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market review 09 February 21

09 February 21

Economic Data Puts the EUR and the Greenback in Focus

It’s a relatively quiet day ahead on the economic calendar. Stats from Germany and the U.S will influence, however.

The Day Ahead:

For the EUR

It’s another relatively quiet day ahead on the economic calendar.
German trade data for December is due out going into the European open.
With economic data on the lighter side, industrial production figures for Italy will also draw attention later in the day.
Away from the economic calendar, Draghi’s progress in forming government will also need tracking.
At the time of writing, the EUR was up by 0.09% to $1.12061.

For the Pound

It’s another quiet day ahead on the economic calendar, with no material stats due out of the UK.
The lack of stats will continue to leave the Pound in the hands of COVID-19 news updates and market risk sentiment.
Earlier in the day, retail sales figures were in focus.
According to the BRC Retail Sales Monitor, retail sales rose by 7.1%, year-on-year, picking up from a 4.8% rise in December.
At the time of writing, the Pound was up by 0.13% to $1.3759.

For the USD

It’s a relatively quiet day ahead on the economic calendar. JOLTs job openings for December are due out later today.
Following disappointing nonfarm payroll figures for January, we can expect increased market sensitivity to the figures.
Away from the economic calendar, chatter from Capitol Hill will continue to influence.

Gold Price Futures (GC) Technical Analysis – Sustained Breakout Over $1831.80 Targets $1875.70 – $1878.90

The early price action suggests the direction of the April Comex gold market is likely to be determined by trader reaction to the pivot at $1831.80.
Daily Swing Chart Technical Forecast
The early price action suggests the direction of the April Comex gold market on Tuesday is likely to be determined by trader reaction to the pivot at $1831.80.
Bullish Scenario
A sustained move over $1831.80 will indicate the presence of buyers. If this generates enough upside momentum then look for a rally into the intermediate 50% level at $1875.70, followed closely by a main top at $1878.90.
Bearish Scenario
A sustained move under $1831.80 will signal the presence of sellers. This could trigger a quick break into about $1814.70. If this fails then look for the selling to possibly extend into the main bottom at $1784.60.

EUR/USD Forecast: Limited bullish scope

Majors trade choppily this Monday, with the EUR/USD pair ending this first day of the week little changed in the 1.2050 price zone. The dollar attempted to advance ahead of Wall Street’s opening but turned south as US Treasury yields turned read after hitting their highest levels since March 2020 in pre-opening trading. Equities post modest gains, but reached fresh record highs, reflecting the persistent positive mood.
The macroeconomic calendar included no relevant data, having no impact on currencies. Germany published December Industrial Production, which was down 1% YoY, while the EU released February Sentix Investor Confidence, which contracted to -0.2 from 1.3, well below the 1.9 expected. This Tuesday, the calendar will remain light, as Germany will publish its December Trade Balance, while the US will release the January NFIB Business Optimism Index and JOLTS Job Openings for December.

EUR/USD short-term technical outlook

The EUR/USD pair has a limited bullish potential, as it retreated from a critical Fibonacci resistance, the 38.2% retracement of its November/January rally at 1.2072. In the 4-hour chart, the pair is stable above a flat 20 SMA but below the longer ones, which offer mildly bearish slopes. Technical indicators have lost their bullish potential, but remain well into positive levels. Bulls will have better chances on a break above the mentioned Fibonacci resistance level.
Support levels: 1.2020 1.1970 1.1925
Resistance levels: 1.2070 1.2110 1.2150

USD/JPY Analysis: Repeated failure near 200-DMA warrants caution for bulls

The USD/JPY pair continued with its struggle to find acceptance above the very important 200-day SMA and witnessed some selling during the second half of the trading action on Monday. The retracement slide extended through the Asian session on Tuesday and dragged the pair to one-week lows, below the key 105.00 psychological mark. The downfall marked the third consecutive day of a negative move and was exclusively sponsored by the emergence of fresh selling around the US dollar.
Friday’s rather unimpressive US jobs report raised doubts about a relatively faster US economic recovery from COVID-19 and sustainability of the recent USD rally. This, along with a turnaround in the US Treasury bond yields, exerted some downward pressure on the greenback. It is worth recalling that the yield on the benchmark 10-year government bond shot to the highest level since March 2020 amid developments to fast-track the US President Joe Biden’s proposed $1.9 trillion stimulus package.
Short-term technical outlook
From a technical perspective, repeated failures near a technically significant moving average could be the first sign of bullish exhaustion. That said, any subsequent pullback is likely to find decent support near a multi-month-old descending trend-line resistance breakpoint. The mentioned resistance-turned-support is pegged near the 104.45 region, which should act as a key pivotal point for short-term traders.
A sustained breakthrough might prompt some technical selling and turn the pair vulnerable to weaken further below the 104.00 mark, towards testing the next major support near the 103.55-50 region. On the flip side, the daily swing highs, around the 105.25 zone, now seems to act as an immediate resistance ahead of the 105.55 supply zone. Bulls might wait for some strong follow-through buying beyond the mentioned hurdle before positioning for any further near-term appreciating move.

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