Daily Technical analysis for February 26, 2021petar skakalov
Dollar fails to take comfort in higher yields so far today
EUR/USD climbs to a six-week high of 1.2200
Despite yields ticking higher to start European morning trade, the dollar is actually tracking lower across the board – except against the yen – in the major currencies space.
EUR/USD has climbed to a fresh high of 1.2200, its highest level since 13 January, as buyers look to try and break through resistance around 1.2170-97 at the moment.
The two key levels to watch going into the daily close will be the 22 January high @ 1.2190 and the 61.8 retracement level of the swing move lower this year @ 1.2197.
Keep a daily close above that and buyers will have more confidence in chasing a further move to the upside, with the dollar also looking vulnerable elsewhere.
AUD/USD is inches away from touching 0.8000 while USD/CAD is being pressured down to three-year lows just below 1.2500 at the moment.
While the dollar may be failing to find shelter now, the drop in US futures reflect more of a rotation trade rather than any broad risk aversion. But if the latter is to come around, just be mindful that it could help to keep the dollar somewhat supported later on.
More gloom in store for gold as November low looks to be giving way
The sell everything mode in the market is dragging gold lower as well
Gold is down 0.7% on the day as price falls below its 30 November low @ $1,764.80, trading to levels last seen since June last year.
With the November low and 50.0 retracement level @ $1,763.51 out of the picture, gold looks primed for a test of $1,700 next with a flush towards $1,670-90 on the cards.
It has been a rough start to the new year for gold with seasonal tailwinds failing to offer much reprieve in January and now this in February trading.
When looking at gold, I continue to look at ETF holdings as the main driver at the moment and the signs are showing that investors are still shedding positions for now:
As long as that continues, the lack of enthusiasm in the yellow metal may see gold tough to find much footing as it is stuck between a rock and a hard place – both from a technical and somewhat fundamental point of view at the moment.
The surge higher in yields this week is another reason that punches gold right in the gut, with real yields in the US having risen by almost 40 bps since the start of the month:
Source: Technical analysis