Crude oil lost around 7% today, amid the concern over short-term demand…
Crude oil lost around 7% today, amid the concern over short-term demand and as a strong US dollar weakened commodities priced in the currency
In the US market, Nasdaq fell as the US Treasury yields hit another highest level in more than a year amid the concern of letting inflation accelerate after the FOMC. The 10-year US Treasury hiked to as high as 1.75% for the first time since January 2020 even though the Fed has announced that currently there is no plan to raise interest rates anytime soon until 2023. In the meantime, the 30-year yield has breached 2.5% for the first time since August 2019. Jerome Powell appears to be willing to keep pumping support into the economy and let it run hotter on fast-paced growth and inflation.
Japan’s central bank planned to carry out monetary policy adjustments designed to increase its flexibility for financial institutions. Bank of Japan is considered to be looking at measures that widen the fund rates move in a slightly larger range of 0.25%. With this consideration, it not only can maintain low-interest rates but also give the financial institution a chance to increase revenue.
The Bank of England decided to keep interest rates unchanged on the future monetary policy. As a response, the UK bond yields moved higher on expectations of rising inflation. Moreover, BOE reassured that a tightening monetary policy won’t happen until clear evidence of economic recovery.
Main Pairs Movement
Gold declined as the US Treasury yields reached to highest in more than a year. In response to the climbs in the yields, most metals fell. As Jerome Powell mentioned, inflation is likely to be transient, and will not mark progress toward the Fed’s long-term goals. With this, the Fed has no intention to push back against the surge in Treasury yields. In the meantime, holdings in ETF have gradually fallen in every session since February for the longest decline on record. With the combination of the selloff from ETFs and the surge in Treasury yields, gold is heading to a bearish trend.
Crude oil lost around 7% today, settling at $60 a barrel amid the concern over short-term demand and as a strong US dollar weakened commodities priced in the currency. The selloff was the biggest since September.
XAUUSD (Daily Chart)
After riding with the FOMC news, contesting the resistance at 1746.91(Fibonacci 23.6% retracement,) gold turns to a bearish trend as it fails to breakthrough. At the same time, the bullish- to- bearish momentum is confirmed as the MACD indicator narrows down, and the RSI continues to stay neutral, implying that there is still more room for the pair to the downside. The next target for gold is expected to sit around the support level at 1676.89(Fibonacci 0% retracement.) if gold successfully breaks the strong support level at 1676.89, then it will open up an accelerating downside pressure.
Resistance: 1746.91, 1790.23, 1825.24
EURUSD (Daily Chart)
EURUSD drops toward 1.1900 as the US dollar index recovers with the US bond yield continues to surge, currently trading around 1.1925. On the daily chart, EURUSD continues to trade within the descending channel; at the same time, it is located below the 50- and 100- SMA, indicating a bearish mode. However, the RSI indicator stays in a neutral situation, suggesting that there is room for the pair to climb or drop. However, after turning into a positive mode from the descending trend, the pair has hovered around the resistance for a while, implying that the pair might not have enough boost to go up. If the pair can successfully climb above the resistance at 1.1945, then it will open a chance to contest the next resistance at 1.2349, where turns the pair from bearish to bullish in the near-term and long-term. To the downside, if the pair fails to test 1.1945, then it will potentially head toward 1.1695, which confirms a bearish trend.
Support: 1.1945, 1.1695, 1.1492
BTCUSD (Daily Chart)
Bitcoin once again explodes to an all-time high this week as bitcoin is moving towards the mainstream where major companies, including Square, Paypal, Tesla, and some China giants, are confident in the future. From a technical aspect, bitcoin has overcome the downside pressure from the beginning of the week and now has turned back to a bullish trend with the psychological support level at 58000. As of now, bitcoin is expected to keep up its bullish momentum as the RSI of 63 has not yet reached the overbought condition while the pair is trading within the ascending channel and above the 50 SMA. The next price target is expected to be the next resistance of 61742.41(Fibonacci 100% retracement.); if bitcoin can successfully break the level, it will open up a chance to hit another record-high.
Support: 58000, 49564.44, 42030.61
Beijing plans to press Washington to reverse many of the policies targeting…
Beijing plans to press Washington to reverse many of the policies targeting China during the Trump presidency
US equity market refreshed record high after the Federal Reserve continues to project low-interest rates at least through 2023 despite rising inflation concerns. The S&P reached the highest 3973 in history, consumer discretionary stocks and industrials stocks led the gain, whilst health care and utility shares fell behind. The yield on 10-year Treasury hit 1.69% on Wednesday.
Beijing plans to press Washington to reverse many of the policies targeting China during the Trump presidency. China prioritizes reversing limits on American sales to Chinese firms such as Huawei Technologies Co and chip maker SMIC Corp. However, a senior Biden administration official played down expectations that the Alaska meeting would lead to any agreement.
The Federal Reserve kept interest rate unchanged on Wednesday, and here are Bloomberg’s key takeaways from FOMC News Conference:
Pledged to keep up its $230 billion-a-month asset purchase program.
Powell repeatedly said the Fed’s dot-plot does not represent a committee consensus view.
Revised its other economic projections, which show a slight pickup in inflation this year, with a return to 2% next year.
The Fed won’t act on forecasts but will wait for actual data to confirm that the economy is on track to achieve its goals before tightening policy.
The recent move in Treasury yields isn’t an indication of disorderly markets or persistent tightening in financial conditions.
Main Pairs Movement
Forex market is dominated by dovish FOMC statement on Wednesday. The US dollar index plunged 0.52% upon Fed releasing its dot-plots. The Federal Reserve continues to forecast interest rates to stay put until 2023 via its dot plot. However, the market seemed to expect a sooner rate hike given rallying bond yields, hence the negative reaction for the dollar. Despite the market disappointment, the new dot plot is still more hawkish than the previous edition where three more members forecasting a hike in 2023.
Gold ramped up 0.85% after Fed’s dovish message. However, the surge is dwarfed by rising bond yield. The US 10-year treasury yield gained 1.42%. This synergy in Gold and bond yield has been odd since fading demand for a risk-free asset should also devalue the non-yielding metal. Perhaps the previous plummet in Gold ran ahead of itself, and sellers still await for a better entry.
XAUUSD (Daily Chart)
After established a Doji pattern yesterday, Gold is poised to decline from here. Price managed to revisit Bollinger mid-line, which acted as a dynamic resistance since late January. It is also facing stubborn resistance around 78.6% Fibonacci around $1740. We are yet to witness any convincing attempt to overcome this pressure point, which implies either speculators are indecisive or the bulls are dying. The latter looks more plausible given ongoing rising yields and inflation optimism. Bears are waiting for headlines to kick off their journey to the south, they would attack support of $1680, then possibly to $1600.
Resistance: 1765, 1839
Support: 1691, 1673, 1600
USDJPY (Weekly Chart)
USDJPY is extending its gains to the fifth consecutive week, approaching the highest price of 109.67 since last June. It is currently marching into a 5-year descending trendline. Moreover, weekly RSI is wondering at the edge of the overbought zone. These two trading signals could provide considerable resistance to the current bullish bias. However, we cannot rule out the possibility of the price reaching 109.67 before a major pullback takes place. On the downside, the correction would fall onto the first key horizontal support of 108, followed by 106.73.
Support: 108, 106.7, 104.9
GBPUSD (Daily Chart)
The cable was supported by a 1.38 handle for the third time in a month. This pair is still well within an ascending channel despite the recent pullbacks. It is constructing a double bottom pattern as shown on the daily chart. Now the bulls look to retake the driver seat, and eyes for February high of 1.4145. But they will need to overcome near-horizontal resistance of 1.4, which is also the neckline of a double bottom. Upward momentum could accelerate if they can find solid acceptance at 1.4.
Resistance: 1.4, 1.4145
Support: 1.38, 1.352
President Joe Biden looks to impose a higher tax rate on the…
President Joe Biden looks to impose a higher tax rate on the corporation and wealthy Americans, with relief eyed for middle-class households
US stocks market was mixed on Tuesday while the 10-year yield edged slightly higher. Apple Inc. and Microsoft Corp. lifted the tech-heavy Nasdaq 100 index. Meanwhile, the S&P 500 index closed marginally lower, with energy and industrials stocks leading the decline.
President Joe Biden looks to impose a higher tax rate on the corporation and wealthy Americans, with relief eyed for middle-class households. Biden’s proposal will mostly affect families earning more than $400,000 a year and could lay out a path for his long-standing economic and infrastructure plans. However, the road to higher taxation will be bumpy since any tax changes will have to move through Congress, and Biden has almost no power to push through his plan via executive order.
European Union looks to resume vaccination campaign as the block’s drug regulator signaled AstraZeneca’s Covid shot was safe. Shortly after, Italy and France hinted that they would resume using the AstraZeneca vaccine. Despite the setbacks, European Commission will unveil its strategy to gradually lift coronavirus lockdowns on Wednesday.
Bloomberg’s key takeaways from China’s economic data releases:
The official figure showed growth rates of more than 30% for industrial production, retail sales, and fixed-asset investment.
Economists warned that recovery remains imbalanced, and the foundation for economic recovery is not yet solid.
The jobless rate was 5.5% at the end of February, up from 5.2% in December.
Main Pairs Movement
Eurodollar dipped 0.17% albeit upbeat investor’s confidence data. Germany published the ZEW Economic Sentiment for March on Tuesday, the figure came on top of the forecast of 74, printed 76.6. Speculators now await the Fed announcement to look for a clue on how the central bank will deal with its current account deficit and whether they will push agenda to hike interest rates.
Aussie, Kiwi, and Cable plunged before the EU session but pared most of their loss later in the day. Safe-haven pairs such as USDJPY and USDCHF dropped 0.14% and 0.42% respectively. However, low-yielding currencies should remain subdued given the global rise in yields triggered by the US-led reflation trade.
XAUUSD (Daily Chart)
Gold is gradually losing its bouncing strengths as $1740 kept a solid lid on any upward moves. Price is close to kissing its descending trendline that started in January, but the price has been rejected by a $1740 hurdle three times. This in turn diminishes the likelihood of price touches the dynamic resistance line. Sellers are patiently waiting for bond yields to edger higher to kick off another round of bearish run, and the price would breach below the support band of $1691 and $1673 this time. Further on the south, bears ultimately eyes for $1600 handle. MACD on the daily chart is printing a bullish picture.
Resistance: 1765, 1839
Support: 1691, 1673, 1600
GBPJPY (Weekly Chart)
GBPJPY is extending its gains to the tenth consecutive week, approaching the highest price of 152.83 since April 2018. Strong fundamentals for the Sterling combined with receding demand for safe-haven currency have helped this pair to forge such an incredible surge. Meanwhile, the continuous appreciation has driven RSI deeply into the overbought zone, currently printing 77. We expect the price to contest a 152.83 resistance level before profit takings, which would prompt a correction toward the purple trendline. However, the prospect of this pair remains to be bullish within a risk-on environment in 2021.
Support: 149.43, 145.9, 141.17
EURUSD (Daily & Monthly Chart)
Euro is under pressure amid recovering US dollar and is on a third losing streak. Despite price managed to overcome horizontal resistance of 1.1954, but it failed to reclaim the key 1.2 psychological level. The false breakout marked a retracement of the current bearish trend, which looks to resume toward 1.1778.
On the monthly chart, the euro-dollar is correcting toward a 23.6% Fibonacci level of 1.167, which is in confluence with the daily picture. However, we expect a robust rebound at this stern support line. In the longer term, the bulls look to challenge the previous high of 1.25.
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