Gold and Copper Sold Ahead of Breakouts

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, April 13. A week where elevated risk appetite, courtesy of a weaker dollar and softer Treasury yields, helped drive stocks and commodities higher, while the VIX dropped to a 14-month low. The reporting week ended before the surprise drop in US yields to a one-month low, a move that helped support multiple technical breakouts in commodities, most noticeable oil, copper and gold.

Please join me this Tuesday for our monthly commodities webinar where we take a closer look the latest developments driving the action across the sector. To sign up for this and future webinars covering the major asset classes, or watch replays of previous held webinars, please visit.

Commodities

Money managers turned net buyers of commodities for the first time in seven weeks. The combined net long across 24 major commodity futures contracts, however, rose by less than 1% to 2.28 million lots with buying of crude oil, natural gas, sugar and corn being somewhat offset by selling of gold, soybeans, platinum and copper.

The reporting week ended just before multiple technical breakouts in oil, copper and gold, continued grain market strength, and renewed demand for soft commodities saw the Bloomberg Commodity index jump the most since December to reach a near three-year high.

Energy

The combined crude oil long in WTI and Brent crude oil rose 31k lots to 661k lots as speculators added to fresh longs while cutting short positions. The reporting week ended before an upbeat monthly oil market report from the International Energy Agency and the weaker dollar helped push prices above their recent trading ranges.

Latest on crude oil from our daily Market Quick Take:
Crude oil futures (OILUKJUN21 & OILUSMAY21) closed above their recent ranges on Friday, but with global virus cases hitting new records, the prospect for a sustained rally at this stage seems limited. Not least considering last week’s rally, apart from strong economic data from the U.S. and China, was based on assumptions for a strong recovery in global fuel demand into the second half of 2021. With the prospect of additional barrels over the coming months from OPEC+, Iran and the U.S. we see the upside potential in Brent crude limited to $70/b until vaccine rollouts significantly changes the demand dynamics.

Metals

Gold’s inability to build on the previous weeks strong rejection below $1680 – now a double bottom – helped trigger a 16% reduction in the net-long to 64.8k lots. Again, just like oil, the reporting week ended before Thursday’s technical breakout above $1765, a development that is likely to have attracted fresh fund buying from momentum and trend following strategies.

Latest on gold from our daily Market Quick Take:
Gold (XAUUSD) ticked higher in Asia overnight after closing above the key resistance-turned-support area at $1760-65/oz on FridayWhile the dollar trades a bit firmer U.S. Treasury yields remain soft with 10-year real yields back below –80 bp for the first time in six weeks. Partly driven by a continued rise in global corona virus cases worldwide supporting safe havens like Treasuries and gold. Continued focus on dollar and yields as well as geopolitical developments between the U.S. and Russia. Important resistance levels, using Fibonacci, at $1785 (double top) and $1818. 

The copper net-long was cut by 20% to 38.2k lots, a nine-month low, and down 58% from last Octobers peak. The reporting week did not include the price jump that followed the multiple technical breakouts of a research note from Goldman Sachs in which they forecast copper rising by more than 60% by 2025.

Agriculture

The corn net-long increased to a fresh 11 year high and at 402k lots the position represents 37% of the total net long across the whole agriculture sectors 13 different futures contracts. While speculators have been adding to their corn position, they have been selling soybeans and wheat. As a result the combined net long has remained almost unchanged for the past six months at 530k lots with corn now accounting for 60% of that long position.

In soft commodities, the Arabica coffee net long more than doubled in response to price supportive reports pointing to a rising supply deficit due to adverse weather in Brazil, the world’s largest producer of quality beans.

Forex

Speculators continued buying (short covering) of dollars almost came to a halt last week. Following three months of near non-stop buying, the dollar short against ten IMM currency futures and the Dollar Index dropped to $5.2 billion, down 86% from the mid-January peak at $37 billion. Only small changes was seen with the most noticeable being Sterling, which despite trading lower saw a 28% increase in the net-long to a one-month high.

Financials

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

multiple technical breakouts

This article is provided by multiple technical breakouts, part of Saxo Bank Group through RSS feeds on FX Empire

Asian Stocks Hit One-Month Highs, Bitcoin Climbs

By Swati Pandey

Indicators were positive for Europe as well with futures for Eurostoxx 50 up 0.2% and Germany’s DAX adding 0.1% though those for London’s FTSE were barely changed.

MSCI’s broadest index of Asia-Pacific shares outside Japan went as high as 699.70, a level not seen since March 18. It was last up 0.1% at 696.46.

The index jumped 1.2% last week and is up 5.1% so far this year, on track for its third straight yearly gain.

“The extremely supportive monetary and fiscal policy setting continues to provide a fertile environment for risk assets,” said Rodrigo Catril, senior forex strategist at National Australia Bank.

Australian shares finished unchanged from Friday’s close while New Zealand’s benchmark index gained 0.6% and South Korea’s KOSPI added 0.1%. Japan’s Nikkei turned around its losses to end flat.

Chinese shares, which started in negative territory, recouped losses with the blue-chip index up 2.2%. Hong Kong’s Hang Seng index rose 0.6%.

On Friday, the S&P 500 gained 0.4% to close at a new record high while clocking its sixth straight weekly gain. The Dow finished 0.5%, also at a record high while the Nasdaq climbed 0.1%.

The gains are unlikely to extend further with e-mini futures for the S&P 500 down 0.2%.

This week is off to a quiet start with no major data releases slated on Monday.

Investors will keep their eyes peeled for earnings from IBM and Coca-Cola later in the day. Netflix reports on Tuesday while later in the week American Airlines and Southwest will be the first major post-COVID cyclicals to post results.

The European Central Bank (ECB) meets on Thursday with no changes to rates or guidance expected while preliminary data on factory activity around the globe for April is due on Friday.

Elsewhere, Bitcoin, the world’s biggest cryptocurrency, reversed its losses after plunging as much as 14% on Sunday following speculation the U.S. Treasury may be looking at cracking down on money-laundering activity within digital assets, NAB’s Catril said.

Data website CoinMarketCap cited a blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining, for the selloff.

The retreat in Bitcoin also comes after Turkey’s central bank banned the use of cryptocurrencies for purchases on Friday.

Bitcoin was last up 1%. It has risen more than 90% year to date, driven by its mainstream acceptance as an investment and a means of payment, accompanied by the rush of retail cash into stocks, exchange-traded funds and other risky assets.

In currencies, the U.S. dollar loitered near a four-week low against a basket of currencies as investors increasingly bought into the Federal Reserve’s insistence it would keep an accommodative policy stance for a while longer.

The dollar index measuring the greenback against a basket of six currencies was unchanged at 91.567, not far from its lowest since March 18 touched on Friday.

Against the Japanese yen, the greenback was off 0.2% at 108.52. The euro was a tad lower at $1.1964 while the British pound gained 0.2% to $1.3854. [FRX/]

The risk-sensitive Aussie dollar climbed to $0.7740.

In commodities, oil prices were down with the Brent slipping 22 cents to $66.55 a barrel and U.S. crude falling 19 cents to $62.94.

Gold was up a tad at $1,776.7 an ounce.

(Editing by Michael Perry and Sam Holmes)

AUD/USD Daily Forecast – U.S. Dollar Is Under Pressure At The Start Of The Week

AUD/USD Video 19.04.21.

Australian Dollar Gains Ground Against U.S. Dollar

AUD/USD continues its attempts to settle above the resistance at 0.7750 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the support at 91.50 and is trying to settle below the next support level at 91.30. If the U.S. Dollar Index settles below this level, it will head towards the next support at the 91 level which will be bullish for AUD/USD.

Today, Australia reported that New Home Sales increased by 90.3% month-over-month in March after growing by 22.9% in February. Analysts expected that New Home Sales would grow by 20%. Low interest rates continue to provide material support to the Australian housing market which is growing fast.

Foreign exchange market traders will also keep an eye on the developments in commodity markets which have been moving higher in recent trading sessions. In case commodity markets continue to gain ground, commodity-related currencies like Australian dollar will get more support.

Technical Analysis

aud usd april 19 2021

AUD/USD settled above the resistance at 0.7720 and managed to get above the next resistance level which is located at 0.7750. Currently, AUD/USD is moving towards the resistance at 0.7775. RSI remains in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If AUD/USD settles above 0.7775, it will head towards the next resistance level at 0.7800. A move above the resistance at 0.7800 will open the way to the test of the resistance at 0.7820.

On the support side, a move below 0.7750 will push AUD/USD towards the next support at 0.7720. If AUD/USD manages to settle below the support at 0.7720, it will move towards the next support at 0.7700. A successful test of the support at 0.7700 will open the way to the test of the support at the 50 EMA at 0.7690. The 20 EMA is located in the nearby, so AUD/USD will likely get material support in the 0.7685 – 0.7700 area.

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

Dollar Pinned Near One-Month Low, Bitcoin Steadies Near $57k After Weekend Drop

By Ritvik Carvalho

The dollar was also held down by improved risk sentiment amid a rally in global stocks to record highs.

Bitcoin stabilized after losses from Sunday, when it plunged as much as 14% to $51,541, which a report attributed to news of a power outage in China.

The dollar index, which tracks it against six other currencies, was at 91.552, not far from last week’s low of 91.484, a level not seen since March 18.

The dollar bought 108.40 yen, its lowest against the Japanese currency since March 24.

“Following the decline since end-March, the dollar index has stabilized since mid-last week,” said Jussi Hiljanen, chief strategist, USD and EUR rates at SEB.

“The dollar is likely to remain counter cyclical until the dollar rates in the 2-5y sector take another leg higher. As we expect the dollar rates to move more or less sideways during Q2, EUR/USD has room to gain in the coming months, especially if vaccination speeds up in the euro area and the earnings season pushes the stock market even higher.”

The euro changed hands at $1.1985, flat on the day and near its highest against the dollar since March 4. The European Central Bank meets on Thursday with internal divisions over the pace of bond buying, extended COVID-19 lockdowns and potential delays to the EU recovery fund form the backdrop.

The 10-year Treasury yield sank as low as 1.5280% last week from 1.7760% at the end of last month, its highest in more than a year.

The S&P 500 closed at a record high on Friday, extending a rally in global stocks.

Fed Governor Christopher Waller said on CNBC on Friday that the U.S. economy “is ready to rip” as vaccinations continue and activity picks up, but a rise in inflation is likely to be transitory, echoing comments from other Fed officials, including Chair Jerome Powell, over the past week.

“With liquidity still abundant, we are going to hear more about the FX carry trade – which thrives in a low volatility environment,” said Chris Turner, global head of markets and regional head of research for UK and CEE at ING.

“This especially being the case if the Fed manages to make the April 28th meeting a non-event. With the SOFR overnight USD interest rate now at 0.01%, the dollar clearly doesn’t score highly on the carry front. And indeed a little more confidence in the European and global recovery stories may well see flows start to resume to EM – having been derailed by the Treasury sell-off in February and March.”

MSCI’s emerging market currency index traded 0.1% higher on the day, and is up 0.8% from the start of last week.

Bitcoin stabilized around $57,471 after a weekend plunge.

Data website CoinMarketCap cited a blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining, for the selloff.

Analysts at National Australia Bank cited “speculation in several online reports” that the U.S. Treasury may crack down on money laundering within digital currencies for the sharp move lower.

The bitcoin rout also followed a decision on Friday by Turkey’s central bank to ban the use of cryptocurrencies for purchases.

Despite recent weakness, the world’s most popular cryptocurrency remains up 97% in 2021, after more than quadrupling last year.

“We suspect the 15% weekend correction in Bitcoin will not have broader market ramifications,” ING’s Turner said.

(Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo; editing by Larry King)

EUR/USD Daily Forecast – Support At 1.1965 Stays Strong

EUR/USD Video 19.04.21.

Euro Is Mostly Flat Against U.S. Dollar At The Beginning Of The Week

EUR/USD has recently made an attempt to settle below the support at 1.1965 but failed to develop sufficient downside momentum while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index is currently testing the nearest support level which is located at 91.50. In case the U.S. Dollar Index settles below this level, it will move towards the next support at 91.30 which will be bullish for EUR/USD.

On Friday, EU reported that Euro Area Inflation Rate increased by 1.3% year-over-year while Euro Area Core Inflation Rate grew by 0.9%. Both reports were in line with the analyst consensus. There are no signs of pricing pressure in the Euro Area as the European economy remains under pressure from the third wave of the virus.

Today, foreign exchange market traders will have a chance to take a look at Euro Area Construction Output report for February. Analysts forecast that  Construction Output declined by 3.6% year-over-year.

Technical Analysis

eur usd april 19 2021

EUR/USD failed to settle below the nearest support level at 1.1965 and is moving towards the resistance at 1.1990. This resistance level has already been tested several times in recent trading sessions and proved its strength.

In case EUR/USD manages to get above the resistance at 1.1990, it will gain additional upside momentum and head towards the resistance at 1.2025. A succcessful test of the resistance at 1.2025 will open the way to the test of the next resistance level at 1.2040. If EUR/USD settles above this level, it will head towards the resistance at 1.2060.

On the support side, a move below the support at 1.1965 will push EUR/USD towards the support at the 50 EMA at 1.1935. In case EUR/USD declines below the support at the 50 EMA, it will move towards the 20 EMA which is located at 1.1915. A successful test of the support at the 20 EMA will push EUR/USD towards the next support at 1.1900.

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

GBP/USD Daily Forecast – British Pound Is Strong At The Start Of The Week

GBP/USD Video 19.04.21.

U.S. Dollar Is Under Pressure Against British Pound

GBP/USD is currently trying to settle above the resistance at 1.3865 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to get to the test of the nearest resistance level at the 50 EMA at 91.80 but failed to develop sufficient upside momentum and pulled back closer to the support at 91.50. A successful test of this support level will push the U.S. Dollar Index towards the next support at 91.30 which will be bullish 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. government bond markets.

U.S. Treasury yields are moving lower at the start of the week which is bearish for the American currency. If the yield of 10-year Treasuries manages to settle below the recent lows at 1.53%, it will head towards the 50 EMA at 1.51% which will put more pressure on the U.S. dollar.

Technical Analysis

gbp usd april 19 2021

GBP/USD managed to get above the resistance at 1.3835 and is trying to settle above the next resistance level which is located at 1.3865. In case this attempt is successful, GBP/USD will move towards the resistance at 1.3900.

A move above the resistance at 1.3900 will open the way to the test of the resistance near April highs at 1.3920. If GBP/USD gets above this level, it will head towards the resistance which is located at 1.3950.

On the support side, the previous resistance level at 1.3835 will likely serve as the first support level for GBP/USD. If GBP/USD declines below this level, it will head towards the next support at the 50 EMA at 1.3805. The 20 EMA is located in the nearby, so GBP/USD will likely get material support near 1.3800.

If GBP/USD manages to settle below the 50 EMA and the 20 EMA, it will get to the test of the next support at 1.3780. A successful test of this level will push GBP/USD towards the support at 1.3745.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 91.555, Strengthens Over 91.870

The U.S. Dollar is trading slightly better against a basket of major currencies early Monday. However, the greenback is still holding very close to a one-month low hit last week. Furthermore, Treasury yields, the main driver of the dollar, are hovering just above their lowest levels in five weeks.

Continuing to keep a lid on yields and the greenback is the dovish Federal Reserve monetary policy. Even with U.S. Consumer Inflation and Retail Sales coming in well-above expectations, and weekly initial claims hitting a level not seen since last year, Federal Reserve officials reiterated last week its view that any spike in inflation was likely to be temporary.

At 04:12 GMT, June U.S. Dollar Index futures are trading 91.660, up 0.116 or +0.13%.

Last week’s steep sell-off marked the second straight weekly loss for the dollar index and indicated that investors have accepted the Fed’s conclusion that the expected surge in inflation is likely to be transitory.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on March 31.

A trade through 91.290 will change the main trend to down, while a move through 93.470 will signal a resumption of the uptrend. Due to the prolonged move down in price and time, the market is susceptible to a closing price reversal bottom. If confirmed, this could trigger a 2 to 3 day counter-momentum rally.

The minor trend is also down. A trade through 91.810 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 89.655 to 93.470. The index is currently testing its retracement zone at 91.555 to 91.100.

The main range is 94.590 to 89.155. Its retracement zone at 91.870 to 92.510 is potential resistance. This zone is also controlling the near-term direction of the index.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index on Monday is likely to be determined by trader reaction to the short-term 50% level at 91.555.

Bullish Scenario

A sustained move over 91.555 will indicate the presence of buyers. The first upside target is 91.810, followed closely by 91.870. Sellers could come in on the first test of this level, but taking it out could trigger an acceleration into 92.365 to 92.510.

Bearish Scenario

A sustained move under 91.555 will signal the presence of sellers. Taking out 91.470 could trigger a break into the main bottom at 91.290, followed closely by the Fibonacci level at 91.100. This is a potential trigger point for an acceleration to the downside with 90.620 the next target.

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

A Light Economic Calendar Leaves COVID-19 and Geopolitics in Focus

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Japanese Yen was in action this morning. Later this morning, finalized industrial production figures from Japan are also due out. Barring a marked revision from prelim figures, however, the numbers should have a muted impact on the Yen and the broader market.

For the Japanese Yen

Trade data was in focus this morning.

In March, the trade surplus widened from ¥215.9bn to ¥663.7bn. Economists had forecast a widening to ¥490.0bn.

According to figures released by the Ministry of Finance,

  • Exports surged by 16.1% to reverse a 4.5% decline from February. Economists had forecast an 11.6% increase.
    • Exports to China jumped by 37.2%, with exports to Western Europe rising by 8.5%.
    • To the U.S, exports rose by a more modest 4.9%.
  • Imports rose by 5.7%, year-on-year, following an 11.8% jump in February. Economists had forecast a 4.7% increase.
    • Imports from China rose by 10.0%, with imports from Western Europe rising by 19.4%.
    • From the U.S, imports rose by 6.5%.

The Japanese Yen moved from ¥108.702 to ¥108.690 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.14% to ¥108.65 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.18% to $0.7720, with the Kiwi Dollar down by 0.11% to $0.7134.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no major stats from the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of COVID-19, vaccination rates, and any plans to ease containment measures.

At the time of writing, the EUR was down by 0.32% to $1.1945.

For the Pound

It’s also 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.

A lack of stats would leave the Pound in the hands of market risk sentiment on the day.

At the time of writing, the Pound was down by 0.11% to $1.3817.

Across the Pond

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

The lack of stats will leave chatter from Capitol Hill and U.S foreign policy in focus. A rise in geopolitical tension between the U.S and China and the U.S and Russia needs monitoring.

From the weekend, news of new COVID-19 cases rising by a record number last week delivered Dollar support early on. The latest surge in new COVID-19 cases comes amidst the ongoing vaccination programs that had delivered market optimism in recent weeks.

At the time of writing, the Dollar Spot Index was up by 0.20% to 91.735.

For the Loonie

It’s another quiet day ahead on the economic calendar. Housing start figures 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 COVID-19 vaccine news to remain the key areas of focus.

At the time of writing, the Loonie was down by 0.10% to C$1.2521 against the U.S Dollar.

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

The Week Ahead – Economic Data, Monetary Policy, and Geopolitics in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 45 stats in focus in the week ending 23rd April. In the week prior, 72 stats had been in focus.

For the Dollar:

After a quiet 1st half of the week, the weekly jobless claims figures on Thursday will influence.

Expect any increase in claims to test market risk appetite.

On Friday, prelim private sector PMI figures for April wrap things up. The services PMI will have the greatest impact on the markets.

In the week ending 16th April, the Dollar Spot Index fell by 0.66% to 91.556.

For the EUR:

It’s a quiet start to the week on the economic data front.

German wholesale inflation figures for March are due out on Tuesday. Increased market sensitivity to inflation will give the numbers greater attention than usual.

The focus will then shift to prelim April private sector PMIs for France, Germany, and the Eurozone on Friday.

On the monetary policy front, the ECB will also deliver its first monetary policy decision of the quarter on Thursday.

While the ECB is expected to stand pat on interest rates, updates on the bond purchasing program will be the main area of interest.

From the ECB press conference, views on the economic outlook will also need monitoring on the day.

At the end of the week, ECB President Lagarde will be back in action. Following the Thursday press conference, however, there shouldn’t be too many surprises.

The EUR ended the week up by 0.66% to $1.1977.

For the Pound:

It’s a busy week ahead on the economic calendar.

In the first half of the week, employment, wages, and inflation figures will be in focus.

Expect March claimant counts and annual rate of inflation to be the key drivers.

The focus will then shift to March retail sales and prelim private sector PMIs for April on Friday.

Expect the retail sales and services PMI figures to be the key drivers at the end of the week.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak on Wednesday. Expect any views on the economic outlook or monetary policy to influence.

The Pound ended the week up by 0.53% to $1.3779.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, March inflation figures will be in focus ahead of house price figures on Thursday.

Expect the inflation figures to be the key driver, with focus likely to be on the core inflation figures.

On the monetary policy front, the BoC is also in action on Wednesday. With the BoC expected to stand pat on policy, the monetary policy report will be the main area of focus.

The Loonie ended the week up 0.22% to C$1.2503 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead.

Prelim retail sales figures are due out on Wednesday. With consumption key to the economic recovery, expect plenty of sensitivity to the numbers.

On the monetary policy front, the RBA meeting minutes on Tuesday will also influence.

The Aussie Dollar ended the week up by 1.46% to $0.7734.

For the Kiwi Dollar:

It’s a quiet week ahead.

1st quarter inflation figures are due out on Wednesday.

Expect sensitivity to the numbers, with the markets having little else to consider in the week.

The Kiwi Dollar ended the week up by 1.55% to $0.7142.

For the Japanese Yen:

It is also a relatively quiet week ahead.

Early in the week, March trade data and finalized industrial production figures for February are due out.

Expect the trade data to have the greatest influence in the week.

At the end of the week, inflation figures for March and private sector PMIs will also draw interest. Expect the private sector PMI and services PMI in particular to have the greatest influence.

The Japanese Yen rose by 0.79% to ¥108.80 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead.

There were no material stats to provide the broader financial markets with direction in the week.

While there are no stats to consider, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave 1-year and 5-year loan prime rates unchanged.

The Chinese Yuan ended the week up by 0.49% to CNY6.5206 against the U.S Dollar.

Geo-Politics

U.S-China and U.S-Russia relations are the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however.

Corporate Earnings

There are some big names on the docket in the week ahead…

From the U.S:

IBM (Mon), Coca Cola (Mon), Procter & Gamble (Tue), Netflix (Tue), Johnson & Johnson (Tue), and American Express (Fri).

From the EU:

Nestle (Thurs), Renault (Thurs), Daimler (Fri), and Software AG (Fri).

Weekly Technical Market Insight: 19th – 23rd April 2021

Charts provided by Trading View

US Dollar Index (Daily Timeframe):

According to the US dollar index, the greenback extended the recent retracement slide by 0.7 percent last week and concluded a touch off session lows.

Technical movement observed an early-week retest at the lower side of the 200-day simple moving average, currently circling 92.21. This followed the prior week’s downside breach of the said SMA, movement typically interpreted as a bearish cue. Chart studies also shine light on nearby Quasimodo support coming in from 91.36, with subsequent selling unmasking additional layers of support at 91.00 and 90.00.

For those who read the previous week’s technical market insight, you may recall the report underlined that trend studies have displayed a downside bias since topping in March 2020, shaped by way of clear lower lows and lower highs (black arrows). Interestingly, the 93.43 31st March peak echoes the early stages of a bearish wave within the current downtrend (dashed black arrow).

RSI movement travelled south of the 50.00 centreline last week, implying momentum remains to the downside for the time being. This unearthed support at 41.24, though a break of the level indicates oversold space could be challenged.

  • While an obvious downtrend is evident, the combination of support at 91.00 and Quasimodo support at 91.36 may underpin a short-term bullish scenario this week. A 91.00 breach, on the other hand, hints at bearish conviction, targeting 90.00 support.

EUR/USD:

Monthly timeframe:

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

Following the three-month retracement slide, demand at 1.1857-1.1352 sparked a resurgence of bullish activity in April, up 2.2 percent MTD. The possibility of fresh 2021 peaks is on the table, followed by a test of ascending resistance (prior support – 1.1641).

Spinning 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:

Largely unchanged reading from previous analysis.

A closer reading of price action on the daily scale reveals EUR/USD voyaged north of the 200-day simple moving average at 1.1900 the week ending April 9th. While interpreted as a bullish signal, buyers and sellers squared off around resistance at 1.1966 at the tail end of last week.

Additional bullish sentiment this week directs the technical radar to another layer of resistance at 1.2058, with further outperformance throwing light on Quasimodo resistance at 1.2278.

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

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

H4 timeframe:

Resistance at 1.1990, sited above daily resistance at 1.1966, capped upside attempts heading into the closing stages of last week. The lack of energy from sellers hints at the possibility of a 1.1990 breach this week, with any bullish bets likely targeting supply at 1.2101-1.2059, which happens to rest on top of daily resistance at 1.2058.

H1 timeframe:

As can be seen from the H1 chart, 1.1956-1.1945 demand proved an effective floor last week, withstanding numerous downside attempts (representing a decision point to break through remaining offers within supply at 1.1956-1.1935).

Trendline support, extended from the low 1.1738, and the 100-period simple moving average at 1.1954, represent additional areas of importance. To the upside, nonetheless, technical analysts will note the 1.20 figure, a widely watched psychological level which may serve as resistance this week. Note that 1.20 resides ten pips above H4 resistance at 1.1990.

Above 1.20 on the H1, resistance is parked at 1.2026 (previous Quasimodo support).

The view from within the RSI oscillator has seen the value weave around the 50.00 centreline since early Thursday. Support to be mindful of rests at 35.45, with resistance tucked inside overbought space at 78.97.

Observed levels:

Long term:

The technical landscape on the bigger picture has buyers at the wheel for now, with monthly price attempting to claw its way out of demand at 1.1857-1.1352. This helps explain the lack of selling around daily resistance at 1.1966.

The above hints at bullish attempts this week, at least until price shakes hands with daily resistance at 1.2058.

Short term:

The bullish vibe stemming from higher timeframes places H4 resistance at 1.1990 in question, along side the 1.20 figure on the H1.

This underscores two possible scenarios:

  • A H1 breakout above 1.20, movement that could interest breakout buyers to H1 resistance at 1.2026, and then daily resistance at 1.2058 as well as H4 supply at 1.2101-1.2059.
  • A test of H1 demand at 1.1956-1.1945 could come about, with buyers likely targeting 1.20, followed by the aforementioned resistances.

AUD/USD:

Monthly timeframe:

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

Since the beginning of 2021, AUD/USD has been consolidating just south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082.

Demand at 0.7029-0.6664 (prior supply) is featured to the downside, should we see a bearish showing over the coming months.

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 modestly snapped a three-day winning streak on Friday, within striking distance of resistance at 0.7817. North of the latter, supply at 0.8045-0.7985 is on the radar.

Lower on the curve, the 0.7563 February low has delivered support since March 25th.

Momentum remains above the 50.00 centreline, according to the RSI oscillator. Increased upside momentum this week is likely to elbow things to channel resistance, drawn from the high 80.12.

H4 timeframe:

Largely unchanged reading from previous analysis.

H4 shows price retested 0.7696-0.7715 as demand Thursday and held.

Quasimodo resistance at 0.7800 deserves notice as the next potential ceiling this week, closely stationed by demand-turned supply from 0.7848-0.7867.

H1 timeframe:

Demand at 0.7715-0.7737 served buyers in early trade on Friday, guiding the currency pair to tops around 0.7760, before collapsing back into the jaws of demand. Interestingly, this demand is glued to the upper side of H4 demand at 0.7696-0.7715.

Beneath 0.7715-0.7737, 0.77 is visible, fixed north of demand at 0.7679-0.7695. This is an important area as it was within this base a decision was made to break above 0.77. Should buyers command position off 0.7715-0.7737 this week, the 0.78 level is likely watched as probable resistance (also represents Quasimodo resistance on the H4).

RSI action dipped a toe in waters beneath 50.00 on Friday, threatening possible moves into oversold space, in particular support at 19.40.

Observed levels:

Long term:

The daily timeframe displays scope to approach resistance at 0.7817 this week. Overthrowing this level underscores a possible bullish phase to supply at 0.8045-0.7985.

Short term:

Lower on the curve, H4 is attempting to secure position above demand at 0.7696-0.7715, aided by H1 demand plotted at 0.7715-0.7737. Therefore, a run higher from the aforesaid demand areas this week is on the table, targeting 0.78 on the H1, closely followed by daily resistance at 0.7817.

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 1.7 percent, is retesting the breached descending resistance, movement that may eventually ignite bullish flow. With respect to long-term upside targets, supply at 126.10-122.66 calls for attention.

Daily timeframe:

Largely unchanged from previous analysis.

Bids and offers were pretty much even on Friday, establishing what’s known as a doji indecision candle.

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 point to demand at 107.58-106.85, in conjunction with 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:

The Fib cluster drawn between 108.44 and 108.66 (blue), a zone attached to the upper side of demand at 108.31-108.50, stimulated bullish interest on Friday. Sailing through resistance at 108.99 this week may stir additional buying, with the move perhaps underpinning an approach to supply at 109.97-109.72 (houses a 50.0% retracement within at 109.77).

H1 timeframe:

Demand at 108.60-108.71, an area sharing a connection with the H4 Fib cluster at 108.44-108.66, supported price action into the second half of the week.

109 calls for attention to the upside, while any bearish flow could lead to support at 108.39.

Momentum dipped in line with price action on Friday, with the RSI oscillator now facing trendline support, taken from the low 20.94. It’s also worth pointing out the RSI crossed beneath the 50.00 centreline, indicating the possibility of increased strength to the downside.

Observed levels:

Long term:

Monthly action testing descending resistance-turned possible support, alongside daily price testing an area of support around the 108.36 lows, emphasises a potential bullish atmosphere this week.

Short term:

H4 crossing swords with a Fib cluster at 108.44-108.66, fastened to the upper side of H4 demand at 108.31-108.50, reinforces the higher timeframe bullish vibe.

While the above H4 zones may be sufficient to encourage bullish interaction, Friday’s lacklustre buying from H1 demand at 108.60-108.71 suggests the unit could be headed for H1 support at 108.39 before buyers attempt to make a show. Note the aforesaid support resides within the lower range of H4 demand noted above at 108.31-108.50.

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 subsequently 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 would generally be viewed as a bearish signal.

April has offered limited action so far, currently up by 0.4 percent.

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:

Sterling recovered earlier losses against the buck Friday and finished around session tops.

Despite the near-two-month corrective slide, GBP/USD has been trending higher since early 2020.

The technical arrangement on the daily chart remains unchanged. Quasimodo support at 1.3609 is seen, a level associated with a 1.272% Fib expansion at 1.3631, as well as 1.618% and 1.272% Fib extension levels at 1.3614 and 1.3607, respectively. In terms of resistance, April 6th top at 1.3919 is likely considered, closely shadowed by a trendline support-turned resistance, taken from the low 1.1409.

RSI movement finished Friday a touch above the 50.00 centreline, suggesting momentum to the upside could continue to gather traction this week.

H4 timeframe:

Latest developments out of the H4 chart reveal Friday crossed swords with trendline support-turned resistance, taken from the low 1.3670. Note this structure is sheltered just under resistance parked at 1.3852.

A rejection from the said resistances this week throws light back on a possible 1.3680 support test, while scaling above resistance tips the scales in favour of a push to April 6th top at 1.3919 mentioned above on the daily timeframe, with further outperformance to perhaps take aim at H4 Quasimodo resistance at 1.4007.

H1 timeframe:

Friday swept through any offers around 1.38 on Friday and triggered buy-stops. Technicians will note that price formed a bearish outside reversal into the close, alongside RSI action testing a trendline support-turned resistance (taken from the low 27.61).

What’s also technically appealing on the H1 scale this week is the Fib cluster (resistance) around 1.3870.

Observed levels:

Long term:

Although the monthly trendline resistance breach in late 2020 promotes a long-term bullish vibe, traders will likely want to see 1.4376 taken out before committing.

Short term:

Over on the shorter-term charts, buyers face a potential ceiling on the H4 scale at trendline resistance and horizontal resistance at 1.3852. H1 also turns the headlights on a Fib cluster around 1.3870. Given this, between 1.3870 and 1.3840ish, sellers could make an entrance in early trading this week, perhaps zeroing in on the 1.38 figure on the H1.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

The Weekly Wrap – Economic Data, COVID-19 Vaccine News, and Geopolitics Were in Focus

The Stats

It was a busy week on the economic calendar, in the week ending 16th April.

A total of 72 stats were monitored, following 36 stats from the week prior.

Of the 72 stats, 38 came in ahead forecasts, with 21 economic indicators coming up short of forecasts. There were 13 stats that were in line with forecasts in the week.

Looking at the numbers, 36 of the stats reflected an upward trend from previous figures. Of the remaining 36 stats, 23 reflected a deterioration from previous.

For the Greenback, it was a second consecutive weekly loss. In the week ending 16th April, the Dollar Spot Index fell by 0.66% to 91.556. In the previous week, the Dollar had fallen by 0.90% to 92.182.

The Dollar remained under pressure following the dovish FOMC meeting minutes from the week prior. This was in spite of a pickup in inflationary pressures, with FED Chair Powell’s reassurances resonating across the markets.

Out of the U.S

It was a busier week on the economic data front.

Key stats included inflation, retail sales, and jobless claims figures, which were market risk positive.

Early in the week, a pick in inflationary pressure failed to spook the markets. In spite of the annual core rate of inflation accelerating to 1.6%, the FED’s assurance of unwavering support was key.

In the week ending 9th April, initial jobless claims decreased from 769k to 576k. Economists had forecast a decline to 700k.

In the month of March, retail sales jumped by 9.8%, reversing a 2.7% decline from February. Core retail sales rose by 8.4%, reversing a 2.5% decline from February.

Economists had forecast retail sales to rise by 5.9% and for core retail sales to increase by 5.0%.

From the manufacturing sector, the Philly FED Manufacturing PMI fell from 51.8 to 50.2 in April. Economists had forecast a sharper decline to 42.0, however.

At the end of the week, stats were also skewed to the positive. The Michigan Consumer Sentiment Index rose from 84.9 to 86.5 in April, according to prelim figures.

In the equity markets, the NASDAQ rose by 1.09%, with the Dow and the S&P500 gaining 1.18% and 1.37% respectively.

Corporate earnings supported the indexes in the week.

Out of the UK

It was a relatively busy week.

Industrial and manufacturing production, trade, and GDP figures were in focus in the week.

It was a mixed set of numbers for the Pound.

While industrial and manufacturing production partially recovered from declines in January, trade data disappointed. Manufacturing production increased by 1.3% in February, after having fallen by 2.3% in January.

The UK’s trade deficit widened from £12.59bn to £16.44bn in February. While exports to the EU picked up, it was with the rest of the world that led to the sharp widening.

In February, the UK’s trade deficit with non-EU countries widened from £4.46bn to £10.73bn.

GDP numbers also disappointed. The economy grew by just 0.4% in February, partially recovering from a 2.2% contraction in January.

In the week, the Pound rose by 0.53% to end the week at $1.3779. In the week prior, the Pound had fallen by 0.90% to $1.3707.

The FTSE100 ended the week up by 1.50%, following a 2.65% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Key stats included Eurozone retail sales, industrial production, and trade data along with economic sentiment figures for Germany and the Eurozone.

It was a mixed set of numbers for the EUR.

Retail sales rose by more than expected in February, while industrial production hit reverse.

Economic sentiment figures for Germany and the Eurozone disappointed Sentiment waned in both Germany and the Eurozone.

For Germany, the ZEW Economic Sentiment Index fell from 76.6 to 70.7, while the Eurozone’s declined from 74.0 to 66.3.

At the end of the week, the Eurozone’s trade surplus widened from €11.0bn to €17.7bn, delivering a positive spin at the end of the week.

Throughout the week, inflation figures for member states and the Eurozone were aligned with prelim figures. The pickup in inflationary pressures delivered EUR support in the week.

For the week, the EUR rose by 0.66% to $1.1977. In the week prior, the EUR had risen by 1.19% to $1.1899.

The CAC40 rallied by 1.91%, with the DAX30 and EuroStoxx600 ending the week with gains of 1.48% and 1.20% respectively.

For the Loonie

It was a quieter week.

Manufacturing sales and wholesale sales figures were in focus in the week.

The stats had a muted impact on the Loonie, however, with market sentiment towards crude oil demand providing support. WTI and Brent ended the week up by 6.42% and by 5.90% respectively.

From the Bank of Canada, the BoC’s business outlook survey reflected a pickup in optimism amongst businesses in Q1. The timing of the survey, however, muted the impact as a pickup in new COVID-19 cases and fresh containment measures were introduced after the survey dates.

In the week ending 16th April, the Loonie rose by 0.22% to C$1.2503. In the week prior, the Loonie had risen by 0.38% to C$1.2530.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 16th April, the Aussie Dollar rose by 1.46% to $0.7734, with the Kiwi Dollar ending the week up by 1.55% to $0.7142.

For the Aussie Dollar

It was a relatively busy week.

Key stats included business and consumer confidence and employment figures.

It was a mixed set of stats for the Aussie Dollar.

Business confidence softened modestly in March, while consumer sentiment improved in April.

The numbers were Aussie Dollar positive ahead of the all-important employment figures late in the week.

In March, Australia’s unemployment rate fell from 5.8% to 5.6% in spite of a rise in the participation rate. Another marked increase in employment led to the fall in the unemployment rate. It was noteworthy, however, that full employment fell in the month.

For the Kiwi Dollar

It was also a relatively busy week.

Early in the week, business confidence and electronic card retail sales were in focus.

The stats were Kiwi Dollar positive. Business confidence improved in the 1st quarter, with retail sales on the rise after a slide in February.

At the end of the week, the business PMI jumped from 53.4 to an all-time high 63.6 in March. A sharp increase in new orders and production drove the PMI to its all-time high.

On the monetary policy front, the RBNZ was also in action. While holding rates steady, the rate statement tested the Kiwi Dollar mid-week. Talk of a willingness to cut the cash rate further amidst a slowdown in the recovery pegged the Kiwi back.

For the Japanese Yen

It was a quiet week.

There were no material stats to provide the Yen with direction.

The lack of stats left core machinery orders in focus mid-week, which took an unexpected slide in February.

While the numbers drew interest, concerns over a fresh spike in new COVID-19 cases, geopolitics, and a weaker Greenback delivered Yen support.

The Japanese Yen rose by 0.79% to ¥108.80 against the U.S Dollar. In the week prior, the Yen had risen by 0.92% to ¥109.67.

Out of China

It was a busy week on the data front.

In the first half of the week trade data impressed, with exports surging by 49.0% and imports by 38.1%.

At the end of the week, GDP and industrial production figures were also in focus.

In the 1st quarter, the China economy expanded by 0.6%, quarter-on-quarter, following 2.6% growth in the 4th quarter. Economists had forecasted growth of 1.5%.

Year-on-year, the economy expanded by 18.3%, versus a forecasted growth of 19.0%. In the 4th quarter, the economy had expanded by 6.5% year-on-year.

Industrial production was up by 14.1% in March, year-on-year, falling short of a forecasted 17.2% rise. In February, industrial production had risen by 35.1%.

Other stats from China included fixed asset investment, unemployment, and retail sales figures.

Fixed asset investment rose by 25.6% year-on-year, coming in ahead of a forecasted 25.0% rise. In February, fixed asset investment had increased by 35.0%.

Retail sales increased by 34.2%, which was better than a forecasted 28%. In February, retail sales had risen by 33.8% year-on-year.

Finally, the unemployment rate fell from 5.5% to 5.3% in March. Economists had forecast for unemployment to hold steady at the end of the quarter.

In the week ending 16th April, the Chinese Yuan rose by 0.49% to CNY6.5206. In the week prior, the Yuan had risen by 0.22% to CNY6.5526.

The CSI300 fell by 1.37%, while the Hang Seng ended the week up by 0.94%.

Gold And Silver Continue To Gain Value As Multiple Events Support Safe-Haven Assets

Rising geopolitical tensions, recent drops in the yield of 10-year Treasury notes, dollar weakness, a highly accommodative Federal Reserve and concern about the rising national debt all collectively moved gold and silver to multiweek highs.

The last time gold traded to $1784 occurred on February 25. On that date, gold opened above $1800 and closed at $1775. The last time gold closed above today’s highs occurred on February 22. This week gold opened at $1745 and gained approximately $30 based on today’s close.

june gold april 16

As of 4:30 PM EST, gold futures basis the most active June 2021 Comex contract is currently trading up $9.80 (+0.55%) and is fixed at $1776.60. Silver basis, the most active May 2021 Comex contract, is currently trading up $0.061 (+0.23%) and fixed at $26.025. This follows yesterday’s strong gains in both precious metals. Seeing as on Thursday, gold futures gained $28.10, and silver futures gained $0.40.

silver April 16

Dollar weakness provided mild tailwinds as the dollar index is currently fixed at 91.54. The dollar traded at 92.21 on Monday and lost 67 points on the week. The result is that the dollar index was devalued by -0.067% this week.

The U.S. 10-year Treasury note traded lower this week and is now yielding approximately 1.56%. This week’s decline also provided solid tailwinds aiding the safe-haven asset class.

On Wednesday, April 14, Chairman Jerome Powell spoke virtually at the Economic Club of Washington DC. He addressed the concern that many economists have about the ever-growing national debt that has been created from fiscal stimulus as well as the monetary policy of the Federal Reserve.

In response to these concerns, Chairman Powell said that “The U.S. federal budget is on an unsustainable path, meaning simply that the debt is growing meaningfully faster than the economy. The current level of debt is very sustainable. And there’s no question of our ability to service and issue that debt for the foreseeable future.”

In addition to that there is rising tension between the United States and Russia. Yesterday President Joe Biden signed an executive order imposing new sanctions on Russia based on information suggesting that they had interfered with our election as well as an increased amount of Internet hacking and other “malign activities,” which include sending additional troops to Ukraine as well as the continuation of persecution of Russian dissidents in specifics to Alexei Navalny.

In response to these issues, the White House issued an “Executive Order on Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.” The full Executive Order can be read by following this link.

There is also increased tension with China. Today President Joe Biden met with the Japanese Prime Minister, Yoshihide Suga. According to CNBC, “The two leaders will gather in Washington in what will be the U.S. president’s first in-person summit with a foreign leader since his January inauguration. The meeting comes as the U.S. seeks to challenge China on issues ranging from human rights to unfair trade practices.”

These events collectively have been the driving force moving both gold and silver to gain value this week. All things being equal, they could continue to drive gold back above $1800 per ounce and silver above $28 per ounce.

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary Wagner

 

USD/CAD Daily Forecast – Canadian Dollar Gains Ground Ahead Of The Weekend

USD/CAD Video 16.04.21.

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is trying to settle below the support at 1.2500 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the support at 91.50. In case this test is successful, the U.S. Dollar Index will move towards the support at 91.30 which will be bearish for USD/CAD.

Today, the U.S. reported that Building Permits increased by 2.7% month-over-month in March compared to analyst forecast of 2.9%. Housing Starts grew by 19.4% compared to analyst forecast of 11.2%. The reports showed that the housing market remained strong but they failed to provide additional support tot the American currency.

Yesterday’s decline in Treasury yields continued to put some pressure on the U.S. dollar on the foreign exchange market. Treasury yields were less volatile today ahead of the weekend but volatility may return on Monday. If Treasury yields continue to move lower, the U.S. dollar will find itself under more pressure.

Technical Analysis

usd cad april 16 2021

USD to CAD managed to get below the support at 1.2525 and is trying to settle below the next support level which is located at 1.2500. This support level has been tested several times in recent trading sessions and proved its strength.

In case USD to CAD declines below the support at 1.2500, it will head towards the next support level which is located near the recent lows at 1.2470. RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge. In case USD to CAD settles below the support at 1.2470, it will head towards the next support level at 1.2450.

On the upside, the previous support at 1.2525 will serve as the first resistance level for USD to CAD. A move above this level will open the way to the test of the resistance at the 20 EMA at 1.2550. If USD to CAD gets above this level, it will move towards the next resistance at 1.2565.

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

Silver Price Daily Forecast – Test Of Major Resistance At $26.25 – $26.30

Silver Video 16.04.21.

Silver Moves Higher Ahead Of The Weekend

Silver gained upside momentum and tested the resistance level in the $26.25 – $26.30 area while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index settled below the 50 EMA at 91.80 and is trying to settle below the support level at 91.50. In case this attempt is successful, the U.S. Dollar Index will head towards the next support at 91.30 which will be bullish for silver and gold price today. Weak dollar is bullish for precious metals as it makes them cheaper for buyers who have other currencies.

Gold managed to get above the 50 EMA at $1760 and continues its upside move. RSI remains in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge. If gold manages to get to the test of the $1800 level, silver will get more support.

Gold/silver ratio has recently made an attempt to settle below the 68 level. A move below this level will open the way towards the major support level at 67 which will be bullish for silver.

Technical Analysis

silver april 16 2021

Silver has recently made an attempt to settle above the major resistance area at $26.25 – $26.30 but failed to develop sufficient upside momentum. If silver manages to settle above this level, it will head towards the next resistance level which is located at $26.65.

A successful test of the resistance at $26.65 will open the way to the test of the next resistance at $27.00.

On the support side, the previous resistance level at $25.85 will likely serve as the first support level for silver. In case silver declines below $25.85, it will move towards the 50 EMA at $25.70.

A move below the support at the 50 EMA at $25.70 will push silver towards the next support level which is located at $25.55. If silver manages to settle below this level, it will head towards the support at the 20 EMA at $25.40.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Be Careful Shorting into 91.555 – 91.100 Retracement Zone

The June U.S. Dollar is inching lower against a basket of currencies on Friday as investors continue to react to the choppy, but weak trade in U.S. Treasury yields. Nonetheless, the greenback is headed for its worst consecutive weekly drop this year amid an extended decline in Treasury yields as investors increasingly put their trust into the Federal Reserve’s insistence of keeping an accommodative policy stance for a while longer.

At 14:22 GMT, the June U.S. Dollar Index is trading 91.580, down 0.038 or -0.04%.

One has to be careful getting “too short” or “too bearish” the U.S. Dollar Index at current price levels. The index is down 12 sessions from its most recent top, which makes it ripe for a closing price reversal bottom. Furthermore, it is testing the February 25 to March 31 range’s 50% to 61.8% retracement zone, an area known to bring in buyers.

Furthermore, although the Fed is dovish in its tone, the economy is still growing so Treasury yields are justifiably higher than they were earlier in the year. That being said, the dollar could also be finding its “sweet spot” since the U.S. economy is performing better than most of the economies in the index, especially the Euro Zone.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. The main trend will change to down on a trade through 91.290.

A move through 93.470 will signal a resumption of the uptrend. This is highly unlikely, but due to the prolonged move down in terms of price and time, the index is trading inside the window of time for a closing price reversal top.

The minor trend is also down. A new minor top was formed earlier today at 91.810. A trade through this level will change the minor trend to up. This will shift momentum to the upside.

The index is currently trading on the weak side of the main retracement zone at 91.870 to 92.510. This zone is potential resistance. It’s also controlling the near-term direction of the market.

The short-term range is 89.655 to 93.470. Its retracement zone at 91.555 to 91.100 is potential support. The index is currently testing the upper level of this zone.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index on Friday is likely to be determined by trader reaction to 91.555.

Bearish Scenario

A sustained move under 91.555 will signal the presence of sellers. This could trigger a break into the main bottom at 91.290, followed by the Fibonacci level at 91.100.

Bullish Scenario

A sustained move over 91.555 will indicate the presence of buyers. This could trigger a rally into 91.810, followed closely by the 50% level at 91.870. This is a potential trigger point for an acceleration to the upside.

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

AUD/USD Daily Forecast – Resistance At 0.7750 Stays Strong

AUD/USD Video 16.04.21.

Australian Dollar Pulls Back Against U.S. Dollar

AUD/USD did not manage to settle above the resistance at 0.7750 and is moving lower while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance at the 50 EMA at 91.80 and is moving towards the nearest support level at 91.50. If the U.S. Dollar Index manages to settle below the support at 91.50, it will move towards the next support level at 91.30 which will be bullish for AUD/USD.

Today, foreign exchange market traders will focus on the economic data from the U.S. Analysts expect that Building Permits increased by 2.9% month-over-month in March while Housing Starts grew by 11.2%.

Consumer Confidence report is projected to show that Consumer Confidence increased from 84.9 in March to 89.6 in April. Yesterday’s Retail Sales report indicated that Retail Sales increased by 9.8% month-over-month in March compared to analyst consensus of 5.9%, and it looks that Consumer Confidence report may also exceed analyst expectations.

Technical Analysis

aud usd april 16 2021

AUD/USD failed to settle above the resistance at 0.7750 and pulled back. The nearest support level for AUD/USD is located at 0.7720. In case AUD/USD declines below this level, it will move towards the next support at 0.7700. RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If AUD/USD settles below the support at 0.7700, it will head towards the next support level which is located at the 50 EMA at 0.7685. A move below the 50 EMA will open the way to the test of the support at the 20 EMA at 0.7670.

On the upside, a move above the resistance at 0.7750 will push AUD/USD towards the next resistance at 0.7775. In case AUD/USD gets above this level, it will head towards the resistance at 0.7800. A successful test of this level will open the way to the test of the resistance at 0.7820.

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

EUR/USD Daily Forecast – U.S. Dollar Is Mostly Flat Against Euro

EUR/USD Video 16.04.21.

Resistance At 1.1990 Remains Strong

EUR/USD is currently testing the support at 1.1965 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get to the test of the resistance level at 91.80. In case the U.S. Dollar Index manages to settle above this level, it will move towards the next resistance at 92 which will be bearish for EUR/USD.

Today, foreign exchange market traders will focus on the final readings of inflation reports from the EU. Analysts expect that Euro Area Inflation Rate increased by 0.9% month-over-month in March. On a year-over-year basis, Inflation Rate is projected to increase by 1.3%. Core Inflation Rate is projected to grow by 0.9%. There are no signs of significant inflation in the Euro Area as the European economy remains under pressure from the third wave of the virus.

Traders will also continue to monitor the developments in the U.S. government bond markets. Currently, Treasury yields are trying to gain some ground after yesterday’s downside move. If this attempt is successful, the American currency may get more support.

Technical Analysis

eur usd april 16 2021

EUR/USD did not manage to settle above the resistance at 1.1990 and is trying to settle below the support at 1.1965. In case this attempt is successful, EUR/USD will move towards the next support level which is located at the 50 EMA at 1.1930.

A successful test of the support at the 50 EMA will open the way to the test of the next support at the 20 EMA at 1.1900. In case EUR/USD gets below this level, it will move towards the support at 1.1880.

On the upside, the nearest resistance level is located at 1.1990. If EUR/USD gets above this level, it will head towards the next resistance at 1.2025. A move above the resistance at 1.2025 will open the way to the test of the next resistance level which is located at 1.2040.

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

GBP/USD Daily Forecast – British Pound Is Under Pressure Ahead Of The Weekend

GBP/USD Video 16.04.21.

U.S. Dollar Gains Ground Against British Pound

GBP/USD is currently trying to settle below the support at 1.3745 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the resistance level which is located at the 50 EMA at 91.80. In case the U.S. Dollar Index manages to settle above this level, it will move towards the next resistance at the 92 level which will be bearish for GBP/USD.

Yesterday, U.S. reported that Retail Sales increased by 9.8% month-over-month in March compared to analyst consensus which called for growth of 5.9%. Initial Jobless Claims report also exceeded expectations as Initial Jobless Claims declined from 769,000 to 576,000 compared to analyst consensus of 700,000.

Better-than-expected reports provided support to the American currency at a time when it was under pressure from falling Treasury yields. Today, Treasury yields are trying to rebound after yesterday’s downside move which may serve as an additional positive catalyst for the U.S. dollar.

Technical Analysis

gbp usd april 16 2021

GBP/USD failed to settle above the 20 EMA at 1.3780 and pulled back towards the support at 1.3745. Currently, GBP/USD is trying to settle below this support level. In case this attempt is successful, GBP/USD will move towards the next support level which is located at 1.3710. RSI is in the moderate territory, so there is plenty of room to gain downside momentum in case the right catalysts emerge.

If GBP/USD manages to settle below the support at 1.3710, it will head towards the next support at 1.3665. A move below this level will open the way to the test of the support at 1.3625.

On the upside, the nearest resistance level for GBP/USD is located at the 20 EMA at 1.3780. If GBP/USD gets above this level, it will move towards the 50 EMA at 1.3800. In case GBP/USD settles above the 50 EMA, it will head towards the resistance at 1.3835.

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

Economic Data and Geopolitics Keep the Dollar in the Spotlight

Earlier in the Day:

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

For the Kiwi Dollar

Business PMI numbers were in focus in the early hours.

In March, the Business PMI increased from 53.4 to an all-time high 63.6.

According to the March survey,

  • A sharp increase in the production sub-index from 58.4 to 66.8 and the new orders sub-index from 58.0 to 72.5 drove the PMI to its all-time high.
  • The employment sub-index saw a more modest rise from 50.2 to 53.5

The Kiwi Dollar moved from $0.71740 to $0.71767 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.25% to $0.7152.

From China

GDP and March industrial production figures were in focus this morning.

In the 1st quarter, the China economy expanded by 0.6%, quarter-on-quarter, following 2.6% growth in the 4th quarter. Economists had forecasted growth of 1.5%.

Year-on-year, the economy expanded by 18.3%, versus a forecasted growth of 19.0%. In the 4th quarter, the economy had expanded by 6.5% year-on-year.

Industrial production was up by 14.1% in March, year-on-year, falling short of a forecasted 17.2% rise. In February, industrial production had risen by 35.1%.

Other stats from China included fixed asset investment, unemployment, and retail sales figures.

Fixed asset investment rose by 25.6% year-on-year, coming in ahead of a forecasted 25.0% rise. In February, fixed asset investment had increased by 35.0%.

Retail sales increased by 34.2%, which was better than a forecasted 28%. In February, retail sales had risen by 33.8% year-on-year.

Finally, the unemployment rate fell from 5.5% to 5.3% in March. Economists had forecast for unemployment to hold steady at the end of the quarter.

The Aussie Dollar moved from $0.77345 to $0.77241 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.35% to $0.7725.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.08% to ¥108.85 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Finalized April inflation figures for Eurozone are due out later today.

Following finalized numbers from member states in the week, we don’t expect too much influence from the numbers, however.

At the time of writing, the EUR was down by 0.12% to $1.1953.

For the Pound

It’s another 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 the Pound in the hands of COVID-19 and vaccine news.

At the time of writing, the Pound was down by 0.22% to $1.3756.

Across the Pond

It’s another busy day ahead on the economic calendar. Building permit and housing start figures are due out along with prelim consumer sentiment figures for April.

Expect the consumer sentiment figures to have a greater impact on the day.

Away from the economic calendar, chatter from Capitol Hill will also need monitoring.

At the time of writing, the Dollar Spot Index was up by 0.09% to 91.757.

For the Loonie

It’s another quiet day ahead on the economic calendar. Wholesale 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 COVID-19 vaccine news to remain key areas of focus.

At the time of writing, the Loonie was down by 0.12% to C$1.2558 against the U.S Dollar.

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

April 16th 2021: DXY Indecisive Amid Upbeat US Retail Sales and Declining US Treasury Yields

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 2.1 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:

Partly modified from previous analysis.

Despite US retail sales surging 9.8 percent in March, and US unemployment claims totalling 576,000 (consensus: 703,000), the US dollar index concluded Thursday unmoved.

EUR/USD, as you can see, engages with resistance drawn from 1.1966. Additional bullish sentiment directs the technical radar to another layer of resistance at 1.2058.

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

RSI analysis has the value hovering within TOUCHING 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:

Although the pair left behind a muted tone on Thursday, resistance at 1.1990 made an entrance.

Traders will be looking to 1.1937 to provide support should a modest decline materialise. A 1.1990 breach, on the other hand, shines the technical spotlight on supply at 1.2101-1.2059, which happens to rest on top of daily resistance at 1.2058.

H1 timeframe:

1.1956-1.1945 demand is an area of technical importance on the H1 scale, representing a decision point to break through remaining offers within supply at 1.1956-1.1935.

South of demand, analysts will note trendline support, extended from the low 1.1738, aligning with the 100-period simple moving average at 1.1935. Equally important, of course, is potential resistance residing around the 1.20 figure, a widely watched psychological level.

RSI action dipped to trendline support, taken from the low at 20.57.

Observed levels:

Longer-term flow reveals monthly price showing signs of bullish life out of demand at 1.1857-1.1352, potentially placing upside pressure on daily resistance at 1.1966.

Across the page on the shorter-term charts, we can see that although H1 demand is respected structure at 1.1956-1.1945, H1 trendline support and the 100-period simple moving average at 1.1935 could be the more appealing supports, having seen a convergence with H4 support at 1.1937.

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. Any 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:

Partly modified from previous analysis.

Functioning as a proxy for global risk sentiment, the Australian dollar extended recovery gains against the US dollar on Thursday.

Up by 0.4 percent at the time of writing, increased interest to the upside shifts focus to resistance at 0.7817.

It’s also worth noting that since 25th March, buyers and sellers squared off around the 0.7563 February low, aided by a 1.272% Fib extension at 0.7545.

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

Momentum, as measured by the RSI oscillator, recently scaled the 50.00 centreline after discovering a floor off channel support at the end of March, taken from the low 43.70.

H4 timeframe:

The technical landscape on the H4 scale shows price retested 0.7696-0.7715 as demand yesterday and established short-term buying. Quasimodo resistance at 0.7800 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, despite sparking moderate bearish flow in early trade on Thursday, stepped aside and served as demand heading into US hours. North of 0.7747-0.7734, the path appears relatively clear to 0.78.

In spite of the bullish tone, momentum, according to the RSI oscillator, is levelling off in the form of bearish divergence out of overbought territory. Note Wednesday also shook hands with resistance at 80.85.

Observed levels:

The daily timeframe displays scope to approach resistance at 0.7817, a level sharing space with Quasimodo resistance on the H4 timeframe at 0.7800 which, of course, also represents 0.78 psychological resistance on the H1.

The above, therefore, informs technicians that a short-term bullish wave may come about from H1 demand at 0.7747-0.7734 today, targeting 0.78.

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 1.8 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:

Largely unchanged from previous analysis.

USD/JPY shed 0.2 percent on Thursday, nearing three-week troughs in the shape of four consecutive bearish candles.

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 show 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:

Recent downside action pulled H4 candles into 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 London and early US hours probed demand at 108.60-108.71 (shares a connection with the H4 Fib cluster at 108.44-108.66). To the upside, 109 calls for attention, while any bearish flow could lead to support at 108.39.

RSI movement shows the value bottoming north of oversold space, forming what technicians call bullish divergence.

Observed levels:

Monthly action testing descending resistance-turned possible support, alongside daily price testing a possible area of support around the 108.36 lows and H4 crossing swords with a Fib cluster at 108.44-108.66, could have H1 buyers attempt to make a show from demand at 108.60-108.71.

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.

GBP/USD ended another session off 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.

RSI movement is seen closing in on the underside of the 50.00 centreline, following 40.00 lows formed on 9th April.

H4 timeframe:

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:

Unchanged from previous analysis.

The 1.38 figure, surrounded by a 1.272% Fib expansion at 1.3809 and a 50.0% retracement level at 1.3793, continued to deliver resistance on Thursday. 1.3750 support remains in sight to the downside, sharing chart space with the 100-period simple moving average at 1.3754.

Demand-turned supply at 1.3853-1.3869, along with a number of Fib studies between 1.3870 and 1.3847, is an area worth noting higher on the curve. Below 1.3750, technical eyes will likely be drawn to 1.37.

Interestingly, the RSI nudged beneath trendline support, taken from the low 27.58, and subsequently retested the lower side of the ascending line around the 55.00ish region.

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.

A H1 close above 1.3809-1.3793 may spark breakout buying, with many taking aim at H1 supply from 1.3853-1.3869. Not only does this base align with numerous Fib levels, the area also joins with H4 resistance at 1.3852.

A H1 close beneath 1.3750, on the other hand, signals a bearish scenario to 1.37.

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