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US dollar collapses through support

Market Wrap 19/04/21

Looking across the G10 currencies, the clear winner for the day is the British pound as it moves higher against the US dollar and Canadian dollar by 1.13% and 1.22% respectively. The greenbacks fall has taken it to prices seen several weeks ago and look likely to test the March 2021 lows and the rising trend line from the 2021 low.

Cable is approaching 1.3986 after holding just above the big figure below and the Pound is starting the new week in a much better position vs the Euro after the cross reached 0.8719 last Friday, with EURGBP now trading 0.8609. Sentiment favors the euro bulls with the ActivTrader platform printing 2/3rds of traders bullish EURGBP.

Japanese trade data this morning is helping the Yen against the US dollar as the USDJPY is pinned to the day's lows around 108.00. The antipodean commodity-based currencies are firmer against the greenback too with the AUDUSD trading higher to 0.7760. The AUDUSD has run into the Ichimoku cloud resistance so could be about to find a turning point as this is confluent with previous balance areas.

WTI is in a tight range as markets trading either side of USD 63/bbl and the lack of movement even with a weakening US dollar highlights that the market is treading water and waiting for some fundamental news. Spot gold started the day quite bullish but during the US session has fallen below the days opening price and is finding significant resistance at previous swing lows from the latter end of 2020. With the US yields rising this has a negative impact on the precious metals so it will be interesting to see if the momentum can continue into the end of the week.

The economic calendar is light this week and today is extremely quiet on the data front, so a decline in the US dollar and a rise in yields is slightly bucking recent trends.

Big Tech firms are under pressure in the US session as bad news and the US senate way on the Nasdaq. US senator Hawley is looking to get a bill passed that breaks up the big tech companies with special attention on Google and Amazon but will affect the likes of Apple and Facebook just as much. Although not necessarily Tesla’s fault a car crash that killed two passengers whilst in autopilot mode with no one at the seat has meant that investors are spooked at the share price is down -3.56% at the London close.

We are in earnings season so any good news will be digested along with the bad news and assuming earnings carry on beating expectations these bearish moves are expected to be unwound as the fiscal stimulus and momentum are still on the equities side.

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