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12 April 21
Dollar pinned down by lower U.S. yields; inflation data in focus
The dollar languished near 2-1/2-week lows against major peers on Monday as a decline in Treasury yields restrained the U.S. currency.
The British pound sank toward a two-month low, continuing its decline from a nearly three-year high reached in February, with analysts pointing to blood clot concerns around the AstraZeneca vaccine, which the U.K. has relied heavily on for its aggressive vaccination program.
Both the dollar and Treasury yields are taking something of a breather after scaling multi-month peaks at the end of last month, powered by bets that an accelerating U.S. recovery from the pandemic will lift inflation faster than Federal Reserve policymakers anticipate.
While the Fed’s repeated insistence that near-term price pressures will prove transitory has soothed investors this month, the dollar firmed on Friday following stronger-than-expected producer price data, taking the edge off the currency’s worst week this year.
The dollar index, which tracks the greenback against a basket of six rivals, was little changed at 92.304 in Asia, following a 0.9% slump last week. It dipped below 92 on Thursday for the first time since March 23.
Fed Chair Jerome Powell speaks on Wednesday at the Economic Club of Washington. In an interview on Sunday on CBS’s “60 Minutes,” Powell said the U.S. economy is at an “inflection point” with expectations that growth and hiring will pick up speed in the months ahead, but he also warned of risks stemming from a hasty reopening.
Against the euro, the dollar hovered near the lowest since March 23 at $1.1901. It bought 109.66 yen, close to a two-week low below 109 reached on Thursday.
“USD has some upside potential this week,” Commonwealth Bank of Australia strategist Kimberley Mundy wrote in a report.
“Strong U.S. economic data will highlight the divergence between the U.S.’s fast economic recovery and the more stunted recoveries in other developed economies.”
The dollar can lift back toward 110 yen, while the euro has scope to retrace most of that recent gains from its almost five-month low near $1.17, she said.
The British pound slipped 0.2% to $1.36745, nearing Friday’s low of $1.3670, a level not seen since Feb. 8.
https://www.cnbc.com/2021/04/12/forex-markets-dollar-us-treasury-yields.html
EUR/USD set for a course-correction after a bullish beginning to April
EUR/USD pressured under 1.19
“At an inflection point – that is how Federal Reserve Chair Jerome Powell has described the economy, which is reopening rapidly and creating jobs amid America’s successful vaccination campaign – which provides the dollar advantage over the euro. Around 35% of Americans have received at least one shot, while the figure in Europe is below 20%.”
“Tension is now mounting toward Tuesday’s Consumer Price Index statistics. Economists expect annual inflation to rise in the coming months and uncertainty about its sustainability is what is driving the dollar.”
“Even if the old continent is making some headway against the virus and jabbing its population at a faster rate, vaccines may prove less effective than previously thought. A study in Israel has shown that Pfizer’s immunizations provide less protection against the South African variant of the virus. Such worries may boost the safe-haven dollar.”
“Support awaits at 1.1860, which cushioned it late last week. It is followed by 1.1820, which is where the 100 and 200 SMAs converge.”
“Resistance is at the April high of 1.1925, followed by 1.1950 and 1.1990, lines that were last seen in March.”
https://www.investing.com/currencies/eur-usd-chart
AUD/USD Forex Technical Analysis – Strengthens Over 7605, Weakens Under .7587
The direction of the AUD/USD early Monday is likely to be determined by trader reaction to .7604 to .7587.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD early Monday is likely to be determined by trader reaction to .7604 to .7587.
Bullish Scenario
A sustained move over .7605 will indicate the presence of buyers. If this can create enough upside momentum then look for the buying to possibly extend into .7677. Taking out this level will reaffirm the uptrend with .7691 the next likely target. This is a potential trigger point for an acceleration to the upside with .7729 the next target price.
Bearish Scenario
A sustained move under .7587 will signal the presence of sellers. This could trigger an acceleration to the downside with .7532 the next potential downside target.
https://www.investing.com/currencies/aud-usd-chart
Gold Price Analysis: XAU/USD to accelerate the decline on a break below $1730
The risk-off mood, softer US bond yields extended some support and might help limit losses
“There isn’t any major market-moving economic data due for release from the US on Monday, leaving the XAU/USD at the mercy of the USD price dynamics. Apart from this, the US bond yields might also influence the commodity. Traders might further take cues from the broader market risk sentiment for some meaningful opportunities around gold.”
“Failure near a previous strong support breakpoint near the $1,760-65 region might have shifted the bias in favour of bearish traders. That said, it will still be prudent to wait for some follow-through selling below the $1,730 level before positioning for any further depreciating move. The next relevant support is pegged near the $1,720 area, below which bears might aim to challenge the $1,700 mark.”
“XAU/USD could eventually drop to retest multi-month lows support near the $1,677-76 region, which constitutes the formation of a bullish double-bottom.”
“A sustained strength beyond the $1,760-65 region will be seen as a fresh trigger for bullish traders and set the stage for additional gains. The yellow metal might then accelerate the momentum towards an intermediate resistance near the $,1,782-84 area before eventually aiming to reclaim the $1,800 round-figure mark.”
https://www.investing.com/currencies/xau-usd-chart
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