Wall Street Closes Higher on Profit Optimism

• U.S. equity market gain propelled by tech profit optimism.
• The dollar was hit by lower-than-expected PMI readings and softened last night.
• Australian dollar jumps on upbeat CPI reading. 

Market Summary

In the latest trading session, the Dollar Index retreated, failing to sustain its position above the $106 mark. This movement coincides with heightened buying interest in U.S. 2-year Treasuries, suggesting that investors are bracing for slower economic growth and potentially anticipating a Federal Reserve rate cut within the year.

In the commodities market, both gold and oil prices saw an uptick, benefiting from the dollar's lacklustre performance. Oil traders are particularly focused on today's U.S. crude inventory data and developments surrounding Iran sanctions, which could influence price dynamics further.

On the equities front, U.S. markets experienced significant gains, with both the Nasdaq and S&P 500 closing up over 1%. The market's attention is riveted on impending earnings reports from tech giants such as Meta Platforms, Qualcomm, and IBM, expected to drive substantial market volatility today.

In the currency markets, the Australian dollar has surged nearly 2% this week, bolstered by Australia's CPI figures, which exceeded market expectations, lending strength to the Aussie. Meanwhile, the Japanese yen continues its weakening trend, prompting comments from Japan's former Forex chief. He indicated that intervention by Japanese authorities could be imminent if the yen's depreciation persists.

Current rate hike bets on 1st May Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (97%) VS -25 bps (3%)  

Market Movements

DOLLAR_INDX, H4

The Dollar Index, gauging the greenback against a basket of major currencies, stumbled amidst signs of cooling US business activity in April. S&P Global data revealed a downturn, with US business activity hitting a four-month low due to subdued demand. Despite input prices surging, inflation rates tapered slightly, offering a glimmer of hope for the Federal Reserve's inflation management strategy.

The Dollar Index is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 35, suggesting the index might extend its losses since the RSI stays below the midline. 

Resistance level: 105.80, 106.35

Support level: 105.25, 104.75

XAU/USD, H1

Despite experiencing a notable dip amid heightened risk appetite, gold regained ground following lacklustre US manufacturing data. As investors sought refuge from fluctuating market conditions, the precious metal garnered support, bolstered further by diminished demand for the US Dollar. With economic focus pivoting towards key data releases such as US GDP and Personal Consumption Expenditures (PCE), market participants are urged to remain vigilant for potential trading cues.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 46, suggesting the commodity might extend its losses toward support level since the RSI stays below the midline. 

Resistance level: 2325.00, 2360.00

Support level: 2300.00, 2265.00

GBP/USD，H4

In the recent trading session, the GBP/USD pair experienced a notable upturn, rebounding from its recent lows and registering a gain of nearly 1%. This surge was primarily attributed to the divergent Purchasing Managers' Index (PMI) readings from both countries. The PMI data from the United States fell short of expectations, indicating a potential slowdown in the economy. In contrast, the PMI data from the UK surpassed expectations, pointing to stronger economic performance than anticipated. Despite this positive data, concerns persist regarding the strength of the Sterling due to expectations of an early rate cut by the BoE. These expectations continue to weigh on the outlook for the British currency.

The GBP/USD pair recorded a sharp rebound but currently resisted at its previous consolidation range. The RSI rebounded sharply while the MACD is approaching the zero line from below, suggesting the bearish momentum drastically vanishes. 

Resistance level: 1.2540, 1.2660

Support level: 1.2370, 1.2260

EUR/USD，H4

In the latest trading session, the EUR/USD pair surpassed its previous high level, signalling a potential bullish trend for the pair. This upward movement was largely driven by the positive Purchasing Managers' Index (PMI) readings released yesterday, indicating a strengthening economy in the Eurozone.

The pair has broken its previous high level, suggesting a potential trend reversal. The MACD has broken above the zero line, while the RSI is on the brink of breaking into the overbought zone, suggesting fresh bullish momentum is forming. 

Resistance level: 1.0775, 1.0866

Support level: 1.0630, 1.0560

AUD/USD，H4

The AUD/USD pair experienced a notable rebound following the formation of a double-bottom price pattern. This surge occurred after the release of Australia's Consumer Price Index (CPI), which surpassed market expectations, during the Asia opening session. Additionally, the pair benefited from the weakening U.S. dollar following the disappointing Purchasing Managers' Index (PMI) readings released last night.

The AUD/USD is currently trading with a strong bullish trajectory. The RSI has just broken into the overbought zone, and the MACD has broken above the zero line, suggesting strong bullish momentum. 

Resistance level: 0.6590, 0.6640

Support level: 0.6450, 0.6410

Nasdaq, H4

Investor confidence remained robust amidst geopolitical developments, notably Iran's assertion of non-retaliation following an Israeli drone attack. This bolstered risk appetite, with a notable influx towards US equity markets. Nasdaq notched consecutive gains, buoyed by upbeat quarterly earnings and alleviated Middle East tensions. Concurrently, Treasury yields retreated from recent peaks following unexpected weakness in April's manufacturing and services activity, further reinforcing the upbeat sentiment in the equity market.

Nasdaq is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 43, suggesting the index might extend its gains toward resistance level since the RSI rebounded sharply from oversold territory. 

Resistance level: 17850.00, 18430.00

Support level: 16975.00, 16230.00

USD/JPY, H4

The USD/JPY pair is currently trading within a narrow range, maintaining its position at the weakest level it has seen in decades. Despite a slight easing in the dollar index (DXY) triggered by lower-than-expected U.S. PMI readings from the previous evening, the Japanese Yen remains the weakest among its major peers. This persistent weakness has prompted comments from the former Japanese Forex chief, who indicated that authorities in Japan are nearing a point where they might intervene in the market if the current trends persist.

The USD/JPY pair is consolidating in a tight range and is on the brink of breaking above the next resistance level. The RSI remains hovering above the 50 level, while the MACD is declining and approaching the zero line from above, suggesting that the bullish momentum is easing. 

Resistance level: 154.89,155.50

Support level:153.35, 151.85

CL OIL, H4

Crude oil prices surged in early trading as industry data from the American Petroleum Institute (API) disclosed a surprise drop in US crude stocks. With inventories plunging by 3.2 million barrels against market expectations of a 1.8-million-barrel increase, optimism swelled regarding demand prospects. Attention remains fixated on Middle Eastern tensions, influencing investor sentiment and market dynamics.

Oil prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 55, suggesting the commodity might extend its gains toward resistance level since the RSI stays above the midline. 

Resistance level: 84.65, 87.50

Support level: 82.85, 80.45