FX Commentary – Weak US Data Led To A Weaker US Dollar

Market Talk
– The dollar was down on Thursday morning in Asia, subdued by weak U.S. economic data and optimism over the development of a COVID-19 vaccine, leading investors to riskier assets tied to global commodities.

– The dollar also took a hit after data released on Wednesday showed that US GDP grew 33.1% quarter-on-quarter during the third quarter but US jobless claims were higher than forecasted, highlighting the ongoing reality of the coronavirus epidemic.

– The Aussie traded near its highest since September 2020, boosted by improved risk appetite and strong demand in China for Australian commodities exports. The NZ dollar was trading near its strongest level in over two years.

– The pound was near its strongest level against the dollar since 2 Sep 2020, while holding steady against the euro. Investors await details on the Brexit trade talks between the U.K. and the European Union this week with optimism on progress towards a trade deal.

– Gold was up on Thursday morning in Asia, as investors looked to the safe-haven asset on the back of weak U.S. jobs data, rising COVID-19 numbers, and as a hedge against a fall in stocks.

Chart Focus Gold
Key Points
1. Sell Gold recommendation
2. Sell Gold at $1818.50. Stop at $1827.60 and target at $1790.30
3. A weak US dollar and optimism of an economic recovery are leading investors away from the safe haven US dollar into gold.
4. Price is capped by a bearish 20EMA and MACD is also hinting of a bearish price trend.

Fundamental Comments
1. Weak US dollar on the back of weak US jobless claims is in favour of Gold.
2. Development of a COVID-19 vaccine led investors to riskier assets tied to commodities on the back of optimism of economic recovery.

Technical Comments
1. Price is likely to be capped by the 20EMA which is hinting of a strong bearish price trend ahead.
2. MACD remains bearish and is hinting of another price decline ahead.

Key Levels


Technical Overview

USD/JPY – Our buy order from Monday was filled at 104.20 and is still pending. Price had reached a high of 104.75 but has declined lower to 104.25 this morning. Our view remains unchanged. Yesterday, we had shifted stop higher to break even at 104.20 while keeping profit target at 104.90. MACD remains bullish and 20EMA is still bullish and supporting price.  However, Stochastic is moving lower.

Support 104.30104.00103.65
Resistance 104.65104.95105.25

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 1.1920 today. We are expecting this rally to continue to the next resistance at 1.2010. Stochastic is still moving higher but is in the overbought zone. MACD is mildly bullish but 20EMA is still strong bullish. A break below 1.1910 could negate our bullish view

Support 1.19201.18901.1860
Resistance 1.19551.19851.2010

GBP/USD – We had a buy call on this pair yesterday and our entry was filled at 1.3330 as price fell to 1.3303 overnight. Price has moved higher to 1.3397. We would recommend moving stop loss higher to break even at 1.3330 while keeping profit target at 1.3470. Stochastic is still rising and MACD remains bullish at the moment. There is a possible of MACD giving a divergence warning later.

Support 1.33601.33101.3265
Resistance 1.33951.34251.3480

AUD/USD -Price have risen to a two-month high but there is MACD divergence warning of a possible high being formed. Stochastic is also into the overbought extreme. However, 20EMA remains bullish and price is still above the 20EMA. However if price were to decline below the 0.7330, it could confirm a top being formed and a decline to 0.7250 to follow. Watch the reaction at 0.7330.

Support 0.73300.73000.7265
Resistance 0.73750.74150.7450

USD/CAD – Price declined to a low of 1.2986 last night after price has been unable to move above 1.3100. So far, the decline looks incomplete and there could be one more decline to follow. If price is unable to move above 1.3030, we are looking for a decline to test the previous low of 1.2927 in the next couple of days. MACD remains bearish but Stochastic is already in the oversold zone.

Support 1.29851.29401.2905
Resistance 1.30251.30701.3115

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