15/2/2021
…AND THE RALLY GOES ON
Best Choice for the next weeks to months
Currencies
Buy USDJPY in the long run, now at 105.25
USDJPY dropped last week from 105.32 to 104.92 but the most of the bears took place in the beginning of the week. Later, the higher US 10-year treasury yield, climbed up to 1.21% boosting the pair higher. Also, we need to underline that early this week the USD Index is dropping 0.17% while USDJPY is moving higher, like 0.35% and this divergence shows us that the pair is bullish despite the weakness of USD. In the mid-to-long term, there is a good probability for the pair to reach the price area of 108 as it’s expected to see even higher yields in USA.
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Weekly Report: Currencies, Indices, Commodities and Cryptos
General Comment
Last week closed with the heavy expectations of the $1.9 trillion new economic aid package in USA and with US 10 years treasury yield climbing above 1.20%. As a result of the above, we saw the US Stock Indices performing new price record levels while most of the major European Indices were profitable as well.
As per the COVID-19 issues and the vaccinations, some countries including Israel and UK have accelerated the process and a remarkable percentage of the population has been already vaccinated but in European Union is still very low in numbers as only a 5% of the whole populations has been vaccinated.
USD was weak against all the other major currencies but there’s also a remarkable rally on GBP since there is a positive mood that things will get better due to the vaccinations process. It’s also important to mention that in most of the major currency pairs there was a significantly lower volatility. Gold moved mildly higher and for one more week the rally at the oil prices carried on. Bitcoin had impressive profits and for the first time its price approached the important level of $50,000.
The current week contains important economic announcements and events such the Eurogroup and the Ecofin meeting, the Eurozone Monetary Policy, the Retail Sales in USA, UK, Canada and Australia and the PMIs in the most of the major economies worldwide. Above all there is the Federal Open Market Committee (FOMC) in USA where the Monetary Policy and the risk will be assessed. Of course, any possible news & updated regarding the US new aid package and regarding COVID-19 may affect heavily the markets this week as well.
EURUSD (Euro vs US Dollar)
Bullish was the last week for EURUSD after two bearish weeks, by opening at 1.2037 and closing at 1.2119. The high US treasury yields and the stock markets’ rally in USA, weakened USD so the pair exceeded easily the resistance of 1.2050 and moved above 1.21. Moreover, there’s a serious concern regarding the jobs market in USA as Robert Kaplan of FED claimed that the market is far from full employment. Prices above 1.2185 will give credits to the scenario of a further uptrend with an obvious target of 1.2350 which is a 3-year high price for the pair. In case of returning below 1.2050, the correction that has started since the beginning of January may become heavier by giving prices below 1.20. Our selection for this week is to open buy positions, since we notice that EURUSD seems resilient above 1.2050.
GBPUSD (Great Britain Pound – US Dollar)
GBPUSD continued to move higher for one more week (5th in a row) with a weekly open price at 1.3715 and a weekly close price at 1.3854. There is a positive mood in UK that the pandemic will be under control soon and the restrictions will end as the vaccinations are in a satisfying level and process. At this positive outlook we should add the announcement of the UK GDP which was finally better than expected. The pair which is also affected by the USD weakness, seems to travel for the price area of 1.40 as early this week it is already moving close to 1.39. Prices below 1.3760 and maybe below 1.3565 are maybe an indication of the uptrend slowdown (this uptrend has started in last September from the price area of 1.2750) but trusting more the bullish scenario we’ll keep on opening buy positions, targeting the price of 1.40.
USDJPY (US Dollar – Japanese Yen)
Bearish was the last week for USDJPY (open price at 105.32 – close price at 104.92) since USD was weak. The 10-year US treasury yield performed a remarkable rise, surpassing 1.20% by reaching at the highest yearly price but it could not help the pair to close higher, despite the good attempts by the end of last week. Early in the current week, the Japanese GDP was released at the impressive 3% for the Q4 2020 and USDJPY is already moving higher. There’s a potential uptrend that may drive the pair at 106 and this uptrend won’t be affected as long as the pair remains above 104.40. Buy positions is our weekly selection.
EURJPY (Euro – Japanese Yen)
Bullish week for EURJPY as it opened at 126.79 and closed at 127.16. The price area of 127 as a balance spot at this period, confirmed for one more week but early in the current week there’s a heavy uptrend that leaded the pair to 128, even if the recent announcement regarding the Japanese GDP should be positive for JPY. This price area is a two years high level and it seems as a good indication for the pair to escape from 127, so we’ll try buy positions this week.
EURGBP (Euro – Great Britain Pound)
Another bearish week passed by for EURGBP as it opened at 0.8771 and closed at 0.8750, confirming the heavy downtrend that has started from the end of 2020 and the price area of 0.92. GBP seems quite strong and under this consideration, we expect to see a test of the major supports at 0.8670 and 0.85 so we prefer sell positions this week too.
USDCAD (US Dollar – Canadian Dollar)
Bearish was the last week for USDCAD since the pair opened at 1.2755 and closed at 1.2690. The weak USD combined with oil prices rally (oil is a major export good of Canada), sent the pair below 1.27 and most likely (under the same conditions) we will see prices below 1.26 or close to 1.25 soon. The announcements for the Canadian Inflation and Retail Sales this week will be critical but again, the major factors will be the strength of USD and the oil prices. We choose to remain sellers on USDCAD this week.
USDCHF (US Dollar – Swiss Franc)
Last week was bearish for USDCHF which opened at 0.8987 and closed at 0.8918. The pair attempted two weeks ago to remain above 0.90 with no success, as USD is weak. A possible bearish breakout of 0.89 will give extra power to the pair’s sellers and the next supports exist at 0.8835 and 0.8760. We cannot exclude a reaction above 0.90 again, if USD becomes stronger but our selection is to open sell positions this week.
AUDUSD (Australian Dollar – US Dollar)
A total bullish recovery took place for AUDUSD as we witnessed a very bullish week. The pair opened at 0.7667 and closed at 0.7760, boosted by the weak USD. China has lack of news due to Chinese Nye Year but the current week contains a lot of Australian announcements: RBA Meeting Minutes, Unemployment Rate and Retail Sales will show the situation in the economy of Australia. The recovery above 0.77 is considered very critical and as we expect the price to climb a the 3-year highs at 0.7820, we’ll try buy positions for the current week.
SP500
Another bullish week for SP500, another time that we saw all time high prices. SP500 closed at 3,935 points with profits like 1.30%. The expectations of the $1.9 trillion new economic aid package in USA that has been announced by the new presidency of Joe Biden, provides extra fuel to the buyers due to the huge liquidity that is expected to be offered to the stock markets. The target of the buyers is at the very significant and psychological level at 4,000 points but in such cases, there is a correction probability that may occur from the profit taking investors. In any case, we won’t be trend contrarians so long positions is what we’ll open this week.
DAX30
Consolidative was the last week for DAX30, as it closed at 14,057 points with limited losses like 0.10%. The resistance at 14,120 points is confirmed to be very critical for the time being and we also need to mention that DAX30, underperformed comparing to the other major Indices. It takes a solid bullish breakout above 14,120 points in order to have a further uptrend and of course, any possible corrections cannot be excluded. We’ll wait to see prices above 14,120 points before we open long positions.
FTSE100
Clearly bullish was the last week for FTSE100 as it closed at 6,554 points, performing profits more than 1.50%. The positive mood that comes from the vaccinations in UK, the increased GDP and the general positive outlook in stock markets globally boosted the Index higher. Above 6,630 points, we may see an even heavier uptrend so we’ll take our chances with long positions this week too.
Gold
Last week, gold moved mildly higher by closing at $1,8124, performing profits close to 0.50%. The USD weakness (gold is denominated in USD) and the higher US treasury yields, stopped the further dropping of gold. In order to have a full downtrend reversal, we need to see prices above $1,880 while prices below $1,800 would mean that the bears will carry on. The bearish scenario seems more solid so we’ll open short positions this week.
US Oil
The oil prices rally carried on for one more week, even heavier. Next month’s oil futures closed at $59.68 (very close to $60) with remarkable profits of 4.60%. There is a good outlook that the pandemic will end soon so the demand will return, the production cuts based on the recent OPEC’s decisions still stand but this rise is still beyond the expectations. In any case, it is very difficult to stand contrarian to this heavy uptrend and the reasonable behavior (since we already see a bullish breakout above $60), is to wait prices at $65. Without excluding pullbacks and corrections, we’re keen to open long positions.
Bitcoin
Very good profits for Bitcoin last week as it closed at 48,662, more than 25% higher! The Bitcoin’s capitalization now approached the unbelievable (a few months ago) amount of $1 trillion and the major event of the week was that Tesla announced the purchase of Bitcoins of $1.5 billions and that they will accept Bitcoin for the transactions. After this, there was really a price & volatility explosion in the most of the major cryptos. Many analysts predict the target of $100,000 for Bitcoin but speaking in a short-term manner, it seems that close to $50,000 there are many profit taking cryptos investors that liquidate their assets, pushing the price lower. There is a correction to the price area of $47,000 but this heavy uptrend has not been affected so far, so long positions is still an obvious choice for us.
