Daily Analysis 05/04/2023


EURUSD

EUR/USD was trading 0.1% lower at 1.0948, just below the two-month peak it hit on Tuesday, despite the release of healthy German industrial orders rising 4.8% in February.

European stock markets mostly rose on Wednesday with the DAX index in Germany trading flat, CAC 40 in France climbing 0.1%, and the FTSE 100 in the U.K. rising 0.2%, despite a somewhat pessimistic risk sentiment in the market.

French industrial production rose 1.2% on the month in February, exceeding expectations of 0.5% growth, and an improvement from the revised drop of 1.4% the prior month.

ECB could potentially hike by 50 basis points in early May, with Governing Council member Robert Holzmann stating earlier this week that such a move is "still on the cards".

Later today, the ADP Non-Farm Employment Change and ISM Services PMI numbers will be announced in the US, which is highly important news to influence the dollar.

Closing statement: In conclusion, the EUR/USD currency pair saw a slight dip in trading on Wednesday but remains just below a two-month peak thanks to the rise in German industrial orders. Despite lingering risk sentiment, European stock markets mostly saw gains, with the DAX in Germany trading flat and the CAC 40 in France and the FTSE 100 in the UK seeing slight increases. French industrial production also exceeded expectations, rising 1.2% in February. The European Central Bank may potentially hike interest rates in May, according to Governing Council member Robert Holzmann. Traders should keep an eye on the upcoming ADP Non-Farm Employment Change and ISM Services PMI numbers being announced in the US later today, which could have an impact on the dollar.

SMA (1D) Rising
RSI (1D) Neutral
MACD (1D) Slightly Rising

GBPUSD

GBP/USD fell 0.1% to 1.2487, slipping from Tuesday’s ten-month high, still testing the resistance at around 1.25100 zone.

The DXY, which tracks the dollar against six other currencies, moved just higher at 101.295, just above a fresh two-month low of 101.140 hit earlier in the session.

Tuesday's JOLTS report in the US showed that job openings dropped to their lowest level in nearly two years in February. This followed data showing that the U.S. manufacturing sector sank deeper into contraction in March.

Federal Reserve Bank of Cleveland President Loretta Mester indicated on Tuesday that the central bank likely has more rate rises ahead of it, seeing the fed funds rate moving above 5%.

Closing statement: The GBP/USD currency pair retreated slightly from a ten-month high on Tuesday, while the US dollar index, which measures the greenback against six other major currencies, bounced back slightly from a two-month low hit earlier in the session. Additionally, weak economic data, including the recent JOLTS report and manufacturing sector contraction, may have impacted the dollar's performance. Meanwhile, the Federal Reserve Bank of Cleveland President's comments suggesting further rate hikes could be on the horizon may also be influencing the currency market.

SMA (1D) Slightly Rising
RSI (1D) Slightly Falling
MACD (1D) Slightly Rising

CRUDE OIL

Oil prices are rising after OPEC+ announced unexpected output cuts.

The American Petroleum Institute reported that U.S. crude oil inventories fell by approximately 4.3 million barrels in the week ended March 31, indicating an improvement in demand.

The official weekly report from the U.S. Energy Information Administration is expected later today.

Russia has also decided to extend its half-a-billion bpd production cut until the end of 2023, right after OPEC+ members declared their decision to reduce output until the end of this year.

Investors will be keeping an eye on the U.S. non-farm payrolls data set to be released later this week for cues on broader economic trends.

Closing Statement: The oil market continues to be influenced by the latest decision from OPEC+ and Russia's extension of its production cut. Moreover, the demand outlook for crude oil is expected to be shaped by the U.S. non-farm payrolls data to be released later this week.

SMA (1D) Neutral
RSI (1D) Slightly Falling
MACD (1D) Slightly Rising

GOLD

Gold is trading at around $2020-2025 level this morning, which is a sign that traders expect US interest rates to fall this year.

Traders' view that US interest rates are at or near their peak is driving gold towards the highs of March 2022.

The dollar started last month on a firm footing on expectations of higher interest rates, but the failure of two regional US banks in March and soft economic data have added to the growing belief that the Fed may soon stop increasing interest rates.

With the Fed raising rates by a quarter percentage point in March, this could mean only one more hike of 25 basis points before pausing.

Investors will be looking for cues on broader economic trends from the US non-farm payrolls data due later this week.

Closing statement: The price of gold is being driven higher by traders' expectations of falling US interest rates, as they believe the Federal Reserve may soon stop increasing interest rates due to soft economic data and the failure of two regional US banks in March. Investors will be keeping a close eye on US non-farm payrolls data later this week for further cues on broader economic trends.

SMA (1D) Rising
RSI (1D) Neutral
MACD (1D) Slightly Rising

NASDAQ

The Nasdaq market experienced modest losses, but traders remain optimistic about its future performance.

Technicals remain net bullish, although the index did lose some relative performance against the S&P 500.

The resistance level at around 13200 zone held up yesterday, and it will still be valid for the time to come.

The S&P 500 hasn't yet challenged the February high but has at least taken out the March swing high.

The Dow Jones Industrial Average added more than 300 points on Monday, showing resilience despite an oil output cut from OPEC+ that threatens to stoke inflation and recession fears.

Closing statement: Overall, the Nasdaq market remains in a strong position, despite some losses in the short term. Traders are optimistic about the market's performance going forward, and technicals remain net bullish.

SMA (1D) Rising
RSI (1D) Slightly Falling
MACD (1D) Slightly Falling

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