Silver Remains Bearish, USD Flexes Muscles, CAD Rises On The Back Of Higher Oil Prices

The U.S. Congress approved over the weekend a new round of fiscal stimulus worth about $1.9 trillion and sent a buying spree on the equity markets. Because of the size of the package and the importance of the U.S. equity markets to the international financial markets, the news impacted other markets too. 

As such, the Dax in Germany closed at record highs, well above the 14,000 level, and FTSE 100 traded above 6,700. Yet, some interesting divergences formed. For example, while the Dow Jones index made a new all-time high, the Nasdaq 100, the tech index, continued its correction a week or so ago. Also, the U.S. dollar held strong, gaining across the board, both against developed and emerging markets currencies.

On the commodity front, gold broke below $1,700. From a technical perspective, it is at a confluence area, meeting both dynamic and horizontal support. Crude oil trades above $64 and silver barely holds the $25 level.

Daily Analysis

Just like yesterday, today is another day with irrelevant economic data. The market participants, therefore, have time to prepare for the ECB meeting on Thursday, the key event of the week.

Until then, it is worth mentioning that the ECB has sent some mixed messages lately. On the one hand, it signaled its intention to ease some more, as suggested by some speeches of its members. On the other hand, judging by the weekly PEPP data revealed yesterday, the ECB did not step up the bond-buying. As such, the Euro found a bottom currently, bouncing from 1.1840 (EURUSD) and pressuring 130 (EURJPY).

Markets to Watch

Silver, GBPUSD, EURUSD – markets in focus today.

Silver

Silver remains week while in the bearish channel. Ever since it broke the neckline of a head and shoulders pattern, it trades with a week tone. Naturally, it all depends on what the price of gold does. Gold broke below $1,700 yesterday, and more weakness should trigger similar price action for silver.

GBP/USD

An interesting setup forms on the GBPUSD pair. Cable broke the neckline of a head and shoulders pattern as well, but with little or no follow-through. Because the market is close to the 1.40 round number, we should not be surprised to see a reversal and an invalidation of the pattern. A new lower low puts pressure on the downside, but a reversal above 1.40 suggests another attempt at the highs.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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