FX Commentary – USD Weakened On Optimism Of US Stimulus Relief Measures.

Market Talk
– The dollar was down on Wednesday morning in Asia as investor appetite for risk increased on the prospects of further fiscal stimulus from the United States as well as expectations of a solid global economic recovery.

– Senate leader Mitch McConnell said on Tuesday that Congress should include a fresh wave of measures in a $1.4 trillion spending bill, aimed at heading off a government shutdown amid COVID-19, while U.S. Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi held their first talks for the latest stimulus measures, raising hopes for investors.

– Weaker-than-expected manufacturing activity data for November alongside speculation on whether the Fed will move to support the U.S. economy before COVID-19 vaccinations are made available, weighed on the dollar.

– The AUD got a boost from data released by the Australian Bureau of Statistics earlier this morning showing GDP grew above forecast at 3.3% quarter-on-quarter. On Tuesday, RBA kept its interest rate unchanged at 0.10%, as widely expected.

– Gold jumped and silver soared as the dollar slid, with increasing U.S. stimulus bets adding to bullion’s appeal as an inflation hedge and increasing number of global COVID-19 cases add to the yellow metal’s appeal.

Chart Focus AUD/JPY
Key Points
1. Buy AUD/JPY recommendation
2. Buy AUD/JPY at 76.90. Stop at 76.50 and target at 77.95
3. Good Australian GDP data and COVID-19 vaccines are both weighing on the Japanese yen
4. Price could be about to resume its uptrend and Stochastic is hinting there could be more price upsides ahead.

Fundamental Comments
1. Good Aussie GDP data coming in above forecast at 3.3% quarter on quarter is giving the Aussie dollar a boost.
2. COVID-19 vaccine is giving investors’ risk sentiment a boost and driving investors into riskier currencies and away from safe haven JPY.

Technical Comments
1. Stochastic is rising and has yet to reached the overbought zone, hinting there could be more upsides to follow.
2. Price could be breaking out of a range and could be continuing its uptrend after the breakout.

Key Levels


Technical Overview

USD/JPY – Price has been trading within a range of 103.85 to 104.75 and we are expecting this range to continue. Stochastic is near to the overbought zone but MACD is bullish and rising at the moment.20EMA remains bullish and is point higher, hinting there could be more upside ahead. We see price moving higher to test the previous high of 104.75 in the next couple of days ahead.

Support 104.20103.90103.65
Resistance 104.55104.85105.15

EUR/USD – Price broke above 1.2003 overnight to reach a high of 1.2083. The price trend looks strong at the moment and is likely to continue. Stochastic is rising but is inside the overbought zone while MACD remains bullish and strong. 20EMA has a steep slope, hinting of a strong bullish trend. We are expecting price to move higher to 1.2150 in the next few days ahead.

Support 1.20451.19951.1965
Resistance 1.20851.21101.2155

GBP/USD – Price broke above 1.3397 to reach a high of 1.3442 overnight and we could see a decline to 1.3397 as the market consolidates its gains. MACD is bullish and Stochastic is also rising. Stochastic had not reached its overbought extreme, which means there could be more upsides ahead. 20EMA has a steep slope hinting of a strong bullish trend ahead,

Support 1.33951.33451.3310
Resistance 1.34201.34751.3510

XAU/USD -Price had dropped to a low of $1764.40 on Monday, which was close to the Fibonacci 50% correction point of the rally from $1450 to $2075. MACD has started to warn with divergences and Stochastic is also rising after a bullish crossover. Price rose to a high of $1817.50 last night and 20EMA is hinting there could be more upsides ahead. If price can move above $1819, it can move higher to $1865 but inability to move above $1819 could send price back to $1764.

Support 1807.501799.801789.85
Resistance 1817.501829.451836.85

USD/CHF -We had a sell call on this pair yesterday but price only reached a high of 0.9073, missing our 0.9090 entry price. Overnight, price has reached a low of 0.8982 and candlestick pattern is suggesting this could be a low and a reversal is possible. Stochastic is in the oversold extreme. Both MACD and 20EMA remain bearish and price is trading outside a down trending channel.

Support 0.89750.89400.8900
Resistance 0.90000.90350.9075

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