Market Talk
– The greenback weakened in early Asian trades on Monday morning, but barely enough to trim its biggest surge since June 2020 from Friday as yields surged and acceleration in the pace of vaccinations globally and optimism over improving global growth bolster bets that inflation will rise.
– Currency markets have taken cues from the global bond market, where yields have surged in anticipation of an accelerated economic recovery. The aggressive bond selling implies a bet that global central bankers will need to tighten policy much earlier than they have so far been forecasting.
– The Australian dollar jumped to $0.7754 early in the Asian session on Monday, following a 2.1% plunge on Friday, its biggest plunges in a year amid a hefty sell-off in global bond markets. The New Zealand dollar strengthened to $0.7270, recovering some of Friday’s 1.9% slide.
– China’s official manufacturing PMI out over the weekend missed forecasts, but Japanese figures showed the fastest growth in two years. Investors are also counting on upbeat news from a raft of U.S. data due this week including the February payrolls report.
– Gold tumbled to an eight-month low en route to its worst month since November 2016 as a stronger dollar and elevated U.S. Treasury yields helped to strengthen the US dollar while hammering the non-yielding yellow metal’s appeal
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation.
2. Sell GBP/USD at 1.3995. Stop at 1.4035 and target at 1.3830.
3. An acceleration in the pace of vaccinations, rising US yields and optimism over improving global growth have bolstered the US dollar.
4. Price is facing a strong resistance and MACD is hinting of a bearish price trend ahead
Fundamental Comments
1. Yields have surged in anticipation of an accelerated economic recovery keeping the US dollar strong.
2. An acceleration in the pace of vaccinations globally and optimism over improving global growth bolster bets that inflation will rise keeping the US dollar strong.
Technical Comments
1. Price is likely to be capped by the Fibonacci correction points as well as the 20EMA.
2. MACD remains bearish and is hinting of a bearish price trend ahead.
Key Levels
| Support | 1.3960 | 1.3930 | 1.3880 |
| Resistance | 1.4005 | 1.4060 | 1.4095 |
Technical Overview
USD/JPY – The price rally continues for another day and price has now reached a high of 106.69. MACD remains bullish but is near to its extreme. Stochastic is in the overbought zone and could be turning down. However, 20EMA is bullish and rising with a steep slope, hinting of a bullish price trend ahead. There is a good chance of the uptrend going higher to 107.05 over the next couple of days.
| Support | 106.50 | 106.20 | 105.80 |
| Resistance | 106.95 | 107.25 | 107.55 |
EUR/USD – Price reached a high of 1.2243 on Friday but a sharp decline on the same day brought price lower to 1.2061. While MACD remains bearish, Stochastic is in the oversold zone. However 20EMA is bearish and has a steep slope hinting of a strong bearish price trend. If price is capped by the 20EMA at 1.2125, we could see another decline to 1.2020. A move above 1.2125 could see another test of 1.2240 again.
| Support | 1.2060 | 1.2020 | 1.1990 |
| Resistance | 1.2090 | 1.2125 | 1.2160 |
XAG/USD -Price reached a low of $26.12 on Friday and currently Stochastic is in the oversold zone. Stochastic also had a bullish crossover hinting of a price rally ahead. We are likely to see price moved higher to the Fibonacci 50% correction point and 20EMA resistance at $27.20 in the next couple of days. MACD remains bearish and 20EMA is pointing lower. We are looking at another decline to $26.20 after the corrective rally to $27.20.
| Support | 26.80 | 26.45 | 26.10 |
| Resistance | 27.15 | 27.55 | 27.90 |
XAU/USD – Price tumbled to an eight-month low at $1716.90 on Friday. Today we are likely to see a price correction to the Fibonacci 50% correction point of the decline from $1815 to $1716 at $1766. From there, we are predicting another decline to $1700. MACD remains bearish but Stochastic has reached the oversold extreme. 20EMA remains strongly bearish.
| Support | 1744.50 | 1733.40 | 1720.95 |
| Resistance | 1755.20 | 1766.30 | 1777.90 |
USD/CHF – We had a buy call on this pair last Thursday and was entry order was filled on 25 February. Last Friday price reached a high of 0.9100, filling our profit order. Price had declined lower to the 20EMA support at 0.9070 this morning and if price can hold above this support, we are likely to see a test of 0.9100 again either today or tomorrow. MACD remains bullish and Stochastic is still rising.
| Support | 0.9065 | 0.9025 | 0.8995 |
| Resistance | 0.9090 | 0.9125 | 0.9150 |