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  • Writer's pictureMike Paterson

Soggy Greenback still as a new year gets underway

Monday 4 January 2021

Welcome to 2021 dear readers.

A new year but same old story as the US Dollar remains on the back foot amid a continued grab for equities, Bitcoin, oil et al with the DXY down to lowest levels since April 2018 while COVID continues to cast its sad shadow but vaccine-based optimism producing a myopic market response. Risk sentiment therefore starts the year on a happy-clappy optimistic note overall but we will wait to see if we witness reversals as another year gets underway. Indeed we are seeing some softer tones as my report proceeds....

There's little doubt that we live in strange times and rationale was thrown out the window a long time ago so as we look at trading opportunities to begin the year it's even more important not to over analyze but trade the price action with discipline and patience.

GBPUSD has found its latest base at 1.3650-60 with larger support between 1.3580-00 still and now tested 1.3700 amid the softer USD and better risk tones. I'm still not jumping in as the new year reveals itself. 2021, as all years, will be a marathon not a sprint. EURGBP based at the strong 0.8930-35 support area (GBPEUR resistance 1.1195-1.1200) after diving through 0.8985 and some EUR dip buys duly made toward the lows. Currently back up to test 0.9000 (GBPEUR 1.1110) the Pound finds a few sellers and EUR dip demand notable after recent retreats.GBPJPY has failed at 141.30 and now testing 140.50 this morning as the Pound takes a small reality check and risk sentiment softens as I type.

I still have a naturally bearish stance on GBP overall but respecting the current vagaries for the moment.

USDJPY failed above 103.30 again and now down through the support at 102.80 amid the softer USD/risk combo.EURJPY held 126.00 again but failed once more above 127.00 and still providing good two-way pips. EURUSD held 1.2230 and now testing 1.2300 again amid the softer USD tones and some general EUR cross-pair dip demand after the recent retreats. USDCHF capped above 0.885 agin and now breaking down through 0.8800 on the softer USD and risk tones with EURCHF lower but with the SNB ever watchful.

AUDUSD has duly found a base at 0.7680 and used the general USD supply plus some initial AUDDJPY demand to test 0.7740 while USDCAD capped this time at 1.2750 and has fallen to test 1.2675 as I type on the general USD supply.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.33 GMT

GBPUSD 1.3683

EURUSD 1.2284

EURGBP 0.8973

GBPEUR 1.1142

GBPAUD 1.7696

GBPCAD 1.7371

GBPJPY 140.67

GBPZAR 19.8388

GBPHKD 10.5984

USDJPY 102.78

USDZAR 14.5060

EURJPY 126.77

EURCHF 1.0814

EURHKD 9.5121

AUDUSD 0.7734

USDCAD 1.2692

USDCHF 0.8806

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