Risk-off Sentiment Prevails on Markets

What you need to know on Friday

• Risk aversion dominates in the financial markets as the resurgent of coronavirus cases may slow global growth. Thus, safe-haven currencies are rising such as the CHF, the JPY, the USD, and riskier assets and commodity-linked currencies (the CAD and the AUD) are weakening.
• Oil is heading for its largest weekly loss since April amid the overall risk-off mood and the pause of OPEC+ talks.
• Bitcoin is again in the lower part of a trading range as investors favor fewer cryptocurrencies and meme stocks these days. This is a turning point. Will investors start buying dips in risk assets or continue buying safe havens amid the rising cases of delta virus strain?
• Tensions between the US and China are rising. The US will blacklist at least 10 Chinese entities over human rights abuses in Xinjiang.
• Pfizer is going to request US emergency authorization this summer for the third dose of its Covid-19 vaccine, which should be effective against the delta variant. This positive news may push Pfizer up.

Technical outlook

EUR/USD has reversed down from the 50-period moving average of 1.1850. Indeed, the 50-period MA is a strong resistance for EUR/USD, just look how many times the pair has failed to cross it in the past. The move below Tuesday’s low of 1.1810 will press the pair down to yesterday’s low of 1.1780. 

XAU/USD is has reversed from the 38.2% Fibonacci retracement level of $1815. It’s likely to fall to the $1790 support which lies at the 100-day moving average and the 23.6% Fibo level. It’s unlikely to break it on the first try, but if it does, the way down to late-June lows of $1790 will be open. Resistance levels are at $1815 and $1833.

It’s quite an interesting situation on the NZD/USD chart. The pair has approached the 0.6930 support, which it has failed to cross a few times. Thus, the reverse up may occur. However, the ongoing risk-off mood may press the risky NZD down. If the pair closes below the 0.6930 support on smaller timeframes (H1, H4), it’s likely to keep falling to the next round number of 0.6800. On the flip side, the jump above the 0.7000 psychological mark will push the pair to the 200-day moving average of 0.7050.

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