US stock markets trade mixed

The USD remained relatively stable yesterday, maybe edged up a bit, as market expectations for a prolonged period of tight monetary policy tended to be enhanced. US stock markets also tended to send out mixed signals yesterday, with the earnings season being in full swing. We had some positive results from the banking sector, with Morgan Stanley releasing its earnings report yesterday adding to previous releases, more or less generating also some interest on a fundamental level, as they would imply that the sector remains resilient and strong despite the debacle of SVB and Signature Bank. Also, we note that Tesla’s share price remained in the reds yesterday after the company announced new price cuts despite a slight correction higher in the normal trading hours. Please note that in the after-trading hours, the company also released its earnings report showing that it slightly undershot both its Earnings Per Share (EPS) figure as well as its revenue figure for the quarter. The release may renew the downward pressure on the share price today. Another loser for the day was aluminium processor Alcoa which also reported lower-than-expected EPS and revenue figures disappointing traders, while we still maintain our worries for mining company Rio Tinto as well as Australian-based resources company BHP Group, which is to deliver its earnings report later today. In the high-tech sector, we note the mixed report by IBM while also note that TSM is to release its earnings report today. Overall we expect that the US stock markets are to continue to be affected by the earnings reports released by primarily high-profile companies, yet at this point, we may also see the Fed’s intentions having a bearing on the market sentiment and thus affecting US stock markets. Should Fed policymakers today sound hawkish enough we may see US equities markets slipping.

EUR/USD remained stable yesterday just below the 1.1000 (R1) resistance line. On the one hand, the upward trendline guiding the pair since the 20^a. of March remains intact implying a bullish outlook, yet on the other hand the pair has failed to make a higher peak and the RSI indicator continues to run along the reading of 50 implying a rather indecisive market which may allow the sideways motion to continue. Hence we tend to maintain a bias for a sideways motion, which may ultimately put the upward trendline to the test. Should the bulls regain control over the pair we may see EUR/USD breaking the 1.1000 (R1) resistance line and aim for the 1.1140 (R2) resistance level. Should the bears take over, we may see EUR/USD breaking the prementioned upward trendline, the 1.0855 (S1) support line and aim for the 1.0695 (S2) support level. 

USD/JPY moved slightly higher yesterday testing the 135.15 (R1) resistance line, before correcting lower. We tend to maintain our bullish outlook for the pair, yet the R1 may prove to be strong and provide the necessary resistance to keep the pair in a sideways motion. Also note that the RSI indicator is nearing the reading of 50 implying that the bullish sentiment for the pair is fading away. Should the pair find extensive fresh buying orders along its path we may see it breaking the 135.15 (R1) resistance line, thus opening the gates for the 137.55 (R2) resistance level. On the other hand, should a selling interest be expressed by the market for USD/JPY, we may see the pair dropping and aiming if not breaching the 132.85 (S1) support line.  

Other highlights for the day:

During today’s European session, we note the release of France’s business climate for April, while ECB President Christine Lagarde is scheduled to speak. In the American session, we note the release from the US of the weekly initial jobless claims figure, the Philly Fed Business Index for April and the existing home sales for March, while from the Eurozone we get April’s preliminary consumer sentiment for April. On the monetary front, we note that BoE MPC Tenreyro, BoC Governor Tiff Macklem, Fed Board Governor Waller, Cleveland Fed President Mester, Dallas Fed President Logan and ECB Board Member Schnabel are scheduled to speak. During tomorrow’s Asian session, we note the release of Australia’s and Japan’s preliminary PMI figures for April, while from Japan we also get March’s CPI rates. On the monetary front, we note that Atlanta Fed President Bostic and  Philadelphia Fed President Harker are scheduled to speak.  

EUR/USD H4 Chart

Support: 1.0855 (S1), 1.0695 (S2), 1.0530 (S3)

Resistance: 1.1000 (R1), 1.1140 (R2), 1.1270 (R3)

USD/JPY H4 Chart

Support: 132.85 (S1), 130.50 (S2), 127.55 (S3)

Resistance: 135.15 (R1), 137.55 (R2), 140.65 (R3)

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