Last week, we saw a continuing up trend in stock markets and in riskier currencies such as the pound, the euro, and the Australian dollar and a strong negative trend in the US dollar. Also, we have seen stock market indices make new all-time highs. Even though there were key central bank releases from the U.S.A., the U.K. and Switzerland, they contained no surprises, but the FOMC gave fresh impetus to the greenback’s decline.
The newest news on the EU/UK Brexit talks is pessimistic concerning a prospect of a deal, which seems that will be negative for the British pound when markets open later today. The UK also faces the problem of a more transmittable strain of the Covid-19 which is heading to an increase in the UK lockdown restrictions and prompting other countries to consider banning entrance from the UK.
This week markets are expected to see less activity in the Forex market as there are no high-impact releases scheduled and with the Christmas holiday looming before the end of the week.
The major story last week in the US, has been the strong increase in new daily confirmed Covid-19 cases, with new hospitalizations and deaths also continuing to rise strongly. Numerous US states have announced new lockdown measures and other restrictions in an attempt to stop the spread of the virus.
Last Thursday, there were an all-time record number of new daily Covid-19 cases confirmed globally, at 738,913, and last Wednesday saw an all-time high in global daily Covid-19 deaths, at 13,696. The EU and the US are reporting comparable levels of new cases and deaths, with the increase in cases seemingly beginning to level off in the U.S.
EUR/USD
Last week saw the Euro continuing the recent bull trend with a weakening US dollar.
This week’s trading will be difficult due to lack of liquidity at times, and the irregular large order moving the market. However, we expect that the euro is going to test the 1.23 level so keep looking for dips as short-term buying opportunities.
FORECAST: LONG
Resistance: 1.2275, 1.2300, 1.2350
Support: 1.2200, 1.2175, 1.2150
AUD/USD
The Aussie last week closed above the 0.7600 price level. The candlestick closed quite near to the peak of its price range, suggesting that the price is probable to rise further over the coming week. A further bullish sign is that the price has cleared the round number at 0.7600.
This week we expect the bullish trend to continue testing the 0.7700 level.
FORECAST: LONG
Resistance: 0.7650, 0.7700, 0.7750
Support: 0.7600, 0.7550, 0.7500
GBP/USD
The pound continues to wait for politicians to get it together, as far as the Brexit negotiations are concerned. It seems though we are getting nearer to a deal it seems, and we are most certainly in “crunch time.” It is expected that the two sides will eventually agree, based on the fact that the pound refuses to fall for a significant amount of time.
FORECAST: LONG
Resistance: 1.3550, 1.3600, 1.3625
Support: 1.3450, 1.3400, 1.3350
GOLD (XAU/USD)
The US Dollar is expected to continue falling in all markets but with low liquidity due to the Christmas season.
FORECAST: LONG
Resistance: 1900, 1925, 1950
Support: 1875, 1800, 1750
USD/JPY
The dollar continues to fall against the Yen, as it has been doing all year now. This is due to stimulus, and possibly based on a little fear out there in the markets. We are seeing is a simple continuation of what has been the case for so long. With that, we will find trading opportunities going forward if we simply just wait for short-term rallies to fade. Longer term, I believe that we are going to go looking towards the 102 level.
FORECAST: NEUTRAL/RANGE
Resistance: 103.75, 104.00, 104.15
Support: 103.15, 103.00, 102.75
