Market Talk
– The dollar was down to a 10-week low on Monday morning in Asia, starting the week with losses as Democrat candidate Joe Biden was declared the winner of the U.S. presidential elections, but Trumps has made no sign of conceding
– Investors retreated from the greenback on expectation that a Biden administration would mean a steadier U.S. foreign policy and the continuation of a soft monetary policy, as announced by the Federal Reserve during the previous week.
– The yuan rose against the US dollar to a 28-month peak over news of Biden’s victory, with investors hopeful of a more conciliatory approach to U.S.-China relations. China also released trade data over the weekend which was positive.
– Bank of England Governor Andrew Bailey and chief economist Andy Haldane are due to speak later in the day, with the focus squarely on negative rates which could cap the British pound rise against a weak US dollar.
– Gold rose to a six-week high as the dollar weakened on a Joe Biden victory in the U.S. presidential election which boosted hopes for a larger coronavirus relief bill. Market is expecting a larger stimulus will lead to inflation in future which is likely to benefit gold.
Chart Focus EUR/AUD
Key Points
1. Sell EUR/AUD recommendation
2. Sell EUR/AUD at 1.6330. Stop at 1.6370 and target at 1.6220
3. Rising coronavirus cases in Europe and interest rate differential are both likely to weigh on the Euro.
4. Price is capped by a strong resistance and momentum indicators are hinting of a bearish price trend.
Fundamental Comments
1. Rising coronavirus cases in Europe is likely to weigh on the Euro.
2. Interest rate differential is in favour of the Aussie dollar
Technical Comments
1. Price is capped by the falling 20EMA line and a strong resistance point
2. MACD is bearish and is turning down while Stochastic has a bearish crossover hinting of a bearish price trend ahead.
Key Levels
| Support | 1.6275 | 1.6220 | 1.6190 |
| Resistance | 1.6330 | 1.6375 | 1.6405 |
Technical Overview
USD/JPY – Price declined to a low of 103.17 last Friday’s night but the decline is showing signs of bottoming out. Both MACD and Stochastic are turning up from their oversold extreme. However the 20EMA is pointing lower with a steep slope, hinting of a strong bearish price trend. We think there could be a price correction to 103.70 before the downtrend resumes again.
| Support | 103.15 | 102.75 | 102.30 |
| Resistance | 103.55 | 103.85 | 104.10 |
EUR/USD – We had a buy call on this pair last Friday but our buy order was not filled. Price has moved to a high of 1.1894 this morning and there are divergence warning given by the MACD indicator. After rising for 3 consecutive days, the market may be overbought. We are looking at a pullback to 1.1790 to get into the longer term bullish trend. A stronger support lies at 1.1760 but a move below this point could threaten the bullish trend.
| Support | 1.1870 | 1.1845 | 1.1790 |
| Resistance | 1.1905 | 1.1930 | 1.1965 |
GBP/USD -Price tested the recent high of 1.3175 this morning and if price is able to sustain above this level, we are likely to see a price move to 1.3250. If price fails to hold above 1.3175, we are likely to see a decline back to 1.3080. MACD is still bullish but Stochastic is into the overbought zone at the moment. 20EMA is pointing higher with a steep slope, indicating a strong bullish price trend.
| Support | 1.3170 | 1.3125 | 1.3080 |
| Resistance | 1.3210 | 1.3265 | 1.3315 |
XAU/USD – Price broke above $1916 on Thursday night and rallied above the Fibonacci 161.8% price projection target at $1952.30 to reach a high of $1959.60. Our view remains the same as last Friday. We are expecting this rally to continue towards $1975 over the next few days and on a longer term basis to $1993. MACD is still rising and Stochastic is near to the overbought zone but both indicators are capable of supporting a price rally.
| Support | 1950.75 | 1940.55 | 1932.05 |
| Resistance | 1959.60 | 1973.50 | 1985.20 |
USD/CAD – Price was capped by the support turned resistance line at 1.3096 and moved lower on Friday night. Price reached a low of 1.3005 but momentum indicators are hinting that price is near to a low. MACD and Stochastic are both showing divergence warnings. However 20EMA is pointing down with a steep slope and is hinting of a strong bearish price trend ahead. A move above 1.3095 would confirm a reversal of the bearish trend.
| Support | 1.2990 | 1.2945 | 1.2910 |
| Resistance | 1.3030 | 1.3070 | 1.3105 |
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