Market Talk
- The dollar held onto gains against the yen on Wednesday ahead of data expected to show U.S. manufacturing activity and hiring continued to recover from the economic shock caused by the coronavirus pandemic. The mood for the yen soured after Bank of Japan data showed business sentiment fell to an 11-year year low.
- A surge in coronavirus infections in the U.S. south and southwest has worried some market participants, but most investors are betting this will not be enough to derail a broader rebound in the global economy.
- The euro was hemmed into a narrow range as traders awaited data on Germany’s manufacturing sector, retail sales, and the jobless rate to gauge the health of the Eurozone economy.
- The pound surged against the dollar after clawing back early-day losses on Tuesday, as the Bank of England chief economist Haldane suggested that the U.K. was on track for a stronger than expected rebound following its worst slump in more than 40 years in the first quarter.
- Gold broke beyond the $1,780 per ounce high as concerns about a second wave of coronavirus infections colluded with stimulus measures aimed at helping economic recovery from the coronavirus pandemic.
Chart Focus XAU/USD – Gold
Key Points
1. Buy Gold recommendation
2. Buy Gold at $1781.50. Stop at $1777 and target at $1791.40
3. An increase in coronavirus cases in US, couple with low interest rate and quantitative easing has eroded the value of the US dollar.
4. A Triangle chart pattern breakout with rising MACD is a hint of further price upsides ahead.
Fundamental Comments
1. A surge in coronavirus infections in the U.S. has led to safe haven gold buying.
2. Low interest rate and quantitative easing has eroded the value of the US dollar.
Technical Comments
1. Price broke above a Triangle chart pattern which hints of a continuation of the rally.
2. MACD is bullish and is rising again, hinting of more price upsides in the near future
Key Levels
| Support | 1778.90 | 1764.80 | 1755.25 |
| Resistance | 1791.50 | 1802.70 | 1821.70 |
Technical Overview
EUR/JPY – Price declined to a low of 120.58 last night after divergence warning from MACD. However, we saw another rally to a high of 121.47 this morning. Price was not able to hold above 121 and has declined lower to 120.71. MACD is still bullish and we think price may test the high of 121.47 again. However a move below 120.50 could signal a deeper decline to 119.80
| Support | 120.60 | 120.05 | 119.75 |
| Resistance | 121.00 | 121.45 | 121.80 |
EUR/USD -Price declined to a low of 1.1189 overnight but the breakout failed to have a follow through. Price managed to bounce up strongly to a high of 1.1261 but MACD is still bearish at the moment and Stochastic is still near to the oversold zone. Price is likely to be in a range of 1.1190 to 1.1260 for today unless German data later today can move it out of this range.
| Support | 1.1190 | 1.1160 | 1.1115 |
| Resistance | 1.1240 | 1.1290 | 1.1320 |
GBP/USD – Price reached a low of 1.2251 on Monday and following comments from BOE’s economist Haldane overnight, we have seen a strong bounce to 1.2400. Price is drifting lower after hitting 1.2400 but we are expecting price to be supported by the 20EMA at 1.2360 and another rally to 1.2440 to follow. Stochastic and MACD are both still rising, hinting the uptrend may not be over as yet.
| Support | 1.2355 | 1.2315 | 1.2280 |
| Resistance | 1.2400 | 1.2450 | 1.2490 |
AUD/USD – Price broke below 0.6840 but it turned out to be a false breakout. We have seen a price recovery to 0.6915. Stochastic is still rising but is close to the overbought extreme. MACD is still bullish and 20EMA is bullish as well. If price can stay above the 20EMA at 0.6870, we see a price continuation to 0.6970. A move below 0.6840 would negate our bullish view for today
| Support | 0.6870 | 0.6840 | 0.6805 |
| Resistance | 0.6915 | 0.6945 | 0.6975 |
USD/JPY – We had a buy call yesterday but price did not reached our buy level at 107.50. The breakout of the Inverse Head and Shoulder chart pattern only move price to a high of 108.15. As long as it stays above the 20EMA at 107.55, the trend is still bullish. As long as price stays above 107.20, the chart pattern target is still valid. MACD is still bullish but Stochastic is near to the overbought zone.
| Support | 107.45 | 107.00 | 106.70 |
| Resistance | 107.90 | 108.20 | 108.60 |
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