Market Talk
- The dollar started the New Year under pressure as investors wagered U.S. economic outperformance could be coming to an end as optimism on trade brightens the outlook for growth globally.
- A lack of progress in the Sino-U.S. trade dispute undermined the dollar for much of December but U.S. President Donald Trump said in a tweet on Tuesday that he will sign an anticipated “phase one” trade deal with China at the White House on Jan. 15,
- A pause in US interest rate hike and an easing in Sino-U.S. trade concerns could see the US dollar peaked and has boosted optimism that this year could favour other major nations’ currency against the US dollar.
- The Markit/Caixin Purchasing Managers’ Index (PMI) for manufacturing in the month of December came in 51.5, versus 51.8 in November. China’s central bank on Wednesday cut the amount of cash that banks must hold as reserves, releasing around 800 billion Yuan to shore up the mainland economy.
- Gold prices edged higher on Thursday as the dollar hovered near a six-month low hit on New Year’s Eve amid bets U.S. economic outperformance could be coming to an end.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation
2. Sell AUD/USD at 0.7000. Stop at 0.7035 and target at 0.6950
3. A 2 week rally in the AUD/USD may have reached its peak with interest rate differential in the US dollar favour
4. An Evening Doji candlestick price pattern coupled with divergence warning from MACD is warning that price may have reached its peak
Fundamental Comments
1. A 2 week rally in the AUD/USD may have reached its peak.
2. Interest rate differential is in the US dollar favour
Technical Comments
1. An Evening Doji Star candlestick price pattern is warning of a price high.
2. Divergence between MACD and price is another warning of a possible price high in place
Key Levels
| Support | 0.6990 | 0.6960 | 0.6930 |
| Resistance | 0.7015 | 0.7030 | 0.7055 |
Technical Overview
USD/JPY – With Tokyo on holiday for today, we are unlikely to see much price action. Price may do a correction after last week’s decline but we expect the correction to halt at either 108.90 or 109.15 for another test of the low at 108.50. Stochastic is near to the oversold extreme and MACD is bearish
| Support | 108.65 | 108.45 | 108.15 |
| Resistance | 108.90 | 109.15 | 109.30 |
EUR/USD – Price has rallied before the New Year to 1.1240 but MACD is starting to warn with divergence. We are expecting a price correction back to 1.1150. Stochastic is also turning lower but 20EMA is still bullish. This could be a corrective decline before price moved higher again next week.
| Support | 1.1195 | 1.1170 | 1.1150 |
| Resistance | 1.1220 | 1.1240 | 1.1275 |
GBP/USD – Price reached a high of 1.3286 on the last day of 2019, which was also the Fibonacci 62% of the decline from 1.3512 to a low of 1.2905. If price is unable to move this high, price is likely to test the low of 1.2905 again in the next few days. Stochastic is in oversold zone and is turning down. MACD is still bullish
| Support | 1.3205 | 1.3185 | 1.3160 |
| Resistance | 1.3230 | 1.3265 | 1.3285 |
XAU/USD – Price had reached a high of 1525 on the last day of the previous year but that high was accompanied with divergence from MACD. This is a warning that price could have reached a temporary high. MACD is also turning down and is bearish but Stochastic is moving higher. We are watching range from 1525 to 1517. A break of either boundary is likely to see a price continuation in that direction.
| Support | 1516.50 | 1507.10 | 1498.90 |
| Resistance | 1525.20 | 1535.50 | 1545.90 |
USD/SGD – Price reached a low of 1.3420 and has bounced higher. However there is a 20EMA resistance at 1.3475 as well as a price resistance at 1.3485. We think the corrective rally could be capped at this resistance zone for another decline to test the low at 1.3415. MACD is bearish with both its lines below the zero line but Stochastic is turning up from the oversold zone.
| Support | 1.3450 | 1.3415 | 1.3385 |
| Resistance | 1.3475 | 1.3505 | 1.3525 |
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