Market Talk
– Weaker-than-expected German PMIs, coupled with poor Eurozone data, renewed fears the euro zone may be heading for a recession. Federal Reserve had earlier trimmed its US GDP growth forecast which rekindled worries of an economic slowdown and increasing concerns of a global recession.
– Global bond yields added to the week’s steep losses on Friday as bond traders lost confidence in the strength of the U.S. and global economies just days after the Federal Reserve downgraded its own forecast. An inverted curve is also considered a recession indicator.
– Dismal US manufacturing data fuels worries about US economic slowdown. US March prelim PMI fell to 52.5 against an expectation of 53.5. US also posted the largest monthly fiscal deficit on record. However Fed’s Evans commented that the US economy is in a strong position and Fed is prepared to ease if downside risk becomes a reality.
– PBOC governor Yi Gang said that the central bank had pulled back from day to day currency intervention. This could be a positive step towards meeting US trade demands and a step closer to a trade deal between the world two largest economies.
– There were UK media reports of a coup to oust PM May over the weekend but there have been no confirmations or May’s resignation till now. May’s leaving may complicated things rather than solved any problems.
Chart Focus GBP/USD
Key Points
1. Sell GBP/USD recommendation
2. Sell GBP/USD at 1.3165. Stop at 1.3225 and 1.3005
3. With Brexit deadline nearby and parliament no nearer to a deal, a no deal Brexit will have a big negative impact on Sterling.
4. Price is capped by 20EMA and Fibonacci and MACD is bearish and turning down.
Fundamental Comments
1. Brexit deadline is approaching but parliament is unable to agree on a withdrawal deal
2. A no deal Brexit would have a big negative impact on Sterling
Technical Comments
1. Price is capped by Fibonacci 62% and also by the 20EMA line
2. MACD is bearish and could be about to turn lower.
Key Levels
| Support | 1.3150 | 1.3105 | 1.3075 |
| Resistance | 1.3200 | 1.3240 | 1.3290 |
Technical Overview
USD/JPY – Price has exceeded its target but there were no divergence warnings from both MACD and Stochastic. Stochastic is currently oversold and MACD is deep in extreme condition. We think there will be a corrective price rally to the 20EMA. Watch the reaction at 20EMA for the next directional clue.
| Support | 109.70 | 109.40 | 109.10 |
| Resistance | 110.20 | 110.50 | 110.90 |
EUR/USD – Price has declined to a low of 1.1273 on Friday night. This low is just below the Fibonacci 62% of the rally from 1.1170 to 1.1447. Stochastic is into oversold extreme but MACD is bearish. 20EMA is bearish. We prefer to stay bearish. We are looking at a corrective rally to 20EMA point at 1.1330 to get into a short position.
| Support | 1.1270 | 1.1220 | 1.1175 |
| Resistance | 1.1330 | 1.1365 | 1.1410 |
NZD/USD – Price is currently sitting on support at 0.6870. 20EMA is still bullish and MACD is also bullish. Stochastic is turning up. We think price is likely to move higher to 0.6920 again. A move below 0.6820 would negate our bullish scenario.
| Support | 0.6870 | 0.6830 | 0.6805 |
| Resistance | 0.6890 | 0.6920 | 0.6940 |
XAU/USD – Our buy call was filled on Friday and we would recommend keeping profit target at 1321.50 but bring stop higher to cost at 1310.50. MACD and Stochastic are both rising. MACD is also bullish. 20EMA is also rising and will be the first support for price on this uptrend.
| Support | 1311.40 | 1306.50 | 1298.55 |
| Resistance | 1317.10 | 1321.10 | 1327.20 |
USD/CAD – Price could continue to advance to the previous high at 1.3465. Stochastic is into overbought extreme but MACD is still bullish and strong. 20EMA is also bullish and rising. We think price is likely to test the previous high of 1.3465 again. Support is at 1.3380.
| Support | 1.3405 | 1.3375 | 1.3350 |
| Resistance | 1.3435 | 1.3465 | 1.3485 |
AUD/JPY – Price has been in a consolidation for the past 2 weeks and this week, there is still no sign of a potential breakout. It looks like price is likely to continue in a range of 76.40 to 75.40. MACD is flat and neutral while Stochastic is near to the high side but not yet into overbought extreme. Wait for better trade idea.
| Support | 75.65 | 75.35 | 75.00 |
| Resistance | 76.00 | 76.30 | 76.70 |
EUR/USD – The trend is bullish but with concerns over Italy-EU confrontation, the view becomes cloudy. If price can stay above 1.1160, there is a good chance of price going higher to 1.1215. However if price were to fall below 1.1160, it could be heading back to 1.1105. MACD is bullish but Stochastic is moving lower from overbought zone.
| Support | 1.1160 | 1.1140 | 1.1105 |
| Resistance | 1.1195 | 1.1220 | 1.1245 |
GBP/USD – Price looks weak as it was not able to overcome the resistance at 1.2760. MACD is still bullish and Stochastic could be turning up from oversold zone. If price is able to hold above 1.2645, there is still a chance of another rally to 1.2810. However a move below 1.2645 is likely to see another test of the low at 1.2605.
| Support | 1.2665 | 1.2640 | 1.2605 |
| Resistance | 1.2710 | 1.2750 | 1.2785 |
XAU/USD – Price reached a high of 1287.25 and has declined lower. Price is now sitting on the 20EMA support at 1282.50. Stochastic is turning lower from overbought zone but MACD is still bullish and could be turning up. A price move below 1280.60 could mean a decline to 1269 again.
| Support | 1282.25 | 1278.80 | 1269.20 |
| Resistance | 1287.30 | 1291.40 | 1298.60 |
AUD/USD – Price reached a low of 0.6912, filling our buy call at 0.6915. Keep stop at 0.6870 and target at 0.6995. 20EMA is bullish and pointing higher. MACD is still bullish and moving higher. Stochastic is correcting from the extreme level. Signs are good that Aussie is poised for a rally.
| Support | 0.6910 | 0.6885 | 0.6860 |
| Resistance | 0.6935 | 0.6965 | 0.6995 |
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