FX Commentary 1 March 2019

Market Talk

– EU’s Brexit negotiator Barnier will not change Irish backstop or re-open withdrawal agreement for negotiation. Even if UK pushes back deadline with an extension, if there is no solution, there could still be a no-deal Brexit at the end of Jun 2019. Market, at the moment, has only price in a soft Brexit. Hopefully UK’s PM May can come up with an agreement deal.

– Trump/Kim summit ended without a deal as both sides were unable to come to an agreement. North Korean minister said his country has made realistic proposals and position would not change if US proposes further talk.

– US/China trade tariffs deadline is today which Trump was willing to extend. Mnuchin said Trump administration remains united on China trade talks and deal with China will detail specific structural commitments. There is progress made but still got more work to be done. We wait for further announcement on tariffs

– Powell said the economy is in a good place. Fed will be patient and watching risks. Mnuchin also said US outlook remains very strong. US Advance 4Q GDP beats expectation with a 2.6% reading.

– Safe haven JPY and CHF pared gains against the US$ achieved from US-North Korean summit after US 4th Quarter GDP economic growth turned out stronger than expected. US$ was stronger across the board against most of its peers.

Chart Focus GBP/USD

Key Points

1. Buy GBP/USD recommendation

2. Buy GBP/USD at 1.3235. Stop at 1.3175 and target at 1.3345

3. A likely extension to Brexit deadline is giving hope to a Brexit deal for a sound UK economy

4. A bullish MACD trend is a good opportunity to buy on a correction to Fibonacci 38%

Fundamental Comments

1. A likely extension of the Brexit deadline is raising hopes of a Brexit deal

2. BoE’s governor Carney said fundamental of UK economy is sound

Technical Comments

1. A likely price correction with support zone from the previous low to Fibonacci 38% correction point.

2. A strong MACD trend is hinting of more upside to price movement.

Key Levels

Support 1.3250 1.3200 1.3145
Resistance 1.3285 1.3315 1.3350

Technical Overview

USD/JPY – Price broke above the recent high of 111.25 with a strong price action. There could be more upside before this uptrend can be considered over. We would recommend buying a price dip at 111.30 for a movement to 112.25. MACD trend is strong and bullish. A move below 110.70 would negate our bullish view.

Support 111.35 111.00 110.70
Resistance 111.75 112.00 112.35

EUR/USD – Price has turned lower after hitting a high of 1.1420 with the high just above the Fibonacci 62% point. MACD is showing divergence and warning of a possible price high. We remain bearish as price showed a Spinning Top candlestick with a long upper shadow. A move above 1.1420 would negate our bearish view which is calling for a decline to 1.1315

Support 1.1360 1.1315 1.1290
Resistance 1.1390 1.1420 1.1460

USD/SGD – Price has moved higher and is near to our profit target price of 1.3550. We would recommend bringing stop higher to cost at 1.3490 and keeping profit target unchanged at 1.3550. Stochastic is into overbought extreme but MACD is strong and bullish and price should be able to move higher to our target price.

Support 1.3505 1.3485 1.3440
Resistance 1.3550 1.3585 1.3610

XAU/USD – Price is moving towards our target at 1310.10 and we would recommend bringing stop lower to 1319.80. MACD movement lower is getting weaker but Stochastic is not into oversold extreme as yet and should be able to move lower. Be prepared for a reversal just above our target price by watching for MACD divergence.

Support 1310.10 1302.70 1298.30
Resistance 1319.80 1324.50 1332.30

NZD/USD – Price has dropped below 0.6825 and should be heading towards 0.6775. Stochastic is into oversold extreme but MACD is still bearish. 20EMA is trending lower and we are expecting price to move lower. Resistance is now at 0.6835. A move above 0.6855 would negate our bearish view and confirm the end of this decline.

Support 0.6800 0.6775 0.6745
Resistance 0.6835 0.6855 0.6890

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