FX Commentary – Yuan Back Above 7

Market Talk

– The dollar clung to most of its recent gains on Wednesday after U.S. President Donald Trump said a trade deal with China was “close” but offered no new details on negotiations. China’s Yuan weakened past the 7-per-dollar mark after the speech and was steady at 7.0232 per dollar in offshore trade on Wednesday.

– Hopes for an imminent deal to wind back tit-for-tat tariffs the world’s two largest economies have imposed on each other have lifted the dollar to a one month-high against the euro overnight and steadied near that level at $1.012 on Wednesday.

– The British pound was steady at $1.2850, after a brief boost after the Brexit Party head Nigel Farage said his party won’t contest any seats currently held by the Conservative Party, increasing the chance that Prime Minister Boris Johnson’s EU withdrawal agreement can be secured.

– The Reserve Bank of New Zealand (RBNZ) held the official cash rate (OCR) at 1.0% on Wednesday, against market expectations for a 25bp easing, but said it remained prepared to act on policy as required. The New Zealand dollar, which fell to near a month-low on Tuesday after a soft survey on inflation expectations, soared 1% on the announcement.

– Later on Wednesday, Fed Chairman Jerome Powell is due to testify on the U.S. economic outlook before the congressional Joint Economic Committee at 12 midnight Singapore time. The first public hearings in Trump’s impeachment inquiry begin an hour earlier.

Key Levels

Support 0.68300.68000.6775
Resistance 0.68600.68850.6915

Technical Overview

USD/JPY – Price dipped below Monday’s low of 108.90 this morning but managed to bounce up. MACD is neutral near the zero line but Stochastic had stayed above the oversold extreme. Our view remains the same as yesterday. Unless 108.90 support breaks, we are bullish for 109.50.

Support 108.85108.60108.25
Resistance 109.20109.50109.90

EUR/USD – Price may have move below Monday’s low of 1.1015 but our view remains the same as yesterday. We think the downside is limited and a rally is more likely. MACD is starting to warn with divergence while Stochastic is near to oversold extreme. However, 20EMA is still bearish and its bearish trend is strong. Watch the support at 1.0990 for clue.

Support 1.09901.09651.0935
Resistance 1.10251.10601.1090

GBP/USD – Price declined to a low of 1.2817 last night, which was also the Fibonacci 62% correction point of the rally from 1.2768 to 1.2897. MACD is bullish while Stochastic is rising. If price is stayed above 1.2817, we think there is potential for a price move to 1.2930.

Support 1.28201.27701.2735
Resistance 1.28601.28951.2930

XAU/USD – – Price make a new 3-month low at 1445.50 but in the form of a High Wave candlestick pattern. The candlestick pattern is a warning of a possible low in place and price is currently capped by a downtrend line as well as the 20EMA. A move above 1462 would be bullish and hint of a price move to 1481. MACD is warning with bullish divergence while Stochastic is turning up.

Support 1456.951445.501439.40
Resistance 1461.851470.151481.60

GBP/JPY – Our sell call and stop loss were both filled last night. We got our levels wrong yesterday. Price is still within the Ascending Triangle and was supported by a strong support at 139.90. Our view remains the same as yesterday. As long as price is supported above 139.90, we think price could be moving higher to 141.40. MACD is bullish and Stochastic is just below the extreme point.

Support 139.90139.65139.35
Resistance 140.30140.65141.00

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