Market Talk
– The dollar was up on Wednesday morning in Asia, but remained near its lowest levels of 2021, as traders hung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of data expected to show a sharp rise in annual U.S. inflation.
– US JOLTS jobs openings rose to a record 8.123 million in March but with nearly 10 million Americans still looking for a job, last night’s data is indicating that a shortage of right workers is hindering job growth.
– The greenback touched its weakest in two months against the euro, following a strong European growth survey. The Euro traded at $1.2140 in early Asia, while the yen fell marginally to 108.79 per dollar.
– Commodity currencies cooled their heels near milestone peaks. The Aussie dollar traded at 0.7792 after hitting an 11-week high on Monday. The Canadian dollar held just shy of Tuesday’s almost four-year high at 1.2120.
– Gold was down on Wednesday morning in Asia after U.S. 10-year benchmark Treasury yield jumped to more than a one-week high, ahead of inflation data that could have further implications the U.S. Federal Reserve’s dovish stance on inflation.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.2130. Stop at 1.2160 and target at 1.2045.
3. An uptick in benchmark US 10-year Treasury yield and an increase in risk aversion are both likely to aid the US dollar.
4. A Double Top chart pattern with bearish momentum is a sign of a possible price high and an impending trend reversal.
Fundamental Comments
1. A recovery in U.S. 10-year benchmark Treasury yield which jumped to more than a one-week high is likely to aid the US dollar.
2. A sharp decline in the equity market is likely to aid the safe haven US dollar
Technical Comments
1. A Double Top chart pattern is hinting of a possible price high.
2. Divergence in MACD and Stochastic are hinting of a possible price high and a possible reversal in trend.
Key Levels
| Support | 1.2115 | 1.2075 | 1.2045 |
| Resistance | 1.2150 | 1.2180 | 1.2220 |
Technical Overview
USD/JPY – Price reached a low of 108.32 last night, forming a possible Double Bottom chart pattern, which is a sign of a possible price low. Stochastic and MACD had each given a divergence warning, hinting of a possible low as well. We have seen a rally to 108.80 this morning. The rally was capped by the 20EMA at 108.80 and price will need to move above 108.90 to confirm the reversal and a move to 109.70 again.
| Support | 108.75 | 108.35 | 107.90 |
| Resistance | 109.05 | 109.40 | 109.70 |
USD/CAD – Last night price tested the 4-year low at 1.2077 again and was able to hold above this low. We have seen a rally but the rally was capped by the 20EMA at 1.2130. MACD and 20EMA remain bearish and is hinting of a bearish price trend. Stochastic is in the oversold zone. We think price is likely to be capped at either 1.2130 or 1.2190 and we are likely to see another decline from either of these 2 levels.
| Support | 1.2095 | 1.2065 | 1.2030 |
| Resistance | 1.2130 | 1.2160 | 1.2195 |
GBP/USD – Price reached a high of 1.4166 last night which was also the 261.8% of the rally from 1.3800 to 1.3930. We think price may have reached a short term target and a correction is likely which could bring price lower to 1.4010. Stochastic is in the overbought zone but MACD remains bullish. 20EMA is rising with a steep slope, hinting of a bullish price trend ahead.
| Support | 1.4100 | 1.4045 | 1.4005 |
| Resistance | 1.4140 | 1.4180 | 1.4240 |
XAU/USD – Price saw a brief decline to $1817 but 20EMA support at $1825 has largely supported price. MACD remains bullish and is hinting of a bullish price trend. Stochastic is in the middle of its range at the moment and could be declining. 20EMA remains bullish and is supporting price at the moment. If price is able to hold above the 20EMA support, we see another price rally to $1855 in the next few days.
| Support | 1825.80 | 1817.90 | 1809.65 |
| Resistance | 1838.60 | 1845.25 | 1855.25 |
AUD/USD – We had a buy order at 0.7815 which was filled when price declined to a low of 0.7785, which was close to our stop order. Stochastic is still declining but is close to the oversold zone. MACD lines are declining from their peak but remain bullish. Our view remains unchanged and we would recommend keeping stop order at 0.7780 and profit order at 0.7890.
| Support | 0.7780 | 0.7740 | 0.7695 |
| Resistance | 0.7820 | 0.7855 | 0.7890 |