Forex Market Wrap- 5th Feb
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Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go over the Forex Market Wrap. We’re going to highlight what happened this week and what could potentially see next week.
Just to cover the news for this week: there’s been quite a lot of data and news that we’ve seen this week. One of those things was Kiwi employment.
We had the Kiwi employment data, which showed that there had been positive news on the NZ Dollar. We outlined something, and we had a little look at EUR/NZD on what could potentially happen there if the downtrend continues.
We can see here on EUR/NZD that we’re getting a nice bearish weekly close after consolidation, and what we’re hoping for is a pullback, here, into this zone. We can look for further shorting opportunities because we believe that the Kiwi economy will pick up a lot quicker than others. That could benefit the Kiwi economy in the short-term. We could see some Kiwi buying continue and the Eurozone is way behind. Coronavirus cases are going up there as well and the fact that they are one of the latest to start vaccinating, it could be a problem in the Eurozone in the short-term.
So, Kiwi was quite big on this week’s agenda. Another one was the GB Pound.
We had the Bank of England interest rate decision. They kept rates at 0.10% We saw a little bit of boost from the Bank of England initially because they stated that they do not see anything that would suggest that they’ll go into negative rates. They’re going to leave rates pretty much as they are. Still, they also hinted that the UK economy is not doing as bad as they thought and that there could be some hikes in the future. And, the fact that the UK and the rolling out vaccinations quite quickly could suggest that the UK could get back to business quite soon as well.
That’s very interesting, the difference between the Eurozone and the UK’s approach to the coronavirus vaccinations. It could pay off for the UK in the short-term.
Looking at the other data we had this week; we had non-farm payrolls. That’s the US employment and what we saw here was that the average hourly earnings dropped substantially.
Now, if the average earnings come in lower, it’s suggesting that the number of jobs that have been created is low-income jobs. There are lower-income jobs, which could suggest that the economy isn’t doing too great.
Again, we know the coronavirus had a big impact there. Although the number of previous jobs was -227,000, it came in at +49,000. More jobs are being created in the US. However, they are lower-income jobs. That’s why we’re seeing a huge spike in prices at the moment on the US Dollar.
If we look at EUR/USD, for instance, we have the news come out here, and the market is continuing to push to the upside. The market is selling the US Dollar on the back of this data. We’re all in the medium-term; we want to be buyers of the US Dollar, this little move, here, could be a pullback in the grand scheme of things.
We pointed out 1.2 as a key level to watch this week for some potential buying opportunities. The price came down into this zone. We’re starting to see those buyers step in. We could see a little bit of US Dollar weakness next week. Potentially, coming back into some key levels. We have a nice level up at 1.2165 on EUR/USD where we can see that the price found some resistance, support, support, and resistance. Could this be an area where the price wants to head towards a rejection? We’ll have to wait and see. There’ll be some resistance levels within this area, which will give us a sign if the price is going to continue or break this 1.2 level, which we are anticipating with the price coming down into the 1.18 level, which is through here.
Moving on then to the GB Pound. We were talking about the GB Pound and the fact that the UK economy could have a little bit of a boost in the short-term. The GB Pound is loving that. We’re getting a lot of chop on the GB Pound and the strength and weakness table at the start of the week was suggesting that we could see a reversal.
Now, the price is hovering around this 1.3750 level, struggling to break above it at the moment. We’re sitting on our hands with the GB Pound. If the GB Pound can start to show us signs of a reversal like a weekly bearish candlestick, then that’ll be something that we’d be interested in. However, until then, the price could still surge and head towards this key area here, around 1.39, because we do have a large volume area within this candlestick here.
If the UK is going to benefit from the recent data and investors are going to look to buy the GBPound off that recent Bank of England statement, we could see the price rally into 1.39. But that’s all going to depend on what happens with the US Dollar. At the moment, the price is capped at these highs. Let’s see if we can break above it. If we break above it, we’ve got some long opportunities to take a look at potentially.
Finally, we had a little look at XAU. XAU was on the list for some potential opportunities. We’re looking for some more downside on XAU. The price is going to spike a little bit on the fact that the data out of the US wasn’t so great. We could see a little bit of boost there, but in the midterm, I still feel like the price should come and retest around this 1700 or 1690 area as we expect the US Dollar strength to continue heading towards March and April.
We’ll have a little look in the Market Outlook at the strength and weakness changes. Those were the key charts to have a little lookout and the key news this week.
I hope you enjoyed this video update. If you did, give it a thumbs up, comment down below on how you got on this week, and I’ll speak to you soon.
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