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Daily Analytics: GBP/USD climbs to fresh two-week tops

GBP/USD climbs to fresh two-week tops

The recent rise in COVID-19 cases in the UK might act as a headwind for the British pound.

The GBP/USD pair shot to two-week tops during the early European session, with bulls now looking to build on the momentum further beyond the 1.3800 round-figure mark.

Following the previous day’s brief pause, the GBP/USD pair caught some fresh bids on Tuesday and prolonged its recent strong rebound from the 1.3600 neighbourhood or one-month lows. The uptick was exclusively sponsored by the prevalent selling bias surrounding the US dollar, which continues to be pressured by Fed Chair Jerome Powell’s comments on Friday.

During the highly anticipated speech at the Jackson Hole Symposium, Powell reassured the market that the Fed is in no hurry to raise interest rates. Powell confirmed that the central bank plans to begin rolling back its pandemic-era stimulus later this year but offered no signal on the specific timeline. His remarks were interpreted as dovish by the market.

This was evident from the ongoing decline in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond dropped to 1.27% during the first half of the trading action on Tuesday. Apart from this, a generally positive tone around the equity markets further undermined the safe-haven USD and provided a goodish lift to the GBP/USD pair.

It, however, remains to be seen if bulls are able to capitalize on the move amid the recent surge in new COVID-19 cases in the UK. According to the official figures released on Monday, another 26,476 people in Britain tested positive for COVID-19. This might act as a headwind for the British pound and cap any further gains for the GBP/USD pair, at least for now.

Even from a technical perspective, the pair was last seen hovering near a confluence hurdle comprising of the very important 200-day SMA and the 50% Fibonacci level of the recent leg down. This further makes it prudent to wait for some follow-through buying before placing fresh bullish bets around the GBP/USD pair and positioning for any further appreciating move.

There isn’t any major market-moving economic data due for release from the UK on Tuesday, leaving the GBP/USD pair at the mercy of the USD price dynamics. Later during the early North American session, traders might take cues from the US economic docket, featuring the releases of Chicago PMI and the Conference Board’s Consumer Confidence index.

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Market Analytics

Daily Analytics: Gold Price bulls eye $1,818

Gold Price Analysis: XAU/USD bulls eye $1,818

XAU/USD : Daily chart

This is what it sounds like when doves do not cry – Paraharasing Prince’s 1984 hit, Federal Reserve Chair Jerome Powell has shown his dovish feathers, sending gold above $1,800. Contrary to a long list of his hawkish colleagues, Powell, the man at the top, refrained from committing to tapering the bank’s $120 billion/month bond-buying scheme soon. While he acknowledged improvement in the labor market, his stance on inflation was mixed and he expressed worries about covid.

If the Fed continues printing dollars at a rapid clip, stock markets and the precious metal have reasons to be cheerful. After the initial gold rush, how is XAU/USD positioned on the charts? 

The Technical Confluences Detector is showing that gold is battling near-term resistance at around $1,800, which is a cluster including the Fibonacci 38.2% one-month, the Bollinger Band 4h-Upper, the Pivot Point one-week Resistance 2, and more.

Bulls are eyeing higher levels, and $1,818 stands out. That is the convergence of the Fibonacci 23.6% one-month, the PP one-day R3 and the PP one-week R3.

Immediate support awaits at $1,805, which is where the BB 1h-Upper and BB 15min-Upper hit the price. 

The next significant cushion is at $1,796, which is the confluence of the previous weekly high, the BB 4h-Middle and the Simple Moving Average 5-1h. 

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Market Analytics

Daily Analytics: USD/JPY Price Analysis Challenges 50-DMA

USD/JPY Price Analysis: Challenges 50-DMA

USD/JPY: Daily chart

USD/JPY is challenging four-day highs above 110.00, having taking out the post-FOMC top at 110.07, as the bulls continue to take advantage of the unabated US dollar demand across the board.

The Fed minutes revealed that the officials discussed tapering plans for the latter part of this year when they met in July for the monetary policy review. The greenback bulls were just awaiting this confirmation for advancing further, which drove USD/JPY higher alongside.

 

However, the bulls could face some stiff resistance on its three-day uptrend, as the Treasury yields are bearing the brunt of the risk-off trading in the global markets, thanks to the covid woes and tapering fears.

Technically, USD/JPY needs to crack the 50-Daily Moving Average (DMA) at 110.19 on a sustained basis to unleashing the recovery towards the August 13 highs of 110.46.

Further up, the buyers will target the August 11 highs of 110.80.

The daily Relative Strength Index (RSI) has pierced through the midline, reclaiming the bullish territory, which suggests that the tide has turned in favor of the optimists.

On the flip side, horizontal 21-DMA offers immediate support at 109.89, below which the daily low at 109.77 will get tested.

The last resort for USD/JPY buyers is envisioned at the 100-DMA cap at 109.66.

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Market Analytics

Daily Analytics: XAU/USD loses traction before testing $1,800

Gold Price Forecast : XAU/USD loses traction before testing $1,800

XAU/USD: Daily chart

The XAU/USD pair closed the fourth straight day in the negative territory and preserved its bullish momentum during the first half of the day on Tuesday. After reaching its highest level in 10 days at $1,795, however, gold lost its traction and was last seen posting small daily gains at $1,790.

The risk-averse market environment at the start of the week helped XAU/USD gather bullish momentum. Nevertheless, the greenback also capitalized on safe-haven flows and didn’t allow the pair to push higher in the early American session.

Reflecting the dismal market mood, the S&P Futures and the Nasdaq Futures indexes are down 0.43% and 0.52%, respectively. Meanwhile, the US Dollar Index is rising 0.31% on the day at 92.90. In case Wall Street’s main indexes suffer heavy losses after the opening bell, the USD could continue to outperform its rivals and force XAU/USD to extend its downward correction.

The data published by the US Census Bureau showed on Tuesday that Retail Sales declined by 1.1% on a monthly basis in July to $617.7 billion. This reading came in worse than the market expectation for a decrease of 0.2% and revived concerns over the coronavirus Delta variant crippling the economic recovery.

Gold technical outlook

Key resistance for gold seems to have formed at $1,800 (psychological level, 50-day SMA). In case buyers manage to carry the price beyond that level and confirm it as support, the next target on the upside could be seen at $1,807 (100-day SMA) and $1,815 (200-day SMA). 

In the meantime, the Relative Strength Index (RSI) indicator on the daily chart is moving sideways near 50, suggesting that the pair could have a difficult time clearing $1,800 unless it’s supported by a fundamental driver. 

On the flip side, the 20-day SMA at $1,790 is the first technical support. With a daily close below that level, gold could edge lower toward 1,760 (static level) and $1,750 (static level, June 29 low).

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Market Analytics

Daily Analytics: EUR/USD Price Analysis Charting a bear

EUR/USD Price Analysis: Charting a bear pennant on the daily sticks

EUR/USD : Daily chart

EUR/USD is back in the green zone, reversing Thursday’s bearish momentum, as the US dollar remains on the back foot amid risk aversion-led weakness in the Treasury yields.

Despite the latest bounce, the spot remains below the key 1.1750 barrier, now trading at 1.1736, up 0.08% on the day.

From a near-term technical perspective, EUR/USD’s daily chart has taken the shape of a bear pennant formation, in the wake of the recent sell-off that followed a brief consolidative phase.

A daily closing below the rising trendline support at 1.1712 is needed to validate the bearish formation, which will confirm deeper losses in the coming days.

The 14-day Relative Strength Index (RSI) trades flat but remains below the midline, keeps floors open for further downside.  

Confirmation of the bearish continuation pattern could expose the September lows at 1.1612.

Alternatively, Wednesday’s high of 1.1754 offers immediate resistance to the euro buyers.

Acceptance above the latter would invalidate the potential bear pennant, calling for a test of the August 9 high of 1.1769.

Further up,  a test of the bearish 21-Daily Moving Average (DMA) at 1.1798 cannot be ruled out.

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Market Analytics

Daily Analytics: XAU/USD rebound fades below $1,750

Gold Price Forecast XAU/USD rebound fades below $1,750

XAU/USD: Daily chart

Gold (XAU/USD) fades the latest bounce off a four-month low near $1,688 to $1,740, down 1.4% intraday, heading into Monday’s European session. While US dollar consolidation and recovery in the market’s risk appetite seems to have triggered the gold price rebound, the bears remain hopeful amid the Fed’s tapering concerns and covid woes.

Gold extended Friday’s US NFP-led south-run during early Asia before bouncing off the lowest levels since March 31. The corrective pullback takes clues from the market’s optimism for the US infrastructure spending bill’s passage from the Senate as policymakers are up for the final voting on Tuesday.

Technical analysis

Gold confirmed the double top bearish chart pattern on Friday by breaking $1,790 horizontal support. The daily closing below an ascending trend line from March also strengthened the bearish impulse. However, oversold RSI conditions backed the latest corrective pullback.

The same, however, remains less impactful for the gold buyers until the quote rises past the previous support line from March 31, around $1,784. Even so, the horizontal area surrounding $1,790 will test the recovery moves.

In a case where gold buyers keep reins past $1,790, 100-DMA and 50-DMA will challenge the upside bias, respectively around $1,804 and $1,815, before highlighting the one-month-old horizontal resistance near $1,832-34.

On the flip side, the $1,700 threshold could entertain the gold bears ahead of directing them to the recent low surrounding $1,688-87.

Though, a horizontal area comprising the yearly lows near $1,676, touched twice in March, will be a tough nut to crack for the gold sellers.

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