Data from the U.S caused a strong rally for the dollar against most major currencies on Tuesday, as U.S. building permits and housing starts exceeded analyst expectations. The U.S. Commerce Department reported that the number of building permits issued last month increased by 10.1% when analysts expected a 2.2% increase. In addition, U.S. housing starts announced a 20.2% increase in April far past expectations for an increase of 9.9%. In the European front the ZEW Centre for Economic Research reported that German economic sentiment fell to 41.9, the lowest level since December and far below expectations of a 49.0 reading. Elsewhere, the Reserve Bank of Australia held the minutes of its May policy meeting where it announced that it is open to further rate cuts, due to the slowdown in China's economy and worries regarding the jobs sector. Investors' will be watching closely on the Fed minutes later in the day as they look for clues on the future monetary policy of the Fed.
The euro posted a sharp drop against the dollar for a second consecutive day, after Senior ECB policymaker Benoit Coeure said the bank is planning to speed up the pace of its bond-buying stimulus program before the summer in order to avoid the "notably lower market liquidity" in late July and August. In addition, solid building permits and housing starts data from the U.S combined with a weak reading of the German ZEW economic sentiment index caused the EUR/USD pair to drop by more than 1%, to trade below the 1.12 level. Investors' attention today will be shifted towards the Fed minutes as the market awaits for clues on the future monetary policy of the Fed.
Pivot
1.1215
Support
1.1065
1.1015
1.113
Resistance
1.1215
1.128
1.091
Scenario 1: Short positions below 1.1215 with targets @ 1.1065 & 1.1015 in extension.
Scenario 2: Above 1.1215 look for further upside with 1.128 & 1.1325 as targets.
Comment: Technically the RSI is below its neutrality area at 50.
Renewed strength in the U.S economy, brought by the strong housing sector data from the U.S adds pressure on the price of the precious metal as it paves the way for the Federal Reserve to raise interest rates in the near future. The U.S Department Of Commerce reported a rise in building permits by 10.1% when analysts expected a 2.2% increase. In addition, U.S. housing starts announced a 20.2% increase in April far past expectations for an increase of 9.9%. Early in the day investors are expected to remain on the sidelines, with the continued focus on the Fed minutes and on Friday's inflation data for any new hints on the timing of a rate hike by the Federal Reserve.
Pivot
1216
Support
1200
1191
1179
Resistance
1216
1224
1232
Scenario 1: Short positions below 1216 with targets @ 1200 & 1191 in extension.
Scenario 2: Above 1216 look for further upside with 1224 & 1232 as targets.
Comment: As long as 1216 is resistance, likely decline to 1200.
OIL/USD
Crude oil prices dropped yesterday, pressured by a stronger dollar and by reports from Saudi Arabian oil minister Ali al-Naimi that the kingdom produced the highest output in nearly 10 years. OPEC is currently in a battle with the U.S for market share, thus, does not appear willing to step back on production. The drop was limited by the American Petroleum Institute, which reported a drop in crude oil and gasoline inventories ahead of the U.S. summer driving season when demand normally peaks. Today the focus will shift towards the closely-watched inventory data from the EIA which last week, reported its first drop this year.
Pivot
59.3
Support
57.9
57.5
57
Resistance
59.3
60
60.8
Scenario 1: Short positions below 59.3 with targets @ 57.9 & 57.5 in extension.
Scenario 2: Above 59.3 look for further upside with 60 & 60.8 as targets.
Comment: The break below 59.3 is a negative signal that has opened a path to 57.9.
DOW JONES
The main U.S. indices posted mixed results on Tuesday, however, the Dow Jones Industrial Average rose to an all-time high for a second consecutive day after the solid building permits data and housing starts from the U.S that indicate the strongest month in residential construction since 2007. The index received downward pressure by Wal-Mart (NYSE:WMT), which fell by 4.37% after missing analysts' sales forecasts, however, McDonald`s Corporation gained by 2.71%. The Fed's point of view on the economy will be the highlight of this week at the release of the minutes from the board's April meeting.
Pivot
18200
Support
18200
18030
17910
Resistance
18400
18510
18690
Scenario 1: Long positions above 18200 with targets @ 18400 & 18510 in extension.
Scenario 2: Below 18200 look for further downside with 18030 & 17910 as targets.
Comment: The RSI is above its neutrality area at 50%.
APPLE
Apple (NASDAQ:AAPL) stock ended the day slightly lower on Tuesday while remaining in the spotlight, after the company introduced a new 15-inch MacBook Pro model to its line. The tech giant also cut the price of its top-end iMac to $2,299. Overall, Apple stock has gained 1.4% since it replaced AT&T (NYSE:T) in the Dow two months ago which is considered underperformance for the stock. The focus for today will be on the Fed minutes for further indications on the Fed's future monetary policy and how this might affect the value of the dollar and earnings in multinational companies.
Pivot
127.7
Support
127.7
124.8
123.4
Resistance
131.6
133.1
134.6
Scenario 1: Long positions above 127.7 with targets @ 131.6 & 133.1 in extension.
Scenario 2: Below 127.7 look for further downside with 124.8 & 123.4 as targets.
Comment: The RSI is bullish and calls for further advance.