US Stock Indexes Gain But Not Nasdaq

Mar 26 21, 10:49 GMT

US stocks tended to gain, as optimism for the US economic recovery may have gotten a boost from the financial data released yesterday. Characteristically the weekly initial jobless claims figure was lower than market expectations, reaching the lowest level since the start of the pandemic and its adverse effects on the US economy. At the same time, the final US GDP growth rate for Q4 2020, was higher than expected, also providing some confidence to the markets. On the other hand, this wasn’t the case with Nasdaq, which has witnessed losses for a third consecutive day, as big tech shares seem to be under threat, at least over the near term. The grilling of CEOs of Facebook, Twitter and Google on whether the tech firms shared part of the responsibility for the recent riots in Capitol Hill, seemed to weigh on the Tech index and it’s not the first time US lawmakers are outraged at these tech giants. The USD seemed to stabilize somewhat against a number of its counterparts, after reaching a new high since around mid-November. We expect traders to keep an eye out for today’s US financial releases in a quest for further hints for the US economic recovery.

Dow Jones climbed higher surfacing above the 32600 (S1) resistance line, now turned to support. Based on yesterday’s movement we tend to maintain a bullish bias for the index, yet the RSI indicator below our 4-hour chart implies that the index has not reached a bullish market yet as it maintains its sideways movement near the reading of 50. Should the bulls actually maintain control over the index’s direction, we may see it aiming if not breaking the 32900 (R1) resistance line and if R1 is breached the way opens for the 33200 (R2) line which marks a record high level for the index reached on the 18th of March. Should the bears take over, we may see Dow Jones breaking the 32600 (S1) support line and taking another aim for the 32230 (S2) level which was tested yesterday.

GBP gains despite threats of the EU to curtail vaccine exports

The pound tended to gain against the USD, EUR, CHF and JPY yesterday despite the possibility of the EU curtailing its vaccine exports to the UK, which could slow down the country’s vaccination program. Also on a positive note, the UK government, is reported to have won Parliamentary backing to slowly start lifting the lockdown measures in the UK, as the UK Parliament voted 484 to 76 in favour of extending the UK Government’s pandemic emergency powers. At the same time, it should be noted that the GBP may have also benefitted from the better-than-expected PMI readings for March, showing increased economic activity for both the UK manufacturing and Services sectors. Today we expect financial data to continue to capture pound trader’s attention along with fundamentals and could provide some volatility for GBP.

GBP/USD rose yesterday after unsuccessfully trying to break the 1.3700 (S1) support line. As in its upward motion, cable also broke the downward trendline incepted since the 18th of March, we switch our bearish outlook for the pair, initially for a bias for a sideways movement. Should the pair find renewed buying orders along its path, we may see it breaking the 1.3845 (R1) resistance line and aim for the 1.3990 (R2) level. Should a selling interest be displayed by the market, we may see cable breaking the 1.3700 (S1) support line and aim for the 1.3565 (S2) level.

Other economic highlights today and early tomorrow

In today’s European session, we note UK’s retail sales growth rate for February and from Germany the IFO indicators for March. In the American session from the US we get the Consumption rate for February and the final University of Michigan consumer sentiment for March. Oil traders though may be more interested in the release of the Baker Hughes oil rig count, while on the monetary front note that ECB President Lagarde is to participate in the Euro Summit.

Dow Jones Cash H4 Chart