Market Talk
– The dollar started the week pinned near two-week lows on Monday as traders questioned whether the economic recovery from the pandemic in the United States would be as fast as expected and outpace other major economies, amid disappointing employment data.
-President Joe Biden’s US$1.9 trillion Covid-19 relief package will move to the next stage during this week, with the House Budget Committee pulling all the components into a single piece of legislation. Successful coronavirus vaccine rollouts globally raise hopes of a rapid economic recovery amid new fiscal aid from Washington.
– There has been a tug-of-war over the dollar’s direction this year with some market participants expecting it to strengthen as the U.S. economy outperforms peers including Europe. Others view the U.S. recovery as a key driver in a global reflation narrative that should lift riskier assets at the dollar’s expense.
-The euro was little changed at $1.2121 after climbing last week. The dollar rose to 105.09 yen, recovering from some of the previous week’s losses with many financial markets in Asia closed on Monday for Lunar New Year; and the United States also out for Presidents Day.
– Gold edge up as the US dollar weakened. Platinum prices extended a rally on Monday to scale their highest in more than six years on firmer investor expectations that an economic recovery would boost demand for the metal and lead to a supply shortfall.
Chart Focus XAU/USD Gold
Key Points
1. Buy Gold recommendation.
2. Buy Gold at $1817. Stop at $1806.00 and target at $1854.00.
3. With a likely passage of Biden’s US$1.9 trillion relief package and successful rollout of COVID-19 vaccine, the US dollar is likely to be weaker.
4. Price is supported by the Fibonacci 62% correction point and Stochastic is hinting of a bullish price trend ahead.
Fundamental Comments
1. With a likely passage of Biden’s US$1.9 trillion relief package, US dollar is likely to be weaker.
2. With a successful coronavirus rollout, hopes of an economic recovery is likely to dampen demand for safe haven US dollar.
Technical Comments
1. Price was supported previously by the Fibonacci 62% correction point and is likely to be supported again by this point.
2. Stochastic is near to the oversold zone and a bullish crossover is hinting of a bullish price trend ahead
Key Levels
| Support | 1813.85 | 1802.30 | 1791.70 |
| Resistance | 1824.80 | 1834.55 | 1846.05 |
Technical Overview
USD/JPY – Our sell recommendation on Thursday was stopped out at 105.05 as price rose to a high of 105.15. As long as price does not exceed 105.30, we cannot exclude that this rally is a correction. MACD, while bullish is not strong and Stochastic is near to the overbought zone, hinting of a possible price high. However, 20EMA is bullish and is hinting of a bullish price trend ahead. Above 105.30 would target the previous high at 105.80
| Support | 104.85 | 104.40 | 103.95 |
| Resistance | 105.20 | 105.45 | 105.80 |
EUR/USD – Price saw a correction lower into the 1.2080 support level on Friday and is currently at 1.2138 this morning. We see price continuing the rally to 1.2175. MACD is bullish and is still rising. Stochastic, however, is in the overbought extreme, indicating a possible price high in the making. 20EMA is bullish and is pointing higher with a steep slope, which is a hint of a strong bullish price trend.
| Support | 1.2130 | 1.2095 | 1.2055 |
| Resistance | 1.2165 | 1.2190 | 1.2225 |
GBP/USD – Price reached a high of 1.3902 this morning and looks like it will continue to move higher. Stochastic is rising but has not yet reached the overbought zone, hinting that there is more room for a rally. MACD is bullish and is hinting of more upsides before the reversal. 20EMA is pointing higher with a steep slope, hinting of a bullish price trend.
| Support | 1.3865 | 1.3830 | 1.3780 |
| Resistance | 1.3905 | 1.3960 | 1.4010 |
AUD/USD – Since the 2 February low of 0.7563, price has moved up to 0.7787 and we could be near to a price high. MACD is hinting of a possible price high with a divergence warning. Stochastic is moving into the overbought extreme. 20EMA is still hinting of a bullish price trend but after a 5-wave movement, we are in need to a price correction. Be cautious of a possible price reversal.
| Support | 0.7765 | 0.7720 | 0.7695 |
| Resistance | 0.7795 | 0.7820 | 0.7850 |
EUR/AUD – We had a sell recommendation on Wednesday which was filled when price rose to a high of 1.5706 on Thursday morning, narrowly missing our stop at 1.5715. Price declined below 1.5600 this morning and we are out with a 70 pips profit. Stochastic is still declining but MACD is hinting of a possible divergence. 20EMA is bearish and pointing lower but price could be near to a low.
| Support | 1.5570 | 1.5545 | 1.5520 |
| Resistance | 1.5615 | 1.5645 | 1.5680 |
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