Market Talk
– The dollar hovered near a seven-week high on Tuesday, largely benefiting from a euro selloff overnight after coronavirus lockdowns choked consumer spending in Europe’s biggest economy leading to decreased consumer spending.
– The euro sank the most in 2-1/2 weeks on Monday after data showed German retail sales plunged by more than forecast in December, with the continent still struggling with vaccine rollouts. Data showed Europe is still feeling the impact of a second wave of COVID-19 cases in the continent.
– Investor sentiment was boosted after a “very productive” two-hour meeting on Monday between U.S. President Joe Biden and a group of ten Republican senators to discuss a downsized COVID-19 stimulus package proposed by the group.
– The Aussie inched up to 0.7660 after the Reserve Bank of Australia kept interest rates unchanged at 0.10%, as widely expected. The central bank gave guidance that it does not expect the conditions for a cash rate hike to be in place until 2024 at the earliest.
– Gold was down on Tuesday morning in Asia, but the focus remained on silver as investors booked profits from Monday’s rally. Silver prices rose as much as 11.2%, near highs last recorded in February 2013, during the previous session. The precious metal’s price soared after retail investors piled into the market to drive prices up, driven by messages on Reddit.
Chart Focus XAG/USD Silver
Key Points
1. Buy Silver recommendation.
2. Buy Silver at $27.65. Stop at $26.95 and target at $30.00
3. Social media support for silver and a positive meeting on COVID-19 aid has dampened demand for safe haven US dollar.
4. A strong price support coupled with bullish MACD is a sign of a bullish price trend ahead.
Fundamental Comments
1. Investor groups via Reddit are encouraging investors to buy silver, helping to support and push up price.
2. A positive meeting on COVID-19 has boosted investors’ sentiment and dampened the US dollar demand.
Technical Comments
1. Price is likely to be supported by the 20EMA and Fibonacci 50% support as well as a gap support.
2. MACD is bullish and is hinting of a bullish price trend ahead.
Key Levels
| Support | 28.20 | 27.85 | 27.35 |
| Resistance | 28.75 | 29.20 | 29.55 |
Technical Overview
USD/JPY – We had a sell recommendation yesterday which was filled at 104.80 when price rose to a high of 105.03. Our view remains unchanged and would keep stop at 105.10 and profit order at 104.10. MACD is starting to warn of a potential high with divergence. Stochastic is already in the overbought zone. Momentum indicators are hinting the market is overbought and poised for a decline. However 20EMA is still bullish.
| Support | 104.80 | 104.55 | 104.15 |
| Resistance | 105.10 | 105.40 | 105.70 |
EUR/USD – Yesterday, we had raised our profit order to 1.2080 and it was filled this morning. We are out of this position with a profit of 50 pips. MACD is still bearish and moving lower. Stochastic has a bearish crossover and is moving lower. Momentum indicators are hinting of a bearish price trend ahead. 20EMA is also bearish. We think price is likely to break support at 1.2060 and declines to 1.1970.
| Support | 1.2055 | 1.2005 | 1.1965 |
| Resistance | 1.2085 | 1.2115 | 1.2155 |
GBP/USD -Price failed to move above 1.3755 yesterday and has instead declined to 1.3655. Price could be caught in a range from 1.3635 to 1.3755 as MACD is now neutral and flat. Stochastic is also in the middle of its range and hinting of a sideways movement. 20EMA is also hinting of a sideways movement. Watch out for the range boundaries and follow with a break of either range boundary.
| Support | 1.3655 | 1.3610 | 1.3570 |
| Resistance | 1.3705 | 1.3755 | 1.3800 |
XAU/USD – Price tried to test high of $1875 but only managed a high of $1871.65 before declining to $1852.40. Stochastic had a bearish crossover and is moving lower. MACD has a bearish crossover and is also moving lower. Both momentum indicators are hinting of a bearish price trend ahead. 20EMA is supporting price at the moment and if this support at $1855 fails, price is likely to decline to $1840.
| Support | 1853.60 | 1839.05 | 1831.15 |
| Resistance | 1863.90 | 1874.90 | 1884.40 |
EUR/JPY – The price decline had stopped just ahead of the previous resistance turned support line at 126.40. If price can hold this support, it should move higher to test the previous high of 127.35 again within the next few days. MACD is bullish and the fast line is turning up, hinting of a bullish price trend. Stochastic is likely to have a bullish crossover and move higher, hinting of a price rally. A move below 126.30 would negate this bullish view.
| Support | 126.65 | 126.35 | 125.90 |
| Resistance | 126.95 | 127.35 | 127.60 |
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