On Thursday, the stock market saw a significant upturn with the S&P 500 and Nasdaq Composite achieving gains, propelled by a resurgence in technology stocks, while the Dow Jones Industrial Average slightly lagged. Major tech companies, including Nvidia, Amazon, Alphabet, and Apple, led the rally, particularly after positive news about Apple’s shift to AI-focused chips. In the currency markets, the US dollar hit new highs for 2024, buoyed by expectations of upcoming economic data and Fed speeches. The EUR/USD and GBP/USD experienced volatility, with the former dipping below key support levels. Meanwhile, commodity prices showed mixed dynamics; WTI oil prices fell amid geopolitical tensions, while gold and silver prices rallied, with gold targeting historic highs. These market movements reflect ongoing concerns about inflation and the global economic outlook, influencing investor sentiment across various asset classes.
The stock market witnessed a notable rebound with the S&P 500 and the Nasdaq Composite making impressive gains, largely fueled by a surge in tech stocks. The S&P 500 rose by 0.74% to close at 5,199.06, while the Nasdaq Composite increased by 1.68%, reaching a new record high of 16,442.20. Despite the broader market gains, the Dow Jones Industrial Average slightly underperformed, edging down by 2.43 points to settle at 38,459.08.
Technology stocks played a pivotal role in driving the market’s recovery, particularly a few major players dubbed the “Magnificent Seven.” Notably, Nvidia saw a jump of 4.1%, Amazon climbed 1.7% to reach a new all-time high, Alphabet rose by more than 2%, and Apple surged 4.3% following news of a strategic shift to AI-focused chips for its Mac product line. This rebound came after a week characterized by volatile trading influenced by persistent inflation concerns and a mixed inflation report.
On the economic front, the latest producer price index (PPI) for March came in below expectations, offering some respite from the previous day’s sell-off triggered by a higher-than-expected consumer price index (CPI). The market’s reaction was mixed, reflecting the ongoing uncertainty around inflation trends. New York Fed President John Williams also hinted at stability in monetary policy in the near term, providing further context to the market’s day-to-day fluctuations. Meanwhile, disappointing earnings from CarMax and anticipation of upcoming reports from major banks like JPMorgan and Citigroup kept investors on edge.
The US dollar continued to display strength, reaching new highs for 2024, as measured by the DXY index, which peaked around 105.50. This upward movement comes ahead of the upcoming preliminary Michigan Consumer Sentiment and scheduled speeches from Fed officials Bostic and Daly, which are keenly awaited by market participants for further directional cues.
In Europe, the EUR/USD pair faced downward pressure, briefly dipping below the 1.0700 support level. Investors are now looking ahead to Germany’s final inflation rate and the ECB’s Survey of Professional Forecasters, both due to be released soon, which could influence the Euro’s trajectory. The GBP/USD, however, managed to end the day with slight gains after initially touching multi-week lows, with a full slate of UK economic data including GDP and production numbers due to be released.
The Japanese yen remained weak against the dollar, with USD/JPY reaching levels not seen since June 1990, around 153.30. This movement coincides with the forthcoming release of Japan’s final industrial production figures. Meanwhile, the AUD/USD found some support near the 0.6500 level and made a modest recovery. In the commodities sector, WTI oil prices resumed their downtrend amid geopolitical tensions and reduced expectations for a Fed rate cut in the summer, while gold prices rebounded, aiming for historical highs, and silver also recovered, surpassing the $28.00 mark per ounce.
EUR/USD dips as Fed and ECB policies diverge amidst strengthening dollar
The EUR/USD pair has seen a downward trend for the third consecutive session, dipping below 1.0700 amid strengthening of the US dollar, driven by revised expectations of a delayed rate cut by the Federal Reserve, likely in December, and an uptick in US Treasury yields. Concurrently, the European Central Bank (ECB) maintained steady interest rates, with signals of possible cuts ahead given falling inflation rates in the eurozone. Despite ECB President Lagarde’s assertion of the ECB’s independence from the Fed’s decisions, the resilient US economy versus the weaker economic indicators in the eurozone suggests a potentially earlier rate cut by the ECB compared to the Fed, thus forecasting a further weakening of the EUR/USD in the near term.
On Thursday, the EUR/USD moved lower and reached the lower band of the Bollinger Bands. Currently, the price is moving slightly above the lower band with wider bands, suggesting a potential downward movement to reach the lower band. Notably, the Relative Strength Index (RSI) maintains its position at 30, signaling a bearish outlook for this currency pair.
Resistance: 1.0767, 1.0808
Support: 1.0699, 1.0663
| Currency | Data | Time (GMT + 8) | Forecast |
|---|---|---|---|
| GBP | GDP m/m | 14:00 | 0.1% |
| USD | Prelim UoM Consumer Sentiment | 22:00 | 79.0 |
