The US markets were mixed on Monday as investors were concerned about the potential stimulus withdrawal and a resurgence of the delta virus variant

10 August 2021, 04:33

Market Focus

The US markets were mixed on Monday as investors were concerned about the potential stimulus withdrawal and a resurgence of the delta virus variant. The Dow Jones Industrial Average dropped 106.66 points. The S&P 500 was down 0.1% and the Nasdaq 100 climbed 0.16%. The market tone was flat as investors mulled comments from the Fed’s tapering asset purchases and the US jobs report was better than expectations.

Gold slumped as much as 4.4% during the early trading hours of the Asian session, but gradually recover later Monday. The major sudden sell-off was a prototypical shake by last Friday’s better-than-expected jobs report, which led the market to fear that the Fed might be being one step closer to reducing asset purchases and to accelerating the pace of raising the interest rates.

The president of the Fed of Boston added more comments on monetary policy. The Fed’s Eric Rosengren mentioned, there is a growing number of people, outside and inside of the Fed agreeing on the Fed who should start dialing back its extraordinary aid because the economy is coming back strongly. In addition to Rosengren’s comment, the central bank should announce in September that it will start reducing its $120 billion by this fall.

Main Pairs Movement

The Aussies bear moving in on critical support, declining 0.32% on Monday. The bearish move was mostly driven by a strong US dollar as the tapering talk continued to be brought up the table. The US 10- year Treasury yields climbed 1.32%, which underpinned the demand for the US dollar.

The EURUSD currency pair dropped to a multi-month low, closing at 1.1736, and the GBPUSD currency pair declined 0.13% on Monday. The pairs continued to be under pressure as the US dollar held onto gains across the board.

Crude oil price edged lower as much as 4%, closing at 66.48 as the demand might be lower since Return- to- Office might delay.

Technical Analysis

GBPUSD (4-hour Chart)

Sterling is trading a touch lower on the day, down 0.15% at the time of writing after sliding from a high of 1.3894 to 1.384. The markets are in consolidation and are still digesting Friday’s jobs report, which showed that jobs were added and it was the largest gains in NFP since August 2020. The dollar is better bid on the back of the data, taking on the bears at fresh daily highs. For the technical aspect, the RSI indicator printed 39 figures nearly market close, suggesting a bearish momentum ahead. For the moving average side, 15 long SMA indicators have death cross with 60 long SMA indicators while 60 long remaining slightly upside movement.

All in all, we believe this pair still lacking a direction as it miring in a tiny horizontal channel which is choppy for nearly a week. If the price falls ahead, the first immediately support level is 1.3843 as recently low on Jul 28 and successive fall then the market will eye on 1.385 level in short term and 1.38 level follow. On the up way, if the price could go over the last highs spot which is around 1.395, it will heading to over 1.4 level.

Resistance: 1.3896, 1.395, 1.4

Support: 1.3843, 1.38, 1.3745

EURUSD (4- Hour Chart)

The eurodollar turned downward and gained a fresh monthly low under 1.174 threshold that pressure as the greenback holds daily win across the board, losses 0.19% to 1.1736 as of writing. No key macroeconomic data was released on Monday. Market participants continue to digest last Friday’s NFP data. From the technical perspective, the RSI indicator has dropped to 27 figures as of writing, suggesting over sought sentiment for a short term. For moving the average side, 15 long SMA indicator retaining downward slope and 60 long SMA has turned it way to the negative side.

As mention previously, we expected if the price drop below 1.1755, market momentum would drag it to lower lows than eyes on 1.17. Therefore, we forecast 1.17 will be the last support level, especially forbid buyers. In contrast, if the price could stand above 1.1755, the price will choppy between 1.1755 and 1.18.

Resistance: 1.1755, 1.18, 1.185

Support: 1.17

XAUUSD (4- Hour Chart)

Gold is having a difficult time staging a convincing rebound following the steep drop witnessed in the early Asian session. With the latest data from the U.S. confirming the improving labor market conditions, the pair started to edge lower and was last seen losing 1.91 daily at $1729. At the same time, the greenback rallied along with the U.S. treasury yield shooting into 1.3% territory. Concerns that the Fed is about to taper are likely to remain heightened in the short term, denting investor appetite for the precious metal for which we have witnessed an exodus at the start of the week. For the technical side, the RSI indicator still immerses in over sought territory, suggesting extremely sell-side momentum fuel the market. From the moving average perspective, both 15 and 60 long SMAs indicators are retaining downside movement.

For the market sentiment, we see indicator shows the market is overly inclined to selling momentum which fueled by market data. On the other hand, extremely dynamic movement impact the perspective of moving average. Therefore, we expect the market will possibly rebound according to indicator suggestions. However, if the momentum continues toward to downside, the first critical will be in 1730. On up way, we expect 1751 will be strong resistance.

Resistance: 1751.5, 1792, 1830

Support: 1730, 1700, 1682