Daily Market Analysis

Market Focus

Major U.S. indexes climb, buoyed by Chinese stimulus overnight, as of writing. The S&P 500 aims at its before the pandemic closing- record; the Nasdaq outperforms as a jump in several technological companies. In the meanwhile, China has decided to roll over medium- term loans and keep borrowing costs constantly for banks, assisting to life Chinese stocks as well as investor’s confidence.

After releasing the CPI last week, the Federal Reserve announces that it will soon reveal a subtle plan in how it will conduct monetary policy for the United States. The Fed has officially embraced a more relaxed perspective on inflation, setting the benchmark rate at 1.5%. At the same time, the Fed also suggests that the expectation of imposing a negative interest rates policy would not be an option in the U.S. The Fed believes that it will essentially undermine the entire premise of U.S. banking systems and U.S. financial markets.

Market Wrap

Main Pairs Movement

The dollar drops about 0.60% on a daily basis against the Aussie as a deadlock in the U.S. stimulus negotiations weighted on the dollar. At the same time, the dollar is undermined by the existence of a further escalation in tensions between the White House and Beijing; besides the recent controversy on WeChat and TikTok, the U.S. Commerce Department also discloses that it adds 38 Huawei facilities to the blacklist, inflaming concerns over a further escalation in U.S.- China relations. With all the downsides, the dollar is under pressure, pushing the AUDUSD pair higher today.

The dollar index drops around 0.20% during American trading session as of writing. The dollar index is falling as investors are uncertain of the currency as a foreign reserve. According to major banks like Bank of America, their recent survey shows that more than 40% of investors expect the amount of the dollar reserves to drop; 30% of them expect the euro to keep up its bullish mom

COVID-19 Data (EOD):

Technical Analysis:

USDCAD(H4)

The USDCAD is trading around 1.3197 as of writing. The USDCAD pair has failed to challenge the 20 SMA in the 4- hour chart from last week, and now is retesting the downtrend line, signaling high bearish pressure. The first resistance level at 1.3247 is seen as the first downside signal. A valid breakthrough suggests a selling signal. The pair is currently heading to test the support level at 1.3177; if it rebounds, it is likely to be a buy signal. Adding up to the rebounding condition, the RSI indicator seems to almost reach the lower bound at 32.63 mark., implying an oversold. As of now, it cannot confirm the future movement of the pair yet.

Resistance: 1.3247, 1.3351, 1.3414

Support: 1.3177, 1.3090

EURUSD (H4)

The EURUSD pair has been trading in a narrow consolidation zone between 1.1772 and 1.1881 for more than a week. The pair is currently trading along with the 20 SMA and the mean in the Bollinger Band. In the meanwhile, the RSI indicator suggests that the pair is still in neutral at a 61 mark. With recent news and fundamentals, the euro still remains the bulls; however, if the pair wants to breakthrough its first resistance, the momentum must need a dynamic push.

Resistance: 1.2004, 1.1881

Support: 1.1772, 1.1714, 1.1591

USDCHF(H4)

The USDCHF pair is under selling pressure, and it just merely breaks through its crucial support level at 0.9066. A downside breakout suggests a further drop in the upcoming period; currently, the pair is trading its multi- year lows. Moreover, the pair is trading firmly below the 20 SMA while Ichimoku Cloud also suggests that the pair is in the bearish trend in the 4- hour chart. Thus, USDCHF is anticipated to continue its downward trend.

Resistance: 0.9066, 0.9131, 0.9220

Support: 0.8929

Economic Data