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Daily Pivots: (S1) 1.5840; (P) 1.5896; (R1) 1.5962; More...

EUR/AUD is staying below 1.5959 temporary top despite strong recovery. Intraday bias remains neutral for the moment. At this point, we're still slightly favoring the bullish case that correction from 1.6765 has completed with three waves down to 1.5683. On the upside, above 1.5959 affirm this week and target 1.6122 resistance for confirmation. On the downside, in case of another fall, downside should be contained above 1.5683 to bring rise resumption.

In the bigger picture, as long as 1.5346 support holds, outlook will still remain bullish. Uptrend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal, with bearish divergence condition in weekly MACD, and turn outlook bearish.

The S&P500 continued to move higher on Tuesday surpassing record levels it reached on the previous days. Analysts said the recent all-time highs are due to a largely positive earnings season that are taking place currently, positive economic releases from the US and progress in U.S.-China trade talks. Some of the most important market movers from yesterday include Alphabet Inc. (the parent company of Google) shares dropped 8.28% enacting its worst decline since January 2012, after the company announced its slowest revenue growth in three years. While Apple Inc. was down 2% on normal trading hours due its drop in quarterly earnings. However Apple Inc. is said to have jumped 5% on after hour trading on positive comments from Tim Cook the tech giants CEO and its CFO. More emphasis may be placed on stocks as we have a busy week ahead.

The S&P 500 gained 17.5% since the end of December. On the past Friday the Index managed to break above the (S1) 2934.20 support level of which it had tested many times in the previous week. Yet it managed to stabilize above that level moving against many analysts’ expectations that it would correct lower. The index’s current course maybe sending the signal that it’s moving in new era, breaking higher and higher, as US companies expand their growth and become even more dominant around the globe. However if the bull run is to continue we may see the index reach the (R1) 2965 resistance level and aim even higher for the (R2) 2980 resistance line. In the opposite direction the Index may drop lower to the (S1) 2934.20 support level and move lower for the (S2) 2911.30 support line. However for the time being we see the Index moving in a sideways movement between the (R1) 2965.00 resistance level and the (S1) 2934.20 support line.

All eyes on the FOMC Meeting

The U.S. dollar was down against its major counterparts on Tuesday, falling for a third session in a row. Today the FOMC is expected to announce its interest rate decision, at 18:00 (GMT). The bank is widely expected to remain on hold keeping the current level of +2.50%. Fed’s Funds Futures support such a notion as they provide currently a 97.9% probability for such a scenario. We could see the bank maintaining a wait and see position as the data relating to the US economy seem to be sending mixed signals. Please note that volatility for the greenback could be extended throughout Jerome Powell’s press conference later on.

The dollar index dropped lower yesterday as the greenback maintained its bearish momentum ahead of today’s FOMC meeting. In the past 3 trading sessions the USD index moved lower and took back the gains it made previously reaching yearly highs. Even though the Index remains at high levels we could see it move higher surpassing the (R1) 97.27 resistance line and aiming for the (R2) 97.50 and the (R3) 97.80 resistance barriers. On the contrary, should the index come under the selling interest of the market, we could see it breaking the 96.91 (S1) support line and aim for the 95.50 (S2) support level. Please note, the index may come under significant volatility during tonight’s FOMC meeting.

Other economic highlights, today and early tomorrow

In the European morning, we get from the UK the Manufacturing PMI for April. In the American session, we get ADP National Employment for April and the ISM Manufacturing PMI for April. Later on, the EIA Crude oil inventories weekly reading is to be released and towards the end of the US session we get the FOMC Interest Rate Decision. As for speakers please note that ECB’s De Guidos speaks and BoC governor Poloz speaks. Please note due to the fact that 1st of May is a global holiday we may see thin trading prevailing in the financial markets.

US500 H1

Support: 2934.20 (S1), 2911.30 (S2), 2892.15 (S3)
Resistance: 2965.00 (R1), 2980.00 (R2), 3000.00 (R3)

USDIndex Daily

Support: 96.91 (S1), 96.50 (S2), 96.10 (S3)
Resistance: 97.27 (R1), 97.50 (R2), 97.80 (R3)

Yesterday, the US dollar weakened against a basket of major currencies despite positive economic statistics. Thus, consumer confidence index CB rose in April to 129.2, while experts expected 126.0. The index of pending home sales grew in March by 3.8%, although investors forecasted an increase by only 1.1%. However, the dollar index (#DX) updated weekly lows and closed in the negative zone (-0.39%). Today, investors have taken a wait-and-see attitude before the Fed’s decision on the interest rate. It is expected that the regulator will leave the figure at 2.50%.

The euro strengthened against the US dollar after the publication of optimistic economic data from Germany and the eurozone. The number of unemployed fell in April by 12K instead of the forecasted reduction by 6K. The eurozone GDP (YoY) grew by 1.2% instead of 1.1%, the eurozone GDP (QoQ) also grew by 0.4% instead of 0.3%.

Today in the Asian trading session weak economic data were released in New Zealand. Thus, employment declined in the first quarter by 0.2%, although experts expected a growth by 0.5%. Volatility in foreign exchange markets is reduced, as many countries celebrate International Labor Day.

The "black gold" prices are falling. At the moment, the WTI crude oil futures are testing the mark of $63.20 per barrel. At 17:30 (GMT+3:00) crude oil inventories will be published in the United States.

Market Indicators

• Yesterday, in the US stock market, a variety of trends was observed: #SPY (+0.05%), #DIA (+0.13%), #QQQ (-0.77%).
• The yield on 10-year US government bonds has fallen. Currently, the indicator is at the level of 2.50-2.51%.

The news feed on 05.01.2019:

• the manufacturing PMI in the UK at 11:30 (GMT+3:00);
• ADP nonfarm employment change in the US at 15:15 (GMT+3:00);
• ISM manufacturing employment in the US at 17:00 (GMT+3:00);
• the Fed's decision on interest rate at 21:00 (GMT+3:00).

The US dollar index was relatively unmoved as traders waited for the FOMC decision. The committee, started the meeting yesterday, and is expected to leave rates unchanged. It is also expected to give its review of the economy and guidance on whether it will raise interest rates this year. In previous meetings, the bank has announced that it will likely not hike rates today. In anticipation of the decision, Donald Trump sent a tweet asking the committee to lower interest rates.

The kiwi dropped slightly today after the country released weaker jobs numbers. In the first quarter, the New Zealand participation rate declined to 70.40% from the previous 70.90%. The employment change in the quarter dipped by 0.2%, which was lower than the expected gain of 0.5%. The labor cost index rose by an annual rate of 2%, which was higher than the expected 2.1%. On a positive note, the unemployment rate improved slightly to 4.2% from the previous 4.3%.

The sterling rose slightly ahead of key economic numbers. In April, the national housing price index is expected to rise by 0.7% and at a MoM rate of 0.1%. The manufacturing PMI is expected to decline slightly from 55.1 to 53.2. Mortgage lending in March is expected to grow to £3.54 billion from the previous £3.46 billion in February. The BOE consumer credit is expected to have dropped to £1 billion from the previous £1.14 billion.

EUR/USD

The EURUSD pair jumped from a low of 1.1109 and reached a high of 1.1230. It is now trading at the 50% Fibonacci Retracement level of 1.1217. This price is along the middle line of the Bollinger Bands and above the 25-day and 50-day moving averages. The RSI has stabilized along the 50s level. Today, the pair could make major movements as the FOMC releases its decision.

GBP/USD

The GBP/USD pair is trading along the 1.3040 level. This price is between the 38.2% and 50% Fibonacci Retracement level. It is also along the upper line of the Bollinger Bands while the RSI has moved above the overbought level of 70. The key points to watch today will likely be the 61.8% Fibonacci Retracement level of 1.3150 and the 23.6 level of 1.2915.

NZD/USD

The NZD/USD pair declined slightly after the weak job numbers. The pair reached a low of 0.6625, which is slightly below the 50-day and 25-day moving averages. The price is also below the important resistance line shown in green below. The RSI has moved lower, to the current level of 45. There is a likelihood that the pair will remain at these levels ahead of the US FOMC decision.

When it comes to the US equity markets, a new piece of history was written yesterday. The S&P 500 gained another 0.10 percent closing at another record high of 2945. The index performance during the month of April was 3.9 percent, the best April since 2009. The year to date gain for the S&P 500 index sits at 17.51 percent.

The factor which is pushing the market higher today is the stellar earnings report from Apple. The company has increased its dividend and it will also buy back $75 billion of its stock. The tech giant delivered a very clear message: the demand for iPhones is reviving. Apple's premium for its phone was getting out of proportion and given that the company has decided to trim that premium, this has helped its iPhone sales.

Strong earnings from California based company is helping the equity markets to start the month of May on a positive note and extend their historic gains from last month.

Nonetheless, the focus for today is going to be the Fed’s statement. We know that Donald Trump has tried several times to push the Fed hand towards cutting the interest rate. In his most recent comments, he has called for a 1% interest rate cut. However, in light of the most recent data, especially the US GDP data, it has become extremely arduous for the Fed to comply with such a request. The fact is that the Fed isn't going to cut the interest rates anytime soon and strong GDP numbers provide enough catalyst for the Fed to stay firm on their current stance.

However, there's always a chance for a negative surprise for the market participants during the press conference by Jerome Powell, the Fed chairman. A hawkish stance by the Fed could be negative for the markets. What the market is expecting from the Fed is to remain patient and patient doesn't necessarily mean cutting the interest rate. We all know that the Treasury market is expecting a rate cut which is at odd when we look at the economic numbers. So, if during the press conference the Fed continues to emphasize on practicing patience, the message could be taken out of its context.

Having said this, one thing is for certain, the upcoming event is an opportunity for those who love volatility. This is why we think that this event could bring some interesting moves for the dollar index and for the yellow metal. If the message reflects that the Fed cannot ignore Donald Trump's message, we may see some weakness for the dollar index and this could push the gold price higher.

Daily Pivots: (S1) 1.1398; (P) 1.1421; (R1) 1.1454; More...

Intraday bias in EUR/CHF remains neutral as recovery was limited well below 1.1476 resistance so far. On the upside, sustained break of 38.2% retracement of 1.2004 to 1.1162 at 1.1484 will confirm completion of corrective fall from 1.2004. Further rally should then be seen to 61.8% retracement at 1.1682 and above. On the downside, sustained break of 55 day EMA (now at 1.1333) will pave the way back to 1.1162 low.

In the bigger picture, at this point, we're slight favoring the case that corrective fall from 1.2004 has completed after being supported by 61.8% retracement of 1.0629 to 1.2004 at 1.1154. Decisive break of 1.1501 resistance should confirm and target 1.1713 resistance next. And, firm break of 1.1154 is needed to confirm down trend resumption. Otherwise, medium term outlook will be neutral at worst.

The Euro holds in green for the fourth straight day and extends advance in early Wednesday’s trading, maintaining positive tone from Tuesday’s better than expected EU GDP data.

Series of data from the US today and key event – Fed rate decision, are expected to generate fresh signals.

The Fed is expected to stay unchanged but dovish tilt in the statement could sour the tone.

Weaker than expected US GDP data last week would likely impact Fed’s decision, however, analysts see underlying strength of the economy, although weaker, still strong enough to sideline an idea of rate cut, despite the central bank is under strong verbal pressure from President Trump to cut interest rates.

Fresh advance broke above cracked Fibo barrier at 1.1217 (50% of 1.1323/1.1111) and pressures 20SMA (1.1233), which guards next key resistance at 1.1242 (Fibo 61.8% / 30SMA).

Break here is needed to confirm bullish continuation, while failure would keep broader bears alive.

Broken Fibo barrier marks initial support at 1.1217, followed by broken 10SMA (1.1201) and broken Fibo 38.2% (1.1192), close below which would signal an end of corrective phase and shift near-term focus lower.

Res: 1.1233, 1.1242, 1.1278, 1.1303
Sup: 1.1217, 1.1201, 1.1192, 1.1163

UK PMI manufacturing dropped to 53.1 in April, down from 55.1 and matched expectation of 53.1. Markit noted that new export business declines. Also, stock-building continues at solid, yet slower, pace.

Rob Dobson, Director at IHS Markit, which compiles the survey:

"The upturn in the UK manufacturing sector eased at the start of the second quarter. Growth of output and new orders slowed, leading to job cuts for the third time in the past four months. The trend in new export business was especially weak, as high stock holdings at clients and slower global economic growth led to reduced demand from key markets such as the European Union, the USA and China. There were also reports of overseas clients acting now to re-route their supply chains away from the UK in advance of Brexit.

"A central theme at UK manufacturers during recent months has been stockpiling activity in advance of Brexit, and this process continued into April. Rates of increase in both inventories of inputs and finished products remained historically rapid, despite cooling from the record highs seen in March. Companies noted that the delay to the scheduled Brexit date meant they had to ensure levels of key inputs remained sufficiently large to cover as broad a range of outcomes as possible in coming months.

"The stock build has clearly still helped support production growth, with a number of companies attributing increased output in April to Brexit-related stock-building.

"Manufacturers' outlook remained relatively upbeat, however, with over 50% forecasting their output will be higher in 12 months' time. Companies plan to use new product launches, new technologies and improved marketing strategies to drive growth forward in the coming months. However, Brexit uncertainty continues to weigh on plans, as some firms remain concerned about future growth prospects and the likely impact on output and demand from the unwinding of inventory positions later in the year."

Full release here.

Daily Pivots: (S1) 1.1184; (P) 1.1207; (R1) 1.1238; More.....

No change in EUR/USD's outlook. Recovery from 1.1111 is seen as a corrective move. Upside should be limited well below 1.1324 resistance to bring fall resumption. On the downside, below 1.1175 minor support will turn bias to the downside for 1.1111 first. Break there will resume larger down trend from 1.2555. However, firm break of 1.1324 resistance will be an early indication of larger bullish reversal and turn focus to 1.1448 resistance.

In the bigger picture, down trend from 1.2555 (2018 high) has just resumed. Current fall should now target 78.6% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.0813. Sustained break there will pave the way to retest 1.0339. On the downside, break of 1.1448 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Daily Pivots: (S1) 1.2956; (P) 1.3003; (R1) 1.3081; More....

Intraday bias in GBP/USD remains mildly on the upside at this point. Current development suggests that corrective pull back from 1.3381 has completed at 1.2865. Also, with 1.2773 key support intact, near term bullishness is retained. Further rise should be seen back to retest 1.3381 first. Break will resume whole rebound from 1.2391. On the downside, though, break of 1.2865 will target 1.2773 key support.

In the bigger picture, medium term decline from 1.4376 (2018 high) halted after hitting 1.2391. The structure of the rebound from 1.2391 suggests that it's a corrective move. In case of another rise, strong resistance could be seen around 61.8% retracement of 1.4376 to 1.2391 at 1.3618 to limit upside. On the downside, break of 1.2773 support will suggests that such corrective rise is completed and bring retest of 1.2391 low first.