Market Focus

The broad U.S. equity index rose during Wednesday’s trading, with the Dow Jones closing 102.32 points in the green, the S&P 500 gaining 0.41%, and the Nasdaq recovering 0.47%.

The U.S. ADP Nonfarm employment change returned better-than-expected results. The report number of 568K, beating analysts’ estimates of 428K.

Despite strong performance by equity indices on Wednesday, volatile market conditions remain as soaring gas prices can potentially weigh on inflation data. Furthermore, the rising bond yield continues to put pressure on the valuation of technology firms.

Market participants will now shift their attention to the Initial Jobless Claims data that will be released on the 7th.

Cryptocurrencies have made a strong comeback after weak performance over the past two months. Bitcoin traded above 50,000 for the first time since early September. On the other hand, “alt-coins”, Etherium specifically, also made strong gains.

Main Pairs Movement

The Japanese Yen is testing its downside as US stocks recover and the US yields climbed with investors’ concern over inflation. USDJPY is trading above the 111.00 level with an eye on the 112 region, where selling pressure is prone to emerge.

GBPUSD climbed higher, approaching 1.3650. After dipping last week, the pound rebounded as the markets seem to have shifted their focus from the fuel shortage to the impact of the Bank of England, and whether it will lead the major central banks on hiking rates.

Gold declined, trading at $1759 as US Treasury yields edged higher after data from last week boosted optimism about economic recovery. In the meanwhile, the decline in gold also came from the dollar rebound, pressuring bullion, which did not earn interest.

Technical Analysis

USDJPY (Daily Chart)

GBP/JPY has breached both the 200-DMA at 150.18 and the 50-DMA at 151.36 and bounced once off the 152.00 price level. It is trading at 151.90 as of writing.

If GBP/JPY buyers would like to resume the uptrend, they would need a daily close above 152.00. In case of that outcome, it could pave the way for further gains. The first resistance level would be 152.55, with the key zone being the confluence of the September 28 high and the 100-DMA. A breach of that level would expose July’s peak, 153.50, followed by the yearly peak of 156.08.

On the other hand, a retreat heading to the 50-DMA could exert downward pressure in the cross-currency. The first support level would be the 50-DMA, 151.30. A daily close below that level could push the price towards the 200-DMA at 150.18, immediately followed by October’s first low at 149.22.

Both the RSI indicator and MACD histogram are above the middle line, supporting the upside bias, but caution is warranted as the negative macro impact looms.

Resistance: 111.50, 112.00

Support: 111.00, 110.42, 110.00

 

EURUSD (4-Hour Chart)

GBP/JPY has breached both the 200-DMA at 150.18 and the 50-DMA at 151.36 and bounced once off the 152.00 price level. It is trading at 151.90 as of writing.

If GBP/JPY buyers would like to resume the uptrend, they would need a daily close above 152.00. In case of that outcome, it could pave the way for further gains. The first resistance level would be 152.55, with the key zone being the confluence of the September 28 high and the 100-DMA. A breach of that level would expose July’s peak, 153.50, followed by the yearly peak of 156.08.

On the other hand, a retreat heading to the 50-DMA could exert downward pressure in the cross-currency. The first support level would be the 50-DMA, 151.30. A daily close below that level could push the price towards the 200-DMA at 150.18, immediately followed by October’s first low at 149.22.

Both the RSI indicator and MACD histogram are above the middle line, supporting the upside bias, but caution is warranted as the negative macro impact looms.

Resistance: 111.50, 112.00

Support: 111.00, 110.42, 110.00

 

EURUSD (4-Hour Chart)

Loonie closed the previous four days in the negative area, but managed to stage a slight rebound on Wednesday. After reaching a daily high of 1.2648, however, the pair lost its bullish momentum and erased a portion of its daily gains. As of writing, the Loonie is barely advancing and closed below 1.26 at 1.2586 during the New York session. The market sentiment has been dismal throughout the day, with investors nervous due to surging oil and gas prices, U.S. political uncertainties, and central banks tightening monetary policy.

From a technical perspective, the RSI index slightly retreated from yesterday’s bleak close at 41, suggesting bearish momentum ahead. Meanwhile, the MACD indicator shows positive territory, but figures converged during the market close.

For the slipway, it seems to not have much downside support level past the last support at 1.256, while we expect effective support will be between 1.255 and 1.256. On up way, the first resistance will be psychological level at 1.26.

Resistance: 1.26, 1.2638

Support: 1.256