FX Commentary 22 April 2019

Market Talk

– The U.S. dollar held near a two-week high on Friday, in a quiet session for currencies with most major U.S. and global markets closed for the observance of Good Friday holiday. Currency trading continues globally but volume is low.

– US$ gained against the Euro and Sterling, supported by the relative strength of the U.S. economy in light trading on Monday. Market is expected to be quiet today with European markets, including London closed for Easter Monday holiday.

– Better-than-expected retail sales data lifted market sentiment when Retail sales in the U.S. rose by 1.6% in March, which was the strongest gain since September 2017. Economists had expected a gain of 0.9%. Initial jobless claims was 192K vs 205K estimate, which was a 50-year low.

– Japan will have an unprecedented 10-day holiday from 27 April to May 6, to mark the ascension of the new emperor, Crown Prince Naruhito. JPY swaps, during this period will be expensive due to the long holding period for holder of long JPY.

Chart Focus Gold

Key Points

1. Trading Sell on Gold

2. Sell Gold at 1279.50. Stop at 1285.50 and target at 1270.50

3. Recent good US data has eased concerns over economic slowdown and increased risk appetite which does not favour Gold

4. The decline was unable to surpass an important resistance and with MACD still bearish, there is a high chance of another decline to test the low.

Fundamental Comments

1. Recent good US data has eased concerns over a slowdown in US economy.

2. An increase in risk appetite has moved capital into assets with higher return and away from Gold

Technical Comments

1. Price decline has been unable to surpass the resistance zone of 1279.50 to 1280.80, which keep the downtrend intact

2. MACD has reached it zero line while being bearish and a turn lower is hint of more price declines.

Key Levels

Support 1275.25 1271.50 1266.40
Resistance 1280.80 1289.30 1295.80

Technical Overview

USD/JPY – Our sell call on Thursday was filled and we are now short at 111.90. Keep stop at 112.20 and target at 110.95. However, later in the week, if there is no much movement, we will have to exit this position as an extended holiday in Japan will make our short position very costly to hold. MACD is flat at the moment.

Support 111.80 111.50 111.25
Resistance 112.15 112.45 112.80

EUR/USD – Price broke the uptrend channel on Thursday on the back of a disappointing European PMIs data. The decline does not seem to be over as yet. We are expecting another price move to 1.1210 to end this decline. Immediate resistance lies at 20EMA resistance point of 1.1255. Only a move above 1.1330 would negate this bearish view.

Support 1.1220 1.1185 1.1135
Resistance 1.1250 1.1280 1.1320

GBP/USD – Price has exceeded our target of 1.2985 after reaching a low of 1.2965. MACD and Stochastic are both showing divergence warnings of a potential price low. While 20EMA is still bearish and trending lower, we are wary of holding short position at this low level. UK is on holiday today and we are likely to see a thin and quiet market for today. Wait for better trade direction.

Support 1.2960 1.2920 1.2880
Resistance 1.3010 1.3050 1.3090

EUR/JPY – Our position from 17th April was stopped out at 126.20. We had raised our stop higher on Thursday afternoon. Price has been in a sideways movement for the past 2 days and there are no clues at the moment on direction. MACD is flat. Japan will have an extended holiday after this Friday. Wait for better direction.

Support 125.60 125.20 124.85
Resistance 125.95 126.30 126.80

USD/CAD – Price has been trapped in a range of 1.3280 to 1.3400 for the past 3 weeks. There is still no sign of a break of this range at the moment. Last Thursday’s combination of a good US data coupled with a below expectation of Canadian ADP employment data also failed to move price out the range. MACD is neutral. Wait for a break of the range for directional clue.

Support 1.3340 1.3415 1.3375
Resistance 1.3370 1.3400 1.3450

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