USD Weakens As Fed Remains Dovish

Apr 29 21, 11:56 GMT

The USD weakened against a number of its counterparts yesterday, as the Dollar index reached its lowest point since the 26th of February. As was widely expected the Fed remained on hold and tended to recognize the improvement made regarding the US economic recovery, yet at the same time the bank stated that it’s too early to taper its monetary policy. It’s characteristic that Fed Chairman Powell stated to reporters that its not time yet to begin discussing any change in policy, as the US is 8.5 million jobs below February 2020 and that “we are a long way from our goals”. On the fiscal front US President Biden proposed a sweeping new $1.8 trillion plan in a speech to a joint session of Congress yesterday. Biden, also pleaded to members of Congress to raise taxes on corporations and rich Americans in order to pay for the “American Families Plan”. We expect the market’s attention to turn to the financial releases today with the US GDP preliminary rate for Q1 standing out.

EUR/USD continued to rise breaking the 1.2100 (S1) resistance line, now turned to support. We maintain our bullish outlook for the pair as long as it remains above the upward trendline incepted since the 5th of April. Should the bulls actually maintain control over the pair’s direction, we may see EUR/USD breaking the 1.2175 (R1) resistance line and aim for the 1.2275 (R2) resistance level, which hasn’t seen any price action since the 8th of January. Should the bears take over, we may see the pair breaking the 1.2100 (S1) support line and aim for the 1.1990 (S2) support barrier, which held ground on the 22nd of the month.

Apple beats estimates for revenues

Apple Inc. (#AAPL) reported quarterly revenue, significantly higher than expectations, fueled by sales of the 5G I-phone 12 line and other devices. The technology giant reported fiscal second-quarter sales of $89.6 billion, up 54% from the same period in 2020, while analysts on average, estimated $77.3 billion, while profitability reached $1.4 per share also topping estimations of around $0.99 per share. Apple’s revenues reportedly grew significantly in each of its major markets, and we highlight the year-on-year growth in China and Europe. Apple has increased its dividend by 7% and extended its share buyback program by another $90 billion and both news could support its share price. It should be noted that the earnings reported may not be preserved in the future should the pandemic retreat, thus turning consumer’s attention elsewhere, yet that remains still in the months to come. For now besides Apple, also Facebook (#FB) had a great earnings report, while Microsoft could have been better, yet overall we may see the Tech sector getting some support today, with interest also turning to the Nasdaq Index which tends to characterize the sectors’ movement.

Apple’s share price remained relatively calm yesterday, hovering just below the 135 (R1) resistance line. Technically the share’s price could remain in a sideways motion, given its movement since the 13th of April, yet the fundamentals surrounding it, as described above could push the share’s price higher. Should a buying interest be actually displayed by the market, we may see Apple’s share price breaking the 135 (R1) resistance line and aim for the 145 (R2) resistance level, which marks a high point since the 22nd of January. Should a selling interest be displayed by the market, we may see Apple’s price aiming for the 127 (S1) support line.

Other economic highlights today and early Tuesday:

With a heavy schedule ahead today, during the European session, we note Sweden’s GDP rate for Q1, Germany’s employment data for April as well as the preliminary HICP rate for the same month later on. Also from the Eurozone we get Economic as well as the industrial sentiment and the final consumer confidence indicator, all for April. In the American session, we highlight the release of the preliminary US GDP rate for Q1, as well as the weekly initial jobless claims figure while Fed’s Vice chair Quarles and NY Fed President Williams are scheduled to speak. During Friday’s Asian session, we note the release from Japan of Tokyo’s CPI rates for April, as well as China’s PMI figures for the same month.

EUR/USD H4 Chart