Market Focus

 

U.S. equity markets bounced back strongly on Thursday as upbeat economic data and stellar corporate earnings results boosted market sentiment. The S&P 500 gained 1% to close at another record high of 4596.42. The Nasdaq gained 1.4% to close at 15448.12, and the Dow gained 0.7% to close at 35730.48. Since earnings season began, 82% of the companies that make up the S&P 500 has been able to report earnings that beat analyst estimates.  

The U.S. GDP grew by 2% quarter over quarter, marking the weakest quarter of growth since mid-2020. A surge in COVID cases and the supply chain crunch both hindered the growth over the past quarter. On the other hand, the Initial Jobless Claims figure hit a fresh pandemic low at 281,000. 

The 10-year Treasury yield increased slightly to settle at 1.578% and the 30-year Treasury yield increased slightly as well to settle at 1.979%.  

Facebook’s CEO, Mark Zuckerberg, has announced that beginning on December 1st, Facebook will be rebranded as Meta Platforms Inc and will be switching the ticker FB to MVRS. The new parent company will be devoted to creating a more immersive experience of the world wide web by combining virtual reality and building a virtual world where all media sources can be combined and utilized. 

Main Pairs Movement

The Greenback declined sharply at the onset of the Q3 GDP data release. The U.S. recorded a 2% growth in GBP, quarter over quarter, weaker than analyst estimates. Despite record-low jobless claim figures, the Dollar continued to dive as the DXY hit the intraday low of around $93. 

The Japanese Yen weakened as BoJ governor Haruhike Kuroda reiterated the central bank’s dovish monetary policy despite inflation rising to a 13-year high in September. The Euro traded higher against the Greenback, mainly due to the Dollar’s weakness as the ECB left monetary policy unchanged. The Sterling traded lower against the Dollar as well due to Dollar weakness across the board. 

Technical Analysis

USDJPY (4- Hour Chart) 

USD/JPY is hanging near two-week lows, trading around 113.41 at the time of writing. After Bank of Japan’s Haruhiko Kuroda’s commented on the outlook of Japan’s GDP and inflation, the currency pair witnessed some selling pressure. 

From the technical perspective, USDJPY remains depressed, hovering near the lower bound of the Bollinger Band and trading in the descending trend. However, the immediate support level at 113.38 would be a possible turning point as the RSI indicator has nearly reached the oversold territory, and is currently at the 36.6 mark, giving the pair room to rebound. At the same time, the MACD is nearly flat, indicating a possible direction change from sell to buy.  

Resistance: 114.70 

Support: 113.38, 112.57, 111.91 

EURUSD (4- Hour Chart) 

EUR/USD is trading monthly highs above 1.1680 as the US dollar sell-off picks up steam. The US dollar has lost strength and is having a hard time finding demand after the ECB’s cautious tone on European inflation outlook. From a technical standpoint, the 4-hour chart outlook for EUR/USD has provided a mildly bullish stance since mid-October. Today’s bullish move has breached the monthly highs, providing some supports to bulls. At the same time, the pair has recovered above its 20 Simple Moving Average, indicating a neutral-to-bullish trend. At the moment, the pair is heading to its next immediate resistance at 1.1697, which would be an obstacle to overcome as the RSI has nearly reached the overbought condition. At the same time, the currency pair has traded above the upper band of the Bolliger Bands. If EUR/USD can successfully breach the resistance level, then it will head toward the next level at 1.175. On the contrary, if the pair fails to penetrate the level, it will possibly consolidate for an adjustment.  

Resistance: 1.1697, 1.1750, 1.1180 

Support: 1.1631, 1.1524 

GBPUSD (4- Hour Chart)

GBP/USD extended, and is trading around the 1.3800 region as the US dollar loses traction after the disappointing Q3 GDP data. From the technical perspective, despite the recent recovery, the currency pair remains on the downside and is trading in a descending trend. However, the pair still has the potential to move further north as the RSI is only at the 59 level, with plenty of room to extend further. The short-term bulls are supported as the pair has traded above the 20 Simple Moving Average at the time of writing. For the upside, if the pair can break the next immediate resistance at 1.3801, then the bullish momentum would have a chance to bring the pair further toward 1.3835.

Resistance: 1.3801, 1.3835

Support: 1.3735, 1.3673, 1.3623