FX Commentary – Strong U.S. Economic Data Keeps U.S. Strong

Market Talk

– Signs that China may be planning further measures to support its economy and aid growth including possible bailout for hard-hit industries as it reels from a virus-induced slowdown sent safe haven yen to nine-month lows amid signs that the spread of the coronavirus virus is slowing.

– The US dollar index climbed to a four-month high after data on housing starts and building permits exceeded analysts’ estimates and FOMC Jan’s 2020 minutes showed Fed officials viewed monetary policy as appropriate for a time suggesting US interest rates will likely be on hold for a time.

– The pound continued to drift lower, shrugging off better-than-expected U.K. inflation data as market sentiment is caught between optimism about the economy and pessimism about UK’s talks with the EU for a free trade deal.

– The Euro recovered a tad to $1.0810, after slumping to 1.0781 overnight which was close to its lowest since April 2017.  Sentiment remains weak after disappointing economic data sent it crashing through closely-watched support levels in the past few days.

– Gold hit seven-year highs above $1,600 an ounce Wednesday, rising to $1,612.63 and extending Tuesday’s first break of that level in six weeks, as investors continue to shore up their positions amid the coronavirus outbreak.

Chart Focus USD/SGD
Key Points
1. Buy USD/SGD recommendation
2. Buy USD/SGD at 1.3970. Stop at 1.3930 and target at 1.4080
3. Upbeat U.S. economic data while Singapore is affected by the coronavirus are likely to weigh on the Sing dollar
4. Strong uptrend with MACD bullish is likely to keep price going higher

Fundamental Comments
1. Upbeat U.S. economic data is keep the US dollar strong
2. Coronavirus is affecting the Singapore economy and weighing on the Sing dollar

Technical Comments
1. Price uptrend is intact with each closing higher than the previous closing price.
2. MACD is bullish and strong, which is a hint of a strong trend.

Key Levels

Support 1.39851.39601.3925
Resistance 1.40301.40801.4100

Technical Overview

USD/JPY – Price broke above the range high of 110.15 and we saw a sharp rise to 111.58. MACD is strongly bullish but Stochastic is into the overbought extreme. 20EMA is bullish and rising. 20EMA is likely to provide support at 110.50 and we could see another test of the high at 111.58 over the next 2 days after a pullback.

Support 111.30110.95110.65
Resistance 111.60111.90112.05

EUR/USD – Price made a marginal low at 1.0781 overnight but a recovery was capped at the 20EMA resistance at 1.0817. MACD has been giving bullish divergence warnings in the past few days while price moved lower. Stochastic is in the oversold extreme and looks weak. We remain bearish but see a correction higher to 1.0845 before the downtrend resumes again.

Support 1.07851.07651.0730
Resistance 1.08101.08451.0870

GBP/USD – Price broke the lower range boundary at 1.2970 and has declined to a low of 1.2905. MACD is bearish and there is no divergence warning as yet. Stochastic is moving lower into the oversold extreme. 20EMA is bearish and its gradient is steep, which is a hint of a strong bearish trend. We think the strong bearish trend can continue lower to 1.2870, which is the recent low.

Support 1.29051.28701.2835
Resistance 1.29301.29751.3005

XAU/USD – Price broke above a previous high of 1610.99 but there was no follow through. Currently price is hanging around this previous high. Stochastic has a bearish crossover in the overbought zone but MACD is still bullish. As long as price stays above 1593, the trend is bullish. However, if price failed to move strongly above 1611, we may see a pullback to 1599.40 before the rally resumes.

Support 1605.501593.401584.85
Resistance 1616.551625.701635.50

USD/CAD – Our buy call was filled as price declined to a low of 1.3210 this morning. Stochastic is moving up from the oversold extreme and we may see a bullish crossover later. MACD is still bearish and near to the zero line. The low this morning may be a pivot and if it holds, we should see a rally higher to 1.3275 over the next 2 days.

Support 1.32251.31901.3155
Resistance 1.32551.32801.3310

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