Market Focus

U.S. equities extended its last week’s losses on Monday as investors returned from a holiday weekend and geared up for another busy week of corporate earnings results. Several major companies including United Airlines (UAL), American Express (AXP), Netflix (NFLX) and Tesla (TSLA) will be reporting their latest quarterly results. The S&P 500 edged lower after fluctuating between gains and losses throughout the session. The Dow Jones and Nasdaq Composite also ended in the red, down 0.11% and 0.14% respectively.

According to people familiar with the matter, Apollo Global Management Inc. is interested in helping finance a bid for Twitter Inc. following Elon Musk’s unsolicited offer of $43 billion to take the company private.

Apollo is considering backing a potential deal for Twitter and could provide Musk or another bidder like private-equity firm Thoma Bravo LP with equity or debt to support an offer, the people said, declining to be named because the discussions are private. The participation could come in the form of credit or preferred equity, one of the people said.

Twitter shares posted their biggest gain in two weeks on Monday after the social media company launched a poison pill defence to thwart Musk’s bid to take the company private at $54.20 a share.

Morgan Stanley is advising Musk, according to a filing Thursday, while Twitter has enlisted the help of Goldman Sachs Group Inc. and JPMorgan Chase & Co. as it considers how to respond to Musk’s hostile bid, Bloomberg reported.

Main Pairs Movement:

The US dollar is trading firmly across the board against its major G10 counterparts, with the Dollar Index hitting its highest level since April 2020 in the 100.80s. Traders cited expectations for an increasingly aggressive Fed tightening cycle, which is also reflected by an upside in US yields across the curve, boosting the greenback on Monday.

EUR/USD dropped about 0.25% to back under 1.0800 and is once again eyeing last week’s lows around 1.0750. GBP/USD dropped about 0.4% to just above 1.3000 and is also eyeing annual lows, which in this instance are just under the 1.3000 level. NZD/USD fell about 0.3%, dipping below a key level of support in the form of the March low at 0.6728, hitting its lowest point since late February.

The worst performer of the major G10 currencies was the Aussie dollar, with AUD/USD falling 0.6% to one-month lows underneath the 0.7350 mark. The yen also faired poorly amid the upside in US yields, with USD/JPY hitting its highest levels since 2002 around 127.00. Loonie was the second-best G10 performer, aided by higher oil prices. USD/CAD remained subdued just above 1.2600 and below its 200 and 50-Day Moving Averages.

Commodities advanced yet another day on Monday. Gold once surged to almost $2,000 a troy ounce but then fell to familiar levels at the end of the day, closing 0.27% higher. Crude oil claimed mild gains as well, with WTI up 0.9% to $106.90 a barrel, and Brent up 1.38% to $112.70.

Technical Analysis:

GBPUSD (4- Hour Chart)

GBPUSD edged lower, staying below 1.3050 as the market mood remains cautious on Monday, boosting the greenback. From the technical perspective, the decline from last week has brought GBPUSD to bearish territory. GBPUSD continues to lose traction, testing the support at 1.3002. The breakout of the support at 1.3002 will attract more sellers, accelerating the downside toward the next hurdle. In the meantime, the RSI indicator remains near 40, suggesting that the latest recovery attempt was a technical correction and the GBP buyers remain hesitant and cautious.

Resistance:  1.3077, 1.3275

Support:  1.3002

XAUUSD (4- Hour Chart)

Gold extended its rally toward $1,990 per ounce, aiming for $2,000 as the US yields turn south. From the technical perspective, the bulls are in control and taking on fresh highs. The four-hour outlook of gold remains bullish as it continues to trade within the ascending trendline and above the midline of the Bollinger Bands. In the meantime, the 20 SMA is scaling higher, adding to the upside filter. The RSI indicator has not reached the overbought territory, which indicates a potential bullish momentum moving forward.

Resistance: 2001

Support: 1975, 1950, 1916

EURUSD (4- Hour Chart)

EURUSD is back under pressure as the US dollar advances to its highest in two years. For the technical aspect, EURUSD’s intraday bias remains downside and under pressure as the price trades below the 20 and 50 SMAs and trades within the lower bounce of Bollinger Bands. The bearish momentum is now heading toward the immediate support level at 1.0758. Failure to defend the level will lead EURUSD further south, accelerating its downside pressure. The near-term outlook of EURUSD also shows a bearish picture. The RSI indicator is hovering near 40, suggesting the absence of buyers. The MACD continues to signal within the negative territory, lending supports to bears.

Resistance: 1.0932, 1.1039, 1.1126

Support: 1.0758