Top trade setups in forex – Weaker dollar dominates the market!

The U.S. stock indexes lost over 1% as a worse-than-expected jobs report showed the carnage inflicted by the coronavirus pandemic. The Dow Jones Industrial Average fell 360 points (-1.7%) to 21,052, the S&P 500 dropped 38 points (-1.5%) to 2,488, and the Nasdaq 100 was down 107 points (-1.4%) to 7,528.

The shares in Banks (-3.87%), Utilities (-3.62%) and Automobiles & Components (-2.75%) sectors suffered significant losses. Xerox (-8.6%), Foot Locker (-8.2%), MGM Resorts (-8.1%), Wynn Resorts (-7.9%), American Airlines (-6.7%) and FedEx (-6.4%) were among the biggest losers. Let’s find out trade setups for the U.S. session.

XAU/USD - Triple Top Resistance

Gold may continue to be in "wait and see" mode because traders continue to observe how long it will take the economy to drag from depression. Meanwhile, most traders expected that gold would be higher after the payroll data, but the main problem is the supply tightness is easing, as well as, the U.S. dollar strength also weighed on gold prices. Eventually, gold may shine from all the fiscal and monetary stimulus being raised into global markets.

The U.S. Labor Department's closely watched jobs report showed that the economy shed 701,000 nonfarm payrolls in March, much worse than a reduction of 100,000 jobs expected. This abruptly ended a historic 113 straight months of employment growth. Meanwhile, the jobless rate rose 0.9 percentage point, the largest single-month change since January 1975, to 4.4%.

By the weekend, the number of confirmed coronavirus cases in the U.S. surged past 333,000, with the related death toll crossing above 9,500. President Donald Trump warned Americans to prepare for the toughest week of the pandemic while predicting "a lot of death."

XAU/USD - Daily Technical Levels

XAU/USD - Daily Trade Sentiment

Gold prices are trading with a bullish bias around 1,642 level, testing the triple top level, which is keeping fold prices under pressure at 1,645. A bullish breakout of this level can extend buying until 1,672 level. While on the lower side, the gold prices can find support around 1,615. The 4 hours timeframe is likely to continue support at 1617.15, and below this, the next support can be found at around 1,607 level. Bullish bais remains strong as the RSI and Stochastics remain in a bullish zone.

USD/CAD - Saudia to Increase Production 

The USD/CAD advanced 0.5% to 1.4203, while other commodity-linked currencies were broadly lower against the greenback. The AUD/USD plunged 1.1% to 0.5996, and NZD/USD dipped 0.8% to 0.5871. The Chinese central bank announced that it would lower the required reserve ratio for rural banks and small city commercial banks by one percentage point, releasing 400 billion yuan of liquidity.

On Monday, the Canadian dollar rallied versus its U.S. counterpart as symptoms of an economic slowdown in coronavirus-related deaths bolstered investors sentiment, balancing lower oil prices.

On the other hand, the U.S. Labor Department's closely watched jobs report showed that the economy shed 701,000 nonfarm payrolls in March, much worse than a reduction of 100,000 jobs expected. Thus the U.S. dollar is getting weaker, and the USD/CAD pair is taking a bearish turn.

Oil prices jumped over 10% as traders expect the U.S. to help coordinate a deal between Saudi Arabia and Russia to cut oil output and support prices. WTI Crude Oil jumped $3.38 (+13.4%) to 28.70 a barrel at the close. Consequently, the Canadian dollar has gained a bit of bullish momentum, and it's driving selling trends in the USD/CAD prices.

USD/CAD - Daily Technical Levels

USD/CAD - Daily Trade Sentiment

The USD/CAD is trading choppy within a range-bound market of 1.4245 - 1.4080. On the 4 hour timeframe, the commodity currency pair USD/CAD has developed a descending triangle, which is expected to underpin the Loonie pair at 1.3990. On the higher side, the downward trendline may provide resistance at 1.4220.

As we know, the descending triangle patterns usually break out of the lower side, and if this happens, we may see USD/CAD prices traveling further lower towards the next support level of 1.3735. Alternatively, an upward breakout of 1.4200 mark can point the USD/CAD pair further higher towards 1.4270. Let's now look for selling traders below 1.4170 level today.

AUD/USD – Ascending Triangle Pattern

The  AUD/USD currency pair stops its consecutive 4-day losing streak and rose to 0.6077 level due to fresh uptick in the global risk sentiment. The currency pair gained some bullish traction on the 1st-day of the new trading week and traded bullish so far. Currently, the AUD/USD is trading in a narrow range of 0.5991 - 0.6077. However, the gains in the currency pair were limited due to broad-based USD strength.

The drops in the death toll and cases of the COVID-19 gave substantial relief and confidence to the traders. Whereas, the considerable gain in the U.S. equity futures provides a modest boost to the perceived riskier Australian dollar.

On the flip side, the on-going fear about the economic recession from the coronavirus pandemic continues to support the greenback, and we can say the reason behind the pair limited bullish bias is greenback strength.

At the data front, Friday's U.S. monthly jobs report, which showed that the economy lost 701K jobs in March, and the unemployment rate rose to 4.4% from 3.5% previously also fueled the market concerns.

Due to the absence of any major market-moving economic releases, developments surrounding the coronavirus will likely continue to influence the USD price dynamics and give some meaningful trading impetus.

AUD/USD - Technical Levels

AUD/USD - Daily Trade Sentiment

On Monday, the AUD/USD has recovered over 0.6025 resistance levels in the wake of a weaker dollar and stronger Aussie. Last week, the AUD/USD seemed to have violated the choppy range of 0.6205 - 0.6025, but eventually, the breakout provided to be a fakeout.

At the moment, the AUD/USD pair is closing candles upward over 50 EMA, which is supporting the pair around 0.6080 level. Continuation of a bullish bias can extend the buying trend until the next resistance level of 0.6115 and 0.6175. The 50 periods exponential moving average (EMA) and the RSI are suggesting buying trends and may lead Aussie further higher towards 0.6200 target level.

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