Market Talk
– The dollar was up on Monday morning in Asia over worries triggered by fresh COVID-19 outbreaks in Singapore and Taiwan and easing commodity prices. Investors are also looking to the Fed’s minutes from its April meeting, due to be released on Wednesday, for further clues on the central bank’s next steps.
– However, investors are heavily positioning for a fall in the U.S. currency as the U.S. Federal Reserve sticks to its current dovish policy and a bounce from higher-than-expected U.S. inflation data released during the previous week faded over mounting investor expectations that the Fed will keep interest rates low.
– Sterling was perched near a two-and-a-half-month high on Monday, at $1.4088, as Britain reopens its economy after a four-month COVID lockdown. The Euro last traded at $1.2130 per dollar and has resistance around $1.2179.
– The offshore yuan was little changed at 6.4361 per dollar after a mixed round of economic data showed China’s industrial output had slowed and retail sales missed forecasts last month.
– Gold was up on Monday morning in Asia and extended its gains, buoyed by a dip in the dollar and U.S. Treasury yields after data showed U.S. retail sales unexpectedly stalled in April.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.7215. Stop at 0.7180 and target at 0.7295.
3. Soft US retail sales data and expectation of a dovish US monetary policy are weighing on the US dollar.
4. Price is supported by the 20EMA and MACD is hinting of a bullish price trend
Fundamental Comments
1. Expectation of a dovish US monetary policy is weighing on the US dollar.
2. Soft US retail sales data on Friday is also weighing on the US dollar.
Technical Comments
1. Price is supported by the 20EMA and a previous price resistance turned support line.
2. MACD is rising and is hinting of bullish price trend ahead.
Key Levels
| Support | 0.7210 | 0.7175 | 0.7135 |
| Resistance | 0.7255 | 0.7285 | 0.7305 |
Technical Overview
USD/JPY – We had a buy call on Friday which was filled at 109.30 when price declined to a low of 109.15. Our view remains unchanged and we would recommend keeping stop at 108.95 and profit order at 109.90. Stochastic is declining and is hinting of a bearish price trend but MACD is neutral at the moment. 20EMA is pointing lower and hinting of a bearish price trend.
| Support | 109.00 | 108.70 | 108.35 |
| Resistance | 109.30 | 109.75 | 110.00 |
EUR/USD – We had a short position at 1.2130 from Wednesday and had raised our stop loss to 1.2115 on Friday while keeping our profit target unchanged at 1.2045. Our stop was triggered on Friday but we still managed to make 15 pips from this trade. MACD remains bearish but 20EMA had turned bullish. Stochastic is near to the overbought zone. Price may continue to move higher to 1.2180.
| Support | 1.2115 | 1.2085 | 1.2050 |
| Resistance | 1.2150 | 1.2185 | 1.2220 |
GBP/USD – Price made a low at 1.4005 on Thursday night and had moved higher to 1.4092 this morning. Stochastic is rising after a bullish crossover near to the oversold zone. MACD is turning bullish and 20EMA is hinting of a bullish price trend ahead. We think price is likely to test the previous high of 1.4167 again in the next few days ahead.
| Support | 1.4075 | 1.4035 | 1.3990 |
| Resistance | 1.4120 | 1.4165 | 1.4200 |
XAU/USD – Price had reached a low of $1808.60 on Thursday night and we have seen a rally that has brought price to $1855.25 on Monday morning. MACD is bullish and rising and 20EMA is also hinting of a bullish price trend. Stochastic is near to the overbought zone and we think the upside could be limited to $1863.90 in the next 48 hours ahead.
| Support | 1851.40 | 1842.50 | 1828.50 |
| Resistance | 1861.40 | 1877.25 | 1884.90 |
USD/CAD – Price has been on a downtrend since 21 April 2021. A corrective rally started on Friday night and has moved higher to 1.2135 this morning. However, we think the correction is likely to be capped around this resistance area and another decline is likely in the next couple of days which should see price declined lower to the previous low of 1.2040. MACD is hinting of a bearish trend and Stochastic has a bearish crossover near to the overbought zone and is on a decline at the moment.
| Support | 1.2100 | 1.2080 | 1.2045 |
| Resistance | 1.2135 | 1.2175 | 1.2220 |