Market Talk
– The dollar sank to an almost two-week low against major peers on Tuesday, moving in tandem with retreating Treasury yields from recent peaks despite signs of a robust U.S. economic recovery.
– March data showed a gauge of U.S. services activity hit a record high which bolstered the global economic outlook, while currency and bond markets paused for breath after a month of rapid gains in the dollar and in U.S. Treasury yields.
– The yen continued to recover from a more than one-year low near 111 per dollar, briefly strengthening back below 109 on Tuesday. The euro extended its rise from a nearly five-month trough close to $1.17 to trade as high as $1.1821.
– The Australian dollar, considered a proxy for risk appetite, edged higher to $0.7657. The Reserve Bank of Australia announces a policy decision earlier in the day with no change its in cash rate at 0.10%.
– Gold prices rose on Tuesday, as a weaker dollar made bullion cheaper and more attractive for buyers outside the United States, while a pull-back in U.S. Treasury yields provided further support.
Chart Focus XAU/USD – Gold
Key Points
1. Buy Gold recommendation.
2. Buy Gold at $1728.25. Stop at $1714.00 and target at $1754.00.
3. A retreat in US Treasury yield and fear of rising inflation are both aiding Gold.
4. A bullish 20EMA and MACD are both hinting of a bullish price trend ahead for Gold.
Fundamental Comments
1. A retreat in US Treasury yield is weighing on the US dollar.
2. A robust US economy is raising fear of inflation which is aiding Gold, which is a hedge against inflation.
Technical Comments
1. A rising 20EMA is providing support as well as hinting of a bullish price trend for Gold.
2. MACD is bullish and is hinting of a bullish price trend.
Key Levels
| Support | 1734.10 | 1721.25 | 1714.80 |
| Resistance | 1745.30 | 1755.30 | 1768.20 |
Technical Overview
USD/JPY – We had a buy recommendation which was filled last Thursday. Yesterday, we had raised stop to 110.30 while keeping profit target unchanged at 111.40. Unfortunately, our stop was triggered and we lost 10 pips on this trade. Price has declined to a low of 109.92 but we think the downside could be limited to 109.40 as MACD is turning around from the bearish zone. Stochastic is also near to the oversold zone.
| Support | 109.95 | 109.65 | 109.35 |
| Resistance | 110.40 | 110.75 | 111.00 |
EUR/USD – Price have probably found a bottom at 1.1700 with an Inverse Head and Shoulder chart pattern on the 4-hourly chart. MACD has also warned with a divergence. 20EMA has also turned bullish. Stochastic is near to the overbought zone. We see the rally continuing toward the chart pattern target at 1.1860 in the next few days. A move below 1.1750 would negate our bullish view.
| Support | 1.1795 | 1.1740 | 1.1705 |
| Resistance | 1.1835 | 1.1875 | 1.1915 |
GBP/USD – The price rally continued to a high of 1.3918 after price managed to stay above the 20EMA at 1.3810. However, momentum from both MACD and Stochastic appear weak. Both momentum oscillators are hinting of a price high. However, 20EMA is pointing up with a steep slope hinting of a strong bullish trend.
| Support | 1.3855 | 1.3805 | 1.3760 |
| Resistance | 1.3890 | 1.3920 | 1.3960 |
USD/CAD – We had a buy recommendation yesterday at 1.2570 but we were wrong and got stop out at 1.2535. We lost 35 pips on this trade. Price reached a low of 1.2501 which is also the Fibonacci 50% correction point of the rally from 1.2365 to 1.2646. We think the downside could be limited. MACD and Stochastic both are warning with divergences, hinting of a possible price low.
| Support | 1.2500 | 1.2470 | 1.2430 |
| Resistance | 1.2545 | 1.2590 | 1.2645 |
USD/CNH – We had a buy recommendation at 6.5640 which was filled last Wednesday and yesterday, we had recommended shifting stop to cost at 6.5640 while keeping profit target 6.6090. Unfortunately, stop was triggered and we are out at cost. MACD and 20EMA have turned bearish and are hinting of a bearish price trend. Stochastic is still moving lower into the oversold zone. Price may move lower to 6.5375.
| Support | 6.5465 | 6.5375 | 6.5190 |
| Resistance | 6.5600 | 6.5725 | 6.5875 |