Merry Christmas!
Last week traders experienced low volatility in the Forex market, despite the announcement that a deal between the EU and the UK had been agreed, due to the Christmas holidays. The low volatility in the FX marker is likely to continue over the week as many countries have public holidays this week, including London banks closing this Monday and Friday.
The announcement of the trade resolution between the EU and the UK, last Thursday, pushed up the pound The deal is almost certain to be approved by the British Parliament this Wednesday and should then come into effect on Friday as 2021 begins. Traders are expected to see volatility to rise after the start of 2021 as the Brexit deal will unfold in reality and show the effects of the breakup.
The key issue of entree to fishing waters around the UK, has been resolved. The UK will allow a 5 ½ year transition period to incorporate new rules and laws on how much fish the EU can catch. Afterwards, the fishing laws will be reviewed annually.
In the US last week, the major story was the Congress passing a new $900 billion stimulus bill which would deliver a one-off payment of $600 to all adult Americans. Nevertheless, President Trump has declined to sign the bill, calling for the payment to be raised to $2,000 and for several ancillary provisions to be dropped. On the Covid-19 situation in the US, there’s seem to be a significant decline in confirmed new cases, over the past week.
In addition, for the first time in many weeks, last week did not have any rate of increase in the number of new cases globally. The EU and US are reporting comparable levels of new cases and deaths, with the rise in cases seemingly beginning to cool off.
To conclude, it is likely to see low volatility in the Forex market due to the continued holiday season and an absence of important economic releases. We are looking beyond the start of 2021 for any significant moves.
EUR/USD
Last week, the EURUSD ended up on the downside due to the Brexit talks and resolution.
This week we expect to see a choppy price movement due to the resolution of the trade deal and due to the holiday season. We stand neutral.
FORECAST: NEUTRAL
Resistance: 1.2200, 1.2225, 1.2350
Support: 1.2150, 1.2125, 1.2100
AUD/USD
The AUSUSD last week saw a small bull run trying to retest the 0.7838 peak.
This week we expect the bullish trend to continue due to the continuing weakening of the dollar.
FORECAST: LONG
Resistance: 0.7650, 0.7700, 0.7750
Support: 0.7575, 0.7550, 0.7500
GBP/USD
Last week the pound has a small bull run constricted by the low liquidity in the market.
This week we remain bullish but again without significant moves dues to the holiday season
FORECAST: LONG
Resistance: 1.3575, 1.3600, 1.3650
Support: 1.3500, 1.3450, 1.3400
GOLD (XAU/USD)
Last week saw a bull run on the Gold. The US Dollar is still expected to continue falling in all markets but with low liquidity due to the holiday season.
We expect the XAUUSD to lose steam and start a bearish trend from the new year as vaccines will get more common globally and Brexit deal reached.
FORECAST: SHORT
Resistance: 1900, 1925, 1950
Support: 1875, 1800, 1750
