Market Talk
– The dollar was on the defensive on Thursday, after the U.S. Federal Reserve said it was in no rush to raise interest rates through all of 2023 even after predicting a V-shaped 6.5% growth in 2021, the largest annual jump in GDP since 1984 and a 2.3 percentage points higher from its projection three months ago.
– Fed Chairman Jerome Powell stuck to his dovish tone as he handed down the Fed’s latest policy decision on Thursday morning putting paid to speculation that the central bank would cut back its stimulus as hopes rise for a strong economic recovery.
– The Fed’s comments also sent the ten-year U.S. Treasuries yield on a roller-coaster ride, with yields at around 1.648% during the Asian session. Seven of 18 Fed officials now expect higher rates in 2023, compared to five in December 2020 with inflation predicted at 2.4% which is above the Fed’s 2% target.
– Bank of England is widely expected to leave its benchmark bank rate at a historic low of 0.1% and its bond-buying program unchanged when it hands down its policy decision later in the day.
– Gold was up on Thursday morning in Asia, topping a two-week high after the Federal Reserve said it does not expect to raise interest rates through all of 2023, contrary to market expectations.
Chart Focus USD/CHF
Key Points
1. Sell USD/CHF recommendation
2. Sell USD/CHF at 0.9255. Stop at 0.9290 and profit target at 0.9175
3. Powell’s comments to keep interest rate low and not cut back its bond buying program is likely to keep the US dollar weak.
4. Price is capped by a strong resistance zone and momentum indicators are hinting of a bearish price trend.
Fundamental Comments
1. Powell’s dovish comments are likely to keep the US dollar weak.
2. Federal Reserve’s decision not to cut back on cut back its bond buying program is likely to keep yields low and US dollar weak.
Technical Comments
1. Price is capped by a previous support turned resistance line as well as the 20EMA.
2. Both MACD and Stochastic are hinting of a bearish price trend.
Key Levels
| Support | 0.9210 | 0.9175 | 0.9135 |
| Resistance | 0.9245 | 0.9280 | 0.9325 |
Technical Overview
USD/JPY – Price was unable to move above 109.36 and we saw a price decline to 108.61 this morning. We are expecting the decline to continue lower to 108.30. A break of this support would be a bearish hint. It confirms a Double Tops chart pattern and a possible price move to 107.30. MACD remains bullish but is showing weakness. Stochastic and 20EMA are both hinting of a bearish price trend ahead.
| Support | 108.60 | 108.30 | 107.85 |
| Resistance | 108.95 | 109.35 | 109.55 |
EUR/USD – Price tested the previous high of 1.1990 but was unable to move above this point. MACD and 20EMA are both hinting of a bullish price trend ahead. Stochastic is rising but has not yet reached the overbought zone. If price breaks above 1.2000, it is likely to head towards 1.2035 or the Fibonacci 161.8% price projection target of 1.2085.
| Support | 1.1950 | 1.1910 | 1.1880 |
| Resistance | 1.1990 | 1.2035 | 1.2085 |
GBP/USD – Our sell recommendation from yesterday was stopped out and we lost 40 pips as a result. Price rose to 1.3977 overnight which was still below the previous week’s high of 1.4004. If price is unable to break above 1.4004, we could be facing another decline to test the downside at 1.3850. Stochastic is rising but is close to overbought zone. MACD and 20EMA are both hinting of a bullish price trend ahead.
| Support | 1.3935 | 1.3895 | 1.3860 |
| Resistance | 1.3975 | 1.4005 | 1.4050 |
XAU/USD – Gold rallied on the back of Powell’s comments past our $1747.40 price target to a high of $1755.35 this morning. Price is likely to head higher to the Fibonacci 200% price projection target at $1763.95. MACD remains bullish but is close to the zero line. Stochastic is rising but is close to the overbought zone. 20EMA is hinting of a bullish price trend.
| Support | 1745.40 | 1733.35 | 1721.20 |
| Resistance | 1755.35 | 1763.95 | 1772.60 |
AUD/USD – We had a sell recommendation on this pair on Monday and yesterday we had lowered stop to 0.7760 and raising profit order at 0.7670. Our stop was triggered last night and we lost 15 pips on this trade. Price is likely to travel higher to 0.7880 in the next 1-2 days ahead. MACD is bullish and Stochastic is rising. Both are hinting of a bullish price trend ahead. 20EMA is also bullish and hinting of a bullish price trend.
| Support | 0.7795 | 0.7760 | 0.7705 |
| Resistance | 0.7840 | 0.7880 | 0.7915 |