FX Commentary – Has Aussie Reached A High?

Market Talk

  • Risk currencies rose on Thursday on rising hopes that much of Europe and the United States could soon see themselves out of the worst period of the COVID-19 pandemic and that major oil producers may agree to cut output to stem a plunge in crude oil prices.
  • Risk appetite increases despite New York State reporting its highest death toll overnight while Italy and Spain had an increase in the number of cases as forecasts from governments and experts that the peak could come within days are leading markets to ditch safe havens.

  • Commodity currencies drew support on Thursday from hopeful signs the coronavirus pandemic may be peaking. The Australian dollar fetched its highest level since mid-March, maintaining most of its gains since rallying from a 17-year trough of $0.5510 touched three weeks ago.

  • The euro was in a tight range on Wednesday after European Union finance ministers failed in all-night talks to agree on more economic support for their coronavirus-stricken economies but is set to recommence formally at 1500GMT on Thursday.
  • Sterling was range bounded as British Prime Minister Boris Johnson, who is fighting worsening coronavirus symptoms spent his third night in intensive care. There were no updates on his condition out of the UK. 

    Chart Focus AUD/USD
    Key Points

    1. Sell AUD/USD recommendation
    2. Sell AUD/USD at 0.6200. Stop at 0.6240 and target at 0.6120
    3. Risk in oil production cut talk and month long rally in Aussie could be near an end.
    4. Price has reached a resistance and MACD is warning of a possible price high

    Fundamental Comments

    1. Risk of failure in oil production cut is weighing on risk currencies
    2. Aussie had gain for almost a month and could be reaching a possible high.

    Technical Comments

    1. Price has failed to breach the Fibonacci 62% correction point of the decline
    2. MACD is warning with divergence of a possible price high

Key Levels

Support 0.61850.61500.6110
Resistance 0.62500.62950.6325

Technical Overview

USD/JPY – Price reached a low of 108.51 and our buy order was filled. However in the past 24 hours, price has not gained much reaching a high of 109.05 this morning. Momentum indicators are also getting flat. We would suggest bring stop higher to 108.50 and profit order lower to 109.35.

Support 108.80108.50108.15
Resistance 109.05109.40109.90

EUR/USD – Price found support at 1.0765, forming a Double Bottom chart pattern. A breakout of this chart pattern has seen price moved higher to 1.0925. A pullback to 1.0828 yesterday could be a correction low. If price can hold above 1.0828, we think price will move higher to initial 1.0925 and later 1.0965. MACD is neutral and Stochastic is still moving lower but both do not offer much clues.

Support 1.08251.07901.0765
Resistance 1.08651.08901.0925

GBP/USD – Price has been in a range of 1.2155 to 1.2485 since the 27 Mar 2020. MACD is flat and neutral at the moment while Stochastic has reached the overbought extreme.  We may see a test of the lower range boundary at 1.2290 if price is unable to move above 1.2420.

Support 1.23601.23051.2265
Resistance 1.24151.24751.2525

XAU/USD – Price has come back to the previous high turn support point at $1642.50.MACD is still bullish and if price can stay at the support point, we may see another rally to test the high of $1673 again. A drop below $1642 is likely to drive price lower to $1616.

Support 1641.351631.451622.25
Resistance 1656.351663.801672.55

USD/CNH – Price reached a low of 7.0472 two days ago and this could be the staging point for further upside. MACD is bullish and could be turning up again. 20EMA has been halting price decline and we could see a move to 7.1425 in the next few days if price can hold above 7.0470.

Support 7.06407.05507.0440
Resistance 7.08607.10307.1225

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