Upbeat US Data Sends Equities and USD Higher | FXTRADING.com - International

  • BOE sent GBP broadly lower overnight, with comments that it could take the UK several years to return to full capacity and some sectors may not fully recover to their pre-Covid size. EUR/GBP fall to a 3-month low and tested the 200-day eMA.
  • Firmer PMI data saw the S&P500 surge to fresh all-time high during its most bullish session in 6 weeks and notched up its 9th consecutive rise on 10 days.
  • Despite the positive tone from stocks, the US 10-year treasury yield declined for a fourth session and the VIX (volatility Index) remains elevated at 26.57.
  • Gold and silver also closed lower on the back of a stronger USD, with DXY (US dollar index) enjoying its most bullish session in 2-weeks.
  • AUD/USD fell to around 73c overnight amidst its most bearish session in 2-weeks, as Australian entered its first technical recession in three decades.

 

  • Australia’s construction and service sectors contracted again in March, although the service PMI expanded at a slower pace of 49 than the expected 48.1.
  • PMI data remains at the core of today’s calendar with manufacturing PMI from Japan, Europe, Germany and France and China’s service PMI up shortly.

Market to watch for news reactions:

  • China PMI: AUD/JPY, NZD/JPY
  • European PMI: EUR/USD, EUR/JPY, DAX (US30), CAC (FR30), STOXX (STOXX50)
  • US PMI and employment: USD/JPY, EUR/USD, DJI (US30), S&P 500 (US500), Nasdaq (USTEC)

 

DJI (US30): Eyes up the All-Time Highs

  • Price action broke above gap resistance and now consolidates near yesterday’s high. We’d prefer to see prices consolidate and / or retrace towards the 28,800 support-zone before reconsidering longs.
  • Bias remains bullish above the 28,270 low although bulls can consider bullish setups above the 28,800 support zone.
  • Bulls could target the ATH around 29,590.

 

GBP/NZD Breaks Below the 200-day eMA

  • Prices broke lower in line with our bearish bias, and now consolidating beneath prior support.
  • Bias remains bearish below 1.9747, although we’d prefer to see volatility subside around current levels before considering further shorts.
  • Next target is around the 1.9630 lows.

 

EUR/NZD Hits 2nd Target:

  • Our second bearish target was achieved overnight. Prices have stabilized around 1.7500 support and prices may correct higher from here.
  • Trend remains bearish, so bears could seek evidence of weakness below the 1.7572 and 1.7644 resistance levels.
  • A break below 1.7500 support zone brings the 1.7300 lows into focus.

 

USD/SGD Pauses at Resistance

  • We have seen a simple setup on the USD/SGD daily chart as the retracement from recent lows has stalled near the monthly pivot point. Given the downtrend we are now waiting for bearish momentum to return.
  • Bears could seek a break of yesterday’s low to confirm the correction has finished.
  • If yesterday’s low is broken then the 1.3526 low becomes the next target.

 

Watchlist Update:

EUR/USD: Mean reversion is underway and prices fell to a 4-day low overnight. Whilst support has been found around the 20-day eMA, we favour further losses after a minor bounce higher.

AUD/NZD: Removed from the watchlist. Weak AU GDP and comments from RBNZ stating they were happy with the level of currency saw a strong sell-off through the 1.0900 support area.

AUD/JPY: Retracement phase underway, so we are stepping aside until volatility subsides or a new directional trend takes shape.

AUD/CAD: Downside break failed to trigger the bullish flag scenario. Removed from watchlist until volatility subsides.

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