Market Focus

Wall Street stocks rose slightly on Monday, continuing the recent record gains of major stock indexes. The S&P 500 Index rose 0.2%, the Dow Jones Industrial Average rose 0.3%, and the Nasdaq Index rose 0.6%. These gains pushed the three indexes above the all-time highs set on Friday. As U.S. crude oil prices rose 0.6%, more than 65% of the S&P 500 stocks rose, with energy companies leading the gains with a year-to-date increase of more than 75%. Exxon Mobil rose 1.8%. Companies that rely on consumers to directly consume goods and services constitute a large part of the index’s earnings. Tesla rose 8.5% and Starbucks rose 3.5%.

More than half of the companies in the benchmark S&P 500 index have already announced their results. Analysts expect that by the time the report is completed, overall profits will increase by 36%. Another 167 companies in the index will report their performance this week. Investors will also be paying attention to another Fed policy meeting, which will be discussing how to end the special support measures for the economy. The central bank will issue its latest statement on Wednesday. Investors will also get another update on the job market when the Bureau of Labor Statistics releases its report for October on Friday.

Main Pairs Movement

Compared to the last trading day of October, most currency pairs got some respite on Monday. The benchmark 10-year U.S. Treasury bond yield is trading sideways at around 1.5%, but investors are still concerned about the flattening yield curve.

The EUR/USD faced heavy bearish pressure last Friday, erasing all gains after the European Central Bank (ECB) meeting on Thursday. On Monday, the currency pair finally found support near the 2021 low of early October’s 1.1524 level, and rebounded by about 0.58%, breaking through the 1.16000 level.

Pressured by the renewed concerns about Brexit and the overall strength of the U.S. dollar, Cable was trading around 1.3660, the lowest level since mid-October.

Technical Analysis

EURUSD (4- Hour Chart)

The EUR/USD pair advanced on Monday, ending its slide that began last Friday. The pair was trading lower in the early Asian session and dropped to a daily low under the 1.155 area. But the bearish momentum didn’t persist as the pair rebounded back above the 1.157 level during the European session. The recent strength witnessed in the EUR/USD is mainly due to a weaker US dollar across the board, as the risk-on market sentiment has put some pressure on the safe-haven US dollar and assisted the EUR/USD pair to move higher.

From a technical perspective, the RSI indicator is at 44 as of writing, suggesting tepid bear movement ahead. But for the MACD indicator, the negative histogram has started to diminish, which indicates a possible upward trend for the pair. If we take a look at the Bollinger Bands, the price has risen from the lower band after touching it, so the price might move up toward the moving average, which means that the bullish momentum is likely to persist. In conclusion, we think that the market will be bullish as long as the 1.1546 support holds. The pair is now heading to test the 1.1624 resistance line.

Resistance: 1.1624, 1.1669, 1.1692

Support: 1.1546, 1.1524

AUDUSD (4- Hour Chart)

AUD/USD advanced on Monday, attracting some dip-buying and trading around daily tops at the time of writing. The pair was trading lower in the early Asian session, but then started to see some buying and climbed toward 0.752 area. The US dollar struggled to preserve its modest intraday gains and pulled back below the 94.00 level, which underpinned the riskier Aussie and assisted the AUD/USD pair to find support. AUD/USD was last seen trading at 0.7533, posting a 0.21% gain for the day. Market focus has now shifted to RBA’s interest rate decision, which is scheduled to release on Tuesday.

From a technical standpoint, the RSI indicator reads 56 as of writing, suggesting tepid bull movement ahead. As for the MACD indicator, the negative histogram has started to diminish which indicates a possible upward trend for the pair. Looking at the Bollinger Bands, the price is rising from the lower band and crossing above the moving average, as a result, the upper band becomes the profit target. In conclusion, we think that the market will be bullish as the pair is heading to test the 0.7556 resistance, a break above that level will open the door for additional near-term profits.

Resistance: 0.7556, 0.7618

Support: 0.7454, 0.7379, 0.7227

 

USDCAD (4- Hour Chart)

USD/CAD declined on Monday as investors looked past Friday’s downbeat Canadian GDP print for August. The pair was trading higher during the Asian session, but failed to preserve its bullish momentum. USD/CAD was surrounded by selling pressure and dropped to a daily low during the American session. The higher oil prices continue to support the pair with expectations that OPEC+ will slowly increase oil production. On top of that, a more hawkish Bank of Canada pulled forward its expected timeline for interest rate hikes, acting as a tailwind for the domestic currency.

From a technical perspective, the RSI indicator stands at 44 figures as of writing, suggesting tepid bear movement ahead. As for the MACD indicator, the negative histogram has started to diminish, which indicates a possible upward trend for the pair. Meanwhile, with the Bollinger Bands, the price has dropped below the moving average and moved toward the lower band, which indicates a bear market. In conclusion, we think that the market will be bearish as long as the 1.2432 resistance line holds.

Resistance: 1.2432, 1.2499, 1.2648

Support: 1.2288, 1.2013