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AETOS Market Commentary 29/04/2019

AETOS Capital Group



The Euro rose on Friday, closing at 1.1147(+12 pips) against the greenback. On Friday, the US released its advanced Q1 GDP, which showed that the economy grew at a faster-than-expected pace in the first three months of the year, up by 3.2% vs. the expected of 2%.

The strongly positive number was partially offset by a softer PCE, which rose in the same quarter by 1.3%, well below the previous 1.8% and the expected 1.6%. Some dollar long traders used this data as an excuse to take some profits out of the table, although the final Michigan Consumer Sentiment Index for April came in better than expected at 97.2, keeping the greenback close to multi-month highs against most rivals.

Market players will step into the upcoming week with a cautious stance, as this Monday, the US will release February and March core PCE inflation, the Fed's most-watched inflation figure. The central bank will have a monetary policy meeting Thursday(04:00 AEST), which, by the way, will be a holiday elsewhere, as most of the world celebrates Labour Day. At the beginning of the week, the EU will also release the April Economic Sentiment Indicator, foreseen at 105.0 vs. the previous 105.5. The economic imbalances between the US and the EU will likely keep favoring the dollar.

EURUSD Daily Chart


The daily chart shows that last Friday the pair topped at 1.1173, where the pair had its previous yearly low, making of the area an immediate resistance.

Despite closing the day with gains, a lower low keep the risk skewed to the downside, as the modest uptick was barely enough to turn the RSI flat near oversold levels. The Momentum indicator, however, maintains its strong bearish slope, while the price develops below moving averages, and with the 20 DMA(Red Line) accelerating below the larger ones, all of which paints a bearish picture.


The Pound strengthened on Friday, closing at 1.2915(+22 pips) against the greenback. The Cable pair remained under selling pressured by Brexit uncertainty throughout of last week, as there was no progress on cross-party talks, and in fact, they are close to collapse, amid UK Prime Minister May's position on keeping her red lines.

The UK macroeconomic calendar was quite scarce last week, and beyond the BOE's decision, the UK will see the release of April Markit PMI these upcoming days. Carney & Co. have no usual concerns. In fact, the BOE has hinted it would be raising rates if it weren't by Brexit chaos posing a major risk. The fact that the UK got some extra time, with Brexit now delayed to the ends of October, seems no reason to change such a view. The main question is whether UK policymakers will follow the path of most of its counterparts and adopt a more dovish stance

GBPUSD Daily Chart


The technical outlook for the GBP/USD pair remains bearish, as, in the daily chart, it remains well below its moving averages, with the 20 DMA(Red Line) crossing below the 200 EMA(Blue Line) over 100 pips above the current level, while technical indicators keep consolidating within negative levels, the RSI close to oversold readings.

In the 4 hours chart, the pair settled at around a firmly bearish 20 SMA after a failed attempt to extend gains beyond the indicator, while technical indicators retreated sharply from their midlines, reached after correcting oversold conditions.


Risk Disclaimer

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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