Market Focus

After a bruising selloff driven by worries over a peak in earnings and a slowdown in growth momentum, the S&P 500 notched its biggest back-to-back advance in two months. Once again, the gains were led by companies that stand to benefit the most from a reopening of the economy, such as a commodity, financial and industrial shares. Meanwhile, Dow Jones rose 0.83%, or 286.01 to 34,798.00, and Nasdaq climbed 0.92%, or 133.08 to 14,631.95.

Elon Musk’s love affair with Bitcoin runs deeper than previously known. Speaking at “The B Word” conference hosted by the Crypto Council for Innovation, Musk discussed the outlook for Bitcoin with fellow backers Cathie Wood, head of Ark Investment Management, and Jack Dorsey, CEO of Twitter Inc. and Square Inc.

Musk said that he owns Bitcoin, Ethereum, and Dogecoin, while Tesla and SpaceX both exclusively own Bitcoin. “I would like to see Bitcoin succeed,” Musk said. “If the price of Bitcoin goes down, I lose money. I might pump but don’t dump.”

Musk said that Tesla would most likely resume accepting Bitcoin for purchases once mining becomes less environmentally taxing. “It looks like Bitcoin is shifting more toward renewables,” Musk said. “I would want to do a little bit more diligence to confirm the percentage of renewable energy usage is at or above 50%.”

As for Tesla, Musk noted that the company’s bank balances in Europe have negative interest rates, saying it “drives me crazy.”

“We should move that into Bitcoin,” he said.

Main Pairs Movement

The market mood improved; the dollar shed some ground but with no critical level being broken. Greenback edged slightly lower against most major rivals as global indexes closed in the green. US government bond yields were sharply up, also signaling decreasing demand for safety.

The euro pair hovers around the 1.1800 level, as caution prevails ahead of the European Central Bank monetary policy decision. The ECB is widely anticipated to maintain its monetary policy unchanged, and the general perception is that policymakers will maintain a dovish stance.

Cable is up to the 1.3700 price zone despite persistent Brexit tensions. The EU rejected the UK’s demand for a new approach to the Northern Ireland Protocol. UK Prime Minister Boris Johnson said that there are practical steps they can take to do that, but it does not seem the Union will convene to any change.

Commodity-linked currencies were also up, with Aussie being the weakest amid discouraging local retail sales figures. Loonie dropped to the 1.2560 level, and Kiwi bounced back to 0.6960, just a step to the 0.7000 level. USDJPY continues its yesterday’s lift, climbing to the 110.30 level.

Gold retreated further, with the spot ending the day at $1,803 a troy ounce. Crude oil prices recovered, with WTI got back to $70, and Brent settles around $72.20 a barrel.

Cryptocurrencies have finally made a sharp rebound on Wednesday after a long-lasting sliding trend. Bitcoin surged 7.80% to prices around $32100, and Ethereum skyrocketed 11% to around $2000.

Technical Analysis

XAUUSD (4-hour Chart)

Gold declined as Treasury yields rose and stocks continued their revival from fears as Australia and U.K. exacerbated in a variant pandemic. Treasury yields climbed further above 1.2% as demand for safe-haven eased, curbing bullion’s attraction. Gold steadied around $1,800 an ounce after resurging in recent weeks but failed to push much higher even with TIPS bond yields scuttle to under negative territory. Investment demand for bullion has stayed on the sideline so far, with outflows seen from ETF this fund.

For the technical aspect, the RSI indicator closes around 43 figures which suggests a slightly bearish signal, but it also heading to the natural area asymptotically. For moving average side, 15 long SMA indicator shows get rid of the headwind movement and turn flat action. On the other hand, 60 long SMA indicator remaining a slight upside but seems flat movement. All in all, we foresee the market volatility will continue curb by price action currently. However, if the market slid beneath the critical support pivot in 1795, bullion will fell into a lower stage.

Resistance: 1.3665, 1.3745, 1.3896

Support: 1.36

AUDUSD (4- Hour Chart)

Aussie once slipped to the daily lowest point at 0.73, yet recovery to an intraday high at 0.736 around afterward. All thanks to risk appetite improved in global shares market, pan-commodities weathering creep up the momentum that dwindles stress to commodities-link pairs as well. However, Aussie is still very susceptible to variant contagious at the current stage.

From the technical perspective, the RSI indicator ratchets up to 47 figures from over sought nadir, suggesting a natural momentum for the short term. For moving average side, 15 and 60 long SMA continue it descending, yet short one slowly turns into flat momentum. On the downside, 0.73 shows it is desirable as compelling support in the current stage while the market has tested it for times. Hence, if the market turn to a negative way again and penetrate the mainstay support, it will usher in another tamp down market momentum.

Resistance: 0.7415, 0.7492

Support: 0.7323, 0.73

 

EURUSD (4- Hour Chart)

The European Central Bank starts a potentially heated two-day meeting on Wednesday, yet currency options traders see a very low risk of market turmoil. Disagreements within the governing council may be key for realized volatility around chairman press conferences. As of writing, euro fiber is trading at 1.18 around and up some .2% into the market closing. Other than this, the safe-haven dollar fell back from the three-month highs as the U.S. share market rallied despite caution about inflation fears and concerns about the highly contagious Delta variant.

For the technical side, RSI indicator show 50 figure that feeling well in the neutral zone with lacking direction guidance. For moving average perspective, 15 long SMA indicator moving along with the price closely as slightly downward movement and 60 long SMA cater to sputter movement.

Following the recent suggestion, we deem the market is rejuvenating to the upper stage if the market could outstrip the first resistance at 1.1804 around. Moreover, if the price could propel to higher than the next price level would eye on 1.1848~1.188.

Resistance: 1.1804, 1.1848, 1.188

Support: 1.1766, 1.17