Home > Market Recap: Risk-On Dominated the Month as a Weak Dollar Pushed Stocks and Commodities Higher

Market Recap: Risk-On Dominated the Month as a Weak Dollar Pushed Stocks and Commodities Higher

The declining dollar triggered higher equity and commodity prices in April. The EUR/USD formed a rising wedge above 1.20 and may signal a sharp reversal for the month ahead.

The last trading day of the month has arrived, and no important economic data lies ahead. Therefore, traders will focus on money management, on how to roll their positions into the next trading month, and on what the NFP report (due a week from now) will show.

April was a one-way trip for financial markets, with the US dollar declining for the entire month. The EUR/USD pair, in particular, declined all month from the very first day.

Most currency pairs suffered from the dollar’s weakness, with a notable exception being the USD/JPY pair that recovered some losses in the last week of the month. Unsurprisingly, the weaker dollar led to higher equity and commodity prices.

The earnings season has been in full swing in the USA as the big tech companies have released their earnings for the first quarter of the year. This week alone, we have seen Alphabet (Google’s parent company), Apple, Microsoft, and Amazon reporting their earnings— none of which disappointed. Facebook’s share price rose to a new all-time high after much better than expected results for the quarter.

Stocks, therefore, remained bid throughout the month. The main US indices have kept pushing to new all-time highs, supported by the lack of volatility and an accommodative Fed.

The Bank of Canada tapered its quantitative easing program this month, which may portend what other major central banks will do in due course. But the bullish party is set to continue until they do.

Commodities had a great month. Gold mostly consolidated below the $1,800 level, not strong enough to overcome resistance. Oil made a strong comeback from below $60 to trade at $64.60 at the time of writing, while copper kept pushing to new highs for the month after it broke higher from a bullish pennant formation.

Monthly Analysis

The day ahead will likely be marked more by end-of-the-month flows (which will likely increase volatility) than by economic events. As such, traders should focus on the narratives of the month: the dollar, the stock market, and the end-of-month flows.

Markets to Watch

The Dow Jones, EUR/USD, and USD/JPY markets are in focus today.

Dow Jones

This chart shows the Dow Jones index daily prices during April. We see the bullish candlesticks dominate, and the price action remained bullish even when the market had a down day.

At this point, the market appears to have met resistance at around 34,000, with consolidation just below it. There may be an ascending triangle formation, and bulls may want to wait for a daily close above 34,300 before joining on the long side.


The EUR/USD chart is one of the most interesting charts this month. As mentioned earlier, this market traded with a bid tone for the entire month. Investors bought the EUR/USD regardless of the ECB or the Fed decisions.

The fact is, European economic data got better and the vaccination effort gained pace. On Wednesday this week, Germany inoculated over one million of its adult population, Spain half of that, and Italy did well too. Coupled with the resilience of the ECB to step in the Fed’s footsteps when it comes to the accommodative stance, the market took it as a bullish sign and bought the euro.

But (there always is a “but”) bulls should be cautious at the end of the month. The EUR/USD formed a rising wedge pattern while above 1.20; a reversal pattern. A move below the lower edge will signal more weakness and opens the gates to the 1.20 level.


The USD/JPY weekly timeframe shows a declining dollar despite the strength seen during the last trading week of the month. After forming a bearish engulfing pattern at the 110 level, the USD/JPY declined by more than two hundred pips on the back of the dollar weakness.

If the USD/JPY fails to retake the 110 level, as suggested by the bearish engulfing pattern, weakness will likely continue in the month ahead. If the EUR/USD breaks the rising wedge to the downside, then the best way to trade the JPY strength will be by selling the EUR/JPY pair.

Winners and Losers

The dollar is the monthly loser in April, declining against all its G10 peers and fueling the stocks rally. This month’s winners are the US stock markets and the euro.

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