USD strengthened as optimism waned

USD strengthened as optimism waned

Fundamentals

  • The market optimism waned amid stricter restrictions to control rising coronavirus infections. S&P 500 and Nasdaq dropped from the all-time highs, while the USD jumped higher.
  • President Joe Biden warned that the Covid-19 pandemic will worsen before it improves.
  • Hong Kong will for the first time lock down tens of thousands of citizens to take the virus spread under control. It added to the overall risk-off tone in markets.
  • ECB President Christine Lagarde cautioned that the Covid-19 continues to present a severe risk. The central bank will continue pumping huge amounts of money to support the economy.
  • Elsewhere, oil dropped amid Friday’s risk-off mood.
  • All attention to PMI reports from the EU, UK, and USA during the day.

Technical tips

EUR/USD

Since the pair touches the upper line of Bollinger Bands, we can assume that it should fall till it reaches the 50-period moving average of 1.2140. The move below this level will drive the euro lower to the next support of 1.2100. Resistance levels are 1.2180 and 1.2220.

EURUSDH4.png

GBP/USD

The British pound dropped below the key support of 1.3700, but the 50-hour moving average constrained the further falling. It’s more likely to reverse up as it could be just a natural selling after the breakout above 1.3700. If it rises above 1.3740, the way up to 1.3750 will be open.

GBPUSDH1.png

Gold

XAU/USD is trying to break down the support of $1 860 but has failed to do it so far. If it manages to do so, it will plunge to the 50-period moving average of $1 850. On the flip side, the move above yesterday’s high of $1 875 will push the pair up to $1 885.

XAUUSDH4.png

AUD/USD

The aussie may turn to the upside now as it touches the 50- and 100-period moving averages at 0.7730. The move above yesterday’s high of 0.7780 will drive the pair up to 0.7800. Support levels are 0.7730 and 0.7690.

AUDUSDH4.png

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