Daily market analysis

April 28, 2022

U.S. stocks climbed Wednesday afternoon, recovering some of their losses after major stock indexes fell, as worries about inflation and global growth added to further volatility in risky assets. The S&P 500, Dow Jones, and Nasdaq rose about 1 % during the session. On Tuesday, the S&P 500 fell 2.8 percent, the biggest drop in seven weeks, with technology shares especially slammed. The Nasdaq Composite Index dropped 4 percent to 12,490.74, its lowest level since December 2020. The S&P 500 is heading for a monthly decline of 7.8%, with only three trading days left in April.

Facebook’s main social network added more users than projected in the first quarter, potentially staving off concerns that the company is losing momentum as a new generation flocked to younger sites like TikTok.

Revenue for the period jumped 6.6% to $27.9 billion and would have been higher if not for the war in Ukraine, the company said. The stock had dropped almost 50% this year as investors became increasingly worried that Meta’s main business and profit engine — advertising in its social media feeds — was losing steam.

Still, many of Meta’s challenges remain. Tik-Tok, owned by China’s Byte Dance Ltd., is providing serious competition for young users’ attention. At the same time, changes to data-collection rules on Apple Inc.’s iPhones have hindered Meta’s ability to serve users’ targeted ads. Last quarter, Meta executives said the privacy changes would reduce the company’s 2022 sales by $10 billion. Advertisers have also been spending less due to issues with supply chains, inflation, and the ongoing war in Ukraine, Meta executives said.

Main Pairs Movement

The U.S. dollar returned to the top of the G10 daily performance chart, meanwhile, the trade-weighted U.S. dollar index (DXY) hit a new 5-year high. The DXY rebounded to 103.00 for the first time since January 2017, peaking near 103.30 before falling back and stabilizing around that figure as U.S. trade closed.

The bank of Japan will announce its latest monetary policy decision and new economic forecasts during the upcoming Asia-Pacific conference, and any dovish sentiment is likely to exacerbate the yen’s latest decline. USD/JPY rallied more than 100 pips, from 127.00 to 128.30.

AUD/USD and USD/CAD were both flat around the 0.7120 and 1.2820 levels respectively, while NZD/USD fell again by 0.3% below 0.6550 and GBP/USD declined again by 0.2% below 1.2550 but support at 1.2500. The pound’s better performance may be due to a series of recently released data on the U.K. economy and government borrowing that has sparked new concerns about the country’s economic outlook and the prospect of tighter Bank of England policy. mIn terms of other underperforming G10 currencies, the EUR/CHF depreciated 0.8% and 0.7% against the dollar.

Technical Analysis

USDJPY (4-Hour Chart)

After two consecutive days of decline, USDJPY regains traction on Wednesday, boosted by a combination of factors, including the Fed- BoJ monetary policy divergence. Technically speaking, USDJPY turns into its bid tone through the mid-European session on Wednesday after hitting a one-week low and the support level at 127.48. The bullish pullback brings USDJPY back to the positive territory, above the ascending trend-line. The upside momentum is expected to keep on if USDJPY is able to finish above the trendline by the end of the day; then, as the RSI has not yet reached the overbought territory, USDJPY has room to extend further north toward 129.40, the next hurdle.

Resistance:  129.40

Support:  127.48, 126.30, 125.34

XAUUSD (4-Hour Chart)

Gold confronts a steeper decline after the breakout of the psychological support of $1900. The precious metal plunges hard as investors seem to weigh an aggressive US tightening cycle over the tension between Russia and Ukraine. From the technical perspective, though XAUUSD was attempting to bounce back toward the $1900 mark, the RSI indicator on the four-hour chart keeps pointing lower within the negative level, suggesting that any recovery attempts are likely to remain shallow. Furthermore, failure to rebound leads XAUUSD to trade further south, contesting the immediate support at $1889. On the flip side, bulls need to climb above $1916 to regain positive traction in the near- term.

Resistance: 1916, 1940, 1950

Support: 1889, 1877, 1828

GBPUSD (4-Hour Chart)

GBPUSD continues to plunge toward the psychological support of 1.2500 as the risk sentiment is providing a boost to the safe-haven US dollar. From the technical aspect, the downside seems to see no limit since last Friday after slipping below the old support of 1.2973. GBPUSD remains deeply bearish as the MACD is heavily located in the negative territory. Now, the support at 1.2500 acts as an important defended line; failure to defend the territory would vigorously strengthen the downside momentum. Further price action eyes on BoE Governor’s speech on Thursday.

Resistance: 1.2600, 1.2674, 1.2700

Support: 1.2500

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDRetail Sales (MoM) (Mar)09:301.0%
JPYBOJ Monetary Policy StatementTentativeN/A
GBPBoE Gov Bailey Speaks17:00N/A
USDGDP (QoQ) (Q1)20:301.1%
USDInitial Jobless Claims20:30180K