Market Talk
- The U.S. dollar inched up on Wednesday in Asia as traders wait for news on the FOMC’s meeting and Sino-U.S. trade news with tariffs deadline looming. Wall Street Journal reported that U.S. and China were planning for a delay of the December tariffs. Investors believed tariffs would be postponed to salvage a trade deal and may be 2020 before both countries can come to an agreement.
- In another trade-related development, Canada, Mexico and the United States agreed to an overhaul of their quarter-century-old regional trade pact, but there were few hints of progress on a deal between the globe’s two largest economies.
- The British pound slipped to $1.3107 on Wednesday after hitting high of $1.3215 on Tuesday after a poll showed PM Johnson’s lead in UK’s general election was slashed by more than half in a closely watched opinion poll released just two days before election votes begins.
- The Euro gained against the US dollar after better than expected German economic sentiment survey turned sharply positive, indicating a bottoming of the German economy and boosted the common currency.
- FOMC ends tonight with market expecting the Fed to keep interest rate on hold at 1.75% and Friday’s strong US economic data helped to reinforce this view. Fed Chair Jerome Powell’s news conference will be used by investors to look for cues about the health of U.S. economy.
Chart Focus EUR/AUD
Key Points
1. Buy recommendation for EUR/AUD
2. Buy EUR/AUD at 1.6245. Stop at 1.6215 and target at 1.6320
3. While strong German survey data is supporting the Euro, trade dispute between the U.S and China is weighing on the Aussie.
4. Price has broken above a trend channel and could be heading towards the Fibonacci 200% target with MACD hinting of more price upsides.
Fundamental Comments
1. Strong German data is supporting the Euro
2. Trade tariffs uncertainty is weighing on the Aussie
Technical Comments
1. Price broke out of a trend channel and could be heading to the Fibonacci 200% price projection point
2. MACD is bullish and is turning higher again
Key Levels
| Support | 1.6235 | 1.6200 | 1.6150 |
| Resistance | 1.6275 | 1.6305 | 1.6325 |
Technical Overview
EUR/JPY – Our sell recommendation was stopped out last night when price reached a high of 120.75. We are out with a 35 pips loss. The upside could be limited to 120.90-121.00 as Stochastic has reached the overbought extreme and MACD is still bearish. Price could also move within the boundaries of 120.00 to 121.00 ahead of looming trade tariffs decision from Trump.
| Support | 120.60 | 120.30 | 119.95 |
| Resistance | 120.95 | 121.30 | 121.50 |
EUR/USD – Price was capped by resistance at 1.1095 after good German data sent the single currency higher. If 1.1095 caps, price is likely to move lower to 1.1055. MACD is still bearish but both its lines are near to the zero line. Stochastic has almost reached the overbought extreme. We think price is likely to move within the range of 1.1050 to 1.1100 till FOMC’s meeting.
| Support | 1.1060 | 1.1035 | 1.0990 |
| Resistance | 1.1095 | 1.1115 | 1.1145 |
GBP/USD – Price declined yesterday but managed to hold above an important support at 1.3100, which was a previous low on 6 Dec 2019. As long as price is above this 1.31 handle, the trend is still bullish and there is a chance of another test of 1.3215. However MACD has turned bearish but Stochastic is near to the oversold extreme. Watch the support at $1.3100.
| Support | 1.3100 | 1.3065 | 1.3030 |
| Resistance | 1.3145 | 1.3175 | 1.3205 |
XAU/USD – Price was little changed from yesterday. It stayed within our expected consolidation range except for a brief moment when it spiked higher to 1469 but declined back into range soon after. After hitting a high and unable to sustain, price is likely to decline lower to test 1458. MACD is still bearish.
| Support | 1458.50 | 1445.50 | 1438.20 |
| Resistance | 1468.90 | 1479.40 | 1484.10 |
NZD/USD – Our sell call on Monday has performed better yesterday moving lower to 0.6520. We would recommend bringing stop lower to 0.6570 while keeping profit target at 0.6480. MACD is about to turn bearish. Stochastic has not moved into oversold extreme as yet and is able to support price moving lower.
| Support | 0.6500 | 0.6465 | 0.6435 |
| Resistance | 0.6540 | 0.6580 | 0.6620 |
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