Daily market analysis

April 26, 2022

U.S. equities advanced on Monday, reversing earlier losses in the day amid worries about an escalating COVID outbreak in China added to jitters over U.S. economic growth, not to mention the surging inflation and Fed policy tightening. S&P 500 went up 0.6% to reach 4,296.12. Dow Jones climbed more than 200 points, or 0.7%, to close the day at 34,049.46, and Nasdaq Composite rallied 1.3% to close just above 13,000. U.S. stocks bucked the trend of global equity markets, with the major stock indices in Europe and Asia declining significantly on Monday.

Well-known billionaire Elon Musk agreed to buy Twitter Inc. for $44 billion, using one of the biggest leveraged buyout deals in history to take private a 16-year-old social networking platform that has become a hub of public discourse and a flashpoint in the debate over online free speech.

Investors will receive $54.20 for each Twitter share they own, the company said in a statement Monday. The price is 38% more than the stock’s close on April 1, the last business day before Musk disclosed a significant stake in the company, sparking a share rally.

Musk, one of Twitter’s most-watched users with more than 83 million followers, began amassing a stake of about 9% in January. By March, he had ramped up his criticism of Twitter, alleging that the company’s algorithms are biased and feeds cluttered with automated junk posts. He also suggested Twitter’s user growth was inflated by bots. After rejecting an invitation to join the company’s board, on April 14 he offered to take Twitter private, saying he’d make the platform a bastion of free speech and dropping other hints about the changes he’d make as an owner.

The ideas verged from the practical — say, letting users edit tweets and combating the spread of bots — to the peculiar, such as a proposal to turn the company’s San Francisco headquarters into a homeless shelter.

Main Pairs Movement

Despite an impressive recovery of the US equities, the sentiments in the forex markets on Mo remained risk-off, with traders citing China lockdown concerns as the major driver. Amid a sharp pullback in global bond yields, as traders reassessed global growth prospects amid the rising risk of a wider shutdown of the world’s second-largest economy, the rate-sensitive safe-haven yen was the best performing G10 currency.

USD/JPY now trades around the 127.50 area, more than 1.5% below last week’s multi-decade highs above 129.00. The safe-haven US dollar also benefited as a result of risk-off flows and was the second-best performing major G10 currency, with the Dollar Index (DXY) hitting fresh highs in March 2020 in the upper 101.00s.

On the other hand, GBP/USD at one point plummeted under 1.2700 for the first time since September 2020 and was last seen down 0.7% in the 1.2740s, while EUR/USD dropped a similar percentage just above 1.0700 and also at fresh multi-month lows. Any Euro relief in wake of French President Emmanuel Macron’s re-election was no longer last.

Technical Analysis

USDJPY (4-Hour Chart)

USDJPY witnessed some selling pressure on Monday despite the downside still lacking bearish conviction. The Japanese Yen seems to benefit from the prevalent risk-off mood, driving some safe-haven flow. Technically speaking, on the four-hour chart, USDJPY remains upside as it stays above the bullish trendline. At the time of writing, bulls are trying to defend their ascending trendline and the support level at 127.41 from the intraday decline. As the RSI reading is still far from oversold, a convincing breakthrough of the trendline should pave the way for deeper losses and bring USDJPY toward further south 126.30. On the flip side, if the dollar succeeds to defend the trendline and the support level at 127.41, then it might be able to attract some fresh buying interests.

Resistance:  129.40

Support:  127.41, 126.30, 125.34

AUDUSD (4-Hour Chart)

The Australian dollar underperforms amid China’s lockdown from its “zero- Covid” policy. The underperformance of the Aussie drags AUDUSD to the lowest since late February. From the technical perspective,  the outlook of AUDUSD stays bearish, turning more downside, as the pair has traded further south below the descending trendline. At the moment, the downside looks limited before breaking the next support at 0.7093 as the RSI indicator has reached the oversold territory, suggesting any attempted recovery move. However, AUDUSD might need to climb above 0.7277 in order to gain some follow-through buying as beyond the 0.7277 resistance might be able to neglect the negative bias in the near- term.

Resistance: 0.7170, 0.7227, 0.7372

Support: 0.7093

GBPUSD (4-Hour Chart)

GBPUSD crashes through 1.2750, heading toward 1.2700, the psychological support. From the technical aspect, the outlook of GBPUSD stays intensely bearish of the fact it falls below the major psychological support at 1.3000 last week. At the moment, there are no major support levels between 1.2700 and 1.2500 aside from the September 2020 low of 1.2674. The downside of GBPUSD might show some slowdown as it is trading in oversold territory. The market mood, however, needs to turn neutral before GBP sellers decide to book their profits.

Resistance: 1.2800, 1.2730, 1.3002, 1.3077, 1.3143

Support: 1.2700, 1.2674

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDCore Durable Goods Orders(MoM)(Mar)20:300.6%
USDCB Consumer Confidence(Apr)22:00108
USDNew Home Sales(Mar)22:00765K