Market Focus

US stocks market edged higher after strong economic data added to evidence that the recovery is gaining momentum, with a batch of earnings sessions are coming up. The Dow Jones Industrial Average climbed 227.59 points, led by the financial sector. The S&P 500 edged 1.1% while the Nasdaq climbed 1.4%.

Economic data on US new home sales rebounded sharply in March to the highest since 2006; by this, it suggested that the housing market is back on track. At the same time, output at American manufacturers and service providers reached a record high in April. As a result, both economic data appear to show that the economy is gradually back on track in the US.

President Joe Biden wanted to end the preferential US tax treatment of investment income. With that, the White House planned to propose almost doubling the capital gains tax rate for those earning more than 1 million to 39.6%. This proposal will send the top federal rate on the appreciation in assets sold as high as 43.4%, almost doubling.

The equities market whipsawed this week as Joe Biden plans to propose almost doubling the capital gain tax rate for the wealthy. As stocks traded near all-time highs, investors reacted to get a sense of the pace of rebound inactivity.

Main Pairs Movement

The precious metal, gold slid as the US bond yields rose today. The yield on benchmark 10- year Treasuries is heading for its first positive move in four days, making gold less attractive. Moreover, gold’s bullion shrugged off news that Joe Biden will propose the new tax rates on capital gains for wealthy individuals, which hammered both stocks and gold.

The Canadian dollar climbed against the US dollar for a third straight weekly gain amid the US dollar losses and as a key gauge of commodities touched the highest since 2018.

Aussie gains after Westpac’s influential economist Bill Evans forecast an improving employment profile for the nation and higher bond yields. The Australian unemployment rate is forecasted to get better, cutting to 5% from the original 5.7%, while also raising three-year bond forecasts.

The eurodollar edged higher amid positioning ahead of next week’s Fed meeting and expectations that the common currency will receive ongoing support from reserve asset diversification.

Technical Analysis

EURUSD (4 Hour Chart)

EURUSD has shown a strong rebound since the beginning of April. The pair’s bulls are in charge, currently trading at 1.2070. With its current bullish momentum, the pair is hovering around the immediate resistance at 1.2070. If the pair can successfully breach the resistance, it will accelerate toward the next level at 1.2175 as the upward momentum will lead the pair to trade above both 20 SMA and 50 SMA. Moreover, the technical indicator, the MACD continues to lend support to the bulls while the RSI has not yet reached the overbought condition. That being said, EURUSD still sustains its upward traction.

Resistance: 1.2071, 1.2106

Support: 1.199, 1.192, 1.1877

GPBUSD (4 Hour Chart)

GBPUSD extends decline towards the 1.3800 regions despite a pullback later in the day. The pair are fighting to hold onto the 50 SMA on the four-hour chart. Momentum has turned to the downside after the pair fails to challenge the resistance level at 1.3879, signaling that bears are gaining ground. At the moment, the MACD is in the stage of lending supports to bears whilst the RSI is neither overbought nor oversold. That being said, the near-term outlook is mixed, but the downside looks more appealing.

Resistance: 1.3879, 1.3929, 1.4009

Support: 1.3839, 1.3799, 1.3749

XAUUSD (Daily Chart)

Gold loses its traction after contesting psychological resistance in 1800. It seems like the bullish trend from the previous double bottom has been diminished, and needs a temporary adjustment. However, in a bigger picture, the bullish momentum from gold can still be seen, moving further north toward 1800 again, as the technical indicator, RSI, is still outside of the overbought territory on the daily chart, giving the pair rooms to extend further north; at the same time, the MACD continues to lend support to bulls as the MACD line is still well above the signal line. The temporary adjustment is expected to see in the price range between 1800 and 1749; afterward, the bullish trend should not be a surprise to see.

Resistance: 1800, 1861, 1953.46

Support: 1749.27, 1684.94