euro

The single currency stood near three weeks high against the Greenback after a larger-than-expected uptick in a U.S consumer price gauge did not spark wider fears about accelerating inflation and the Federal Reserve's tapering. Still, many investors are wary of risk of further acceleration in the U.S economy as vaccination rollouts have moved fast. Overall, the EUR/USD traded with a low of 1.1865 and a high of 1.1918 before closing the day around 1.1899 in the New York session.

Yen

The Japanese Yen gained yesterday as the dollar fell as the U.S consumer price index jumped 0.6% in March versus the previous month, the largest gain since August 2012, and rose 2.6% from a year earlier, both 0.1 percentage point above market expectations. Inflation has been expected to accelerate in the April-June quarter. Overall, the USD/JPY traded with a low of 109.19 and a high of 109.94 before closing the day around 109.64 in the U.S session.

British Pound

The British Pound rose for a second day against the dollar and the euro yesterday, as analysts said Britain’s vaccination drive had not been derailed by its curbing of the use of AstraZeneca’s COVID-19 vaccine. The pound lost 1% against the dollar last week as Britain advised alternatives to the Oxford-AstraZeneca vaccine to vaccinate under-30s. Overall, the GBP/USD traded with a low of 1.3668 and a high of 1.3748 before closing the day at 1.3702 in the New York session.

Canadian Dollar

The Canadian Dollar was little changed against its U.S counterpart yesterday as oil rose and U.S data showed a tamer-than-expected increase in U.S underlying inflation, with the loonie rebounding from an earlier six-day low. Business sentiment in Canada continues to improve and many firms consider the impacts of the COVID-19 pandemic behind them. Overall, USD/CAD traded with a low of 1.2522 and a high of 1.2608 before closing the day at 1.2530 in the New York session.

Australian Dollar

The Australian Dollar has found itself undermined by vaccine rollout concerns in Australia and a mixed business confidence index from the country. National Australia Bank’s (NAB) Business Confidence edged down to 15 in March missing forecasts of 18. Despite the hawkish comments from the bank, Australia’s economic recovery seems to be dependent on the coronavirus vaccine rollout. Overall, AUD/USD traded with a low of 0.7584 and a high of 0.7646 before closing the day at 0.7638 in the New York session.

Euro-Yen

EUR/JPY is trading above 14, 50, and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The Relative Strength Index is above 58 and lies above the neutral zone. In general, the pair has gained 0.25%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50, and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 46 reading and lies above the neutral zone. On the whole, the pair has gained 0.15%.

Aussie-Yen

Currently, the cross is trading above 14, 50, and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 50 reading and lies above the neutral region. In general, the pair has lost 0.09%.

Euro-Sterling

This cross is currently trading below 14, 50, and 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 62 and lies below the neutral region. Overall, the pair has gained 0.12%.

Sterling-Swiss

This cross is trading below 14, 50, and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 42 and lies above the neutral region. In general, the pair has lost 0.20%.

Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.