EURUSD
- EUR/USD is consolidating its gains around 1.0700 in the European morning on Wednesday, supported by robust business activity in the Eurozone.
- Business activity in the Eurozone expanded at its fastest pace in nearly a year in April, driven by a strong rebound in the major service sector, according to the latest Purchasing Managers Index (PMI) survey released by HCOB on Tuesday.
- Despite the positive data, the Euro's gains against the US Dollar may be limited by the dovish stance of the European Central Bank (ECB), which has signaled potential rate cuts in the future.
- ECB President Christine Lagarde has suggested the possibility of a deposit rate cut in June, but the central bank remains cautious and keeps its options open for further monetary policy action.
- On the US side, the preliminary S&P Global Composite PMI for April weakened to 50.9 from the previous reading of 52.1, with the Manufacturing PMI dropping to 49.9, below expectations, indicating a slowdown in economic activity.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD is consolidating around 1.0700, buoyed by robust business activity in the Eurozone. Despite positive data, the Euro's gains are tempered by the ECB's dovish stance, with potential rate cuts on the horizon. Meanwhile, weaker-than-expected US PMI data suggests a slowdown in economic growth, influencing the currency pair's dynamics.
GBPUSD
- GBP/USD is maintaining its range around 1.2450 in European trading on Wednesday, showing stability amid ongoing market uncertainty.
- From a technical standpoint, GBP/USD continues to exhibit a downward bias, with key resistance levels holding firm against price action, signaling potential downside pressure.
- Bank of England Chief Economist Huw Pill's comments on Tuesday emphasized that easing policy based solely on easing headline inflation might not be warranted, highlighting greater risks associated with premature rate cuts.
- The US Dollar faces selling pressure as downbeat US April PMI data and growing risk appetite in the market weigh on investor sentiment towards the greenback.
- Later in the day, market participants will turn their attention to the release of US Durable Goods Orders and weekly Mortgage Applications, which could provide further insights into the economic landscape.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: GBP/USD remains range-bound around 1.2450, displaying stability amidst prevailing market uncertainties. Technical indicators suggest a downward bias, with resistance levels holding firm. BoE Chief Economist's remarks caution against premature policy easing, while weak US PMI data and improved risk sentiment contribute to selling pressure on the US Dollar. Investors await key US economic data releases for further market direction.
GOLD
- Gold price is experiencing a minor recovery while holding above $2,300 early Wednesday, stabilizing after a two-day decline, indicating resilience despite recent losses. From a technical perspective, gold price is hovering around the key 21-day Simple Moving Average (SMA) at $2,318, maintaining its position above this level after closing above it on Tuesday, suggesting potential support.
- A risk-on sentiment observed in Wall Street indices, driven by anticipation of corporate earnings results from major US tech companies, has dampened demand for the traditional safe-haven asset, gold price.
- Market expectations indicate the first Fed rate cut might occur in September, with the total anticipated easing for the year projected at 40 basis points, a significant shift from the initial forecast of about 150 basis points of cuts at the beginning of the year, according to Reuters and the CME Group’s FedWatch Tool.
- Investors are closely monitoring the mid-tier US Durable Goods data scheduled for release later on Wednesday for fresh trading cues, with particular attention on the upcoming first-quarter US Gross Domestic Product (GDP) report following Tuesday’s disappointing US Preliminary Composite PMI data.
Closing statement: Gold price shows signs of recovery above $2,300, supported by technical levels such as the 21-day SMA. However, a risk-on sentiment in Wall Street and reduced expectations of aggressive Fed rate cuts weigh on gold's appeal. Investors await US economic data releases, including Durable Goods and GDP figures, for further market direction.
CRUDE OIL
- WTI crude oil prices are struggling to extend gains after bouncing from the 50-day Simple Moving Average (SMA) support near the $80.75 level, indicating a cautious sentiment in the market.
- Geopolitical tensions in the Middle East eased as Iran signaled no immediate plans for retaliation against Israel following a limited-scale missile strike, alleviating concerns about supply disruptions in the region. The American Petroleum Institute (API) reported a larger-than-expected drawdown of 3.2 million barrels in US oil inventories for the week ending April 19, boosting optimism about improving demand fundamentals.
- The US Dollar (USD) remains subdued near its recent lows, supported by disappointing US PMI data for April, which could provide additional support to crude oil prices, as commodities are typically inversely correlated with the USD.
- Traders are eagerly awaiting the official US crude inventory data to validate the API report and provide further direction to crude oil prices, with the anticipation of a confirmed drawdown potentially offering a bullish catalyst.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: WTI crude oil prices struggle to gain momentum despite bouncing from key technical support, as easing geopolitical tensions and positive inventory data vie with subdued US Dollar sentiment. Traders await official US crude inventory data for confirmation and additional market direction.
DAX
- Positive service sector PMI numbers for both Germany and the Eurozone on Tuesday drove buyer demand for DAX-listed stocks. The German HCOB Services PMI rose from 50.1 to 53.3 in April, while the Eurozone HCOB Services PMI increased from 51.5 to 52.9, indicating an expansion in economic activity.
- Corporate earnings results, including those from SAP, contributed to the gains for the DAX on Tuesday, providing further support to investor sentiment.
- Wednesday's focus shifts to German Ifo Business Climate figures, with investors anticipating the release of the Index. A larger-than-expected increase in the Index could boost buyer demand for DAX-listed stocks.
- ECB commentary remains crucial for market sentiment, as several ECB Executive Board members, including Piero Cipollone, Anneli Tuominen, Elizabeth McCaul, and Isabel Schnabel, are scheduled to speak, potentially providing insights into future monetary policy decisions.
- Alongside economic data and central bank commentary, investors must also keep an eye on ongoing corporate earnings results, which could influence market movements and investor sentiment.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: Positive service sector PMI numbers, coupled with corporate earnings results, drove buyer demand for DAX-listed stocks on Tuesday. Attention now turns to German Ifo Business Climate figures and ECB commentary, with investors awaiting further insights into economic conditions and monetary policy. Ongoing corporate earnings results also remain a key factor influencing market sentiment.