President-elect Joe Biden promised a plan that would cost trillions of dollars. His announcement is due next week but it already put pressure on USD and thus supported dollar-priced risky assets. Saudi policy on oil production changed and they decided to cut their supply to the markets by 1 million barrels per day in February and March. This has supported oil price lately and should the vaccination projects move forward as planned there should be more demand for oil in the near future. Saudi decision to cut production suggests that they have confidence in rising oil demand that with their lower supply creates an environment for higher prices in oil. We as traders, however, don’t commit to any long term projections but always base our decisions on the latest price action as it unfolds on our screens. Price is always the ultimate truth about collective market opinion and this is why it is our only guide in trading. If the price action doesn’t support our fundamental view or the indications given by the newsflow we either stay in cash or do the opposite (e.g. trade short instead of long). GBPUSD rallied hard after penetrating a key resistance at 1.3533. Now Cable is trading near the last week high at 1.3703 and losing momentum. Gold and silver show signs of strength in higher timeframes but are now trading near resistances that need to be penetrated in order to rally higher. BTCUSD is attempting to create higher lows but rally attempts have been thwarted by a descending trendline resistance. Crude is still trending higher while the US stocks took a breather yesterday. The main risk events include the ECB President Lagarde’s speech and US CPI numbers. See our economic calendar for times and details. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

We suggested yesterday that EURUSD was losing downside momentum and a move above 1.2174 would change the technical picture likely taking the pair to 1.2208. This happened and at the time of writing this, the pair is trading at 1.2202 after rallying to 1.2223. The key support and resistance levels remain much the same as yesterday. They are as follows 1.2058, 1.2105, 1.2129, 1.2178 and 1.2282. A return move to 1.2178 level seems likely while on the upside the 1.2282 level is likely to be quite important as it coincides with the upward-pointing channel low and 22.6% Fibonacci retracement level. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.

After the sizeable drop last Friday the price of gold has created higher lows on Monday and Tuesday. This indicates strength but the yellow metal is now trading right below yesterday’s high which increases the risk of the market correcting lower before it can continue higher. Price is moving in a rising channel and as long as is stays above the lower end of the channel price action can be deemed bullish but current price action takes place near the top and could result in a correction first. The key support and resistance levels in gold are 1816.90, 1836.20, 1863.90, 1900.90, 1927.80 and 1958.90. The rising channel low support is currently at 1843. Biden’s promise of bring a proposal for an aid package worth trillions of dollars is still some way off but if there are signs of it being accepted by the law makers then it should translate into strength in the price of gold. We will monitor the developments in this front and update our readers accordingly.

Recent macroeconomic data releases

  • Canadian Ivey PMI 46.7, 53.1 expected
  • US ISM Services PMI 57.2, 54.5 expected
  • Canadian Employment Change -32.5K expected
  • Canadian Unemployment Rate 8.7% expected
  • US Average Hourly Earnings 0.2% expected
  • US Non-Farm Employment Change 60K expected
  • US Unemployment Rate 6.8% expected
  • Canadian Employment Change -62.5, -32.5K expected
  • Canadian Unemployment Rate 8.6%, 8.7% expected
  • US Average Hourly Earnings 0.8%, 0.2% expected
  • US Non-Farm Employment Change -140K, 60K expected
  • US Unemployment Rate 6.7%, 6.8% expected

Important macroeconomic data releases this week

  • ECB President Lagarde Speaks
  • US CPI 0.4% expected
  • US Core CPI 0.1% expected

You may access the times and dates in the economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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