- August 19, 2021
- Posted by: Range Markets
- Category: Technical Analysis
US stocks declined on Wednesday as the market reacted to the latest Federal Reserve minutes. The minutes showed that most members of the bank’s monetary policy committee believe that the economic recovery could help tapering by the end of this year. These minutes supported statements by some of the bank’s officials. On Wednesday, Fed’s Eric Rosengreen said that the bank should start tapering its asset purchases and that some Federal stimulus should be removed to supercharge the economy. He argued that some of the measures like the enhanced unemployment benefits were encouraging some people not to work. The Dow Jones index declined by 382 points while the S&P 500 fell by 47 points.
US futures tilted higher overnight, with the Dow Jones and Nasdaq 100 adding 30 and 10 points each. This price action was mostly because of strong earnings by Nvidia. The company reported that its revenue surged by more than 60% in the second quarter. It also boosted its third-quarter revenue estimate to between $6.6 billion and $6.94 billion. As a result, its stock price jumped by more than 2% in the futures market. The futures also rose after reports that CME Group was holding talks to acquire CBOE Global Markets in an all-stock deal worth $16 billion. CME rejected the claim.
The Australian dollar slumped in the overnight session after the country published strong employment numbers. The country’s unemployment rate declined from 4.9% in June to 4.6% in July. This number was better than the median estimate of 5.0%. The participation rate declined from 66.2% to 66.0%. This happened as the country added just 2.2k jobs after it added more than 29k jobs in the previous month. The currency declined as investors priced in the country’s controversial stance on lockdowns in New South Wales and Victoria.
The AUDUSD pair declined sharply during the overnight session. It fell to 0.7210, which was the lowest level since November last year. On the four-hour chart, the pair moved below the 25-day and 15-day moving averages. It also fell below the key support at 0.7288, which was the lowest level on July 31st. The MACD has moved below the neutral level while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the pair may keep falling as bears target the next psychological level at 0.7100.
The EURUSD pair declined to 1.1685, which was the lowest level since November after hawkish Fed minutes. On the four-hour chart, the price moved below the key support level at 1.1700. It also fell below the 25-day and 15-day moving averages. The Relative Strength Index (RSI) and MACD have also been in a deep dive in the past few days. Therefore, for now, the path of least resistance is lower.
The USDJPY has been in an upward trend mostly because of the stronger US dollar. It rose from this week’s low of 109.10 to a high of 110.08. On the four-hour chart, the pair has moved to the upper side of the Bollinger Bands indicator. The MACD has made a bullish crossover while the DeMarker indicator has moved to the overbought level. Therefore, the pair may keep rising as bulls target the next key resistance at 110.50.