FX Commentary – Weak Economic Data And COVID-19 Worries Supported The US Dollar.

Market Talk
– The dollar was slightly down on Monday morning in Asia, as weak economic data from Europe and UK and fresh worries about the coronavirus supported investor demand for safe-havens.

– The euro capped its gains partly due to growing political instability in Italy, while data released on Friday indicated that economic activity in the European Union shrank notably in January as stringent lockdowns to contain the coronavirus pandemic hit the service industry.

– Investors remain hopeful that at least part of the $1.9 trillion coronavirus relief package proposed by U.S. President Joe Biden will be passed by Congress soon to help the US economy recovers from the pandemic.

– Sterling recovered above 1.3700 on Monday morning, not far off a 2-1/2-year high of $1.3745 touched on Thursday thanks in part to Britain’s lead in COVID-19 vaccinations despite data showing British retailers struggled to recover in December.

– Gold was down on Monday morning in Asia, giving up some earlier gains as it recovers from a sharp decline seen during the previous session. Investor hopes that the U.S. would pass more stimulus measures that could kick start the economic recovery from COVID-19 capped losses.

Chart Focus XAG/USD Silver
Key Points
1. Buy Silver recommendation
2. Buy Silver at 25.25. Stop at 24.80 and target at 26.50
3. US stimulus is likely to lead to a weaker US dollar but is likely to lead to higher demand for Silver as the US economy recovers
4. Price is supported by the Fibonacci 50% correction point and momentum indicators are hinting of a bullish price trend ahead.

Fundamental Comments
1. Expectations of more US stimulus are likely to lead to bigger US budget deficits and drive the US dollar weaker.
2. Stimulus is likely to lead to a US economic recovery which is likely to lead to more demand for Silver.

Technical Comments
1. Price was supported by the Fibonacci 50% correction point of the rally from $24.09 to $26.02
2. MACD remains bullish and Stochastic has a bullish crossover and is moving higher.

Key Levels

Support	25.25	24.95	24.95
Resistance	25.70	26.05	26.45

Technical Overview–

USD/JPY – We had a sell call on Thursday at 103.45 but our stop at 103.75 was triggered on Friday when price reached a high of 103.88. MACD remains bearish and Stochastic has a bearish crossover and is heading lower. Both momentum indicators are hinting of a bearish price trend ahead. 20EMA is neutral and is currently supporting price at 103.70. A break down is likely to lead price lower to 102.75.

Support	103.65	103.30	102.95
Resistance	103.90	104.15	104.50

EUR/USD – Price has moved past the previous rally high of 1.2160 and we think the rally should continue higher to 1.2210 over the next couple of days. MACD remains bullish and Stochastic is rising but is close to the overbought zone. 20EMA is bullish and point up with a steep slope, hinting of a strong bullish trend. 20EMA is also providing support at 1.2150. A move below 1.2100 would negate our view.

Support	1.2155	1.2110	1.2080
Resistance	1.2185	1.2220	1.2260

GBP/USD -Price dipped below 1.3670 to a low of 1.3635 but has managed to bounce back up to 1.3720 again. MACD remains bullish and Stochastic has a bullish crossover and is moving higher. Both momentum indicators are hinting there is likely to be a continuation of the rally to 1.3745 again. Stochastic has a divergence warning and a possible correction is likely to follow after the rally.

Support	1.3710	1.3675	1.3625
Resistance	1.3745	1.3790	1.3840

XAU/USD – Price had dipped to a low of $1837.20 on Friday night but has bounced up higher to $1859.85. However the rally was capped by the 20EMA. MACD remains bearish and could be turning down. Stochastic has a bearish crossover near to the overbought zone and is heading lower. 20EMA remains bearish as well. Indicators are hinting price is likely to head lower to $1830 in the next 24 hours.

Support	1857.75	1831.95	1822.65
Resistance	1857.75	1866.55	1874.80

NZD/USD – Our buy recommendation at 0.7160 was not filled as price declined to only a low of 0.7166. This morning price has moved up to 0.7210 and we are expecting price to continue higher to 0.7240-0.7250. MACD remains bullish and has turned up from near the zero line. Stochastic has a bullish crossover and is moving higher as well. 20EMA is also bullish. Above 0.7250 the next target could be 0.7305.