Market Talk
– The dollar hovered below a two-week high on Thursday, following some softer-than-expected U.S. economic data that prompted traders to consolidate positions ahead of the April jobs report due on Friday night that may provide clues on when the Federal Reserve will dial back monetary stimulus.
– Fed Chair Jerome Powell has argued the labour market is far short of where it needs to be to start talking of tapering asset purchases but the greenback has rebounded, swung by U.S. economic data that has largely supported the case for a rapid recovery from the pandemic
-The commodity-linked Canadian dollar traded at C$1.2268 per greenback after hitting a three-year high of 1.2252 on Wednesday, helped by higher crude prices and optimism over the global economic recovery.
-Sterling was little changed at $1.3904, consolidating around that level over the past two weeks with the Bank of England expected by some forecasters to announce a tapering of its bond-buying programme at a meeting later this evening, after vaccinations bolstered Britain’s economic recovery.
– Gold prices edged higher as the U.S. Treasury yield retreated from a session high with the 10-year U.S. Treasuries yield little changed at 1.584%., which helped to offset pressure from a stronger US dollar with Friday’s Nonfarm Payroll eyed.
Chart Focus XAG/USD Silver
Key Points
1. Buy Silver recommendation.
2. Buy Silver at $26.40. Stop at $26.05 and target at $27.10.
3. A retreat in US Treasury yield and a rapid economic recovery are both likely to aid Silver.
4. Price is supported by a strong support with momentum indicators hinting of a bullish price trend.
Fundamental Comments
1. A retreat in the U.S. Treasury yield is weighing on the US dollar.
2. U.S. economic data that has largely supported the case for rapid economic recovery from the pandemic is likely to aid Silver.
Technical Comments
1. Price is supported by the rising trend channel and the 20EMA.
2. MACD is bullish and rising and Stochastic is about to have a bullish crossover hinting of a bullish price trend.
Key Levels
| Support | 26.30 | 26.00 | 25.70 |
| Resistance | 26.75 | 27.10 | 27.45 |
Technical Overview
USD/JPY – We had a buy call which was filled at 109.20 yesterday when price declined to a low of 109.13. Our view remains unchanged and we would recommend keeping stop at 108.85 and profit target at 109.95. Stochastic is still rising after a bullish crossover and MACD remains bullish. 20EMA is also bullish and rising, supporting our bullish view.
| Support | 109.10 | 108.85 | 108.45 |
| Resistance | 109.45 | 109.95 | 110.40 |
EUR/USD – Price had declined to the critical support zone from 1.1990 to 1.2000 and yesterday there was a brief break to 1.1986 but there was no follow through. Price is currently hanging around the 1.1990 to 1.2000 zone. MACD is warning with a divergence but is currently in the bearish zone. Stochastic is also warning with a divergence of a potential price low. 20EMA remains bearish. We think price could be building a base and there is a potential reversal in the making.
| Support | 1.1985 | 1.1945 | 1.1915 |
| Resistance | 1.2025 | 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. We think price is likely to stay within this range until Bank of England meeting later in this evening. MACD is neutral and 20EMA is flat. Both are hinting of a sideways consolidation. Stochastic has a bearish crossover and is hinting of a price decline. We would prefer to wait for BOE meeting for clues to the next direction.
| Support | 1.3880 | 1.3840 | 1.3800 |
| Resistance | 1.3920 | 1.3980 | 1.4010 |
XAU/USD – Our view yesterday was wrong. We had expected the 20EMA to cap and a price decline to $1755 to follow. However, price has moved above the 20EMA to reach a high of $1790 at the time of writing. We are likely to see a test of $1798.70 and a break that will see price move above $1800. MACD is bullish and Stochastic is rising after a bullish crossover. 20EMA is also bullish and rising.
| Support | 1783.65 | 1770.70 | 1755.90 |
| Resistance | 1798.70 | 1813.45 | 1823.30 |
USD/CAD – We had a buy recommendation at 1.2280 from Friday and yesterday, price declined below our stop at 1.2260 and we are out with a loss of 20 pips. Stochastic is close to the oversold zone and there is a potential divergence developing. MACD is neutral but there could be a potential divergence developing. 20EMA continues to be bearish. We think price is close to a low and a correction is likely in the next few days ahead.
| Support | 1.2250 | 1.2200 | 1.2145 |
| Resistance | 1.2305 | 1.2350 | 1.2385 |