Technical Analytics Report

 

AUD/USD: 

AUD/USD eases towards 0.7750 as virus woes probe risk-on mood

AUD/USD fails to extend Tuesday’s gains despite refreshing weekly high early in Asia.

Aussie Job Vacancies eases to 23.9% in three months to November.

Record high covid-led deaths in the US, China’s biggest jump in infections join likely medical shortage in London, Germany.

American Congress stays firm to vote on Trump’s impeachment despite VP Pence’s reluctance.

Having initially refreshed the weekly top to 0.7782, AUD/USD recedes to 0.7767, down 0.10% intraday, during early Wednesday. While previous risk-on mood could be traced for the quote’s run-up, challenges to risks and downbeat employment data from Australia weighed on the AUD/USD prices off-late.

Australia’s Job Vacancies for three months to November dropped below 59.4% prior to 23.4%. The data become additionally negative for AUD/USD as the Aussie government’s employment relief measures expire in March and a weakness in jobs number before that challenges policymakers.

Talking about risks, the US coronavirus (COVID-19) death toll refreshed record high to near 4,500 as per John Hopkins data. On the same line, China’s virus numbers jumped to the highest in five months with 115 new confirmed cases on the mainland (55 the previous day) including 107 local infections. Furthermore, Japan’s Prime Minister Yoshihide Suga is set to declare a state of emergency in seven additional prefectures, per Kyodo News. It’s worth mentioning that the virus has recently posed a serious threat to the health care systems of Britain and Germany.

Other than the virus, US political drama surrounding President Donald Trump’s impeachment and President-elect Joe Biden’s fiscal stimulus also weigh on the risks.

Against this backdrop, the US 10-year Treasury yields drop for the first time in the last seven days but the S&P 500 Futures gains 0.25% to pierce the 3,800 threshold by press time.

While challenges to the risks recently weighed on the AUD/USD prices, US dollar weakness restricts the losses. That said, the US dollar index (DXY) drops for the second day, currently down 0.08% to 89.96.

Given the lack of major catalysts ahead of the US Consumer Price Index (CPI) and ECB President Christine Lagarde’s speech, AUD/USD traders may have to keep their eyes on risk headlines for fresh impulse.

Technical analysis

Having failed to extend the latest recovery moves from an ascending trend line from November 02, at 0.7677 now, AUD/USD sellers are again trying to retake the reins from the bulls who target the 0.7800 round-figure as an immediate upside hurdle.

ADDITIONAL IMPORTANT LEVELS

OVERVIEW

Today last price 0.7767

Today Daily Change -7 pips

Today Daily Change % -0.09%

Today daily open 0.7774

TRENDS

Daily SMA20 0.766

Daily SMA50 0.7479

Daily SMA100 0.7331

Daily SMA200 0.707

LEVELS

Previous Daily High 0.7778

Previous Daily Low 0.7687

Previous Weekly High 0.782

Previous Weekly Low 0.7642

Previous Monthly High 0.7743

Previous Monthly Low 0.7338

Daily Fibonacci 38.2% 0.7743

Daily Fibonacci 61.8% 0.7721

Daily Pivot Point S1 0.7715

Daily Pivot Point S2 0.7655

Daily Pivot Point S3 0.7623

Daily Pivot Point R1 0.7806

Daily Pivot Point R2 0.7838

Daily Pivot Point R3 0.7898

 

GBP/USD:

 

Fizzles BOE’s Bailey-led gains below 1.3700 amid UK’s covid fears

GBP/USD eases from eight-day top after posting the heaviest gains in 10 weeks the previous day.

BOE’s Bailey ruled out negative rates, UK government forced to set up temporary morgues amid virus-led challenges to healthcare system.

Brexit costs more to UK fisheries, Brussels-London will talk finance cooperation soon.

US policymaker push for Trump impeachment, President-elect Biden’s stimulus and virus woes eyed.

GBP/USD steps back from the weekly top of 1.3693 to 1.3680, up 0.15% intraday, while heading into London open on Wednesday. The sterling jumped the most since early November the previous day as Bank of England (BOE) Governor Andrew Bailey dropped calls of negative rates. While the initial US dollar weakness helped cable to extend those gains early in Asia, renewed coronavirus (COVID-19) fears and Brexit pessimism weigh on the quote off-late.

In his latest comments, BOE’s Bailey not only muted negative rate chatters but also said he does not, “think covid will cause a structural shift in the UK economy.” Following the news, GBP/USD managed to post the biggest since in more than two months while broad market optimism over US President-elect Joe Biden’s fiscal stimulus dragged the US dollar down and helped extend the upside early on Wednesday.

However, a jump in the covid cases and death tolls in the UK poses a serious challenge to the British health care system. The same could be gauged from the New York Post article saying, “British authorities have had to set up temporary morgues in some areas after local hospital mortuaries ran out of space due to a surge in deaths caused by the COVID-19 pandemic. Britain has reported record levels of deaths and new infections in the last few weeks, fuelled by a new variant of the coronavirus which has caused a surge in cases, especially in London and southeast England.”

Additionally testing the British currency are Brexit worries as Reuters mention British fishermen’s problems with French fishmongers and seafood factories.

It should be noted that the virus woes are also escalating in the US, Germany, Japan and China, which in turn probes the previous risk-on mood and stops the US 10-year Treasury yields around March 2020 top, flashed the previous day.

Looking forward, Brexit talks over UK-EU services, as suggested to take place this week by Bloomberg, will be the key while the US political turmoil and aid package signs can entertain GBP/USD traders as well. It should be noted that the comments from the ECB President Christine Lagarde and the US Consumer Price Index (CPI) for December, expected 1.3% YoY versus 1.2% prior, will also offer extra catalysts to watch.

Technical analysis

Having breached the one-week-old falling trend line, GBP/USD is up for challenging the multi-month high flashed last week around 1.3705. Meanwhile, daily closing below the 21-day SMA level of 1.3555 becomes necessary to recall sellers.

ADDITIONAL IMPORTANT LEVELS

OVERVIEW

Today last price 1.3686

Today Daily Change 20 pips

Today Daily Change % 0.15%

Today daily open 1.3666

TRENDS

Daily SMA20 1.3549

Daily SMA50 1.3393

Daily SMA100 1.3193

Daily SMA200 1.2896

LEVELS

Previous Daily High 1.3669

Previous Daily Low 1.3502

Previous Weekly High 1.3704

Previous Weekly Low 1.3532

Previous Monthly High 1.3686

Previous Monthly Low 1.3134

Daily Fibonacci 38.2% 1.3605

Daily Fibonacci 61.8% 1.3565

Daily Pivot Point S1 1.3555

Daily Pivot Point S2 1.3445

Daily Pivot Point S3 1.3388

Daily Pivot Point R1 1.3722

Daily Pivot Point R2 1.3779

Daily Pivot Point R3 1.3889

 

 

Gold Price Analysis:

XAU/USD eyes $1876 but needs acceptance above critical $1863 cap – Confluence Detector

Gold (XAU/USD) is consolidating Tuesday’s rebound above $1850, gathering pace for the next leg higher. The US dollar’s decline alongside the Treasury yields is keeping the XAU buyers hopeful amid expectations of a multitrillion-dollar stimulus likely to be announced by President-elect Joe Biden on Thursday.

Investors rethink about the recent rally in Treasury yields against the Fed’s tapering talks and growing covid cases. Focus shifts to the US CPI report due later on Wednesday for fresh clues.

The Technical Confluences Indicator shows that gold continues to face strong offers around $1863, the convergence of the SMA200 four-hour, SMA5 15-minutes and Bollinger Band four-hour Middle.

A sustained break above that level is needed to take on the next barrier aligned at $1869, which is the confluence of the pivot point one-day R1 and SMA50 one-day.

Further north, the Fibonacci 23.6 one-month at $1876 could cap the advances. However, powerful resistance at $1879 will be a tough nut to crack for the XAU bulls.

Alternatively, immediate support awaits at $1856, the Fibonacci 38.2% one-month, below which $1853 could be challenged. That level is the intersection of the previous low on four-hour, SMA10 one-hour and Bollinger Band 15-minutes Lower.

Sellers would then target the critical cushion at $1842, where the SMA200 one-day coincides with the pivot point one-day S1.

The last line of defense for the buyers is seen at the previous day low of $1837.

EUR/USD:

 

EUR/USD catches a bid as US Treasury yields ease, focus on Lagarde’s speech

EUR/USD trades above 1.22 as US yields retreat from multi-month highs.

The pullback in yields could be temporary as US fiscal stimulus expectations persist.

Some analysts say the dollar’s yield-driven rally could be transient.

The US CPI and Lagarde’s speech could influence market trends on Wednesday.

EUR/USD is extending Tuesday’s gain with the US Treasury yields losing altitude and causing a broad-based decline in the US dollar.

If yields recover losses, EUR/USD will likely come under pressure. Analysts at HSBC are skeptical about the sustainability of the dollar’s yield-driven bounce and expect major currencies to continue tracking risk sentiment rather than yield differentials.

The US Consumer Price Index, scheduled for release at 13:30 GMT, could influence bond yields and demand for the US dollar. The focus would also be on the European Central Bank (ECB) President Christine Lagarde’s speech and the Eurozone Industrial Production data. With the Eurozone bond yields rising along with the US treasury yields despite a relatively weak fiscal stimulus by Eurozone governments, the ECB President has very little room to sound hawkish. The central banker is likely to reiterate willingness to provide more easing if required.

Technical levels

EUR/USD

OVERVIEW

Today last price 1.2213

Today Daily Change 0.0007

Today Daily Change % 0.06

Today daily open 1.2206

TRENDS

Daily SMA20 1.2228

Daily SMA50 1.2062

Daily SMA100 1.1921

Daily SMA200 1.1592

LEVELS

Previous Daily High 1.2208

Previous Daily Low 1.2137

Previous Weekly High 1.235

Previous Weekly Low 1.2193

Previous Monthly High 1.231

Previous Monthly Low 1.1924

Daily Fibonacci 38.2% 1.2181

Daily Fibonacci 61.8% 1.2164

Daily Pivot Point S1 1.2159

Daily Pivot Point S2 1.2113

Daily Pivot Point S3 1.2088

Daily Pivot Point R1 1.223

Daily Pivot Point R2 1.2255

Daily Pivot Point R3 1.2301

The pair is trading above 1.2210 at press time, representing a 0.10% gain on the day, having carved out a bullish inside day candle on Tuesday. The US 10-year yield fell from 1.18% to 1.12%, and is now hovering near 1.10%

That said, it is still significantly higher than the 0.9% level seen a week ago. The pullback seen in the past 24 hours could be short-lived, as inflation expectations remain elevated near multi-month highs, and the US President-elect is expected to announce additional fiscal stimulus on Thursday.