It’s a relatively quiet day ahead on the economic calendar. Economic data from the Eurozone and U.S stimulus talk will be in focus.
For the EUR
It’s a relatively quiet day ahead on the economic calendar.
German industrial production figures for December are due out ahead of the European open.
Following some dismal factory order figures, disappointing industrial production figures will weigh on the EUR.
Later tonight ECB President Lagarde is scheduled to speak. Expect any chatter on the economic outlook and monetary policy to also influence.
During the ECB Press Conference, Lagarde had taken a more cautious stance as a result of extend lockdown measures.
At the time of writing, the EUR was down by 0.08% to $1.2036.
For the Pound
It’s a 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 will leave the Pound in the hands of COVID-19 news updates and market risk sentiment on the day.
At the time of writing, the Pound was down by 0.04% to $1.3730.
For the USD
It’s a quiet day ahead on the economic calendar.
There are no material stats to provide the U.S Dollar with direction. The lack of stats leaves the market focus on Capitol Hill.
Short-term technical outlook
From a technical perspective, the attempted recovery struggled to lift the pair further beyond a previous strong support breakpoint, now turned resistance, near the 1.2055-60 region. This should act as a key pivotal point for short-term traders. A sustained move beyond might prompt some short-covering move and assist the pair to aim back to reclaim the 1.2100 round-figure mark. The momentum could further get extended towards the 1.2135-40 supply zone, which if cleared decisively will negate any near-term bearish bias.
On the flip side, the key 1.2000 psychological mark now seems to protect the immediate downside. Any subsequent fall might continue to find decent support near the 1.1950 area. Some follow-through selling will reaffirm the near-term negative bias and turn the pair vulnerable to break below the 1.1900 mark, towards testing the next major support near the 1.1860-55 region.
“The bulls remain hopeful amid the continued broader market optimism on stimulus hopes. Meanwhile, fresh concerns over the covid vaccines’ efficacy against the South African strain could also offer some support to the precious metal.”
“An increase in physical demand for gold ahead of China’s Lunar New Year holiday season and a broadly subdued US dollar could help put a floor under the prices. However, the recovery could remain in check amid rallying Treasury yields and upbeat sentiment on Wall Street.”
“A sustained break below the 21-hourly moving average (HMA) at $1810 is needed to negate the recovery momentum.
“With the 21-HMA having crossed the 50-HMA from below, the buyers keep their eyes on the bearish 100-HMA at $1823. A move above the 100-HMA would expose the 200-HMA hurdle at $1836.”
“The downward-sloping 50-HMA at $1806 could come to the bull’s rescue if the 21-HMA support is caved in. The next relevant support for the bright metal is seen at Friday’s low of $1792.”
From a technical perspective, bulls are likely to wait for a sustained move beyond the 1.3755-60 congestion zone, or multi-year tops, before positioning for any further appreciating move. Some follow-through buying beyond May 2018 swing highs, around the 1.3770 region, will mark a fresh bullish breakout and pave the way for a move beyond the 1.3800 level, towards the 1.3840 resistance zone. The momentum could further get extended towards the 1.3900 round-figure mark before the pair eventually aims to test the next major hurdle near the 1.3960 region.
On the flip side, the 1.3700 mark now seems to protect the immediate downside. This is followed by supports near the 1.3670 horizontal level and the 1.3640 region. A convincing break below will negate prospects for any further appreciating move and turn the pair vulnerable to slide further. The corrective pullback might then drag the pair back below the 1.3600 mark, towards the last week’s swing lows, around the 1.3565 region. Some follow-through selling has the potential to drag the pair further towards challenging the key 1.3500 psychological mark.
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