Market Talk
- Asian currencies found support on Wednesday from a slowdown in the spread of coronavirus, but a strong dollar and caution about the rising death toll kept gains in check, while the New Zealand dollar jumped after the central bank dropped its easing bias.
- The New Zealand dollar jumped 0.7% to $0.6458 after the central bank held interest rates steady, as expected, but forecast holding rates unchanged through the year thereby reducing the likelihood of future easing.
- The U.S. dollar was flat Tuesday as traders weighed weaker-than-expected labour data against positive remarks from Federal Reserve Chairman Jerome Powell on the economy. The U.S. Labour Department’s latest JOLTS report showed job openings in January fell to about 6.43 million, missing expectations of 7 million.
- The pound, meanwhile, continued to climb, keeping the dollar on the back foot following data showing the U.K. economy did not contract further in the fourth quarter of the year but some experts warned further gains will likely be kept in check by on-going UK-EU trade tensions and steady U.S. interest rates
- The single currency recovered to $1.0915 from a 4-month low against the US dollar with European Central Bank President Christine Lagarde adding to the chorus of calls for EU members to adopt more supporter fiscal measures to underpin growth in the economic bloc and support the single currency.
Chart Focus USD/CHF
Key Points
1. Sell USD/CHF recommendation
2. Sell USD/CHF at 0.9770. Stop at 0.9795 and target at 0.9725
3. Poor JOLTS job data coupled with rising coronavirus death toll could lead to demand for safe haven Swiss Franc.
4. Price pullback to Fibonacci 62% with falling Stochastic and MACD are signs of a bearish trend.
Fundamental Comments
1. Poor JOLTS job data is likely to weigh on the US dollar.
2. Rising coronavirus death toll past 1100 could lead to demand for safe haven Swiss Franc.
Technical Comments
1. Price pull back to the Fibonacci 62% correction point could be a good location to get into a short position
2. Falling Stochastic and MACD are hints of a bearish trend ahead
Key Levels
| Support | 0.9745 | 0.9720 | 0.9695 |
| Resistance | 0.9775 | 0.9795 | 0.9825 |
Technical Overview
USD/JPY – Price had declined to a low of 109.50 three days ago and price was capped by the 110.00 handle. Today, we think the rally should start and bring price higher to 110.30 as long as immediate support at 109.65 holds. MACD is turning up and is still bullish. Stochastic has a bearish crossover. A price move below 109.50 would negate our bullish view.
| Support | 109.70 | 109.50 | 109.20 |
| Resistance | 110.00 | 110.30 | 110.60 |
EUR/USD – Price fell to a low of 1.0891 overnight and has recovered to 1.0920. However the trend remains bearish. MACD is still bearish with both its lines deep below the zero line. Stochastic has moved above the oversold extreme but remains weak. Our target was 1.0870 and we still think price will move lower over the next 48 hours. A move above 1.0990 would negate our bearish view.
| Support | 1.0890 | 1.0870 | 1.0845 |
| Resistance | 1.0930 | 1.0965 | 1.0990 |
GBP/USD – Price reached a high of 1.2968 overnight but the bearish trend may not have found a bottom as yet. Price resistance at 1.2960 and 1.2975 could cap the rally and provoke another decline to 1.2810. While Stochastic is rising, it is near to the overbought extreme. MACD is still bearish. A move above 1.3000 could negate our bearish view
| Support | 1.2940 | 1.2905 | 1.2870 |
| Resistance | 1.2990 | 1.3045 | 13080 |
XAU/USD – We view price as consolidating within the range of 1593 to 1547. Yesterday, price moved to a low of 1561.90, just above our expectation. Stochastic is still moving down and MACD is moving lower as well, we think price is likely to move lower to 1560 today. Overall we view price as moving within the bigger range as determined by the Stochastic reading.
| Support | 1561.45 | 1554.20 | 1547.25 |
| Resistance | 1571.50 | 1582.75 | 1593.05 |
EUR/AUD – Our sell call was filled yesterday at 1.6265 when price reached a high of 1.6281. Price has declined this morning to a low of 1.6205. We would recommend bringing stop lower to cost at 1.6265 while keeping profit target at 1.6180. Stochastic is near to oversold extreme while there could be a possible MACD divergence warning of a possible low in formation.
| Support | 1.6205 | 1.6170 | 1.6135 |
| Resistance | 1.6235 | 1.6265 | 1.6310 |
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