Market Talk
– The dollar was up on Wednesday morning in Asia as it tried to extend a rally on Wednesday as chatter about the possibility of higher U.S. interest rates and a sell-off in tech stocks soured risk sentiment to the benefit of the safe-haven US dollar.
– One drag for the dollar was the U.S. trade deficit, which expanded to a record $74.4 billion in March. Investors await economic data like U.S. PMI and ADP National Employment Report, both due later in the day for clues to the greenback direction.
– Trade was limited in Asia with the Japanese and Chinese markets closed for a holiday. A selloff in tech stocks overnight soured risk appetite and gave the safe-haven U.S. currency an additional boost.
– The New Zealand dollar was boosted by stronger-than-expected local employment data, including employment change that grew 0.6% quarter-on-quarter during the first quarter of 2021.
– Gold was down on Wednesday morning in Asia as investors digested U.S. Treasury Secretary Janet Yellen’s comments that interest rate hikes might be needed to stop the economy overheating due to U.S. President Joe Biden’s spending plans.
Chart Focus USD/JPY
Key Points
1. Buy USD/JPY recommendation.
2. Buy USD/JPY 109.20. Stop at 108.85 and target at 109.95.
3. Talks of higher U.S. interest rates and a sell-off in tech stocks has soured risk sentiment to the benefit of the safe-haven US dollar.
4. Price is supported by a bullish 20EMA line and momentum indicators are hinting of a bullish price trend ahead.
Fundamental Comments
1. Talk of higher U.S. interest rates is aiding the US dollar.
2. A sell-off in tech stocks soured risk sentiment and is aiding the safe-haven US dollar.
Technical Comments
1. Price has been supported by the 20EMA and is likely to be supported by the 20EMA line.
2. MACD remains bullish and Stochastic has a bullish crossover and is hinting of a bullish price trend.
Key Levels
| Support | 109.20 | 108.85 | 108.45 |
| Resistance | 109.50 | 109.95 | 110.40 |
Technical Overview
XAU/USD – Yesterday, we had a buy call at $1780 but price only reached a low of $1780.57 before moving higher to $1798.70. Price had a sharp decline from the high and dropped to a low $1770.69, filling our entry order and taking out our stop as well. MACD is bearish and 20EMA is also hinting of a bearish price trend. Stochastic is near to the oversold zone. We think the 20EMA is likely to cap price at $1780 and we are likely to see a return to $1755 again in the next few days ahead.
| Support | 1770.70 | 1755.90 | 1747.20 |
| Resistance | 1783.65 | 1798.70 | 1813.45 |
EUR/USD – Price had again declined to 1.2000 support zone, which forms a critical support zone from 1.1990 to 1.2000. If price fails to hold this support zone, we are likely to see 1.1945 in the next couple of days. Ability to hold above this support zone is likely to keep the uptrend intact and call for a test of 1.2150. Watch the support zone for clue to the next direction.
| Support | 1.1990 | 1.1945 | 1.1915 |
| Resistance | 1.2035 | 1.2075 | 1.2115 |
GBP/USD – Since last Friday’s decline, price has been in a large consolidation with 1.3800 as the base and the high of 1.3930 acting as a resistance. Stochastic has reached the oversold zone and MACD is flat and neutral near to the zero line. 20EMA is also not showing a trend. We think this range consolidation is likely to continue again for today. Watch the range breakout for clue.
| Support | 1.3880 | 1.3840 | 1.3800 |
| Resistance | 1.3920 | 1.3950 | 1.3980 |
USD/CAD – We had a buy recommendation at 1.2280 from Friday and yesterday, we had shifted stop higher to 1.2260 while keeping profit order unchanged at 1.2365. Yesterday we saw a price rally to 1.2350 but price was unable to sustain and had declined to 1.2283. MACD is turning bullish but 20EMA is flat and neutral. We would keep our stop and profit orders unchanged for another day.
| Support | 1.2260 | 1.2200 | 1.2145 |
| Resistance | 1.2315 | 1.2350 | 1.2385 |
NZD/JPY – We had a buy call on this pair on Monday but yesterday, price turned lower and our stop at 78.05 was triggered. We lost 35 pips was a result. Stochastic has a bullish crossover and is turning higher but both MACD and 20EMA are hinting of a bearish price trend ahead. If price is unable to move above the 20EMA resistance at 78.40, we are likely to see another test of 77.70.
| Support | 78.15 | 77.70 | 77.45 |
| Resistance | 78.40 | 78.75 | 79.15 |