Market Focus

US equities oscillated throughout the NA trading session, but tech stocks were still outperforming other sectors. The Nasdaq Composite Index gained 0.43%, while the S&P Index and Dow Jones Industrial Index were little moved.

US President Joe Biden had his first conversation with Chinese leader Xi Jinping since inauguration. Biden expressed his concern about China’s “coercive and unfair economic practices” as well as human rights abuses in the Xinjiang region.

US initial jobless claims decreased by 19,000 to 793,000 in the week ended Feb.6 but still failed to beat economists’ forecast of 757,000. While the labor market recovery remains bumpy, job growth should improve as the number of COVID-19 cases decline, business reopens, and vaccinations accelerate.

The Fed chairman Jerome Powell gave a speech on Wednesday, he called on both lawmakers and the private sector to support workers. There remains a long way from a full recovery, it will require a more supportive monetary policy to achieve and sustain full employment. More importantly, Powell stated that the Fed will not tighten policy until seeing a better state in the labor market. He also downplayed inflation, prompting some selling pressure on the US greenback and treasury yield.

Some follow up on Donald Trump’s second impeachment. Prospects grew that the impeachment may end as soon as Saturday. The House managers plan to begin presenting their case on Friday. Assuming neither side seeks to call witnesses, the trial would end with up to four hours of questions from senators, other possible motions, and a vote on the outcome.

Market Wrap

Main Pairs Movement

Eurodollar edged higher against the US dollar amid uneven development in the Forex space. Dovish comments from Fed chairman Jerome Powell weighed on the dollar as he indicated that the rate is here to stay until employment and inflation are restored to optimal levels.

Cable pulled back 0.15% on Thursday as the pair struggled to find strong footing around the key resistance level. However, fundamentals on the Pound are poised to lead price to higher ground. UK’s vaccination rollouts have reached nearly 20% of the population, far outpacing its main rival the US, and the EU.

Early movement in the Gold market was fairly muted, then the price took a hit during the mid-US trading session, closed the day at around $1825. The bears are in an attempt to erase all of the early week’s gain. Rising 10-year yield continues to divert demand from the safe-haven metal, up 2.4 bps on Thursday.

Aussie gained 0.37% after Australian Treasury Secretary Steven Kennedy said the “We are quite confident now that the recovery is locked in.” Price was once hit 0.7772, the highest we have seen in three weeks. On the other hand, Kiwi’s rally was relatively dismal, up 0.13%.

Technical Analysis

EURUSD (Daily Chart)

The story of the Eurodollar is essentially unchanged from yesterday besides adding confirmations to our previous theory. The pair has managed to reclaim 1.206 support and is clinging to the short term descending trendline. The yellow upward trendline has previously proven itself to be worthy of defending, now the bulls are in charge of another attack. However, there have been several layers of defense line set up the bears, the first being the blue descending trendline, next to horizontal resistance of 1.2173, then the January’s high of 1.2333. The more rejections we see upon confronting the blue downward trendline, the higher the likelihood of a retreat. On the south, near support sits around 1.206, followed by 1.193.

Resistance: 1.2173, 1.2333

Support: 1.206, 1.193

GBPUSD (Weekly Chart)

The cable is well placed in an upward trending tunnel since last April and is currently meeting some stubborn resistance around 1.38. It came on top of the 1.38 hurdle from March 2018, but we still have one more trading day to confirm whether if it can overcome this hurdle. It is hardly any surprises to see the Pound clinging to the Bollinger upper band in the longer term since it was severely subdued from Brexit shock. However, a retreat from here seems plausible since the weekly RSI figure is one step away from overheating, currently hovers around 66.5.

Resistance: 1.416, 1.4625

Support: 1.38, 1.338, 1.2769

XAUUSD (Daily Chart)

Gold preciously formed a double-top pattern on the daily chart, which usually points to a bearish trend. Price seems to be stuck within the previous support band between $1838 and $1823. Moreover, it failed to stand on top of the previous neckline, which speculators usually perceive as a strong sell signal. That being said, it would be prudent to wait for a convincing breakthrough from either side of the support band since we cannot completely rule out a sudden strengthening of the bulls. In other words, recent dollar weakness could prompt demand for the precious metal. MACD on the daily chart is still undergoing a bullish reversal.

Resistance: 1839, 1872, 1930

Support: 1823, 1765, 1691