The dollar recovered some losses against most major currencies on Wednesday, after the release of strong U.S. home sales data, although uncertainty over the timing of a U.S. rate hike continues to weigh on the markets. The U.S. National Association of Realtors said that existing home sales rose 6.1% last month above expectations for a 3.0% rise. The dollar's rise was limited as the recent streak of weak economic data dampened optimism on the country's recovery. The euro remained under pressure as the Greek government is no closer to reaching an agreement with its euro zone partners while the European Central Bank is considering tighter rules on Greek banks in return for emergency liquidity, adding further pressure on Athens. In China, one of the biggest buyers of gold a weak manufacturing PMI announcement signalled weakness and created worries over the health of the sector adding further pressure on metals and energy commodities.
The euro posted a drop against the dollar yesterday, after the release of strong U.S. home sales data. In addition, today's Gfk German consumer climate index rose to 10.1 this month below expectations for a 10.2 rise causing the euro to move lower against the U.S. dollar on Thursday. Later in the day, the euro zone is to release manufacturing and service sector data on economic activity, while Spain is to release its employment report. In the U.S. front, the focus is on initial jobless claims and new home sales. For the week ahead, investors are focusing on a key meeting of euro zone finance ministers in Latvia on Friday.
Pivot
1.0745
Support
1.0655
1.062
1.058
Resistance
1.0745
1.08
1.085
Scenario 1: Short positions below 1.0745 with targets @ 1.0655 & 1.062 in extension.
Scenario 2: Above 1.0745 look for further upside with 1.08 & 1.085 as targets.
Comment: The pair stands below its resistance and remains under pressure.
Gold prices fell yesterday after the National Association of Realtors said existing home sales increased 6.1% last month to 5.19 million, the highest level in 18 months. For Thursday, China, one of the biggest buyers of the metal announced weak manufacturing PMI data signalling weakness in the sector and creating worries over demand for the metal. Recent recovery in the U.S dollar adds further pressure on demand, however, investors are still in doubt on whether we will see an interest rate hike in June. For today, the focus is shifted on initial jobless claims and new home sales.
Pivot
1130
Support
1130
1085
1050
Resistance
1224
1255
1309
Scenario 1: Long positions above 1130 with targets @ 1224 & 1255 in extension.
Scenario 2: Below 1130 look for further downside with 1085 & 1050 as targets.
Comment: The RSI is mixed.
OIL/USD
On Wednesday, increasing U.S. inventories announced by the EIA, combined with continued conflict in Yemen caused crude oil prices to fluctuate between gains and losses, and finally to end the day in negative territory. The fuel made early gains on Thursday as investors digested U.S. supply and production figures and are now watching closely on events in Yemen for any signs of a wider conflict. Saudi Arabia's pledge to maintain production levels constant, has caused a sharp increase in prices, posting more than a 10% rise for the month.
Pivot
57.2
Support
55.3
54.6
53.8
Resistance
57.2
58
58.8
Scenario 1: Short positions below 57.2 with targets @ 55.3 & 54.6 in extension.
Scenario 2: Above 57.2 look for further upside with 58 & 58.8 as targets.
Comment: As long as 57.2 is resistance, likely decline to 55.3.
DOW JONES
U.S. stocks posted a rise on Wednesday, as gains in the Technology, Financials and Telecoms sectors led shares higher. The Dow Jones approached an all-time high with best performers being Visa Inc (NYSE:V) which rose 4.07%, McDonald`s Corporation which rose by 3.13% and American Express Company (NYSE:AXP) which was up by 1.50%. An optimistic sentiment led by strong gains in the Technology sector, combined with Visa's potential expansion into China and talk of a rebound at McDonald's provided strong support following the mixed earnings.
Pivot
17585
Support
17585
17040
16330
Resistance
18290
18900
19200
Scenario 1: Long positions above 17585 with targets @ 18290 & 18900 in extension.
Scenario 2: Below 17585 look for further downside with 17040 & 16330 as targets.
Comment: The RSI is supported by a bullish trend line.
MCDONALDS
Shares of McDonald's Corp (NYSE:MCD) posted a rise yesterday after it announced a plan for a fresh start following another quarter of disappointing financial results. The company prepares a plan to revive its business by reconnecting with lower income consumers who remain faithful to the brand, by improving wages and easing the financial burden on operators. Steve Easterbrook, the company's new chief executive, on May 4 will announce his plan to reinvent McDonald's as a "modern, progressive burger company" increasing demand for fresh, less processed and more customized food.
Pivot
94.5
Support
94.5
91.5
86.75
Resistance
104
107.5
110.5
Scenario 1: Long positions above 94.5 with targets @ 104 & 107.5 in extension.
Scenario 2: Below 94.5 look for further downside with 91.5 & 86.75 as targets.
Comment: The RSI lacks downward momentum...