Top trade setups in forex – Risk-off sentiment driving the market!

On Wednesday, the risk sentiment remains mixed in the wake of increased coronavirus cases and weaker U.S. dollar. Global stock markets are showing some recovery in the market. Such as shares in Automobiles & Components (+17.44%), Energy (+16.31%), and Consumer Services (+16.17%) sectors were market leaders.

Norwegian Cruise Line (+42.2%), American Airlines (+35.8%), MGM Resorts (+33.1%), Whirlpool (+29.6%), IHS Markit (+28.4%), Ford Motor (+23.4%), Cummins (+21.2%), Chevron (+22.7%), American Express (+21.9%) and Boeing (+20.9%) were among the top gainers.

Regarding U.S. economic data, the Markit U.S. Manufacturing Purchasing Managers' Index (preliminary reading) fell to a contraction reading of 49.2 in March (43.5 expected). New home sales declined to an annualized rate of 765,000 units in February (750,000 units expected).


XAU/USD - COVID 19 Continues to Support Dollar

Gold posted big gains for a third session as it advanced 68 dollars or 4.4% to $1,622 an ounce. Gold prices edge higher due to increase volatility in the market. It's mostly due to rising hopes for an extensive U.S. economic stimulus package to begin the coronavirus outbreak's economic toll offset liquidation by traders watching for bills and to cover losses in other assets.

The U.S. President Donald Trump and the White House Economic Adviser Larry Kudlow gave positive vibes about the nearness of the bill. Apart from this, the United States is showing a willingness to allow a 90-day pause to its trade partners over the tariffs and therefore gave additional support to the risk-on.

The U.S. stock futures failed to extend its previous day's goodish performance by Wall Street while the U.S. 10-year treasury yields marked 3-basis points (bps) of gains to 0.85% at the time of writing.

Looking forward, the U.S. Durable Goods Orders for January, expected -0.8% versus -0.2% prior, may offer an additional direction apart from the virus news to watch. However, the yellow-metal traders also await fresh details of the much-awaited US COVID-19 Bill for fresh impulse.



XAU/USD - Daily Technical Levels


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XAU/USD - Daily Trade Sentiment

The yellow metal gold is one of the least popular security to exchange due to an extensive surge in it's spread rate. The precious metal is facing immediate support at 1,603, which is a primary trading level today. A bearish crossover of this level can stretch selling unto 1,588 and 1,579. Whereas, a succession of a bullish bias over 1,603 level can lead to buying until 1,635. The overall sentiment is rather mixed, but bullish sentiment may prevail considering a safe-haven appeal in the market.


USD/CAD - Currency Pair Dropped Below 1.4200

The USD/CAD currency pair flashing red and dropped to fresh weekly lows below the 1.4200 regions in the last hour, mainly due to the broad-based USD weakness. The latest recovery in the oil prices weakened the loonie and pushed the pair lower. At the time of writing, the USD/CAD currency pair is currently trading at 1.4328 and consolidates in the range between the 1.4295 - 1.4482.

The currency pair failed to maintain its previous day's intraday bounce and continued to struggle to hold its gain near the key 1.4500 psychological marks but failed due to broad-based U.S. dollar weakness. In contrast, the Federal Reserve's unusual decision of the Q.E. program to buy unlimited amounts of Treasury bonds and mortgage-backed securities continues to send the greenback lower.

After the two-days of disappointment, the Senate Democrats and Republicans ultimately agreed on the Trump administration-backed stimulus package plan. However, the raised expectations of the expected $2 trillion package to control the deadly virus impact and fresh strategy of reducing coronavirus (COVID-19) cases from Italy also improved the market risk sentiment.

The risk-on market sentiment also gave support to the oil prices and allowed to expand its strong overnight gains, which eventually weakened the demand for the commodity-linked currency loonie and fueled further to the USD/CAD pair's bearish moves.

On the other hand, the escalating fears of a global recession could limit the strong gains for oil prices and boost the greenback's status as the global reserve currency, which should help the pair to change its bearish bias.



USD/CAD - Daily Technical Levels


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USD/CAD - Daily Trade Sentiment

The USD/CAD is trading bearish at 1.4315, having violated the upward channel at 1.4400. Closing of candles below this level is suggesting chances of a further selling trend in the USD/CAD pair until the next support level of 1.4266. It's a level that is extended by 50 EMA and 50% Fibonacci support level.

Violation of 1.4266 level can also open further room for selling until 1.4160 level, which marks 61.8% Fibonacci support. While the RSI is still holding in the selling zone, support the bearish trend. Considering this, we should stay bearish today below 1.4350 area to target 1.4265.


AUD/USD – Lowers Low Pattern In-Play

The  AUD/USD  pair continued its recovery rally for the 4th consecutive session and reached on the one-week high above mid-0.6000s, mainly due to broad-based USD weakness. As well as, the recovery in the market risk sentiment also boosted the riskier currencies like Aussie. The AUD/USD is currently trading at 0.6051 and consolidates in the range between the 0.5937 - 0.6057.

However, the Federal Reserve's unusual decision of the Q.E. program to buy unlimited amounts of Treasury bonds and mortgage-backed securities continues to sending the greenback lower. The pair continued its recent recovery momentum from 17-year lows and got some follow-through traction for the 4th-consecutive session. The USD weakness is one of the key factors driving the pair higher.

Following the two-days of failure, the Senate Democrats and Republicans finally showed agreeability on the Trump administration-backed stimulus package plan. However, the raised expectations of the awaited $2 trillion package balanced any negative impact from the coronavirus and fresh strategy of reducing coronavirus (COVID-19) cases from Italy also improved the market risk sentiment.



AUD/USD - Technical Levels


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AUD/USD - Daily Trade Sentiment

The AUD/USD price gains in the wake of improvement in China, Australia's biggest trading partner, which is driving the bullish trend in the Aussie. Technically, the AUD/USD prices have crossed over 50 EMA at 0.5973, and the closing of this candle above 0.5970 is likely to extend bullish bias until the next resistance level of 0.6090.

On the 4 hour timeframe, the AUD/USD has already completed and violated the 38.2% Fibonacci resistance level at 0.5950. For now, the pair is pretty much likey to maintain a slight bullish bias until 50% Fibo level of 0.6080. Let's consider staying bearish below and bullish above 0.5945 level today.



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