Daily market analysis

June 29, 2021

Daily Market Analysis

Market Focus

Wall Street benchmarks refreshed all-time highs with mild gains, except for Dow Jones Industrial Average (DJI), on Monday. Nasdaq surged 1.20%, while DJI closed red (-0.53%). The equities offered a mixed beginning to the key week comprising the US Nonfarm Payrolls (NFP) amid a light calendar. The Federal court’s dismissal of the Federal Trade Commissions’ (FTC) antitrust lawsuit against Facebook boosted FB by 4.0%, also propelled shares of Microsoft, Amazon, Apple, and other tech giants.

The House passed two bills Monday that are expected to form the core of legislation in the chamber designed to boost U.S. research and development in response to China’s challenge to U.S. economic supremacy.

By wide bipartisan margins, the House authorized more funding for the National Science Foundation and additional money for the Department of Energy, following a similar effort in the Senate that saw the passage of a comprehensive $250 billion measure that included more than $52 billion in incentives and grants for domestic semiconductor manufacturing.

While the Senate pulled separate pieces of legislation into a single bill intended to bolster U.S. competitiveness with China, the House is taking a more piecemeal approach. Some lawmakers and industry groups are pressing for the House to include the incentives for chipmakers in whatever package eventually emerges.

“As the legislation advances, we urge Congress to include $52 billion to fund the critical semiconductor research, design, and manufacturing initiatives” included in previous congressional legislation that was never funded, the Semiconductor Industry Association said in a statement.

Main Pairs Movement:

Major pairs remained restrained to narrow price ranges. Dollar managed to post a modest intraday gain, helped by optimistic market sentiments.

The euro pair fell to 1.1902, its lowest in 5 days, but finished the day in the 1.1920 area. ECB’s Robert Holzmann said there is no room to increase rates given weak inflation, adding that the PEPP will end when the coronavirus emergency is over, something that won’t happen anytime soon. The facilities program will be revised in September.

Cable failed to recover the 1.3900 mark and trades around 1.3875. After Matt Hancock resigned over the weekend, Sajid Javid is the new UK’s health minister. Javid affirmed that coronavirus-related restrictions would be lifted on July 19, as the government sees “no reason to go beyond” that date. Meanwhile, the UK reported 22,868 new coronavirus cases, the largest one-day increase in five months, amid the spread of the Delta variant.

Antipodean currencies lost some ground against their American rival. Aussie ended the day at 0.7565, and Kiwi at 0.7040. The loonie pair trades at 1.2335, slightly higher than the previous day. Gold continued consolidating around $1,780, but crude oil prices edged lower. WTI settled at $72.75 a barrel, and Brent at $74.58. US 10-year Treasury yields advanced during European trading hours, but retreated ahead of Wall Street’s opening, to end the day below 1.500.

Technical Analysis:

USDJPY (4- Hour Chart)

Despite of today’s retreat, USDJPY remains its bullish momentum as it keeps trading within the ascending channel and trading above a bullish 20 simple moving average in a bigger outlook. Nonetheless, USDJPY seems to lose its direction on the 4- hour chart as the pair is unable to sustain gains beyond its immediate resistance of 111.12; at the same time, both technical indicators, the MACD and the RSI, lose their directional strength around the midlines. To the downside, if the pair loses traction below the support of 110.51, then its intraday bias will become bearish in the near- term; on the other hand, if the pair regains its bulls above 111.12, then it will continue to be bullish and extend further north.

Resistance: 111.12

Support: 110.51, 109.14, 109.84

EURUSD (4- Hour Chart)

EURUSD continues to consolidate in the tight range above 1.1900 level. On the 4- hour chart, the pair remains neutral at this point since it continues to cling around 1.1985 level. On the upside, a break of 1.1919 will lead the pair head to 1.1985 instead; to the downside, if the pair fails to hold above 1.1919, then it might aim for the weekly low at 1.1837. However, similar to GBPUSD, the pair seems to be in a neutral position as the MACD and the RSI are both in a neutral status. As a result, the focus will shift to Tuesday’s mid- tier US economic data releases.

Resistance: 1.1985, 1.2052

Support: 1.1919, 1.1837

GBPUSD (4- Hour Chart)

GBPUSD retreated below 1.1900 level as the resurgent demand for the US dollar and the coronavirus delta variant tension in the UK. The outlook of GBPUSD remains under pressured on the 4- hour chart. The pair is currently contesting its minor support level of 1.3896; to the downside, a break of the level will resume the fall to chanllege the next level of 1.3787. On the upside, if the support level of 1.3896 is held, then the pair will turn bias back to upside for the level of 1.3963 instead. As the time of writing, the intraday bais remains neutral first as the MACD is overlapped and the RSI remains neutral

Resistance: 1.3963, 1.4017, 1.4072

Support: 1.3896, 1.3787

Economic Data