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Daily Market Review 20th of April, 2018

Main contemporary issue in the background:

A weak dollar corresponds to US goals – The US dollar still looks rather weak against the major G7 currencies even against the backdrop of good macroeconomic indicators.

You can ridicule Trump for all his seemingly awkward and inconsistent actions, but the facts tell a different story. On Monday, the US Treasury reported on the dynamics of purchases of securities by foreign investors in February inclusive, the trend can be clearly seen – after the lowest was reached in July 2017, and in November – at least for Treasuries, the demand for US securities is steadily growing, and this growth immediately begun after Trump’s election to the presidency of the United States.

Thus, there is a growing demand for US assets, while the dollar becomes more expensive, and assets – more profitable against the background of rising rates. All these factors should lead to an increase in the dollar index, but in practice we observe the opposite – the trade-weighted dollar exchange rate reached a 14-year high in December 2016, after which it began to decline, that is, immediately after Trump was elected to the the post of the US president.

Summarizing all of the above, we come to the conclusion that US financial authorities will continue to adhere to the weak dollar rate. Rhetoric can be absolutely anything, the main thing is to go through the most difficult stage of reforms with the help of a weak dollar.

Today’s top impact announcements:

  • 1 – 13:30 (GMT), Canada – Consumer Price Index (MoM), Retail Sales ex Autos (MoM) –  The purchase power of CAD is dragged down by inflation. The Bank of Canada aims at an inflation range (1%-3%). Generally speaking, a high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the CAD.
  • The Retail Sales ex Auto released by the Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes except the automobile sector. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.
  • C.P.I. – Previous data release: 0.6%, Consensus regarding current release: 0.4%.
  • Retail Sales – Previous data release: 0.9%, Consensus regarding current release: 0.3%.

BTC/USD:

Expected trend for today is bullish.

Bitcoin price shows calm bullish bias to gradually approach our waited target at 8643.35, as the EMA50 continues to support the price positively, to keep the bullish trend scenario active in the upcoming sessions, reminding you that breaching the mentioned level will extend Bitcoin price gains to reach 9000.00 as a next station, while holding above 7730.00 represents key condition to achieve the suggested targets.

Expected trading range for today is between 7900.00 support and 8800.00 resistance.

USD/CHF:

Expected trend for today is bullish.

The USDCHF pair provided positive trades yesterday after leaning on the support base formed above 0.9675, to keep the bullish trend scenario active in the upcoming period, organized inside the bullish channel that appears on the chart, supported by the EMA50, noting that our next target is located at 0.9790, while holding above 0.9675 represents key condition to continue the expected rise.

Expected trading range for today is between 0.9660 support and 0.9820 resistance.

USD/JPY:

Expected trend for today is bullish.

The USDJPY pair begins today’s trading with new rise to approach our waited target at 107.98, motivated by the positive signal provided by stochastic, besides the EMA50 that carries the price from below.

Therefore, we will continue to suggest the bullish trend conditioned by the price stability above 106.71, noting that breaching the mentioned target will extend the bullish wave towards 109.00 as a next main station.

Expected trading range for today is between 106.90 support and 108.50 resistance.

DAX Index:

Expected trend for today is bullish.

The German index drifted a little bit lower during the trading session on Thursday, reaching down towards the €12,500 level.

This is an area that was previous resistance, so it makes sense that it would be support. I believe that the market will probably go looking towards the €12,700 level next, as we continue to “stairstep” to the upside. The €12,000 level underneath is massive support, and I believe that the market should continue to have a bullish attitude in general, but I think that you will need to be patient. I think that short-term trading is probably the best way to go going forward, as the market has been so choppy and tight.

However, we think the one thing you can take from this chart is that selling isn’t going to be very profitable. Look for signs of support on pullbacks, as they give us an opportunity to take advantage of what has been a reasonable uptrend for several sessions now. I believe that the uptrend is defined by staying above the €11,800 level underneath, which doesn’t look like it’s going to be challenged in the short term.

On the longer-term charts, there is a nice uptrend line slicing through the €11,800 level, so I think that the fact that we have bounced from that area shows that we have saved the uptrend in general, but that doesn’t mean it’s going to be a straight shot higher. I think that these times are quite often very choppy and difficult, so keep in mind that it will take a certain amount of patience to realize the gains from buying.

We wish you successful trading!