The US Federal Reserve’s new eagerness to discuss tapering of its asset purchase program, was the main headline last week. This was disclosed in the FOMC meeting minutes release did not have a major effect in the markets. The yellow metal, gold is rising, while the Canadian dollar has the strongest long-term trend of any major currency with the US dollar remaining weak.
In the last week, we saw the global number of confirmed new Covid-19 cases drop for the third week going, indicating that the recent surge which saw a new record daily high has possibly peaked globally. The vaccination campaign seen mainly in more developed economies has added substantially to this improvement.
In the coming week, the most important announcements will be the preliminary US GDP data on Thursday and a testimony from the Bank of England before Parliament on Monday and the monthly policy release from the Reserve Bank of New Zealand scheduled for this Wednesday. Monday is expected to be slow with the Swiss, French, German banks will be closed in observance of Whit Monday. Also, Canadian banks will be closed in observance of Victoria Day.
Major Currencies Performance and Signals
EUR/USD
The euro initially raced higher during the trading session at the end of the week but gave back the gains above the 1.22 handle. We believe that the Euro will continue in range but will also be a “buy on the dips” opportunity as the US dollar continues to fight back.
FORECAST: NEUTRAL
Resistance: 1.2200, 1.2250, 1.2300
Support: 1.2150, 1.2100, 1.2050
GBP/USD
The Cable is in the same scenario with the EURUSD as the market is expected to be ranging and an opportunity might be found on the dips.
FORECAST: NEUTRAL
Resistance: 1.4150, 1.4200, 1.4250
Support: 1.4100, 1.4050, 1.4000
AUD/USD
Last week, the Aussie finished the week with a bearish trend after a ranging neutral session. We expect next week that the AUDUSD will continue the bearish trend downwards.
FORECAST: SELL
Resistance: 0.7750, 0.7800, 0.7850,
Support: 0.7700, 0.7650, 0.7600
USD/JPY
US Treasury yields held at the lower end of their weekly range in spite of optimistic US data. The US Dollar’s demand is not sufficient to drive the pair above the 109.00 mark. The USDJPY is bearish in the near-term, with critical support at 108.50.
FORECAST: SELL
Resistance: 109.00, 109.50, 110.00
Support: 108.50, 108.00, 107.500
USD/CAD
The US dollar rebounded significantly from the 1.20 price line, an area that has been vital and if we crack down below that level, then it is likely that we could break down rather significantly to go looking at much lower levels. We expect the bearish trend to continue this week as well.
FORECAST: SELL
Resistance: 1.2100, 1.2150, 1.2200
Support: 1.2050, 1.2000, 1.1950
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