FX Commentary – Gold Weighed Down By Stronger US Dollar and Positive U.S. Data

Market Talk

  • The dollar started the week on a flat note on Monday morning in Asia, with investors awaiting further guidance on U.S. monetary policy outlook later in the week when Fed Chairman Powell is widely expected to discuss monetary policy during the Jackson Hole symposium.
  • The ongoing stall in the U.S. Congress over the latest stimulus measures also continues to dampen investor sentiment but supportive data on business activity and home sales, as companies in both manufacturing and services sectors saw resurgence in new orders aid the US dollar.
  • The dollar was little changed against the yen at 105.84 yen, which showed no reaction to a domestic media report that Japanese Prime Minister Shinzo Abe will visit hospital on Monday amid speculation about his health.
  • The Yuan was little changed as investors keep a wary eye on U.S.-China relations, as tensions between the two countries continue to simmer. But both countries are looking to reschedule talks to discuss trade and other matters originally due to have taken place on August 15.
  • Gold was down on Monday’s morning in Asia, continuing a second consecutive week of losses, weighed down by a stronger US dollar, positive U.S. data and hopes for a new COVID-19 vaccine.

Chart Focus
Key Points
1. Buy EUR/USD recommendation
2. Buy EUR/USD at 1.1790. Stop at 1.1750 and target at 1.1880
3. The ongoing stall in Congress over stimulus package and a retreat in US Treasury yields are both weighing of the US dollar
4. Momentum indicators are indicating a corrective rally ahead after a price decline may have reached a temporary low.

Fundamental Comments
1. The ongoing stall in the U.S. Congress over the latest stimulus measures also continues to dampen investor sentiment
2. A retreat in US Treasury yields is weighing on the US dollar

Technical Comments
1. A price decline may have stalled at 1.1756 and a pullback to 1.1880 is likely
2. MACD has a bullish crossover and could be moving higher. Stochastic is also moving higher.

Key Levels

Support 1.17851.17501.1710
Resistance 1.18151.18601.1895

Technical Overview
USD/JPY – Price moved to a high of 106.06 on Friday but that does not negate our bearish view as price did not move above 106.21. Our view remains the same. We continue to look for a decline to 105.10 in the next few days. MACD is mildly bullish at the moment. Stochastic has a bullish crossover and could be heading higher. 20EMA is flat and inconclusive at the moment.

Support 105.35105.05104.70
Resistance 105.80106.20106.65

AUD/USD – Price has reached a low of 0.7139 and has recovered higher to 0.7180. This is also the 20EMA resistance point. Stochastic has a bullish crossover and is moving higher. MACD is in the bearish zone but is likely to move higher. If the low at 0.7139 holds, we are likely to see a corrective rally to 0.7215 in the next couple of days ahead.

Support 0.71600.71150.7075
Resistance 0.71900.72250.7270

GBP/USD – Price reached a low of 1.3058 on Friday but the low on marginal compared to the previous low at 1.3063. MACD has reached an extreme and is indicating a price recovery. Stochastic is near to the oversold zone. We are expecting a price recovery back to 1.3160 over the next 2 days. A move below 1.3050 is likely to extend the decline to 1.2980.

Support 1.30601.30151.2980
Resistance 1.31151.31651.3205

XAU/USD – Price moved to a low of $1911.35 on Friday but has recovered to $1945. MACD is still bearish but Stochastic is rising after a bullish crossover from the oversold zone. 20EMA is still bearish and moving lower. We think price is likely to test the low of $1921.35 again. Above $1957 would negate our bearish view.

Support 1924.551911.351898.60
Resistance 1940.201955.801966.05

AUD/JPY – Price reached a high of 76.05, missing our sell order at 76.10. Price had reached a low of 75.52 on Friday and has managed to recover higher to 75.90 on Monday’s morning. 20EMA has turned bullish and is pointing higher. Stochastic is near to the overbought zone. MACD has also turned bullish. We think the low may have been reached and price is likely to move higher to 76.25 in the next couple of days.

Support 75.9075.6075.25
Resistance 76.2576.6576.90

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