Daily Market Analysis

Market Focus

US equity market took a hit at its opening on Tuesday ahead of Powell testimony, the S&P 500 Index declined as much as 1.8% whereas the Nasdaq 100 plunge reached 3.5%. These losses were mostly pared after reassuring comments from the Fed chairman Jerome Powell on inflation and the outlook for growth. Energy stocks and Media stocks were leading the gains, while Food & Staples Retailing and Auto sectors lagged behind in the S&P 500 Index.

President Joe Biden on Tuesday indicated the congressional vote for the proposed $1.9 trillion stimulus package will be close. The House Budget Committee pushed Biden’s pandemic-relief legislation, setting it up to pass the lower chamber by the end of this week. Even Biden seems to be quite confident in finalizing a bipartisan deal, but Senator Susan Collins told reporters she doesn’t see a single GOP vote the President’s pandemic relief bill.

Bloomberg’s key takeaways from Federal Reserve Chairman Jerome Powell’s testimony before the US Senate Banking Committee:

Market Wrap

Main Pairs Movement

Euro dollar recovery stalled albeit Powell was pouring cold water on the US greenback, the pair dipped 0.08% on Tuesday. Meanwhile, the dollar index gained 0.14% to 90.13.

The Sterling outperformed the US dollar amid upbeat employment data, rallied 0.37%. According to the official release, the ILO unemployment rate hit 5.1%, as expected, in the three months to December. Average Earnings Including Bonus in the same quarter were up 4.7%, beating the 4.2% expected. Also, the number of unemployed people decreased by 20K in January, much better than the 35K increase anticipated.

The European safe-haven Swiss Frac was the worst performer among its G-10 peers against the US dollar, USDCHF soared 1.03%. This move somewhat resembles recent rally in USDJPY. The surging US 10-year treasury yield took a pause on Tuesday, it is currently hovering above 1.34%. As long as yield are hanging high, then investors will shift their attention away from safe-haven currencies.

Bitcoin relentlessly plunged as much as 17% on Tuesday, reached lowest price in three weeks, closed the day down 11%. Meanwhile, Ethereum was more volatile, plummeted as much as 24%, and pared half of its loss near end of day.

Technical Analysis:

EURCHF (Daily Chart)

EURCHF refreshed new highs since November 2019, currently trading around 1.0983. The pair is on a six-winning streak after trapping between 1.089 and 1.0742 for four months, and is looking to contest resistance of 1.1057. It is well bolstered by an ascending trendline, but the recent spike seems to be running ahead of itself, RSI of 79 may prompt some pullbacks before it could resume its bullish run. The sudden surge was powered by rising 10-year European bond yields as indicated in yellow curve. This pair could be exposed to potential downside risk since higher Euro could draw ECB’s attention to intervene.

Resistance: 1.1057, 1.1187

Support: 1.089, 1.0742, 1.0672

GBPUSD (Weekly Chart)

The Cable continued to capitalize on its gain, taken down multiple hurdles along the way. The bulls seem to be invincible as strong fundamentals act as a backdrop for the Pound. It has been edging higher and higher while staying well within upper Bollinger band since last July. That being said, it will soon run into 1.416 resistance, combined with overextended RSI of 72.3 on the weekly chart, we could finally see some retreats triggered by profit taking orders. However, the bullish bias for Sterling will be here to stay throughout 2021. On the downside, 1.38 handle would be a nice cushion to fall on.

Resistance: 1.416, 1.4377

Support: 1.38, 1.338

XAUUSD (Daily Chart)

Gold recovered some ground after failing its second attempt to breach below support line of $1765. Currently, it is retracing back towards $1823, which it spent quite some efforts to penectrate. This former support would likely to turn into a strong resistance for the yellow metal to overcome given its recent bearish bias. We have seen consistent unloading from few of the largest Gold ETF such as the SPDR Gold ETF and iShares Gold Trust. If our theory is on point, then the bears will be threatening to breakthough 50% Fibonacci of $1765, followed by $1691.

Resistance: 1823, 1872

Support: 1765, 1691

Economic Data

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Daily Market Analysis

Market Focus

Tech stocks dropped on valuation concerns while commodities rallied, and bond yields rose with investors pricing in stronger growth and faster inflation as the global economy recovers. The Nasdaq 100 tumbled more than 2.5% to a three-week low as investors questioned the appeal of expensive, growth-focused stocks. The S&P 500 Index fell for a fifth day, its longest losing streak in a year. Gains for energy shares and financial companies limited losses on the Dow Jones Industrial Average. European and Asian markets were broadly negative.

Commodities were almost uniformly green. Brent oil climbed above $65 a barrel as Goldman Sachs Group Inc. predicted prices could advance into the $70s in coming months. Copper briefly rose above $9,000 a metric ton for the first time in nine years, taking another step closer to an all-time high set in 2011 as investors bet that supply tightness will increase as the world recovers from the pandemic.

After a tremendous run from the depths of the pandemic selloff 11 months ago, stocks are under scrutiny as an increase an interest rates bolsters the appeal of fixed-income investments.

According to Scott Knapp, a chief market strategist of CUNA Mutual Group, “Long-duration assets are the ones that are most vulnerable in a rising interest rate environment. The exact same stocks that led the market higher when interest rates were plummeting are the ones most vulnerable when interest rates rise.”

Treasury yields climbed and a key part of the curve – the gap between 5- and 30-year yields – touched the highest level in more than five years.

Market Wrap

Main Pairs Movement

The EURUSD pair trades just below the 1.2170/80 resistance area, lacking momentum despite the broad dollar’s weakness. Risk is skewed to the upside. The Aussie pair trades around 0.7920, as a better market mood and firmer commodity prices, underpin AUDUSD. US Treasury yields keep setting the market’s tone. The Loonie pair rose to 1.2650 during the early American session but lost its traction with the rising crude oil prices providing a boost to the commodity-sensitive CAD.

With decreasing US yields, DXY turned south and is approaching 90.00. Crude Oil prices regain the smile at the beginning of the week and push the barrel of WTI back above the key barrier at $60.00. The uptick in crude oil prices comes amidst the persistent weakness hitting the dollar, while activity in Texas is expected to gradually return to normality following the recent extreme freezing weather conditions.

Technical Analysis:

USDJPY (Four-hour Chart)

After failing to find acceptance above the 105.88 resistance level earlier today, the USDJPY gradually tumbled near 105 in the following sessions. At the moment, the USDJPY is teasing the 105 support level at 105.04. Please note that the price range USDJPY is trading at currently is also the lowest seen in a week. A declined in the US yields weakened the greenback, but no rebound has been formed as the DXY continued to dive lower, sitting around 90.009 (the lowest in a month). From a technical perspective, the USDJPY is still on a bullish trend as indicated by the 21-Day SMAVG. Therefore, it is inferable that the plummet of USDJPY is mainly constructed by the fundamental outlook of the lowered US yields circulating the markets. In other words, the fundamental outweigh the technical. Given that the RSI is nearing the oversold threshold, a positive correction can be expected.

Resistance: 105.40, 105.88

Support: 105, 104.79, 104.53

GBPUSD (Four-hour Chart)

The Cable pair extended to a multi-year high after UK PM Boris Johnson announced his plan to ease UK’s lockdown in a four-step procedure. On top of that, a broad-based greenback weakness also helps fuel the surge of Cable. At the moment, we can see that the Cable has been confined in an uptrend channel since the beginning of Feb and some higher highs are suggesting the bullish GBPUSD is well-supported. Additionally, from a technical perspective, both 15-Day SMAVG and MACD histogram indicate that the Cable remains on a bullish momentum. However, as the RSI for the pair is almost hitting the 70 line, a downward correction is likely. On the side note, if GBPUSD can penetrate the 1.4085 resistance, the following resistance would be 1.4150.

Resistance: 1.4085, 1.4150

Support: 1.4009, 1.3977, 1.3900

XAUUSD (Four-hour Chart)

The precious metal extends its modest gain from last Friday amid a broad-based greenback weakness and advances north above $1800. At the time of writing, the XAUUSD is trading around $1808. Technically speaking, the recent rise of XAUUSD is supported by the MACD histogram. However, in the bigger picture, the price action of the precious metal has yet to overturn the bearish trend implied by the 60-Day SMAVG. The low 60s RSI indicate that the bulls are dominating the market at the moment, but there is little room for them to further extend their gains. If XAUUSD can sit wellabove the $1808 resistance, the next resistance level the bulls are within reach is $1817, followed by $1825. Conversely, the most immediate cushion for XAUUSD is $1788 and $1774.

Resistance: 1789, 1823, 1872

Support: 1765, 1691

Economic Data

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Daily Market Analysis

Market Focus

US equities slightly edged to the downside amid continuously rising US Treasury yields, hit as high as 1.36%. Soaring yields could derail the ongoing economic recovery by rising borrowing cost and depressing price. The S&P 500 Index fell 0.1% with materials and industrial stocks leading the gain whilst utilities suffered amid Texas power outages.

The Federal Reserve warned of significant risk in business bankruptcies and acute drops in commercial real estate prices in a report released on Friday. The committee said “Business leverage now stands near historical highs. Insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.”

Bitcoin’s market value surpassed $1 trillion as price topped $55,000. The leading cryptocurrency has added more than $450 billion since 2021, data complied by Bloomberg show. Experts suggests FOMO (fear of missing out) may be creeping behind the scenes as various cryptocurrency prices constantly breaks higher ground.

The G7 group said they will work closely to defeat the coronavirus and rebuild their economy in a joint statement. Group members will “engage” with others, especially G20 countries including large economies such as China. Meanwhile Biden and Merkel condemned Beijing for its economic abuses.

Market Wrap

Main Pairs Movement

Euro dollar rallied 0.21% on Friday. February’s German Manufacturing PMI increased to 60.6 from previous month’s 57.1, and also beating expectation of 56.5. On the vaccination front, European countries are finally receiving more doses albeit EU commission’s hesitancy to take the AstraZeneca shots.

The US dollar tracking index dropped 0.25% as vaccine rollouts were slowed down by the freezing storm in Texas. The power outage also hampered down oil price, the WTI crude oil futures plunged 2.16%. Rising US treasury yields touched 1.36%, highest level since February 2020, and it is somewhat concerning to investors since such steep climb could spook risk sentiment and trigger “tantrum” in stock market. There are also speculations that the Fed will have to step in to initial an emergent yield curve control if yield continues to rise.

Cable extended its gain beyond 1.4 level. The groundbreaking move was inspired by upbeat PMI figure, both Manufacturing PMI and Services PMI came on top of estimates, printed 54.9 and 49.7 compared to forecasts of 53.2 and 41.0. Successful Covid19 vaccination rollout resumes in the backdrop of Sterling’s strength.

Antipodean Aussie and Kiwi soared 1.25% and 1.07% respectively. RBA noted earlier this week that the trade-weighted Aussie would normally be expected to be around 5% higher based on higher commodity prices, which were greatly boosted by the reflation theme. Aussie’s bullish run is also supported by cyclical recovery in Australia.

Technical Analysis:

GBPJPY (Daily Chart)

GBPJPY is marching straight into the long-lasting resistance line of 148.3. Upward momentum accelerated after sellers failed to guard resistance band between 141.6 and 142, rising US yields should be credited for the depression of the Japanese Yen. Given the lack of technical levels established between 144.65 and 148.27, it is likely that this pair will be capped by near resistance and retreat toward the blue trendline to create some supports prior to advancing forward. Moreover, RSI on the daily chart indicates price is overheated, which boost the possibility of a temporary pause from the bulls.

Resistance: 148.27, 152.83

Support: 144.65, 142

AUDUSD (Weekly Chart)

Aussie refreshed three-year high amid broad dollar weakness. The pair is approaching resistance of 0.79 dated back to August 2017, it has been rising on a steep slope since March 2020. Current consensus of reflation continues to bolster commodities price, which in turn ekes out the commodity linked Aussie. We have not seen any major retracements after it regained 0.7 handle, or any further validations of the ascending trendline. Combined with overheated relative strength index of 71.45, we expect some strong friction ahead of 0.79 hurdle, then a pullback toward 76.4% Fibonacci of 0.7516 or at least a test of the upward trendline.

Resistance: 0.79, 0.8, 0.8136

Support: 0.7516, 0.7133, 0.6823

XAUUSD (Daily Chart)

Gold’s value continues to deteriorate in the wake of constantly rising US bond yields. Price plummeted nearly $70 in five consecutive day, and speculators were playing tug-of-war during yesterday’s session, which created a nice Doji pattern. That being said, Doji usually implies a trend reversal, and this would be a bullish reversal in our case. Moreover, selling bias was eased upon failing to breach 50% Fibonacci of $1765, some rebound would give bidder some breathing room, and provide sellers better entry prices to keep the longer-term downtrend alive. On the upside, $1789 will act as a near resistance, next to $1823.

Resistance: 1789, 1823, 1872

Support: 1765, 1691

Economic Data

Click here to view today’s important economic data.

Daily Position Report

Market Focus

US stocks and bonds pared losses amid lingering concern rising borrowing costs could cap a rally that’s driven equity values to historic highs. The tech-heavy Nasdaq 100 trimmed its loss by more than half to 0.6%. The energy and technology sectors weighed on the SP 500, while utilities were in the green. A report earlier showed initial jobless claims rose more than expected. Walmart Inc. dropped after saying it will increase spending on worker salaries and automation.

Yields on 10-year Treasuries climbed as high as 1.31% before paring the increase. Yields reached the highest levels in a year earlier this week. Technology companies such as Tesla Inc., which have seen their valuations surge, are often seen as the most at risk of a pullback.

According to Peter Boockvar, chief investment officer at Bleakley Advisory Group, “This rise in rates will certainly test the mettle and staying power of the bulls.”

Market Wrap

Main Pairs Movement

EURUSD is rising toward 1.21 as US jobless claims disappointed with a leap to 861,000. US Treasury yields are off the highs. AUDUSD heads into the Asian opening trading around 0.7770, as bulls refuse to give up. The pair steadies around 0.7765 ahead of Australian Retail Sales take center stage. The Loonie dropped to a daily low of 1.2660 during the early trading hours of the American session but didn’t have a hard time staging a rebound with falling crude oil prices hurting the commodity-sensitive CAD.

The greenback loses further the grip and drops to session lows near 90.50. After a stunning recent run to the upside, crude oil markets have come off the boil a little on Thursday; front-month futures contracts for the delivery of West Texas, the US benchmark for sweet light crude oil, are back below the $61.00 mark and down about 40 cent or 0.7% on the day. The yield on 10-year Treasuries gained two basis points to 1.29%.

Technical Analysis:

USDJPY (4-Hour Chart)

Extending on the previous day’s loss, USDJPY remains under the bearish pressure today. Retreating US bond yields weighed on the USD and exerted additional downward momentum on the USDJPY. At the moment, a cushion at 105.60 seems supportive as the bulls have fenced off the bears’ multiple attempts to drag USDJPY further down low in the past 12 hours. From a technical perspective, the USDJPY still enjoys a modestly bullish trend as indicated by the 21-Day SMAVG and the 50ish RSI. However, looking at the long tails of the two-prior candlestick, I would assume the USDJPY is now slowly shifting its trend downward. If the pair can break below the 105.60, it would be a confirmative signal for the bears to engage, and as a result, the price for USDJPY could dip to 105.31, then 105.13. Conversely, if an upward momentum resumes, the bulls will first meet some resistance at 105.85, followed by 106.16.

Resistance: 105.85, 106.16

Support: 105.60, 105.31, 105.13

GBPUSD (4-Hour Chart)

The Sterling continues to overwhelm the greenback on Thursday as the Cable surges above 1.3950, hitting the highest price level since early 2018. The upbeat UK coronavirus figures strengthen the markets’ expectations of a near-term UK economy reopen. There was a temporary downward correction during the early American session that was due to a modest recovery in the greenback as equity prices in Wall Street dropped further into the negative territory. The pullback was overturned, and the bulls continue to drag the Cable back near the 1.3980 territory. From a technical perspective, the Cable’s bullish trend is supported by the 15-Day SMAVG, however, with an RSI nears the 70-threshold, a downward correction is likely. In the short-term, it would not be prudent to place additional long positions at the current price level, at least not until the pair finds acceptance above 1.3979 resistance level.

Resistance: 1.4029, 1.3979

Support: 1.3922, 1.3875, 1.3849

XAUUSD (4-Hour Chart)

The Gold witnessed a modest recovery that brought the pair back near $1790 during the early European session, but the gain was immediately wiped out in the following sessions and XAUUSD now trades around $1774. Improving market sentiment and higher real bond yields put the non-yielding precious metal on the back foot. Technically speaking, the XAU/USD is going to remain on the downward slide, as indicated by the 60-Day SMAVG. However, with a below-than-30 RSI, it implies that a near-term upward correction is likely. If the XAU/USD finds acceptance above the $1779 level, the bulls can cap their gains at $1785, followed by $1797. On the flip side, if the pair continues to dive low, the most immediate cushion is $1769 then $1764.

Resistance: 1779, 1785, 1797

Support: 1769, 1764

Economic Data

Daily Position Report

Market Focus

US equity market dropped on a second day amid rising long term treasury yield, the US 10-year treasury yield hit as high as 1.33% prior to some pullbacks. Technology stocks lead the decline, with the Nasdaq Composite Index retreated 0.54% from high. Meanwhile, energy stocks like Devon Energy Corp. and Chevron Corp. hiked albeit Texans were hit by power outage, blackouts are expected to last until at least Thursday.

US retail sales accelerated in the month of January, increased by 5.3% from last December. The recovery in the retail segment is an encouraging signal that consumers are actually spending their stimulus checks on physical goods instead of putting it into saving accounts.

UK Prime Minister Boris Johnson announced on Wednesday that they are planning to ease the recent lockdowns on February 22^nd, stating “the unwinding of restrictions will be done in stages”.

The cryptocurrency mania resumes with Bitcoin refreshing record high, jumped beyond $52,000 on Wednesday. The digital token recently gained tremendous traction after Tesla Inc. announced its $1.5 billion purchase. JPMorgan Chase & Co. strategists said Bitcoin’s volatility needs to ease to prevent its rally from fizzling.

Key takeaways from FOMC January meeting minutes:

Market Wrap

Main Pairs Movement

Gold fell to the lowest level in more than two months as US 10-yield treasury yield topped 1.3%, and dollar index rebounded to 91. The precious metal headed for a fifth straight decline on Wednesday, and is currently struggling to penetrate $1774 support line. The upbeat retail sales prompted demand for the US greenback, putting pressure on Gold.

The euro fell 0.54% against the US dollar, closed around 1.2041, the lowest price in two weeks. European restrictive measures will persist under spreading UK new variants, capping any upward move in the shared currency. Meanwhile, Italian Prime Minister Mario Draghi says EU needs common budget to combat recessions.

The Cable dropped 0.3% albeit upbeat CPI figure. The annual CPI increased by 0.1% from last year’s 0.6%, printed 0.7% compared to forecast of 0.6%. PM Johnson’s plan to lift lockdown help to alleviate some of Sterling’s pressure.

Commodity linked Aussie and Kiwi declined 0.1% and 0.4% respectively. Aussie has been outperforming Kiwi since Feb 4^th, AUDNZD rallied 2.06% throughout this period. The uptrend would continue since RBA will likely maintain its current dovish tone until inflation and unemployment targets are achieved unless there is a downside surprise in Australian job data.

Technical Analysis:

EURUSD (Daily Chart)

Euro dollar is drifting away from the short-term descending trendline towards 1.193 support level. The pair will first encounter a longer term upward trendline which was eking out a long bullish run during the last eight-month. A breakthrough from the downside will mark the end of Euro’s bullish trend against the safe-haven greenback. However, the road to south will be bumpy as it has to take down multiple critical supports such as the 1.2 handle and previous stern resistance of 1.193. Conversely, bidders will have to overcome the blue descending trendline in order to regain meaningful upward momentum. MACD on the daily chart shows tendency of a bearish reversal.

Resistance: 1.206, 1.217, 1.2333

Support: 1.193, 1.163

GBPUSD (Daily Chart)

Cable retreated from yearly highs as price kissed the ceiling of an upward tunnel. Cable managed to stand above 1.38 hurdle dated back to March 2018, but the overbought RSI signal helped to pull the overextended price down toward 1.38. If this support fails to defend further decline, then DMA50 will still be supportive in the downside. Nonetheless we maintain our long-term bullish bias on this pair given its strong fundamental, and most of the previous Brexit negativity have been removed from the market. MACD on the daily favors the bulls.

Resistance: 1.416, 1.4625

Support: 1.38, 1.338, 1.2769

XAUUSD (Daily Chart)

Gold’s value continues to deteriorate in the wake of dollar strengths and higher US long bond yield. Gold was previously stuck within support band between $1838 and $1823, and it failed to stand on top of previous neckline, which speculators usually perceive as a strong sell signal. Price then dipped to November’s low of $1770, but not quite reached 50% Fibonacci support level around $1765. The bearish bias will remain intact in the long term, but given the magnitude of plummet in the past five trading days, we expect the bears to take a breather during the rest of this week. It seems like MACD on the daily chart changes its tone from a bullish reversal to continuation of bearish trend.

Resistance: 1823, 1872, 1930

Support: 1765, 1691

Economic Data

Daily Market Analysis

Market Focus

US bond yields surged to the highest in a year, while American stocks climbed to records as optimism over the economic recovery continued to ripple through markets. The yield on the benchmark 10-year Treasury note increased as much as nine basis points to 1.30%, the highest since Feb 2020. Global bonds extended the worst start to a year since 2013.

The S&P 500, Nasdaq, and Dow Jones all set records Tuesday before easing from the highs. The MSCI benchmark for emerging and developed market stocks snapped an 11-session winning streak. The reflation trade is powering assets tired to economic growth and price pressure, including commodities and cyclical stocks. At the same time, investors are riding a wave of speculative euphoria from penny stocks to Bitcoin amid abundant policy support.

According to Eric Freedman, chief investment officer at US Bank Wealth management, “We certainly have data that suggests that being more glass half full than glass half empty remains the right posture. People are looking at parts of the world as well as sectors that have been underperforming and saying, ‘hey this is maybe the next part of the market that heads higher.’”

Market Wrap

Main Pairs Movement

EURUSD trades near the 1.2100 level, down for the day, amid renewed demand for the greenback. US equities are struggling around their opening levels while Treasury yields are surging.

AUDUSD eased from 0.7804, with bulls still in charge despite the poor performance across Wall Street.

The Loonie pair has witnessed a slide during the Asian session, losing almost 60 pips, and touched a fresh multi-week low at 1.2610. Nevertheless, thanks to the solid crude oil prices, the pair modestly recovered its loss and is later seen trading around the high of 1.2690s.

The DXY captures some positive traction on Tuesday and has surpassed the 90.50 level. The reflation trade has been gathering pace which has seen investors move over to riskier asset classes in the past number of trading session where US oil prices rallied to fresh cycle highs.

Technical Analysis:

USDJPY (Four-hour Chart)

USDJPY successfully broke above the key resistance at 105.68 and advanced towards the 106.00 zone in the American session. The 10-year US bond is up nearly 4% and the USD Index has reclaimed 90.50 threshold, both supported the greenback to overwhelm its JPY rival. From a technical perspective, the bullish trend of the pair is supported by the 21-Day SMAVG and MACD histogram. However, because the RSI has topped the 70 overbought threshold, it is inferable that the USDJPY pair might not advance above the psychological resistance at 106.00 in the short-term. On the upside, if USDJPY can penetrate 106.00, then the next resistance would be around 106.17, which is a price zone last seen in Oct 2020. On the flip side, if the current bullish trend is reversed, the most immediate support would be 105.68, then 105.30, followed by 105.07.

Resistance: 105.96, 106.17

Support: 105.68, 105.30, 105.07

GBPUSD (Four-hour Chart)

Ever since the greenback found demand in the early US session, the GBPUSD pair has remained confined between a compacted region between the high 1.3800s and low 1.3900s. A stronger than expected NY Empire State Manufacturing Index Survey and a surging US 10-Year bond are fueling fresh demands for the greenback. The sterling continues to be supported by the drop in UK covid cases. From the 4-hour chart, we can see that the Cable pair is still on a bullish run, indicated by the 15-Day SMAVG; and at the same time, because today’s pullback has cleared some room in the pair’s RSI reading, it is likely that GBPUSD can resume its prior rally. However, before reclaiming the surging momentum, the bulls must first find acceptance above the most immediate resistance near 1.3939.

Resistance: 1.3939, 1.4025

Support: 1.3881, 1.3849, 1.3787

XAUUSD (Four-hour Chart)

With a broad based risk-on sentiment and a strengthened USD, the precious metal plummeted below $1800 and is currently trading around $1794. The Gold has been on the back foot for nearly a week, and the current market is still pretty much biased against the bulls as indicated by the 29ish RSI reading. Although the RSI is implying an upward correction is likely, the precious metal can still dive down further towards the $1778 support if the bulls remain unable to carry the sell-off weight of XAUUSD. Moreover, with both 60-Day SMAVG and MACD histogram signaling a bearish trend, it would not be prudent to place any long position of the yellow metal until the Gold price is rejected solidly in its most immediate support level at $1789 and regains some momentum back on top over the $1800 threshold.

Resistance: 1808.50, 1818.24, 1829.73

Support: 1789.28, 1778.28

Economic Data

Daily Market Analysis

Market Focus

Global stocks and US equity futures rallied as investors took comfort in progress on the Covid-19 vaccine rollout, while freezing temperatures in Texas and across the American South roiled energy markets. The dollar weakened, and US and Canadian stock markets were closed for national holidays.

The FTSE 100 Index finished up 2.5% and the pound strengthened after the UK recorded 15 million vaccinations against coronavirus. Japan’s Nikkei 225 Stock Average topped 30,000 yen for the first-time since August 1990 on data showing the economy is charging ahead.

Meanwhile, an Arctic blast in the US threatened to disrupt energy supplies, sending crude oil to a 13-month high. Texas began rolling power blackouts for millions of households for the first time in a decade and traders estimate a few hundred thousand barrels a day of output in the state may be impacted by well shutdowns, traffic jams and power outages. West Texas intermediate futures rose 1.5%.

Several major markets didn’t trade on Monday. The US is shut for the Presidents Day and exchanges in China and Hong Kong were closed for the Lunar New Year Holiday.

Market Wrap

Main Pairs Movement

USDJPY has enjoyed a spell on the bid in a significant retracement of the monthly bearish trend; however, the following is a top-down analysis that illustrates the mountain that the bulls still have to climb.

The Aussie pair trades near 0.7780 as boosted by the broad-based greenback weakness, near multi-year high of 0.7819. RBA’s meeting minutes will shed some light on the latest decision to extend QE.   

The Loonie is showing some strong, bullish sign on Monday, largely driven by strengthened crude oil prices, a risk-on sentiment and following strong Canadian economic data.

The barrel of WTI finally breaks above $60.00, risk-on sentiment kept the recent rally rolling. The API, EIA reports are next on tap later in the week.

The DXY begins the week on a soft note, retracing back to the 90.30 level, weighing down by the market expectation of President Biden pushing a huge stimulus bill in the foreseeable future.

Technical Analysis:

EURUSD (Four-hour Chart)

EURUSD remained confined between 1.2116 and 1.2145 on Monday. Optimism surrounding vaccine news and fresh hope on US stimulus kept the market on risk-on sentiment. Although European industrial output missed the market estimates, the market largely ignored the news, and the Fiber pair has been trading solidly above 1.2100 level. From a technical perspective, the bullish momentum of EURUSD is supported by the 15-Day SMAVG and MACD. On top of that, the 50ish RSI indicates that there is still room for the pair to further extend its upward trend. If the EURUSD can penetrate 1.2145 resistance, then the next resistance can be found at 1.2163 and 1.2181. Conversely, the most immediate support levels for the pair are 1.2116, 1.2086, and 1.2060.

Resistance: 1.2145, 1.2163, 1.2181

Support: 1.2116, 1.2086, 1.2060

GBPUSD (Four-hour Chart)

GBPUSD continues to advance further as it has reached a 34-month high above 1.3900 price zone today. The main driver for the Cable’s strong bullish trend is the vaccination milestone that UK just achieved, which is 15 mil people have officially been vaccinated. The broad-based weakness on the greenback also boosted the Cable pair to steady near the multi-year high. USD is struggling to gain demand as the markets are hopeful that US President Biden would pass a large relief package after the trial of former US President Trump ended. The bullish Cable is supported by the 15-Day SMAVG and MACD histogram. However, with a RSI that has topped the overbought region, a downward correction seems likely. If the Cable can find acceptance above the 1.3913 resistance level, the next resistance can be seen at 1.4026. Conversely, 1.3851, 1.3787, 1.3741 are the nearest support for GBPUSD.

Resistance: 1.3913, 1.4026

Support: 1.3851, 1.3787, 1.3741

XAUUSD (Four-hour Chart)

Not only did the risk-on sentiment across the globe continue to weigh down on the yellow metal, but the broad-based greenback weakness also failed to lift XAUUSD above key resistance level near $1830. Given that the markets today have digested and reflected the expectation for a big US stimulus bill, it remains unknown in terms of whether the additional USD flow would push the XAUUSD higher because the broad-based greenback weakness was not reflected significantly on Monday’s price action. From a technical perspective, the bears are taking the advantage now as a death cross has been formed in the past hour, and at the same time, the low 40s RSI reading is suggesting a slightly bearish bias is solidifying. If the bears can break below the key $1815 support that has been tested multiple times since last week, then the next support level can be seen around $1804. Conversely, key resistance awaits at $1828, followed by $1837.

Resistance: 1828, 1837, 1846

Support: 1815, 1804

Economic Data