iFOREX Daily Analysis : April 06, 2016

The dollar remained moderately higher against the other major currencies on Tuesday, after the release of mixed U.S. economic reports, as investors turned their attention to the release of the minutes of the Federal Reserve’s March meeting on Wednesday.

The Institute of Supply Management said its non-manufacturing purchasing manager's index improved to 54.5 last month, from 53.4 in February, which was the lowest level in almost two years. The report came after the U.S. Commerce Department said the trade deficit widened to $47.06 billion in Februray, from $45.88 billion in January, whose figure was revised from a previously reported deficit of $45.7 billion.

The dollar remained under pressure however, after last Friday’s strong U.S. jobs report did little to alter the view that the Fed will stick to a cautious approach on rate hikes.
Today the Fed is to publish the minutes of its March monetary policy meeting, giving investors insight into how officials view the economy and their policy options.

EUR/USD

The euro inched down fractionally on Tuesday, remaining near five-month highs, as foreign exchange traders reacted to broad indications on slowing economic growth and plunging government bond yields throughout the euro zone.

The currency pair traded in a tight range between 1.1357 and 1.1405, before settling down 0.02% on the session. Following a five-day winning streak last week, EUR/USD remained flat for the second consecutive session.

Citing low inflation, weak growth opportunities, a lack of new jobs and high debt burdens, International Monetary Fund managing director Christine Lagarde said Tuesday that the global economic outlook has darkened over the last six months. While delivering an address at the Goethe Institute in Frankfurt, Lagarde also criticized top political leaders for not enacting stronger fiscal measures to help stave off a potential recession.

Today investors’ focus will be on the Fed’s minutes of its March monetary policy meeting.

Pivot: 1.1415Support: 1.134 1.131 1.128Resistance: 1.1415 1.1435 1.1465Scenario 1: short positions below 1.1415 with targets @ 1.1340 & 1.1310 in extension.Scenario 2: above 1.1415 look for further upside with 1.1435 & 1.1465 as targets.Comment: the RSI is mixed to bearish.

Gold

Gold surged as much as $20 an ounce on Tuesday, bouncing off 5-week lows from the previous session, as broad indications of slowing economic growth in the U.S. and around the world sent investors scurrying for shelter in the safe-haven asset.

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The precious metal traded in a tight range between $1,216.70 and $1,238.30 an ounce before settling up 0.87% on the day.

Now investors await a wave of public comments from key Federal Reserve policymakers, including Yellen on Thursday, for further signals on the pace of the Fed's current tightening cycle. Any rate hikes by the Fed this year are viewed as bearish for gold which struggles to compete with high yield bearing assets in rising rate environments.

Pivot: 1222.5Support: 1222.5 1214.5 1208.5Resistance: 1236.8 1243 1249Scenario 1: long positions above 1222.50 with targets @ 1236.80 & 1243.00 in extension.Scenario 2: below 1222.50 look for further downside with 1214.50 & 1208.50 as targets.Comment: the RSI is mixed with a bullish bias.

WTI Oil

U.S. Crude futures fell to fresh 1-month lows on Tuesday, before turning positive just before the close of trading, as an unexpected decline in monthly U.S. gasoline demand and continued skepticism on the viability of a comprehensive output freeze among major producers provided downward pressure on global oil prices.

WTI crude for May delivery traded in a broad range between $35.24 and $36.00 a barrel, before settling up 0.70% on the session.

Bullish comments from Kuwait's OPEC governor on the increased likelihood of a deal at an April 17 meeting in Doha, even without approval from Iran, were largely shrugged off by investors on Tuesday.
But crude prices jumped in Asia on Wednesday after a bullish U.S. industry group inventory estimate showed a sharp drop in stocks and an upbeat services PMI from China. The American Petroleum Institute said crude oil stock fell 4.3 million barrels at the end of last week, while distillates stocks rose 2.7 million barrels and gasoline stock fell 116,000 barrels.

Today investors’ focus will be on the EIA’s closely-watched figures.

Pivot: 37.25Support: 35.88 35.2 34.5Resistance: 37.25 38.39 39.07Scenario 1: short positions below 37.25 with targets @ 35.88 & 35.20 in extension.Scenario 2: above 37.25 look for further upside with 38.39 & 39.07 as targets.Comment: as long as 37.25 is resistance, expect a return to 35.88.

US 500

U.S. stocks fell broadly on Tuesday, amid mounting fears of a weakening long-term economic outlook, as the major indices posted their worst two-day decline since early-February.

On Tuesday morning, Monetary Fund managing director Christine Lagarde said that the global economic outlook has dimmed over the last six months, citing low inflation, weak growth opportunities, a lack of new jobs and high debt throughout the world.

The Dow Jones Industrial Average lost 0.75%, closing near session-lows; the NASDAQ Composite index, meanwhile, fell 0.98%; while the S&P 500 Composite index dipped 1.01%.

On the S&P 500 all 10 sectors closed in the red, as stocks in the Utilities and Financials lagged. In total, four industries decreased by more than 1% on Tuesday.

Today investors’ focus will be on the Fed’s minutes of its March monetary policy meeting.

Pivot: 2020 Support: 2020 1970 1950 Resistance: 2080 2100 2130 Scenario 1: long positions above 2020.00 with targets @ 2080.00 & 2100.00 in extension. Scenario 2: below 2020.00 look for further downside with 1970.00 & 1950.00 as targets. Comment: the RSI has struck against a major resistance around 70% and is reversing down. But the 20-day simple moving average is trending higher and plays a suppport role.

Written By: iFOREX