US stocks erased some of the gains made on Monday as investors continue worrying about corporate earnings. Social media shares like Snap and Pinterest crashed by more than 20% after Snap warned about trends in the ad business. Advertising companies like Trade Desk, Digital Turnbine, and Omnicon declined sharply. Similarly, Abercrombie & Fitch declined sharply as investors worried about its weak earnings. The next key corporate earnings to watch today will be Nvidia, Snowflake, and Box will publish their results later today.
The US dollar rose slightly after the hawkish statement by Jerome Powell. Like he did last week, the Fed chair warned that the bank will continue hiking interest rates in the coming months. It also rose even after the relatively weak new home sales numbers. The numbers showed that new home sales declined by 16.6% in April. They dropped from 709k to 591k, which was lower than the median estimate of 750k. This trend happened as mortgage rates kept rising. Further data showed that the country’s manufacturing PMI declined from 59.2 to 57.2. The next key mover will be the minutes by the Federal Reserve.
The New Zealand dollar rose slightly on Wednesday morning after the latest interest rate decision by the country’s central bank. It decided to hike interest rates by 0.50% to 2% in its bid to fight inflation. It also signaled that it would continue hiking interest rates in the coming months. This view is in line with what other central banks like the Fed and the Bank of England are doing. The next key economic numbers to watch will be the German and Mexico GDP data. Also, the US will publish the latest core durable goods orders and crude oil inventories.
EURUSD
The EURUSD pair has been in a strong bullish trend in the past few days. The pair managed to move above the important resistance at 1.0646, which was the highest level on May 5th. It is being supported by the 25-day and 50-day moving averages. At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have kept rising. Therefore, the pair will likely keep rising as bulls target the key resistance level at 1.0800.
EURCHF
The EURCHF pair has been moving up gradually in the past few days. It is trading at 1.0311, which is slightly above the key support level at 1.0250. A closer look shows that the pair has formed a bearish flag pattern, which is usually a bearish signal. The Relative Strength Index has moved slightly below the neutral point at 50 while the Stochastic Oscillator has moved downwards. The pair will likely have a bearish breakout soon.
NAS100
The Nasdaq 100 index came under intense pressure as investors focused on the weak guidance by Snap. The index is trading at $11,750, which is slightly above the year-to-date low. On the four-hour chart, the index is between the descending channel shown in blue. The Relative Strength Index has moved to the neutral level at 50. The index will likely keep falling as bears target the key support level at $11,200.
