The U.S. dollar was broadly higher on Tuesday and was on course for its biggest gains against the euro in more than a month following comments from Federal Reserve officials who appear to favour an interest rate hike in the near future, while European political uncertainty provided additional support to the dollar.
The drop in the euro was limited by purchasing manager index (PMI) reports which showed the euro zone economy expanded much faster and more smoothly than expected.
Eurozone private sector and manufacturing growth unexpectedly accelerated to near a six-year high in February and job creation reached its fastest since August 2007.
On Wednesday investors await for the minutes of the Federal Reserve's latest meeting for clues as to the pace of interest rate hikes, while Europe's political worries kept the euro under pressure.
The Fed minutes due to be released later on Wednesday could either reinforce or undermine recent hawkish comments from central bank policy makers.
For today, the Ifo Institute is to report on German business climate, the UK is to release revised figures on fourth quarter growth and the U.S. will also be releasing industry data on existing home sales
Despite a strong round of Eurozone manufacturing data, the euro struggled for upside momentum, as concerns over upcoming elections in France and the Netherlands continued to weigh on the single currency.
The euro traded lower against the dollar, with EUR/USD down 0.59% at $1.0548.
The euro remained pressured by market concerns about the French presidential elections with the first round coming on April 23.
Polls show the lead of centrist Emmanuel Macron and conservative rival Francois Fillon is losing ground against Le Pen, suggesting Le Pen may have more chance if she can make it through to the second round of the elections in May.
For today, investors will be focusing on the Ifo Institute report on German business climate and U.S. industry data on existing home sales while later the Fed is to publish the minutes of its February policy meeting.
Pivot: 1.057Support: 1.052 1.049 1.045Resistance: 1.057 1.059 1.06Scenario 1: short positions below 1.0570 with targets at 1.0520 & 1.0490 in extension.Scenario 2: above 1.0570 look for further upside with 1.0590 & 1.0600 as targets.Comment: the RSI is mixed to bearish.
Gold
Gold was trading in negative territory for most of Tuesday reaching as low as $1225 per ounce, but posted a sharp recovery later in the session.
The precious metal was pressured by a rise in the dollar, after two Federal Reserve policymakers hinted at a possible rate hike in March.
The trading range for the past week is between $1244.5 and $1225 and investors anticipate a breakout in either direction even though recently, downward pressures are increasing.
Market participants’ turn their attention to the minutes from the Fed’s January meeting, due to be released on Wednesday, for clues on the likelihood of a March interest rate hike.
Pivot: 1237.5Support: 1231.2 1229 1227Resistance: 1237.5 1239 1241Scenario 1: short positions below 1237.50 with targets at 1231.20 & 1229.00 in extension.Scenario 2: above 1237.50 look for further upside with 1239.00 & 1241.00 as targets.Comment: technically the RSI is below its neutrality area at 50.
WTI Oil
Crude prices rose on Tuesday, hitting a 19-month high in intraday trade, after OPEC secretary General Mohammed Barkindo, reiterated that the oil cartel was sticking to its agreement to cut production and expressed confidence that compliance would be higher in the coming months.
Later on Wednesday, the American Petroleum Institute will release its estimates of crude oil supplies at the end of last week, followed on Thursday by official data from the U.S. Department of Energy.
Analysts expect crude oil stocks rose 3.325 million barrels at the end of last week, while gasoline inventories are seen down 1.625 million barrels and distillates declined by 1.075 million barrels.
Pivot: 54.21Support: 54.21 53.9 53.72Resistance: 54.65 54.85 55.03Scenario 1: long positions above 54.21 with targets at 54.65 & 54.85 in extension.Scenario 2: below 54.21 look for further downside with 53.90 & 53.72 as targets.Comment: a support base at 54.21 has formed and has allowed for a temporary stabilisation.
US 30
U.S. stocks were higher after the close on Tuesday, as gains in the Utilities, Consumer Goods and Oil & Gas sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average rose 0.58% to hit a new all-time high, while the S&P 500 index gained 0.60%, and the NASDAQ Composite index climbed 0.47%.
Some of the best performers of the session were Wal-Mart Stores Inc (NYSE:WMT) which rose 3.00% and Boeing (NYSE:BA) Co which was up 1.65%.
Despite a slow-down in the services sector in February, market sentiment is still supported by the strong corporate earnings results which added to a strengthening U.S. economy.
For today, market focus is shifted towards the minutes of the Fed’s last meeting for clues on future monetary policy.
Pivot: 20600 Support: 20600 20560 20505 Resistance: 20740 20790 20900 Scenario 1: long positions above 20600.00 with targets at 20740.00 & 20790.00 in extension. Scenario 2: below 20600.00 look for further downside with 20560.00 & 20505.00 as targets. Comment: the RSI is bullish and calls for further upside.