Market Talk
- The dollar was steady on Friday morning in Asia ahead of the release of U.S. jobs data that could shed some light on the strength of the U.S. economic recovery. US Treasury yields edged higher overnight and a plunge in U.S. equity market helped the greenback.
- Yoshihide Suga declared his candidacy to lead the Liberal Democratic Party and succeed outgoing Prime Minister Shinzo Abe. Suga also signaled his readiness to compile a third extra budget in response to COVID-19 pandemic if he succeeds.
- The Australian dollar clawed back early losses and stabilized after the country’s retail sales accelerated in July, easing concern about a slowing down of the Australian economy.
- The Euro continues to lose ground against the dollar after the latest round of purchasing manager indexes suggested a sharp loss of economic momentum in August as a result of a second wave of coronavirus inflection.
- Gold hanged on to gain from overnight trades on Friday morning in Asia as the U.S. dollar steadied as a result of risk sentiment increasing after U.S. stock markets tumbled during the previous session.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.1860. Stop at 1.1895 and target at 1.1765
3. U.S. Treasury yields edged higher while a decline in PMI is weighing down the Euro dollar.
4. Price is capped at a resistance point with MACD turning down is a bearish sign.
Fundamental Comments
1. August purchasing manager indexes suggested a sharp loss of Eurozone economic momentum which is weighing on the Euro
2. U.S. Treasury yields edged higher over which is aiding the US dollar
Technical Comments
1. Price rally is capped by the 20EMA resistance point as well as the Fibonacci 38% correction point
2. MACD is bearish and the fast line is turning down from the zero line.
Key Levels
| Support | 1.1825 | 1.1785 | 1.1750 |
| Resistance | 1.1865 | 1.1895 | 1.1925 |
Technical Overview
USD/JPY – Price is currently sitting on the 20EMA line at 106.15. As long as price stays above this support line, we think price can test the high of 106.90 again. MACD is still bullish and the fast line is already turning up from the zero line. However, Stochastic is still declining and has not yet turned around. A move below 105.70 would negate our bullish view.
| Support | 105.85 | 105.50 | 105.10 |
| Resistance | 106.15 | 106.55 | 106.95 |
EUR/JPY – Price was supported at 125.28 on two occasions and has managed to bounce higher. However, the bounce was capped by the 20EMA at 125.90. With Stochastic turning down, if price is unable to move above the 20EMA resistance point, price is likely to test the low of 124.50 again. MACD has also had a bearish crossover in the bearish zone and is likely to be moving lower, pulling price lower.
| Support | 125.50 | 125.20 | 124.80 |
| Resistance | 125.90 | 126.30 | 126.60 |
GBP/USD – Price reached a high of 1.3482 on Tuesday night but the rally has hit a temporary high. A bearish Engulfing candlestick has sent price lower after 20EMA support point at 1.3345 was broken. Price has reached a low of 1.3242 but is likely to continue lower to 1.3215. Stochastic is turning up from the oversold zone after a bullish crossover. MACD is bearish but is also turning up. However, 20EMA is still strongly bearish.
| Support | 1.3240 | 1.3210 | 1.3160 |
| Resistance | 1.3295 | 1.3330 | 1.3375 |
XAU/USD – Price broke above $1976.50 to reach a high of 1992.22 Tuesday night. That was followed by a swift decline and which send price lower to $1921.45. MACD has a bullish crossover and is rising but is in the bearish zone. Stochastic also had a bullish crossover and is rising from the oversold extreme. Resistance lies at 1945.30.
| Support | 1926.60 | 1913.30 | 1902.55 |
| Resistance | 1939.45 | 1947.80 | 1962.20 |
USD/CNH – Our buy order was filled at 6.8410 when price dropped to a low of 6.8330. Our view remains unchanged. Keep stop at 6.8220 and profit target at 6.8920. MACD is still bullish and pointing higher. Stochastic has a bullish crossover in the middle of its range and is moving towards the overbought zone. 20EMA is currently supporting price and a move above 6.8495 would confirm the bullish view.
| Support | 6.8330 | 6.8130 | 6.8000 |
| Resistance | 6.8495 | 6.8700 | 6.8935 |
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