15-Feb-2021

1) AUD/USD: Poised To Extend The Momentum Amid Vaccine Optimism
2) XAU/USD: Gold’s Technical Set Up Favors Bears, A Test Of $1800 Inevitable
3) GBP/USD: Bulls Remain In Control Near Multi-Year Tops, Likely To Target 1.4000

1) AUD/USD: Poised To Extend The Momentum Amid Vaccine Optimism

The AUD/USD pair kicked off the new week on a positive note and shot to one-month tops during the Asian session. The momentum marked the sixth day of the positive move in the previous session and was supported by a combination of factors, which, to a larger extent, overshadowed the Reserve Bank of Australia’s efforts to keep a lid on the local currency. It is worth recalling that the RBA – at its February 2 meeting – decided to purchase an additional $100 billion of bonds issued when the current bond purchase program is completed in mid-April.

The progress in coronavirus vaccinations and hopes for a massive US fiscal spending plan continued fueling hopes for a strong global economic recovery. This, in turn, remained supportive of the underlying bullish sentiment in the financial markets, which dented the US dollar’s safe-haven status and benefitted the perceived riskier aussie. Apart from this, the steady advance in commodity prices further underpinned the commodity-sensitive Australian dollar.

Meanwhile, the US bond market continued reacting strongly to the prospects for the passage of the US President Joe Biden’s proposed $1.9 trillion COVID-19 stimulus package. In fact, the yield on the benchmark 10-year US government bond climbed back above the 1.20% for the first time since February 2020, albeit did little to provide any respite to the USD bulls or hinder the pair’s positive move. In the absence of any major market-moving economic releases on Monday, the pair remains at the mercy of the broader market risk sentiment and the USD price dynamics.

From a technical perspective, the positive move adds credence to last week’s bullish breakout through a one-month-old descending trend-line resistance. With technical indicators still far from being in the overbought territory, the pair seems all set to extend the momentum further beyond the 0.7800 mark. The next relevant target on the upside is pegged near multi-year tops, around the 0.7820 region touched on January 6. Some follow-through buying should pave the way for a further near-term appreciating move and assist bullish traders to aim back to reclaim the 0.7900 mark for the first time since March 2018.

On the flip side, any meaningful pullback now seems to find decent support near the 0.7720 region. This is closely followed by the descending trend-line resistance breakpoint, around the 0.7700 mark. Failure to defend the mentioned support levels might prompt some technical selling and accelerate the fall further towards the 0.7660 intermediate support before the pair eventually drops to retest the 0.7600 round-figure mark.

2) XAU/USD: Gold’s Technical Set Up Favors Bears, A Test Of $1800 Inevitable

Gold (XAU/USD) extends Friday’s bearish momentum into a fresh week this Monday, as the sellers remain in control amid the overall market optimism, thanks to the encouraging covid vaccine rollout news worldwide. Meanwhile, no fresh updates on the likely US $1.9 trillion fiscal stimulus and broad-based US dollar weakness fail to offer any support to the gold bulls. The greenback remains on the back foot amid renewed doubts about the pace of the US economic recovery while investors await fresh cues ahead of the Retail Sales data and the FOMC minutes due later this week.

Amid holiday-thinned light trading, gold traders will also closely follow the performance of the platinum group metals (PGMs). Also, geopolitical tensions in the Middle East could be in focus, as the Saudi-led coalition fighting in Yemen intensifies.

Gold’s hourly chart shows the price is on the verge of a symmetrical triangle breakdown.

An hourly closing below the rising trendline support at $1822 would confirm the downside break. At the level, the horizontal 21-hourly moving average (HMA) coincides.

Therefore, a test of the Feb 8 low of $1808 remains inevitable, below which the January 18 low of $1803 could be challenged.

The relative strength index (RSI) at 48.57 also points to more downside in the offing.

On the flip side, recapturing the powerful barrier at $1827 is critical to reviving the recovery momentum. That level is the confluence of the falling trendline resistance, 200 and 50-HMAs.

The horizontal 100-HMA at $1834 is the next relevant upside target for the XAU bulls.

3) GBP/USD: Bulls Remain In Control Near Multi-Year Tops, Likely To Target 1.4000

The GBP/USD pair gained strong positive traction on the first day of a new trading week and shot to the highest level since April 2018 during the Asian session. The Bank of England’s neutral policy stance, the continuous fall in new coronavirus cases and the impressive pace of vaccinations in the UK continued underpinning the British Pound. In fact, the UK government is expected to hit the target of offering vaccines to 15 million people in priority groups, which should allow the UK Prime Minister Boris Johnson to lift restrictions sooner rather than later and get the economy moving. Johnson is said to outline his plans for easing lockdown in a speech to be broadcast on February 22.

The sterling was further supported by Friday’s upbeat UK GDP report, which showed that the economic growth stood at 1% during the October-December period as against 0.5% anticipated. The data added to the optimistic view that the economy might have escaped a double-dip recession. That said, the data for the coming months would be closely scrutinized to assess the effects of the third nationwide lockdown that began in January. On the other hand, the underlying bullish sentiment in the financial markets continued denting the US dollar’s safe-haven demand. This was seen as another factor that provided an additional boost to the major and remained supportive of the ongoing momentum.

The progress in coronavirus vaccinations, along with expectations for a massive US fiscal spending plan has been fueling hopes for a strong global economic recovery. Meanwhile, expectations for the passage of the US President Joe Biden’s proposed $1.9 trillion COVID-19 stimulus package pushed the yield on the benchmark 10-year US government bond back above the 1.2% for the first time since February 2020. The extension of the recent strong upsurge in the US bond yields, however, did little to provide any respite to the USD bulls. There isn’t any major market-moving economic data due for release from the UK on Monday. Moreover, the US banks will be closed in observance of Presidents’ Day. This, in turn, leaves the pair at the mercy of the USD price dynamics and the broader market risk sentiment.

From a technical perspective, last week’s sustained move beyond the 1.3755-60 region and the emergence of some dip-buying on Friday supports prospects for additional gains. However, RSI on the daily chart has moved on the verge of breaking into the overbought territory and warrants some caution before placing fresh bullish bets. This makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for the next leg up. Nevertheless, the pair seems all set to test an intermediate resistance near the 1.3960-70 region before eventually aiming to reclaim the key 1.4000 psychological mark.

On the flip side, the 1.3860-55 horizontal zone now seems to protect the immediate downside and is followed by support near the 1.3810-1.3800 region. Any subsequent pullback might still be seen as a buying opportunity and remain limited near a previous strong resistance breakpoint, now turned support near the 1.3760-50 area.