Asian shares were mixed on Tuesday despite the S&P 500 and Dow Jones surging to record closing highs overnight. Fears around a new Covid-19 variant in Japan leading to a possible fourth wave hit the Nikkei 225. European shares are set to play catchup with Wall Street as traders return from their desks after the Easter holiday break. Although US futures are slightly in the red, equity bulls remain in the driving seat and are likely to flex their muscles further in the week ahead.
How much further can the S&P 500 rally? Yesterday was another day another record high as positive US data fuelled optimism over a rapid economic recovery. The S&P 500 is up over 8.50% year-to-date while the trend remains firmly bullish on the daily charts. Prices are trading comfortably above the 50 Simple Moving Average while the MACD is above 0. The upside momentum could send prices towards the next psychological price level at 4100.
Should bulls decide to take a quick breather, this may result in a pullback towards the 4000 regions.
IMF global outlook report
The International Monetary Fund’s (IMF) global outlook report will be published today. It is safe to say that the global economy is certainly in a better place compared to last year when the Covid-19 menace spread its poisonous tentacles across the globe. The fund is expected to announce that the global economy will grow quicker than previously expected in 2021. However, it will be assisting more countries than ever. Should the overall tone of the report express optimism over the global economic outlook, this could support the risk-on mood.
Dollar nurses holiday hangover
The dollar stabilised near an almost two-week low this morning after falling against most of its major pairs on Monday. Regardless of recent losses, prices remain bullish on the daily charts as there have been consistently higher highs and higher lows. Should 92.50 prove to be reliable support, this could provide a strong foundation for the Dollar Index (DXY) to retest 93.00, 93.47, and possibly higher. Alternatively, a breakdown below 93.00 is likely to trigger a decline back towards 91.70.
Euro steady ahead of unemployment data
The Euro has entered Tuesday’s session on a firm note, slightly higher against most G10 currencies. Investors will direct their attention towards February’s eurozone unemployment rate which will be released at 10 am London time (BST). The unemployment rate is forecast to rise 8.2% in February compared to 8.1% back in January. Euro bulls may take a hit if the report meets expectations.
Focusing on the technicals, the EURUSD is under pressure on the daily charts. Prices are trading below the 200 Simple Moving Average while the MACD is below 0. A move back below 1.1800 could open the doors towards 1.1710. However, if prices are able to keep above the 1.1800 regions, the next key level of interest can be found around 1.1900.
Commodity spotlight – Gold
There is just something about the $1730 level on Gold. Over the past few weeks, prices have gravitated around this sticky pivotal level. If bulls can keep about this point, Gold may venture towards $1755. Alternatively, sustained weakness below $1730 is likely to invite a decline towards $1705 and $1680.