May 10, 2024
CURRENCIES
EUR/USD Overview:
- Recently rallied after rebounding from support at 1.0725, now testing resistance near 1.0790 where the 50-day and 200-day SMAs converge.
- Potential rise to trendline resistance at 1.0810 and possibly a major Fibonacci level at 1.0865 if upward momentum continues.
- Should the price reverse, support is at 1.0725 and 1.0695; a break below could lead to a decline towards 1.0645 and possibly April lows at 1.0600.
USD/JPY Technical Analysis and Price Outlook:
- Held steady above 155.00 after a strong rally; next resistances are at 158.00 and 160.00.
- A pullback could see support at 154.65, with further downside targets at 153.15 and the 152.30-152.00 range, where significant technical indicators align.
GBP/USD Technical Analysis and Price Outlook:
- Post Bank of England meeting, the GBP/USD briefly dipped then surged past the 1.2500 mark.
- Upcoming resistance at 1.2540 near the 200-day SMA, with further potential up to the 1.2600-1.2620 range.
- Downside risks include support at 1.2500 and 1.2430; failure to hold these levels could push prices towards the April low around 1.2300.
STOCK MARKET
Recession-Proof Stocks Lead Market’s Uptrend:
- After a rough April, the market rebounds led by recession-proof stocks.
- Utilities sector (XLU) surged nearly 12%, topping its gains for the year.
- Consumer Staples (XLP) also up nearly 5% in the same timeframe, while S&P 500 overall gained approximately 2.7%.
Sector Analysis:
- Utilities (XLU):
- Entered March trading at a significant valuation discount since 2009.
- Recent 26.7% earnings increase this quarter drives sector interest.
- Interest rate sensitivity noted as Treasury yields fell, boosting sector performance.
- Consumer Staples (XLP):
- Underperformed the S&P 500 by almost 30% over the past year.
- Identified as a potential buying opportunity due to its defensive nature.
Strategist Insight:
- Keith Lerner, Truist co-chief investment officer:
- Suggests the strong performance is a result of investor rotation into sectors that have lagged in the recent market rally.
- Describes the current market sentiment as cautious, with investors favoring more defensive stock positions amidst broader market upswing.
Economic and Sector Drivers:
- Recent economic slowdown evident from a weaker jobs report and contraction in manufacturing in April.
- Growing interest in AI and electric vehicles speculated to boost demand in the Utilities sector.
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