FX Commentary – Gold & Silver Snapped A Losing Streak But Will It Recover?

Market Talk

  • The U.S. dollar dipped from a two-month peak early on Friday after scaling a two-month high of 94.60 in Thursday’s U.S session amid a bout of risk aversion as Democrats in the U.S. House of Representatives are working on a $2.2 trillion coronavirus stimulus package that could be voted on next week.
  • Latest data showed the number of Americans filing new claims for unemployment benefits unexpectedly increased last week in a sign the economic recovery was running out of steam.
  • U.S. political uncertainties are also keeping many investors on edge,with a disputed election becoming more likely after U.S. President Donald Trump refused to commit to a peaceful transfer of power if he lost the election.
  • The pound found its footing against the dollar Thursday, after the U.K. unveiled fresh measures to protect jobs and businesses that helped ease fears about the impact of newly imposed lockdown measures on the economy as the second wave of Covid-19 sweeps across the U.K
  • Gold snapped a three-day losing streak on Thursday to post a modest half percent gain as the dollar came off its relentless highs as renewed hopes of U.S. stimulus eased investors’ concerns about economic recovery

Chart Focus USD/CNH
Key Points
1. Buy USD/CNH recommendation
2. Buy USD/CNH at 6.8190. Stop at 6.8050 and target at 6.8490
3. Trump talk about Chinese currency manipulation and his refusal to commit to a peaceful transfer are both likely to drive up USD/CNH rate.
4. Strong support and bullish MACD are both hints of a bullish price trend ahead.

Fundamental Comments
1. Trump talk about Chinese currency manipulation is likely to increase tensions and drive up the USD/CNH rate.
2. U.S. President Trump has refused to commit to a peaceful transfer of power if he lost the election; increasing uncertainties are likely to drive up USD/CNH rate

Technical Comments
1. Strong support provided by a previous resistance turned support and the 20EMA.
2. MACD is bullish with both its lines above the zero line, which is a hint of a strong uptrend

Key Levels

Support 6.82206.80706.7895
Resistance 6.83156.85156.8675

Technical Overview

NZD/USD – We had a sell recommendation on 23 Sep 2020 which is still opened. Yesterday, we had recommended bringing stop lower to cost at 0.6595 while keeping profit target unchanged at 0.6495. Price has declined to 0.6510 yesterday. For today, we are likely to see a pullback to 0.6565 as Stochastic is rising from the oversold zone. MACD is bearish but is correcting as well.

Support 0.65300.65000.6470
Resistance 0.65650.66100.6645

EUR/USD – Price reached a low of 1.1625 last night and has rallied higher to 1.1685 this morning. We are expecting the rally to continue higher to 1.1750 over the next couple of days. Both MACD and Stochastic have been giving divergence warnings of a possible low. 20EMA is still bearish and is likely to provide the first point of resistance at 1.1690. However a move below 1.1625 is likely to lead to another decline to 1.1590.

Support 1.16601.16201.1595
Resistance 1.16901.17251.1755

GBP/USD – Price reached a marginal low of 1.2670 on Wednesday compared to Tuesday’s 1.2678. Stochastic has a bullish crossover and is moving up from the oversold extreme. MACD is bearish but has given a divergence warning of a potential low in price. Price is currently being resisted by the 20EMA but a break will open up a path to 1.2870. We are looking for a corrective rally to 1.2870 in the next couple of days ahead.

Support 1.27401.26951.2655
Resistance 1.27901.28251.2870

XAU/USD – The bearish trend sent  price to a low of $1848.75 last night and we think this could be a temporary low and a corrective rally higher to $1900 or $1894 are possible in the next few days. MACD is bearish but Stochastic is rising from the oversold extreme. 20EMA is still bearish and pointing lower with a steep slope, hinting of a strong bearish trend. Price would need to move above $1932 to be really bullish.

Support 1861.351847.901838.40
Resistance 1876.201896.301905.30

USD/JPY – Our sell call was filled at 105.35 last night and price is currently at 105.40. Our view remains unchanged. Keep stop at 105.65 but we would recommend bringing profit target higher to 104.55. Stochastic has a bearish crossover and is turning down but MACD is currently bullish although MACD is declining from its extreme. 20EMA is bullish and is likely to provide the first level of price support.

Support 105.15104.85104.40
Resistance 105.55105.90106.25

Related Posts


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.