Market Talk
– The dollar was down on Wednesday morning in Asia, after increasing optimism over a global economic recovery, possibility of a COVID-19 vaccine becoming available soon and clarity over the incoming U.S. presidential administration saw investors turn towards riskier assets.
– Reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen, as Treasury Secretary seen as move that could shift the focus heavily toward efforts to tackle growing economic inequality also cheered markets.
– The dollar slumped close to a two-week low against the euro with the greenback’s decline likely to continue in the short term as its appeal as a safe harbour currency is diminished.
– The U.S. currency teetered near a two-month low against the Australian dollar and a two-year low against the NZ dollar, both considered barometers of risk sentiment due to their close ties with the global commodities trade.
– Gold slid to a four-month low on Wednesday morning in Asia as investor risk appetite grows on vaccine hopes and White House transition prompted investors to flock to riskier assets and away from safe-haven assets.
Chart Focus GBP/USD
Key Points
1. Buy GBP/USD recommendation
2. Buy GBP/USD at 1.3330. Stop at 1.3290 and target at 1.3470
3. Growing optimism of a Brexit deal and growing risk appetite is weighing on the US dollar.
4. A Triangle chart pattern and bullish momentum indicators are hinting of a bullish price trend ahead.
Fundamental Comments
1. Growing risk appetite has prompted investors to flock to riskier assets and away from safe-haven US dollar.
2. Optimism of a Brexit deal is keeping the British pound strong.
Technical Comments
1. A Triangle chart pattern, which is usually a continuation pattern, spotted on the chart is hinting of another price rally ahead.
2. MACD remains bullish while Stochastic has a bullish crossover and is moving higher but has not yet reached the overbought zone.
Key Levels
| Support | 1.3310 | 1.3265 | 1.3230 |
| Resistance | 1.3360 | 1.3395 | 1.3425 |
Technical Overview
AUD/JPY – We had a buy call on this pair on Monday and last night, our profit target at 76.65 was reached. We are out of this position with an 80 pips profit. Price reached a high of 77.03 this morning but Stochastic has reached the overbought zone and has a bearish crossover. We think there could be a pullback to 76.30 in the next 1-2 days ahead. Both MACD and 20EMA remain bullish
| Support | 76.40 | 76.00 | 75.70 |
| Resistance | 76.75 | 77.05 | 77.50 |
EUR/USD – The decline’s ability to stay above 1.1795 on Monday night has kept the bullish trend intact and price has moved above 1.1900 again today. Price will need to move above 1.1920 to continue the rally to the next resistance at 1.2010. Stochastic is still moving higher but is near to the overbought zone. MACD is mildly bullish but 20EMA is still strong. Watch 1.1920 for idea to the next directional move. Inability to move above 1.1920 can send price lower to 1.1800 again.
| Support | 1.1890 | 1.1860 | 1.1830 |
| Resistance | 1.1920 | 1.1960 | 1.2010 |
USD/JPY – Our buy order was filled at 104.20 when price declined to a low of 104.14. Overnight, price reached a high of 104.75 but has declined lower to 104.48 this morning. Our view remains unchanged. We would recommend lifting stop higher to break even at 104.20 while keeping profit target at 104.90. MACD remains bullish and 20EMA is also bullish and strong. However Stochastic is in the overbought zone.
| Support | 104.40 | 104.00 | 103.65 |
| Resistance | 104.75 | 105.15 | 105.55 |
XAU/USD -After breaking below $1850, price has reached a low of $1799.80 overnight. We do not think this decline is completed. We are looking for another decline to at least $1780 in the next couple of days. MACD is still bearish but Stochastic is oversold. However, 20EMA has a steep slope hinting of a strong bearish trend. We remain bearish unless price can move above $1860.
| Support | 1799.80 | 1784.50 | 1769.90 |
| Resistance | 1812.05 | 1828.15 | 1840.20 |
USD/CAD – Price went to a low of 1.2989 overnight and our profit order was filled at 1.3000. We are out of this position with a 110 pips profit. Price has turned up and has reached a high of 1.3025 this morning. Stochastic has turned up from the oversold zone and is rising but MACD is still bearish. However price has now moved above the 20EMA. We would recommend watching the resistance at 1.3050 for clue to the next direction for trend. A break above this resistance could confirm the bottom is formed.
| Support | 1.2990 | 1.2960 | 1.2930 |
| Resistance | 1.3035 | 1.3070 | 1.3110 |
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