FX Commentary – US Dollar Weakened On Soft Labour Data

Market Talk
– The dollar was up on Monday morning in Asia, even as investors digest disappointing U.S. jobs data that caused some investors to ease bets on a strong dollar but some analysts say better U.S. economic data and continued progress in fighting the coronavirus pandemic will be needed for further dollar gains.

– Last Friday’s U.S. jobs report for January showed that fewer jobs were created in the economy than expected. 49,000 jobs were created, better than the previous month’s contraction of 227,000, but was below the 50,000 forecasts. The unemployment rate was at 6.3%, lower than the forecast 6.7%.

– U.S. President Biden and his Democratic allies in Congress moved ahead with their $1.9 trillion COVID-19 relief package as lawmakers approved a budget plan that will allow them to muscle Biden’s plan through in the coming weeks without Republican support.

– The euro held gains versus the dollar at 1.2050 after a 0.7% slump on Friday but faces a test later on Monday with data that is expected to show German industrial output growth slowed at the end of last year. The British pound bought $1.3736, close to an almost three-year high.

– Gold held on to gains on Monday morning in Asia.  The yellow metal received a boost after the U.S reported disappointing jobs data, which cast doubts on the U.S. economic recovery from COVID-19 and put pressure on the dollar, sending price to $1815.

Chart Focus XAU/USD Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1815.30. Stop at $1826.60 and target at $1785.10.
3. Disappointing employment data and doubts over US economic recovery are both weighing on the US dollar.
4. Price is capped by a strong resistance point and MACD is hinting of a bearish price trend ahead.

Fundamental Comments
1. Disappointing US employment data is weighing on the US dollar.
2. Doubts over the US economic recovery from coronavirus pandemic is weighing on the US dollar

Technical Comments
1. Price is capped by the Fibonacci 38% correction point, 20EMA and a previous support turned resistance line.
2. MACD is bearish and is hinting of a bearish price trend ahead.

Key Levels


Technical Overview
USD/JPY – The price rally continues to make higher high and last Friday we saw a high at 105.76. MACD remains bullish but there was a divergence warning of a potential price high in the making on the 4-hourly chart. After the high, we saw a price decline to 105.20 late on Friday’s night. This morning we had a rally which brought price higher to 105.53. We are expecting price to move in a range of 105.75 to 105.15 for the next 1-2 days ahead.

Support 105.40105.15104.80
Resistance 105.65105.90106.10

EUR/USD – Price has rallied on Friday but is into a strong resistance area at 1.2055 at the moment which could cap the rally. MACD remains bearish and Stochastic has moved higher and is close to the overbought zone. 20EMA is bullish but is not strong. Indicators we are looking at favour a bearish price trend.

Support 1.20101.19751.1940
Resistance 1.20551.20901.2130

GBP/USD – Our sell idea last Friday was wrong and we lost 30 pips on that trade. Price has again moved higher above 1.37, rising to a high of 1.3740. MACD remains bullish but Stochastic is into the overbought extreme at the moment. 20EMA is bullish and is hinting of a bullish price trend. We think price is likely to test the previous high of 1.3755 again today. The next direction will depends on this test.

Support 1.37151.36851.3650
Resistance 1.37551.37951.3840

XAG/USD – Price managed to hold above the support at $26 and this morning we have reached a high of $27.25. For today, we may see another test of $27.50 and price will need to break above this resistance in order to move higher. Failure is likely to result in a decline back to $25.86. Stochastic has reached the overbought zone but MACD remains bearish while 20EMA is flat and neutral.

Support 26.8026.5026.20
Resistance 27.1527.4527.90

AUD/USD – We had a buy recommendation from last Thursday which was filled at 0.7605. This morning price reached a high of 0.7680, which is just below our profit target at 0.7695. MACD remains bullish but Stochastic is near to the overbought zone. However 20EMA trend is still hinting of a bullish price trend. We would recommend keeping profit order at 0.7695 while raising stop higher to 0.7650.

Support 0.76500.76200.7580
Resistance 0.76950.77250.7760

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