GBP/USD Range Reaches Decisive Moment for Bear or Bull Break

The GBP/USD is showing a lengthy bearish reversal since the end of February 2021. More recently, price action has bounced at the previous bottom (blue box) creating a double bottom.

The GBP/USD is now stuck between support and resistance but a breakout could offer the needed clarification. Let’s review.

Price Charts and Technical Analysis

GBP/USD 15.04.2021 4 hour chart

The GBP/USD seems to have completed a bearish 5 wave pattern (purple). This could be part of a larger bearish ABC pattern (red).

  1. Currently price action is probably in a bullish wave C (purple), which could complete the wave B (red) of a larger ABC (red).
  2. The double bottom could have completed the wave c (pink) of wave B (purple).
  3. A bullish breakout (green arrows) above the resistance trend line (orange) and long-term moving averages would confirm this analysis.
  4. The main upside targets are the previous tops (red boxes).
  5. A bearish bounce at the resistance (orange arrows) could end the wave B (red) and start the wave C (red),
  6. A bearish push could retest the support line (green) and bounce (blue arrow).
  7. A bearish breakout below the support (green) could indicate a downtrend (red arrows). In that case, price action could be completing a bearish 123 (black) and the bullish correction is invalidated.

On the 1 hour chart, blue SWAT candles indicate a bullish trend. But a breakout remains key for confirming any upside:

  1. A push above wizz 4 level with strong price action could confirm the breakout (green arrows).
  2. The bullish break could confirm the wave 3 (green) of 3 (grey) within the larger wave C (pink) of the 4 hour chart.
  3. A bearish breakout (red arrow), however, indicates that the upside was not a wave 1-2 but an ABC (orange) pattern.

GBP/USD 15.04.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Resistance At 1.3780 Stays Strong

GBP/USD Video 15.04.21.

British Pound Is Mostly Flat Against U.S. Dollar

GBP/USD continues its attempts to settle above the resistance at 1.3780 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index did not manage to get to the test of the support at 91.50 and rebounded closer to the resistance at the 50 EMA at 91.80. In case the U.S. Dollar Index manages to get back above the 50 EMA, it will head towards the resistance at the 92 level which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on the economic data from the U.S. Initial Jobless Claims report is expected to indicate that 700,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are projected to decline from 3.73 million to 3.7 million.

Retail Sales report is expected to show that Retail Sales increased by 5.9% month-over-month in March after declining by 3% in February. The report may have a material impact on the dynamics of the U.S. dollar as it will show how U.S. consumers reacted to the new round of economic stimulus. Analysts also expect that Industrial Production increased by 2.8% month-over-month in March while Manufacturing Production grew by 4%.

Technical Analysis

gbp usd april 15 2021

GBP/USD has recently made another attempt to settle above the resistance at 1.3780 but failed to develop sufficient upside momentum and pulled back. The nearest support level for GBP/USD is located at 1.3745.

In case GBP/USD declines below this level, it will move towards the next support at 1.3710. A successful test of the support at 1.3710 will open the way to the test of the support at 1.3665.

On the upside, GBP/USD needs to settle above the resistance at 1.3780 to continue its rebound. If GBP/USD manages to settle above 1.3780, it will head towards the 50 EMA at 1.3800.

A successful test of the 50 EMA level will push GBP/USD towards the resistance at 1.3835. If GBP/USD moves above the 50 EMA, it will head towards the next resistance at 1.3865.

For a look at all of today’s economic events, check out our economic calendar.

U.S Jobless Claims and Retail Sales Put the Greenback in the Spotlight

Earlier in the Day:

It was a quieter start to the day on the economic calendar this morning. The Aussie Dollar was in action this morning.

For the Aussie Dollar

Employment figures were in focus this morning.

According to the ABS,

  • The unemployment rate fell from 5.8% to 5.6% in March, while the participation rate rose from 66.1% to 66.3%.
  • In March, employment increased by 70,700 following an 88,700 rise in February. Economists had forecast a more modest 35,000 increase.
  • Full employment declined by 20,800, however, partially reversing an 89,100 rise from February.

The Aussie Dollar moved from $0.77377 to $0.77253 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.09% to $0.7721.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.05% to ¥108.88 against the U.S Dollar, with the Kiwi Dollar up by 0.10% to $0.7148.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Finalized April inflation figures for Germany, France, and Italy are due out later today.

Barring a marked upward revision from prelim figures, however, we don’t expect the numbers to influence.

Away from the economic calendar, news updates on COVID-19 and vaccination rates will continue to influence.

At the time of writing, the EUR was down by 0.04% to $1.1975.

For the Pound

It’s a particularly quiet day ahead on the economic calendar.

There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats leaves market sentiment towards the latest easing of lockdown measures in focus along with next steps.

At the time of writing, the Pound was down by 0.03% to $1.3775.

Across the Pond

It’s a busier day ahead on the economic calendar. Retail sales, jobless claims, and Philly FED Manufacturing PMI numbers are in focus.

Industrial production, business inventories, and NY Empire State manufacturing numbers are also due out. We don’t expect these stats to have an impact on the broader market, however.

At the time of writing, the Dollar Spot Index was down by 0.02% to 91.671.

For the Loonie

It’s a quiet day ahead on the economic calendar. Manufacturing sales figures for February are due out later today.

Barring particularly dire numbers, however, we don’t expect too much influence from the stats.

Expect market risk sentiment and economic data from the U.S to have a greater impact market risk sentiment and the Loonie.

At the time of writing, the Loonie was up by 0.01% to C$1.2520 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

April 15th 2021: 91.60 Daily Support Makes an Entrance on the US Dollar Index

Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

March carved out a third consecutive loss, extending the 2021 retracement slide by 2.8 percent. Recent underperformance, as you can see, pulled EUR/USD into the upper range of demand at 1.1857-1.1352.

April’s 2.8 percent rebound from the aforesaid demand thus far shifts attention to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641). Extending lower, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Dollar action navigated to three-week troughs on Wednesday. Interestingly, though, the US dollar index (ticker: DXY) shook hands with 91.60 support.

EUR/USD, following Tuesday’s one-sided advance north of the 200-day simple moving average (currently circling 1.1896), crossed swords with resistance at 1.1966 Wednesday. Follow-through upside here shines the technical spotlight on resistance at 1.2058.

Despite the 2021 retracement slide, trend studies reveal the pair has been higher since early 2020.

RSI analysis has the value hovering within striking distance of resistance at 60.30. This follows a trendline resistance breach last week (taken from the peak 75.97) as well as a bullish failure swing.

H4 timeframe:

Quasimodo resistance at 1.1937 stepped aside in recent trading (now potential support) and unlocked upside towards resistance at 1.1990. Upstream, interesting supply resides at 1.2101-1.2059 (sits on top of daily resistance at 1.2058).

H1 timeframe:

Supply from 1.1956-1.1935 had its upper side penetrated on Wednesday, with subsequent movement retesting the zone as demand and holding. 1.20 is seen as potential resistance on the H1 chart, with additional bullish flow targeting resistance at 1.2026 (previous Quasimodo support).

Modest RSI bearish divergence materialised around overbought space. The value currently circles the 60.00 region.

Observed levels:

The 1.20 figure based on the H1 and H4 resistance from 1.1990 forms potential confluence to be mindful of.

A H1 close north of 1.20, however, unbolts a possible bullish scenario, targeting H1 resistance at 1.2026, followed by H4 supply at 1.2101-1.2059 and daily resistance at 1.2058.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s interesting was February also came within striking distance of trendline resistance (prior support – 0.4776 high), sheltered under supply from 0.8303-0.8082.

March subsequently erased 1.5% over the Month and probed February’s lows. Follow-through selling shines light on demand at 0.7029-0.6664 (prior supply).

With respect to trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

The Australian dollar outperformed against a broadly softer US dollar on Wednesday, adding more than 1 percent on the session and concluding at tops. Following a period of indecision around the 0.7563 February low, aided by a 1.272% Fib extension at 0.7545, recent enthusiasm elbowed resistance into the spotlight at 0.7817.

Trend studies reveal the unit has been higher since early 2020.

Momentum, as measured by the RSI oscillator, climbed the 50.00 centreline after discovering a floor off channel support, taken from the low 43.70.

H4 timeframe:

Trendline resistance, extended from the high 0.8007, as well as supply at 0.7696-0.7715, came under fire yesterday. Quasimodo resistance at 0.7800, therefore, deserves notice as the next potential ceiling, closely stationed by demand-turned supply from 0.7848-0.7867.

H1 timeframe:

Supply at 0.7747-0.7734 made an entrance amid US hours on Wednesday, following a decisive advance through 0.77 offers. Price action traders will note this movement established a demand area at 0.7679-0.7695

North of 0.7747-0.7734, the path appears relatively clear to 0.78.

Resistance at 80.85, plotted within overbought space on the RSI oscillator, welcomed the value as price tested supply. As you can see, noted resistance has so far held form, with the value on course to potentially exit overbought territory (considered a bearish signal).

Observed levels:

Scope to advance on the daily timeframe until resistance at 0.7817 places a question mark on H1 supply at 0.7747-0.7734. This, coupled with H4 action overthrowing supply at 0.7696-0.7715, highlights a bullish market for the time being.

A retest of the H4 supply-turned demand at 0.7696-0.7715 may entice dip-buyers, particularly if H1 greets 0.77.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

April, currently down 1.6 percent, is seen retesting the breached descending resistance, movement that may eventually entice bullish flow. With respect to long-term upside targets, supply at 126.10-122.66 calls for attention.

Daily timeframe:

Partly modified from previous analysis.

The greenback eked out modest losses against the Japanese yen Wednesday, consequently extending downside for a third consecutive session.

Despite supply at 110.94-110.29 limiting upside since the beginning of April, the monthly timeframe testing descending resistance-turned support questions further selling. Consequently, the collection of lows around 108.36ish (green oval) could limit downside moves.

Structure beyond said lows, however, shows demand coming in at 107.58-106.85 alongside trendline support, etched from the low 102.59.

In terms of trend on the daily scale, we have been decisively higher since early 2021.

RSI action journeyed beneath support at 57.00, and recently dipped a toe under the 50.00 centreline. This implies momentum remains to the downside for the time being.

H4 timeframe:

As noted in previous writing, supply at 109.97-109.72 stood firm in early trade this week. Thanks to continued weakness, this brings light to a Fib cluster between 108.44 and 108.66 (blue), glued to the upper side of demand at 108.31-108.50 (note the area also holds lows highlighted on the daily scale around 108.36).

H1 timeframe:

Early hours on Wednesday dropped through 109 support and pencilled in lows a few pips ahead of demand at 108.60-108.71 (shares a connection with the H4 Fib cluster at 108.44-108.66). Subsequent action observed a 109 retest, which held as resistance.

RSI movement rebounded from oversold space, following the formation of an AB=CD pattern (black arrows). This led the value back to the 50.00 centreline, which formed resistance and informed traders that momentum faces southbound.

Observed levels:

Partly modified from previous analysis.

Having noted the monthly timeframe testing descending resistance-turned possible support, any selling may be short-lived. As such, overtaking lows around 108.36 on the daily scale, according to chart studies, is unlikely.

In light of where we’re coming from on the monthly timeframe, H1 demand at 108.60-108.71 is likely on the radar for traders, an area plotted just north of H4 demand at 108.31-108.50 (and shares space with the H4 Fib cluster at 108.44-108.66).

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. Contained within February’s range, however, March snapped a five-month winning streak and formed what candlestick enthusiasts call an inside candle pattern (represents a short-term consolidation with low volatility). A breakout lower in subsequent months would generally be viewed as a bearish signal.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Largely unchanged from previous analysis.

Sterling against the US dollar gathered traction Wednesday, though ended the session considerably off session peaks.

The technical arrangement present on the daily chart remains unchanged. Quasimodo support at 1.3609 is seen, a level connected with a 1.272% Fib expansion at 1.3617, as well as 1.618% and 1.272% Fib extension levels at 1.3614 and 1.3607, respectively.

With reference to trend, GBP/USD has been trending higher since early 2020.

The RSI failed to find grip north of the 50.00 centreline last week, though at the same time is reluctant to explore levels south of 40.00.

H4 timeframe:

Largely unchanged from previous analysis.

Action out of the H4 chart remains focussed on support at 1.3680, as well as trendline support-turned resistance, taken from the low 1.3670.

Additional areas to be cognisant of are 1.3852 resistance and Quasimodo support mentioned above on the daily timeframe at 1.3609.

H1 timeframe:

The 1.38 figure, surrounded by a 1.272% Fib expansion at 1.3809 and a 50.0% retracement level at 1.3793, delivered resistance on Wednesday and guided the currency pair back to 1.3750 support.

External levels to be aware of on the H1 scale are the 100-period simple moving average at 1.3740, and a demand-turned supply base residing at 1.3853-1.3869, sharing chart space with a number of Fib studies between 1.3870 and 1.3847.

Interestingly, RSI flow greeted trendline support, taken from the low 27.58, following an earlier rejection from overbought terrain.

Observed levels:

With higher timeframe levels showing limited support and resistance nearby, GBP/USD traders are likely monitoring 1.3750 support on the H1, along with 1.3809-1.3793 resistance.

Another area likely on the technical radar is H1 supply at 1.3853-1.3869. Not only does this base align with numerous Fib levels, the area also joins H4 resistance at 1.3852.

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GBP/USD Price Forecast – British Pound Continues to Find Same Level

The British pound has rallied a bit during the trading session on Wednesday to break above the 50 day EMA, only to turn around and give that right back up almost immediately. By doing so, it has formed a less than enthusiastic candlestick, making this a very unlikely scenario for a sudden break out. This does not mean that I think the market is going to fall apart, rather I think we have a lot of work to do before we get to the upside again. Having said that, if we were to break above the top of the candlestick from the trading session on Wednesday, that could be a very good sign.

GBP/USD Video 15.04.21

If we were to break down below the lows from earlier this week, that opens up the possibility and the high likelihood of a move down to the 1.35 handle. That is an area that is a large, round, psychologically significant figure, and also features the 200 day EMA. With that in mind, I would be very interested in buying down at that level, assuming that we get there and of course get a bit of a bounce. If we do not get that bounce, then I would be a little bit more suspicious.

Whether or not the US dollar can climb against other currencies seems to be an open-ended question, and depending on who you listen to, the answers very wildly. As for myself, I think what we are going to see is more choppiness than anything else, making it yet another headache inducing couple of months in some of these pairs. I suspect the British pound will probably be one of them.

For a look at all of today’s economic events, check out our economic calendar.

Australian Dollar On The Rise

Gold traders are fighting to keep the bullish dream alive and they’re trying to create the right shoulder of the Inverse head and shoulders pattern. A breakout of the neckline can possibly bring serious bullish sentiment.

Silver bounced from a crucial support on the 24.8 USD/oz.

Brent oil broke the mid-term down trendline and is aiming higher.

The Dow Jones is in the third wedge pattern in a row. The previous two ended in an upswing.

The EURUSD climbed back above the 23.6% Fibonacci.

The GBPUSD wasted a great chance for an upswing and failed to break the neckline of the inversed head and shoulders pattern.

The AUDUSD on the other hand, is very close to activating the buy signal from its own inversed head and shoulders formation.

The USDCAD is locked in a tight rectangle below major down trendlines.

The GBPAUD is in a sweet long-term sell signal, after the price created a head and shoulders pattern at the end of the wedge. A breakout of the lower line of the wedge opens a way towards new mid-term lows.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD, GBP/USD Analysis & Setups 14 – 16 Apr 2021

The EUR/USD bullish wave 5 has reached the first target zone at 1.1975. But an extension for one more higher high is possible if price action bounces at the shallow Fibs near 1.1937-50. The GBP/USD remains stuck between the moving averages but a bullish breakout could occur if a triangle chart pattern emerges.

If you think our videos, analysis, and education can help you become a better trader, then you can ask your own questions via our form and we will answer them in the weekly live webinar every Tuesday.

EUR/USD & GBP/USD Overview

The EUR/USD bullish breakout could aim for the 1.20-1.2025 Fib target zone. This is where the 5 wave pattern of wave A could be completed.

The GBP/USD bullish bounce or breakout could aim as high as 1.39, which is the previous top and resistance zone.

Check out the video below for the full analysis and trade plans on 14 – 16 April 2021:

EUR/USD, GBP/USD technical analysis: patterns, trends, key S&R levels

  • Explanation of potential trade ideas both up and down
  • Beginner friendly, explaining concepts in more detail

EUR/USD & GBP/USD Video

For a look at all of today’s economic events, check out our economic calendar.

Good trading,

Chris Svorcik
CTA

 

GBP/USD Analysis, These Charts Suggest That Pound Is Bullish

Pound gains as the US dollar shrinks on fears of an inflation hike. While the economic data from the rest of the world is considered positive, investors watch the economic data from the US closely as positive data, growing debt, surging inflation alarm investors on interest rate change by the FED.

Despite the lower GDP announced yesterday, higher than expected manufacturing production gives confidence on the economic recovery of the UK. New Coronavirus cases in the UK sank amid several harsh measures taken by the Government, the average number of daily new Covid-19 cases reached August 2020’s lows, while the daily new cases in the US grew and vaccines were questioned for their effectiveness.

Source: Worldometers.info

With the Covid-19 becoming less weighted, the UK can now completely focus on the full recovery.

GBP/USD daily chart suggests that the British pound could enter into another bullish cycle soon as the pair hits the lower threshold of the ascending parallel channel.

GBP/USD quote on Overbit

Both indicators RSI and MACD are bullish on a daily chart and the pair has a strong support from MA100.

Double bottom pattern on the 4H GBP/USD chart also suggests that the pair should continue the uptrend.

GBP/USD quote on Overbit

The first resistance to test lies at £1.38660 which is a decisive level where a local dynamic resistance is located. If the resistance withholds, GBP may retrace to £1.36550, though if GBP is able to break the £1.38660, we might witness another bullish run and tests of resistances at £1.39885 and £1.41780.

Bullish continuation of the Pound will be supported by a weaker Dollar. Not only the inflation hikes but the growing tension between the US and China may weaken the US Dollar Index.

 

GBP/USD Daily Forecast – Test Of Resistance At 1.3780

GBP/USD Video 14.04.21.

British Pound Moves Higher Against U.S. Dollar

GBP/USD is currently testing the resistance at 1.3780 while the U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at the 92 level and is trying to settle below the next support level which is located at the 50 EMA at 91.80. In case this attempt is successful, the U.S. Dollar Index will move towards 91.50 which will be bullish for GBP/USD.

Yesterday, the U.S. reported that Inflation Rate increased by 2.6% year-over-year in March compared to analyst consensus which called for growth of 2.5%. Core Inflation Rate grew by 1.6%. While inflation exceeded analyst expectations, Treasury yields moved lower which was bearish for the American currency.

Today, foreign exchange market traders will continue to monitor the developments in U.S. government bond markets. The yield of 10-year Treasuries managed to get below the 20 EMA at 1.635% and is trying to get below the recent lows near 1.61%. If this attempt is successful, it will gain additional downside momentum which will be bullish for GBP/USD.

Technical Analysis

gbp usd april 14 2021

GBP/USD managed to settle above the resistance at 1.3745 and is testing the next resistance level which is located near the 20 EMA at 1.3780. In case GBP/USD settles above this level, it will head towards the next resistance at the 50 EMA at 1.3800.

A move above the 50 EMA will push GBP/USD towards the resistance at 1.3835. If GBP/USD gets above the resistance at 1.3835, it will move towrds the next resistance at 1.3865.

On the support side, the previous resistance at 1.3745 will serve as the first support level for GBP/USD. If GBP/USD declines below this level, it will move towards the next support at 1.3710. This support level has been tested during yesterday’s trading session and proved its strength.

In case GBP/USD moves below the support at 1.3710, it will head towards the next support level which is located near the recent lows at 1.3665.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data and Central Bank Commentary Keep the EUR and Greenback in Focus

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in focus this morning, with the RBNZ also in action.

For the Japanese Yen

Core machinery orders were in focus this morning.

In February, core machinery orders slid by 8.5% month-on-month, following a 4.5% decline in January. Year-on-year, orders were down by 7.1%. In January, core machinery orders had been up by 1.5%.

Economists had forecast core machinery orders to increase by 2.8% in the month and to rise by 2.3% year-on-year.

The Japanese Yen moved from ¥108.927 to ¥108.861 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.18% to ¥108.86 against the U.S Dollar.

For the Kiwi Dollar

While there were no material stats to consider, the RBNZ delivered its April monetary policy decision this morning.

In line with market expectations, the RBNZ left the cash rate unchanged at 0.25%.

Salient points from the RBNZ Rate Statement included:

  • The global growth outlook has improved, though the recover in growth is uneven across countries.
  • COVID-19 mutations continue to provide uncertainty over the economic outlook.
  • Economic activity in NZ slowed over the summer before a rebound in domestic activity.
  • December quarter GDP was weaker than expected and more recent indicators suggest that momentum has reduced.
  • Members noted that supply chain disruptions could constrain economic domestic economic activity near-term.
  • Business credit growth and investment also remains subdued.
  • New government housing policies will likely dampen house price growth. It may take time, however, to see any implications on price inflation and employment.
  • Near-term price increases are likely and these will see headline inflation exceed 2% for a period. Price increases are likely to be temporary, however.
  • Employment is below its maximum sustainable level and expect employment to increase gradually.
  • Overall risks to the economic outlook remain balanced, supported by ongoing stimulatory fiscal and monetary policies.
  • The Committee agreed to maintain its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained at the 2% per annum target midpoint, and that employment is at or above its maximum sustainable level.
  • A prolonged period of time is expected to pass before these conditions are met.
  • The Committee agreed that it was prepared to lower the Official Cash Rate if required.

The Kiwi Dollar moved from $0.70580 to $0.70556 in response to the rate statement. At the time of writing, the Kiwi Dollar up by 0.14% to $0.7063.

For the Aussie Dollar

Consumer confidence was in focus following business confidence figures on Tuesday.

In April, the Westpac Consumer Confidence Index rose by 6.2% to 118.8, its highest level since Aug-2010. In March, the index had risen by 2.6% to 111.8.

According to the latest Westpac Report,

  • Family finances vs a year ago jumped by 13.4% to 103.5, with family finances next 12-months up by 5.4% to 117.6.
  • Economic conditions next 12-months increased by 10.3% to 125.5, with conditions next 5-years up by 4.1% to 123.8.
  • Significantly, the economic conditions next 12-months was up 133.8% year-on-year.
  • The Unemployment Expectations Index rose by 5.6% to 118.4, however, with time to buy a dwelling falling by 7.9%.
  • Time to buy a major household item slipped by 0.2% in the month, while up 61.9% year-on-year.

The Aussie Dollar moved from $0.76455 to $0.76445 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.08% to $0.7647.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Industrial production figures for the Eurozone are due out along with finalized inflation figures for Spain.

Expect February industrial production figures to have a greater influence on the EUR.

On the monetary policy front, ECB President Lagarde could also move the dial in a scheduled speech later in the day.

At the time of writing, the EUR was up by 0.09% to $1.1959.

For the Pound

It’s a quieter day ahead on the economic calendar.

4th quarter labor productivity figures are due out later today. With the UK government easing COVID-19 restrictions, however, we don’t expect the numbers to have an impact.

Away from the economic calendar, expect COVID-19 news to influence, however.

At the time of writing, the Pound was up by 0.07 to $1.3759.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. Import and export price index figures are due out later today. We don’t expect too much influence from the numbers.

Any FOMC member commentary and chatter from Capitol Hill will need monitoring, however.

FED Chair Powell is due to speak and will garner plenty of interest late in the day.

At the time of writing, the Dollar Spot Index was down by 0.07% to 91.789.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats from Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil inventory numbers and market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.06% to C$1.2542 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

April 14th 2021: Dollar Index Extends Bearish Presence South of 200-Day SMA Following Inflation Data

Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

March carved out a third consecutive loss, extending the 2021 retracement slide by 2.8 percent. Recent underperformance, as you can see, pulled EUR/USD into the upper range of demand at 1.1857/1.1352.

April’s 1.8 percent rebound thus far shifts attention to the possibility of fresh 2021 peaks and a test of ascending resistance (prior support – 1.1641). Extending lower, on the other hand, shines the technical spotlight on trendline resistance-turned support, taken from the high 1.6038.

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Trading primarily as a function of USD weakness, EUR/USD movement adopted a bullish phase Tuesday and consequently recorded fresh multi-week peaks. Resistance at 1.1966 is next in line, with a break unmasking additional resistance at 1.2058.

The 200-day simple moving average continues to echo supportive structure, following an upside breach in the second half of last week.

Despite the 2021 retracement slide, trend studies reveal the pair has been higher since early 2020.

RSI analysis shows upside momentum continues to gather traction, after the value swept through trendline resistance (taken from the peak 75.97) and formed a bullish failure swing (a sign of a potential reversal). Resistance is now in sight at 60.30.

H4 timeframe:

Following 1.1870 support serving well since early last week, Quasimodo resistance at 1.1937 came under fire on Tuesday, movement emphasising bullish intent.

With 1.1937 potentially out of the picture, bullish bets may take aim at resistance from 1.1990.

H1 timeframe:

The 100-period simple moving average at 1.1895, once again, delivered dynamic support on Tuesday. This led to a one-sided advance north of 1.19 to supply at 1.1956/1.1935.

1.1974/1.1965 supply is next in the firing range should buyers maintain a bullish trajectory today. Traders, however, are also urged to pencil in the possibility of a 1.1919 support retest.

Thanks to recent upside, RSI movement rebounded from trendline support, taken from the low 20.50, and has made its way to within touching distance of overbought space and RSI resistance plotted at 78.97.

Observed levels:

The technical view from the monthly scale implies a bullish theme could develop, given we’re coming from demand at 1.1857/1.1352. However, buyers face daily resistance at 1.1966, closely shadowed by H4 resistance at 1.1990.

With the above in view, a short-term bullish scenario may materialise today, taking out H1 supply at 1.1956/1.1935 and testing H1 supply at 1.1974/1.1965. It is the latter zone that sellers could make an appearance from, given this area shares chart space with daily resistance at 1.1966. Any bullish moves north of here, nevertheless, buyers could reach for the key figure 1.20 (and H4 resistance at 1.1990).

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

February finished considerably off best levels, establishing what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. What’s interesting was February also came within striking distance of trendline resistance (prior support – 0.4776 high), sheltered under supply from 0.8303/0.8082.

March subsequently erased 1.5% over the Month and probed February’s lows. Should follow-through selling develop, demand is in view at 0.7029/0.6664 (prior supply).

With respect to trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Largely unchanged analysis from previous report.

Since 25th March, buyers and sellers have been squaring off around the 0.7563 February low, aided by a 1.272% Fib extension at 0.7545. Tuesday concluded in the shape of a bullish outside reversal (similar formation to a bullish engulfing pattern, though focuses on the range of the previous candle rather than the real body).

Resistance remains at 0.7817; a dip beneath 0.7563 brings light to demand from 0.7453/0.7384 (dovetailing closely with a 100% Fib expansion at 0.7465 and a 1.618% Fib extension at 0.7460). Technicians will also note the 200-day simple moving average circling nearby at 0.7408.

Trend studies reveal the unit has been higher since early 2020.

As for the RSI oscillator, the value remains reinforced off channel support, taken from the low 43.70, and nears the underside of 50.00.

H4 timeframe:

Declining US Treasury yields pressuring the buck lower Tuesday provided AUD/USD support, with enough force to bring light to trendline resistance, extended from the high 0.8007.

Also of technical importance is resistance at 0.7668, followed by supply at 0.7696/0.7715 and a 50.0% retracement at 0.7689.

Any decisive downside shines the technical spotlight on Quasimodo support at 0.7529, a level joined closely by a trendline resistance-turned support, taken from the high 0.7805.

H1 timeframe:

Heading into the early hours of US trading Tuesday, price movement speared through 0.76 to shake hands with a Fib cluster around 0.7586. Strong bids soaking up sell-stops south of 0.76 lifted the currency pair north of the 100-period simple moving average to 0.7650ish, adding 0.3 percent on the day.

Limited (obvious) resistance shifts technical interest to the 0.77 figure, a psychological base sheltered under supply drawn from 0.7716/0.7707 (an important decision point to initially push below 0.77).

Action out of the RSI oscillator reveals the value testing space just south of overbought territory, threatening moves to resistance at 80.85.

Observed levels:

Largely unchanged analysis from previous report.

From the bigger picture, the lack of buying interest from the 0.7563 February low on the daily scale may be due to monthly price pencilling in a bearish candlestick formation in February ahead of notable structure. This indicates sellers could eventually topple 0.7563 and challenge daily demand at 0.7453/0.7384.

In conjunction with higher timeframes, the H4 trendline resistance as well as H4 resistance at 0.7668 may be on the radar for short-term sellers today.

Should the unit spike to 0.77 on the H1, however, sellers may also show interest here as the psychological level aligns with H4 supply at 0.7696/0.7715.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

April, currently down 1.5 percent, is seen retesting the breached descending resistance, movement that may entice bullish flow. With respect to long-term upside targets, supply at 126.10/122.66 calls for attention.

Daily timeframe:

The US dollar notched up a second consecutive decline against the Japanese yen Tuesday, in line with US Treasury yields also dipping lower (the benchmark 10-year US Treasury yield ended lower by nearly 3 percent).

Despite supply at 110.94/110.29 limiting upside since the beginning of April, the monthly timeframe testing descending resistance-turned support places a question mark on further selling. Therefore, technically speaking, the collection of lows around 108.36ish (green oval) could limit downside moves.

Structure beyond said lows, however, shows demand coming in at 107.58/106.85 alongside trendline support, etched from the low 102.59.

In terms of trend on the daily scale, we have been decisively higher since early 2021.

RSI action journeyed beneath support at 57.00 in recent trading, implying that momentum remains firmly to the downside for the time being.

H4 timeframe:

Supply at 109.97/109.72 has stood firm in early trade this week, throwing light on a 78.6% Fib level at 108.95. Breaking south of here also shines light on demand at 108.31/108.50, an area not only joined by a Fib cluster between 108.44 and 108.66 (blue), it also holds lows highlighted on the daily scale around 108.36.

H1 timeframe:

Any USD/JPY upside was swiftly capped by the 100-period simple moving average on Tuesday, currently circling 109.47. Technical elements now show demand plotted at 108.86/108.98, with subsequent bearish flow highlighting demand at 108.60/108.71.

In addition to price action, RSI flow dipped a toe in oversold waters in recent hours, establishing an AB=CD formation (black arrows).

Observed levels:

Partly modified from previous analysis.

Having noted the monthly timeframe testing descending resistance-turned possible support, any selling may be short-lived. As such, overtaking lows around 108.36 on the daily scale, according to chart studies, is unlikely.

In light of where we’re coming from on the monthly timeframe, the 78.6% Fib level on the H4 at 108.95 and H1 demand at 108.86/108.98 could deliver a platform for buyers to work with.

H1 demand at 108.60/108.71 is also likely on the radar for traders, an area plotted just north of H4 demand at 108.31/108.50 (and shares space with the H4 Fib cluster at 108.44/108.66).

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. Contained within February’s range, however, March snapped a five-month winning streak and formed what candlestick enthusiasts call an inside candle pattern (represents a short-term consolidation with low volatility). A breakout lower in subsequent months would generally be viewed as a bearish signal.

Despite the trendline breach, primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Partly modified from previous analysis.

Sterling wrapped up Tuesday off worst levels against a broadly weaker greenback; GBP/USD has staged a moderate comeback so far this week off March 25th Lows at 1.3670.

The technical arrangement present on the daily chart displays a Quasimodo support at 1.3609, a level connected with a 1.272% Fib expansion at 1.3617, and 1.618% as well as 1.272% Fib extension levels at 1.3614 and 1.3607, respectively.

With reference to trend, GBP/USD has been trending higher since early 2020.

The RSI failed to find acceptance north of the 50.00 centreline last week, though at the same time is reluctant to explore levels south of 40.00.

H4 timeframe:

Shorter-term flow on the H4 chart has support in play at 1.3680, delivering a floor to work with on Monday. Upside attempts have so far been limited by a 38.2% Fib level at 1.3763, as well as trendline support-turned resistance, taken from the low 1.3670.

External areas to be cognisant of are 1.3852 resistance and the Quasimodo support mentioned above on the daily timeframe at 1.3609.

H1 timeframe:

1.37 welcomed price action on Tuesday, fuelling a healthy bid into the US session (aided by RSI trendline support, taken from the low 27.58). As you can see, this elevated GBP/USD above the 100-period simple moving average to test the mettle of 1.3750 resistance.

Territory north of 1.3750 highlights resistance around the 1.38 figure, surrounded by a 1.272% Fib expansion at 1.3809 and a 50.0% retracement level at 1.3793. Beneath 1.37, the technical radar points to support at 1.3653.

Observed levels:

The daily timeframe’s Quasimodo support at 1.3609 is likely to remain on the watchlist for many traders. Not only is this considered stable structure, the neighbouring Fib confluence reinforces its technical presence.

Across the page on the lower timeframes, H4 is attempting to overthrow a 38.2% Fib level at 1.3763, while H1 is battling 1.3750 resistance. A firm H1 close above 1.3750 may be enough to tempt breakout buying to around 1.38. Equally interesting, this psychological area may be sufficient to hold back buyers, given the level shares space with H1 Fib levels and also unites with H4 trendline support-turned resistance.

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GBP/USD Price Forecast – British Pound Continues to Grind Sideways

The British pound has gone back and forth during the course of the trading session on Tuesday, as we continue to struggle with the 1.3750 level. This is an area that has been important more than once, and the fact that the 50 day EMA sits just above there also causes a bit of a headache for those who are bullish. As things stand right now, we have seen a slight micro double bottom, and the question now is whether or not that hold? If it does not, then we will probably revisit the bottom of the overall range down at the 1.35 handle. The 200 day EMA sits just below there, and it could offer a bit of support as well if it reaches the same area.

GBP/USD Video 14.04.21

On the other hand, if we were to take out the 50 day EMA to the upside on a daily close, that could send this market much higher, reaching towards the 1.40 level. That is an area that has been resistance previously, so if we struggle in that area I would not be hugely surprising. On the other hand, if we were to break above that level it opens up the possibility of a move towards the 1.42 level. That is an area that is extreme resistance, and of course has been where we have seen quite a bit of pressure. If we break above there, it opens up another 300 points to the upside. In general, I think what we are going to see is a lot of noisy behavior, but it certainly looks as if we may have to test the bottom of the overall support range.

For a look at all of today’s economic events, check out our economic calendar.

Gold Extends the Drop

Gold extends the bearish correction giving chance to bulls, who missed the initial buying opportunity from the beginning of the month.

Silver bounces from a crucial mid-term horizontal support.

Brent Oil breaks the upper line of the triangle but the breakout itself is not very convincing.

Indices are ready to make another all-time highs.

The GBPUSD testing the neckline of the mid-term inverse head and shoulders pattern.

The AUDUSD with a flag just below the neckline of the H&S pattern.

The NZDUSD with a very similar situation.

The USDCAD consolidates below crucial long-term down trendlines.

The GBPAUD breaks two major short-term resistances but the main sentiment still looks rather negative.

The EURRUB stays bullish despite two dangerously looking shooting stars on an important horizontal resistance.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – British Pound Tries To Gain More Ground Against U.S. Dollar

GBP/USD Video 13.04.21.

Test Of Resistance At 1.3745

GBP/USD is currently trying to settle above the resistance at 1.3745 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently tested the nearest resistance level at the 20 EMA at 92.30. If the U.S. Dollar Index manages to settle above the 20 EMA, it will gain upside momentum and head towards the resistance at 92.50 which will be bearish for GBP/USD.

UK has recently reported that its GDP increased by 0.4% month-over-month in February compared to analyst consensus which called for growth of 0.6%. On a year-over-year basis, GDP declined by 7.8%.

Industrial Production grew by 1% month-over-month in February compared to analyst consensus of 0.5%. Manufacturing Production increased by 1.3% month-over-month compared to analyst consensus of 0.5%.

On a year-over-year basis, Industrial Production and Manufacturing Production remained under pressure. Industrial Production declined by 3.5% while Manufacturing Production decreased by 4.2%. Both reports exceeded analyst expectations.

It remains to be seen whether better-than-expected reports will be able to provide additional support to British pound as Treasury yields are moving higher which is bullish for the American currency.

Technical Analysis

gbp usd april 13 2021

GBP/USD managed to settle above the resistance at 1.3710 and is testing the next resistance level which is located at 1.3745. RSI remains in the moderate territory so there is plenty of room to gain upside momentum in case the right catalysts emerge.

In case GBP/USD settles above the resistance at 1.3745, it will head towards the next resistance level at 1.3780. A move above the resistance at 1.3780 will push GBP/USD towards the 20 EMA which is located at 1.3790.

If GBP/USD gets above the 20 EMA, it will get to the test of the next resistance at the 50 EMA at 1.3800. Most likely, GBP/USD will face material resistance in the 1.3780 – 1.3800 area.

On the support side, a move below 1.3745 will push GBP/USD back towards the support at 1.3710. If GBP/USD declines below this level, it will move towards the support at 1.3665.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD, GBP/USD Analysis & Setups 12 – 13 Apr 2021

The EUR/USD is building an ABC correction in a wave 4 pattern. A breakout or bounce at the 38.2% Fibonacci level could confirm more upside. The GBP/USD made a double bottom at the double bottom but the resistance zone remains strong.

If you think our videos, analysis, and education can help you become a better trader, then you can ask your own questions via our form and we will answer them in the weekly live webinar every Tuesday.

EUR/USD & GBP/USD Overview

The EUR/USD bullish breakout could aim for the Fibonacci levels around 1.1975-1.2025. Here a bearish ABC pattern could emerge.

The GBP/USD needs a break above the 50% Fib at 1.3775 for a potential move upwards. A bearish bounce, however, could indicate a re-challenge of the double bottom.

Check out the video below for the full analysis and trade plans on 12 – 13 April 2021:

EUR/USD, GBP/USD technical analysis: patterns, trends, key S&R levels

  • Explanation of potential trade ideas both up and down
  • Beginner friendly, explaining concepts in more detail

EUR/USD & GBP/USD Video

For a look at all of today’s economic events, check out our economic calendar.

Good trading,

Chris Svorcik
CTA

 

A Busier Economic Calendar Puts the EUR, the GBP, and the Greenback in Focus

Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Aussie Dollar and the Kiwi Dollar were in action this morning, with economic data from China also in focus.

For the Kiwi Dollar

Business confidence and electronic card retail sales were in focus in the early hours.

In the 1st quarter, a net 11% of businesses expect a worsening in general economic conditions in the coming months.

According to the NZIER, this was a modest improvement from 16% of businesses that were pessimistic in the previous quarter.

Electronic card retail sales rose by 0.9% in March, partially reversing a 2.5% decline from February. The upside came in spite of spending constraints in the 1st week of March.

According to NZ Stats,

  • Card spending increased in four of the six retail industries.
  • Sales of durables increased by 1.8%, while spending on consumables slid by 3.3%.

The Kiwi Dollar moved from $0.70293 to $0.70324 upon release of the figures. At the time of writing, the Kiwi Dollar down by 0.20% to $0.7016.

For the Aussie Dollar

In March, the NAB Business Confidence Index fell from 18 to 15. In February, the index had risen from 13 to 18.

According to the March survey,

  • In spite of the fall in confidence, confidence remained at a high level suggesting that firms are optimistic that the strength in activity will continue.
  • While confidence declined, business conditions rose by 8 points to a record high +25 in March.
  • Strong increases in all the sub-components, which are all now also at record highs drove the conditions index higher.

Looking at the sub-components:

  • The employment sub-index climbed from +9 to +16, with the capacity utilization rate rising from 81.8% to 82.3%.
  • Profitability also improved, with the sub-index rising from +18 to +26.
  • A pickup in inflationary pressures was also evident. The labor costs sub-index rose by 1.9% following a 1.1% increase in February. Purchases costs increased by 1.8%, following a more modest 0.7% rise in February.
  • Forward orders were also on the rise, with the sub-index climbing from +10 to +17.
  • The trading sub-index saw the largest increase, however, jumping from +23 to +35 in March.

The Aussie Dollar moved from $0.76095 to $0.76109 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.20% to $0.7608.

From China

Trade data was in focus this morning.

In March, China’s U.S Dollar trade surplus widened from $103.25bn to $116.35bn. Economists had forecast a narrowing to $52.05bn.

Exports surged by 49.0% year-on-year, following a 60.60% jump in March, with imports rising by 38.1%. In February, imports had risen by 22.2%.

Economists had forecast for exports to increase by 35.5% and for imports to rise by 23.3%.

The Aussie Dollar moved from $0.76105 to $0.76116 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.22% to ¥109.62 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. ZEW Economic Sentiment figures for Germany and the Eurozone are due out later today.

Expect both sets of numbers to provide the EUR with direction. EUR sensitivity to the numbers has picked up recently, so we expect the numbers to influence.

Away from the economic calendar, COVID-19 news and progress on the vaccination front will also continue to influence.

At the time of writing, the EUR was down by 0.11% to $1.1898.

For the Pound

It’s a busier day ahead on the economic calendar.

3-month rolling GDP, manufacturing and industrial production and trade data are due out later today.

While we will expect the GDP and manufacturing production figures to have the greatest interest, trade data will draw more interest.

The markets will be looking to assess the ongoing effects of Brexit on UK trade terms.

At the time of writing, the Pound was flat at $1.3741.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. March inflation figures will be in focus later today.

With market sensitivity to inflation continuing to linger in spite of the FED’s assurances, expect plenty of influence from the numbers.

Away from the economic calendar chatter from Capitol Hill and FOMC member commentary will also need monitoring.

At the time of writing, the Dollar Spot Index was up by 0.08% to 92.211.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats from Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.10% to C$1.2575 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Forming Possible Double Bottom

The British pound has rallied quite nicely after initially dipping slightly on Monday, showing signs of continuation to the upside. That being said, it is worth noting that the pair has been forming a potential double bottom, so the fact that we rallied is a good sign. Having said that, there is also a significant amount of support underneath that extends all the way down to the 1.35 handle, so it is very likely that we will eventually see buyers come in and pick this pair up. That being said, I would expect a lot of volatility, but we have been in a long-term uptrend for quite some time and therefore it is difficult to imagine how this pair would suddenly change trends without some type of major disruption.

GBP/USD Video 13.04.21

The US interest rates do continue to spike, and that has been a bit of a problem for the Forex market, but at the end of the day the British pound has been a bit of an outlier, and I do believe that will continue to be the case. That being said, I do think that we are eventually going to see a bigger move, and as things stand right now it seems more likely that we will go higher rather than lower. However, if we were to break down below the 1.35 handle, it would not only break a major psychologically important level, but it would also break the 200 day EMA, something that would certainly be worth paying attention to. With this in mind, I like the idea of buying dips and most certainly would like the idea of buying a breakout the 50 day EMA. The next major target would be the 1.40 level.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Support At 1.3665 In Sight

GBP/USD Video 12.04.21.

British Pound Remains Under Pressure At The Beginning Of The Week

GBP/USD managed to get below the support at 1.3710 and is moving towards the next support level at 1.3665 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the nearest resistance level at the 20 EMA at 92.30. If the U.S. Dollar Index manages to settle above this level, it will head towards the next resistance at 92.50 which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released in the U.S. and UK today so foreign exchange market traders will focus on general market sentiment and dynamics of U.S. Treasury yields.

The yield of 10-year Treasuries has recently made several attempts to settle below the 20 EMA at 1.64% but failed to develop sufficient downside momentum. If Treasury yields get back to the upside mode, the U.S. dollar will get more support.

Today, British shops, pub gardens and other businesses are set to reopen as the country gradually lifts virus-related restrictions. However, it remains to be seen whether this move will provide support to the British pound which found itself under pressure in recent trading sessions amid problems with AstraZeneca COVID-19 vaccine.

Technical Analysis

gbp usd april 12 2021

GBP/USD has recently made an attempt to get to the test of the nearest support level at 1.3665. In case GBP/USD manages to settle below this level, it will head towards the next support at 1.3625. A successful test of the support at 1.3625 will push GBP/USD towards the next support at 1.3575.

On the upside, the previous support at 1.3710 will serve as the first resistance level for GBP/USD. If GBP/USD gets above this level, it will move towards the next resistance at 1.3745.

A move above the resistance at 1.3745 will push GBP/USD towards the resistance which is located near the 20 EMA at 1.3780. In case GBP/USD gets above the 20 EMA, it will head towards the next resistance at the 50 EMA at 1.3800.

For a look at all of today’s economic events, check out our economic calendar.

Eurozone Retail Sales and the BoC Business Survey Put the EUR and Loonie in Focus

Earlier in the Day:

It was a quiet start to the week on the economic calendar this morning. There were no material stats for the markets to consider in the early hours.

The Majors

At the time of writing, the Japanese Yen was down by 0.05% to ¥109.72 against the U.S Dollar, with the Kiwi Dollar down by 0.11% to $0.7025. The Aussie Dollar was down by 0.21% to $0.7607.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. February retail sales for the Eurozone are due out later today.

With the ECB looking for consumer spending to support the economic recovery, we can expect some sensitivity to the numbers. Fresh lockdown measures reintroduced across a number of member states in recent weeks, however, could limit the impact of any positive numbers.

Away from the economic calendar, COVID-19 news and progress on the vaccination front will also influence.

At the time of writing, the EUR was down by 0.07% to $1.1891.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of COVID-19 and vaccine news updates.

At the time of writing, the Pound was down by 0.04% to $1.3701.

Across the Pond

It’s also a quiet day ahead on the economic calendar. There are no material stats to provide the Greenback with direction.

The lack of stats will leave the Dollar in the hands of news from Capitol Hill and FOMC member commentary.

At the time of writing, the Dollar Spot Index was up by 0.06% to 92.216.

For the Loonie

It’s a relatively quiet day ahead on the economic calendar. The Bank of Canada’s Business Outlook Survey is due out later today.

With little else for the markets to consider, we can expect plenty of influence from the survey.

Away from the economic calendar, crude oil prices and market sentiment towards demand will also influence.

At the time of writing, the Loonie was down by 0.13% to C$1.2546 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Dollar May be at an Inflection Point

The dollar’s inability to gain after the much stronger than expected March employment data may have encouraged a bout of profit-taking. Next week offers a test on the hypothesis that the dollar-bullish divergence meme has been fully discounted. After a brief hiatus, US coupon sales will return ($110 bln), and a string of high-frequency data is likely to confirm an acceleration of prices and activity.

On balance, we expect the US dollar and long-term interest rates to rise next week. US rates fell, with the 10-year yield falling to two-week lows near 1.60%. This means that there is no concession to next week’s supply that begins with a $58 bln sale of three-year notes on Monday. The US will be raising $110 bln in coupon sales, while the data will likely show a jump in prices (base effect and more).

There will also be a surge in real sector data, partly reflecting the recovery from February’s weather-induced weakness and the new stimulus. Meanwhile, new restrictions in Japan and Europe mean that divergence with the US may extend deep into Q2. In fact, if the dollar does not trade higher next week, the bears, who seemed to go into hibernation in Q1, will re-emerge on ideas that investors are moving beyond its focus on the stimulus-driven US recovery and yawning divergence.

Dollar Index

Last week’s pullback met the (38.2%) retracement target of the leg up since the late February low (~89.70) found near 92.00. A convincing break could signal a return to the 91.00-91.30 band. A move now above the 92.50 area would lift the tone, with an initial target in the 92.85-93.00 band, and, perhaps, to the five-month high set at the end of last month closer to 93.50. The MACD and Slow Stochastic point lower, while the RSI is turning higher. The 200-day moving average, which the Dollar Index begins the new week a bit above, is found around9 2.35. The recent decline has seen the five-day average slip below the 20-day moving average for the first time in a little more than a month.

Euro

The outside up day on April 5, which seemed to complete a small head and shoulders pattern with the close above $1.18. It set the technical tone for the rest of the week, and the euro met the minimum objective of a bit more than $1.19. However, disappointing European industrial production figures and a jump in US rates (before the US PPI jump that was twice the median forecast in Bloomberg’s survey) stalled the euro’s recovery.

A little shelf has emerged near $1.1860. A bit lower is the (38.2%) retracement of the bounce since the end of March and the 20-day moving average (~$1.1840). A break of the $1.1790-$1.1800 area would signal a retest on $1.17. Some think a new range may be emerging, roughly $1.17-$1.20.

Japanese Yen

The 15 bp decline in the US 10-year yields from its March 30 peak above 1.77% seemed to drag the dollar lower against the yen. Speculators in the futures market had jumped with both feet into short yen positions. The gross short yen position by non-commercials jumped from 13.3k contracts, a multi-year low, in the first half of January to 84.7k contracts as of April 6. Last week was only the third (weekly) decline in the dollar since the end of January.

The dollar peaked in the last session of Q1, just shy of JPY111.00. It hit JPY109 on April 8 before jumping back to almost JPY110 ahead of the weekend as higher US (and China) inflation lifted yields. The JPY110.20 area is the next retracement (61.8%) of the dollar’s pullback. It takes more than a pre-weekend dollar bounce to turn the momentum indicators. A break of last week’s low could spur a move toward the JPY108.30-JPY108.40 area.

British Pound

Sterling fell for the fifth week of the past seven. It flirted with the lows from late March, near $1.3670 ahead of the weekend, before recovering back to almost $1.3750. The MACD remains in its trough, while the Slow Stochastic is turning lower from the mid-range. The five-day moving average has held below the 20-day since early March. Cable also appeared influenced by the dramatic recovery of the euro against sterling. The euro fell to its lows level since March 2020 against sterling at the start of last week (~GBP0.8470).

It recovered smartly to almost GBP0.8700 before the weekend, which corresponds to the (38.2%) retracement of the leg lower that began on January 6 near GBP0.9085, where it met strong selling pressure. It was the biggest euro advance against sterling in about seven months. While we cast a jaundiced eye over many seasonality claims in the foreign exchange market, we note April tends to be a good month for sterling. In the past 20 years, sterling has risen in 17 Aprils. However, May is cruel and sterling has fallen in 16 of the past 20 years in May.

Canadian Dollar

The US snapped a three-week advance against the Canadian dollar that lifted it from a three-year low (~CAD1.2365) to around CAD1.2650 at the end of March. That late March high was retested last week. A robust Canadian jobs report blew away expectations and gave the Loonie a bid. The greenback settled on its lows, and a break of CAD1.25 will open up the downside.

The MACD is trying to turn lower, while the Slow Stochastic already has rolled over. The Bank of Canada meets on April 21. Even though Ontario has reintroduced social restrictions, and the excess fatalities in Canada may rival the US on a per capita basis, the central bank will likely be increasingly confident of a strong economic rebound.

Australian Dollar

The Aussie peaked in late February at a little over $0.8000. It fell to around $0.7600 and has spent most of the past three weeks confined to around a half of a cent range around it. While there appears to be little momentum, the MACD is trying to turn up from overextended territory, and the Slow Stochastic is already trending higher.

Upticks last week were capped by the 20-day moving average, which begins the new week near $0.7660. Australia lost around 350k full-time positions from March through June last year. In the eight months since, it has recouped them all, plus. On the other hand, the unemployment rate was at 5.8% in February, up from 5.1% at the end of 2019. The March figures are the highlight of next week’s data.

Mexican Peso

The dollar eased by around 0.7% against the peso last week. It was the second consecutive weekly decline and the fourth in the past five weeks. This largely mirrors the performance of the JP Morgan Emerging Market Currency Index. Mexico reported a jump in inflation (CPI 4.67%, up from 3.76% in February, and the bi-weekly readings warn it may not have peaked. Mexico also reported a 0.4% rise in industrial output (economists had projected a decline).

A recovery in auto production and sales seems to be critical and linked to the strengthening US economy. The greenback peaked in early March near MXN21.6350 and last week recorded a low around MXN20.0650, its lowest level in almost two months. The move is stretched. The MACD is at its lows for the year, while the Slow Stochastic is poised to turn higher from oversold terrain. The MXN20.40-MXN20.50 area offers the first hurdle for a dollar bounce.

Chinese Yuan

The yuan rose for the first time against the dollar in seven weeks. It has completely unwound its earlier gains and is now off about 0.4% for the year. More trackers of flows into different funds are seeing outflows from Chinese bonds. The yuan’s weakness seems to be fundamentally driven, and the PBOC is not leaning hard against it. Last week, the dollar traded inside the previous week’s range (~CNY6.54-CNY6.58).

The offshore yuan is a little softer than the onshore yuan, which is understood as offering insight into the direction of the underlying pressures. Beijing is expected to report lending figures, trade, investment, retail sales, and industrial production figures for March, culminating in the first look at Q1 GDP. The economy has lost some of its mojo, and the median forecast in Bloomberg’s survey projects that growth nearly halved from the Q4 20 pace (2.6%) to around 1.4%.

This article was written by Marc Chandler, MarctoMarket.