U.S. Brief, February 18 - Top Trade Setups in Forex – Risk-off Sentiment


China's central bank lowered the rate by ten basis points, to 3.15%, on 200 billion yuan worth of one-year medium-term lending facility loans to financial institutions. Chinese authorities cited its target of keeping the banking system liquidity reasonably ample to counter factors including maturing reverse repos as the reason for this measure. 

European stocks returned to positive territory, as the Stoxx Europe 600 Index rose 0.3%. Germany's DAX, France's CAC, and the U.K.'s FTSE 100 were all up 0.3%.

Mining giant BHP Group said it could lower its expectations for economic and commodity demand growth in case the viral outbreak is not well contained within the March quarter. Spot gold price retreated to $1,580 an ounce halting a two-day rally.

XAU/USD – Bullish Channel Putting Up Resistance 

On Tuesday, the precious metal climbed to a two-week day as traders sought safe shelters after a profit warning from iPhone producer Apple because of coronavirus, increasing concerns of the outbreak's influence on the global economic extension.

The precious metal gold is trading bullish by 0.4% to trade at $1,586.63, having climbed to its highest level since February 3, which is $1,589.40. The U.S. gold futures crawled up 0.2% to $1,589.70.

According to China's official data, the number of confirmed coronavirus cases has exceeded 72,000, and more than 1,800 people have died due to the outbreak. 
 At the same time, China's central bank lowered the interest rate by ten basis points to 3.15% on 200 billion yuan. Thus, eventually, the safe-haven demand is surging, which is making the gold stronger. 


XAU/USD - Daily Technical Levels

Support Resistance 
1562.34 1576.29
1554.3 1582.19
1540.35 1596.14
Pivot Point 1568.25

XAU/USD – Daily Trade Sentiment

Gold has moved in line with our estimate to hit the target level of 1,588, and now it's heading towards 1,592 marks. At the moment, the yellow metal gold may retrace back until 1,587 mark. As we can see in the 4-hour timeframe now, the gold has formed a bullish channel, which is likely to extend resistance around 1,596 and 1,600 level. While the immediate support prevails at 1,586. 

USD/CAD - EMA Crossover Leading the Pair

A day before, the USD/CAD fell 0.1% to 1.3237. Canada's December manufacturing sales will be reported (+0.7% on month estimated). On Tuesday, the greenback is up versus the Canadian dollar amid a further risk-off mood in markets that witnessed a growing demand for the dollar. 

A piece of information from Apple that the coronavirus is likely to suggest that Apple may miss its sales target due to fears of China-induced retardation. 

The USD/CAD was trading bullish by 29 pips (+0.22%) to trade at 1.3265 with a daily high of 1.323 to 1.326. Having sailed lower on Monday, the currency pair is presently making fresh highs for the week over 1.325. Today's gains leave a weekly return of +0.10%.


USD/CAD- Daily Technical Levels

Support Resistance 
1.3283 1.3325
1.3259 1.3344
1.3217 1.3387
Pivot Point 1.3302

USD/CAD- Daily Trade Sentiment

The USD/CAD is soaring higher to trade around 1.3268 resistance level in the wake for stronger dollar and weakness in the Canadian dollar. The surge in the USD/CAD came when the pair crossed over 50 EMA resistance around 1.3268. 

For now, the USD/CAD is looking to break higher above 1.3268 resistance area, and if it manages to break over this level, we may see USD/CAD prices going higher towards 1.3300. While the immediate support stays around 1.3245 area, let's look for buying trades above 1.3302 and bearish below the same. 

AUD/USD – Double Bottom Pattern In pLay

The AUD/USD currency pair flashing red and dropped below the 0.6700, having hit the low of 0.6684 on the day mainly due to the increasing calls of RBA rate cut. The AUD/USD is trading at 0.6688 and consolidates in the range between the 0.6684 - 0.6730. However, the minute's statement repeated the policymaker's willingness to deliver the rate cut if needed.

Traders were expecting the aggressive signs considering the rate statements' upbeat comments after the RBA Governor Philip Lowe's optimism that the Australian economy can cover the impact of coronavirus.

The market risk-tone is getting more critical day-by-day, largely due to the coronavirus concerns, which provides support to the greenback as a safe-haven currency. Despite decreasing the pace of the death toll and infected peoples in China, the uncertainty and fears still surrounding the market.

As in result, the market's risk-tone remains a bit under pressure with the U.S. 10-year treasury yields declining almost 2-basis points to 1.57% whereas S&P 500 Futures also weaken 0.20% to 3.375 by the press time.

Looking forward, traders will now keep their eyes on the return of the U.S. traders from the holiday to see how U.S. traders react to the latest coronavirus updates. On the economic calendar, Empire State Manufacturing Index, expect 5.0 against 4.8 prior, as well as Australia's 4th-quarter (Q4) 2019 Wage Price Index will be key to watch. Moreover, the key Aussie employment data will remain under the trader's radar.


AUD/USD - Technical Levels 

Support Resistance 
0.667 0.6705
0.6653 0.6724
0.6618 0.676
Pivot Point 0.6689

AUD/USD - Daily Trade Sentiment

The AUD/USD slipped lower to test the double bottom support area of 0.6670, and closing of the candle above this level is suggesting chances of bullish reversal in the AUD/USD pair. It's also the same level which extended by a bearish channel which got violated previously. 

Above 0.6665, the AUD/USD pair may continue to trade bullish until 0.6715 and 0.6740, while the RSI is also looking to come out of the oversold zone. Let's look for buying trade above 0.6665 today. 

All the best for the New York session!



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