For the US Dollar, last week was one of the best weeks against an average of its major counterparts, the Euro, British Pound, Australian Dollar and Japanese Yen, the US Dollar experienced its best week in about 4 months. This is a trend that is expected to continue in the next week.
In the US, according to Bloomberg, about 218.9 million vaccine doses have been administered globally. About 67.8 million doses have been given out. For the Meantime, President Joe Biden is inching closer to passing a US$ 1.9 trillion Covid-19 relief package. A potentially larger infrastructure package is in the works to follow-up on the Covid-19 related aid. This has in turn lifted local growth and inflation prospects in the medium-term.
In the next week ahead, the US will release its latest non-farm payrolls report on Friday. According to the Citi Economic Surprise Index, data out of the world’s largest economy has been tending to outperform as of late. Better-than-expected results could magnify some of the moves seen in Treasuries, with a particular focus on average hourly earnings.
In the EU, February inflation figures from Germany Monday and the Eurozone as a whole Tuesday will be the centre of attention and any above-forecast increases would likely reinforce the view that Euro strength can be expected. German and Eurozone unemployment and retail sales figures are due too but are likely to have an impact on the Euro.
EUR/USD
The EURUSD rallied significantly during the week but then gave back all of the gains as we started to see yields in America rise yet again. Because of this, it makes the US dollar more attractive, but at the end of the day we are still very much in an uptrend.
FORECAST: NEUTRAL
Resistance: 1.2100, 1.2150, 1.2200
Support: 1.2050, 1.2000, 1.1950
AUD/USD
The AUD/USD pair plummeted on Friday to a fresh two-week low of 0.7691, closing the week a few pips above this last. Commodity-linked currencies were the worst performers at the end of the week, undermined by falling oil and gold prices.
We expect the Aussie Bears to prevail also in the next week.
FORECAST: SHORT
Resistance: 0.7750, 0.7800, 0.7850
Support: 0.7700, 0.7650, 0.7600
GBP/USD
As predicted, Prime Minister Boris Johnson’s speech on Monday 22 February, as well as the expectation of positive data from the UK labour market on Tuesday 23 February, continued to push the pair GBP/USD to the highs of 2018, raising it to the height of 1.4240.
From a technical standpoint, the trading preference is to the short side unless we see some type of reversal and consolidation. Keep an eye on risk trends as well, as stocks fall and US Dollar gain a bid.
FORECAST: SHORT
Resistance: 1.3250, 1.3300, 1.3350
Support: 1.3200, 1.3150, 1.3100
GOLD (XAU/USD)
Yellow metal prices fell significantly last week, losing as much as -5.43% from the Tuesday high to the Friday low. While recovery arguments remain, US yields have continued to rise, and inflation expectations are moving as well. The Friday Non-farm Payrolls report will be the highlight of next week, where there will likely be attention paid to the Average Hourly Earnings portion of the report.
We expect XAUUSD to continue its short trend, but all could change on Friday.
FORECAST: SHORT
Resistance: 1750, 1800, 1850
Support: 1725, 1700, 1675
USD/JPY
The US dollar was boosted significantly against the Japanese yen last week, breaking the back of the shooting star of the previous week.
We expect that every time this pair pulls back there will be bulls underneath looking to pick up the US dollar. This will be especially true if 10 year note yields continue to increase.
FORECAST: NEUTAL
Resistance: 106.75, 107.00, 107.25
Support: 106.50, 106.25, 106.00
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