Market Talk
- The Euro fell towards a three-year low versus the dollar ahead of a highly watched German ZEW survey on Tuesday, which is expected to show a sharp slump in investor confidence and fuel growing pessimism about the outlook for Europe’s largest economy.
- Sentiment for the Euro has worsened this month after weak manufacturing and GDP data from Germany, Europe’s largest economy, suggested that the euro zone is more vulnerable to external shocks that previously thought.
- The Australian dollar slipped below the 67 U.S. cent level after minutes from the central bank’s last meeting revived the prospect of policy easing. RBA kept rates unchanged at an all-time low of 0.75% at that meeting, but the minutes showed central bankers are prepared to ease policy further if needed.
- The Australian and New Zealand dollars were jolted lower on Tuesday as a production warning from Apple highlighted the mounting economic costs of the coronavirus and spooked investors across Asia while the Chinese yuan was weighed down by worries about the economic impact of the coronavirus.
- Sterling also nursed losses against the dollar and the euro due to worries about economic ties between Britain and the European Union as both sides laid out conflicting views on how to proceed with trade negotiations.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation
2. Sell AUD/USD at 0.6705. Stop at 0.6740 and profit target at 0.6665
3. Worries over RBA’s easing and interest rate differential are likely to weigh on the Aussie dollar
4. Price has broken below a support level with bearish MACD is a bearish sign.
Fundamental Comments
1. Worries over Aussie rate is likely to weigh on Aussie dollar
2. Interest rate differential is in the US dollar favour.
Technical Comments
1. Price has broken below a support and could be heading towards the next support
2. MACD has turned bearish and is likely to move lower.
Key Levels
| Support | 0.6685 | 0.6660 | 0.6630 |
| Resistance | 0.6705 | 0.6740 | 0.6775 |
Technical Overview
USD/JPY – Price stayed within last week range of 109.65 to 110.10 yesterday. We see this range continuing until there is a break of either boundary. Stochastic is about to have a bearish crossover. MACD is weak and neutral around the zero line. 20EMA is flat. These are signs of a consolidation. Watch the boundary for direction.
| Support | 109.60 | 109.20 | 108.90 |
| Resistance | 109.90 | 110.15 | 110.30 |
EUR/USD – Price reached a low of 1.0822 this morning, which is close to our target at 1.0810. We believe price is close to a bottom after an 11-day decline. Stochastic is still in the oversold extreme and not rising. MACD is moving higher but MACD is still bearish. .MACD is also starting to warn with divergence of a possible price low.
| Support | 1.0810 | 1.0790 | 1.0765 |
| Resistance | 1.0845 | 1.0870 | 1.0905 |
GBP/USD – Price failed to move above 1.3069 and has reversed course to below 1.30. Price has managed to stay above a previous resistance turned support at 1.2990. At the moment, price can go in either direction but we prefer to be bearish. Stochastic is moving but MACD is still bullish at the moment.
| Support | 1.2985 | 1.2940 | 1.2905 |
| Resistance | 1.3010 | 1.3040 | 1.3070 |
XAU/USD – Our range view remains unchanged. Yesterday, we had stated 1588 could be the limit. Price reached a high of 1587.35 and if 1588 if breached, the next resistance lies at 1593, which is also the top of the big range. Stochastic is the in overbought zone but we could be seeing a bullish crossover soon. MACD is bullish but looks weak at the moment.
| Support | 1584.85 | 1576.90 | 1567.50 |
| Resistance | 1593.05 | 1611.00 | 1615.55 |
NZD/USD – Our buy order was filled at .06420 when price dropped to a low of 0.6405 this morning. MACD has turned bearish; both its lines had dropped below the zero line, which is a bad sign. Stochastic is close to the oversold extreme but looks weak. Keep stop at 0.6395 and profit target at 0.6510.
| Support | 0.6405 | 0.6395 | 0.6375 |
| Resistance | 0.6445 | 0.6470 | 0.6515 |
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