FX Commentary – EURO Could Be Heading to 1.0900

Market Talk

  • The dollar was weaker on Monday morning following in last Friday’s footsteps, as U.S. durable goods orders fell by 14.4% last month, the biggest slide since 2014, weakening the US dollar as a result.
  • After four consecutive sessions of lower daily lows, EUR/USD has perked up on the Friday and continues its climb on Monday morning but delays to an agreement on divisive details of the European Union’s stimulus package has kept investors from turning more bullish on the euro.
  • The British pound continued its rally despite U.K.’s retail sales falling by the most ever on record in March, as food buying for the coronavirus lockdown was dwarfed by a plunge in sales of clothing and most other goods.
  • Aussie and NZ dollar are both ticking higher as both countries announced an easing of lockdown restrictions. Aussie dollar is challenging the 14 April high of 0.6442 while NZ dollar could be headed to 0.61.
  • Gold was up in Asia on Monday morning, boosted by expectations that gold will continue to benefit from the continuous stimulus packages rolled out by central banks to cushion the COVID-19 pandemic’s economic impact.

Chart Focus EUR/USD
Key Points

  1. Buy EUR/USD recommendation
  2. Buy EUR/USD at 1.0835. Stop at 1.0790 and target at 1.0900
  3. Poor US data and EU stimulus package is likely to aid the Euro dollar against the US dollar
  4. Price breaking out of a down trending channel after making a 1-month low and with bullish momentum indicators, are a sign of a reversal.

Fundamental Comments

  1. US Durable Goods biggest slide since 2014 is a sign the US economy will be weak as the US is the biggest victim of the coronavirus.
  2. EU’s stimulus package is likely to aid the Euro after 4 consecutive sessions of lower daily low.

Technical Comments

  1. Price broke out of a 2 week down trending channel after making a new 1-month low
  2. Both Stochastic and MACD are rising and hinting of more price advances.

Key Levels

Support 1.08251.07901.0755
Resistance 1.08651.09001.0945

Technical Overview

USD/JPY – Price has moved in a tight range of 107.20 to 107.90 for a week now, expect for a brief moment when it spiked higher to 108.04. We are expecting this range to persist until a breakout of either direction. MACD is flat and near to the zero line. Stochastic is near to the oversold zone. Stand aside and wait for better direction or breakout

Support 107.20106.90106.55
Resistance 107.60107.90108.35

AUD/USD – Price broke above the 14 April high of 0.6443 and we could be heading higher on the last leg of the rally to 0.6520 or to 0.6575. Both MACD and Stochastic are rising, hinting that price is likely to heading higher. MACD is also bullish at the moment and its gradient is steep. 20EMA gradient is also steep, hinting of a strong bullish trend. Only a move below 0.6380 would negate our bullish view.

Support 0.64600.64100.6350
Resistance 0.65000.65350.6575

GBP/USD – Price broke above 1.2415 this morning and currently we are at the Fibonacci 50% correction point at 1.2450. If price is able to move above this point, it is likely to test the Fibonacci 62% correction point at 1.2495. Both Stochastic and MACD are rising and hinting of more price advances. Only a move below 1.2290 would negate our bullish view for a test of 1.2495.

Support 1.24301.23751.2330
Resistance 1.24951.25251.2575

XAU/USD – After reaching its first target at $1738, price declined to a low of $1707.05 on Friday’s night. Price managed to close above its 20EMA on the dip and we remain bullish for our second target at $1747. While Stochastic is still correcting and moving lower, MACD is showing sign of turning around. If MACD turns around and start moving higher, price should be on its way to $1747. A move below $1699 would negate our view.

Support 1717.701704.401691.10
Resistance 1728.351738.551747.10

USD/SGD – Our buy order got stop out late on Friday night when price dropped to 1.4204, which is just 1 pip below our stop loss order. This morning, a rally was capped by the 20EMA, which could mean another test lower today. A break of 1.4204 will open up for a test of 1.4185. A break of this support could end our bullish view on this pair. Stand aside and wait for better direction.

Support 1.42051.41801.4125
Resistance 1.42451.42851.4325

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