The Senate passed a $550 billion infrastructure plan that would represent the biggest burst of spending on U.S. public works in decades

11 August 2021, 06:30

Market Focus

Slumping technology stocks stood in contrast to a broader gain in U.S. equities, exposing the lingering concerns about the ability of the economy to weather less stimulus and rising Covid outbreaks. While the S&P 500 and Dow Jones climbed to another all-time high, the tech-heavy Nasdaq declined along with Amazon.com Inc. Micron Technology Inc. led a decline in chip stocks, which slid for a fourth session. Energy shares rallied with oil. In Europe, the Stoxx 600 Index climbed for the seventh day.

The Senate passed a $550 billion infrastructure plan that would represent the biggest burst of spending on U.S. public works in decades, sending the legislation to the House where its fate is in the hands of the fractious Democratic caucus.

The bipartisan 69-30 vote Tuesday marked a significant victory for President Joe Biden’s economic agenda. It was a breakthrough that has eluded Congress and presidents for years, despite both parties calling infrastructure a priority and an issue ripe for compromise. Nineteen Republicans, including Minority Leader Mitch McConnell, joined with all 50 senators who caucus with Democrats to support the bill.

However, the bill still faces hurdles in the House, which is scheduled to be on break until Sept. 20. House Speaker Nancy Pelosi, under pressure from progressives who want their priorities addressed, has said she will not allow a vote on the bipartisan package until the Senate has passed the broader economic plan. Moderates, meanwhile, are clamoring for the House to take up the bill sooner than that.

Main Pairs Movement

The greenback surged against European and safe-haven rivals but edged marginally lower against commodity-linked currencies, which were underpinned by the solid performance of crude oil and energy stocks.

The euro pair fell for a seventh consecutive day, heading toward the yearly low at around 1.1700. Cable settled around 1.3840, while Aussie added some 20 pips, and Lonnie hovered within the 1.2520 price zone. NZD/USD has been back to the 0.7000 level on Tuesday. USD/JPY extended its advance and trades at its highest in almost a month around 110.60.

Gold remained depressed, ending the day at $1,730 a troy ounce. Crude oil prices recovered some ground, with WTI ending the day at $68.50 a barrel, and Brent at $70.85. US Treasury Bond Yields continues their rising streak, with the 10-year yield closing the day at 1.3560.

Cryptocurrencies seesawed around the familiar price level amid the ongoing infrastructure bill negotiation which could impose tax requirements on digital assets. Though both Bitcoin and Ethereum ended the day red against the US dollar, their losses were within 2%.

Technical Analysis

GBPUSD (4-hour Chart)

Pound trade near a daily low of 1.3827 with mounting pressure amid persistent dollar’s strength after spending most of the day hovering around the 1.385 level. The pair has declined with consecutive 4 days. At the same time, the dollar remaining in the top spot on the hawkish Fed and anticipation of tapering. On the other hand, net GBP position perspective, last week net shorts dropped sharply in a follow-through from month end squaring. For the technical aspect, the RSI indicator printed 41 figures, suggesting a bearish momentum ahead. For moving average side, 15 long SMA indicator remaining downside movement and 60 long SMA seems to change its upward movement to the sideway.

In light of the aforementioned, we still expect this pair will continue to slightly move to sideway. If the price falls ahead, the first immediate support level will eyes on the 1.385 level in short term and the 1.38 level follow. However, the imminent U.S. CPI data might give dollar rival currencies a whipsaw. If the price could go over the last highs spot which is around 1.395, it will heading to over 1.4 level.

Resistance: 1.3896, 1.395, 1.4

Support: 1.38, 1.3745

EURUSD (4- Hour Chart)

EUR/USD pair is stocking 1.172 around as solid greenback demand persists while the shared currency gives up to tepid German data. Investors welcome U.S. news on infrastructure investment, eyes on U.S. inflation data. The pair seems to have gone into a consolidation phase and was last seen losing 0.14% in the daily market at 1.17190 as of writing. From the technical perspective, the RSI indicator still immerses in over sought territory, suggesting overly including on bearish momentum. For moving the average side, 15 long SMA indicator retaining downward slope and 60 long SMA completely head their way to the negative side.

As mention previously, we expected if the price drop below 1.1755, market momentum would drag it to lower lows than eyes on 1.17. Therefore, we forecast 1.17 will be the last support level, especially forbid buyers. In contrast, if the price could stand above 1.1755, the price will choppy between 1.1755 and 1.18.

Resistance: 1.1755, 1.18, 1.185

Support: 1.17

USDJPY (4- Hour Chart)

The Japan yen advanced to an almost one-month high of 11.058, trading nearby as the day comes to an end. The greenback retained its strength while the New York session, the latter fueled by news indicating a fresh financial injection in the U.S., coming from the government. At the same time, 10 years U.S. Treasuries yields have rallied to 1.35%, printed the record high in nearly two-week, that just gain 20% advanced from the last bottom. For the technical side, the RSI indicator record 71.6 figures as of writing, suggesting over-bought sentiment for the yen market. From a moving average perspective, both 15 and 60 long SMAs indicators are retaining downwind movement.

For the price action, the strong resistance has been built by the last couple of high points which is around the neckline of the bottom pattern at 110.66. Meanwhile, a relatively strong indicator also shows the overly sentiment that might forestall the bid side momentum or fuel the take profit action. In contrast, we expect 110.11 will be the first support level yet is short of the price cluster, and 109.7 following.

Resistance: 110.665

Support: 110.11, 109.7, 109.36