USD Regained Some Strength As Retail Investors Turned Their Attention On Silver

Feb 02 21, 11:29 GMT

The USD tended to be on the rise yesterday against a number of its counterparts, as retail investors seemed to turn their attention on silver pushing the precious metal’s price through the roof reaching at 8 year high before correcting lower. At the same time, it should be noted that US stock markets took a breather from the selling pressure and gained some ground as the focus of retail traders aligning through reddit seemed to ease on stock markets. All three main indices, Dow Jones, S&P 500 and Nasdaq were in the green territory yesterday given also that some restrictions on the popular Robinhood trading platform for various shares including GameStop, one of retail trader’s favourites are still in place. It should be noted that Asian markets this morning tended to extend gains as the market sentiment remained in the positives and we expect that should it continue to be present in the markets, we may see US equities rise further.

Dow Jones was on the rise yesterday after bouncing on the 30065 (S1) support line and started aiming for the 30375 (R1) resistance line. As the index’s price action broke the downward trendline incepted since the 26th of the month, we switch our bearish outlook in favour of a sideways movement initially, yet should the positive market sentiment continue to guide the index we may see the bulls taking over. Should the bulls actually be in charge of the Dow Jone’s direction, the index could break the 30375(R1) resistance line and aim for the 30650 (R2) resistance level. Should the bears take over, we may see Dow Jones aiming if not breaking the 30065 (S1) support line which was yesterday’s low point and if so the way opens for the 29740 (S2) support level.

EUR plunges as Germany’s retail sales sink

The common currency weakened against USD, GBP and the JPY yesterday as Germany’s retail sales sunk to the lowest point since records were kept back in 1994 according to the Federal Office for Statistics, reaching -9.8% mom for December. The strict lockdown measures employed on the largest economy of the Eurozone, including the closure of a wide range of shops and schools dented the spending habits of German consumers in the crucial Christmas period. The outlook does not look so bright given also that the measures were extended until mid February, which weakens the outlook for the recovery for the German economy and the EUR. Today EUR traders may be eyeing the financial releases from France and the Eurozone given their gravity, yet fundamentals are also expected to play a role.

EUR/USD’s drop yesterday steepened breaking the 1.2100 (R1) support line, now turned to resistance. We tend to maintain a bearish outlook for the pair which started earlier, as a downward trendline incepted since the 22nd of the month seems to be dominating its movement and dictates our outlook. Should the selling interest persist, we may see the pair breaking the 1.2050 (S1) support line, which EUR/USD briefly approached yesterday, and aim for the 1.2000 (S2) support level. Should EUR/USD find extensive buying orders along its path, we may see it reversing course breaking the 1.2100 (R1) resistance line and aim for the 1.2155 (R2) level.

Other economic highlights today and early Tuesday:

Today during the European session, we highlight UK’s Nationwide house prices for January, France’s preliminary CPI (EU Normalised) rate also for January and Eurozone’s preliminary GDP rate for Q4. Just before the Asian session starts, we note from the US the API weekly crude oil inventories figure while a bit later we get New Zealand’s employment data for Q4, which could create some volatility for the Kiwi. Also note that during the American session, New York Fed President Williams, Dallas Fed President Kaplan and Cleveland Fed President Mester are scheduled to speak. In Wednesday’s Asian session, we get Australia’s building approvals growth rate for December and later on China’s Caixin services PMI for January. Also note that RBA Governor Lowe is to speak tomorrow, given RBA’s decision to widen its QE program.

US 30 Cash H1 Chart