iFOREX Daily Analysis : April 22, 2016

The dollar gained slightly against most major currencies on Thursday, following the remarks by European Central Bank President Mario Draghi and after mixed batch of U.S. economic reports. The euro pulled back from session highs after ECB President Draghi said the bank stands ready to use “all instruments available,” including further interest rate cuts to ensure the inflation rate returns to its target. The comments came after the ECB held the interest rate at a record low, in a widely anticipated decision. The ECB's stance could prompt the Federal Reserve to follow, when it faces a similar interest rate decision next week. Also Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 16 decreased by 6,000 to 248,000 from the previous week’s total of 253,000. Analysts had expected jobless claims to rise by 10,000 to 263,000 last week. Separately, the Federal Reserve Bank of Philadelphia said its manufacturing index fell to -1.6 this month from March’s reading of 12.4. Economists had expected a more modest decline to 8.9. For today, euro zone is to publish its flash purchasing managers' index while Canada is to round up the week with reports on inflation and retail sales.

EUR/USD

The dollar gained slightly against most major currencies on Thursday, following the remarks by European Central Bank President Mario Draghi and after mixed batch of U.S. economic reports. The euro pulled back from session highs after ECB President Draghi said the bank stands ready to use “all instruments available,” including further interest rate cuts to ensure the inflation rate returns to its target. The comments came after the ECB held the interest rate at a record low, in a widely anticipated decision. The ECB's stance could prompt the Federal Reserve to follow, when it faces a similar interest rate decision next week. Also Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 16 decreased by 6,000 to 248,000 from the previous week’s total of 253,000. Analysts had expected jobless claims to rise by 10,000 to 263,000 last week. Separately, the Federal Reserve Bank of Philadelphia said its manufacturing index fell to -1.6 this month from March’s reading of 12.4. Economists had expected a more modest decline to 8.9. For today, euro zone is to publish its flash purchasing managers' index while Canada is to round up the week with reports on inflation and retail sales.

Pivot: 1.1345Support: 1.127 1.1245 1.122Resistance: 1.1345 1.139 1.143Scenario 1: short positions below 1.1345 with targets @ 1.1270 & 1.1245 in extension.Scenario 2: above 1.1345 look for further upside with 1.1390 & 1.1430 as targets.Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

Gold

Gold prices posted a slight gain on Thursday despite positive jobless data from the U.S. due to a relatively flat dollar. The gain in gold prices came as the European Central Bank held interest rates steady at a highly-anticipated meeting on Thursday, while hinting that rates could be cut again in the short-term future. Gold reached above $1,270 hitting its highest level in more than a month, however, the precious metal reversed course shortly after amid heavy profit taking. The ECB's stance could prompt the Federal Reserve to follow when it faces a similar interest rate decision next week.

Pivot: 1258Support: 1242 1235 1227Resistance: 1258 1270 1281Scenario 1: short positions below 1258.00 with targets @ 1242.00 & 1235.50 in extension.Scenario 2: above 1258.00 look for further upside with 1270.50 & 1281.00 as targets.Comment: the RSI is mixed to bearish.

WTI Oil

Crude oil prices retreated from 2016 yearly-highs on Thursday, as the dollar recovered late in the session following dovish comments from European Central Bank president Mario Draghi on the possibility of future interest rate cuts before the end of the year. It came one day after U.S. crude oil prices surged nearly 7% to hit their highest level since November. Despite the slight losses on Thursday, WTI crude is still 50% higher since touching down to 13-year lows on February 11th. The U.S. rig count data from Baker Hughes later in the day are expected to set the near-term tone for the fuel.

Pivot: 42.5Support: 42.5 41.4 40Resistance: 45 46.5 48Scenario 1: long positions above 42.50 with targets @ 45.00 & 46.50 in extension.Scenario 2: below 42.50 look for further downside with 41.40 & 40.00 as targets.Comment: the RSI is mixed with a bullish bias.

US 500

U.S. stocks fell sharply on Thursday, suffering their worst one-day sell-off in two weeks, as a rally in the dollar late in the day triggered a reversal in oil prices and a disappointing session for the major indices. The Dow Jones fell by 0.63%, while the S&P 500 fell by 0.52%, after closing higher in six of the last seven sessions. The NASDAQ meanwhile, fell by 0.05% as software and other technology stocks posted a drop. On the S&P 500, eight of 10 sectors closed in the red, as stocks in the Utilities, Telecommunications and Consumer Goods sectors lagged. Markets received additional pressure by negative earnings results, as Alphabet posted first-quarter revenue a little below expectations and its stock dropped 5.5 percent and Microsoft (NASDAQ:MSFT) fell 3.5 percent after its quarterly report. Investors are now shifting their attention to next week’s policy meeting by the Fed.

Pivot: 2033 Support: 2033 2006 1970 Resistance: 2115 2130 2135 Scenario 1: long positions above 2033.00 with targets @ 2115.00 & 2130.00 in extension. Scenario 2: below 2033.00 look for further downside with 2006.00 & 1970.00 as targets. Comment: investors have to remain cautious since these levels may trigger profit taking.