Market Focus

US markets declined at the tail end of a big earning reports week as investors worried about the rapid resurgence of new Covid cases, more than 103,000 cases in a seven-day average, the highest since February. The Dow Jones Industrial Averages dropped 0.42% on Friday. Meanwhile, the tech-heavy Nasdaq 100 plunged 0.71% and the S&P 500 declined 0.54%.

The mega-cap technology company, Amazon. com Inc. plummeted 7.6% in its largest decline since May 2020 after its earnings report missed the expectation, contributing the most declines in the Nasdaq 100 and S&P 500.

After China’s intensified requirements on overseas IPOs, cracking down Chinese stocks more than $1.5 trillion, the SEC said that it will also require additional disclosures from Chinese companies seeking to list on US stock exchanges. The SEC will require Chinese companies to distinguish the shell company from the operating company…etc. The move could potentially intensify the tensions between the US and China.

US Senate is on the path to negotiate a $550 billion infrastructure package, which was included in the previous Joe Biden’s infrastructure plan. The package would provide the biggest infusion of the US Federal spending on infrastructure in decades. It includes $110 billion for roads and bridges, $66 billion for trains, and $73 billion for electric grid upgrades…etc.

Main Pairs Movement

Bitcoin holds above $41,000, the highest since May, after a 10- day bullish move that was the longest in eight years. The upside momentum is driven by the Fed as it begins to consider tapering its $120 billion a month of asset purchases. Investors view bitcoin that can serve as an effective hedging instrument against inflation.

The eurodollar retreated from 1.1908 to 1.1870 against the greenback on Friday. At the same time, the British Pound was down 0.35% against the greenback. After the US Core PCE inflation in June came in at 3.5%, lower than expectations, the greenback gained strength, dragging the EURUSD pair to the downside.

Gold and Copper trimmed weekly gains as the greenback rebounded. Copper future fell nearly 1% on Friday with the concerns over the Covid and China’s regulatory clampdown, pushing the greenback up; gold was down as well, slipping 0.75%.

Crude oil price rose 0.45% on Friday. OPEC delivers most of planned supply as demand looks to recover. The cartel increases oil production by 420,000 barrels a day to 26.82 million daily as members restore more of the supplies shuttered last year, according to Bloomberg.

 

Technical Analysis

GBPUSD (4-hour Chart)

Sterling failed to retain the recently upward momentum on Friday and trims the weekly gains to the 13893 level. The dollar rises even as the U.S. yield moves further downward. The key economic report of the U.S. was the core PCE deflator, an important inflation parameter for Fed. In the U.K., still, focus on the variant contagious number. Meanwhile, the BoE will hold a meeting next week. Market expect no change in monetary policy stance. For the technical aspect, the RSI indicator corrects its momentum then sets 50.7 figures as of writing, suggesting a lack of direction at the moment. For moving average side, 15 long SMA indicator easing upward movement then turn to flirt and 60 long SMA indicator remaining up way traction.

As failed to break through the first resistance, it turns back on the first support level. For now, we expect the market will kick off the rooming between a tiny channel between 1.4 and 1.3895. Forbid buyer, off-the-cuff support level is at the current stage. If went down subsequently, it would be expected to tamp down to the lower stage.

Resistance: 1,3985, 1.4

Support: 1.3665, 1.3745, 1.38, 1.3896

 

EURUSD (4- Hour Chart)

Euro fiber corrects lower following the early move beyond 1.19 and after spot hit the pressure on the upper territory. Furthermore, the euro pair is on track to close the week on the positive ground following two consecutive weekly pullbacks. On the eco-data side, preliminary GDP figures in the euro zone now see the region expanding 2% during Q2. From the technical perspective, the RSI indicator closes 55 figures as of writing, suggesting slightly bull movement for the short term. For moving average side, 15 long SMA indicator shows turn it slopes to the north side and 60 long SMA slightly moving to upward.

For price action, the market seems to find a comfortable support level at 1.1848 and flirting around 1.1848~1.188. At the current stage. If the price could breach 1.188 again, it could head to a higher level. On the downside, we deem the most strong support level will be the 1.1766 level, yet the short term is setting at 1.18.

Resistance: 1.188, 1.19

Support: 1.1848, 1.18, 1.1766

 

AUDUSD (4- Hour Chart)

Aussie went down under 0.735 threshold, reaching a fresh two-day low, driven by strong U.S. dollar across the board while greenback gained momentum during the London fix. In the meantime, market participants are awaiting for RBA meeting next Tuesday. On the other hand, most of the commodities were close negative except the oil market. On the technical side, the RSI indicator fell under 50 to 42 figures, suggesting a bearish movement ahead. For moving average perspective, 15 long SMA indicator turn its momentum to floating movement and 60 long SMA still flirting.

In light of the aforementioned, we expect the market will continue to test the 0.7415 level which is immediate resistance. If it could penetrate the first resistance, it would toward to next consolidation between 0.7416 and 0.7492 range. For downside, efficient immediate support will be 0.7384, 0.73 will be way off following.

Resistance: 0.7415, 0.7492

Support: 0.733, 0.73