The currency pair closed at 1.13303 (∆+0.355%) for the week. In November, prices hit a low of 1.1215. Despite a number of bearish drivers pressuring the currency and the Eurozone economy, EUR/USD have continued to move in a range. How long will it continue to range? With the dovish Fed stance after recent FOMC meeting and the US-China trade talks likely to conclude without an extension beyond 1 Mar, will the pair be able to stage a breakout in coming weeks?
Brexit and UK political developments continue to dent sentiments surrounding GBP/USD. Price closed at 1.30532(∆+1.29%) for the week. There was a slight increase in the buying force but still lacks of firm upward momentum. Price currently sits at the critical resistance zone 1.30 – 1.323. It is widely speculated that it is unlikely a meaningful vote on the Brexit deal on February 27 will happen. The pair appears to be headed for more volatility as Brexit continues to drag on the UK economy.
The AUD/USD slumped to a one-week low, partly triggered by reports that China’s Dalian port authorities banned Australian coal imports and weaker than expected PMIs by IHS Markit. Meanwhile, trade talks between the US-China in Washington made good progress and there are increasing hopes for an agreement in principle to be reached soon. The China-proxy Australian Dollar remained supportive during intraday trading on Friday and managed to retake the 0.7100 handle. It closed as a bearish doji candle for the week. The pair is still under bearish pressure at 0.705 support zone and will continue to be vulnerable as long as US-China trade war remains unresolved.
The NZD/USD built on its intraday bounce and is currently sitting at the top end of its daily trading range. Price closed at 0.68391 with strong bullish candle albeit low volume. The latest optimistic outcome of US-China trade talks turned out to be one of the key drivers in extending support to perceived riskier currencies like the Kiwi (NZD/USD) and triggered some short-covering trade. Meanwhile, we will have data releases on retail sales QoQ and ANZ Business Confidence this week. Will the data prove to be strong enough to support a break above resistance level of 0.69 or will it be insufficient and cause the pair to range for a period of time?
The USD/CAD failed to build on its bullish momentum from prior week and continued to decline with price closed at 1.31359 for the week. From the daily chart, the bearish trend is establishing with volume increasing. However, the price is still above the weekly bull trendline despite price action showing bear candles in both the daily and weekly charts. The inflation and GDP data are key focus of this week. Both inflation and growth figures may have a lasting impact on the currency pair. In the meantime, WTI Crude Oil is on an upbeat momentum.
The currency pair failed to surpass a weeklong descending resistance level and may favor a drop to the 0.9985 horizontal support on the daily chart. From our previous article, a pullback to the support levels at 0.989 and 0.980 is possible while volume picks up over the next few weeks.
The USD/JPY traded ranged for a week which was dominated by US Dollar weakness and amid a sharp drop in 10-year US T-bond yield. Despite the decline in yields, the greenback continues to fluctuate in a tight daily range. It closed at 110.653 for the week. From the daily timeframe perspective, the currency pair rallied for the majority of this year and is currently testing resistance levels in the 110.293-111.449 range. Markets will be closely eyeing the release of December’s US retail sales MoM, in addition to the preliminary University of Michigan consumer sentiment for the month of February.
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Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support