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DJ U.S. Dollar Softens, Stocks Set Records as Stimulus Optimism Grows -- Asia Daily Forex Outlook

· 02/07/2021 19:48
Immediate Range Larger Range USD/JPY 105.15-105.60 105.00-105.75 EUR/USD 1.2010-1.2065 1.1990-1.2100 AUD/USD 0.7640-0.7700 0.7620-0.7730 NZD/USD 0.7169-0.7241 0.7140-0.7258 GBP/USD 1.3700-1.3760 1.3675-1.3780 USD/CHF 0.8965-0.9015 0.8945-0.9030 USD/CAD 1.2735-1.2790 1.2710-1.2810 EUR/JPY 126.63-127.42 126.34-127.59 EUR/GBP 0.8747-0.8805 0.8722-0.8820

By Trading Central

Following are expected trading ranges and outlooks for nine major currency pairs in Asia today:

(Ranges are calculated using recent high and lows, information on the placement of option strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)

On Friday, U.S. stocks posted modest gains, as the S&P 500 and the Nasdaq 100 closed at record highs for a second session. The S&P 500 added 15 points or 0.39% to 3886, and the Nasdaq 100 rose 43 points or 0.32% to 13603. The Dow Jones Industrial Average was up 92 points or 0.30% to 31148.

The U.S. Labor Department reported that the economy added only 49,000 non-farm payrolls in January, much lower than an addition of 105,000 expected. However, such a weak jobs report led investors to expect a big Covid-19 relief package to come soon.

In fact, both chambers of Congress passed a budget resolution Friday, a key procedural step that sets up the ability for Democrats to pass President Joe Biden's $1.9 trillion Covid-19 relief package.

The Consumer Durables & Apparel, Consumer Services and Materials sectors performed the best. Coty COTY, which jumped 10.89%, was the top gainer in the S&P 500, followed by Activision Blizzard ATVI, Estee Lauder EL and Wynn Resorts WYNN.

European stocks closed mixed. Germany's DAX 30 ended flat, France's CAC 40 jumped 0.90%, while the U.K.'s FTSE 100 declined 0.22%.

U.S. Treasury prices were mixed. The benchmark 10-year Treasury yield advanced to a year-to-date high of 1.170% from 1.138% Thursday. Meanwhile, the 2-year Treasury yield hit a record low of 0.1013%, indicating strong demand for cash-like investment alternative. The spread between the 10-year and 2-year yields widened to 107 basis points, the widest since April 2017.

Gold rebounded $16 or 0.93% to $1,810 an ounce.

U.S. WTI crude futures jumped $0.72 or 1.28% to $56.95 a barrel.

The U.S. dollar softened against other major currencies, pressured by the disappointing January jobs report. The ICE Dollar Index dropped 0.53% to 91.04.

EUR/USD rebounded 85 pips to 1.2049.

GBP/USD was up for a second session gaining 62 pips to 1.3734.

USD/JPY retreated to 105.39 from 105.54 Thursday.

USD/CHF lost 53 pips to 0.8989, halting a 5-session rally.

Persistently-strong oil prices helped to lift commodity currencies. AUD/USD jumped 77 pips to 0.7677, and USD/CAD fell 70 pips to 1.2756.

USD/JPY Intraday: Key resistance at 105.60. The pair has entered a consolidation phase after touching a high of 105.76 last Friday. Currently it is still capped by the 50-period moving average. A deeper consolidation could bring the pair toward 105.15 and 105.00 on the downside. We need to see a break above the key resistance at 105.60 to confirm a bullish reversal.

EUR/USD Intraday: Upside prevails. The pair continues to trade on the upside after rebounding from a low of 1.1951 seen last Friday. In fact, it is above both 20-period and 50-period moving averages, and the relative strength index is well directed in the 60s, maintaining the intraday bias as bullish. The trailing key support has been raised to 1.2010, and the pair should aim at 1.2065 and 1.2100 on the upside.

AUD/USD Intraday: Further upside. The pair is holding on the upside after last Friday's upward acceleration. Currently, the prices strike against its upper Bollinger band, calling for a further advance. Hence, unless the support level at 0.7640 is violated, the pair should expect a further upside with targets at 0.7700 and 0.7730 in extension. In an alternative scenario, breaking below 0.7640 would bring a return with 0.7620 and 0.7600 as targets.

NZD/USD Intraday: Rebound expected. The pair posted a rebound and returned the level above the rising 20-period moving average. The relative strength index is heading upward. To conclude, unless the support level at 0.7169 holds on the downside, look for a further rise to 0.7241 and even to 0.7258 in extension. On the other hand, breaking below 0.7169 would trigger a drop to 0.7140 as a target.

GBP/USD Intraday: Further advance. The technical outlook of the pair is positive as the prices are supported by a rising trend line. The ascending 50-period moving average should push the prices higher. Hence, as long as 1.3700 holds on the downside, expect a further advance with targets at 1.3760 and 1.3780 in extension. Alternatively, crossing below 1.3700 would bring a return with 1.3675 and 1.3655 as targets.

USD/CHF Intraday: Under pressure. The pair is under pressure below the declining 50-period moving average. The relative strength index is located at the selling zone between 30 and 50. In this case, as long as 0.9015 holds on the upside, the pair should bring a drop with targets at 0.8965 and 0.8945 in extension. On the other hand, crossing above 0.9015 would call for a bounce with 0.9030 and 0.9045 as targets.

USD/CAD Intraday: Downside prevails. The pair remains on the downside after breaking below its previous low. In fact, it is capped by both the descending 20-period and 50-period moving averages, while the relative strength index has dropped to the 30s, suggesting a bearish bias. Unless the key resistance at 1.2790 is surpassed, the pair should drop to 1.2735 and 1.2710. Alternatively, above 1.2790, expect a bounce to 1.2810.

EUR/JPY Intraday: Further upside. The pair is trading within a bullish flag pattern. In fact, the 20-period moving average has moved further above the 50-period one, and the relative strength index stays firm in the 60s, signaling continued upward momentum. Above the key support at 126.63, expect an advance to 127.42 and 127.59. Alternatively, a break below 126.63 would trigger a pull-back to 126.34.

EUR/GBP Intraday: Target 0.8820. The pair has potentially formed a rounding bottom pattern. Currently, the 20-period moving average has crossed above the 50-period one, while the relative strength index has climbed to the 50s, indicating a bullish bias. As long as the key support at 0.8747 holds, the pair should rebound to 0.8805 and 0.8820. Alternatively, below 0.8747, expect a decline to 0.8722.

Any opinion offered herein reflects Trading Central's current judgment and may change without notice. This content is provided in general terms and does not take account of or address any individual user's position. Nothing contained in this publication constitutes personalized investment advice. To the extent that this article includes suggestions as to various possible investment strategies which users might consider, it does so in only general terms without reference to the personal factors which should determine any user's investment decisions; any investment decisions and associated risks are the sole responsibility of the user. The content doesn't reflect the opinion or judgment of Dow Jones, which does not warrant the accuracy, completeness or timeliness of the information in this article, and any errors shall not be made the basis for any claim against Dow Jones. This article does not constitute or form part of any invitation or inducement to buy or sell any security. The author has pledged not to invest in the instruments or markets cited in this article.

(END) Dow Jones Newswires

February 07, 2021 19:48 ET (00:48 GMT)

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