FX Commentary – US Dollar Pressured By Softer US Job Data

Market Talk
– The U.S. dollar found support on Tuesday as investors looked to U.S. inflation data due later in the week after softer-than-expected jobs data pin down U.S. bond yields near their recent lows and eased concerns about early tapering of the Federal Reserve’s monetary stimulus.

– Friday’s U.S. jobs data had put pressure on the dollar as investors bet that jobs growth was not strong enough to raise expectations for the U.S. Federal Reserve to tighten its monetary policy. The Fed is now expected to unveil plans to start tapering assets later in 2021, with the actual process to start in early 2022.

– The euro fetched 1.2178 against the greenback, bouncing back from a three-week low of $1.2104 set on Friday. The British pound stood at  $1.4157 and the Australian dollar eased slightly to 0.7744.

– The US dollar edged higher to 109.41 against the Japanese yen after Japan’s GDP, released earlier in the day, contracted by 1% quarter-on-quarter and 3.9% year-on-year for the first quarter of 2021, weighing of the yen.

– Gold was down on Tuesday morning in Asia, hovering just below the $1,900 mark with US Treasury yields remaining subdued after Friday’s drop, reducing demand for the U.S. currency. Investors are waiting for further clues later in the week to gauge inflationary pressure.

Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.7210 Stop at 0.7170 and profit target at 0.7300.
3. Easing concerns of tapering and a subdued US Treasury yields are both weighing on the US dollar.
4. Price is likely to be supported by a bullish 20EMA and Fibonacci with MACD hinting of a bullish price trend.

Fundamental Comments
1. Softer than expected US job data on Friday has eased concerns on Fed tapering and weigh on the US dollar.
2. Subdued Treasury yields as a result of softer job data is weighing on the US dollar.

Technical Comments
1. Price is supported by a bullish 20EMA and Fibonacci support point, hinting of a bullish price trend.
2. MACD is likely to turn bullish which is a hint of a bullish price trend ahead.

Key Levels


Technical Overview

USD/JPY – Price broke below 109.30 yesterday but only reached a low of 109.18. Price has since bounced up higher to 109.45 at the time of this writing. Stochastic had reached the oversold zone and is turning up from this zone. MACD remains bearish but is close to the zero line. 20EMA is capping price at 109.55. A move above 109.70 could endanger our bearish view for 108.60.


EUR/USD – Yesterday, price had reached a high of 1.2201, filling our entry order at 1.2165 but missing our stop at 1.2205. Our view remains unchanged. We are bearish and are looking for a decline to 1.2065. Stochastic is rising but MACD remains bearish and is hinting of a bearish price trend. 20EMA has turned bullish and is supporting price. We would recommend keeping stop at 1.2205 and profit order at 1.2065


GBP/USD – Yesterday, price was trapped within Friday’s range of 1.4200 to 1.4082, creating an Inside Day chart pattern. We are expecting price to remain within this range until there is breakout. We would recommend following in the direction of the breakout. We prefer the upside as Stochastic is climbing up from the oversold zone and MACD remains bullish. 20EMA is bearish at the moment.


XAU/USD – We were bearish for $1840 yesterday but price had stayed above a strong support at $1875. Price has since moved higher to $1903.30. We are inclined to turn bullish but there is a Spinning Top candlestick price pattern, which is a bearish reversal pattern. 20EMA is bullish and MACD is about to turn bullish as well. Stochastic is close to the overbought extreme. We prefer to wait for further confirmation.


XAG/USD – Last Friday, we had a sell call at $27.60. Price went up to a high of $27.84, filling our entry order on Friday and had recommended keeping stop at $27.95 and profit target at $26.76. On Monday, price reached a high of $27.97 and triggered our stop. We lost 35 cents on this trade. MACD and 20EMA remains neutral but Stochastic is moving into the overbought zone.


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