The market mood remains cheerful, as investors bet on faster economic recovery after the US jobs data released Friday blew past expectations. Thin trading conditions, as most major economies observe Easter Monday, keep the sentiment buoyed starting out a fresh week.
A big beat on the US NFP data, President Joe Biden’s infrastructure plan and hopes for a vaccine-led recovery raised expectations of a Fed rate hike sooner than previously anticipated. Therefore, the US Treasury yields held onto Friday’s upsurge, with the benchmark 10-year rates around 1.72%.
The S&P 500 futures gain half a percent after the Wall Street indices closed the last week at record highs. The US dollar index regains poise ahead of a subdued trading session while traders await the US Services PMI for fresh trading impetus. The US non-manufacturing sector activity is expected to have expanded at a faster rate in March, with an estimated figure of 58.5.
Across the fx board, resurgent demand for the US dollar has fizzled the recovery attempts in most majors. EUR/USD is back under 1.1750 amid the continued surge in covid cases and restrictions in France, Italy and Germany.
GBP/USD trades pressured towards 1.3800 despite the UK completing vaccinations for 10% of its populations. Traders await Prime Minister Boris Johnson’s confirmation on Monday on a plan, which will allow people to attend public events including sports by either showing proof of vaccination, a recent negative test or antibodies from an infection in the last six months.
Gold feels the pull of gravity amid risk-on mood, higher Treasury yields and the greenback. The precious metal could challenge Thursday’s low at $1705 if the selling pressure intensifies.
WTI Crude Oil is trading below $61 despite Saudi Arabia’s oil-price hike for Asian buyers, as investors assess the implications of the OPEC and allies’ (OPEC) decision to ease the oil output cuts.
EURUSD sees a good recovery from the most support for last week at 1.1700/1.1690 to 1.1785. We could be forming an inverse head & shoulders on the 1 hour chart with neck line at 1.1780/90.
USDCAD dipped as far as 1.2527 & held first resistance at 1.2580/90.
EURUSD break above a small inverse head & shoulders neck line at 1.1780/90 is positive for today & can target 1.1820/30, perhaps as far as 1.1850/60 this week.
Minor support at 1.1750/40 (& we bottomed exactly here on Friday). Best support at 1.1710/1.1690 (where we watch for a double bottom bullish pattern). However a break below 1.1675 likely to trigger further losses to 1.1640/30 & perhaps as far as 1.1610/00.
USDCAD retraces about 40% of the recent recovery to hit 1.2527. First resistance at 1.2580/90. A break higher can target last week’s high at 1.2635/45. A break above 1.2650 targets first resistance at 1.2685/95. Bulls then need a break above 1.2700 to trigger further gains.
First support at 1.2540/30 could hold the downside. Below 1.2520 however targets 1.2500/1.2480. Below 1.2460 risks a slide to to 1.2430/20 before a retest of the March low at 1.2370/60
GBP/USD is testing the support level at 1.3820.
GBP/USD is currently testing the support level at the 50 EMA at 1.3820. In case this test is successful, GBP/USD will head towards the next support at 1.3800. RSI is in the moderate territory, and there is plenty of room to gain downside momentum in case the right catalysts emerge.
In case GBP/USD declines below the support at 1.3800, it will move towards the next support level at 1.3780. A move below the support at 1.3780 will open the way to the test of the next support which is located at the recent lows at 1.3745.
On the upside, GBP/USD must settle above the 50 EMA at 1.3820 and the 20 EMA at 1.3825 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at 1.3865. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3900. A move above this level will push GBP/USD towards the resistance at 1.3950.
Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. UR Trade Fix Ltd accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Past performance does not constitute a reliable indicator of future results and future forecasts do not constitute a reliable indicator of future performance.
It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests when providing our services