The dollar closed the week with a firm tone

EUR/USD

The dollar closed the week with a firm tone against most of its major rivals, mostly weighed by the non-event that was the ECB meeting. The European Central Bank failed to provide fresh stimulus, whilst the press conference was dedicated to maintain confidence in the ECB ongoing easing policy.  The comments came as a response to German's criticism, as policymakers in the country have clearly expressed concerns over the fact that “monetary policy has been the only policy in the last four years to support growth” and is clearly not working, given that inflation, according to Mario Draghi, will likely fall back into negative territory during the upcoming months, meaning that achieving the 2% target will take more time. Additionally, the common currency suffered on Friday with the release of the Eurozone PMIs for April, showing a modest growth, with the manufacturing sector still lagging and most of the positive news coming from services output.

Things in the US are far from better, as the US Markit  manufacturing PMI fell to 50.8 in April, down from 51.5 in March. Still, the greenback found support on BOJ's comments suggesting that the Central Bank will add more stimulus in this week´s meeting, and hopes that the Federal Reserve, which also meets this week, will keep rates steady, but will also anticipate a rate hike for June.

The EUR/USD pair closed the week a couple of pips above the 38.2% retracement of its latest bullish run between 1.0821 and 1.1464, and is technically poised to extend its decline as in the daily chart, the indicators maintain strong bearish slopes below their mid-lines, whilst the price has remained below a now bearish 20 SMA, around 1.1330/40, also a strong static resistance region. In the same chart, the 100 DMA heads north around 1.1100,  a possible bearish target should the price extend its decline. In the 4 hours chart, the technical indicators have lost their bearish strength within oversold territory, but the price stands below all of its moving averages, indicating recoveries will likely be corrective, and opportunities to sell.

Support levels: 1.1220 1.1160 1.1120

Resistance levels: 1.1280 1.1315 1.1340

USD/JPY

The USD/JPY pair jumped over 200 pips following BOJ's announcement that policy makers have been discussing negative-rate loans for financial institutions together with another rate cut, closing the week at 111.61, a few pips below the high set at 111.80.  Separately, the Japanese economy continues to struggle to sustain growth, as the Japan’s manufacturing PMI printed 48.0 in April, missing an estimate of 49.5 and was below the previous read of 49.1. At this point, some kind of action has already been priced in, which means Kuroda will need to launch a huge bazooka next Thursday, to actually keep the JPY falling. Nevertheless, the ability of the Central Bank to influence price action is expected to be limited and short-lived. From a technical point of view, the fact that the pair recovered above 110.65, in where the price bottomed between February and March, is a first sign of an u-turn towards the upside, also supported by the technical indicators that head north  almost vertically after crossing their mid-lines into positive territory. Nevertheless, the price is well below a bearish 100 DMA, currently around 114.35, and it will take a recovery beyond this last to see a more sustainable recovery in term. In the 4 hours chart, the price accelerated sharply higher and stands now above its 100 and 200 SMAs, whilst the technical indicators are giving some signs of upward exhaustion within extreme overbought territory, not enough, however, to suggest a downward corrective movement ahead.

Support levels: 111.20 110.65 110.30

Resistance levels: 111.90 112.35 112.85

GBP/USD

The British Pound outperformed its major rivals, closing Friday at a fresh 3-week high above the 1.4400 level, supported by increased demand of high-yielders as risk sentiment continued to improve last week. The Sterling is still affected by Brexit fears, and during these past days a flip in polls showing an increasing intention to vote for staying, has also underpinned the recovery. During this week, focus will be on Chancellor of Exchequer Osborne who is being questioned by the Treasury Committee on the costs and benefits of the UK's EU membership, who will likely paint a gloomy future, should the kingdom leave the union.  The GBP/USD pair closed the week at 1.4411, with the weekly high having been established at 1.4451, a few pips below March 30th high of 1.4458, and the daily chart shows that the price is well above a horizontal 20 SMA, whilst the technical indicators head sharply higher, supporting some additional gains for this Monday, particularly on an upward acceleration above 1.4460. In the shorter term, the 4 hours chart the pair has found some buying interest around a horizontal 20 SMA, currently at 1.4363, while the Momentum indicator remains neutral and the RSI aims slightly higher around 64, all of which supports the upside, but indicates an absence of bullish strength at current levels.

Support levels: 1.4365 1.4320 1.4270  

Resistance levels: 1.4460 1.4510 1.4555

AUD/USD

The AUD/USD pair posted a fresh 10-month high last week of 0.7834 on Thursday, but turned sharply lower into the weekend and closed at 0.7711, as the American dollar gathered upward momentum and commodities trim part of its weekly gains. The Aussie however, maintains the long term positive tone, as higher interest rates and a bounce in commodities from record lows, are attracting overseas investors to Australian investments. The pair has rallied over 1,000 pips ever since the year started, and retracements in between have hardly surpassed the 200 pips, which means that the pair can fall down to the 0.7600 region without actually harming the dominant trend. From a technical point of view, the daily chart supports a downward corrective move, as the technical indicators have turned sharply lower from near overbought readings, and head south towards their mid-lines, still far. In the same chart, the 20 SMA has lost its upward strength, but offers an immediate support around 0.7660, the level to break this Monday to support a bearish day.

Support levels: 0.7660 0.7620  0.7570

Resistance levels: 0.7760 0.7790 0.7835

Dow Jones

Wall Street ended mixed last Friday and not far from the opening levels, tracking earnings reports. The DJIA managed to add 21 points to end at 18,003.75, whilst the S&P closed flat at 2,091.58 and the Nasdaq lost 39 points to end the day at 4,906.23, this last weighed by tech-related shares. Also, dragging sentiment down was the US Markit manufacturing PMI, showing that output fell to a six-year low in April.  Earnings reports reflected the soft start of the year, with  General Electric Company down 0.7% after reporting a 7% decline in organic orders and an 18% decline in organic equipment orders, Caterpillar Inc. falling 0.4% after missing on earnings and revenues, and Visa Inc. shedding 2.1% on a cut to its fiscal year revenue guidance, partially blamed on weakness in China. The DJIA, however, held around the 18,000 mark, retaining the positive tone seen on previous updates, as in the daily chart, the index is well above a bullish 20 SMA, whilst the RSI indicator resumed its advance within positive territory after correcting overbought readings, and heads north around 63. In the 4 hours chart, however, the Momentum indicator heads sharply lower below its 100 level, whilst the RSI is stuck around its 50 line and the 20 SMA stands flat around 18,036, limiting the upside in the short term.

Support levels: 17,963 17,902 17,827

Resistance levels: 18,036 18,094 18,165

FTSE 100

The FTSE 100 fell 1.11% or 70 points on Friday, closing the week at 6,310.44, hit by weakening commodities, as oil prices retreated from fresh year highs and gold turned south on improved risk sentiment. Anglo American was the biggest loser, down 3.4%, whilst Glencore tumbled almost 3% on falling copper prices. Also, HSBC fell after the bank said it would take steps to review pay packages for executive directors following concerns from shareholders.  Having traded as high as 6,440 earlier in the week, the Footsie has partially lost its upward momentum, given that in the daily chart, the technical indicators have turned lower, but the downside is still seen limited, as the 20 DMA, now around 6,253, maintains its bullish strength below the current level and after surpassing the 100 and 200 DMAs. In the 4 hours chart, the technical outlook is bearish, given that indicators head south into negative territory, and the index stands below a horizontal 20 SMA, suggesting the latest decline may extend during the upcoming session, particularly on a break below 6,294, Friday's low and the immediate support.

Support levels: 6,294 6,253 6,206

Resistance levels: 6,368 6,440 6,488

DAX

European equities fell on Friday, with the German DAX closing the day down 0.60% at 10,373.49, weighed by auto makers shares, on concerns that the emissions scandal could spread to more car makers. Among German equities, shares in Daimler AG fell almost 5% after the company said that it is reviewing its US emissions certification process at the prompting of the US Justice Department. The index, however, posted a second week in-a-row of sharp gains, and stands at its highest ever since early January. The fact that bulls refused to give up in spite of Draghi's dovish tone supports some additional gains for the upcoming days, particularly on a break above 10,491, last week high. From a technical point of view, the daily chart shows that the technical indicators have partially lost their upward strength, but continue heading higher near overbought readings, whilst the benchmark holds well above its moving averages, all of which supports some further advances. In the 4 hours chart, the Momentum indicator retreated and turned flat around its 100 level, the RSI indicator also lacks directional strength, but around 67, whilst the index remains well above a bullish 20 SMA, in line with the longer term view.

Support levels: 10,369 10,278 10,223

Resistance levels: 10,491 10,569 10,627

Nikkei

The Nikkei 225 added another 211 points to its weekly rally to close at 17,572.49, fueled by a sharp decline in the JPY, on news that the BOJ is considering  applying negative rates to its lending program for financial institutions, plus cutting rates further lower into negative territory. The advance was led by banking and securities-related shares, with Mitsubishi UFJ Financial up by 6.57%, Fukuoka Financial adding 6.36%, and  Sumitomo Mitsui Trust up by 5.23%. The index advanced further in electronic trading, and is poised to start the week above the 17,700 mark, its highest in over two months. The daily chart shows that the benchmark accelerated sharply higher after breaking above its 100 DMA, and that the technical indicators maintain strong upward slopes near overbought territory, suggesting the rally may continue at the beginning of the week. The 200 DMA stands at 18,176 and seems a probable bullish target for this week, should the positive mood prevail. In the shorter term, and according to the 4 hours chart, the index remains well above a bullish 20 SMA, whilst the technical indicators have lost upward potential within overbought levels, but are far from suggesting a downward move, supporting some consolidation ahead of a new leg north.

Support levels: 17,662 17,580 17,472

Resistance levels: 17,805 17,893 17,965

Gold

Spot gold fell of Friday, dropping to $1.227,38 a troy ounce and hitting the lowest since April 15th, on broad dollar strength. The yellow metal ended the week at $1,233.48, slightly lower, but within the previous week range, consolidating its yearly gains ahead of the US Federal Reserve economic policy decision this week. Gold has been extremely sensitive to US economic policies, and if the Central Bank comes in with a hawkish stance, the commodity may suffer big, and break below the $1,200 figure, approaching then to production cost once again. In the meantime, the daily outlook is neutral, as the price continues hovering back and forth around a horizontal 20 SMA, whilst the technical indicators have turned slightly lower, but around their mid-lines and with no clear directional  strength. In the 4 hours chart, the price accelerated its decline after breaking below its 20 SMA, now bearish around 1,248.30, while the Momentum indicator heads sharply lower below the 100 level and the RSI consolidates around 39, supporting some additional declines towards 1,220.00, a daily ascendant trend line coming from February 10th low at 1,181.46.

Support levels: 1,227.40 1,220.00 1,214.80

Resistance levels: 1,239.40 1,248.30 1,262.60

WTI Crude Oil

West Texas Intermediate crude oil futures closed the week at levels last seen in November 2015, having extended its yearly rally up to $44.47 this past week. On Friday, however, the commodity retreated partially, in spite of news showing that US operating rigs fell by 8 to 343 in the week ended April 22, the fewest since November 2009, according to the Baker Hughes report. It was the fifth straight weekly decline, even as oil prices continued to rebound. The commodity rose amid improved market sentiment, which turned more upbeat on signs that the global supply glut may be finally easing. Technically, the daily chart shows that the indicators have retreated partially from overbought territory, but are far from suggesting the price may fall further. Shorter term, and according to the 4 hours chart, the downward potential remains also limited, as despite the technical indicators have lost upward strength, the price remains well above its moving averages, while approaches to the 43.00 level have been steadily attracting buying interest.  

Support levels: 43.05 42.60 42.10

Resistance levels: 44.30 44.90 49.40