Date Wednesday 14th of April 2021
Drivers
Concerns over the suspension Johnson & Johnson’s Covid-19 vaccine rollout combined with a potential setback to the EU’s COVID-19 vaccination program, and a deteriorating ZEW economic sentiment in both the Eurozone and Germany, are pressuring European equity markets despite upbeat earnings from German and French companies.

However, across the Atlantic, on the back of a string of strong economic data, Wall Street closed at yet another record despite the rise in US consumer prices yesterday, with core CPI rising 0.3% while economists were expecting a 0.2% surge.

US markets are strong because hopes are high for US corporate earnings, with major banks including Goldman Sachs, JPMorgan, and Wells Fargo to report Q1 results before the New York opening bell today.

The Nasdaq Composite is back to record highs, just a few points short of 14000.

The big cryptos are also climbing on making all-time highs, Bitcoin broke above $64000, Ether flew 8% to $2400, and even Ripple ripped 20% following the 220% rally since April 1st. XRP is now down only 50% from its 2018 all-time high.

Earlier in the day, trade data from China showed a surplus of $116.35bn. Economists had forecast a narrowing to $52.05bn. Exports increased by 49.0%, following a 60.6% surge in February, with imports rising by 38.1%. In February, imports had risen by 22.2%. Economists had forecast exports to increase by 35.5% and imports to rise by 23.3%.

USDCNH has been correcting to the upside since February, however momentum seems to be fading following the strong Chinese numbers, and a sustained move below 6.50 to trigger an acceleration to the downside and a retest of the multi-year lows around 6.40.

The uptick in US inflation also spurred some fresh demand on Gold, aided by a weaker greenback and retreating treasury yields, the yellow metal is now back above pivotal $1745. From here, will we move up or down? Place your bets.

Market Updates

EURUSD Both the Eurozone and the German ZEW economic sentiment deteriorated in April. This was the first time that the indicator drops since November 2020. However, the EURUSD jumped to its highest level since March after US inflation rose unexpectedly yesterday. Technically, the Euro has now moved above the 1.1920 resistance and thus momentum is trending higher targeting 1.1985 and 1.20 on the upside. But according to the daily chart, the main trend is still down and therefore closing under 1.1920 will form a reversal signal that could trigger a correction.

GBPUSDGBPUSD managed to move above resistance at 1.3765 as US yields retreated following a surge in US CPI numbers with the next nearest upside resistance at 1.3815 as traders continue to monitor the developments in US government bond markets with a drop below 1.60% to trigger additional downside for the US Dollar. Side note, the RSI is starting to move above 70 and will soon signal extreme overbought conditions.

USDJPYDeclining US yields following strong inflation numbers are pressuring the US Dollar with the USDJPY testing the key support at 108.80. In terms of trend on the daily chart, we hare still decisively on an uptrend, and with RSI action beneath 30 in recent trading, it’s time for a correction higher. But momentum remains to the downside on the hourly chart and therefore a sustained move below the 108.80 support will trigger an acceleration to the downside.

FTSE 100Concerns over the suspension Johnson & Johnson’s Covid-19 vaccine rollout is pressuring the FTSE100 index, however on the back of a string of strong economic data, Wall Street closed at yet another record despite the rise in US consumer prices as hopes are high for US corporate earnings. Technically, with the UK blue-chip index lagging other stock indices, technical indicators favor a declining momentum and a retest of the 200-moving average at 6865.

DOW JONESIn the US earnings calendar today, major banks including Goldman Sachs, JPMorgan, and Wells Fargo report Q1 results before the New York market open, with most stock indices at record highs as investors expect stellar results with the global economy recovering and businesses reopening. Technical indicators today favor a retest to the 200-period moving average at 33570.

DAX 30The German DAX still consolidates in a range between 15150 / 15200 on the downside and 15300 / 15360 on the upside. On one hand upbeat earnings from German companies including software firm SAP increase optimism and on the other, concerns about a potential setback to the EU’s COVID-19 vaccination program triggers selling. A sustained move above resistance or below support to indicate the start of an uptrend or a downtrend momentum.

GOLDAn uptick in US inflation spurred some fresh demand on the yellow metal, aided by a weaker greenback and retreating treasury yields. Vaccine concerns also supported higher prints on the bullion, after the CDC and FDA recommended the halt of the J&J vaccine. $1744 resistance level should be confirmed as support to further boost bullish momentum, with the 200 period SMA as the second line of defense, favoring further upside with $1760 as next closest target.

USOILWTI Crude just hit our long resistance target at $60.74 in early trade, after an industry report registered a third consecutive drawdown in inventories, with all eyes on official EIA data today for confirmation (consensus: -2.889Mb previous: -3.522Mb). Technically speaking, an hourly close above $60.74 will confirm bullish momentum with $61.55 as next closest target.

 

 

Rony Nehme

Rony Nehme

Chief Market Analyst at SquaredFinancial

Rony has over twenty years of experience in financial planning and professional proprietary trading in the equity and currency markets. Prior to joining SquaredFinancial, Rony educated and coached numerous traders helping them find their edge and arming them with proven trading methodologies to successfully battle the markets. Rony obtained a B.S. in Finance from Concordia University in Montreal, and his professional designations include Certified Financial Planner CFP® obtained from the Canadian Securities Institute.

 

Disclaimer: This information is only for educational purposes and is not an investment recommendation. The information here has been created by SquaredFinancial. All examples and analysis used herein are of the personal opinions of SquaredFinancial. All examples and analysis are intended for these purposes and should not be considered as specific investment advice. The risk of loss in trading securities, options, futures, and forex can be substantial. Customers must consider all relevant risk factors including their own personal financial situation before trading.