Market Talk
– The dollar was steady on Friday morning in Asia is heading towards its best weekly gain in three months over growing confidence in the U.S. economic recovery from COVID-19. Positive U.S. initial jobless claims on Thursday also helped to boost investor sentiment that the U.S. economic recovery will outpace its global peers.
– Thursday’s US initial jobless claims data revealed that 779,000 claims were filed over the past week, fewer than the 830,000 claims predicted in forecasts and the 812,000 claims reported during the previous week, showing an improvement in US labour market.
– Bank of England kept its February interest rate at 0.10% as it handed down its policy decision on Thursday and forecast a lower economic growth of 5% against November 2020 forecast of 7.5%. Sterling rallied when BOE steers clear of negative interest rate commitment.
– The euro dipped to $1.1952, a level not seen since Dec. 1 but Westpac strategists see Europe’s vaccine rollout accelerating by the end of this quarter, which, coupled with the Fed’s commitment to ultra-loose monetary policy, will put pressure back on the dollar.
– Gold was up on Friday morning in Asia, after declining more than 2% overnight to lowest level in more than two months. Price broke below the key psychological $1800 level as a strong dollar and US yields eroded the yellow metal appeal despite progress being made towards the passage of further U.S. stimulus measures
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation.
2. Sell GBP/USD at 1.3685. Stop at 1.3715 and target at 1.3570.
3. Rising US yields and strong US employment data are likely to aid the US dollar and depress the British pound.
4. Price capped at the Fibonacci 62% correction point and bearish MACD are both pointing to a bearish price trend ahead.
Fundamental Comments
1. Rally on BOE non-commitment to negative rate may not be sustainable.
2. Rising US yields and strong US employment data is likely to aid the US dollar
Technical Comments
1. Price is capped by the Fibonacci 62% correction point of the decline is a hint that the rally could be a corrective rally.
2. MACD is bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 1.3650 | 1.3610 | 1.3585 |
| Resistance | 1.3685 | 1.3715 | 1.3755 |
Technical Overview
USD/JPY – The price continues to make higher high and this morning we saw a high at 105.63. MACD remains bullish but there is a divergence warning of a potential price high in the making on the 4-hourly chart. Stochastic has already started to decline after a bearish crossover was seen near the overbought zone. 20EMA remains bullish and is currently providing support at 105.15
| Support | 105.40 | 105.15 | 104.80 |
| Resistance | 105.65 | 105.90 | 106.10 |
EUR/USD – MACD remains bearish but has given a divergence warning of a potential price low. Stochastic is in the oversold zone. Both indicators are hinting of a price low ahead. However, 20EMA is also bearish and pointing lower with a steep slope, hinting of a strong bearish price trend. Price will need to move above the 20EMA resistance at 1.2010 to negate the current bearish price trend.
| Support | 1.1940 | 1.1915 | 1.1880 |
| Resistance | 1.1975 | 1.2010 | 1.2060 |
EUR/JPY – Price is hovering near the 20EMA line and we think it is likely to head lower to 125.10 in the next few days ahead. MACD is weak and could be turning bearish. Stochastic has a bearish crossover and is heading lower. Both momentum indicators are hinting of a bearish price trend ahead. Price has also tested the topside recently and was unable to move higher. Instead the reverse could bring price lower to the previous low of 125.10.
| Support | 125.95 | 125.60 | 125.10 |
| Resistance | 126.45 | 126.85 | 127.05 |
XAU/USD – Price broke the previous low support at $1810 overnight and has declined to a low of $1784.70. MACD remains bearish and is hinting of a bearish price trend. However Stochastic is near to the oversold extreme and is rising after a bullish crossover, hinting of a possible corrective price rally ahead. 20EMA is bearish and is pointing lower with a steep slope, hinting of a strong bearish price trend.
| Support | 1791.30 | 1784.70 | 1775.50 |
| Resistance | 1810.20 | 1819.20 | 1829.40 |
AUD/USD – Our buy call was filled at 0.7605 when price dropped to a low of 0.7582. Our view remains unchanged and we would advise keeping stop at 0.7575 and profit order at 0.7695. MACD is still bearish but there was a divergence warning earlier of a potential price low. Stochastic is moving lower but is close to the oversold level. 20EMA is bearish and capping price advancement at 0.7615.
| Support | 0.7580 | 0.7550 | 0.7515 |
| Resistance | 0.7620 | 0.7650 | 0.7695 |
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