US President’s 4 trillion package plan boosts dollar

Greenback is in uptrend by a higher Treasury yields on optimism around a quick economic recovery as vaccinations gain momentum.

The US treasury yields were higher as investors awaited President Biden’s announcement of the $4tn infrastructure plan. U.S. President Joe Biden is about to outline on how he would pay for his $3 trillion to $4 trillion plan to tackle America’s infrastructure needs on Wednesday, the White House made a confirmation on Monday, a proposal likely to include tax increases first laid out on the campaign trail.

Biden will also lay out the plan, which is aimed at rebuilding roads and bridges as well as tackling climate change and domestic policy issues like income equality, in Pittsburgh, Pennsylvania.

White House spokeswoman Jen Psaki told reporters said that “The president has a plan to fix the infrastructure of our country … and he has a plan to pay for it,” . She did not give complete details, but few economists and analysts say the proposal may include the biggest overall tax increase in decades.  It has not be forgotten that While campaigning for president ahead of the November 2020 election, Biden proposed rolling back corporate tax reduction and increasing taxes on the wealthy.

Elsewhere JP Morgan Analysts are expecting an upbeat US jobs report due on the cards this Friday , with a massive increase in the headline NFP expected this month.

According to the analysts, they expected payrolls to rise to 650K in March. Unemployment rate will fall to two-tenths to 6.0%.  Better weather after February storms and easing restrictions should be supportive for the best US payroll print since last October. This also boosts the greenback.

News circulated that global banks, such as Credit Suisse and Nomura, said they faced potential large losses after the New York City-based Archegos Capital defaulted on its margin call, this news also favors the American dollar.

GBP/USD 4 Hour Chart:

Support: 1.3729 (S1), 1.3697 (S2), 1.3638 (S3).

Resistance: 1.3820 (R1), 1.3879 (R2), 1.3911 (R3).

Amidst all the catalysts favoring the American dollar against the Britain pound. We expect a bearish trend for GBP/USD.

BOJ’s Summary of Opinions sets back USD/JPY

USD/JPY traders made a setback on Monday as the market sees challenges in the form of coronavirus (COVID-19) resurgence and US-China trade war tension. The Bank of Japan’s (BOJ) latest “Summary of Opinions” has also impacted its role to pull the USD/JPY backward.

Reuters has reported that the Bank of Japan can increase transparency and stabilize markets by clarifying the band at which it allows long-term interest rates to move around its 0% target, several views voiced by the board members at its March meeting showed.

“The BOJ must respond rigidly to protect the upper limit of the range” with its newly introduced market operation, one of the nine board members said, according to the summary of opinions released on Monday.”

“Japan’s economy may be shifting away from a downward trend since the outbreak of COVID-19, with exports and output remaining firm,” one of the nine board members said.

“Although uncertainties remain over COVID-19, downside risks to economic activity at home and abroad have been contained with no signs of increase in industries suffering from deteriorating business conditions,” another board member said. On prices, some board members warned that risks of deflation or prolonged price stagnation remained the BOJ’s primary concern, even as some Western economies were experiencing an uptick in inflation, as per the summary.

Worsening coronavirus (COVID-19) conditions in Europe and new virus-led activity restrictions in Australia’s Queensland also puts pressure on the pair.

Alongside, the latest comments from US Trade Representative Katherine Tai, suggesting further US-China trade tussle, also adds the risk in the market sentiment.

Soft Us data past week, Push of US President Joe Biden’s for faster vaccinations on Friday and The chatters on the $3.0 trillion infrastructure plan from US President Biden supports the greenback and improves the market sentiment.

USD/JPY 4 Hour Chart:

Support: 109.22 (S1), 108.82 (S2), 108.50 (S3).

Resistance: 109.94 (R1), 110.25 (R2), 110.65 (R3).

Bank of Japan’s (BOJ) latest “Summary of Opinions” and US-China trade war tension pulling back the USD/JPY, we expect a bearish trend for USD/JPY.

GBP/USD Weekly Forecast (29th March 2021 – 2nd April 2021)

Fundamental view:

The British pound fell significantly during the course of the week. Pound has seen to be sliding around dollar strength and concerns is increasing about the UK’s vaccination campaign. The greenback is building on infrastructure plans to rise, and more details are due in the upcoming week which supports the dollar. US President Joe Biden is about to unveil a solid $3 trillion infrastructure program that also adds strength to the US economy and perhaps push inflation higher.

EIA Crude Oil Imports Change on 24th March and US GDP Price Index quarterly report & US GDP Sales quarterly report on 25th March favored uptrend for the pair whereas Britain Employment Change 3-months & US Richmond Fed Manufacturing Index on 23rd March and Britain CPI monthly report on 24th March favored downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are US CB Consumer Confidence Index at Mar 30, UK GDP quarterly report, US ADP Nonfarm Employment Change at Mar 31, US Initial Jobless Claims, UK Markit/CIPS Manufacturing PMI, US ISM Manufacturing PMI, OPEC Meeting at April 01 and US Nonfarm Payrolls at April 02.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.89% lower than the previous week. Maintaining high at 1.3877 and low at 1.3671 showed a movement of 206 pips.

In the upcoming week we expect GBP/USD to show a bearish trend.  The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.3676 may open a clean path towards 1.3570 and may take a way down to 1.3470. Should 1.3882 prove to be unreliable resistance, the GBPUSD may raise upwards 1.3982 and 1.4087 respectively. Chart formation of descending triangle pattern in H4 chart favors prospects of a bearish trend. Bearish harami pattern formation escalates the expectation for a bearish trend.

Preference
Sell: 1.3793 target at 1.3601 and stop loss at 1.3887

 

Alternate Scenario
Buy: 1.3887 target at 1.4086 and stop loss at 1.3793

XAU/USD Weekly Forecast (29th March 2021 – 2nd April 2021)

Fundamental view:

The yellow metal struggled to find direction and fluctuated in a relatively tight range. Although the greenback continued to outperform its major rivals with the help of upbeat data releases. In the last week, While testifying before the US House Committee on Financial Services on the Federal Reserve’s response to the coronavirus crisis on Monday, FOMC Chairman Jerome Powell reiterated that the Fed is committed to using the full range of tools to support the economy. Dallas Fed President Robert Kaplan told that he expected the Fed to start raising rates in 2020 while acknowledging that his economic forecasts had improved significantly. IHS Markit’s preliminary PMI reports released last week revealed economic activity both in the manufacturing and the services sectors continued to expand at a strong pace.               

The major economic events deciding the movement of the pair in the next week are CB Consumer Confidence Index at Mar 30, ADP Nonfarm Employment Change, EIA Crude Oil Stocks Change at Mar 31, Initial Jobless Claims, ISM Manufacturing PMI at April 01 and Nonfarm Payrolls at April 02 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.57% lower than the previous week. Maintaining high at 1745.5 and low at 1721.6 showed a movement of 239 pips.

In the upcoming week we expect XAU/USD to show a bearish trend.  The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1720.8 may open a clean path towards 1709.2 and may take a way down to 1696.9. Should 1744.7 prove to be unreliable resistance, the XAUUSD may raise upwards 1757.0 and 1768.6 respectively. In H4 chart inverted cup and handle pattern formation favors prospects of a bearish trend. Also to be noted shooting star formation exerts the expectation of downtrend for the pair.

Preference
Sell: 1732.0 target at 1710.9 and stop loss at 1749.2

 

Alternate Scenario
Buy: 1749.2 target at 1767.6 and stop loss at 1732.0