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The kiwi is leading gains in the major currencies space, bouncing back late yesterday as dollar gains eased up and helped by better NZ Q4 unemployment data.
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Elsewhere, the risk mood continues to keep more positive as the market mulls over talk of bigger spending revision under Biden’s stimulus plan. While there will be plenty of push and pull in Congress, that is keeping investors hopeful for the time being.
EUR/USD hit a low of 1.2011 yesterday as the dollar continues to hold steadier for the time being. We’ll have to see if there is appetite for the short dollar squeeze to run further and I would argue that the 1.2000 level in EUR/USD would be a good gauge of that.
Other than that, USD/JPY remains stuck around 105.00 as buyers contemplate if a further breakout is warranted. Meanwhile, USD/CAD moved to test its 200-hour moving average before seeing a slight bounce now back to flat levels around 1.2780.
Elsewhere, AUD/NZD is extending a break below its 100-day moving average and tracking under 1.0600 – contesting a firm break below its 100-week moving average @ 1.0593. That could accelerate the downside pressure to the December low just above 1.0400.
Looking at precious metals, gold is under some light pressure technically as sellers break below the 200-day moving average and looking to threaten a breach below key trendline support from the March to November lows as price holds below $1,840.
As the retail trading frenzy ends, the market looks to be more focused on the “basics” once again and that means risk sentiment will stay as a key driver in trading this week.
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