iFOREX Daily Analysis : April 28, 2016

The Federal Reserve's policy making Federal Open Market Committee left short-term interest rates unchanged Wednesday as expected, but adjusted its policy statement, possibly preparing financial markets for another modest rate hike in coming months. The FOMC, left the funds rate in a 25 to 50 basis point target range, on a 9-1 vote, as Kansas City Federal Reserve Bank President Esther George voted in favour of an immediate rate hike for the second straight meeting. The Fed stated that labour market conditions have improved further even as growth in economic activity appears to have slowed. Growth in household spending was moderate, although households real income has risen and consumer sentiment remains high. After the Fed release, the Reserve Bank of New Zealand left the official cash rate at 2.25% and signalled further easing may be needed as well as a need to ease upward pressure on the currency. In addition, the Bank of Japan monetary policy was held steady as expected on Thursday at ¥80 trillion annually, while the bank signalled further moves on negative interest rates. Today in the euro area, Germany and Spain are to release preliminary data on inflation, as well as reports on unemployment. The U.S. is to publish its initial estimate of first quarter economic growth and the weekly report on initial jobless claims.

EUR/USD

The euro posted modest gains against the dollar, extending a rise posted in the previous two sessions, with little movement on Wednesday afternoon after the Federal Reserve held interest rates steady for a third consecutive day. With the gains, the euro closed above 1.13 for the first time in six sessions. After a relatively neutral April monetary policy statement, the FOMC said it will assess economic conditions, measures of labour market conditions, indications of inflationary pressures and expectations, as well as readings on financial and international developments as it determines the size of future adjustments to the Federal Funds Rate. Today in the euro area, Germany and Spain are to release preliminary data on inflation, as well as reports on unemployment. The U.S. is to publish its initial estimate of first quarter economic growth and the weekly report on initial jobless claims.

Pivot: 1.127Support: 1.138 1.142 1.1445Resistance: 1.127 1.1245 1.1215Scenario 1: long positions above 1.1270 with targets @ 1.1380 & 1.1420 in extension.Scenario 2: below 1.1270 look for further downside with 1.1245 & 1.1215 as targets.Comment: the RSI is mixed to bullish.

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Gold

Gold prices fluctuated between gains and losses and finally ended the day almost unchanged after the Federal Reserve held rates steady and signalled that it will continue to assess data on household spending, inflation, labour and economic conditions. The precious metal received significant support after the Bank of Japan's policy review early on Thursday where it signalled further moves on negative interest rates even though it did not take any action in the meeting. Today, gold traders will be focusing on the initial estimate of first quarter economic growth and the weekly report on initial jobless claims.

Pivot: 1244.5Support: 1244.5 1239 1236Resistance: 1260 1262.5 1265.5Scenario 1: long positions above 1244.50 with targets @ 1260.00 & 1262.50 in extension.Scenario 2: below 1244.50 look for further downside with 1239.00 & 1236.00 as targets.Comment: the RSI is well directed.

WTI Oil

Oil prices jumped about 3 percent on Wednesday, hitting new highs for 2016 as the dollar weakened after the Federal Reserve announced it would leave U.S. interest rates unchanged. Prices had retreated earlier, after the U.S. Energy Information Administration reported that crude stocks climbed 2 million barrels last week to an all-time peak of 540.6 million barrels. After the Fed statement, West Texas Intermediate surged hitting new peaks for the year as the dollar sank to session lows. Energy traders are now waiting to see how the coming of the summer driving season will affect prices, while tomorrow, data on oil rigs from Baker Hughes will be in focus.

Pivot: 43.75Support: 43.75 42.9 42Resistance: 46.35 47.25 48Scenario 1: long positions above 43.75 with targets @ 46.35 & 47.25 in extension.Scenario 2: below 43.75 look for further downside with 42.90 & 42.00 as targets.Comment: the RSI is mixed to bullish.

US 500

U.S. stocks rallied late on Wednesday afternoon following the monetary policy statement from the Federal Reserve, offsetting earlier losses from a massive sell-off in Apple shares (NASDAQ:AAPL). On Wednesday afternoon, the Federal Open Market Committee left the target range on its benchmark Federal Funds Rate unchanged in a widely anticipated decision. The statement and the weakness in the dollar had helped recover losses posted earlier in the session after Apple dragged down all three major indices, one day after posting its first quarterly decline in revenues in 13 years. The S&P 500 index closed with moderate gains as eight of 10 sectors closed in the green with stocks in Utilities and Telecommunication leading the rise. Stocks in the Technology and Health Care sectors fell, each by more than 0.15%. Today, traders will be focusing on the initial estimate of first quarter economic growth and the weekly report on initial jobless claims.

Pivot: 2033 Support: 2033 2006 1970 Resistance: 2115 2130 2135 Scenario 1: long positions above 2033.00 with targets @ 2115.00 & 2130.00 in extension. Scenario 2: below 2033.00 look for further downside with 2006.00 & 1970.00 as targets. Comment: investors have to remain cautious since these levels may trigger profit taking.

Written By: iFOREX