March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00

March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00, FP Markets

Note—Charts provided by Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, eked out marginal losses (0.5 percent), ranging between 1.2243 and 1.1952.

Upriver, technical action suggests March could reach for ascending resistance (prior support – 1.1641), while lower on the curve 1.1857/1.1352 represents demand.

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Europe’s shared currency fell sharply against a broadly stronger USD on Thursday, dipping 0.7 percent. Demand for the US dollar was largely driven by a Powell-induced advance in US Treasury yields.

EUR/USD left Thursday shaking hands with support at 1.1965, a previous Quasimodo resistance. A 1.1965 breach re-opens the risk of a return to familiar support coming in from 1.1887. It should also be noted the 200-day simple moving average is lurking close by, currently circling the 1.1804 region.

In terms of the RSI oscillator, we are pursuing terrain south of the 50.00 centreline right now, threatening a possible test of oversold levels.

H4 timeframe:

February 5 low at 1.1952 is within striking distance, thanks to the recent sell-off. Movement also threw light on demand coming in at 1.1913/1.1932—a zone serving buyers at the beginning of December.

H1 timeframe:

1.20, a widely watched level of support in this market, stood aside on Thursday and squeezed out any bids at the level.

The Quasimodo formation at 1.1957 is next on tap in terms of support, fastened just north of 1.1950 support.

Interestingly, the RSI, after dipping A toe in oversold territory, is seen within touching distance of support at 20.64.

Observed levels:

Daily support at 1.1965—given nearby H1 Quasimodo support at 1.1957, the H1 RSI oscillator dipping into oversold territory and the market trending higher since 2020—is an area buyers may welcome today.

March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00, FP Markets

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February finished considerably off best levels, forming what many candlestick fans call a shooting star pattern—a bearish signal found at peaks. Also interesting was price came within striking distance of trendline resistance (prior support – 0.4776), sheltered under supply from 0.8303/0.8082.

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Partly modified from previous analysis –

Trendline support, taken from the low 0.5506, is on the verge of giving way following Thursday’s second consecutive downside push amid a spike in US Treasury yields that underpinned USD health.

Beyond trendline support, the technical radar falls on February 2nd low at 0.7563, with a break unmasking demand at 0.7453/0.7384 (prior supply).

In terms of trend on this scale, the unit has been convincingly higher since March 2020.

The RSI value continues to butt heads with the 50.00 centreline.

H4 timeframe:

Meanwhile, price recently shook hands with demand priced in at 0.7696/0.7715. This follows price action turning ahead of 0.7848/0.7867 supply on Wednesday, an area joined by a 50.0% retracement at 0.7849 and a 127.2% Fib extension at 0.7856.

0.7650/0.7681 is also in the pot as possible demand today should sellers navigate deeper terrain.

H1 timeframe:

The 0.78 round number and trendline support-turned resistance (taken from the low 0.7692) combination welcomed bearish flow on Thursday. A one-sided push to the downside was observed heading into the US session, throwing light on 0.77 and neighbouring demand at 0.7668/0.7688.

Out of the RSI, we can see the value interacting with oversold levels after failing to find acceptance above the 50.00 centreline.

Observed levels:

Between H4 demand at 0.7650/0.7681 and 0.7696/0.7715, together with the 0.77 figure on the H1 and demand from 0.7668/0.7688, this is an area buyers may be drawn to today.

Longer term, nonetheless, sellers appear to be taking the wheel. The trendline support breach on the daily timeframe helps confirm bearish intent from the monthly timeframe’s recently formed shooting star beneath trendline resistance/supply.

March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00, FP Markets

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, price action printed further outperformance in February, with March also mounting a bullish assault so far, up by 1.4 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

On the back of surging US Treasury yields, Thursday witnessed the US dollar index cement a position north of the 91.00 figure and consequently elevate USD/JPY to higher ground.

Upstream, resistance is visible around the 108.28ish neighbourhood, fashioned by way of two Fib levels: 61.8% and 78.6% ratios.

With reference to the RSI indicator, we’re now navigating overbought waters, with resistance at 83.02 on the radar.

H4 timeframe:

Recent outperformance cleared sellers from Quasimodo resistance at 107.44—now a serving support level—and elbowed resistance at 108.09 into the spotlight.

H1 timeframe:

Short term, we can see the unit settled just south of the 108 figure yesterday, after forming demand around 107.52/107.64. The aforementioned area is important as it was within this zone a decision was made to overrun remaining offers within daily supply at 107.58/106.85. Therefore, a return to 107.52/107.64 could be interesting.

As expected, the RSI oscillator is engaging with overbought space, currently crossing swords with resistance at 86.43.

Observed levels:

Between daily Fib resistance at 108.28, the H4 resistance at 108.09 and the 108 figure on the H1, this is likely an area of resistance on the menu today for countertrend sellers and also perhaps a take-profit objective for buyers.

H1 demand at 107.52/107.64 is also likely a watched zone and could, if tested, trigger a short-term bullish scenario, having noted its connection with daily supply from 107.58/106.85.

March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00, FP Markets

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161).

February followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018.

Despite the trendline breach, primary trend structure reveals the trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

Given February’s movement, 1.4376 represents the next upside objective.

Daily timeframe:

Partly modified from previous analysis –

Thursday pencilling in a bearish outside reversal signals a possible dip to support at 1.3755, a level sharing space with trendline support, drawn from the low 1.1409. Higher on the curve, however, Quasimodo resistance at 1.4250 remains in view.

As highlighted in previous writing, RSI resistance made an entrance at 76.14 last week, capping upside since late 2017. Subsequent downside forced the indicator to within striking distance of the 50.00 centreline.

H4 timeframe:

Brought forward from previous analysis –

Support at 1.3852 remains a talking point on the H4 scale, accompanied by a neighbouring 61.8% Fib level at 1.3824. Also technically noteworthy is demand pencilled in from 1.3761/1.3789.

Trendline support-turned resistance remains visible to the upside, taken from the low 1.3566.

H1 timeframe:

1.40, as you can see, has proven stable resistance, withstanding numerous upside attempts since the beginning of the week.

Recent hours had price aggressively drive lower and dethrone not only the 100-period simple moving average, but also the 1.39 figure. The latter is currently being retested as resistance, consequently shifting technical interest to Quasimodo supports at 1.3847 and 1.3861.

Action out of the RSI oscillator shows the value toppled the 50.00 centreline yesterday and is now bottoming a whisker ahead of oversold territory.

Observed levels:

Partly modified from previous analysis –

On the bigger picture, as noted in previous writing, monthly suggests room to approach higher levels over the coming weeks until reaching the 1.4376 top. Before the above graces the charts, a retest of daily support at 1.3755 and intersecting trendline support could be on the cards, a move likely welcomed by dip-buyers.

With 1.39 side-lined as support, the H1 Quasimodo supports at 1.3847/1.3861 (shares space with H4 support at 1.3852) could make a show today and stir a short-term bullish theme. A H1 close back above 1.39 is movement likely to be welcomed by buyers.

March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00, FP Markets

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The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • March 5th 2021: US T Yields Spike Following Powell’s Comments; USD Cements Position North of 91.00, FP Markets
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