Market Talk
– The U.S. dollar fell sharply against its rivals on Monday as analysts declared the recovery in the greenback over, but stopped short of ruling out a “second wave” of strength on worries the Federal Reserve could raise rates sooner than expected.
– U.S. Treasury yields gave up some of their gains from Monday as the 10-year Treasury yields sank as low as 1.528% before rising to 1.603% on Tuesday as compared with its Monday’s U.S. closing of 1.599%.
– The Australian dollar held firm at $0.7769 after hitting a one-month high of $0.7784 on Monday. The Reserve Bank of Australia’s policy meeting minutes showed the board would maintain “highly supportive” monetary conditions until employment and inflation goals were achieved.
– The euro rose above $1.20 for the first time in over six weeks, touching a high of $1.2071 on Tuesday morning on the back of a brightening outlook for the region’s vaccination programme.
– Gold came less than $10 from returning to $1,800 an ounce on Monday before retreating from a more than seven-week peak as U.S. Treasury yields gained, weighing on non-yielding bullion’s appeal and countering support from a weaker dollar.
Chart Focus XAU/USD – Gold
Key Points
1. Buy Gold recommendation.
2. Buy Gold at $1767.00. Stop at $1759 and profit target at 1799.00.
3. A lower U.S. Treasury yield and expectations of lower U.S. interest rate and inflation are weighing on the U.S. dollar.
4. Price is supported by the 20EMA with MACD and 20EMA both hinting of a bullish price trend.
Fundamental Comments
1. A softer U.S. dollar as a result of a retreating yield is likely to lead to higher Gold prices.
2. Expectation that interest rate and inflation will remain low are both likely to weigh on the US dollar.
Technical Comments
1. Price is supported by the 20EMA line, which is hinting of a bullish price trend ahead.
2. MACD is bullish and is hinting of a bullish price trend ahead.
Key Levels
| Support | 1765.45 | 1758.50 | 1749.20 |
| Resistance | 1777.80 | 1789.80 | 1800.00 |
Technical Overview
USD/JPY – Yesterday, we had a buy recommendation on this pair which was wrong. We were stopped out and lost 35 pips on this trade. Price reached a low of 107.97 this morning. MACD remains bearish. Stochastic is into the oversold zone and has a bullish crossover hinting of a bullish price trend ahead. However, 20EMA is bearish and hinting of a strong bearish price trend.
| Support | 107.95 | 107.55 | 107.10 |
| Resistance | 108.40 | 108.75 | 109.10 |
EUR/USD – Price broke above the resistance at 1.1990 and we saw a rally to 1.12071 this morning. Stochastic is warning of a possible price high with a divergence but MACD remains bullish. 20EMA is also hinting of a bullish price trend ahead. The next resistance ahead lies at 1.2110 and we see price moving higher to test this resistance as long as price stays above 1.1990.
| Support | 1.2050 | 1.2015 | 1.1990 |
| Resistance | 1.2080 | 1.2115 | 1.2150 |
GBP/USD – Price broke above 1.3805 last Friday and has reached a high of 1.4008 this morning. MACD remains bullish and is hinting of a bullish price trend ahead. 20EMA is also hinting of a bullish price trend ahead. Stochastic is into the overbought zone. The next resistance ahead lies at 1.4060 and we see price moving higher to test this resistance within the next 24 hours.
| Support | 1.3975 | 1.3940 | 1.3890 |
| Resistance | 1.4015 | 1.4060 | 1.4090 |
AUD/USD – Price hit a one-month high of $0.7784 on Monday and this morning, the rally continues with price reaching a high of 0.7803, negating a possible Double Top chart pattern last night. Price may have reached a higher high but both MACD and Stochastic are both showing divergences and warning of a possible price high in the making. The next resistance lies at the Fibonacci 200% price projection at 0.7820.
| Support | 0.7785 | 0.7745 | 0.7705 |
| Resistance | 0.7820 | 0.7850 | 0.7885 |
NZD/JPY – Price is approaching a recent high at 78.11 and a break of this resistance is likely to send price higher to the previous high at 79.10. Stochastic has a bullish crossover and is hinting of a bullish price trend ahead. MACD has turned bullish and is moving higher, hinting of a bullish price trend. 20EMA is also moving high and hinting of a bullish price trend. A drop below 77.35 would negate our bullish view for the next couple of days.
| Support | 77.75 | 77.35 | 76.95 |
| Resistance | 78.10 | 78.60 | 79.10 |