FX Commentary – US Dollar Was Pressured By Optimism Of US Economic Stimulus Measures.

Market Talk
– The safe-haven US dollar fell in choppy trading, pressured once again by expectations of further U.S. economic stimulus measures and the first approval of a COVID-19 vaccine after the U.K. became the first country to approve a vaccine jointly developed by Pfizer Inc and BioNTech SE.

– Although Republicans and Democrats in Congress have yet to reach agreement over the latest stimulus measures’ price tag, investors remained optimistic that a $908 billion bipartisan proposal is slowly gaining traction.

– The AUD saw a 26-month high overnight as investors digested Wednesday’s positive data, including GDP that showed that the Australian economy saw a stronger-than-expected bounce back in the third quarter.

– The pound was hovering near a three-month high, after trading unevenly during the previous session as Brexit talks between the U.K. and the European Union (EU) reach “a make-or-break moment”, according to chief EU chief Brexit negotiator Michel Barnier.

– Gold was up on Thursday morning in Asia, regaining its shine on optimism of U.S. economic stimulus measures. Congress has until Dec.11 to pass the $1.4 trillion budget or risk a government shutdown, adding a big incentive to reach a deal before the deadline.

Chart Focus EUR/AUD
Key Points
1. Buy EUR/AUD recommendation
2. Buy EUR/AUD at 1.6325. Stop at 1.6290 and target at 1.6415
3. Optimism of a Brexit deal and COVID-19 vaccine are both likely to give the Euro dollar a boost.
4. Price is supported by a strong support zone and MACD is hinting of a bullish price trend, hinting of more price upsides ahead.

Fundamental Comments
1. Optimism of a Brexit deal is giving the Euro dollar a boost.
2. COVID-19 vaccine is likely to give a boost to the Eurozone economic recovery.

Technical Comments
1. Price is supported by the Fibonacci 38% correction point as well as the rising 20EMA.
2. MACD is bullish and high above its zero line, hinting of a bullish price trend ahead.

Key Levels


Technical Overview

USD/JPY – Price has been trading within a range of 103.85 to 104.75 since 23 November and we are expecting this range to continue. Last night, price tested the upper boundary but was unable to move above. Stochastic has a bearish crossover near to the overbought zone and is moving lower while MACD is mildly bullish. We are expecting price to be capped by the upper boundary and price to test the lower boundary in the next couple of days ahead. Above 104.75, price is likely to test the previous high of 105.67.

Support 104.40104.10103.85
Resistance 104.75105.15105.45

EUR/USD – Price broke above 1.2083 overnight to reach a high of 1.2124. The price trend looks strong at the moment and is likely to continue. Stochastic is the overbought zone but is still strong and rising 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 couple of days ahead.

Support 1.21101.20701.2040
Resistance 1.21551.21901.2250

GBP/USD – Price dropped to a low of 1.3287 overnight which was just above the previous low point of 1.3280. As price managed to stay above the previous low of 1.3280 and with Stochastic having a bullish crossover and moving higher, we think price is likely to test the topside of 1.3442 again in the next couple of days ahead. MACD is bullish and there could be a bullish crossover as well. A move below 1.3280 would negate our bullish view.

Support 1.33651.33201.3280
Resistance 1.34051.34451.3480

XAU/USD – Price has broken above a V shaped chart pattern and could be heading higher to $1872 in the next few days. MACD is bullish and rising, hinting of a bullish trend. Stochastic is in the overbought zone but is still strong and rising. 20EMA has a steep slope and is hinting of a strong bullish trend ahead. A resistance zone from $1849-$1852 lies ahead of our target.

Support 1828.851817.501807.10
Resistance 1840.501852.401864.75

AUD/JPY – We had a buy call on this pair yesterday and it was filled at 76.90 when price fell to a low of 76.84. Price has moved to a high of 77.48 and this is also the Fibonacci 127% of the rally from 75.38 to the high of 77.03 on 25 November. This resistance needs to give away or price is likely to decline back into the range. Stochastic is already in the overbought zone and MACD remains bullish. 20EMA is rising with a steep slope, which is a hint of a strong bullish price trend. We would recommend bringing stop to cost while keeping profit target at 77.95.

Support 77.0576.5576.20
Resistance 77.5077.9578.45

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