Top Trade Setups in Forex – Brace for US Advance NFP Figures!

The U.S. stocks ended in negative territory despite a brief spike driven by a surprise 50-basis-point cut in interest rates by the Federal Reserve. The Dow Jones Industrial Average retreated 785 points (-2.9%) to 25917, the S&P 500 fell 86 points (-2.8%) to 3003, and the Nasdaq 100 dropped 283 points (-3.2%) to 8594.

Later today, during the U.S., the Automatic Data Processing (ADP) will release February private jobs report (+170,000 jobs expected). The Institute for Supply Management will post its Non-manufacturing Index for February (54.9 expected). The Federal Reserve will release its economic report, the Beige Book.

XAU/USD – Double Bottom Support

On Wednesday, the precious metal gold surged 52 dollars or 3.3% to $1,640 an ounce, propelled by market uncertainty. Most of the bullish trend came in response to the Fed rate decision. The Fed made an emergency interest-rate cut, the first since the global financial crisis in 2008, of half a percentage point (to a range of 1.00%-1.25%) in response to mounting concerns about the economic impact of the coronavirus.

It should also be noted that China’s Securities Journal indicated that the People’s Bank of China (PBOC) would offer additional open market operations (OMO) during the month.

At the virus front, Vice President Mike Pence, who’s leading the U.S. respondents, said that 13 states now have coronavirus cases. Infections also increased in South Korea and Iran, where more officials were diagnosed.

Looking forward, the Gold will likely trade higher further because investors see safety in gold due to concerns over the global economic slowdown. On the other hand, the coronavirus is now spreading faster outside China, and the US Fed’s emergency rate cut roiled financial markets, the demand for safe assets like gold will increase.

XAU/USD – Daily Technical Levels

Support

Pivot Point

Resistance

1606.47

1627.95

1662.39

1572.03

1683.87

1516.11

1739.79

XAU/USD – Daily Trade Sentiment

A day before, the precious metal gold prices have dispensed a dramatic buying, as the Fed surprisingly evaded the interest rate to deal with the coronavirus. As a result, the negatively correlated gold climbed sharply to trade at 1,643 level. As of now, precious metal gold is expected to gain an immediate resistance near 1,651 level, and violation of this can prolong bullish bias unto 1,662. Bullish bias appears to be dominant today, mainly because of 50 EMA and bearish trendline, which is now supporting the metal around 1,630.

USD/CAD – 50 EMA Test & Reversal

The USD/CAD advanced 0.4% to 1.3382. Later today, the Bank of Canada is expected to lower its benchmark rate to 1.50% from 1.75%. The BOC, for now, is on the same page with FED as we can expect BOC to drop rates by 25 basis points through today’s monetary policy meeting.

The Canadian dollar trades with a selling bias versus the U.S. dollar, giving up most of the previous day’s rally, as the U.S. Central Bank, Federal Reserve, drop the interest rates in an emergency move. The traders are now expecting the Bank of Canada to match at a policy decision on Wednesday.

During the previous week, the USD/CAD broke out to the higher side, after breaking through the 1.3300 resistance level to test the 1.3460 level. The move likely occurred due to oil prices tumbling to a multi-low and markets pricing in a sure rate cut from the BOC. The current retrace lower in USDCAD is suggesting that the expected rate cut is mostly already priced in.

Nymex crude oil futures charged 0.9% higher to $47.18 a barrel, and Brent was little changed at $51.89 a barrel, which is having a slight impact on the Canadian dollar.

USD/CAD – Daily Technical Levels

Support

Pivot Point

Resistance

1.3338

1.3364

1.341

1.3293

1.3436

1.3221

1.3508

USD/CAD – Daily Trade Sentiment

The USD/CAD hasn’t moved much due to a lack of economic events. However, the movement can be seen during the U.S session as the Bank of Canada is very much likely to play with their monetary policy. The USD/CAD is trading at 1.3350, supported above triple bottom level of 1.3320.

The 50 periods EMA is neutral as the USD/CAD pair is tossing above and below the moving average, which stays at 1.3350. The RSI and Stochastics are dropping below 50, which is suggesting bearish bias in the pair. A bearish breakout of 1.3320 can lead the USD/CAD prices towards the next support level of 1.3275 while the bullish trend continuation can extend buying until 1.3430.

AUD/USD – Lowers Low Pattern In-Play

The AUD/USD currency pair continued its recovery rally and rose above the 0.6600 level on the above forecast Aussie Q4 GDP growth figures. The AUD/USD is currently trading at 0.6600 and consolidates in the range between the 0.6576 – 0.6615.

After the previous session’s late drop from the 2-weeks high, the pair succeeded in recovering some bullish traction again in the Asian session after the above-forecast Aussie GDP growth figures.

As per the Australian Bureau of Statistics, the domestic economy recorded a growth of 0.5% during the 4th-quarter of 2019 as compared to 0.3% expected. This was accompanied by an upward revision of the previous quarter’s growth to 0.6% (0.4% reported earlier) and remained supportive.

At the USD front, the U.S. dollar continues to pick up bids despite the continuous drop in the US Treasury yields to fresh record lows while The pair remained capped below the overnight high.

Looking forward, it will now be exciting to observe if the pair can gain any secure follow-through buying or runs into some fresh supply at higher levels. Investors now look forward to the U.S. economic figures, the ADP report, and ISM Non-Manufacturing PMI for some impetus later during the North-American session.

AUD/USD – Technical Levels

Support

Pivot Point

Resistance

0.6446

0.6496

0.6558

0.6384

0.6608

0.6272

0.672

AUD/USD – Daily Trade Sentiment

The AUD/USD has taken a bullish turn in the wake of the FED rate cut decision, and the Aussie is now trading at 0.6640. A bullish breakout of 0.6640 level can extend buying until 0.6707. The AUD/USD has formed a triple top pattern, which is extending resistance at 0.6640 for now.

Whereas the 50 periods EMA is extending support around 0.6550, and the RSI is also suggesting bullish trend. With that being said, I would look for bullish trades above 0.6600 level today until 0.6645 and 0.6675.


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