Forex Market Analysis: Forex and Recession-Proof Stocks

by | May 10, 2024 | Forex Analysis

Forex Markets News – 10 May 2024

CURRENCIES:

EUR/USD Overview:

  • After rebounding from the support level at 1.0725, EUR/USD is currently testing resistance around 1.0790, where the 50-day and 200-day SMAs converge.
  • Potential gains could push it toward trendline resistance at 1.0810 and the key Fibonacci level at 1.0865 if the momentum continues.
  • If a reversal happens, support levels at 1.0725 and 1.0695 will be critical; a break below these levels might lead to declines toward 1.0645 and possibly the April lows of 1.0600.

USD/JPY Technical Analysis:

  • USD/JPY is holding steady above 155.00 following a strong rally.
  • Resistance is expected at 158.00 and 160.00, with potential pullbacks finding support at 154.65. Further downside targets include 153.15 and the 152.30-152.00 range, where key technical indicators align.

GBP/USD Technical Analysis:

  • Following the Bank of England meeting, GBP/USD dipped but quickly surged past the 1.2500 level.
  • Resistance lies at 1.2540, near the 200-day SMA, with potential to rise further into the 1.2600-1.2620 range.
  • Key support rests at 1.2500 and 1.2430; a break below could push prices down to April’s low around 1.2300.

STOCK MARKET:

Recession-Proof Stocks Lead Market’s Uptrend

  • After a challenging April, the market rebounded, led by recession-proof stocks.
  • The Utilities sector (XLU) surged nearly 12%, its best gain this year.
  • Consumer Staples (XLP) also rose nearly 5%, while the S&P 500 gained about 2.7%.

Sector Analysis:

  • Utilities (XLU): Saw a valuation discount not seen since 2009, driven by a 26.7% earnings increase this quarter. Interest rate sensitivity led to improved performance as Treasury yields dropped.
  • Consumer Staples (XLP): Despite underperforming the S&P 500 by nearly 30% over the past year, its defensive nature presents a buying opportunity.

Strategist Insight:

  • Keith Lerner, Truist’s co-chief investment officer, attributes the strong performance to investor rotation into lagging sectors. He believes the current sentiment is cautious, favoring defensive stock positions amid broader market upswings.

Economic and Sector Drivers:

  • Slower job growth and declining manufacturing in April reflect an economic slowdown.
  • Growing interest in AI and electric vehicles may stimulate demand in the Utilities sector.

CRYPTOCURRENCIES:

  • Bitcoin remains stable at $62,341.
  • Ether rose 1.71% to $3,000.

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