Market Talk
– The safe-haven dollar languished near a one-week low on Friday as calming bond markets after a bond auction was met with sufficient demand to help stabilise yields, lifted investor sentiment and appetite for riskier currencies.
– Weekly employment data overnight which points to a recovering US labour market as vaccine rollout led to economic reopening added to positive signals from the jobs market, as President Joe Biden signed his $1.9 trillion pandemic relief bill into law.
– The commodity-linked Australian and New Zealand dollars traded close to one-week highs reached overnight as inflation fears ebbed, sending Wall Street stocks to record highs and lifting investor’s sentiment.
– The euro also traded close to a one-week high of $1.1990 despite the European Central Bank saying it was ready to accelerate money-printing to keep Eurozone yields down to lay the foundation of a solid economic recovery after its monetary policy meeting last night.
– Gold eased off a one-week high at $1726.40 after U.S. Treasury yields stabilize after a successful auction and better-than-expected jobless claims data.
Chart Focus USD/JPY
Key Points
1. Buy USD/JPY recommendation.
2. Buy USD/JPY at 108.50. Stop at 108.20 and target at 109.20.
3. A successful bond auction and a better than expected US labour market report, are both likely to support the US dollar.
4. A price support and bullish momentum indicators are hints of a bullish price trend.
Fundamental Comments
1. US Treasury yield could rise after a successful bond auction which is likely to aid the US dollar.
2. A better than expected US labour market report is also likely to support the US dollar.
Technical Comments
1. Price is supported by the 20EMA and is expected to rise after holding the support.
2. MACD and Stochastic are both hinting of a bullish price trend ahead.
Key Levels
| Support | 108.50 | 108.10 | 107.95 |
| Resistance | 108.80 | 109.25 | 109.60 |
Technical Overview
USD/CHF – Price formed a bearish Flag chart pattern and broke below the trendline yesterday. The pattern has a target of 0.9180. Last night price declined to a low of 0.9232 and price has moved higher to 0.9260 this morning. Stochastic is in the oversold extreme and MACD is also starting to move higher after reaching an extreme point. We are likely to see a rally to 0.9280, which must cap if price were to move down to 0.9180.
| Support | 0.9230 | 0.9205 | 0.9175 |
| Resistance | 0.9275 | 0.9310 | 0.9360 |
EUR/USD – Price moved above 1.1935 yesterday and the rally continues to a high of 1.1989. There is a strong resistance at 1.1995 and we think this resistance is likely to cap the rally. We think price is likely to decline to 1.1915 in the next 1-2 days ahead. Stochastic is already in the overbought zone. MACD and 20EMA, both are bullish and hinting of a bullish price trend ahead.
| Support | 1.1960 | 1.1915 | 1.1870 |
| Resistance | 1.1995 | 1.2025 | 1.2060 |
GBP/USD – Price rally continues and reached a high of 1.4004. We think this could be a temporary top. We see price coming down to 1.3905 over the next 1-2 days in the form of a correction. MACD remains bullish but Stochastic is into the overbought extreme. 20EMA remains bullish and is hinting of a bullish price trend ahead. Above 1.4005, price is likely to continue the rally to 1.4090.
| Support | 1.3965 | 1.3910 | 1.3870 |
| Resistance | 1.4005 | 1.4050 | 1.4095 |
XAU/USD – Our buy call was triggered overnight at $1726.40 when price dropped to a low of $1719.05. MACD has a bullish crossover and should be moving higher. Stochastic is in the oversold zone and should have a bullish crossover soon, Both MACD and Stochastic are hinting of a bullish price trend ahead. Our view remains the same as yesterday. We would recommend bringing stop higher to $1718.90 while keeping profit target at $1760.00.
| Support | 1724.30 | 1715.50 | 1702.40 |
| Resistance | 1739.50 | 1747.40 | 1760.30 |
AUD/USD – We had a buy recommendation that was filled Tuesday and yesterday we had recommended bringing stop higher to 0.7715 while keeping profit target at 0.7770. Our profit order was filled and we are out with a 125 pips profit. Price has the potential to go higher to 0.7810 as MACD and 20EMA remain bullish. Stochastic is in the overbought zone, so the upside could be limited to 0.7815.
| Support | 0.7770 | 0.7725 | 0.7695 |
| Resistance | 0.7815 | 0.7850 | 0.7885 |