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EUR/USD – Will The Resistance Hold?

Over the last two weeks the EUR/USD has moved in one direction… UP!

It has been hard to identify what will stop the run as several key levels were easily broken.

We now see the currency pair in a historically strong level of resistance and we expect to see this level either slow the advance or reject the upward move back to a support level.

We see the closest support level being at 1.21 and price action will need to be reviewed when back at support.

 

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USD/JPY in long term Channel, will it hold?

The long-term pricing pattern of USD/JPY continues to hold firm. We can see in the chart the ongoing depreciation of the US Dollar against the Japanese Yen. The technicals show a large range bound formation since 2017 with its high at 114.780 and low of 105.111.

Expect to see the USD/JPY continue to decline to test the 105.111 support area. Price action should stabilize around the support area however if the economy continues to trade in fear over Covid19, we can expect to see the USD/JPY fall below the long-term support and towards 100.

We believe the USD will continue to slide on the back of weak Economic numbers from the USA as unemployment increased and average incomes declined, thus affecting the value of the dollar.

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DAX finds support, but for how long?

The selling pressure has subsided on the DAX and has met an area of support which can be considered a buying opportunity. The index might consolidate around the support area giving time for the coronavirus fears to pass. We expect price to be contained around the support area giving an opportunity for the price to continue upwards during next month.

A break below the support line will indicate continuing weakness in the European economy and pricing structure will need to be reviewed.

 

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GOLD (XAUUSD) Weekly

News and Data:

  • February 17: USD Bank Holiday
  • February 19: USD Building Permits 1.55M vs 1.45M expected
  • February 19: USD Corn PPI m/m 0.5% vs 0.1% expected
  • February 19: USD PPI m/m 0.5% vs 0.1% expected
  • February 20: USD FOMC Meeting Minutes
  • February 20: USD Philly Fed Manufacturing Index 36.7 vs 10.1 expected
  • February 20: USD Crude Oil Inventory 0.4M vs 3.3M
  • February 21: USD Flash Manufacturing PMI 50.8 vs 51.5 expected

Market Update:

Investors continue to buy the safe-haven asset, yellow metal, amid the Coronavirus outbreak and economic slowdown fears although the price of gold was at the highest on Monday since early 2013. After bouncing off $1,700 mark from the retracement of the rally, gold prices are struggling to hold support at $1,650 an ounce following Monday’s massive rally to a fresh seven-year high. Despite Tuesday’s selling pressure, gold prices will continue to move higher through the second quarter

It is seen that there are buyers waiting to buy on dips as gold is the safe haven that people are keeping when dealing with the coronavirus and everything else that’s going on around the news right now. Apparently, it has continued to work for the time beings as if the market is simply buying first and asking questions later. With that being said, the gold market is very obviously bullish. To the downside, it is anticipated that the $1600 level could be the support for the longer-term trading.

Investors will now wait for today’s CB Consumer Confidence number release. But the question is “Will the coming series of economic news data be more important than the mentioned virus fears in the coming days and weeks?”

Technical Analysis:

Gold has started to gain good momentum. After breaking above the strong resistance at $1,611 on the 20th February 2020, price has so far peaked at a high of $1,689. Whether this high will cause further problems for price is anyone’s guess but as price has started to pull back, a break and close above this high will confirm a continuation to the upside.
If the current pullback drops any further, then the next obvious level that price my move towards is $1,611 which is the resistance turned support from the 8th January 2020 high. It’s the opportunity to buy dips for big reward as gold uptrend momentum is still very strong.

 

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GOLD (XAUUSD) Weekly

News and Data:

 

  • February 13: USD CPI m/m 0.1% vs 0.2% expected
  • February 13: USD Core CPI m/m 0.2% vs 0.2% expected
  • February 14: USD Core Retail Sales m/m 0.3% vs 0.03% expected
  • February 14: USD Retail Sales m/m 0.3% vs 0.3 expected
  • February 14: USD Prelim UoM Consumer Sentiment 100.9 vs 99.5 expected
  • February 17: USD Bank Holiday
  • February 19: USD Building Permits 1.55M vs 1.45M expected
  • February 19: USD Corn PPI m/m 0.5% vs 0.1% expected
  • February 19: USD PPI m/m 0.5% vs 0.1% expected
  • February 20: USD FOMC Meeting Minutes
  • February 20: USD Philly Fed Manufacturing Index

 

Market Update:

Gold price has climbed to its highest level since 2013 at $1,611.07 as continued worries over the COVID-19 epidemic in China put pressure in the world financial market. As the official new from the Center for Disease Control (CDC) on the number of people infected with coronavirus has grown without any sign of slowing down. There are over 64,000 confirmed cases of the virus in China, 588 international cases and 1,383 fatalities. The COVID-19 better known as the coronavirus is now more deadly than the 2003 outbreak of SARS when there were 8,098 reported infections and 774 fatalities worldwide. The price of yellow metal refused to bow before a stronger U.S. dollar, a rampant stock market and news of COVID-19 spreading worldwide Gold are continuing to rally.

 

Technical Analysis:

Despite the negative trade negotiations and rise on the Stock market, gold is kept resistant level $1612 and currently rising due to the weakness on the Bond market and fears of Coronavirus. At the moment gold is on the first Resistance, but all charts are firmly overbought. Gold is surely bullish on the long-term, but the prices above $1650 are overpriced as fair gold value lies at around $1,570. Gold is expected to test $1570 within 3 sessions. What will cause this fall on Gold is a combination of trade optimism (Stocks rise, Investors taking Profits on $1600 levels on their Buy positions) but mostly overbought levels.