Market Talk
– The US dollar rose to a three-week high as investors bet on faster economic growth and placed a greater tolerance of higher U.S. bond yields and inflation. A survey by the Institute for Supply Management (ISM) released on Monday showed U.S. manufacturing activity increased to a three-year high in February amid a surge in new orders boosting sentiment.
– The U.S. economic recovery is on a firmer ground amid successful rollouts of COVID-19 vaccinations and bolstered by prospects of a $1.9 trillion relief package from the Biden Administration with debate to begin in the Senate later in the week.
– The greenback rose to 106.89 yen on Monday, its highest since late August while the euro dipped to $1.2049, near its lowest level in almost two weeks. The euro is lagging as the region falls behind in growth expectations.
– The Australian dollar gained after Australia’s central bank bought more bonds than expected in a bid to stem rapidly rising yields. The Reserve Bank of Australia also kept interest rate at historic low level after its monetary meeting today.
– Gold was down on Tuesday morning in Asia due to a stronger US dollar even with a retreat in U.S. Treasury yields and progress on a massive stimulus package in the U.S. which cheered investor sentiment.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.2650. Stop at 1.2610 and target at 1.2790.
3. Expectation of a faster economic growth, strong ISM data and rising US Treasury yields are lending support to the US dollar.
4. Price is supported by the Fibonacci 38% correction point and MACD is hinting of a bullish price trend ahead.
Fundamental Comments
1. Expectation of a faster economic growth and strong ISM data overnight are lending support to the US dollar.
2. Rising US bond yields is supporting the US dollar
Technical Comments
1. Price was supported by the Fibonacci 38% correction point and the 20EMA, leading to a bounce of the support area.
2. MACD remains bullish and is hinting of a bullish price trend ahead.
Key Levels
| Support | 1.2660 | 1.2635 | 1.2590 |
| Resistance | 1.2695 | 1.2740 | 1.2780 |
Technical Overview
USD/JPY – The price rally continues for another day and price has now reached a high of 106.92. 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 but this could be the final destination of the rally.
| Support | 106.50 | 106.20 | 105.80 |
| Resistance | 106.95 | 107.25 | 107.55 |
EUR/USD – Price has declined to a low of 1.2015 this morning after reaching a high at 1.2243 on Friday. MACD is starting to warn with divergence, hinting of a possible price low. Stochastic also has a divergence warning and is already at the oversold extreme. 20EMA is bearish at the moment. If price can hold above 1.2015, we see price going up to 1.2105 in the next couple of days.
| Support | 1.2010 | 1.1970 | 1.1930 |
| Resistance | 1.2060 | 1.2090 | 1.2125 |
GBP/USD – We had a sell call on this pair at 1.3995 yesterday which was filled when price went to a high of 1.3998. Price has declined to a low of 1.3870. MACD remains bearish but is showing a slowing down of momentum while Stochastic is into the oversold extreme. 20EMA remains bearish and is hinting of a strong bearish price trend ahead. Bring stop lower to 1.3915 and keep profit target at 1.3830.
| Support | 1.3865 | 1.3830 | 1.3775 |
| Resistance | 1.3905 | 1.3950 | 1.3985 |
XAU/USD – Price only reached a high of $1759 instead of our targeted $1766 and has declined to a low of $1707.05 earlier today. MACD and Stochastic are both warning with a divergence of a possible price low. Stochastic is also in the oversold extreme. However, 20EMA is bearish and pointing lower with a steep slope, hinting of a bearish price trend ahead. We think price is near to a low and a rally to $1755 is likely in the next couple of days.
| Support | 1707.05 | 1693.60 | 1681.50 |
| Resistance | 1719.50 | 1733.15 | 1742.60 |
NZD/JPY – Price reached a low of 76.80 last Friday and we have seen a rally to a high of 77.75 this morning. MACD has remained bearish and is hinting of a bearish price trend ahead. Price is also capped by the falling 20EMA and if price is unable to move above 77.80, we are likely to see another decline to last Friday’s low of 76.80 in the next 1-2 days.
| Support | 77.35 | 77.05 | 76.80 |
| Resistance | 77.75 | 78.10 | 78.45 |