Last week was full of surprises! The US dollar plunged despite a better-than-expected retail sales report…
USD is on the back foot after Trump's comments
Investors continue to assess the vaccine rollout versus fears over a new virus variant, which led to the lockdown in the UK and travel restrictions. This new Covid-19 strain is 70% more contagious than the previous one. Vaccine makers believe their shots will also work against the new strain, but this information hasn’t been proved yet, that’s why biotech companies will take performing tests in a few weeks.
US stocks and oil slipped as Donald Trump threatened not to sign a long-awaited stimulus bill into law because he disagreed with too high foreign spending and “ridiculously low” $600 checks for individuals. Analysts still believe that President will eventually sign the bill at the last possible moment. The market sentiment had been already fragile, and Trump’s comments worsened it even more.
As for the Brexit deal, EU-UK talks remain stuck around fisheries. Elsewhere, the UK published its final GDP for the third quarter, which came out better than analysts expected: 16% vs. the forecast of 15.5%. GBP/USD has started the day on a positive footing. It has just broken through the key psychological mark of 1.3400 but has stopped ahead of the 50-period moving average. If it manages to break it, the pair will jump to the next resistance of 1.3450 of Monday’s high.
Let’s move on to EUR/USD. The pair is trading in an ascending channel and it has bounced off the lower trendline. However, it met some selling pressure ahead of the 50-period moving average at 1.2190. If it manages to break it, the way up to the recent highs of 1.2240 will be open. Support levels are 1.2150 and 1.2130.
Gold is trading in a descending channel. Since it touches the upper trendline, we can expect further falling. There is an interesting moment on the chart as XAU/USD is stuck between the support of the recent lows at $1 860 and the resistance of the 50-day moving average of $1 870. If it breaks $1 860, the way down to the 200-day moving average of $1 825 will be clear. If it crosses $1 870, it may jump to the high of December 17 at $1 890.
Finally, let’s discuss USD/CAD. The Canadian dollar is losing against the US dollar due to the current cautious sentiment on the market. Therefore, USD/CAD surged. However, the 200-period moving average of 1.2935 stopped it from further rising. Pay attention to the Canadian GDP release and US unemployment claims at 15:30 MT time, which will impact the pair. If the Canadian data comes better than the forecasts and the US data – worse, USD/CAD will drop. Support levels are at 1.2850 and at the 100- and 50-period moving averages of 1.2820 and 1.2775.
Last week was very interesting for the markets, as we saw the releases of the US Inflation and Disney’s earnings report. So let's see what we should await this week!
The volatility that the markets experienced last week promises the second tidal wave! What should your favorite assets anticipate during the first week of February?
The US Bureau of Economic Analysis will publish Core Personal Consumption Expenditures (PCE) on May 27 at 15:30 GMT+3.
The United States will publish the Preliminary GDP on Thursday, May 26, at 15:30 GMT+3.
The Reserve Bank of New Zealand will publish a monetary policy report and make an update on the interest rate on May 25, at 05:00 GMT+3.