Commodity-linked currencies weakened further against the greenback, as investors were concerned about the economic impact of the Coronavirus on China's economy. AUD/USD and NZD/USD sank 1.0% to 0.6762 and 0.6544, respectively, both the lowest level since early December. USD/CAD advanced 0.4% to 1.3191.
On Tuesday, the U.S. Durable Goods Orders and consumer confidence numbers will be key economic to watch and could offer intermediate directions while news/headlines will be the key to follow as well.
XAU/USD - Double Top Breakout Pattern Retest
The safe-haven-meta prices continue to flash green and hit the 3-week high level at $1,581, mainly due to China's coronavirus outbreak and fresh war between Iran and the United States.
At the Coronavirus front, the United States warned against travel to China and other countries. As well as, the statement came from China's health officials that the Coronavirus could be much more dangerous than earlier thought. This dangerous virus has killed almost 100 lives, and more than 30,000 are infected so far in China.
While portraying the risk-off, the U.S. 10-year treasury yields dropped to the lowest since early October on Monday, whereas major Wall Street benchmarks registered losses above 1%.
Challenging the yellow-metal buyers is the greenback strength that encourages its safe-haven demand and upbeat fundamentals. Whereas, the U.S. Federal Reserve is mostly expected to stand pat during its monetary policy decision on Wednesday.
Looking forward, the U.S. Durable Goods Orders and consumer confidence numbers will be key to watch and could offer intermediate directions while news/headlines will be the key to follow as well.
XAU/USD - Daily Technical Levels
Support Resistance
1576.62 1587.03
1571.07 1591.89
1560.66 1602.3
Pivot Point 1581.48
XAU/USD - Daily Trade Sentiment
The gold technical side continues to be the same as it's prices are falling down after testing strong resistance at 1,586. The precious metal is likely to find next support around 1,568 area, and violation of this could cause a further drop in gold until 1,557, which is not very scenario given the safe haven generated by Coronavirus. Let's consider staying bearish today to target 1,568 level.
USD/CAD - Overbought Pair, Is It Going to Retrace?
The USD/CAD was closed at 1.31937 after placing a high of 1.31999 and a low of 1.31475. Overall the trend for USD/CAD remained bullish throughout the day.
The USD/CAD pair rose to its highest level since December 13 near 1.32000 on Monday amid the sharp fall in WTI crude oil prices on the back of increasing fears over coronavirus outbreak.
The pair USD/CAD found its demand in the market after the dovish comments from the Bank of Canada last week. It posted gains for four days in the previous five days and reached near 1.32000 level on Monday.
The Bank of Canada held its interest rates unchanged but gave dovish comments that the doors for an interest rate cut and easing in monetary policy were opened now in the time of need.
The outbreak of Coronavirus in China has affected the Chinese equity market badly and has shown its impacts on the U.S. stock market as well. U.S. stocks fell more than 1% on Monday amid the rising fears of a virus outbreak. Investors are moving towards safe-haven assets and leaving the energy market & equity market as well.
WTI Crude oil prices fell sharply on Monday when the death figures in China raised to 81, and positive cases from more than a dozen countries were reported. The sharp fall in crude weighed on the commodity-linked currency – Loonie. The weighted Loonie then helped the USD/CAD pair to move upwards towards its month's highest level.
On the other hand, the U.S. dollar remained supported on Monday, followed by the strong U.S. Services PMI, which was released on Friday. But the anti-risk flow sentiment of the market drove U.S. Treasury bond yields lower on Monday. The New Homes Sales data from the United States on Monday also came in short of expectations and kept bulls from placing higher bets and limited the upward rally of USD/CAD.
Furthermore, in the absence of any economic data from Canada, traders will keep an eye on the U.S. Federal Reserve's announcement of its monetary policy for January on Wednesday for taking positions accordingly.
USD/CAD - Daily Technical Levels
1.3156 1.3209
1.3125 1.3231
1.3103 1.3261
Pivot Point: 1.3178
USD/CAD – Daily Trade Sentiment
The USD/CAD is examining the double top mark around 1.3196. The stronger dollar pushed the pair higher, which is now keeping the USD/CAD in consolidation below 1.3196.
Tthe USD/CAD pair has concluded a bullish candle, but the very next candles seem to be bearish, which is hurting the technically bullish sentiment of the USD/CAD. Alternatively, the USD/CAD may find support around 1.3150, along with resistance at 1.3270. Let's consider looking for buying above 1.3170 today.
AUD/USD – Triangle Pattern Breakout
The AUD/USD currency pair stopped its recent losing rally and sidelined near the 0.6760 due to the turnaround in the global risk sentiment that helped decrease the bearish pressure. As of writing, the AUD/USD currency pair is currently trading at 0.6754 and consolidates in the range between the 0.6747 - 0.6765.
The currency pair recently increased its losses and lost some additional ground mainly due to the disappointing release of National Australia Bank's (NAB) Business Confidence, which fell to its lowest level since mid-2013 in December, this was the critical factor behind the Asuatrial dollar weakness.
The AUD/USD pair fell to the lowest level since October 16 but showed some resilience below the mid-0.6700s. Active recovery in the global risk sentiment and subdued U.S. dollar price action continued to give some support to the riskier currencies like Aussie. It also helped ease the bearish pressure surrounding the Aussie. Nevertheless, increased concern regarding the economic impact of a dangerous new coronavirus in China will likely continue to threaten the China-proxy Aussie.
Therefore, it will be reasonable to wait for some strong fresh catalysts before positioning for any further near-term move. Market traders will look forward to the U.S. Durable Goods Orders data and the Conference Board's Consumer Confidence index for some short-term trading impetus.
AUD/USD - Technical Levels
Support Resistance
0.6794 0.6813
0.6788 0.6826
0.6775 0.6833
Pivot Point: 0.6807
AUD/USD - Daily Trade Sentiment
The technical side of the AUD/USD hasn't changed much since the violation of the long-held triangle pattern. The pattern supported the AUD/USD around 0.6825, and now this level seems to work as a resistance. The AUD/USD is holding around 0.6750, having concluded a bearish engulfing on the 4-hour chart, which is suggesting a potential room for further selling.
The pair may find next support nearby 0.6715, and under this level, we may notice further sell-off unto 0.6685. Considering the oversold RSI, we may experience some recovery in the AUD/USD currency pair somewhere around 0.6720 today.
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