07-Apr-2021

1) EUR/USD: Bulls Take A Breather Below 200-DMA, FOMC Minutes Eyed
2) GBP/USD: Bears Challenge Two-Week-Old Trend-Line Support Near 1.3770
3) XAU/USD: Gold Awaits Fresh Impetus Ahead Of FOMC Minutes, Levels To Watch

1) EUR/USD: Bulls Take A Breather Below 200-DMA, FOMC Minutes Eyed

Having faced rejection once again below the 200-DMA at 1.1890, EUR/USD is easing towards 1.1850. The US dollar selling pauses amid stabilizing Treasury yields. All eyes remain on the dollar dynamics and the FOMC minutes.

Heading into the key event risk from this week, the FOMC March meeting’s minutes, investors re-price the Fed rate hike expectations, triggered by the recent series of encouraging US fundamentals.

This led to the sell-off in the Treasury yields across the curve, which accelerated profit-taking in the US dollar, having reached four-month highs against its main competitors last week.

Meanwhile, nothing in terms of economic news or covid conditions justifies the latest upswing in the euro. “The euro’s gain can be put down to a pause in dollar short-covering that allowed a move to form a small bandwagon. Given the expectation of the US surpassing the eurozone in just about everything—job recovery, GDP, vaccinations, early taper—can we really expect the euro to match and surpass the previous high?,” explains Barbara Rockefeller at Rockefeller Treasury Services, Inc.

All eyes remain on the FOMC minutes for any hints on the Fed’s take on the inflation outlook and the forward guidance. In the meantime, the Euro area final Services PMI and US trade balance will entertain the traders. The pair will also remain at the mercy of the dynamics in the US dollar and yields.

2) GBP/USD: Bears Challenge Two-Week-Old Trend-Line Support Near 1.3770

The GBP/USD pair extended the previous day’s sharp retracement slide from over two-week tops and witnessed some follow-through selling for the second consecutive session on Wednesday.

A sustained break below the 1.3800 mark, which coincided with the 200-hour SMA, was seen as a key trigger for intraday bearish traders. The downward momentum dragged the GBP/USD pair to four-day lows, around the 1.3770 region, which marks a near two-week-old ascending trend-line support.

Meanwhile, technical indicators on hourly charts have been gaining negative momentum and just started entering the bearish territory on the daily chart. The set-up supports prospects for an extension of the ongoing bearish trend amid a modest pickup in the US dollar demand.

A convincing break below the ascending trend-line support will reaffirm the bearish bias and turn the GBP/USD pair vulnerable to fall further towards the 1.3700 mark. Some follow-through selling should pave the way for a slide to retest multi-week lows, around the 1.3670 region.

On the flip side, any meaningful recovery back above the 1.3800 mark might now be seen as an opportunity to initiate fresh bearish positions. This, in turn, should cap the GBP/USD pair near the 1.3840 region, or intraday swing highs touched earlier during the Asian session.

3) XAU/USD: Gold Awaits Fresh Impetus Ahead Of FOMC Minutes, Levels To Watch

Gold (XAU/USD) is on the defensive so far this Wednesday, as the US Treasury yields attempt a comeback, snapping a three-day rout. The US dollar wallows in multi-day lows, as investors rethink the Fed rate hike expectation this year. The FOMC minutes are likely to offer fresh direction to gold.

With the earnings season kicking in, markets turned cautious and triggered a pullback in the US stocks from record highs. The retreat in Wall Street indices offered some support to gold on Tuesday.

The Technical Confluences Detector shows that gold has failed to sustain above the $1,740 barrier, which is the confluence of the Fibonacci 38.2% one-day and SMA5 one-hour.

Therefore, the bear’s head for a test of a dense cluster of healthy support levels around $1,736, where the previous week high, Fibonacci 61.8% one-day and SMA200 four-hour coincide.

The next cushion awaits at $1731, which is the pivot point one-day S1.

Crucial support at $1727 could be the line in the sand for the XAU buyers. That level is the intersection of the Fibonacci 61.8% one-month, previous day low, and SMA100 four-hour.

Alternatively, immediate resistance awaits at the Fibonacci 23.6% one day at $1742.

The previous day high at $1745 would challenge the bulls’ commitments.

If the buying interest picks up pace, the pivot point one-week R1 at $1749 could be tested.

Further up, strong resistance of the pivot point one-month R1 at $1753 could then contain the upside.