• NZD/USD fades bounce off one-week low tested last Friday.
  • Market sentiment sours amid doubts over global recovery from the pandemic and on the US stimulus.
  • Off in China, light calendar at home trouble momentum traders.

NZD/USD takes offers around 0.7170 while fading the late Friday’s corrective pullback during early Monday’s Asian trading session. The kiwi pair dropped the most in a month the previous day as the US dollar benefited from risk-off mood and upbeat data at home. Amid an absence of major positives during the weekend, not to forget a light calendar and holiday in China, the kiwi pair extends the latest downtrend.

Despite faster vaccinations in the West and recent recovery in the global economics, not only from New Zealand, risk appetite remains weak amid uncertainty over the future economic recovery. The reason could be spotted from virus resurgence in Asia and uneven jabbing in the developed countries. It’s worth mentioning that the recent chatters suggesting one jab isn’t enough to curb the virus spread even for a short-term, which is the most governments think, seem to weigh on the sentiment.

Elsewhere, US President Joe Biden’s stimulus packages are in limbo as Republicans don’t want to back the tax hike, not to forget the rejection to fund the entire $1.8 trillion “American Families Plan”. Even so, US Treasury Secretary Janet Yellen recently said, during an NBC interview, “it would be ‘safest’ to include the means for President Biden’s infrastructure plan to fund itself.”

Amid these plays, S&P 500 Futures print 0.13% intraday gains despite Friday’s downbeat performance of Wall Street.

Moving on, an off in China and a light calendar in New Zealand keeps NZD/USD traders searching for Aussie catalysts and risk updates for fresh impulse in Asia. It should, however, be noted that the pair marked the biggest monthly gain of 2021 in April and hence further downside can’t be ruled out.

Technical analysis

Not only a monthly support line and 100-day SMA, near 0.7165, but a confluence of 21-day and 50-day SMA around 0.7145 also tests NZD/USD sellers.

 

  • EUR/USD struggles to overcome the heaviest daily losses in a year.
  • Receding bullish bias of MACD, 100-day SMA breakdown direct sellers toward seven-week-old horizontal support.
  • Bulls need a daily closing beyond 1.2100 to retake control.

EUR/USD holds lower ground, despite the latest bounce to the north, around 1.2030 amid the initial Asian session on Monday. In doing so, the currency major pair keeps Friday’s downside break of 100-day SMA amid weakening MACD bullish bias.

Against this backdrop, EUR/USD sellers keep their eyes on a horizontal area surrounding 1.1990 that comprises multiple levels marked since March 11. However, any further downside becomes doubtful at the moment.

Should the quote drops below 1.1990 on a daily closing basis, 1.1930 and 1.1870 levels are likely to return to the chart.

On the contrary, a daily closing beyond the 100-day SMA level of 1.2052 will look to cross the 1.2100 hurdle to keep EUR/USD buyers hopeful.

Following that, April’s low 1.2150 and the yearly peak close to 1.2245 will be important to watch.

EUR/USD daily chart

Trend: Further weakness expected

 

  • AUD/USD defends short-term trading range after the heaviest monthly gain of 2021.
  • US dollar gained on Friday amid covid fears, looming uncertainty over Biden’s stimulus.
  • Mixed PMI from China, month-end moves also weighed on the quote.
  • Second-tier Aussie data, risk catalysts will be the key, off in China, Japan can restrict market moves.

AUD/USD picks up bids around 0.7720, struggles to recover from short-term range support, amid the early Monday morning in Asia. The Aussie pair marked the biggest monthly gain in 2021, despite the recent pullback, in April. The downward pressure remains present at the start of May even as buyers defend 0.7700.

Bulls and bears jostle amid mixed clues…

Fears of delayed economic recovery from the coronavirus (COVID-19) and doubts over the US fiscal relief packages seemed to weigh on the market sentiment of late. Chatters surrounding “the one-jab isn’t enough to tame the covid” and worsening virus conditions in Asia backed the latest risk-aversion wave.

Also on the negative side could be the US Republicans’ firm rejection to support President Joe Biden’s stimulus amid tax hike concerns. On the contrary, US Treasury Secretary Janet Yellen recently said, during an NBC interview, “it would be ‘safest’ to include the means for President Biden’s infrastructure plan to fund itself.”

Elsewhere, mixed activity numbers from China, Australia’s largest customer, as well as downbeat equities and stronger US dollar also dragged AUD/USD prices on Friday.

It’s worth mentioning that faster vaccinations in the West and recently upbeat figures from most part of the globe keep traders hopeful.

Looking forward, AiG Performance of Mfg Index and Commonwealth Bank Manufacturing PMI will precede TD Securities Inflation for April to direct immediate AUD/USD moves. However, covid updates and other risk catalysts keep the driver’s seat. It should, however, be noted that a day off in Japan and China will restrict the quote’s performance in Asia.

Technical analysis

Lows marked during late February and April 22 portray 0.7690 as the key support to watch during the further weakness of AUD/USD prices, a break of which should recall 0.7660 and 0.7620 back to the chart. Meanwhile, 0.7760 and 0.7820 become strong resistance.

 

What you need to know on Monday, May 3:

The American dollar soared on Friday as risk-aversion fueled demand for the greenback alongside month-end flows. The EUR/USD pair settled at 1.2020 while GBP/USD finished the week around 1.3830. The Australian dollar also fell, but held above the 0.7700 threshold, while the USD/CAD settled near weekly lows in the 1.2280 price zone.

Stocks fell, with US indexes posting substantial losses, while US government bond yields remained subdued, ending Friday little changed on a daily basis. Despite the market has been looking beyond coronavirus-related headlines, there was a report on Friday that spurred concerns.

A preliminary study indicates that just one shot of a coronavirus vaccine is not enough to generate protection against the new, more aggressive variants. Given the world’s shortage of vaccines, many countries have chosen to speed up vaccinating with at least one dose, to cover a larger portion of its population, rather than providing two shots to a smaller number of people. With that in mind, the economic comeback may take longer than anticipated.

Gold settled around $ 1,770.00 a troy ounce, little changed for a second consecutive week. Oil retreated on Friday, after hitting fresh one-month highs mid-week. WTI finished the week with gains at $ 63.45 a barrel.

Japan celebrates the Golden Week and will remain on holidays until next Wednesday. China also celebrates different local holidays. Volumes at the weekly opening will be quite low and may result in unexpected wide movements among major pairs.

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