Currency Market Reacts to the Uncertainty of Trump’s Positions

Fundamentals

The US PPI released Thursday was a bit lower than expected, at -0.1%. The initial jobless claims report was also released yesterday. The number fell to 234,000.
Today, the markets are closed for Good Friday, and things are quiet. However, the CPI and the change in retail sales are to be released in the United States. The CPI is expected to remain at 0%.

Stocks

No corporate earnings reports are expected for the same reason.
Meanwhile, the US stock market is still flat. Despite a flag on the Dow Jones weekly charts, the overall outlook is moderately negative. Technically, the trend indicators on the daily charts are headed downwards. The 9-day MA is showing clear bearish signs, and the Bollinger Bands are headed downward, which means the bears are likely to continue dominating the market. It’s still early to talk about a mid-term trend reversal. We assume that this may happen when the 20,200 level is broken through and the price settles below 20,200, which is still 400 points away.
The Russian market continued to decline on Thursday. As we already noted, the MICEX Index hit the 1,935 target. The index has now formed a spike on the daily charts, which may lead to a short-term bounce. This is still in line with wave theory, as the benchmark is in a flat correction. Given that trading volatility is low, we’re not ready to predict a possible technical correction today. However, the bears may still try to increase their short positions if a short-term bounce does occur.

Currency Market

The AUD/CAD pair bounced, as predicted yesterday. The technical resistance may now be at 1.0080, which is a 38.20% Fibo retracement. Meanwhile, the pair is testing the 9-day EMA, and the bears may attack. In terms of wave theory, the Aussie may be trading within Wave 4 out of 5, which could also be a part of a more complicated correctional wave. On the weekly charts, the outlook is much more positive. If the bulls make it to 1.0100, the index may enter Wave 5. But this is a question for the mid-term.
The EUR/USD pair testing its strength at 1.0650, where the 9-day EMA is located on the daily charts. The pair has not managed reach that level and stay there yet. Currency traders are clearly feeling ambivalent, since the Trump administration’s next foreign and domestic policy moves are far from clear. Meanwhile, the MACDF has started rising, giving a weak reversal signal. As we already mentioned, this signal may be confirmed if the EMA breaks through 1.0650 by crossing the middle Bollinger band.

Nikolay Dudchenko, Olymp Trade Analyst

Olymp Trade Review