Daily market analysis

April 23, 2021

Daily Market Analysis

Market Focus

U.S. stocks had their biggest slide in five weeks after President Joe Biden was said to propose almost doubling the capital-gain tax for the wealthy. The dollar advanced.

The S&P 500 turned lower after Bloomberg News reported that for those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means that federal tax rates for rich investors could be as high as 43.4%. Speculation arose that some traders may sell shares before any change is made to capture the lower rate.

Equities whipsawed throughout the session amid mixed economic data and renewed concern the pandemic was worsening. All major groups in the S&P 500 fell, led by material, energy and tech shares. AT&T Inc. jumped after beating earnings estimates. Intel Corp. — the biggest chipmaker — slid in afterhours trading as it reported a drop in data-center revenue and a steep slump in gross profit margin.

Elsewhere, Bitcoin declined for the sixth time in seven days, extending losses after the higher capital gains proposal was revealed. Investors already face a capital-gains tax if they hold the currency for more than a year.

         

Main Pairs Movement:

The dollar rose as reports of President Joe Biden considering almost doubling the capital gains tax rate weighed on risk appetite, with U.S. stocks headed for worst day in four weeks. The euro slipped after the European Central Bank confirmed that it was not yet discussing a phase-out of its emergency bond purchases. U.S. 10-year bond yields slid for a third day, edging lower to 1.55%; U.S. stocks headed for their biggest drop since mid-March.

Here are the takeaways from the ECB decision and news conference.

1.The ECB kept policy steady as widely expected, confirming that the latest incoming information pointed to a continued need for “significantly higher” emergency bond purchases

2. Pressed on whether the last weeks’ purchase figures really constituted a “significant” increase, President Christine Lagarde stressed the focus must be on monthly numbers, rather than weekly

3. She also said it would be premature to discuss phasing out the crisis tool, and offered a downbeat assessment of the short-term risks to the economy. A number of analysts expect buying to slow again in the third quarter

4. Lagarde highlighted that she doesn’t see the ECB and the U.S. Federal Reserve moving in tandem, as the two economies are “not on the same page”

5. Market moves were limited, with the euro erasing a gain to trade around 1.2026 versus the dollar; German and Italian bonds also reversed earlier

USD/JPY is little changed at 108.09, dropped as much as 0.2% as Tokyo Governor Yuriko Koike sought to reimpose a state of emergency. NZD/USD sinks 0.8% to 0.7159 to be the worst performer in G10. The kiwi’s decline was led by sales against the Aussie, according to an Asia-based FX trader. AUD/NZD snapped a three-day drop to rise 0.1%.

             

Technical Analysis:

EURUSD (4 Hour Chart)

The European Central Bank had a monetary policy meeting. As widely anticipated, European policy makers decided to leave rate unchanged. President of ECB said it would be premature to discuss phasing out the crisis tool, and pessimitic assessment of the short-run risks to the economy. On the technical side, RSI indicator has fallen below neutral line to 49.7 figure as of writing, suggesting a shred of bearish movement. On the other hands, 15-long SMA indicator turn side to south way but 60-long SMA indicator remain north way.

On price action, it is obvious that euro dollar attain a strong downside support after correction to 1.199 level couple times. As the mixed information, we foresee market still have a north side chance. However, poor indicator suggestion is pinning the marketplace. Therefore, 1.19 is still vital first support level which need immediately to be defended. If penetrate downward further, 1.192 will be the next support level.

Resistance: 1.2071, 1.2106

Support: 1.199, 1.192, 1.1877

          

GPBUSD (4 Hour Chart)

At the time of writing, pound slip to 1.3839. It seems loss the gravity that down from 1.9349 to low 1.3826 while U.S. session. In imminent sessions, UK Retail Sales is due on Friday, along with the flash PMIs data. Reuters reported that “Brititsh manufacturing’s expectations of an economic rebound rose to highest since 1973 this month as the country begain recovery from COVID-19 pandemic”. However, we need to faint wary of UK PM was warning the next pandemic wave probably forthcoming.

For RSI side, indicator has drop to 37.8 figures, suggesting a bearish momentum ahead. On price average perspective, 15-long SMA turn negative slope whilst 60-long SMA retain upward movement. Currently, we see price has plummeted over the former critical support level at 1.39 which is neckline of previous double bottom. Therefore, we expect market will choppy in a tiny range between first resistance and support gauge. On slid way, if consecutive go down after 1.3822 level, it could induce continuosly downward movement.

Resistance: 1.4, 1.3959, 1.39

Support: 1.3822, 1.3796

           

XAUUSD (4 Hour Chart)

Gold stopped the previous two days snap up momentum that slipped to alongside 15-long SMA indicator; at the meantime, 15 and 60-long SMAs indicator are remaining the asceding trend. Basically, gold market has been dragged down by overwhelming greenback after U.S. president Joe Biden want to rose up the tax. For RSI view, indicator shows 56 figures as of writing which suggest a glimmer of bullish momentum.

All of all, we stll feel optimistic for upcoming market bull movement. Therefore, if we have to keep upward momentum, any correction need to be stop at $1759.7 level on slid way.

Resistance: 1800.7, 1812.8

Support: 1759.7, 1754.5, 1722.75

           

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

GBP

Retail Sales (MoM)(Mar)

14:00

1.5%

EUR

German Manufacturing PMI (Apr)

15:30

65.8

GBP

Composite PMI

16:30

GBP

Manufacturing PMI

16:30

GBP

Services PMI

16:30

USD

New Home Sales (Mar)

22:00

886 K

EUR

ECB President Largarde Speaks

22:30