FX Commentary – US Dollar Stronger On Stimulus & Brexit Double Worries

Market Talk
– The dollar was up on Thursday morning in Asia, as the U.S. and the U.K. both scramble to meet deadlines for the latest stimulus measures and Brexit trade talks with the European Union (EU) respectively

– Investors turned to the dollar, viewed as a safe-haven asset, as doubts begin to mount on whether the Republicans and Democrats can reach a consensus over the latest stimulus measures. The two sides have until Dec. 11 to do so, in order to avert a government shutdown

– The British pound lost about 0.5% on Thursday after British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed they have until Sunday to take a “firm decision” about the future of trade talks, after both sides remain “far apart” on the trade deal.

– The euro fell to $1.2082, a fourth consecutive day of losses and slightly below the two-and-a-half year high of $1.2177 seen on Friday with European Central Bank widely expected to expand its stimulus measures to prop up the recession-hit currency bloc at its policy meeting later on Thursday.

– Gold was up on Thursday morning in Asia, with Wednesday’s optimism over a COVID-19 vaccine tempered by a warning that patients with a history of anaphylaxis to a medicine or food should not be inoculated.

Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1842.70. Stop at $1851.10 and target at 1820.00
3. Doubt of a US stimulus measures and worries over effectiveness of COVID-19 vaccine are both likely to favour the US dollar over Gold.
4. Trend is hinting of another decline with MACD bearish and confirming the decline.

Fundamental Comments
1. Doubt of a US stimulus measures are sending investors into the US dollar
2. Worries over COVID-19 vaccine effectiveness is likely to favour the safe haven US dollar

Technical Comments
1. Price is capped by the 20EMA and should be moving towards the Fibonacci 50% correction point.
2. MACD is bearish and is hinting of a bearish 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 contain trading until we see a breakout outside this range. Price tested the lower boundary earlier but was capped at 104.35. Price moved last night above 104.35 and we are expecting price to test the upper boundary at 104.75.  MACD has turned bullish but Stochastic near to overbought zone

Support 104.35104.05103.75
Resistance 104.75105.15105.45

EUR/USD – Price’s decline continued into a 4th day to a low of 1.2058. However Stochastic is near to the oversold zone and a bullish crossover was seen. MACD is bearish but is close to the zero line. The downside may be limited and with ECB meeting announcement later today, we would prefer to wait for further news and more clues before embarking on a reversal of trend view.

Support 1.20751.20401.2000
Resistance 1.21101.21501.2180

GBP/USD – Price dropped to a low of 1.3308 from 1.3480 after news that the UK and EC was still far apart and working on a Brexit trade deal. MACD has turned bearish and Stochastic has a bearish crossover and is moving lower. 20EMA has also turned bearish. We are expecting price to test 1.3230 but price is likely to be volatile due to Brexit news.

Support 1.33201.33051.3260
Resistance 1.33651.34051.3465

AUD/JPY – We had a buy recommendation yesterday and this order was filled at 77.50 when price dropped to a low of 77.33. Price has reached a high of 78.08 this morning.  We would recommend bringing stop higher to 77.80 while keeping profit target at 78.15. Stochastic has reached the overbought zone but MACD and 20EMA are bullish. However, we think the upside may be limited

Support 77.7077.4576.95
Resistance 78.1078.4578.90

USD/SGD – Our sell call was filled at 1.3380 on Tuesday and yesterday we had recommend bringing stop down to 1.3390 while keeping profit target at 1.3305. Our stop was triggered last night when price reached a high of 1.3392. We are out of this position with a loss of 10 pips. MACD remains bullish but is flat along the zero line while 20EMA is also flat. Stochastic is still moving higher.

Support 1.33501.33051.3260
Resistance 1.33851.34201.3460

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