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AETOS Market Commentary 24/04/2019

AETOS Capital Group



The Euro closed lower on Tuesday, closing at 1.1222(-36 pips) against the greenback. The dollar's strength bolstered during mid-European session, later confirmed by data releases from both economies. The initial catalyst came from China's Central Bank, as PBoC officials see now less room to cut reserve requirement ratio(RRR) amid improving data in Q1. The only non-issue here is that China has cut RRR by 350 bps since April 2018 but it hasn't really translated into much improvement in economic conditions. Also, US stock indexes added to dollar's bullish bias, nearing all-time highs on the back of upbeat earnings reports from big names such as Twitter and Coca-Cola.

In the data front, US New Home Sales surprised to the upside by rising 4.5% in March, while Consumer Confidence in the Union plunged in April according to preliminary estimates, printing -7.9. The shared currency was also hurt by comments from EU Centeno, who said that Italy's weak economic growth is worrisome for the area's finance ministers. Overall, data convinced market players on the health imbalances between both economies, also highlighting divergent paths from central banks, as the ECB is back to adding stimulus while the Fed is just in pause, with nothing suggesting a rate cut needed in the US. For these two economies, the only relevant piece of data will be the German IFO survey for April, with the Business Climate seen improving to 99.9 from 99.6 in March. There's nothing relevant scheduled in the US for today.

EURUSD 4 Hour Chart


The EUR/USD pair opens near the 3-week low, just a handful of pips above the 1.1200 figure, and bearish according to technical readings, as, in the 4 hours chart, the pair is well below all of its moving averages, and with the 20 SMA(Blue Line) accelerating below the larger ones, while technical indicators maintain downward slopes within negative levels. The pair bottomed this month at 1.1183, but a more relevant support is the mentioned yearly lo at 1.1175, with a break below the level opening doors for an approach to the 1.1100 figure.


The Pound closed lower on Tuesday, closing at 1.2934(-46 pips) against the greenback. The cable pair fell to 1.2927, its lowest in over two months, as broad dollar's strength combined with no progress in the Brexit front. Bearish sentiment came with PM May's spokesman statement, as it repeated that the government is focused on passing the withdrawal agreement deal.

Furthermore, cross-party talks resumed this Tuesday after the Easter recess, with the government´s representative reiterating that 'both sides need to compromise.' Underlying issues remain the same around Brexit, and the EU's decision of granting additional time to the UK is just extending the agony. The UK's macroeconomic calendar had nothing to offer Tuesday and will only publish March Public Sector Net Borrowing this Wednesday, hardly a market mover.

GBPUSD 4 Hour Chart


The pair broke below the psychological 1.3000 level, the pair is at risk of extending its decline, initially targeting the 1.2880 price zone. Furthermore, the Pound collapsed after yet another failed attempt to rally beyond 1.3000, which should further put buyers on hold. In the shorter term, and according to the 4 hours chart, additional declines are to be expected as the pair quickly retreated after trying to advance beyond a bearish 20 SMA(Red Line), while the 200 EMA(Blue Line) continues gaining downward strength well above the shortest one. The Momentum indicator stands directionless below its mid-line, while the RSI is partially losing downward strength in oversold territory, without signs of downward exhaustion.

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The information above is of general nature only and does not take into consideration your objectives, financial situation or investment needs. The products and services provided are issued by AETOS Capital Group Pty. Ltd. (AFSL: 313016, ACN: 125113117). Trading Forex margin and CFDs carries a high level of risk, and losses can exceed your deposits. You are strongly recommended to seek independent financial advice before you make an investment decision. Please refer to our Product Disclosure Statement which you can obtain from our website for more details. AETOS has the ownership of the contents of this FX commentary. Copying, reprinting or publishing to a third party is not permitted.

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Source: https://www.aetoscg.com/uk/market-commentary
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