Federal Reserve Governor Christopher Waller said Friday the U.S. economy is set to take off, but there’s still no reason to start tightening policy

19 April 2021, 03:34

Market Focus

Not even a week’s worth of evidence that the U.S. economy is coming back from the COVID-10 pandemic period has been able to derail the concerted rally sweeping stocks and bonds.

The S&P500 has surged up to a record-setting high. The Dow30 index gained consecutive days that crossed the 34000 thresholds for the first time, settle down to 34200.67. Wall Street wrapped up another winning week with the three major benchmarks all gaining more than 1%. The S&P 500 and the Dow posted their fourth straight positive week, while the tech-heavy Nasdaq has registered gains for three weeks in a row.

The last of the six largest U.S. banks to report– Morgan Stanley — posted stronger-than-expected earnings, bolstered by strong trading and investment banking results. Shares of the bank dipped 2.8%, trimming its year-to-date gains to about 14%.

The University of Michigan said Friday its preliminary consumer sentiment index rose to a one-year high of 86.5 in the first half of this month from 84.9 in March. In the meantime, strong housing data also propel the confidence for economic recovery.

Federal Reserve Governor Christopher Waller said Friday the U.S. economy is set to take off, but there’s still no reason to start tightening policy.

Main Pairs Movement

The dollar fell, poised for the biggest weekly pullback since December, as a steep decline in Treasury yields curbed the allure of the U.S. currency. The franc gained Friday amid the Biden administration’s decision to drop Switzerland’s currency manipulator label. U.S. equities were set for another record high close.

EUR/USD +0.1% to 1.1978; touched 1.1995, highest since March 4; talk of barrier at 1.20 slows the ascent with buy stops above. EUR/GBP -0.3% at 0.86603; earlier climbed as much as 0.4% to 0.87192, the strongest level versus the pound since February as the region’s vaccine rollout gathers pace.

The New Zealand and Australian dollars were the worst performers in the G-10. USD/JPY +0.1% to 108.82; rose as much as 0.2%, but still exposed to further downside risks should U.S. yields resume a decline.

Technical Analysis

EURUSD (4 Hour Chart)

Eurodollar continuously hit 1.199 level, its highest since March which also the cogent resistance level at current price action. Euro rebound from month-low was pushed by falling U.S. Treasury yields. In the meantime, U.S. policymakers have repeated multiple times this week that the ongoing massive stimulus program will remain in place until the economy recovers to pre-pandemic levels. For the RSI aspect, indicator record 62 figure which suggests bullish momentum. From a moving average perspective, 60-long SMAs retain their ascending movement but 15-long SMAs are waning upward momentum to flat move.

Therefore, we foresee the market will consolidate between the 1.1900 and 1.192 range as mixed information. Other than this, if Treasuries yields keep moving downward, the euro still got a big chance for the upper side.

Resistance: 1.199

Support: 1.192, 1.1877, 1.1796

GPBUSD (4 Hour Chart)

Sterling hovered for fifth consecutive days toward the last peak at 1.39 level which is supported by a decline of the greenback as well as U.S. Treasuries yields. On the RSI side, the indicator held 64 figures as of writing, suggesting a bullish momentum further. On average price aspect, it is noteworthy that happened a golden cross in the day.

From a price-action perspective, the market seemingly is heading to a double bottom pattern on a month-long scale. Therefore, we expect that still have room for bull move in the further market. On the upside, the immediate resistance would be 1.3848, 1.3867 following.

Resistance: 1.3848, 1.3867

Support: 1.3798, 1.3772, 1.3718

XAUUSD (4 Hour Chart)

Gold continues to accelerate to a higher stage amid U.S. Treasuries yields successively slipped, trading at 1778.18 as of writing which hit a 1-month peak. From the technical perspective, the RSI indicator is approaching the overbought area again in these two days, however, the daily chart still under 70 level which giving the pair a positive side for further extend. On the other hand, 15 and 60-long SMAs indicators are both remaining upward trend.

All in all, after solidly stand above the bottom pattern, we believe the market will consistently edge higher levels. For the next immediate, we eye on the psychological number at 1800 because there seems not to price cluster upon. On defending side, certainly, 1760 around should be the first critical support as it is the shoulder level of the bottom pattern.

Resistance: 1800, 1812.8

Support: 1759, 1754.5, 1722.75