Market Insights 13 January 2020

Market Overview

The US dollar has been holding despite a disappointment in the Non-farm Payrolls data on Friday, starting out the week in a quiet Asian session in the 97.35/42 range and supported by the 50-hour moving average. On Friday, the US December Non-farm Payrolls rose 145k versus market expectations of 162k and the November gain was pared back to 256k from 266k. Moreover, the Average Hourly earnings were a disappointment at 2.9% YoY (est. 3.1% YoY) and there was a very mild lowering in the average workweek to 34.3 hours. AUD/USD has picked up fresh bids over the last hour and hits fresh four-day highs near 0.6915 region, in the wake of improving sentiment on trade deal optimism and latest S&P report on Australian economy while markets gear up for a big week ahead. Gold is consolidating around $1,558/61 at the start of the week following a slight pick up from the 200-hour moving average after US Non-farm Payrolls disappointed on Friday.

Forex Calendar

? Australian Eastern Standard Time (AEST)

The EUR/USD pair has bounced from a weekly low of 1.1084 to settle at around 1.1130, still below 1.1140, the 61.8% retracement of its late December rally. The daily chart shows that the pair is below its 20 and 200 SMA, both converging a handful of pips above the mentioned Fibonacci resistance, while the 100 SMA lacks directional strength at around 1.1065, a strong static support level. Technical indicators in the meantime, head nowhere around their midlines, offering a neutral stance.

The GBP/USD pair is stuck around the 23.6% retracement of its latest daily slump and gaining bearish potential according to technical readings. In the daily chart, a mild-bearish 20 SMA capped the upside by the end of the week, providing dynamic resistance at around 1.3100. Technical indicators hover around their mid-lines without clear directional strength. In the 4-hour chart, the pair is neutral-to-bearish, developing below a congestion of moving averages, and as technical indicators head south below their mid-lines. The weekly low at 1.3013 is the immediate support, while a more relevant one comes at 1.2970.

The USD/JPY pair’s bullish stance persists, although it’s losing momentum. In the daily chart, the pair is still above all its moving averages, while the Momentum indicator is barely entering positive levels. In the shorter term, and according to the 4-hour chart, the bearish potential is limited, as technical indicators are easing from extreme overbought levels, while the pair develops above all its moving averages. A firmly bullish 20 SMA is crossing above the larger ones. The pair could turn bearish once below 108.90 a critical Fibonacci support level. The resistance level is at 110.00.

AUD/USD takes the bids to 0.6911 during the early Monday. In doing so, the pair extends recovery gains beyond 200-day SMA, which in turn pushes buyers towards a 20-day SMA level of 0.6916. Even so, highs marked in October and December months around 0.6930-0.6940 will restrict pair’s further upside, if not then 0.7000 will offer an intermediate halt during the run-up to the monthly top around 0.7040.

Gold is consolidating around $1,558-$1.561 at the start of the week following a slight pickup from the 200-hour moving average after US Non-farm Payrolls disappointed on Friday. Iran/US de-escalation/conflict moves to the back burners, trade comes back to the fore. Now the gold keeps the pattern of consolidation. The support is $1540, and the resistance is at 1562. If the gold price breaks through $1540-$1550, spot gold price will drop further.

WTI has been trading in a tight range between $58.66 and $59.16 at the start of the week following a sideways range of between $58.65 and $59.75 when prices dropped on a de-escalation of the Iran/US conflict last Wednesday. The support now is at $58.66. On H1 chart, the prices show a descending triangle.