USD surged, gold dropped on Friday

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Stock indices such as Nasdaq and S&P 500 dropped as investors turned their views from tech giants as Amazon, Facebook, and Google to companies that will benefit from an end of lockdowns. Besides, GameStop surged again yesterday by 190%, and that shocked investors as everybody thought the stock would stabilize after a rally in January.
Investors try to decipher Fed’s intentions. On the one hand, Fed’s Chair Powell pledged to keep bond-buying and rates unchanged for a long time. On the other hand, investors see that the global economy is recovering and that raise concerns that the Fed will keep its promise.
The 10-year US yield surged to its highest level since June, which added pressure to riskier assets that have benefited from policy easing amid the pandemic. The surge in global yields and a slump in stocks have puzzled investors as it’s unclear whether the trend continues or something stops it. Both the USD and JPY are safe-haven currencies, but the yen tends to fall when US yields rise, while the US dollar tends to go up.

Technical analysis

EUR/USD has dropped to the 50.0% Fibonacci retracement at 1.2150. Since this level lies at the intersection of the Fibo level and the 50-day moving average, it’s strong support. That’s why the pair will pull back up rather than beak out. If it manages to break the 61.8% Fibo level at 1.2200, the way up to the next resistance at 1.2260 will be clear. Support levels are 1.2100 and 1.2030.

GBP/USD plunged below the support of 1.3950, clearing the way down to the low of February 17 at 1.3850. It’s unlikely to break it on the first try, but if it does, it may drop to the next round number of 1.3850. Resistance levels are 1.4000 and 1.4200.

USD/JPY is struggling to break the resistance of 106.50. If it jumps above it, the way up to the psychological mark of 107.00 will be open. On the flip side, the move below 106.00 will drive the pair down to the low of February 24 at 105.80.

Gold keeps moving in a descending channel both in the long and in the short term. If it manages to break the support of $1 760, the way down to the May low of 2020 at $1 730 will be clear. Resistance levels are $1 800 and $1 825.

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Kseniya Medik

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