FX Commentary – Aussie Gained On Gold Price Rally

Market Talk

  • The dollar inched lower on Tuesday but gains in riskier currencies were capped. The Australian and New Zealand dollars held on to overnight gains but so did the safe-haven Japanese yen, highlighting investor uncertainty about the outlook.
  • Hints that the virus may be peaking in the U.S., where states are beginning to plan for re-opening, and in retreat elsewhere are accompanied daily by dire economic reports as global demand dived amid lockdowns and business closures around the world.
  • Fed Atlanta President said recovery from COVID-19 should be much more robust than from usual recession while the US Committee for a Responsible Federal Budget now estimates the US FY2020 deficit will be $3.8 trillion or 18.7% of GDP.
  • Gold was lower early in the day but reversed and then rallied more than $20 to an eight-year high, taking out the March top as the COVID-19 pandemic continues to hit economies worldwide.
  • Market sentiment was boosted as Chinese export data in March fell only 6.6% from the same period a year ago which was a smaller drop than expectation of  a 14% plunge. Imports eased a modest 0.9% compared to expectation for a 9.5% drop.

Chart Focus USD/SGD
Key Points
1. Sell USD/SGD recommendation
2. Sell USD/SGD at 1.4165. Stop at 1.4220 and target at 1.4090
3. An increasing appetite coupled with an above expectation in China’s data is likely to aid the SG dollar
4. Price is capped by a falling 20EMA and MACD is bearish and falling which is a hint of further price decline.

Fundamental Comments
1. Risk appetite is increasing as market sees the pandemic past its worse which will weigh on the US dollar
2. A better set of data from China in the morning is likely to aid regional currency like SG dollar.

Technical Comments
1. The correction in the downtrend is capped by the falling 20EMA
2. MACD is bearish and could be turning down again just below the zero line

Key Levels

Support 1.41351.40901.4060
Resistance 1.41801.42201.4250

Technical Overview

USD/JPY – Price was capped at 109.20 which was also the Fibonacci 50% correction level of the previous decline from 111.70 to the recent low of 106.90. If price stays below 109.20, we are likely to see a movement to 106.90 to test the low again. For today, if price is unable to move above 108.20, price is likely to test the low of 106.90 again over the next few days. MACD is still bearish but Stochastic is in the oversold zone.

Support 107.45106.90106.40
Resistance 107.80108.15108.50

EUR/USD – Our sell order was filled yesterday when price reached a high of 1.0966. Price reached a low of 1.0892 overnight but has bounced back to 1.0945 this morning. We would recommend bringing stop lower to 1.0970 and keeping profit target at 1.0855. Stochastic is still moving lower despite the rally in price this morning. MACD is weak and near to the zero line.

Support 1.09151.08801.0830
Resistance 1.09551.09851.1005

GBP/USD – Price climbed above the upper boundary of a sideway consolidation at 1.2475 overnight and we this breakout likely to send price higher to 1.2560. Price is above our target and MACD and Stochastic have not shown signs of a reversal as yet. We expected another limited up move to 1.2625 over the next one to two day. A move below 1.2475 would abort our bullish view

Support 1.25301.24751.2445
Resistance 1.25801.26251.2655

XAU/USD – Price moved above $1700 to a eight-year high of $1724.85 this morning. MACD is still bullish and rising. Stochastic has reached the overbought zone but is showing no signs of a reversal as yet. 20EMA is still rising and its slope is steep, which is a hint of a strong bullish trend in progress. We think price can continue to move higher towards $1738.

Support 1708.601700.001689.55
Resistance 1717.701724.801738.00

USD/CAD – Price broke the support at 1.3920 overnight and declined to a low of 1.3855. A rally was capped at 1.3905 and if price is unable to move above this point today, the risk is another decline to 1.3850 or 1.3790. MACD is still bearish and moving lower, which confirms our view. However, Stochastic is in the oversold extreme but we expect Stochastic to move lower and also stay in this oversold extreme for another day or two.

Support 1.38501.37901.3745
Resistance 1.39051.39501.4005

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