Forex News Analysis by LiteForex

XAU/USD: wave analysis

The correction ends, the pair may grow.

On the daily chart, the third wave of the higher level (3) formed, a downward correction developed as the wave (4), and the wave (5) forms. Now, the first entry wave of the lower level 1 of (5) has formed, and a local correction is ending to develop as the wave 2 of (5), within which the wave c of 2 has formed. If the assumption is correct, the pair will grow to the levels of 1959.38–2075.45. In this scenario, critical stop loss level is 1763.20.

EUR/USD: wave analysis

The pair may fall.

On the daily chart, the first wave of the higher level 1 of (3) developed, and a downward correction forms as the second wave 2 of (3). Now, the wave a of 2 is developing, within which the third wave of the lower level (iii) of a has formed, and a local correction is developing as the wave (iv) of a. If the assumption is correct, after the end of the correction, the pair will fall to the levels of 1.1880–1.1684. In this scenario, critical stop loss level is 1.2191.

XAG/USD: wave analysis

The pair may grow.

On the daily chart, the first wave of the higher level 1 of (3) formed, and a downward correction developed as the wave 2 of (3). Now, the third wave 3 of (3) is forming, within which a local correction has developed as the wave ii of 3, and the wave iii of 3 is forming. If the assumption is correct, the price will grow to the levels of 33.00–35.00. In this scenario, critical stop loss level is 25.82.

EUR/USD: local trend reversal

Current trend

The EUR/USD pair is correcting upward, trading around the level of 1.2125. EUR is trading neutral against other major competitors but is significantly strengthening against USD.

The main topic of discussion in Europe remains the consequences of the COVID-19 pandemic. Yesterday, the Austrian authorities said that a large outbreak of the South African strain of the virus was recorded in the Tyrol region. 400 cases of the suspected virus have been reported, of which 293 have been confirmed. Due to a sharp increase in the number of new cases, the Greek authorities have decided to close schools and non-grocery stores for at least 2 weeks. The number of new cases in the country in the past day alone amounted to 1526.

USD Index continues to decline, trading at 90.300. Yesterday, the US Senate decided that the impeachment procedure of former President Donald Trump is not contrary to the constitution. 56 senators voted for this, and 44 against. However, to recognize the impeachment itself, at least 67 votes of members of the Senate are required.

Support and resistance

Locally, the price has broken the resistance line of the local downtrend and consolidated above it. Technical indicators gave a buy signal. Fast EMAs on the Alligator indicator crossed the signal one upwards, and the AO oscillator histogram moved into the positive zone.

Resistance levels: 1.2173, 1.2340.
Support levels: 1.2062, 1.1958.

EUR/USD: consolidation at local highs

Current trend

EUR shows the flat dynamics of trading against USD during today's morning session, consolidating after another renewal of local highs the day before. The reason for the emergence of multidirectional dynamics was the correctional sentiment for USD, which received support after the disclosure of some details of the previously announced plan to stimulate the US economy in the amount of USD 1.9 trillion. At the same time, published macroeconomic statistics from the USA often exert moderate pressure on USD positions, as, for example, in the case of data on consumer inflation, which appeared on Wednesday.

In turn, the macroeconomic statistics from Europe, published on Wednesday, turned out to be neutral. The Consumer Price Index in Germany in January rose by 0.8% MoM and 1% YoY, which coincided with market expectations and data for the previous period.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is slightly changing, being spacious enough for the current activity level in the market. MACD indicator is growing preserving a stable buy signal (located above the signal line). The indicator is about to test the zero line for a breakout. Stochastic retains upward direction but is located near its highs, which indicates the risks of overbought EUR in the ultra-short term.

Existing long positions should be kept in the short and/or ultra-short term until the signals from technical indicators clear up.

Resistance levels: 1.2150, 1.2200, 1.2234, 1.2271.
Support levels: 1.2087, 1.2052, 1.2000, 1.1951.

Brent Crude Oil: wave analysis

The price may rise.

On the daily chart, the development of a downward correction of the higher level as wave B was completed and the formation of the ascending wave C began, as part of which the first wave 1 of (1) of C is developing. At the moment, the third wave of the lower level iii of 1 is forming, within which wave (iii) of iii is developing. If the assumption is correct, one may expect the growth of the price of the asset to 65.00–70.00. The level of 57.20 is critical and stop-loss for this scenario.

XAG/USD: wave analysis

The pair may grow.

On the daily chart, the first wave of the higher level 1 of (3) formed, and a downward correction developed as the wave 2 of (3). Now, the third wave 3 of (3) is forming, within which a local correction has developed as the wave ii of 3, and the wave of the lower level (i) of iii of 3 is forming. If the assumption is correct, the price will grow to the levels of 33.00–35.00. In this scenario, critical stop loss level is 25.82.

Brent Crude Oil: trading near record highs

Current trend

Today, during the Asian session, oil prices change slightly, holding near record highs at $64 per barrel.

The instrument is supported by an improvement in the global epidemiological situation amid the rapid spread of vaccines. Markets are hoping that there will be no new restrictions this year, although it is clear that it will not be possible to complete vaccination campaigns completely. Additional support for the quotes is provided by the restrictive OPEC+ policy. Despite the gradual recovery of the energy market, many countries are in no hurry to return to the previous production volumes, which positively affects the supply.

Friday’s US Baker Hughes' report on active oil platforms reflected another rise in the number of rigs from 299 to 306 units, indicating a gradual recovery in the US oil sector.

Support and resistance

Bollinger bands are growing steadily on the daily chart. The price range is narrowing from the bottom, reflecting the ambiguous nature of recent trading. The MACD indicator is growing, maintaining a relatively strong buy signal (the histogram is above the signal line). Stochastic reversed upwards; however, it is near its highs. The indicator readings indicate that the instrument is strongly overbought in the nearest time intervals.

Development of a corrective decline is possible in the short and/or super-short term.

Resistance levels: 64.00, 65.00, 66.00.
Support levels: 63.00, 62.00, 61.00, 60.00.

EUR/USD: US yield rising supports the dollar

Current trend

Yesterday, with the opening of trading on the New York Stock Exchange, the EUR/USD pair sharply changed its direction of moving. US Treasury yields renewed annual highs, reaching the level of 1.292% on 10-year notes and 2.095% on 30-year notes. Meanwhile, the stock market corrected downward from local highs, closing below the opening level.

The EU Q4 2020 GDP decreased by 0.6% and by 5.0% YoY. Employment is recovering but slowly, rising only by 0.3% QoQ. The February index of economic sentiment from the ZEW rose to 69.6 points from the previous reading of 58.3.

In general, the greenback is expected to strengthen further before the adoption of the US $1.9 trillion financial stimulus bill. The correction of the euro towards a long-term uptrend is likely to continue but investors should pay attention to the ECB monetary policy statement at 10:00 (GMT+2) today.

Support and resistance

Initially, the instrument was in a strong resistance area of ​​1.2175–1.2160 but after the release of news on the EU and the US, the rate dropped to 1.2110.

The RSI indicator is in the neutral zone. The instrument is moving within a medium-term downtrend, the key resistance of which is the margin zone 1.2128–1.2112. While this area is held, it is worth opening short positions with a target in the area of ​​the February low.

Resistance levels: 1.2175, 1.2320.
Support levels: 1.1975, 1.1925.

Morning Market Review

EUR/USD

EUR shows flat dynamics of trading against USD during today's Asian session, consolidating after an active decline the day before, as a result of which the instrument has updated local lows since February 8. USD was supported yesterday by strong macroeconomic data from the US on the dynamics of retail sales. In January, sales volumes increased by 5.3% MoM after a decline of 1% MoM in the previous month. Analysts had expected "bullish" trend to appear, but counted only on +1.1% MoM. Excluding car sales, the indicator in January increased by 5.9% MoM, which is also significantly better than the market forecasts of +1% MoM. Industrial production data for the same period was not so optimistic. In January, production slowed down from +1.3% MoM (revised from +1.6% MoM) to +0.9% MoM. However, the real dynamics again turned out to be noticeably better than market expectations at +0.5% MoM.

GBP/USD

GBP is trading ambiguously against USD during today's morning session. The day before, the instrument retreated from its record highs, responding to the strengthening of USD in response to the publication of strong macroeconomic statistics on retail sales in the US. In turn, the British statistics were not so optimistic. The Consumer Price Index in the UK in January fell by 0.2% MoM after growing by 0.3% MoM in December. Analysts, however, had expected a twice as strong fall. On an annualized basis, the index accelerated from +0.6% YoY to +0.7% YoY, beating the forecasts of +0.5% YoY. The Retail Price Index for the same period fell by 0.3% MoM after rising 0.6% MoM at the end of last year. Analysts had expected decline by 0.4% MoM.

AUD/USD

AUD is relatively stable against USD in Asia today. The instrument is consolidating near 0.7750, recovering slightly after the decline at the beginning of the week. The focus is on macroeconomic statistics on the labor market from Australia. The Unemployment Rate in Australia in January fell from 6.6% to 6.4% against the forecast of 6.5%. At the same time, the Employment Change increased by only 29.1K after an increase of 50K in December. Analysts expected growth of 40K. Curiously, the growth in employment as a whole is due to an increase in the level of Fulltime Employment, while Part-Time Employment in January fell by 29.8K jobs. The Participation Rate in January fell slightly from 66.2% to 66.1%.

USD/JPY

USD is showing a slight increase against JPY in trading this morning session, trying to win back some of the losses suffered the day before. USD is still supported by the positive macroeconomic data from the US on the dynamics of retail sales, released on Wednesday, and many analysts associate the appearance of negative dynamics only with technical factors. Today, investors are focused on the statistics on the dynamics of jobless claims in the US. The indicator is expected to continue its moderate decline, reflecting the gradual recovery in the US labor market after the pandemic. It is also worth paying attention to the publication of data on the dynamics of building permits in January and the Philadelphia Fed Manufacturing Survey for February. Interesting statistics from Japan will appear only on Friday with the release of the inflation cut in January-February and Jibun Bank Manufacturing PMI for February.

XAU/USD

Gold prices are showing quite active growth during today's morning trading session, offsetting the no less active decline the day before, which led to the renewal of local lows since November 30. The uptrend was triggered by technical factors, while USD gained additional support in the form of strong US retail sales data for January. In turn, investors are still expecting the development of the situation with the stimulus package for the US economy at USD 1.9 trillion. It is predicted that the approval of such an expensive program, taking into account the current situation in the US domestic market, will lead to a noticeable increase in inflationary pressures. In the meantime, traders are more interested in the yield of US Treasury securities, which are breaking new local records.