FX Commentary – US Dollar Rose On Strong Labour Data

Market Talk
– The dollar was perched near multi-week highs on Friday, bolstered by stronger-than-expected U.S. jobs data that suggested an improving labour market and reinforced signs that the world’s largest economy was on its way to recovery from the COVID-19 pandemic.

– U.S. initial jobless claims dropped below 400,000 last week for the first time since the pandemic started more than a year ago. The next test comes later in the day when U.S. non-farm payrolls data is published.

– The greenback gained to a three-week high of 1.2118 per euro and rose to a two-month high of 110.32 yen. Sterling was steady at $1.4099 in Asia after dropping through its 20-day moving average as the dollar climbed.

– The Australian dollar was licking wounds at 0.7652, after falling to its lowest since mid-April overnight, while the kiwi was parked at $0.7136 after slipping to its lowest since early May on Thursday.

– Gold was down on Friday morning in Asia, hovering near two-week lows and set to record its worst week in three months. Positive U.S. employment data buoyed the dollar and bond yields, and investors remained concerned about a potential pullback of stimulus measures.

Chart Focus XAG/USD – Silver
Key Points
1. Sell XAG/USD recommendation.
2. Sell XAG/USD at $27.60. Stop at $27.95 and profit target at $26.75.
3. Stronger than expected US labour data amid economic recovery is aiding the US dollar.
4. 20EMA and MACD are both hinting of a price decline ahead.

Fundamental Comments
1. Stronger than expected US labour data is aiding the US dollar.
2. Improving US economic recovery is likely to aid the greenback.

Technical Comments
1. 20EMA is likely to cap price and is also hinting of a bearish price trend ahead.
2. MACD remains bearish and is hinting of a bearish price trend ahead.

Key Levels

Support27.2027.0026.70
Resistance27.5027.8028.20

USD/JPY – We had a buy call from Monday, which is still pending with stop at 109.25 and profit target at 110.20. Yesterday, price rose above our profit level and we are out with a 70 pips profit. There is a divergence warning forming from the MACD indicator and Stochastic is into the overbought zone. However, 20EMA is still hinting of a bullish price trend but the topside may be near.

Support109.90109.60109.30
Resistance110.15110.55110.95

EUR/USD – Price broke the support at 1.2130 and has declined to a low of 1.2105 at the point of writing. We think the decline is not completed as yet. We see price going lower to 1.2060 over the next couple of days ahead. 20EMA is hinting of a strong bearish price trend. MACD is also hinting of a strong bearish price trend. Stochastic is in the oversold zone but has not yet shown any signs of a possible reversal.

Support1.20901.20501.2010
Resistance1.21251.21551.2185

GBP/USD – We had a sell call on this pair yesterday at 1.4160. Price rose to a high of 1.4203, taking out our stop on this position at 1.4200. We lost 40 pips on this trade. Our view remains unchanged. Price has since declined to 1.4100 and we are looking at first 1.4075 and later to 1.4005 over the next few days. 20EMA and MACD both are hinting of a bearish price trend. Stochastic is still declining, hinting of more downside ahead.

Support1.40701.40401.4005
Resistance1.41151.41451.4180

XAU/USD – Price broke below last Tuesday’s low of  $1882.25 and declined to a low of $1854.65. We do not think this is the low and we are looking at another decline which is likely to bring price below $1854.65 to $1840. Before the decline, we may see a price pullback towards $1880 as Stochastic is in the oversold extreme and has a bullish crossover, hinting of a price advance. Both 20EMA and MACD are hinting of a strong bearish price trend ahead.

Support1866.251854.501843.55
Resistance1880.001892.251902.90

NZD/USD – We had a sell call at 0.7245 on Wednesday, which was filled when price rallied to a high of 0.7248. We had recommended placing stop at 0.7250 while keeping profit target at 0.7185. Yesterday, price declined below our profit order and we are out with a 60 pips. Price has declined to a low of 0.7125 but trend continues to be bearish. However, Stochastic is in the oversold extreme. We may see a price correction higher to 20EMA resistance at 0.7195 before a resumption of the decline.

Support0.71100.70700.7040
Resistance0.71500.71800.7220

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