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The US dollar is rising alongside yields, ahead of Biden’s critical speech on the economy. Europe continues struggling with the virus and vaccines. Eurozone inflation, ADP’s jobs figures, and Canadian GDP stand out on the calendar.
Infrastructure spending: US President Joe Biden is set to present a massive, $2 trillion fiscal package over eight years, which will likely include classic infrastructure spending, green initiatives, and also investment in human capital. The White House is also mulling tax hikes along 15 years, but it remains unclear if such a move would be introduced in the first phase.
Gold has been under immense pressure following the increase of yields, slipping below $1,700 and remaining there.
ADP’s private-sector jobs report is set to show a leap of over half a million positions in March. The payroll firm’s figures have not been well-correlated to the official Nonfarm Payrolls figures, but tend to move markets.
Flows: The last day of the first quarter is also the final day of Japan’s fiscal year and may trigger choppy movements as money managers scramble to adjust their portfolios. That may explain some of the sharp upward moves in USD/JPY, which is marching toward 111.
GBP/USD is hovering around 1.3750 after UK Gross Domestic Product figures were upgraded to 1.3% growth in the fourth quarter. Sterling continues benefiting from Britain’s successful vaccination campaign.
EUR/USD is under pressure, trading closer to 1.17 as the old continent continues struggling with rising COVID-19 cases. Germany banned the use of AstraZeneca’\s vaccines for those under 60 after additional cases of blood clots among young women. Eurozone Consumer Price Index figures are set to show a yearly rise of 1.4%. The expected increase in inflation is a result of base effects.
USD/CAD is trading around 1.26 as oil prices stabilize after the reopening of the Suez Canal. Canada’s GDP statistics are set to show growth in January 2021.
EUR/USD – 1.1723
Euro’s anticipated resumption of recent downtrend from 2021 peak at 1.2349 (Jan) to a fresh 4-1/2 month trough of 1.1712 in New York yesterday due to continued usd’s strength on the back of rising U.S. yields should pressure price after consolidation, loss of near term downward momentum would limit weakness to 1.1660/65.
On the upside, only a daily close above 1.1761 signals temporary low is made and yields stronger retracement of said decline, however, reckon 1.1800/10 should cap upside.
From a technical perspective, the pair has been trending higher along an upward sloping channel over the past one week or so. The lower boundary of the mentioned trend-channel, currently around the 1.2600 mark, coincides with 100-hour EMA and should now act as a key pivotal point for intraday traders. A sustained breakthrough, leading to a subsequent slide below the overnight swing low, around the 1.2580 area will be seen as a fresh trigger for bearish traders. The pair might then accelerate the fall further towards challenging the key 1.2500 psychological mark.
On the flip side, the 1.2630-40 region now seems to have emerged as immediate strong resistance. Above the mentioned hurdle, the pair might aim to test the trend-channel hurdle, currently near the 1.2675-80 region. Some follow-through buying will mark a bullish breakout and push the pair further beyond the 1.2700 mark, towards the next major hurdle near the 1.2735-40 supply zone, or monthly tops touched on March 5.
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