USD Stabilises By Edging Higher

Apr 27 21, 11:29 GMT

The greenback gained a bit against a number of counterparts yesterday, yet commodity currencies such as the Loonie and the Aussie tended to outperform the USD, with the latter gaining also from high copper and iron ore prices. USD’s gains though seemed to remain capped as stocks started the week rather optimistically, albeit the high number of Covid cases on a global level tends to create some worries. It should be noted that the earnings season tends to draw additional attention to the US equities market and Nasdaq as well as S&P 500 edged higher, while Dow Jones remained relatively stable yesterday. The market seems to be focusing towards the Fed’s meeting on Wednesday and despite no monetary policy change being expected, comments which could be included in the accompanying statement or Chairman Powell’s presser could move the markets. Overall, we expect besides the Fed’s meeting and fundamentals, traders to keep an eye out also for today’s financial releases.

Dow Jones remained relatively stable yesterday testing the 34100 (R1) resistance line. We tend to maintain a bias for a sideways motion and for it to change towards either direction we would require the index’s price action to break clearly either the 34100 (R1) resistance line or the 33800 (S1) support line. Please note that the RSI reading, just below our 4-hour chart, remains near the reading of 50 and could be implying a rather indecisive market. Should the bulls take charge over the index’s direction, we may see it breaking the 34100 (R1) resistance line and aim for the 34400 (R2) resistance level, which would be a new record high for the index. Should the bears take over, we may see the index breaking the 33800 (S1) support line and aim for the 33500 (S2) support level.

BoJ remains on hold, fails to impress the Yen

As was widely expected BoJ remained on hold maintaining rates at -0.10% at its interest rate decision during today’s Asian session and generally failed to impress traders as JPY and Japanese stocks tended to remain relatively quiet. In its accompanying statement the bank maintained its dovishness and stated that it will monitor the effects of the pandemic on the Japanese economy and that it will not hesitate to take additional easing measures if necessary. In its Outlook BoJ seemed to be more upbeat, yet highlighted that risks to the economic outlook are skewed to the downside for the time being. We continue to see safe haven flows as being the main driver for JPY, especially given the low number of high impact financial releases from Japan.

USD/JPY jumped higher testing the 108.35 (R1) resistance line, after bouncing on the 107.65 (S1) support line. As the pair broke the downward trendline guiding it since the 5th of April, we switch our bearish outlook in favour of a bias for a sideways motion, for the time being. The RSI indicator below our 4-hour chart seems to remain near the reading of 50 also implying that the market is still trying to decide on the direction of the pair’s next leg. Should the market extend the buying interest displayed yesterday, we may see USD/JPY breaking the 108.35 (R1) resistance line and aim for the 109.25 (R2) level. Should on the other hand, the sellers take the initiative, we may see USD/JPY breaking the 107.65 (S1) support line, which held its ground yesterday and aim for the 106.95 (S2) support level.

Other economic highlights today and early Tuesday:

Today during the European session, we get from Sweden Riksbank’s interest rate decision. The bank is widely expected to remain on hold at 0.0%. Overall, we expect the bank to maintain its cautiousness until the recovery is well under way and the pandemic related uncertainty retreats considerably yet should the bank allow for some optimism to prevail, we may see SEK strengthening. Also, we note from the UK the CBI distributive trades for April and the US consumer confidence for April in the American session. Please note that during the American session, BoC Governor Tiff Maclem is scheduled to speak, while. During Monday’s Asian session, we get from Australia the CPI rates for Q1.

US 30 Cash H4 Chart