FX Commentary – Gold Rose To A 1 Month Peak On Congressional Progress Of US Stimulus Relief Package.

Market Talk
– The US dollar was up on Friday morning in Asia but slid through major support levels overnight and was headed towards its worst week in a month and has fallen to multi-year lows against the euro, pound, Aussie and the NZ dollar.

– The greenback also slumped to a nine-month low against the safe-haven yen but recovered after the Bank of Japan ends its two-day policy meeting on Friday and announced an extension to a funding package but otherwise left policy unchanged.

– The euro has added nearly 3% in the three weeks since it burst through stiff resistance at $1.2000. At $1.2254, after minor profit taking on Friday, there is clear sky ahead until the common currency’s 2018 top of $1.2556.

– Britain and the EU struck a downbeat tone about the likelihood of an agreement on Thursday, but investors are betting that is yet more brinkmanship and the pound sat comfortably at $1.3554 after hitting a 31-month high overnight.

– Gold prices rose over 1% to a one-month peak as the dollar spiralled lower on hopes of more coronavirus relief aid and the U.S. Federal Reserve’s pledge to funnel more cash into the economy and keep interest rates low

Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.7120. Stop at 0.7090 and target at 0.7170
3. US stimulus bill and more US states imposing COVID-19 restriction are both likely to weigh on the US dollar.
4. Price is supported by a strong support zone and MACD is hinting of a bullish price trend ahead.

Fundamental Comments
1. The US dollar is likely to weaken on an imminent US$904 billion stimulus relief package.
2. More US states are imposing restrictions which is likely to weigh on the US dollar

Technical Comments
1. Price is supported by a strong support zone provided by a resistance turned support line as well as the 20EMA.
2. MACD remains bullish and is hinting of a bullish price trend ahead.

Key Levels


Technical Overview
USD/JPY – Our sell order was filled on Wednesday at 103.70 and we had recommended shifting stop to cost at 103.70 while keeping profit target unchanged at 102.85 yesterday. Unfortunately price reached a low of 102.87 and has recovered higher to 103.45. We would recommend closing the position at current rate. Stochastic is starting to turn up but MACD remains bearish. 20EMA is neutral.

Support 103.15102.85102.50
Resistance 103.50103.90104.15

EUR/USD – Price reached a high of 1.2272 this morning and we are expecting this rally to continue higher to 1.2315 over the next few trading days. Over a long term, we are expecting price to move to the next important resistance at 1.2556. MACD remains bullish but Stochastic is in the overbought extreme. 20EMA remains bullish with a steep slope, hinting of a strong bullish trend.

Support 1.22401.22101.2170
Resistance 1.22751.23151.2355

GBP/USD – Price reached a new high at 1.3624 overnight, just above our target of 1.3620. We think the uptrend is likely to continue towards 1.3740. MACD remains bullish and hinting of a corrective decline at the moment. 20EMA is bullish and has a steep slope hinting of a strong trend. However, with Brexit deadline approaching and a possible no deal scenario, price could decline to 1.3125 or lower.

Support 1.35151.34751.3435
Resistance 1.35551.36251.3655

XAU/USD – Price breached the $1877 resistance overnight to advance to a high of $1896.15. Stochastic is in the overbought zone and is showing a bearish divergence warning but MACD remains bullish and strong. 20EMA is also bullish with a steep slope hinting of a strong trend. We may see a pullback to $1862 but overall and on a longer term basis, the trend remains bullish for $1918.

Support 1875.201868.501856.55
Resistance 1888.951896.151910.20

USD/CNH – Our buy order was filled yesterday at 6.5100 when price fell to a low of 6.5030. MACD has turned up and Stochastic has also turned up and is moving higher. 20EMA has also turned bullish and is moving higher, confirming our view of a possible price rally. Our view remains unchanged. We would recommend bringing stop higher to cost at 6.5100 while keeping profit order at 6.5440.

Support 6.52706.51706.4970
Resistance 6.54506.55406.5670

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