Oil fell for a second day with an increase in U.S. crude inventories compounding concerns around a choppy global demand recovery

22 April 2021, 03:45

Market Focus

Asia stocks are poised to bounce after U.S. equities snapped a two-day drop on a rally in companies that stand to benefit the most from an economic revival. The dollar fell, while Treasuries stabilized.

Futures pointed higher in Japan, Australia, and Hong Kong. Most major groups in the S&P 500 rose, with raw-material, energy, and financial shares leading the charge. The Russell 2000 Index, a gauge of small caps, climbed more than 2%, outperforming major benchmarks.

Oil fell for a second day with an increase in U.S. crude inventories compounding concerns around a choppy global demand recovery. Gold edged higher.

Equities rebounded as traders sifted through corporate results for signs on whether an anticipated jump in profits would bring with its forecasts for stronger growth. Earlier losses were driven by concern over a flare-up in coronavirus cases around the world that could jeopardize an economic rebound, particularly with stocks trading near their all-time highs.

Main Pairs Movement

The Canadian dollar rallied after policymakers pared back their bond-buying program, making Canada the first major economy to reduce emergency levels of monetary stimulus. A gauge of the U.S. dollar retreated as stocks rebounded and commodity currencies edged higher.

USD/CAD fell as much as 1.2% to 1.246, the most since June 2020, backtracking on an earlier gain of 0.4% while the central bank said the recovery will still need extraordinary support, it also indicated that it’s bringing forward its expected timeline for rate increases.

NZD/USD climbed 0.5% to 0.7211, while AUD/USD rose 0.4% to 0.7762. USD/JPY erased an earlier decline to be little changed at 108.12.

EUR/USD fell less than 0.1% to 1.203 after earlier slipping as much as 0.3%. The European Central Bank meeting on Thursday carries little risk of setting off fireworks in the currency market.

Technical Analysis

EURUSD (4 Hour Chart)

Eurodollar choppy in the day in a tiny range for a second consecutive day, trading at 1.2034 as of writing. In day movement, eurodollar once slipped to 1.2 in earlier session then rebound from a strong psychological level. For the technical side, even though the RSI indicator once went down to 50 figure, it pulls up to 58 figure while market close which suggests a bull movement ahead. From an average price perspective, 15 and 60-long SMAs indicators still held ascending momentum. Therefore, from a price-action perspective, we believe the eurodollar still has room on the north side.

On the other hand, investors wait for tomorrow’s ECB rate decision. Most market participants expect ECB could more clarify on the Crisis Exist subject.

Resistance: 1.2071, 1.2106

Support: 1.199, 1.192, 1.1877

GPBUSD (4 Hour Chart)

Sterling has bounced back above 1.39, recovering its earlier session loss amid U.K. CPI missed expectation with 0.7% and PM warn of next covid wave whilst greenback reward from risk-off sentiment in share market. For the technical side, the RSI indicator shows 57 figures, suggesting a slightly bull movement expectation. On the Moving Average view, both 15 and 60-long SMAs indicators retain an upward trend.

For the price action side, we see sterling obtain retreatment on 1.39 where is the neckline of double bottom we considered a strong support level.

Therefore, we expect the market to still have a bullish movement in the further marketplace but it has defended 1.39 level while correction term.

Resistance: 1.4, 1.3959

Support: 1.39, 1.3822, 1.3796

XAUUSD (4 Hour Chart)

Gold has hovered two consecutive days while it is toward 1800 level as the greenback weakens, trading at 1793.79 as of writing. A slipped of the greenback as well as U.S. 10 year Treasuries yields boosted metal sharply up. Meantime, an improvement in market sentiment helped gold. For the RSI view, the indicator is close to the 70 figures which means the market gradually situate in over-bought sentiment. On an average price side, long and short-term SMAs indicator are both retaining it downwind trend.

All in all, we feel optimistic about the upcoming bull market movement. However, we see strong psychological resistance at 1800 on the upper side. Therefore, if we have to keep upward momentum, any correction needs to stop at the $1759.7 level on slid way.

Resistance: 1800.7, 1812.8

Support: 1759.7, 1754.5, 1722.75