EUR/USD Price Outlook Remains Biased to the Downside as Euro Weakness Continues

Federal Reserve chair Jerome Powell may have given a slightly dovish outlook at yesterday’s FOMC meeting but the closely watched US Treasury market is seemingly ignoring his ‘looser for longer’ rhetoric. The yield on the benchmark UST 10-year touched 1.74% early today, up around 9 bps, while the UST 2/10-year spread (inverted) steepened to 160 basis points, its widest level since 2015. And more importantly for EUR/USD, the spread between the 10-year German Bund – the de-facto EU benchmark – and the UST 10-year is now a full 2 big figures or 200 basis points. If this spread remains, or widens further, EUR/USD will come under renewed downside pressure.

The ongoing spread of the coronavirus in Europe continues to weigh on the single currency and this may increase if a mooted third lockdown in parts of Europe becomes reality. German covid-19 cases are growing ‘exponentially’ according to the countries Robert Koch Institute, France recorded just over 38k new cases on Wednesday, while Poland hit a 2021 high in new infections prompting the government to impose a new three-week partial lockdown. The EU will remain at risk of new partial or full lockdowns until the heavily criticized vaccination program turns a corner and begins vaccinating people in their millions a day.

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The daily chart shows the pair now trapped between the 20-day SMA (resistance) and the 200-day sma (support). This bearish outlook will be confirmed if the pair make another break and open below the 200-day sma, leaving the recent multi-month low at 1.1832 as the next downside target. The 20-day sma at 1.1990 guards the upside.

EUR/USD DAILY PRICE CHART (JULY 2020 – MARCH 18, 2021)

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IG Retail trader data show 44.07% of traders are net-long with the ratio of traders short to long at 1.27 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.

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📕 Comment on Gold on March 17

‼ In yesterday's trading session, the world gold price had a bounce to test the "old peak of 1740" but once again did not pass and then declined slightly again after that. At the end of yesterday session, precious metal Gold closed with a slight decreasing candle around 1728. With the last 2 days, the amplitude slowed down and the upside force was restrained at around 1740. In my personal opinion we can resell when the price approaches this price zone.

- Looking at the shorter timeframe H4 we see selling pressure around the resistance zone 1740 so at this price zone we would prefer to sell short to yesterday's range of 1728 and expectation is 1721. At this price zone, let's liquidity and wait for signal of breakout of gold precious metal.

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Gold Prices Hold Up, Crude Oil Higher as Yellen Defies Inflation Fears

 Gold and crude oil prices traded modestly higher during Monday’s APAC morning session following Treasury Secretary Janet Yellen’s comment on inflation over the weekend. Gold has subsequently erased gains as the US 10-year Treasury yields rose anew, however. “Is there a risk of inflation? I think there’s a small risk and I think it’s manageable we’ll certainly monitor for it… but we have tools to address it,” Yellen said. Her comment eased market fears about a ‘taper tantrum’ after rising inflation expectations and longer-dated yields caused heightened market volatility recently.

Yellen’s view on inflation echoed Fed Chair Jerome Powell’s latest comments arguing that the current set of monetary stimulus measures is “appropriate”, hinting that the Fed may hold its policy rate and bond-purchasing program largely unchanged at the upcoming FOMC meeting. Gold traders will closely watch this week’s announcement alongside the BoE and BOJ meetings for clues about global central banks’ take on inflation and economic recovery. If policymakers signal appetite for pushing asset purchases further down the yield curve to contain rising long-term borrowing costs, that may serve as a much-needed positive catalyst for precious metals.

A rapid surge in US real yields, represented by 10-year Treasury inflation-indexed security, has exacerbated the sell-off in gold since early February (chart below). Rising real yields are largely attributed to the prompt rollout of Covid-19 vaccines and fiscal stimulus progress, which painted a brighter outlook for an economic recovery. Fiscal stimulus-backed reflation hopes may lead yields to trend higher alongside inflation expectations, which appears to be bad news for bullion. Gold prices have fallen 6.3% since February 10th, while crude oil prices have climbed 13.3% during the same period. The question is how far will rates go before stabilizing?

Crude oil prices climbed during Monday’s APAC session to a fresh 13-month high, backed by optimism about demand recovery and an OPEC+ extension of output curbs. President Joe Biden signed the US$ 1.9 trillion Covid relief bill into law on Thursday, paving the way for a faster recovery of energy demand. The US had over 100 million vaccines administered as of March 13th, with daily new infections falling to 49,728. Encouraging progress on pandemic control suggests that easing lockdown measures and travel restrictions are on the horizon.

The OPEC+ coalition pledged to keep output curbs unchanged at a meeting in early March, while many traders anticipated a production hike. Saudi Arabia decided to extend its unilateral 1 million barrel per day production cut into April. Restraint by the oil cartel and its allies has further strengthened the oil price outlook alongside demand optimism.

The EIA crude oil inventory report set to be released on March 17th will be closely watched by oil traders after two weeks of large stockpile build due to extreme weather conditions that hurt refinery activity. Refiners operated at 69% of their capacity during the week ending March 5th, compared to an average of 80% capacity seen in January.

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Friday Dax Analysis by Money Life Research

  ℹ️ #DAX #ANALYSIS

At the moment the DAX seems to be taking a break on the rise, something quite normal after everything that has risen, but at the moment it does not seem that there will be strong falls either and it will be a break to continue climbing later.  Looking at data today Michigan consumer sentiment in the USA.

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General analysis of DXY Index

 📝 General analysis of DXY index (measuring USD strength) on 11/03/2021 only in PAID SERVICES:

 After 2 weeks of strong break-through of DXY as analyzed by definition, in my opinion, this week, DXY will likely adjust a little to be able to move to the next thresholds.  As I mentioned last time that the condition for DXY to move forward is that it will have to break through the MA20 on the weekly timeframe (W1) so after breaking this MA it has turned up sharply and is now in  Retest momentum is needed to bounce further.

Moving to the D1 daily chart, we can see that the index's bearish force is strong and in my opinion, DXY will continue to correct this week, the next level DXY is back.  is around 91 points of the index.  At this price zone, in my opinion, DXY is likely to create a bottom-up to conquer the next higher levels after nearly 1 year of continuous decline.

 - Because of the expectation that DXY will reduce, we will prioritize buying XXX / USD and selling USD / XXX including gold (XAUUSD).  But everyone remembers this is the correction of the DXY (USD), not the long-term trend, so after the short-term rally of XXX / USD including gold (XAUUSD), let's find a selling point.  !

 (Currently, the DXY index price is analyzed at 91.78 index points, this indicator is used to analyze USD-related currency pairs NOT TRADE)!

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Monthly Overview on Oil by Money Life Research

 Monthly change: XBRUSD +17.15%

Oil prices rose sharply in February. Saudi Arabia's deep output cuts, an improving demand outlook, and cold front, which shut wells and refineries in Texas, contributed to the price increase.

The growing popularity of commodities as a hedge against resurgent inflation have pushed oil higher this year. There have been a lot of bullish calls in recent weeks predicting that the rally will continue. The maintenance in the North Sea fields is set to reduce the oil supply.

The upcoming OPEC+ meeting is crucial. The market could remain positive in the face of a modest increase in OPEC+ production. If there is a large increase, then it could dampen the outlook in the short term.

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Check out the news of the last day

 + Check out the news of the past 24 hours:

 1️⃣ Many factors drive the strength of the dollar

 - USD continued to hold its strength, rising to the highest level in 3 and a half months, benefiting from the increase in US bond yields and the decrease in risk demand in the stock market.

 - “The increase in US bond yields increased volatility in the stock market, and supported USD.  As for the Fed, it still maintains a soft attitude while pushing back expectations of actions against higher yields ”.  UBS strategists said in a note.

 - Analyst Bofa - Athanasios Vamvakidis, said that strong fiscal stimulus, economic reopening process is accelerating and greater consumer spending are factors driving USD.

 - The US Senate approved a $ 1.9 trillion bailout plan, after a day when the NFP report showed strong labor market growth, which pushed the USD to its highest level since  November 2020. The dollar index stands at 92,186 against a basket of six major currencies, up 0.3%.

 2️⃣ Investment sentiment in the common currency area increased sharply

 - The euro zone investment sentiment index jumped to a more than a year high in March, driven by an improved look at the current situation, a survey found earlier in the week.  .

 - Global immunization campaigns are being achieved, accelerating, raising expectations about the ability of communities to be protected against pandemics.  This allows economies to reopen faster and investors are betting on these.

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