FX Commentary – US Dollar Down After Poor A US NFP Data

Market Talk
– The US dollar fell for a fourth straight day and languished near a one-month low versus major peers on Monday, as investors pushed back expectations for when the Federal Reserve will begin tapering its massive stimulus.

– U.S. nonfarm payrolls increased by just 235,000 in August, compared with a 728,000 median forecast by economists in a Reuters poll, as resurgence in COVID-19 infections weighed on demand at restaurants and hotels, and stalling hiring leading to a weaker US dollar.


– The euro was flat at 1.1877 after matching the highest level since June 29 at 1.1909 at the end of last week. The single currency has been supported by expectations the European Central Bank, which meets Thursday, is close to tapering its own stimulus programme.

– The Australian dollar weakened to 0.7435, but remained close to its highest since July 15 of 0.7477, touched in the previous session. The Reserve Bank of Australia decides policy on Tuesday.

– Gold was down on Monday morning in Asia, but remained below just below a two-and-a-half-month high. A disappointing U.S. jobs report cast doubts on the Federal Reserve’s tapering timeline giving the yellow metal a boost.


Chart Focus AUD/USD

Key Points

1. Buy AUD/USD recommendation

2. Buy AUD/USD at 0.7405. Stop at 0.7375 and profit target at 0.7485

3. Doubts of an early Federal Reserve tapering timeline and a poor NFP data are both weighing on the US dollar.

4. Price is likely to be supported by the 20EMA with both the 20EMA and MACD hinting of a bullish price trend.

Fundamental Comments

1. A poor nonfarm payrolls data is weighing on the US dollar.

2. Doubts of an early Federal Reserve tapering timeline is also weighing on the US dollar.

Technical Comments

1. Price is likely to be supported by the 20EMA which is also hinting of a bullish price trend ahead.

2. MACD remains bullish and is hinting of a bullish price trend.



Key Levels

Support0.74000.73550.7310
Resistance0.74400.74750.7505

Technical Overview

USD/JPY – We were looking for a rally to 110.45 last Friday but price fell below 109.65 and negate our bullish view. Price had declined to a low of 109.58 and Stochastic is into the oversold zone. MACD remains bearish but there could be a possible divergence forming warning of a possible price low. 20EMA is also bearish. Both trend indicators are hinting of a bearish price trend ahead.

Support109.55109.10108.70
Resistance109.85110.15110.45

EUR/USD – Price reached a high of 1.1909 which is close to its resistance point of 1.1910. Stochastic has turned down from the overbought zone and is declining which is a hint of a price decline. A star candlestick price pattern on the daily chart is also warning of a possible price high. MACD and 20EMA both remain bullish on the 4-hourly chart. If price fails to move above 1.1910, we are likely to see a decline back to 1.1830 in the next 1-2 days.

Support1.18651.18301.1790
Resistance1.19051.19451.1975

GBP/USD – Price reached a high of 1.3891 on Friday but there was a bearish Engulfing candlestick price pattern on the 4-hourly chart. This is a warning of a possible price high. Stochastic is also warning of a price decline after a bearish crossover and moving down from the overbought zone. However 20EMA and MACD remain bullish. If price stays below 1.3895, we prefer a decline to 1.3800 in the next 1-2 days.

Support1.38301.37901.3760
Resistance1.38601.38901.3935

XAU/USD – Since last Friday, we have been stating our case for $1831.70. Last Friday, a poor NFP data sent Gold higher to $1833.80. MACD is starting to warning with divergence of a possible price high. Stochastic is into the overbought zone but 20EMA remains bullish and is hinting of a bullish price trend. We think the upside could be limited to $1844 and a correction is due.

Support1824.801814.701804.75
Resistance1833.801844.501858.70

USD/CAD – We had a sell call at 1.2565 on Friday but price only reached a high of 1.2552 and our sell entry order was not filled. Price had on Friday night declined to 1.2492. The down move may have been completed. Stochastic is turning up from the oversold extreme. MACD is warning with a divergence of a possible price low. Only 20EMA remains bearish at the moment. A move above 1.2580 would confirm the low and reversal for 1.2715.

Support1.25301.24901.2450
Resistance1.25751.26101.2655

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