FX Commentary 11 June 2019

Market Talk

– Gold regained some ground last night on Trump’s fresh trade threats against China. Gold had posted its biggest 1-day percentage fall in 2 months in the previous session as U.S – Mexico averted tariffs when both countries managed to conclude a deal.

– The dollar was largely steady against other major currencies on Tuesday, but investor appetite for risk was kept in check after Trump said on Monday, he was ready to impose another round of tariffs against China if a trade deal cannot be reached with China at the G20 summit meeting in late June.

– The Euro dipped on Monday after 2 sources cited that a rate cut was firmly in ECB’s plan if the bloc economy stagnates again after expanding by 0.4% in the first quarter. Euro had rallied on ECB keeping rate unchanged until mid- 2020 despite a global trend of central banks cutting rates to boost their economies.

– Sterling fell on Monday after data showed the UK economy slowed sharply in April and further losses could be expected as investors await the outcome of a weeks-long parliamentary contest to replace Theresa May as Britain’s prime minister, which could increase the risk of a no deal Brexit.

– UK Average Earning is scheduled at 4.30pm today and US PPI is at 8.30pm tonight

Chart Focus NZD/USD

Key Points

1. Sell NZD/USD recommendation

2. Sell NZD/USD at 0.6595. Stop at 0.6630 and target at 0.6540

3. Trump’s threat of new tariffs on China and the impact of tariffs on China economic growth are likely to weigh on NZD

4. A Double Top chart pattern with divergence warnings is a hint of a price reversal

Fundamental Comments

1. Trump’s threat of new tariffs on China if a trade deal is not concluded by late June has increased tensions and this favours the US$

2. Rising Sino-U.S. rivalry is likely to weigh on China’s economic growth and this could weigh on the NZD

Technical Comments

1. Price has a Double Top chart pattern with MACD and Stochastic divergence warnings and has broken below the neckline

2. MACD is bearish and moving lower, hinting of more downside.

Key Levels

Support 0.6575 0.6540 0.6505
Resistance 0.6615 0.6640 0.6685

Technical Overview

USD/JPY – Price moved in a 40pips range yesterday and there are no signs as yet that this consolidation and sideways movement could end soon. In the previous week, price had also moved in a range of 107.80 to 108.60. MACD is flat and Stochastic is near to the overbought extreme zone. Wait for better trading idea.

Support 108.30 108.05 107.80
Resistance 108.70 109.15 109.60

EUR/USD – Price reached a high of 1.1347 on Friday and on Monday, price stayed with Friday’s range. Price could be consolidating its gains and as long as it stays above the 20EMA at 1.1295, there is a strong chance of another push higher to 1.1370. MACD is still bullish and could be turning higher.

Support 1.1305 1.1280 1.1245
Resistance 1.1345 1.1370 1.1410

GBP/USD – Price reached a low of 1.2650 and this is just below the Fibonacci 50% correction point of the rally from 1.2558 to 1.2763. If this support holds, there is a chance of another rally to 1.2875. However if this support breaks, we are likely to see a test back to 1.2560 again. Watch the support at 1.2650 for direction clue.

Support 1.2650 1.2610 1.2560
Resistance 1.2710 1.2745 1.2775

XAU/USD – Price was steady this morning after a sharp decline yesterday. This morning could be the consolidation before another decline. This could be a possible bear Flag pattern in the making with a price target of 1308. MACD is turning bearish and moving lower. Stochastic is inside the oversold extreme.

Support 1324.10 1317.10 1308.80
Resistance 1330.10 1338.70 1348.60

USD/SGD – Our buy call yesterday was filled this morning at 1.3655. Our view remains unchanged. Keep stop at 1.3605 and target at 1.3725. MACD is starting to turn bullish but Stochastic could be turning down. First support is at 1.3645 as well as 20EMA support at 1.3650.

Support 1.3645 1.3610 1.3590
Resistance 1.3695 1.3730 1.3765

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