Last Week’s Market Overview
Since there were no significant economic figures related to EUR being released last week, the movements of EUR were mainly influenced by negotiations of EU-China Trade Deal.
Last Wednesday, China and European Union announced agreement over Joint Investment Deal which has been negotiated for seven years. The treaty aims at enhancing the investment protection, reducing the investing barriers and increasing bilateral investment flows.
The news pushed EUR to break out the resistance level at 1.2270 and refreshed the yearly high. However, the bullish momentums have just lasted for a short period of time, it even made a sharp retracement of -0.63% on the last day of 2020, closing at 1.2257 finally.
The USD has become the worst performer among all major currencies last week as it recorded a decline against all the major counterparts.
Although the pandemic was still spreading across the world and causing millions of deaths, the risk-on sentiment dominated the market, leading to the retreat from safe-haven like the greenback, and turning into more risky assets in the emerging markets.
Moreover, the U.S. debt balloons was another concern as a stimulus bill has just been passed and President-elect Joe Biden would introduce even more stimulus measures in January.
As a result, the downtrend of USD continued and it failed to hold the 90-mark at the end of 2020.
Market Change Last Week
Market Focus This Week
Release of December FOMC Minutes
The investors should pay attention to the minutes released next week which is useful for finding the rationale of some FOMC decisions. For instance, there is no longer a lack of liquidity for the US dollar amid more positive sentiment in the financial market, and the US dollar experienced a sharp drop in recent months too, it seems strange to increase the liquidity of the US dollar by extending the U.S. dollar liquidity swap lines. It may be possible to find the reasons for such action from the details of discussion during the meeting in the minutes.
Apart from that, the Fed mentioned it might purchase more longer-term interest rate in the near future if needed, we may find some hints about the conditions under which the action will be taken.
Last but not least, it is worth reading the minutes and finding the reasons for committee members making more positive economic projections of next few years compared to that in September.
(Source: Federal Reserve)
GBP performed well and experienced a 0.91% surge last week, standing firmly above the strong support at 1.3520.
Technically, the RSI and two-line MA support for continuation of the uptrend according to one-day chart. However, the price is touching the upper resistance of trend channel. Moreover, when we look at the 4-hour chart, the RSI has already entered the overbought zone.
All in all, it is highly possible to have a pullback in coming days, but the retracement would be resisted at 1.3520 support. Then a rally is likely to happen and the uptrend would be resumed.
Support: 1.3520, 1.3180, 1.2700
Resistance: 1.3850, 1.5000
USD Index (H4)
Last week, the greenback was extremely weak compared with other major currencies, failing to hold above the 90.00 psychological support.
Despite the fact that USD climbed up and tested the 90.00 on the last day of 2020, it reversed significantly today, proving the latest rally was only corrective.
For RSI aspect, it once broke through the 50-mark from below, which was a signal for trend reversal. Nonetheless, the indicator has just maintained above 50 for a while and followed by a sharp fall to under 45.
Therefore, the technical analysis suggests the corrective increase has finished and the downtrend may continue in the upcoming sessions.
Support: 88.20, 85.00
Resistance: 90.00, 91.80, 93.15
The oil price had a decline for two consecutive weeks, but the decline was quite small and the fall last week was only 0.22%.
Technically, the RSI is very close to the 70-interval and the fast MA is flattening in the one-day chart. Therefore, there may be a trend reversal in near future. However, before the end of trend, it may move further north and challenge the resistance at 49.50 again in order to accumulate more bearish momentums.
Support: 46.50, 43.50, 40.00
Resistance: 49.50, 54.00
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