Market Talk
– The safe-haven U.S. dollar languished near three-year lows versus riskier currencies on Thursday as continued dovish signals from the Federal Reserve stoked reflation bets. The greenback sank to a fresh low against the Australian dollar, and held near lows set overnight against its British, Canadian and New Zealand peers.
– Fed Chair Powell reiterated on Wednesday that the central bank wouldn’t adjust policy until the economy is clearly improving, and will look through any near-term spike in inflation. The remarks to the House of Representatives Committee on Financial Services mirrored his testimony before the Senate the day before.
– Investors also continue to turn to the reflation trade, placing bets on increasing economic activities and prices, driven by easy financial conditions, the promise of fiscal stimulus and an accelerating COVID-19 vaccine rollout.
– Sterling was little changed at $1.4143 after pushing to the cusp of $1.43 overnight for the first time since April 2018.The euro traded near the top of its recent range at $1.2168, near the almost one-month high of $1.2180 touched earlier this week.
– Gold was down on Thursday morning in Asia, with higher U.S. Treasury yields and U.S. Federal Reserve Chairman Jerome Powell’s commitment to current ultra-easy monetary policy all putting a dent in the yellow metal’s appeal.
– There will be no Daily FX Commentary tomorrow.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9025. Stop at 0.8990 and target at 0.9095
3. Rising Treasury yields and expectation of a global economic recovery are weighing on the Swiss franc against the US dollar.
4. The bullish price trend is supported by a strong support zone and MACD is hinting of a bullish price trend ahead.
Fundamental Comments
1. Rising US Treasury yields continue to support the US dollar.
2. Investors are betting increasing economic activities and a global economic recovery will likely weaken the safe haven Swiss franc
Technical Comments
1. The bullish price trend is supported by the Fibonacci 38% correction point and a previous resistance turned support line.
2. MACD remains bullish and is hinting of a bullish price trend ahead.
Key Levels
| Support | 0.9055 | 0.9025 | 0.8995 |
| Resistance | 0.9090 | 0.9125 | 0.9150 |
Technical Overview
USD/JPY – We had a buy recommendation yesterday at 105.40 but price did not reached this point. Price instead continued to move higher to a high of 106.13. Price may continue to move higher to test the previous high of 106.25 as MACD is still bullish. Stochastic is also moving higher but is near to the overbought zone. 20EMA is also pointing higher with a steep slope, hinting of a bullish price trend.
| Support | 105.80 | 105.45 | 105.05 |
| Resistance | 106.20 | 106.55 | 106.95 |
EUR/USD – We had a buy call on Monday and on Wednesday we had recommend bringing stop loss higher to 1.2125 while keeping profit target at 1.2185. Price reached a high of 1.2182 this morning and has declined to 1.2175. We would recommend closing the position at current level as price is close to our target and both Stochastic and MACD are warning with divergences.
| Support | 1.2155 | 1.2120 | 1.2095 |
| Resistance | 1.2190 | 1.2225 | 1.2255 |
GBP/USD -Price reached a high of 1.4240 on Wednesday morning and declined to a day’s low of 1.4089. Price correction managed to hold above the 20EMA line and we think as long as yesterday’s low can hold, we are likely to see another test of the high of 1.4242 again in the next couple of days. MACD remains bullish and Stochastic could see a bullish crossover in the middle of its range. Both momentum indicators are hinting of a bullish price trend ahead
| Support | 1.4125 | 1.4080 | 1.4040 |
| Resistance | 1.4175 | 1.4240 | 1.4295 |
XAU/USD – We had a buy recommendation at $1800 from Tuesday and yesterday we had raised stop to $1795 and lowered profit order to $1815.90. Unfortunately, stop order was triggered at $1795.00 last night. MACD remains bullish but Stochastic is declining after a bearish crossover in the overbought zone. 20EMA is also turning down. We would prefer to stay aside for today and awaits better trend direction.
| Support | 1783.65 | 1769.95 | 1760.40 |
| Resistance | 1796.40 | 1806.05 | 1815.40 |
NZD/USD – Price reached a high of 0.7453 last night and has declined to 0.7419 this morning. While we are bullish on a longer term, we think price may have reached a short term peak and a correction is needed before the uptrend resumes again. Stochastic had a bearish crossover in the overbought zone and is declining. Both MACD and 20EMA remain bullish.
| Support | 0.7415 | 0.7385 | 0.7340 |
| Resistance | 0.7450 | 0.7485 | 0.7510 |