XAU/USD Weekly Forecast (22nd March 2021 – 26th March 2021)

Fundamental view:

The yellow metal moved up and down against greenback in the previous week. The US dollar’s market valuation, rather than risk sentiment, remained the primary driver of XAU/USD’s movements throughout the week. Powell’s dovish tone and the FOMC’s commitment to continue to support the economic recovery triggered a USD selloff late on Wednesday and helped XAU/USD gain traction. However, the benchmark 10-year US Treasury bond yield extended its rally on Thursday and added strength to the USD.

“Gold as an asset class has moved up on the investors’ lists. The precious metal was irrelevant for many a few weeks ago; there was more action in other markets. But now, it moved itself back up. Gold is a player on the field again after being benched for a while,” said a Strategist.              

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Mar 22, Fed Chair Powell Testimony at Mar 23, Core Durable Goods Orders monthly report at Mar 24, GDP quarterly report, Initial Jobless Claims at Mar 25, PCE Price Index at Mar 26 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.89% higher than the previous week. Maintaining high at 1755.5 and low at 1719.3 showed a movement of 362 pips.

In the upcoming week we expect XAU/USD to show a bullish trend.  The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the downside. A solid breakout above 1760.7 may open a clean path towards 1776.2 and may rise upwards to 1796.9. Should 1703.8 prove to be unreliable support, the XAUUSD may sink downwards 1724.5 and 1688.3 respectively. In H4 chart Ascending Triangle breakout favors prospects of a bullish trend. Also to be noted Bullish engulfing formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1739.1 target at 1773.4 and stop loss at 1717.4

 

Alternate Scenario
Sell: 1717.4 target at 1682.3 and stop loss at 1739.1

GBP/USD Weekly Forecast (22nd March 2021 – 26th March 2021)

Fundamental view:

The British pound has gone back and forth during the course of the week and overall formed a bear candle. The interest rates in America seem to be main culprit in creating a lot of noise. In the previous week, The Fed’s dot-plot shows borrowing costs will rise only in 2024.The dovish approach sent the dollar down, but the move turned upside as Treasury yields resumed their rise. US yields remain in the spotlight for markets and they are set to be influenced by new US stimulus, final GDP and other data. In the UK, a vaccination slowdown, jobs, inflation and retail sales figures are of interest.

US TIC Net Foreign Purchases of Domestic Treasury Bonds & Notes on 15th March and US Fed Industrial Production monthly report on 16th March framed uptrend whereas US EIA Crude Oil Stocks Change on 17th March and US Philadelphia Fed Manufacturing Index & Philadelphia on 18th March framed downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Chair Powell Speech at Mar 22, UK Claimant Count Change, BoE Governor Bailey Speech, Fed Chair Powell Testimony at Mar 23, US Core Durable Goods Orders monthly report at Mar 24, BoE Governor Bailey Speech, US GDP quarterly report at Mar 25, BoE FPC Meeting Minutes, PCE Price Index at Mar 26.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.01% lower than the previous week. Maintaining high at 1.4002 and low at 1.3809 showed a movement of 193 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 1.3778 may open a clean path towards 1.3697 and may take a way down to 1.3585. Should 1.3971 prove to be unreliable resistance, the GBPUSD may raise upwards 1.4083 and 1.4164 respectively. Chart formation of rounding top pattern in H4 chart favors prospects of a bearish trend. Bearish engulfing pattern formation escalates the expectation for a bearish trend.

Preference
Sell: 1.3863 target at 1.3698 and stop loss at 1.3976

 

Alternate Scenario
Buy: 1.3976 target at 1.4163 and stop loss at 1.3863

Bullish sentiment for dollar weighs on gold

The precious metal fell against the greenback in the end day of the week. The downtrend for the precious metal was triggered by the underlying bullish sentiment surrounding the US dollar, which tends to undermine the dollar-denominated commodity.

The Fed declared that it was in no hurry to raise interest rates at least through 2023. However, investors seem convinced that the rapid pace of improvement in economic conditions would warrant faster normalisation of monetary policy. However, policymakers made no mention of the recent surge in long-term borrowing cost.

This helped the US bond by keeping its yield elevated and assisted the USD to erase the post-FOMC losses. Yields on long-end US government bonds jumped to new highs on Thursday.

Meanwhile, the number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but the labour market is regaining its footing as acceleration in the pace of vaccinations leads to more businesses reopening.

Adding to it, vaccine optimism impacts the investors as the European Medicine Authority (EMA) said AstraZeneca is safe while the World Health Organization (WHO) is also likely to reiterate its support for the British-Swedish vaccine on Friday.

As far the geopolitical situation is considered, the US keeps its dominance over geopolitics under Joe Biden’s presidency. US Secretary of State Antony Blinken and Defence Secretary Lloyd Austin have been tough on China and North Korea, not to forget Iran, during their first foreign visit as American diplomats. However, neither China nor North Korea stepped back and hence the tussles become a head-to-head fight with nobody clearly winning but rather impacting the market mood.

XAU/USD 4 Hour Chart:

Support: 1718.6 (S1), 1700.8 (S2), 1682.4 (S3)

Resistance: 1754.9 (R1), 1773.4 (R2), 1791.2 (R3).

Apart from all the factors, the prospects for a relatively faster US economic recovery helped the greenback to be stronger. Amidst all the catalyst supporting dollar. We expect a bearish trend for XAU/USD.

Upbeat Employment data favors Aussie

Aussie seems to be boosted with the positive employment data and further Fed dovish announcement also acts as positive catalyst for AUD/USD.

Australia’s Employment change showed a positive data while crossing 30K forecast and 29.1K prior with 88.7K whereas the Unemployment Rate dropped below 6.3% market consensus and 6.4% previous readouts to 5.8%. It should, however, be noted that the Participation Rate eased from 66.2% to reprint 66.1% level.

Despite predicting a V-shaped economic recovery in the US, the Fed maintained its ultra-dovish tone. It confirmed that it was in no rush to raise interest rates at least through 2023.

“The strong bulk of the committee is not showing a rate increase during this forecast period,” Powell told in a virtual press conference Wednesday following a meeting of the Federal Open Market Committee, adding that the time to talk about reducing the central bank’s asset purchases was “not yet.”

Seven of 18 officials predicted higher rates by the end of 2023 compared with five of 17 at the December gathering, showing a slightly larger group who see an earlier start than peers to the withdrawal of ultra-easy monetary policy, according to fresh quarterly Fed projections.

Further talks that New Zealand and Australia will ease border control also adds support to the Aussie. News that AstraZeneca is up for matching the short deliveries and there are multiple countries outside the European Union (EU) that keep using the covid vaccine impacts the market sentiment positively.

AUD/USD 4 Hour Chart:

Support: 0.7726 (S1), 0.7657 (S2), 0.7615 (S3)

Resistance: 0.7838 (R1), 0.7880 (R2), 0.7849 (R3).

Upbeat Australian employment data and dovish tone of Fed boosted Aussie against greenback. We expect a bullish trend for AUD/USD.