13-Aug-2020

1) GBP/USD: Bulls Remain At The Mercy Of USD Price Dynamics
2) EUR/USD: 1.1700 Mark Holds The Key For Short-Term Traders
3) S&P 500 Near Record High, Global Stock Market Joins Rally

1) GBP/USD: Bulls Remain At The Mercy Of USD Price Dynamics

The GBP/USD pair edged lower for the second consecutive session on Wednesday and dropped to over one-week lows, albeit managed to find decent support near the key 1.3000 psychological mark. A record drop in Britain’s economic output during the second quarter of 2020 was outweighed by the emergence of some fresh selling around the US dollar, which was seen as a key factor lending some support to the major. the preliminary figures showed that the UK economy contracted by 20.4% in the second quarter of 2020 as compared to a 2.2% contraction recorded in the previous quarter. Two consecutive periods of contraction means that the British economy is now in a technical recession. Meanwhile, the monthly report showed that the economy recorded a stronger than expected growth of 8.7% in June as against consensus estimates pointing to a reading of 8%.

On the other hand, the greenback struggled to capitalize on its recent recovery move amid the uncertainty over the next round of the US fiscal stimulus measures. The US lawmakers have been struggling to reach consensus over the latest COVID-19 stimulus package and negotiations ended without a result for the fifth day. The USD failed to gain any respite following the release of hotter-than-expected US consumer inflation figures for July. In fact, the headline CPI rose 0.6% MoM during the reported month as compared to the 0.3% increase anticipated. Annually, the CPI accelerated back to 1.0% from the 0.6% previous. Meanwhile, core CPI picked up to 0.6% and 1.6% on a monthly and yearly basis, respectively, both beating expectations.

A broad-based USD weakness assisted the pair to finally settle around 30 pips from daily swing lows and gain some traction during the Asian session on Thursday. A fresh leg down in the US Treasury bond yields kept the USD bulls on the defensive and turned out to be one of the key factors lending some support to the major. The sterling got an additional boost after NIESR said that the UK economy is expected to grow around 15% in the third quarter of 2020. The pair was last seen trading around the 1.3075 region. In the absence of any major market-moving economic releases, the USD price dynamics will play a key role in influencing the pair’s momentum on Thursday. Later during the early North American session, the release of the Initial Weekly Jobless Claims data from the US will also be looked upon to grab some meaningful trading opportunities.

From a technical perspective, the pair has been oscillating well within a broader trading range since the beginning of this month. This makes it prudent to wait for a sustained move in either direction before positioning for the pair’s near-term trajectory. In the meantime, any subsequent move beyond the 1.3100 mark might confront immediate resistance near the 1.3140 horizontal level, above which the pair is likely to aim to reclaim the 1.3200 round-figure mark.

On the flip side, the 1.3000 mark might continue to act as immediate support and is closely followed by monthly lows, around the 1.2970 area. A sustained break below will be seen as a fresh trigger for bearish traders and turn the pair vulnerable to accelerate the slide to the 1.2900 round-figure mark. Some follow-through selling has the potential to drag the pair further towards June monthly swing highs resistance breakpoint, not turned support, around the 1.2815-10 region.

2) EUR/USD: 1.1700 Mark Holds The Key For Short-Term Traders

The emergence of some fresh selling around the US dollar assisted the EUR/USD pair to reverse an early dip to the 1.1700 neighbourhood and refresh weekly tops on Wednesday. Reviving hopes of the US economic recovery extended some initial support to the greenback and dragged the pair to over one-week lows. However, the deadlock in the US Congress over additional COVID-19 stimulus package held investors from placing aggressive USD bullish bets, rather prompted some fresh selling at higher levels.

The USD failed to gain any respite following the release of hotter-than-expected US consumer inflation figures. In fact, the headline CPI rose 0.6% MoM in July as against consensus estimates pointing to a 0.3% increase. Annually, the CPI accelerated back to 1.0% from the 0.6% previous. Meanwhile, core CPI picked up to 0.6% and 1.6% on a monthly and yearly basis, respectively, both beating expectations. The pair rallied over 100 pips from daily swing lows and held stead above the 1.1800 mark through the Asian session on Thursday.

Given the uncertainty over additional stimulus to support the economic recovery from the coronavirus pandemic, a fresh leg down in the US Treasury bond yields kept the USD bulls on the defensive. This, in turn, was seen as one of the key factors behind the pair’s modest uptick for the second consecutive session on Thursday. Market participants now look forward to the final German CPI print for some impetus. Later during the early North American session, the release of the US Initial Weekly Jobless Claims might influence the USD price dynamics and further contribute to produce some meaningful trading opportunities.

From a technical perspective, any subsequent positive move is likely to confront some resistance near the 1.1840 level. Some follow-through buying has the potential to lift the pair back to the double-top resistance, around the 1.1900-1.1910 region. A convincing breakthrough will be seen as a fresh trigger for bullish traders and set the stage for a move towards reclaiming the key 1.2000 psychological mark with some intermediate resistance near the 1.1975-80 region.

On the flip side, immediate support is pegged near the 1.1740-35 region. This is followed by the 1.1700 mark, which marks the neckline support of the double-top pattern. Sustained weakness below will confirm a near-term bearish breakdown and accelerate the fall towards the 1.1625-20 support area.

Subsequent fall below the 1.1600 mark will set the stage for an extension of the corrective slide towards testing the next major support near the 1.1550-40 region, marking the 50% Fibonacci level of the 1.1168-1.1916 rally.

3) S&P 500 Near Record High, Global Stock Market Joins Rally

The global stock market had a mixed session today. Stocks jumped higher in China, the stock rally pushed the Shanghai index higher by 0.47%. The Japanese stock index, Nikkei advanced 1.85% while the Aussie stock index, ASX 200 dropped by 0.86%. The HSI stock index, fell by 0.25%.

The U.S. stock market’s breadth provides further evidence of bull strength. 63% of the Dow stocks traded above their 200-day moving average on Friday.

The S&P 500 stocks also echo the same message for the coronavirus stock market rally. 60% of the shares traded above their 200-day moving average on Friday.

The Dow Jones futures are trading with caution and are down by 50 points,  stock traders continue to keep a close eye on the upcoming U.S. initial jobless claims data—the biggest economic event of the day.

The Dow Jones industrial average futures has started the week on the front foot. Oday’s price action is already beyond the previous day’s high. It seems that the Dow stocks have a backing from the bulls as price is trading above the 50, 100 and 200–day SMA on a daily time frame. The 50-day SMA of the Down Jones continue to trade above the 100-day SMA, a true bull signal.

The Dow Jones’s daily chart shows that yesterday’s price action was within the trading range of the day prior to that.  The Dow is trading above its 50, 100 and 200-day simple moving average on a daily time frame and this confirms bull strength. The next important resistance level for the Dow remains the all-time high.

The S&P 500 index is sitting near all-time high. If lager stocks do not pick up steam, it is likely that the S&P 500 index may end up forming a double top and may face intense selling pressure. From a technical price analysis perspective, the S&P 500 is trading is  trading well above the 50-day simple moving average and this means retracement could happen. The biggest bull signal comes from the fact the 100-day SMA has crossed above the 200-day SMA.

The S&P 500 index rose above its record level before its closed with some retracement from its record highs. The S&P 500 had one of its biggest roller coaster ride in the last 175 days because first the S&P 500 stocks crashed from their record highs to coronavirus stock market low and then recovered all of their losses. This is the fastest rebound for the S&P500 index.

The S&P 500  index with a gain of 1.40% yesterday. Tech sector led the gains for the S&P 500 stocks and ten out of eleven sectors closed in positive territory. AMD stock add the most gains for the index, it was up 7.45%. FLIR was the biggest drag, it declined 4.67%. The S&P 500 stock index is 1.24% below its 52 weeks high.

The Dow index soared 289 points and the Dow stocks pushed the index higher by 1.05%. 22 stocks of the Dow Jones Index increased in value, and 8 shares of the Dow index declined. Apple stock jumped the most and increased in value 3.23%. Boeing stock remained the biggest decliner, it fell by 2.6%.

The NASDAQ composite, a tech-savvy index,  gained another 281 points yesterday.