Pound surged above 1.50; Dollar mixed; U.S. Indices regained ground

The [B]dollar[/B] held steady or gained against most of its G10 counterparts during yesterday’s session and early Thursday after positive data from the housing sector. The only exception was the British pound which strengthened against both the euro and the greenback.

The [B]British Pound[/B] climbed above 1.5000, reaching 1.5080 mid-Wednesday, after the BoE minutes but may not stay there for long as the uncertain elections approaching. The Monetary Policy Committee kept its 9 - 0 - 0 pattern to keep the interest rates unchanged, but two of the officials were “finely balanced” for their vote. The [B]BoE Minutes[/B] flagged a light turn to the hawkish direction. Policymakers clarified that they still expect deflation in the next months and continuous lower than the Central Bank’s target for the rest of the year. However, they believe the recent sharp decline in Inflation was probably caused by the stronger pound that affected prices sooner than anticipated. Thus, when the current downward forces will be eliminated, the Inflation Rate could recover at a steeper pace and bounce back to strong inflation as MPC said. Meanwhile, both Inflation Rate and Wages will be closely monitored as a strong economic growth is unlikely to firm without high inflation and wages. Furthermore, policymakers were more concentrated on the upside pushes on the British inflation from the Eurozone than the previous months as the Eurozone’s economy started to pick up due to the QE program. Moving ahead, the general election in the UK scheduled next month is set to take center-stage as we step in May.

The [B]GBP/USD[/B] is trading slightly above the psychological level of 1.5000 in early trading. If the bulls manage to maintain the pair above the latter level, then I would expect to see the pair testing the 1.5150 pretty soon. On the other hand, a break below the strong support level of 1.5000, could add further pressure the strong support level of 1.4850. This level is significant as it includes the 50-period and the 200-period SMAs on the 4-hour chart.

The worst performing against the US dollar was the [B]CHF[/B], which plunged after the [B]Swiss National Bank (SNB)[/B] said it would eliminate exemptions from its policy of negative interest rates for certain public accounts, including the central bank’s pension fund. The [B]USD/CHF[/B] pair bounced off from the strong support level of 0.9510, which coincides with the 200-period SMA on the daily chart. The pair has been trading in a range for the last month and it is going to take a significant push to break out of here, with a break to the upside looking more likely, since both, the MACD and the RSI are turning bullish. The euro also gained against the Swiss Franc turning the short-term bias to the upside. If the euro bulls manage to regain 1.0400 EUR/CHF then I would expect further upside pressure, with the next resistance level to come at 1.0500.

The [B]greenback[/B] also traded slightly higher against both the yen and the Aussie on the back of stronger US Housing Market data. Existing home sales jumped 6.1% in the month of March, increasing to 5.19M above expectations of 5.03M while the Housing Price Index for the previous month accelerated to 0.7% from 0.3% the preceding month.

The MBA Mortgage Applications for the last week was also positive for the buck as they increased +2.3% from -2.3% before. On the other hand, in Japan Markit/JMMA Preliminary Manufacturing PMI decreased to 49.7 for the first time in almost a year, from 50.3 in March.

The shared currency edged slightly lower against its main rivals, with the [B]EUR/USD[/B] going up and down from the 1.0700 level. Around that area, the 50-period SMA is moving slightly below the price, while the 200-peridod is moving above the price near the 1.0740. So it’s a matter of time until we see a break out of this tight range. Meanwhile, traders now shift their attention towards the Eurogroup meeting, where Greece will be the center of attention.

[B]U.S. Indices[/B]
U.S. Stocks closed higher on Wednesday. [B]Dow Jones Industrial Average[/B] climbed 0.49% up to 18,038 with Visa and McDonalds be top gainers with a gap from the third Stock on the list but the rest of the list consisted of major companies that their earnings culminate. Some of them are American Express, Apple, Coca-Cola and General Electric. Visa was up from its expansion in China and McDonald’s Stock appreciation based on the high quarterly earnings.
Dow Jones has regained yesterday’s losses, after holding above the 200-period SMA on the 4-hour chart and is now approaching the short-term descending trend line which started back beginning of March. The 18,000 level will play an important role in the next few days. If the index bulls manage to hold the price above that level, then I would expect to see a more aggressive move to the upwards and towards the $18,300 level.

The heavy- technology [B]NASDAQ Composite Index[/B] surged higher 21.07 points to 50,035 (+0.42%) while [B]S&P 500[/B] rose 10.67 points to 2,108 with +0.41% gains.

[B]U.S. Dollar Index[/B]
On Wednesday, the [B]ICE U.S. Dollar Index (DXY)[/B] recorded the fourth consecutive day of gains of 0.07% following the stronger U.S. dollar. Since Monday, the Index rose +0.75% hitting 98.0 from 97.60 the week’s opening level.
The dollar index bounced from the short-term ascending trend line and the 97.00 level. Technically, the strong upward momentum remains intact and a clear break above 98.50, it is expected the index to reach session highs at 99.00, while a break below 97.35, should open the doors for a full retracement towards 96.50.

[B]GOLD[/B]
The yellow metal hovered below the psychological level of $1,200, following the sharp sell-off after strong US housing data. The stronger-than-forecast U.S. data report strengthens the argument for the Federal Reserve to begin raising interest rates in June. The gold fell 1.10 percent on Wednesday, its biggest single-day decline since March 6. The precious metal has been firmly capped below $1,212 since April 07, having made several failed attempts at breaching the critical level of $1,224. On the downside, the gold is receiving support from the 200-period SMA on the 4-hour chart near the $1,190 level. If we do see a move lower, the next support level should come around $1,180.

[B]Economic Indicators[/B]
Today is a PMI day since Preliminary Markit Services, Manufacturing and Composite PMIs for France, Germany and Eurozone as a whole are due. All of them expected to show an improvement in April.

In Germany, the GFK Survey will reveal the Consumer Confidence for May which is forecasted to have increased among the consumers. In UK, the attention will be on the Retail Sales announcement in March. The market predicted a slower pace at the increase of the prices than before.
In US, the Preliminary Markit Manufacturing PMI and the New Home Sales will be released to add at the greater picture of the recovering Housing Sector. Moreover, the weekly report on the unemployment benefits claims is scheduled as usual.