FX Commentary – Progress Towards U.S. Fiscal Stimulus Weakens US Dollar.

Market Talk

The US dollar was weaker on Friday morning in Asia as signs of progress towards U.S. fiscal stimulus and optimism about COVID-19 pandemic is slowly starting to come to an end kept investors upbeat and shifted funds from the greenback into riskier currencies.
A $908 billion COVID-19 aid package was gaining traction in Congress on Thursday, and the Fed is widely expected to expand its bond buying program when it meets later in the month. Both would see the dollar continue its downward trend.
The euro benefited from the dollar’s weakness and looked set to close its best week in a month, after finally breaching the $1.2000 handle after multiple attempts. The European Central Bank said it will provide further stimulus to help the euro zone when it meets on Dec. 10.
Although the pound saw a one-year high, investors continue to await the outcome of Brexit trade deal talks between the U.K. and the European Union (EU). The Australian and New Zealand dollars backed away slightly after hitting more than two-year highs on Thursday.
Gold firmed as the dollar fell and investors clung to hopes of an eventual breakthrough in negotiations over a new U.S. coronavirus aid package as well as expectation that the Federal Reserve would expand it bond buying program when it meets later in the month.

Chart Focus EUR/JPY
Key Points

Buy EUR/JPY recommendation
Buy EUR/JPY at 125.90. Stop at 125.65 and target at 126.65
Optimism that the COVID-19 pandemic is slowly starting to come to an end and ECB pledge to provide further stimulus is boosting the Euro dollar.
20EMA and a price support is halting a price decline while MACD is hinting of a bullish price trend ahead.

Fundamental Comments
1. Optimism that the COVID-19 pandemic is slowly starting to come to an end is sending funds into riskier currencies and away from safe haven yen.
2. ECB’s pledge to provide further stimulus to help the euro zone is providing a boost to the Euro dollar.

Technical Comments
1. 20EMA is providing support together with a price support and both are keep the uptrend intact.
2. MACD remains bullish with the fast line about to turn up, hinting of a bullish price trend ahead.

Key Levels

Support	125.90	125.65	125.10
Resistance	126.35	126.70	127.05

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 lower boundary but was unable to move below this support. We are expecting price to move up to test the upper boundary at 104.75 in the next few days. Stochastic in the oversold zone and is about to move higher. MACD is bearish.

Support	103.65	103.20	102.90
Resistance	104.00	104.40	105.75

EUR/USD – Price broke above 1.2124 overnight to reach a high of 1.2173. The price trend looks strong at the moment and looks 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 1.2210 in the next couple of days ahead.

Support	1.2130	1.2090	1.2040
Resistance	1.2175	1.2210	1.2255

GBP/USD – Price made another new high at 1.3500 overnight on expectation of a Brexit deal. MACD remains bullish and is rising. Stochastic has reached the overbought zone but is still strong and bullish. 20EMA is pointing higher and has a steep slope hinting of a strong bullish trend. Support lies at 1.3410 and we remain bullish for 1.3535. A move below 1.3280 would negate our bullish view

Support	1.3430	1.3400	1.3365
Resistance	1.3465	1.3500	1.3545

XAU/USD – Price has broken above a V shaped chart pattern Wednesday 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. 20EMA has a steep slope and is hinting of a strong bullish trend ahead. A resistance lies at $1852.50 ahead of our target. A move below $1812 would negate our bullish view.

Support	1837.30	1828.85	1817.50
Resistance	1852.50	1864.75	1873.70

EUR/AUD – We had a buy recommendation at 1.6325 yesterday and it was filled when price dropped to a low of 1.6298. Price has moved higher today to 1.6360 and our view remains unchanged from yesterday. We would like to recommend bringing stop higher to 1.6295 while keeping profit target at 1.6415. MACD remains bullish while Stochastic has a bullish crossover and is moving higher.